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Posts Tagged ‘productivity’

Questions From Colleagues & Preserving Sanity…

April 24th, 2017 Comments off

It’s always interesting to me how cycling manages to work its way into professional conversations, even with a population of folks that don’t participate in the sport with any frequency, if at all. However, there’s a certain curiosity to people when they learn that you are actually spending 350-400 miles a week “on that little seat”. Most often they say nothing, might make a passing comment, or sometimes ask how the training is going with an obvious sincerity.

I’ve always talked about how strong a correlation there is between the disciplines I practice in my personal life and those I practice in my professional life. Very seldom are the two very far apart from one another. However, I was asked a very interesting question by one of my prior colleagues at Cylance. Knowing how much I ride, and that my training rides usually started at 5.30a, I was asked “if the effort required for those hours and rides were worth it and did it provide some balance to the turmoil of life at a start-up?” It was a great question and one that I had discussed with folks on my direct team, as well as friends and vendors.

Simply answered…YES. It really is too easy to get caught up…or I should say buried in the weeds and lose your perspectives when the pressure is high, there is change coming at you from every direction, and there is usually a loosely defined direction that is dependent on tracking against a business that is difficult to predict. You can really get caught in an escalating pace of analysis paralysis. Analysis that has you running every possible scenario, discussing every possible outcome with trusted folks on your team, balancing the hourly or daily interruptions that occur “because you need to be in this meeting…” while never really reaching conclusion or final decision. I learned very early on during my time working in equity research to quickly synthesize information, inquire with a few trusted colleagues, and make the necessary decision…and move on. Not all decisions can be made in that manner, but the vast majority can. Exceptions occur when they are going to have a material and lasting impact on the P&L….hiring, capital expenditures, etc.

When those decisions tend to be more prolonged I always found that my time on the bike, in the early morning hours, would give me the opportunity to weigh the alternatives and think about my decision without the inevitable interruptions that come in the office. When you have hours on the bike you sometimes you pass a certain business, recall a pertinent conversation, or simply realize a new idea that would have never materialized in the office. When you are on the bike, and in the dark, the only thing out there is your commitment to achieve specific performance objectives on the bike…and the thoughts of what you need to accomplish in the office. As I mentioned above, those two are seldom far apart. One moment your making sure you are tracking against the wattage number your supposed to maintain for the 40-minute block you’re in the middle of…and the next minute your thinking about the utilization rate that was just reported by Services, what effect that is going to have on their margins for the Quarter, and recalling the last Quarters activities and the contributions to the performance of that group. Was there a specific project where billing was delayed…was it not properly quoted at the beginning? How are the two large Product opportunities progressing with only two weeks left in the Quarter…and there hasn’t been an update in the most recent few days. These are the things going through your mind in the predawn hours of that ride…

Sometimes those hours in the saddle can be with a key member of the team that might be struggling with a certain decision. Very early on our CEO was faced with making a decision to fully replace the first generation Sales team and basically start from scratch. He and I had know each other for years before he made the commitment to start Cylance so bikes were nothing foreign to the two of us. If we got out on the bikes it was never predicated on having a meeting or certain discussion…but only to get out for a training ride. Inevitably it usually went in the direction of business, as it had that day. There was a long discussion about the challenges and potential risk of making the change, but in the end he knew the decision that had to be made…it was only the process of rolling along at 20mph discussing the subject that made it a bit of a therapy session.

That’s exactly what cycling is for me relative to my chosen profession…it’s part therapy, part challenges, part perspectives, part bonding with friends…and one more way for me to quantify & measure my efforts. The conversation I’ve had with colleagues is not about the specific activity of cycling, but to choose any activity that can give you a similar parallel with your activities at work, provide those perspectives, and allow you to avoid getting so embedded in the weeds that you are unable to make effective decisions that are in the best interest of the company, your team, and the objectives that everyone is working towards. Whether it’s running, rock climbing, cross country skiing, or swimming….what’s that activity that is going to keep you healthy, your brain engaged, and sharp for the next stretch of hurdles that you face at the office?

Thanks for reading…

Jeffrey Ishmael

Do You Have a Compass For Your Journey…?

