You get to see all the action but don’t have the wherewithal to get involved.  Sometimes you wistfully think about what you would do if you were running the organisation.  What if the day-dream came true?  Well it turns out that you have less and less time to make a difference and this day-dream may quickly turn into a nightmare.

According to Mark Gottfredson, Steve Schubert and Hernan Saenz in their  February 2008 Harvard Business Review article ‘The New Leaders Guide to Diagnosing The Business’ they pointed out that 1 in 5 of the CEOs who left their jobs in 2006 had only been in position for 8 months. This is hardly enough time to get your new office furniture, the corner room redecorated and your Blackberry fully functional.  

It brings to mind the story of the new CEO who briefly met her predecessor before she was enthroned.  

‘Is there any advice you can give me, Sir, I am new to this role and I would really appreciated some help?’

The old CEO said, ‘You’ve got to find your own way really.  Market conditions change and you will have your own take on things.  But I will do for you what my predecessor did for me.  I’ll leave you 2 envelopes, one in the top right hand drawer of your office desk and one in the left hand drawer.  If things get bad, open the envelope in the right hand drawer.  And if things get really bad, and I mean really bad, then open the envelope in the left hand drawer.’

The new CEO thanked him and thought he’s right I have got to have my own take on things if I am going to move this company forward.  

Three months passed and things weren’t getting better.  In fact, in one of the divisions where profits had traditionally been highest, even though the cost base was high, there was an emergent new upstart that was offering better products at lower prices.  

The company was taking a severe battering. The main investors, sharp minded and sharp-tongued heavyweights wanted to know what the new CEO was going to do.  Nothing had prepared her for this.  Racking her brains about what she was going to do she remembered the envelope in the right hand drawer.  It had got to be worth a look.  With trepidation she opened the drawer, took out the envelope, slit it open and read the note inside.  

It said simply, ‘Blame Your Predecessor’ .

‘Brilliant’, exclaimed the new CEO.  Her presentation was a re-hash of everything that had gone wrong under the old CEO, with no punches pulled.  The investors were impressed and felt that their new person understood why they had had to get rid of the former incumbent.  

‘This will buy me time’, the CEO thought while the project that he was personally overseeing would bear fruit.  It was after all a sure fire winner.  It worked so well at her former company and got her name known in the Business press. The company’s simple products were to be more finally attuned to match the needs of a much enhanced profiling of customers. Alas, here it just seemed to add costs. The sales force could not understand the new product differentials, and they were much more difficult to administer in the Back Office, which led to a sharp increase in costs.  

Well things were truly bad now.  Costs up, market share down.  The CEO remembered the old CEO’s second envelope.  The first one, with it’s brilliant simplicity, had saved her, what would be in the left hand one.  If she had been nervous opening the first one, it was nothing to the cold sweat she found herself in now.  She opened the envelope.  She read the words and a faint smile came over her lips as she read ‘Now prepare 2 envelopes’.

In Gottfredson, Schaubert and Saenzís article they think that the new CEO should approach things differently.  You have to act fast.  To act you need to know.  They recommend a 4-pronged attack.  

First of all look at costs and prices and remember that these, over time, always decline.  If you are out of sync then you are in trouble and don’t forget that your competitors will have moved by the time you reach them. 

Second they make an interesting point that there is a strong correlation between a company’s Relative Market Share and their Return On Assets.  So beloved of consultants they even have a grid in which the best place to be is the top right hand corner.  The companies inhabit this area have a high return on assets and a large market share and need to keep raising the bar to competitors.  If you are in the high market share and low return on assets then cost cutting is in order.  Low market share and low return means the activity is ripe for divesting. And what they term over-performers need to be aware whether this is because of some set of factors which won’t last.  If it is act accordingly.  If it is to do with something like brand loyalty then cement this.  

Thirdly, understand with which customers and which products you are making money.  How much of your customerís wallet are you getting, and could you get more?  They recommend the use of the Net Promoter Score as a simple tool to test loyalty and likely retention.  Basically you ask your customers whether would they recommend you on a score of 1 to 10.  9 and 10 are recommenders.  These are the good guys.  7 and 8 are the passives. Those scoring 0 to 6 are your detractors.  Simply divide promoters by detractors to give you your percentage scores.  Understand what you are doing right with the promoters and stop annoying the detractors.

Finally cut complexity.  Be careful about adding too many product innovations. Also watch out for too many layers in the organisation.  Calculate your average reporting span.  Too narrow means that you probably have too many managers and decision-making will be slower than it needs to be.  Look for areas in the organisation where it is notably narrow. In fact, don’t wait for the new CEO.  

Start the process now and have these 4 areas on the Board Strategy agenda.  Customers are always asking me where I would recommend that they start, for those organisations that are looking to take performance management seriously these areas would be a pretty good place.

Act now to find out where your business is going wrong is a post from Advanced Business Solutions - Supplier of accounting software, business intelligence and document managment

 ’Shared Services’ continues to be held up as a route to radical cost reduction in the back office, freeing up funds that can be passed to the front line where it is needed more.

 Currently, however, virtually all councils are self-sufficient in processing, with around 400 centres for Corporate Services alone.  With the inevitable move to sharing services across Local Government (and possibly across other sectors), there is a question as to how many centres we might end up with.

 The scope to reduce the number of processing centres in Local Government is considerable, with a potential reduction from some 400 centres currently to less than half that in perhaps five years time.  There is also the possibility of a second wave of consolidation, depending on economic, political and technical change, with the final number possibly between 50 and 100.

 Whatever the eventual number, it seems that more organisations are going to have to work together in future if the full scale of savings are to be achieved.

Shared Services in the Public Sector is a post from Advanced Business Solutions - Supplier of accounting software, business intelligence and document managment