The New York Times today has a story, “A New Capital of Call Centers,” which focuses on the fact that many  companies with US customers are moving their call centers to the Phillipines or back to the U.S. because personnel in the new locations speak better English than, say, their counterparts in India.

Evidently, these companies believe that customers’ primary concern is the quality of the language used by the call center agents.  My primary concern, however, is whether or not the call center agent is actually able to answer my questions, solve my problem, and/or take my order accurately.  Overall,  I’ve had much better luck with the hard-to-understand foreign agents who seem to know what they are talking about than with US-based agents who are poorly trained and/or work in call centers in which no system is in place to help callers actually get their questions answered.

In brief, I wish companies would pay more attention to this Renee’s Rule™: Make my life easy.

What do you wish?

When I won a Turnaround of the Year Award from the Turnaround Management Association (TMA)  in 1997, I was thrilled.  In addition to the thrill of being recognized for my achievements, during the award ceremony, I had the opportunity and the pleasure to deliver a thank you and give credit to Ron Torland, the CEO who brought me into the company, gave me full operating authority, worked with me side-by-side, and supported my decisions, some of which were extremely unpopular.  The turnaround would not have been possible without his participation.

When I attended the TMA awards presentation at the conference this year, it struck me that things have really changed.  There were so many awards given to so many people that there were no speeches–just lots of people marching across the stage.

Think about it:  How many announcements about awards events or awards being bestowed do you receive every week?  Clearly, these awards bring people into each organization and its events, and they are are certainly great marketing tools for both the organizations and the winners, but I can’t help feeling that the significance of these awards has been diminished.

In July, I was invited to write an article for the conference issue of The Journal of Corporate Renewal, the publication of the Turnaround Management Association (TMA). The topic I selected was “Ethical Issues in Turnaround Engagements.”

Although TMA  declined to print the article in the conference issue because they found it to be too controversial, Jack Butler, an internationally recognized partner at Skadden’s corporate restructuring and governance practice,  invited me to participate in the Advance Education Panel he is moderating at the TMA Conference in San Diego next week  and to include the article in the materials distributed to session attendees.  The title for the panel is “Ethical Challenges in Large, Mid and Small Companies.”

I intended the article to be a call to action by TMA, and it will be interesting to see how it plays out.  It is my understanding that the article will be shared with TMA’s Strategic Planning Committee as well as the Certification Oversight Committee for the Certified Turnaround Professional program.  I have been invited to submit it again for the March issue, which will be devoted to ethical issues, but I certainly hope that the content will be out-of-date by then!

Although I have made some revisions to the original (suggestions for refinements made by several people I interviewed), all of the basic points remain unchanged.  Here is a link to the article:  Deconstructing the Code.

There have been many analyses written about what made Steve Jobs great, but the articles I have read have missed the key ingredient:  Steve was able to make things easy for his customers.  He knew instinctively that people would be more likely to use products that were intuitively easy to use, and his genius was that he was able to turn the idea of easy into the reality of easy.

My sons have saved my Apple IIe and the floppy disks with the  games they played.  We all love our iPhones, iPads, and Macs…..

I’ve been thinking about the  issue of “easy” because I had two “high-end” ovens installed in my kitchen this week.  Really, I just want to be able to put something into the oven and cook it, but the display is so complicated and the instruction book so inadequate that what should be intuitively easy, will take hours.  Will I love my ovens when I finally figure them out?  Of course, but the manufacturer has missed the boat by failing to provide the “customer delight” that results when something is actually easy to use.

Today, most of us feel that it has become increasingly difficult to get things done, so “easy” is now more important than ever.

As you may recall, one of  Renee’s Rules™ is:  Make my life easy.  This was one of Steve Job’s Rules long before it was mine.

Research conducted at Rice University about the future of  daily deal sites provides interesting insights.  You will likely find this article thought provoking:  Forecast: Tough times ahead for daily deal sites

In my last post, I questioned the wisdom of  Foundary.com’s lack of a search function.  In fact, I had actually sent an email to  them about this topic.

Here is a part of their reply: “Because we have a very limited, specialized, selection and each sale only lasts a few days there is no search feature.”

