Operational efficiency is the key to successful companies, the wish of all companies, and the bane of far too many. Successful COOs have found ways to develop processes that root out inefficiencies, improve productivity, and increase profit margins.
Here, two expert COOs share what they have learned from repeated successes at mega-million-dollar corporations.
Steve Raack, a COO who has led consumer goods giants, including Beautycounter and Herbalife; and Mike Bartikoski, a manufacturing and supply chain expert who has run operations for Hershey and Pepsico among others, shared their insights during a wide-ranging webinar and Q&A moderated by InterimExecs CEO Robert Jordan. You can access the full webinar on-demand.
Despite a plethora of project management software tools and project management certification programs and project management training, protocols and methodologies, there is not always project management success. Schedules slip, costs balloon, plans derail.
Cynical observers of the project management process suggest these stages of a project:
Search for the guilty
Punishment of the innocent
Reward for the non-participants
Or so says William (Bill) Mince, InterimExecs RED Team member and Chief Operating Officer at iMedrix, the California-based maker of a mobile clinical-grade ECG device that connects to remote physicians in real time. Since his first job at 3M in the 70s, Mince has built a career focused on project management.
His passion is trying to improve the project management process across organizations. He’s even writing a book about it. Project Leadership: An Executive Handbook for Project Management Success is to be published in the fall of 2021.
He offers these 10 steps CEOs can take to help ensure the success of project management in their organizations.
When Barry Zekelman’s father passed away he was 19 years old and six months into college. His dad left behind a business employing 5 people manufacturing steel tubing. It wasn’t much of a head start with beat up machinery, negative $5 million of retained earnings, and losing $60,000 every month. The business was on the brink of bankruptcy. Everyone told Barry to shut it down and stay in school, but he admits, “quite frankly, school was boring,” realizing that for him he had already outgrown it. This was his shot.
Barry had to piece together how to run a manufacturing business, like a pilot learning how to fly as the plane takes a nosedive. “I learned how to read an income statement and put one together real quick. I learned that making money doesn’t mean having money. You can make a lot of income – but cash is king,” he says.
He had no sooner moved into his dad’s office when two employees came in asking for a raise. Problem was, he couldn’t afford it – and he honestly didn’t know how they were making a living off what they were paid. He told them to do that he needed more production. The cash wasn’t there. The employees pleaded, ‘well – if you gave us a $2 an hour raise, this machine would never stop.”
Barry remembers thinking: what comes first, the chicken or the egg? “If this machine never stopped, I’d be able to give you a $2 an hour raise,” he said. “If I give you a raise and nothing changes, are you going to give me the money back?” The guys looked at each other and said it doesn’t work that way. Barry told them they had to do this together to be successful.
Private equity funds are entering a new phase that requires new tactics to be successful against many alternative sources of funds. With a vast reservoir of dry powder – $1.5 trillion waiting to be deployed – PE funds seeking the whip hand will build and pivot while the economy is reinventing and reviving in 2021 and 2022. But what worked in the past won’t work in the future. Moving forward, adding value will require more attention to management fit for the purpose of rapidly transforming portfolio companies.
“Every good private equity professional will tell you that the most important factor behind a successful investment is the management team,” said Eric Jones, a partner and member of the corporate and private equity groups at Detroit law firm Honigman LLP. Jones was a speaker at the University of Michigan Private Equity Conference held virtually in September 2020 and attended by InterimExecs. “You can have even market share, but without a very strong management team, it’s not going to be sustained. The business isn’t going to grow and the investment piece isn’t going to be realized,” he said.
“Success has many fathers, but failure is an orphan” is a quote commonly attributed to John Kennedy as he accepted responsibility for the Bay of Pigs fiasco. The idea, however, is an old one. Roman historian and politician Tacitus said that, “This is an unfair thing about war: victory is claimed by all, failure to one alone.”
When things are going well, it’s easy to share credit as a team. When things go sideways, buck-passing and finger-pointing rule the day. Success has many fathers, but for companies, so does failure. The thing about business is that it is always about the people, the process, and systems already in place. And those can fail over time, even at the most successful organizations. Errors, however, can actually help a business move forward – if the problem is identified and fixed. It’s how the owner and management team respond to those mistakes, misses, omissions — or even complacency — that can make all the difference.
