We’ve been through (a) concept-type priorities, (b) specifics, (c) tough-minded initial stack-‘em prioritization, and (d) scrambled assignments; To conclude this topic today I’ll address (e) many mid-course learning-based corrections, and (f) event or decision driven reprioritization.
(e) By launching priorities with very un-proven yet specific goals, making the list of specific possibilities extensive, and continuously challenging the team via review of those specifics, you will face many mid-course learning-based corrections. I previously laid out the specifics for the “get our balance sheet credit-worthy within 6 months” priority. Remember we created this conceptual priority, and then laced it with specifics; specifics created partially by judgment and partially by intuition. So now we’ve been underway for a while, and the team assigned to this priority creates an interim report: “we’ve discovered that we have been billing 5 days after shipping so are losing 5 days on our collections; by billing on the day of shipment we should save $3M not the $1M we estimated”, “collection procedures, originally targeted at $4M, is not achievable, customers are only 2 days late on average so practically no savings are available”, “customer terms are longer than competition by 10 days and gives us no competitive advantage; by correcting to market we can achieve $5M vs. the $2M projected”, “in addition, via this exploration, we found a new opportunity--payments are mostly coming in by mail vs. electronically so by educating and facilitating we can save 2 days, $1.5M” . The result is that the new target for the A/R portion of this objective is now $9.5M vs. the original $7M target. It goes on and on.
(f) When you face real-time decisions, your initial prioritization gets put to the stress test. Two of our initial priorities were #1 cash creation, and #3 re-establishing our market place product quality image. We know that all four of our priorities we considered to be mandatory, but we initially determined that #1 cash creation just had to be ranked higher than #3 product quality image because, without meeting bank covenants on cash, the company will be out of business. So, because of that, initially an investment to re-tool several products and to market those improvements was put on hold. However today we’re now assessing new inputs. First, the cash collection actual results have been above target, and those targets have been increased; second our largest customer has made warning threats to remove us from the bidders list if there was not a quality improvement program in place. Time for a reassessment based on new realities! We now decide that #3 product quality is ahead of #1 cash creation; and therefore the priorities will be reprioritized.
By following steps (a) through (f) your organization is highly engaged in gaining breakthrough results, and you and they are learning rapidly concerning the inner workings of your business and those entrusted to gain further results. [TE1]
[TE1]Published 06/22
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