There is hope, however.  When  I visited their site today, there was a “Search” field…It doesn’t work for items on their site–it takes visitors to other websites–but I am hoping this means they listened and will develop an effective search function in the not-to-distant future.  If they do, I may shop there.

Zulily.com and Foundary.com are websites that offer products of interest to me, HOWEVER, I don’t shop at either one because those sites have no effective search function.  There is no field that says, “Search.”

What are they thinking?  I assume they think people will buy a larger number of items if they have to navigate through lots of different pages to find something of interest because they’ll see multiple items they’d like to buy.

This may be a great strategy for shoppers who either live to shop or have plenty of time on their hands, but it may prevent busy people from doing any shopping at all on those sites.

Here is the question:  Are the total  sales to people with time to shop likely to be larger than total sales WOULD be if it were easy to search for specific items on these websites?  My gut feel is that if these websites had first-rate search functionality, they would land sales not only from people who have time to shop but also from those who are pressed for time.

Perhaps I live in a warped reality–but most of the people I know (all age groups) would prefer EASY and TIME-SAVING to CUMBERSOME and TIME-CONSUMING.

Retailers are always trying something new to boost sales, but this latest trick, having NO price tag, looks like a mistake to me.

For people who live to shop and have plenty of time to do so, being able to see the price may not matter, but for busy people, having to take time to find a clerk in order to learn the price of an item of interest  is not only annoying but may also prevent them from making a purchase.

Take me, for example:  I definitely do not live to shop and, when I need something,  generally shop en route to some other activity.  A few weeks ago, I spotted the perfect purse at Nordstrom–exactly what I’d been seeking for almost a year: leather, waterproof, big enough to hold an iPad and to serve as a tote for carrying shoes, etc.  Perfect for trips to New York City.  It was not a necessity but would definitely have been  nice to have.

No price tag.  No price tag on the outside; no price tag on the inside.  The clerk was helping other customers but told me that not having price tags on purses was their new policy.   I was on my way to a meeting and couldn’t wait.     Nordstrom lost a sale.

Today, while hiking through a mall on my way to purchase a necessity,   I spotted the perfect gift for my granddaughter at a kiosk.  No price tag.  For that matter, no clerk.  Therefore, that kiosk lost a sale.

I suppose that the theory behind this no price tag strategy is that when customers have to ask the price, it gives the sales person a chance either to make the sale and/or sell different or additional items.

It would be interesting to know (but tough to measure) whether the benefits of this strategy outweigh the costs of lost sales.  I’m sure it is NOT a good plan for customers like me.

The greatest danger to the future of our democracy is that too many people are unable to differentiate between what is fact and what is fiction and too few care.

Although I certainly agree that academic achievement needs to be improved in our country, no job in our educational system  is more important than ensuring that our citizens can  evaluate critically the information they receive.

Perhaps you have followed the Kyl/Colbert saga which prompted this post. Senator Jon Kyl declared in a speech in the US Senate that 90% of Planned Parenthood’s budget goes to abortions. He was more than slightly off the mark:  the percentage is only 3%, and his office said that  his comment was “not intended to be a factual statement.”   The comedian Stephen Colbert responded with a twitter campaign that mocked Kyl’s behavior and drew attention to the lack of fact-based discussion which has become all too common.

Regardless of how we may feel about the abortion issue, it is scary to see that our elected officials (and too many others) simply don’t care about basing their arguments on facts.  We will never all agree on all topics, but let’s base our disagreements on FACT rather than on FICTION.  If we do not, we risk domination by demagoguery.

As a child, growing up in Omaha, Nebraska, I became a science fiction nut, and my interest in the future and what technology can achieve has endured.

In 1985, when I was in my MBA program, I took a course about “The Future.”  It was taught by Harold Linstone.   As a part of that course, each student wrote a scenario of what he/she thought the world would be like in 2000.  I have saved my copy (It was composed on my Apple IIe.   My sons were quite enthralled with it at the time, so it is preserved for all posterity in my safe deposit box.)

Among other things, I predicted that  by the year 2000, there would be “terrorist attacks on our shores.”  Am I prescient?  Not really–To prepare for the assignment, I  simply did a great deal of reading about trends at the time.

