X-ecutive

Big Money vs. Big Business

Big money and big business generally go hand in hand but things get interesting when the two have different ideas. Such is the case with my former company.

It is just over six months since we parted ways. Since that time I have all but recrafted the direction of my life. Mentally and physically my family and I have progressed to a much better plain. We have clear direction and a path of progression toward our goals.

During the same six months, the remaining executives at the company have continued on a path that, if it demonstrates leadership and direction, gives credence to the upheaval in control of the organization that occurred this week.

The annual shareholders meeting was held as usual but did not go off as usual. The chairman and two of his supporters on the board of directors were ousted by shareholders in favor of instating a billionaire investor and two of his supporters. While in and of itself this overturning of the control of a company is something that rarely occurs without significant ground work, this vote, as stated by the chairman before the vote occurred, was a referendum on his strategy and direction for the company. If so, then the shareholders clearly spoke.

The billionare investor had been critical of the chairman openly for only the past couple of months but in making his remarks, stated what apparently many have been feeling for some time. Shareholders, not even knowing for sure the direction or plans the billionaire, who is not a retailer, would shape for the company, clearly voted for a change, apparently any change.

An upheaval of the sort that occurred this week points to deep set frustration over the direction, leadership and public handling of an organization. It came just two weeks after another round of culling at the company in which another 300 people lost their careers. It will be interesting to see the outcome of the recrafting of the board and if indeed the new board listens to its shareholders. I have an idea of what will happen but as it is not an optimistic idea I will keep it to myself. Rather, I would spend a few minutes musing over what I think should happen.

To set a direction for any business, some foundational principals need to be understood and cherished as cardinal rules. Unfortunately these were cast off long ago in this company's case. I am not sure weather it was with intention or it occurred because during a period of time the senior management turned over multiple times at a pace that left a void in the transfer of knowledge about the foundational principals that the organization was based on. I like to think it was the latter. Regardless, it is not high science. Seasoned business professionals should have the fortitude and presence to both set aside personal agendas and invest time in gaining knowledge to be able to capitalize on the positive foundational principals that built a fledgling company into an empire. As a matter of fiduciary responsibility that should be a regulation. Most of the memory of this company was lost prior to the current administrations arrival though, so without some effort to retrieve the knowledge that had already left the building the foundational principles were already lost.

So what were the foundational principals? They are not secret. They are basic principals of retail consumerism. I cannot deal thoroughly with each one here today but as a categorical list, here is a start.

People - They are what it is all about, both as consumers and those who serve them.

Product - This is what the people want. Have the right product, in abundance, at the right price.

Propagation - The process of establishing the foundational principals of quality and business specific knowledge with those responsible for making decisions throughout the company.

Presentation - This refers to the organization of the processes and assets of the company. It includes but is not limited to store location positioning, the complexity of merchandising, pricing, and even processes of distribution. None should occur independently as their action impacts the outcome of another.

Within these four categories, which are also in priority order, are the basis for foundational principals that are adapted by consumer based businesses throughout the world. Unfortunately in many cases, as in the case of my former company, the larger a business becomes, if it does not have foundational principals to guide it, the priority order begins to shift. Focus and authority is often narrowed and more emphasis is placed on Presentation initiatives while the more important categories including People suffer.

At my former company, basic tenants were at one time well defined and followed successfully. In their basic definition there was the allowance for a fluid changing business model that allowed the company to evolve and adapt to the changing marketplace. Had the basic foundational tenants been adhered to, the company would look very different today. It certainly would have direction and a clearly established path of progression. Unfortunately, as shareholders have noticed, it does not.

I am not sure the company, in its current state, is repairable at this point. The dismantling of the organization has been in progress for a while. Not intentionally, rather it has been in the wayward pride and agendas of individuals who's confidence in themselves and those select supporters of their agenda is misplaced. None of them are bad people. In fact most I have been proud in the past to call friends and acquaintances. But position does not give one knowledge that should overrule the reality of People. When this occurs, the resulting personal pet projects that make a name for oneself are generally not in the best interest of the broader organization.

What I would like to see, is a setting aside of personal agendas and an open honest discussion among the new board, together with the executive committee, that would lay out a reasonable plan to establish some foundational tenants that would guide the company to a new destination what ever that destination is to be. Tenants, based on good consumerism should guide the agenda of the board and executive committee to a common goal. That would be something that has not occurred in my former company in many years.

Those who cannot subscribe to the tenants among the board and senior management should leave. Once the tenants are again established they should be propagated to the People throughout the company. Those who, once informed can make a decision to support and own the guiding principles will progress and those who do not support the tenant will find an organization they are better suited for but at least they can make an informed decision.

Foundational tenants are not goals, mission statements, or milestone measurements that so many executives like to focus on. They are basic beliefs that guide the way an organization behaves and are able to be crafted into supporting structures that drive business processes. For example:

People nearest the consumer, when given appropriate business principles to operate by, are most qualified to make beneficial business process decisions.

This singular tenant, when honored in the company, mandated a drastically different managerial style. It also mandated a much different level of involvement, training of business mechanics, and Propagation than exist in the company at large today. This singular tenant touches every aspect of business right down to the management of available inventory at the local level. It allows for a dynamic informed sales and management force that has the authority to succeed. It mandates that a company spend its resources on propagation and education of the frontline rather than centralizing authority and control which results in the elevation of Presentation initiatives including narrowed personal agendas that are destine for a short term splash but long term failure due to the lack of involvement, understanding and buy-in at the sales and consumer level.

This was just one of several tenants that created a worldwide icon. No such tenants exist today in the company and the result is evident. Billions of dollars have be spent to push Presentation initiatives without the foundational processes in place to ensure their proper development and execution. As a result initiatives, although good ideas, are ineffective in moving the direction of the company.

Each of us as individuals have have foundational tenants weather we formalize them or not. We use them to evaluate situations at significant decision points. The more aware and reliant on those foundational tenants, the clearer the road map for our lives become. It is when we allow distractions and activities inconsistent with our foundational tenants to lead our direction that we become lost, misguided and ineffective.

I allowed myself to be increasingly guided by forces outside my foundational tenants the last years at my former company. Fortunately for my family and myself, I have been able to recover. I am on track once again.

My former company is a much more complicated situation. I had only one ego to contend with. Will the infusion of the billionaire investor wrought a positive change? Time will tell. Will it continue to be big money vs. big business or will some foundational guiding principle emerge? I would love to be a fly on the wall of the next few board meetings.

On second thought, I am more than happy with my current path. Onward to Montana!

posted by Unknown @ 7:20 AM