Running the business is grounded in the here and now. It depends on data from the past. And it can be a relatively comfortable space because it deals with known facts. In contrast, changing the business is about the world outside the organisation and about the future. And the world outside is much bigger and more complex than the organisation – to the extent that it is essentially unknowable.
In attending to leadership – without attending to development – then your leadership pathway will always be directed to the plan or agenda that you have. It will not be about the plan or the agenda that ‘has you’. In not seeing the plan or agenda that has you – your capacity for change is inherently restricted.
Marginal cashflow tells you how much working capital you require to achieve an additional € in sales. If the working capital requirement is greater than your gross margin you will run out of cash. Your business might be profitable but volume is detrimental to your survival. This is what ‘growing broke’ feels like.
Perhaps the most famous example of a company that revolutionised itself by shortening cycle times is Dell. When Tom Meredith became CFO at Dell in 1991, it had a cash conversion cycle of + 63 days. When he retired in 2001 it was -21 (yes that is a minus!). He did this by streamlining manufacturing, working closely with suppliers and having customers pay in advance.
When there are pressing challenges – there can be a tendency to forget about purpose. The survival instinct narrows the mind and the focus of attention. Sometimes we may regard it as a positive. But in narrowing the mind we risk eliminating a lot of useful data and therefore being blind to many of the options and opportunities presented by an immediate challenge.
Great coaches lie awake at night thinking about how to make you a better board member. A coach is someone who tells you what you don’t want to hear, who has you see what you don’t want to see so that you can be who you always knew you could be. An important part of the coach’s skill and service is to never wait to give feedback – a great coach coaches in the moment.