Some of my predictions were right; some were wrong.  Some were right, but I had NO  idea what they meant.  (e.g., I predicted that we would be communicating via electronic mail, but I had NO idea that we would call it “email” and that it would dramatically change our lives.)

So..for what it’s worth, I am going to start a series of blog posts containing my predictions about what will occur over the next ten years.  Some will be right; some will be wrong.. In any event I’ll be on-the-record, and it will be interesting to see the extent to which my predictions are accurate.

It’s easy to blame e-readers and associated technological changes for Borders’ predicament, but they are merely the symptoms and not the disease.

When companies face the double whammy of game-changing technology and a sagging economy, they simply must have a sound strategy and consistent, capable, visionary leadership. Since 2005, however, Borders has had 4 different CEO’s.  How could the company possibly develop or effectively execute a company-saving strategy while there was a revolving door at the entrance to the executive suite?

The lesson:  If you want to invite people you know to “connect” on LinkedIn, don’t use the section that says, “Enter Email Addresses.”

This is a lesson I learned the hard way.

Recently, I uploaded the email addresses of my key professional contacts (people who were already receiving my periodic email updates) to LinkedIn so I could “connect” with those who wished to do so.  There was no indication that these invitations would be different from those I frequently receive from others.  Those invitations appear only once, and I can either accept or reject them. End of story.

Shortly after the upload, however, I received an email from a long-time professional friend who told me that he had received not one—not two—but three separate invites from me to “connect.”   I was appalled and immediately contacted LinkedIn to stop that process.

Now, I have sent an email note of apology to those who may have received the multiple messages.

If I were the CEO of LinkedIn, I would understand that business relationships must be guarded carefully and take steps to ensure that LinkedIn’s processes would be clearly defined so that my customers could proceed without worry that they might damage their valuable professional relationships.  Evidently the real CEO, Jeff Weiner, does not share my concern.

You may be interested in what I had to say about Harry and David in these articles from the Portland Business Journal and the Medford, Oregon-based Mail Tribune over the last two days.

I’ll have more to say on this topic later….but from feedback I’ve been getting, it appears that the problems I saw were only the tip of the iceberg.

Many people believe that the CEO should have the “vision thing.”  I believe that our presidents (plural!) and other elected officials  should have the the “vision thing,” that it is their responsibility to set the priorities and anticipate problems before they occur.

It appears to me that these officials too often don’t even think about anticipating problems before they occur, let alone initiate preventive actions.

For example:  On February 2nd,  the Washington Post ran a story, Why does Fresno have thousands of job openings- and high unemployment? The answer, of course is that there is a mismatch between job openings and the skill sets of job applicants.  Duh!

We seem to be discovering this nation-wide mismatch only recently, when it has, in fact, been on its way for at least 25 years.

For example, when I was in my MBA program (1984-5), I wrote a paper, “What to do about the coming structural unemployment.”  In the paper  (lost to posterity because I created it on a floppy disk using my Apple IIe), I addressed the unemployment/change in employment opportunities that would result from the two obvious trends:  globalization and greater use of robotics.

If the trends and their impacts were obvious to me, surely they were obvious to countless others.

So here is the question:  Why didn’t we, as a country, pay more attention to this problem earlier?

My answer is two-fold:

1. Elected officials are really fire-fighters who are so busy putting out the the current fires, they don’t have time to attend to the likely future ones.

2. We get the government we deserve.

On the business (as opposed to the political) front:  Is the phenomenon described above any different from the leadership of  Blockbuster and Borders being late to the technological revolution?

Why do some people “see” while others do not?

Wednesday, I am leaving for the Distressed Investing Conference of the Turnaround Management Association and am eager to see whether presenters spend much time discussing  leadership considerations.

Many investments in distressed companies  fail because the investors (most of them private equity firms) pay too little attention to selecting and managing company leadership, but the last time I attended this conference, 2009, there was only one session (really, it was only one panelist) who highlighted this very important issue.

Mike Heisley discussed the fact that distressed companies require a leader with traits that are very different from those required to lead  a “healthy” company.  He was exactly right.  Click here to view my post from that event.