November 13th, 2013 Comments off

I’ve written before about the criticality of having  not only the right systems in place, but having them planned and configured in a manner that will yield the highest quality information that you can use to make your daily decisions. Although I have always worked in relatively lean environments and have always had to have a strong level of self-sufficiency, I’ve come to appreciate the quality of good information even more working in a start-up environment and having to ensure that every resource deployed ($$$) is being done so in the most productive manner.

For our company, our biggest asset, or conversely, our biggest liability, is the people that have come to work for us. We are still a small enough company that every hire must not only have the appropriate experience and skills, but also be able to integrate in with the rest of the team. Even then, the need to hire must be quantified as much as possible and have the appropriate data and long-term plan to support each new position. While this might seem a pretty simple and somewhat rhetorical point of view, its application is a bit harder in a start-up environment. While there has always been the specific business plan in place, many of the early hires were done so at a “gut” level with the belief that they would support the mission and make the necessary contributions.

As the company has moved from living room start-up to growing revenues, it’s been extremely satisfying to be able to have the data that honestly supports the hiring of new positions. Data that is the product of systems that were planned, implemented, and have evolved with the growth of the company. Data that looks at everything from the opportunity pipeline that Sales is working on, to projects currently being scheduled for delivery, the manner in which our consultants are spending their time, to the necessary time our consultants support the Sales team.

We can now look at the time that our folks are spending on both internal and external projects and make informed decisions on when to hire and what specific skills need to be hired in order to support the current team and developing opportunities. It’s certainly a win for the entire team when you can make a decision that is based on data and not based on gut or hope that an expected event will transpire. Although the timing may not always be ideal and the existing team might be taxed a bit longer, you’re ensuring that when the resources are finally deployed and you bring in a new employee that they will be there for the long haul and become part of the “family”.  After all, working in a start-up is no cakewalk and it’s the long days, accomplishments, and team camaraderie that ultimately deliver the success that everyone shares in.

Thanks for reading…

Jeffrey Ishmael

Life In The Start-Up Lane: When “Standards” Keep Changing…

September 25th, 2013 Comments off

As I’ve mentioned in some of my prior posts, whether it’s just another day in Finance or within the life of a start-up, there is no normal day. Take that a step further and you’ll likely find that there is no level of “normal” reporting that you can rely on to measure what is happening with the business.  At least not the “standard” level of reporting that you would have relied on at a prior company, which was likely much larger and more mature. As we are about to kick-off our sixth fiscal Quarter, the reporting that we relied on two Quarters ago is far different than what we are using now, and what I expect to be using in another few Quarters.

Part of the challenge within a start-up is balancing the integration of new systems while developing the rest of the business. This is not a sequential sequence of events, but a series that run parallel, often forcing business decisions based on experience and gut instinct. This is probably where I highly value the time that I spent in equity research covering 20 different retail and apparel companies. Monthly comp sales unleashed a flurry of data that had to be quickly assessed, reported on, and subsequently disseminated to clients. It had to add value, and above all, it HAD to be correct. Making business decisions in the absence of data, or at least incomplete data, is a very uncomfortable position for most folks.

So how do you measure the business when the standards are constantly changing? The absence of standards is not indicative of an absence of accountability or transparency, but part of the evolution that naturally occurs within a start-up. Yes, there is a Budget that is developed and based on certain assumptions, but it’s not long before that Budget becomes a distant reference point as you begin compiling data and assessing the potential trends that are developing within the business. However, one to two Quarters of data certainly is not a “trend” within a start-up, but it sure helps in refining the assumptions used in the Forecast. As with our business, while we are cognizant of the metrics that we will ultimately be using to measure our performance, some of those metrics are simply meaningless at this point since the business is still young and there isn’t enough data yet collected. That doesn’t mean that we’re not tracking our bookings, revenues, margins, and other macro indicators, but the detailed view is in a bit of a holding pattern at the macro level until we can drop down to the next level for more meaningful reporting.

As our business continues to grow and prosper, I absolutely expect a fundamental shift in our reporting abilities as we collect more data. We’ll move from the “spirit” of building the business to “fine tuning” the engine and driving increased performance through the data distributed to our key internal stakeholders. In these early stages of a start-up, it’s a delicate balance between giving the teams the latitude they need in developing the business, tracking their activities to the Budget, and determining whether their invested time and expenses will deliver an ROI in the immediate future. In the initial phases, that ROI may come in the form of customer satisfaction, referrals for new projects, potential new hires, and if all are executed properly….bottom line profitability.

