THE MANUFACTURER’S JOURNAL
Voice of the Industrial Manufacturer November, 2008 Volume MJ-1 Issue 11 lynnjtomjack@comcast.net by Dr. Lynn J. Tomjack Dealing with Uncertainty In my 28 years as an industrial researcher, I have had the privilege to interview several thousand Senior Executives in a variety of situations. A summary of their good / bad personal experiences with “uncertainty” is particularly relevant in today’s markets. These executives averaged 21+ years in manufacturing experience. Their reactions to periods of “uncertainty” faced by their organizations can be classified in 6 major categories: • Advance • Attack! • Retreat • Counter Attack! • Siege Mentality • Defeat Companies tend to reveal their true personalities in times of “uncertainty”, when pressure for performance is intensified and the spotlight magnifies every decision that impacts the bottom line. Budgets that were considered fairly stable for 12 months are shredded. Key vendors are notified that existing P.O.’s have to be drastically scaled back. Accounts Payable is directed to “delay” payments wherever possible. Sales pressure intensifies! Privately, personal conversations now include: “How long will this last? Layoffs? Plant closing? Xxxxx is leaving! They are NOT going to fill that position? We LOST those 3 orders!” In times of “uncertainty”, these executives stressed: 1st – Prepare a battle plan 2nd – Select a Strategy 3rd – Execute the plan!
Executive War Stories ~ Battles against Uncertainty
“Victories and Defeats”
ADVANCE: “Doc … I don’t give a damn about any fancy statistical sampling or 95% confidence levels, or any of that University research learning. Call (10) companies and tell me YES / NO on whether we should proceed with this new product we are developing in-house. And, by the way, I need the answer in 2 weeks; and no more than 2 pages.” ATTACK!: The corporate chain faced a federal multi-million dollar frivolous lawsuit, brought by an
unscrupulous franchisee claiming that the 2.8 feet of the bathroom in the northeast corner of his restaurant was inside the 3 mile restricted corporate limit which violated his franchisee agreement and merited a multi-million settlement. The frustrated federal Judge briefly scanned the documents, “I am going for coffee and a bathroom break. I will be gone exactly 9 minutes and 20 seconds. When I return, both parties will present a full and satisfactory agreement before this bench; or I will settle this joke myself! UNDERSTAND!!!” On his return, with 20 seconds to spare, both parties had miraculously reached a final agreement. The Judge had ended the bitter 19-month feud in 9 minutes!
RETREAT: “We made our decision NOT to purchase your systems over 4 months ago. Hasn’t anybody told you that? I don’t ever even remember having a presentation from your people. Don’t you people ever talk to each other?” COUNTER ATTACK!: “We are having consistent problems with the Xxxxx equipment from Xxxxx
Company; and so is the Xxxxxxxxx utility company back east. If you guys could simply offer a better & more consistent reading and calibration, I would switch the order to you!” A $287,317 per year “key” account is LOST when the new CFO, answering the phone after hours, refuses to overnight ship a critical electronic part to jumpstart a “key” customer’s down production line. Because the new CFO was unfamiliar with the account, he insisted the long time customer pre-pay the $89.14 overnight charge with a personal VISA. The next morning, the furious customer cancelled his contractual order. An embarrassed President flew immediately to TX with a check for $89.14 and a Hallmark apology card and recaptured the account and restored good relations with the “key” customer. An international customer “demands” a $670,000 price concession on equipment for a nuclear site. ITC research revealed the second source, cited by the customer, did not have the manufacturing capabilities to provide the equipment as claimed. The ITC client rejected the price concession demand. A week later the order was placed at full price!
SIEGE MENTALITY:
ITC revealed a Company’s sales during a 3-year period had grown 25% to $8 million. Two major competitors, in the exact same period and markets, had grown in excess of 250%, to over $100 million each. The client placed the research on the top shelf of his bookcase and said, “If I don’t look at your research; they (the competitors) don’t even exist!” “The reason we shifted our business to your competitor is that they put the pressure on us, constantly. They are in our offices physically once or even twice every week. And, as you know, in this business, sales typically go to the guys who were ‘last in the door’ to see us. What happened to you guys, anyway? I haven’t seen a sales guy in 4 months. I haven’t seen your Regional Sales guy since February, & now it’s June! That is forever in my mind!”
DEFEAT: “I know that the $19 million investment in this equipment was a terrible mistake in judgment. We didn’t do ANY field research prior to product launch. Our R & D team was confident this was cutting edge technology. To date we have NOT sold one single unit. The Board is furious; and my R & D budget is still $245,000 per month. I want confirmation from YOU (ITC) that we discontinue this effort! I need you to tell this to the Board, not me!”
Uncertainties can be viewed as CATASTROPHIC CIRCUMSTANCES or UNIQUE OPPORTUNITIES. Confederate calvary Brigadier General Jeb Stuart accidentally rode into a heavily fortified Union encampment by mistake. Immediately he screamed, “split the troops and attack in both directions at once!” Dealing with “uncertainty” allowed Jeb Stuart to escape and fight another day! He quickly formulated a battle plan, selected a strategy, & executed the plan!