As you may recall, last Spring, I held a contest, “Are you smarter than an economist?” My two winners, who received $1,000 each for their on-target predictions, were “ordinary” people–well, definitely not economists.

Now, according to mashable.com, financial bloggers did better than professional analysts in predicting Apple’s revenue, earnings, gross margins, and unit sales for Q1 2011.

Hmmmm…what does this say about professional economists and stock analysts?

In an article yesterday on The Huffington Post, Abby Wendle reported that retail sales increased for the 6th straight month.

This is good news, but how good is it? How do the sales of the most recent 6 months compare with the same months in 2006, 7, 8?

I don’t have the answer to that question, but tomorrow in my blog I will ask the same question about unemployment statistics. For that question I do have the answer.

One of my pet reporting peeves is a story that omits critical information (facts) that would allow the reader (me) to draw some conclusions about the significance of the story.

On several occasions, my local paper, The Oregonian, has reported the remarkable increase in revenues for some local company but has failed to include what is happening to the bottom line. In several instances, companies that have touted their revenue increases in the press have failed not long after.

It may be that the economy is, in fact, reviving, but we definitely are not “there yet.”

My prediction for the coming year—maybe longer—is this: In those industries experiencing intense price competition, the big winners will be those companies that figure out how to provide excellent customer service while remaining cost competitive.

Consumers have had it. They are frustrated by having to take their time to make ten phone calls to solve one simple problem or by spending time looking for an item in a crowded store only to find a clerk (finally!) who either can’t find the product or is unable to answer questions about it.

Many financial experts in the corporate suite subscribe to the axiom that improved customer service adds cost and, therefore, hurts the bottom line. Although there are situations in which that axiom holds true, operational experts know that the opposite is often the case, that companies that think through their processes and procedures–how they provide their products and services to customers—can develop ways to deliver superior service at the same or even at a lower cost thereby improving margins and retaining customers who would otherwise be lost.

Today, TheStreet.com published an article by me, “5 Biggest Business Mistakes.” You can read it by clicking here.

I sent an email to some of my business contacts with a link to the article, and an amazing number responded with either similar views or their own tales of horror.

If you have time, I’d love to see your comments, too.

In the 9/20-9/26 edition of Bloomberg BusinessWeek, Matthew Lynn (and the photo that accompanied the article) implied that Stephen Elop, who became CEO of Nokia on 9/21, is not the best person to lead the turnaround because Elop is not a “phone expert.”

I do not know a great deal about Elop except that he was recently “the Canadian head of Microsoft’s business unit” and that he has software experience and a reputation for “shaking up” businesses, but I do know that Lynn’s apparent assumption—that “industry experience” is central to a turnaround—is just plain flawed.

One needs to look no further than Alex Mandel’s leadership of Teligent in the late ‘90’s to see that “industry experience” does not guarantee success. Mandel had been president and COO of AT&T, but Teligent failed spectacularly under his leadership. Although the failure was blamed on “the downturn and overcapacity,” the underlying issue was that on the ground and in the trenches, Teligent was simply unable to provide the reliable wireless services it promised. The lesson: The leadership skills required to launch a technology start-up with no existing infrastructure are very different from those required to lead a long-established company.

In a turnaround, where time truly is “of the essence,” the most valuable commodity is effective leadership, not industry expertise. I’ve had 34 clients. Of those, 3 were in one industry; 2 were in another; the rest were all “one-off.” Based on that experience, it is clear to me that industry experience is not, by any means, the determining factor.

The most important skills needed in leading a turnaround are

· The “power of the glance;” i.e., the ability to see quickly what needs to be done
· Common sense
· Ability to establish the right priorities
· Clarity of vision and the ability to convey that vision
· Decisiveness
· Ability to mobilize the troops to provide ideas and support the effort

Is having industry expertise a plus? Yes. But it is no substitute for having the right leadership skills. No matter what the industry, it is relatively easy to find someone with industry expertise. It is much more difficult to find someone who has the right leadership skills.

I’m rooting for Stephen Elop and hope he proves Mr. Lynn wrong!