Living the day-to-day life of a start-up is not the black & white mechanical structure most are used to working under. It necessitates the development of comfort in change and knowing that will be the case for quite some time. However, at the end of day, just take a step back, look at the evolution of your bottom line results, the trend in customer engagements, customer feedback….and you’ll know exactly how well you’re performing.

Thanks for reading…

Jeffrey Ishmael

Qualifying The Elements Of Your Forecast….

July 29th, 2009 Comments off

     We’ve recently began the process of transitioning to a 5-Quarter Forecast process, primarily to provide a greater level of insight to our Sales & Marketing folks. As we speak, they are already making trade show commitments, planning regional sales meetings, and finalizing ad placements. How can you be making these significant commitments without your plans in place for the following year? For the previous company I was at we were able to work under a more traditional annual budgeting process. This worked because we had a predictable activity flow, did not have large marketing or development efforts,  and we typically did not have more than 6-8 weeks visibility for our revenues due to the nature of the offering. But now, in the midst of a much more volatile & dynamic environment, not to mention, a Sales & Marketing calendar that is working almost a year in advance, such an approach isn’t feasible.

 

     As I regularly speak with folks in my network, which isn’t just inclusive of my finance friends, I’m surprised by the lack of information that is tabled/submitted with respect to qualifying a Budget or Forecast. I’m surprised that there are still Management teams that accept Budgets which don’t itemize the individual areas of growth or improvement for the coming year. How can you hold specific teams accountable if there are no specific actions tied to achieving the goals?  For instance;

 

          You’re citing revenue growth of 10%.

a.                   For the coming year have you itemized the various channels that will contribute to that growth, or taken into account any shrinking channels?

b.                  Have you timed the growth of your revenue to coincide with the calendars necessary to drive the growth plan?

c.                   Have you erred in forecasting a linear growth plan w/o even a plan to support that?

 

          You’re forecasting an increase in gross margin.

a.                   What are the contributing elements?

b.                  What are the non-recurring elements that will support the increase?

c.                   Have you reviewed the make-up of sales and looked at the margin quality of those transactions? Do you need to look at Domestic vs. Intl or any inter-group sales?

d.                  What portion of your increase is volume based vs. productivity based?

e.                   If productivity-based, what are the specific areas that you are targeting?

 

          Have you discussed your assumptions for OpEx with the rest of the team?

a.                   Do they buy into your preliminary assumptions or are you facing a potential shift in the business model that will necessitate new expenses?

b.                  Are there certain areas that need to be bolstered for a turnaround in 2010? Do your expenses support the revenue growth being projected?

c.                   Have you incorporated the necessary amount of consideration to mitigate unforeseen shifts increases?

 

     No matter what, you’re not going to be able to capture everything within your Budget. At a previous company, we received an unannounced increase in our utility rates from Southern California Edison. This happened a month after the Budget was approved by the Board. When your annual utility bill is $1.3 million, a 22% increase is not a minor element. We were able to make the necessary adjustments, but not without some difficulty for other areas. Whether you’re sitting in the CFO chair, CEO chair, VP of Sales or a Director chair, do you understand all the elements of your Forecast and are the assumptions that are incorporated sound? It’s redundant to start asking about why I may not be discussing other elements of the Budget, but again, this is the 40k foot commentary. Are you clear about the elements that comprise the foundation of your Forecast?

 

Thanks for reading . . . .

 

Jeffrey Ishmael

Discipline #5: CFO as the Master of Measurement

July 13th, 2009 Comments off

            In the last segment on “Reinventing the CFO”, I covered the CFO role as the Warrior of Waste.  The 5th  discipline in Jeremy Hope’s book is CFO; Master of Measurement. This is perhaps one of my favorite sections of the book, and the one area I so rigorously incorporate into my day-to-day operations. Not only in a financial perspective, but in an operational perspective. Without measurement, there is no assessing the progress the company is making, not to mention the accountability that measurement can bring into the development of management goals.  The latter being one of the more important areas, which ultimately will drive the operational results.

