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Archive for the ‘Momentum’ Category

An Unaimed Arrow

Tuesday, February 8th, 2011

There is a saying, “An unaimed arrow never misses its mark.” With today’s modern business practices, it’s difficult to fathom that any corporation or business has an unaimed arrow in their quiver. After all, this is the era of lazer-like focus. This is the era of strategy & relentless execution. This is the era where companies are expected to deliver shareholder value, and everyone knows it. However, there are of course - exceptions. Exceptions like appear to defy logic and many of the principles essential to leading and navigating a business in the world marketplace.

Such appears to be the case of Sara Lee. A conglomerate based in Chicago that has struggled for at least a decade. A recent article on Bloomberg titled, Sara Lee Disarray Costs Shareholders About $1 Billion: Real M&A is interesting. The article discusses how Sara Lee has been a company that has talked about “creating value” over the past 10 years, yet has been on a consistent journey of “destroying value.” Now Sara Lee has been on the sales block for several months now (and been divesting companies for a decade), with several offers coming up short. the article goes on to state:

 Sara Lee Corp.’s managers, who failed to boost the company’s stock buying and selling $12 billion in assets in the past decade, destroyed shareholder value by passing up three chances to sell itself in the last year. ..

While Sara Lee pushed for a sale at about $20 a share, according to two people, it decided to break itself up after JBS, the world’s largest meat producer, and the Apollo group dropped out without boosting their informal offers. After spending $3 billion for businesses from coffee roasters to fabric suppliers since 2000, and selling off more than $9 billion of units such as Hanesbrands Inc., its stock is still worth almost $2 less than at the start of the last decade.
 “The board felt pressured to do something and unless we don’t understand the details, it seems to have given up on its commitment to creating shareholder value in favor of just doing something,” said Tim Ramey, a former Sara Lee vice president of strategy and corporate development who left the company in 2002 and called the recent saga “sad.”

What is the cost of just doing something, which some might say has been Sara Lee’s mantra for the past decade?

While Sara Lee has climbed 15 percent in the past three months as takeover speculation increased, the food company’s 9.4 percent drop since the start of 2000 contrasts with the 45 percent gain for consumer staples stocks in the Standard & Poor’s 500 Index. Only four other companies in the industry fell more than Sara Lee, data compiled by Bloomberg show.
Even with dividend payments, the company’s competitors returned more than twice as much to shareholders on average.

Sara Lee has been a company that talks about delivering shareholder value, yet has consistently come up short. If their arrows in the quiver were aimed, well they either missed their mark, or they were aimed at the wrong target. In the end, Sara Lee is a company that lost their success momentum and success formula. In this arena, everything goes bad from increased turnover, depressed worker productivity, short term thinking and others.

Today, Sara Lee’s arrow is aimed in one direction - R.I.P. And even that is proving to be difficult.

 

 

Momentum Killers

Tuesday, March 23rd, 2010

I grew up on a farm when John Deere A’s were still in use. The John Deere A (and others in the same series) were a 2-cylinder tractor that incorporated a large cast iron flywheel in its design. It was the flywheel that smoothed out the low-revving engine and gave the tractor its remarkable pulling capacity. They were referred to as Johnnie Popps, since they emitted a pop-pop-pop noise that was very distinctive, and could be heard from a distance.

When I think of a business, I often visualize a large flywheel attached to the organization. Successful organizations focus their attention on making their flywheel go faster, realizing increasing the momentum of an organization results in tangible improvements in performance. Organizations that are able to focus time and resources on flywheel acceleration can be very successful and profitable.

In most organizations however, propelling the flywheel faster and faster can be a difficult and inefficient task. Not because they don’t know what to do - in fact it’s likely in their business plan. It’s right there in front of them - plain and simple. But they have a problem. And that problem is friction. Friction amounts to the activities and assets that actually slow down the flywheel - aka Momentum Killers. Friction amounts to the activities that create unwanted noise, heat and distraction. Most of the time, friction occurs inside the organization in areas such as:

  • People: How many times have we experienced a rough cog in our organizations, yet the problem continues to go unresolved.
  • Communication: For some unknown (or known) reason, communication within and across departments is strained and ineffective.
  • Compensation: Is the compensation plan delivering results, oris it creating unwanted friction with unintended consequences?
  • Systems: Are the systems in place holding your organization hostage?

Too often, organizations focus almost solely on momentum generating activities. This is the source of their energy and purpose. Meanwhile, momentum killing activities is what’s really determining their present and future. I’ve have simply been inside too many organizations that allow momentum killing activities to survive and thrive. It’s the elephant in the room. It’s the ugly cousin in the corner. It’s the organization that lives for a paycheck, and that’s it. I’ve also worked with organizations that have a healthy balance between increasing momentum and figuring out how to correct the momentum killers in the organization. And its this type of organization that becomes the high performance organziation of tomorrow. Because this is the organization that deal with their Silent Problems.

Be the one to see it coming!

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