Recently, I had to place a call to American Express’ customer service. First, my problem was solved right away. Second, almost immediately thereafter, I received a customer survey. Guess what the first survey question was? “Do you remember this call?” (paraphrased)

I almost fell out of my chair. Someone had finally THOUGHT about a customer survey and what it was trying to accomplish!

Customer satisfaction surveys are conducted, presumably, to get feedback about the customer’s “experience.” These surveys could be powerful tools for gaining and retaining customers and for reducing costs, but too often they are not. I call them the “Silly Surveys.” (Actually, some additional “S words” spring to mind…)

How many surveys have you received and wondered, “Which call and what person is this survey asking about?” If you are like me, too often, either I’ve had to talk with more than one support person, or the survey arrives long enough after the incident that I am not sure which incident, contact, or person the survey is asking about.

In addition, too many surveys fail to ask a critical question: Should this call have been necessary in the first place? Instead, it asks: Was the support person knowledgeable, clear, polite? Was the problem solved? The answer is often, “Yes, to all of the above,” but too often, the underlying problem is that the company has a poorly constructed website that makes it difficult to accomplish simple tasks–tasks that are easy to accomplish at other sites. I had to waste my time placing a call that should have been unnecessary.

In the case of the above example, the support person will get kudos (or, at least, won’t get into trouble), but I, the customer, having made too many similar calls to this company, am likely to be considering changing vendors, and the company is missing an opportunity to reduce its tech support costs. If customers could easily accomplish simple tasks at the website, fewer tech support people would be needed.

Renee’s Rule™: Put yourself in your customer’s shoes.

One of the headlines today in the New York Times reads, “In Gulf, It Was Unclear Who Was in Charge of Oil Rig.”

If “who was in charge” was, in fact, unclear, it is scary, but, in my experience, too often the case.

Example one: Several years ago, in the process of considering whether to accept a family-owned business client, I interviewed 7 family members, most of whom were in the upper echelons of the business.  Because the company had no organization chart, I asked each person to draw one for me.  No two charts were the same.  The mother-in-law thought the son-in-law was running the company; the son-in-law thought the mother-in-law was running the company.  No wonder the company was on the brink of bankruptcy.

Example two: A 25-year-old, FDA-regulated company with operations in both the US and Canada had been cited for FDA infractions before my arrival.  Unlike the company in example one, this company had a detailed organization chart and job descriptions for every position, so when I met with the Director of Government Compliance and the Director of Quality Assurance,  I asked which one was in charge of ensuring FDA compliance.  The two looked at each other. Neither could answer.

You will not be surprised to learn that I solved the non-compliance problem by simply designating one person who had both the responsibility and authority for compliance. As a result, during the first FDA inspection following my departure, the company received  its first-ever absolutely “clean” bill of health.

The lesson: Imagine a ship with two captains, each issuing different orders—a symphony, in which the conductor is “conducting,” while the concertmaster is directing the strings.  No one would ever consider creating either of those scenarios.  That’s  Management 101.  Why, then, do companies, from small to gigantic, allow that to happen?

Renee’s Rule:  You can’t have two captains on the same ship.

As you may have noticed, my entries are getting shorter–Working 80 hours a week will do that to you….

My thought for this week:  Every time I read in the business news that “Revenues are up,” I ask myself, what about profits?  Are they up or down?

Recently, I sent an email to key business contacts letting them know my turnaround client needed a new CFO.  I received approximately 160 resumes.

The quality of the  emails most candidates sent was appalling.  Based upon what arrived in my inbox, here is my advice to those looking for work:

1. Read the job announcement. If you send a lengthy email in response to an ad that includes the word “turnaround”, you should  assume you will not be considered.  Turnaround experts are looking for people who can cut to the chase and won’t waste their time.
2. Use bullets not paragraphs. Time is money. Cash is king.  Make my life E-A-S-Y.  I am getting hundreds of emails a day.  Which emails do you think I am likely to read? Those with 5 lengthy paragraphs or those with 5 concise bullets?
3. Make sure that the file name of your resume includes your name. If your resume does not have your name in the file name, you are out-of-the-running with me because I have to take time–my time–to change the file name before I save it.  Please, make my life E-A-S-Y.
4. Don’t be a pest. If the job announcement says “send email to,” please don’t call.  If you do, it appears that you have no respect for my time.

