| Being a consultant is like being a eunuch in a harem. | | | | were much more difficult to administer in the Back |
| You get to see all the action but don't have the | | | | Office, which led to a sharp increase in costs. |
| wherewithal to get involved. Sometimes you wistfully | | | | Well things were truly bad now. Costs up, market |
| think about what you would do if you were running the | | | | share down. The CEO remembered the old CEO's |
| organisation. What if the day-dream came true? Well it | | | | second envelope. The first one, with it's brilliant |
| turns out that you have less and less time to make a | | | | simplicity, had saved her, what would be in the left |
| difference and this day-dream may quickly turn into a | | | | hand one. If she had been nervous opening the first |
| nightmare. | | | | one, it was nothing to the cold sweat she found herself |
| According to Mark Gottfredson, Steve Schubert and | | | | in now. She opened the envelope. She read the words |
| Hernan Saenz in their February 2008 Harvard | | | | and a faint smile came over her lips as she read 'Now |
| Business Review article 'The New Leaders Guide to | | | | prepare 2 envelopes'. |
| Diagnosing The Business' they pointed out that 1 in 5 of | | | | In Gottfredson, Schaubert and Saenzís article |
| the CEOs who left their jobs in 2006 had only been in | | | | they think that the new CEO should approach things |
| position for 8 months. This is hardly enough time to get | | | | differently. You have to act fast. To act you need to |
| your new office furniture, the corner room | | | | know. They recommend a 4-pronged attack. |
| redecorated and your Blackberry fully functional. | | | | First of all look at costs and prices and remember that |
| It brings to mind the story of the new CEO who briefly | | | | these, over time, always decline. If you are out of sync |
| met her predecessor before she was enthroned. | | | | then you are in trouble and don't forget that your |
| 'Is there any advice you can give me, Sir, I am new to | | | | competitors will have moved by the time you reach |
| this role and I would really appreciated some help?' | | | | them. |
| The old CEO said, 'You've got to find your own way | | | | Second they make an interesting point that there is a |
| really. Market conditions change and you will have your | | | | strong correlation between a company's Relative |
| own take on things. But I will do for you what my | | | | Market Share and their Return On Assets. So beloved |
| predecessor did for me. I'll leave you 2 envelopes, one | | | | of consultants they even have a grid in which the best |
| in the top right hand drawer of your office desk and | | | | place to be is the top right hand corner. The |
| one in the left hand drawer. If things get bad, open the | | | | companies inhabit this area have a high return on |
| envelope in the right hand drawer. And if things get | | | | assets and a large market share and need to keep |
| really bad, and I mean really bad, then open the | | | | raising the bar to competitors. If you are in the high |
| envelope in the left hand drawer.' | | | | market share and low return on assets then cost |
| The new CEO thanked him and thought he's right I | | | | cutting is in order. Low market share and low return |
| have got to have my own take on things if I am going | | | | means the activity is ripe for divesting. And what they |
| to move this company forward. | | | | term over-performers need to be aware whether this |
| Three months passed and things weren't getting | | | | is because of some set of factors which won't last. If |
| better. In fact, in one of the divisions where profits had | | | | it is act accordingly. If it is to do with something like |
| traditionally been highest, even though the cost base | | | | brand loyalty then cement this. |
| was high, there was an emergent new upstart that | | | | Thirdly, understand with which customers and which |
| was offering better products at lower prices. | | | | products you are making money. How much of your |
| The company was taking a severe battering. The | | | | customer's wallet are you getting, and could you get |
| main investors, sharp minded and sharp-tongued | | | | more? They recommend the use of the Net Promoter |
| heavyweights wanted to know what the new CEO | | | | Score as a simple tool to test loyalty and likely |
| was going to do. Nothing had prepared her for this. | | | | retention. Basically you ask your customers whether |
| Racking her brains about what she was going to do | | | | would they recommend you on a score of 1 to 10. 9 |
| she remembered the envelope in the right hand | | | | and 10 are recommenders. These are the good guys. |
| drawer. It had got to be worth a look. With trepidation | | | | 7 and 8 are the passives. Those scoring 0 to 6 are |
| she opened the drawer, took out the envelope, slit it | | | | your detractors. Simply divide promoters by detractors |
| open and read the note inside. | | | | to give you your percentage scores. Understand what |
| It said simply, 'Blame Your Predecessor.' | | | | you are doing right with the promoters and stop |
| 'Brilliant,' exclaimed the new CEO. Her presentation | | | | annoying the detractors. |
| was a re-hash of everything that had gone wrong | | | | Finally cut complexity. Be careful about adding too |
| under the old CEO, with no punches pulled. The | | | | many product innovations. Also watch out for too |
| investors were impressed and felt that their new | | | | many layers in the organisation. Calculate your |
| person understood why they had had to get rid of the | | | | average reporting span. Too narrow means that you |
| former incumbent. | | | | probably have too many managers and |
| 'This will buy me time,' the CEO thought while the | | | | decision-making will be slower than it needs to be. |
| project that he was personally overseeing would bear | | | | Look for areas in the organisation where it is notably |
| fruit. It was after all a sure fire winner. It worked so | | | | narrow. In fact, don't wait for the new CEO. |
| well at her former company and got her name known | | | | Start the process now and have these 4 areas on the |
| in the Business press. The company's simple products | | | | Board Strategy agenda. Customers are always asking |
| were to be more finally attuned to match the needs of | | | | me where I would recommend that they start, for |
| a much enhanced profiling of customers. Alas, here it | | | | those organisations that are looking to take |
| just seemed to add costs. The sales force could not | | | | performance management seriously these areas |
| understand the new product differentials, and they | | | | would be a pretty good place. |