InterimExecs surveyed interim leaders from around the world for our 2020 Interim Executives Survey. In addition to asking executives about who’s hiring them and the roles they’re taking on, we asked executives for insights into “The Biggest Mistakes Companies Make.” While their responses varied, clear themes emerged in the areas of leadership, operations, human capital, strategy, financials, and change initiatives. Focusing on these fundamentals is a good starting point for any struggling business.
In a merger or acquisition, discord of company cultures and disparate systems can cause the demise of a once-promising partnership. About 70% of acquisitions fail when post-acquisition results don’t meet pre-closing expectations. Many of these M&A failures are caused by poorly executed integration.
What’s surprising is that M&A failures are avoidable with careful integration planning and strategic post merger integration. Pre-acquisition, it takes a lot of forethought on how company cultures might clash and how their systems will integrate. Post-acquisition, it takes a ton of strategic elbow grease to rapidly align systems (and eliminate some), retain productive employees, keep customers, and make stakeholders happy.
Lose weight. Exercise more. The new year’s resolutions are in full gear right now. Whether it’s getting to the gym, reading more, or eating more greens, January usually begins with a reflection of how we did and what we can do more, better, faster this year.
We focus so much on being proactive in our health and personal care. But what about our business health? Is it just business as usual, again? Or do we have bigger business goals for the year ahead?
Talking to company owners and investors over the years, we have discovered a lot less proactivity than you’d expect and a lot more complacency. We don’t mean activity – everyone has lots of to-do lists – where busy work mask over big or growing problems.
We often get calls when the house is on fire: cash is draining away from the business, employees are jumping ship, frustrations are mounting, or lack of fresh thinking, innovation and true leadership have led to stagnation in the market. Owners say to us my ‘business is failing, what do I do’.
It’s hard not to think how many sleepless nights could have been avoided for an owner if they would have just acted sooner. We mean solve the issues not just by trying to dive in themselves or harangue the management team more, but instead through resources or tools that could extend their capabilities and help make vision a reality.
No organization is immune to challenges, not if it has any ambition. But how do we as owners and leaders put our strategy hat on to see down the road, or attempt to see, to predict where markets will go, how customers will act and react? To play the great game of chess in the real world – which is strategy.
Sometimes that is easier said than done. The eloquent Mike Tyson put it so well when he said, “everybody has a plan until I punch them in the mouth.” We would do well to remember how limited our brilliant strategies in fact are, how fragile in the face of ambiguity, uncertainty and future black swan events.
Just look to history to see how companies have been blindsided with the punch they never saw coming. Kodak invented the first digital camera in 1975, but put launch on hold in fear of cannibalizing their film business. We all know the story from there….Kodak who? Or take Blockbuster – which failed to pivot when Netflix showed up. And then Borders and Barnes & Noble, crushed under the Amazon onslaught. And the examples of business strategy gone wrong go on…
The best private equity funds talk about backing great CEOs, entrepreneurs, and management teams. But in the lower middle market ($2-$15 million in EBITDA), what’s a private equity fund to do when the company they are acquiring lacks resources and the management skills to earn great returns?
What if serious talent doesn’t extend beyond the CEO or founder?
Douglas Song, co-founder of Prodos Capital Management and an investor in lower middle market companies, says that “there’s always a way to think creatively and unlock value in any lower middle market company.” He especially finds common themes among companies where entrepreneurs or families have built a great business over time, but are lacking in certain areas where partnering with additional resources will help them take the business to the next level.
Interim executives deliver real results, in real time, real quick. An interim is unique in the depth and breadth of experience they bring to bear. This allows an interim to see hidden value in existing products/processes/systems, implement actionable strategies and gain true alignment necessary to optimize the business. The interim will review the investments the company has made into processes, organizational structure and systems. This will lead to a focus on the areas which can be easily measured and might yield the quickest return on investment such as profits, systems and process efficiency.
First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
*$200 additional charge for Accelerator Program only applies for first-year members. After the first year, membership renews at $485/year.