Renee’s Rule™: Think before you respond. If you were in my shoes, what would you want to know?

• What has the applicant DONE?
• What is he/she LIKE?
  • Will he/she be able to work in a highly charged, fast-paced environment?
  • Will he/she be the kind of employee who anticipates what his/her supervisor needs?  who will make my life E-A-S-Y?

Renee’s Rule™: Make my life E-A-S-Y!

Over the years, I have had the pleasure of working with many wonderful CPA’s who truly put their clients’ interests ahead of their own.  They ask the key questions.  They know what they don’t know.

I have also, however, seen some CPA’s do some really appalling things; e.g.,

• Providing inappropriate advice  ( When I arrived at my very first client, the company was on credit hold or COD with all vendors, bleeding cash, and faced with a threatened shut-down by the IRS.  The CPA, blissfully unaware of the severity of the problems, was billing the customer for business planning assistance.)

• Being unwilling to recommend a change of CFO when that CFO was clearly unqualified  (I’ve seen this multiple times and don’t know whether this happened because the CPAs did not realize the failings of the CFOs or because the CPAs did not want to risk losing their clients.)

• Recommending consultants based on industry or turnaround “experience” rather than on RESULTS   (For the dangers related to this, please visit my post, THE EXPERIENCE FALLACY.)

• Giving false assurances  (Several years ago, I had as a  client a third-generation family-owned business.  The company had experienced increasing losses for three years straight.  The CPA had told the elderly majority shareholders, “Everything will be all right.”  When I arrived, however, the company was at Death’s Door.   The company survived, but it was  an extremely difficult situation.  We had to implement an out-of-court Chapter 11.)

• Preparing unrealistic financial projections because the CPA did not understand the business

It is really important that CPA’s–and other professional advisors–know what they don’t know.

Both national and regional bankers have told me recently that they expect a second wave of troubled companies…..For those companies that may be at risk, here are my key recommendations:

1. Renee’s Rule™: Don’t sell to customers who won’t pay.
2. Prepare worst-cast cash projections for each of the coming 6 months; if necessary, take action now to prevent a meltdown.
3. Solicit ideas from employees and advisors; implement those that will have the greatest impact in the shortest time.
4. Implement changes to company processes that will lower costs and improve customer service.
5. Renee’s Rule™:  If you think you may need help, you probably do.
6. Renee’s Rule™: The sooner, the better.

Every manager knows the axiom “What gets measured is what gets done,” but too often managers overlook key measurements.

An example: When cash is tight, and profits are lagging, managers, boards of directors and lenders often focus on reducing inventories.  Measuring dollar value of inventory and inventory turns can certainly be useful; however, if  there is no report that shows the AGE of the inventory (how old the inventory is and whether or not it is obsolete) and no report that measures stockouts, inventory reductions may produce undesirable, unintended consequences.

When a company holds old or obsolete items and reduces the size of its inventory, the dollars tied up in inventory do decline, but the % of  “bad”  inventory  increases, and the entity may find itself without  materials needed to deliver orders on time and/ or to stock its shelves with the products that customers want.

In addition, if a company does not write down old or write off obsolete inventory (and, yes, this still happens!), the company is inflating its bottom line.  Since financial statements are the scorecard of the business, if financial statements are not accurate, then management’s decisions are based upon misleading information.

Renee’s Rule™: What gets measured matters.

I’ve seen some pretty scary hiring mistakes.  Here is an example in which “The Emperor Had No Clothes.”

In the 1990′s, I became  Interim CEO of a  company that was experiencing the worst production problems I had ever seen.  The company had hired a new Director of Materials Management.  He had been referred by a management team member who had worked with him elsewhere, and his references from former employers were excellent.  Everyone told me–and seemed to believe–that this guy was a genius.  During meetings, he typed on his own notebook computer (fairly unusual at that time), looked impressive,  and made “pronouncements.”