 

     In Jeremy Hope’s book, he notes that the CFO has a key role to play in changing the measurement culture.”  Hope suggests that in order to efficiently fill the role of Master of Measurement, the CFO needs to:

  • Measure to learn and improve
  • Choose the right measures
  • See measurement as patterns, trends, and abnormalities
  • Provide external reality checks
  • Use a range of measures to inform a dialogue about management performance

 However, before any senior Finance manager can start implementing new methods of measurement, the source data needs to be thoroughly understood and its accuracy confirmed. Depending on the size of the project, this might take weeks, or it could very well take multiple quarters if the data sources is a new one and needs to be implemented throughout the organization.  I would cite a new labor reporting platform for North America as a perfect example of a new data source contributing to a new source of labor productivity measurements.

 

For one company I worked at, we had a field service organization that was comprised of 150 field engineers, generated almost 350k paid hours annually, and was responsible for approximately 30% of our revenues. Yet there was no reporting structure in place that reported our productivity levels, hourly cost rates, or the distribution of hours by activity. In an effort that spanned the better part of a year, we implemented a new payroll reporting process that had our engineers reporting their field hours by activity. We rolled this platform out by region, and as we did so, we reviewed the data monthly with our Regional Service Directors to confirm the information. Once we had consecutive quarters of data, we initiated the process of publishing the results and then implementing monthly & quarterly goals for labor productivity and specific improvement plans for non-productive areas where hours were lost.

 

It was not an easy process and it took an open and collaborative approach with the field organization since there was an inherent distrust of anything previously published and there was no confirmed data source that anyone trusted. As a result, we realized a full 10-point increase in productivity levels, which effectively meant the avoidance of hiring an additional 15 field service positions.

 

My reliance on implementing measurement tools is very high, but only those tools that I can trust, since ultimately, those tools will result in implementing levels of accountability for the team, as well as other levels of management in the organization. In the end, accuracy is key. While it’s quite easy to be excessive in assembling a toolbox of measurement tools, brevity is key so that you have the proper tools to drive increased performance with your staff, and ultimately for the organization. Do you have an effective set of tools and do you trust them?

 

Thanks for reading . . . .

 

Jeffrey Ishmael

You’re just now considering “Human Capital”…?

February 16th, 2009 Comments off

     With an 8-hour layover in the London-Heathrow airport I finally had a chance to catch up on so much of the reading I had fallen behind on. A more recent publication that I brought with me was the Feb-09 edition of CFO magazine. Needless to say, I was a surprised that one of the key articles was titled “How to Talk About Layoffs”. Are you joking? We’re essentially 17-months into slowdown that started back in Q4-07 and this leading publication is now talking about how to discuss the topics of layoffs, effective recruitment, and employee morale?  I’d say a bit late to the party.

 

     While I certainly wouldn’t confess to being on the leading edge of “Human Capital Management”, this area should always be an absolute area of focus for every CFO. Unless you are a very R&D intensive firm, the personnel portion of the operating budget is typically the largest consolidated expense within a company, especially when you consider all the peripheral expenses tied to this area. Perhaps I was also fortunate in that my first CFO stint had me working for a French manufacturing company, in which margins were thin, and we had to squeeze every bit of productivity we could out of existing personnel. Nor did we achieve the productivity with a Stalag 17 approach either. Our staff was able to maintain a great balance between their work and personal lives, but certainly delivered on our expected financial results.

 

     Recalling back to our FY06, FY07, and FY08 Budgets, I put a particular emphasis in my presentations to managers that had them questioning their staff and the contributions they were making. I had countless discussions where the message was that every person needed to have a contributory effect on the bottom line. We couldn’t afford to carry personnel that were simply an expense at the end of the day. Whether the contribution was improved quality controls, higher productivity levels in the field, or improved reporting for key-decision makers, we could not afford to carry “C-Players”.

 

     My concern for any Finance person who is only now starting to take a hard look at their personnel costs and get comfortable with “How to Talk About Layoffs” is that any actions at this point will be reactionary and likely not well thought out. I take a very hardline view of this area since employees are also the most important asset of the company. For any Finance person only now looking at this, I would see the sign of a Finance person who does not understand their business, long-term strategic planning, or the ability to properly deploy resources.  What a shame . . . .

 

Thanks for reading . . . .

 

Jeffrey Ishmael