I, however, couldn’t understand a thing the guy was saying (plus, of course, materials management  was still totally out-of-control.).  I said to myself, “I have an MBA, am pretty darned bright, and  have run more than 10  companies.  If I can’t understand him, maybe he isn’t saying anything.  Something is wrong.”

HR had checked his references, but I asked them to contact the universities listed on his resume to verify his degrees.  Surprise, surprise:  this fellow had lied on his resume and had no college degree.   Needless to say, that was the end of his employment with the company.  (The company, by the way, was successfully turned around.)

The question in my mind remains:  Why in the world hadn’t someone else called his bluff?  (A question to be explored in a future blog..)

At least three of Renee’s Rules™ apply:

• If you can’t understand what someone is saying, he may not be saying anything.
• Too often, people are afraid to speak out when they think something is wrong.
• Check references thoroughly.

When is it “safer” to hire a “big” professional firm rather than a smaller one?  This is a topic I’ll be exploring in several different posts.  For the moment, here is an instructional story. (The names and some details have been withheld to protect the guilty.)

Some time ago, a principal from PE (private equity) Firm A, with investments across the country, called me to take the place of the CFO they had hired because he was a consultant with a national (“big”) consulting firm.  Why was the PE firm replacing him?  When the portfolio company’s lender conducted its audit, guess what they found?  The “F” word: Fraud.  (I did not accept this engagement for a variety of reasons I’ll discuss in a later post.)

Several months later, PE Firm B interviewed me for a turnaround in an industry in which I had successfully turned around more than one company.  Did they hire me? No.  Why did they pick someone else?

• He’s from a national firm, so that’s “safer.”
• He has industry “experience.”
• We know him.

Here is what I know about this person:

• He IS a consultant with a national firm.
• He was involved with a company but definitely did not lead a successful turnaround in the “industry.”
• He was the person who was removed by PE Firm A because bank fraud occurred while he was CFO.  (Evidently, PE Firm B didn’t really “know” him.)

I also know that the company was not, in fact, successfully turned around.

Let me be clear:  There are some times that a bigger firm really IS safer; nonetheless, there are many lessons to be drawn from the above story.  Stay tuned for further posts.

In the meantime, remember these Renee’s Rules™:

• When hiring, RESULTS are more important than “experience.”

• Always check references.

• There is no substitute for common sense.
  

Not long ago, I attended a meeting of the local APICS chapter at which managers from a manufacturer of dental equipment described the process they used to obtain outstanding cost savings by  implementing  “lean manufacturing” techniques.

Shortly thereafter, during a visit to my dentist–who had recently purchased new equipment from that company–I discovered that there was a major flaw in their new dental chair– absolutely no ability to adjust part of the chair for people of varying heights–a rather major oversight, the hygienist observed.

So….implementing “lean” techniques may have reduced production cost, but it failed to meet the needs of the customer.

Clearly, my dentist purchased the piece of equipment anyway, but, surely, the next time, he will be more careful to check to see that basic necessary features are in place.  In the meantime, he may tell his colleagues who may be contemplating equipment purchases about the design defect…

So..”lean” is not a panacea.  There is still no substitute for common sense.

It seems like every minute a new book with the “latest” business “secrets” hits the market.  In reality, however, running a business profitably and well boils down to taking care of the basics; i.e., having a well-conceived plan, having a capable leader, and implementing a carefully crafted management control system.  It is astounding to me that so many companies lack these basics—not just family-owned, but also publicly and private equity-owned (You know some of their names.)

Much of the information in this blog may sometimes sound like nothing more than common sense, but common sense and an attention to the basics are too often missing-in-action.

An example from my personal experience: In 2007, a private equity firm interviewed me for a turnaround project.  The company had been losing money for three years; there was no business plan; the president was clearly not qualified; and there was no effective management control system in place.  After I mentioned that the company needed these basics, the managing director said, “We know that.” (As in, “do you think we are idiots?”)  So…if they knew all of that, then where had they been, and what had they been doing for the past three years?  And these were people with MBA’s from prestigious institutions, who, presumably, have a fiduciary duty to their investors and definitely know better.

Find a way to step back from your business, to take a cold, hard look at where you are and what your real prospects are…Are you making money or losing money?