I have been using the acrostic DREAMS to walk through the change process and how to navigate change without losing your crew. Up until now, we have looked at D - determine the destination, R - read the river, E - execute excellent leadership, A - All together, M - manage risks.
The final letter is S for Solving Problems.
Once you begin the change process it is inevitable that there will be problems. It might be software bugs, process bottlenecks, unforeseen turnover in staff, etc.
Even though I have been whitewater rafting for years and have extensive experience and rarely have problems, they do occur once in a while.
It was a great morning, I had a great crew but the water was low and I knew Sunshine Falls was ahead.
At low water, there are a series of technical moves that you have to make if you don’t want to become part of the circus act.
The crew and I were waiting in line behind a half dozen rafts. One by one they made their way down. Finally, it was my turn. I negotiated the S-move up top no problem we moved back to the middle hit the hole at the bottom right with too much momentum and bounced off the wall.
I tried to use the momentum to turn a 180 without getting sucked back upstream I was successful except for a thud…
I was stuck!
It’s what the guides call the rotisserie.
I had a second to get everyone to the downstream side of the raft before we were flipped by the current.
We were stuck between two rocks one at the front-end bow and another at the stern.
There was no amount of wiggling that was going to get us unstuck.
I decided to let some air out of my raft and it’s worked only 2 more inches and we were free!
I yelled “everyone hang on” and we spun out and started downstream.
Before I could get the boat straightened out we were pushed hard left over the hemorrhoids rock where we got even more solidly stuck than before.
There was no way out of this one without unloading everything. I explained to the crew what they are going to have to do and one by one they exited the boat with a little dip and someone from shore them up.
Now with the boat several hundred pounds lighter I was able to get off the rock and negotiate through the next maze ending up just a little way downstream where I picked up my crew and continued downriver no worse for the wear.
1. Identify the problem and use tools to solve the problem quickly
I have been involved with projects that get implemented with workaround solutions that are supposed to be temporary but never end up getting corrected. Or the change is made but then over time the process slowly changes back to what it was before.
To prevent that from happening, all problems, glitches, issues etc. need to be documented and prioritized and then the project does not get closed until everything is working as planned.
2. No blame-shifting
It’s easy to get frustrated if things don’t go as planned. I read a story about Pixar losing all of the work on Toy Story 2. A huge technology glitch. Rather than yell at the CTO or firing a bunch of people. The CEO got the team together to discuss the situation. That is when a woman that had been working from home after maternity leave raised her hand and said I think I have a copy on my laptop at home. IT quickly went to her house and made sure they had multiple backups from that point forward. The movie ended up being a great success.
3. Close the project
Once the change has become part of the new culture and is not likely to morph back into the old way of doing things the project can be closed. This is when the final celebration can take place. The team should take a final look at the process and document lessons learned along the way so that others may benefit from their experience.
As my 5-year-old daughter used to say after we would go through Zoom Flume rapid - “Let’s do it again!”
Now that we have made it through the DREAMS process it is time for you to do some dreaming.
What are the things that you would like to do if money was not a constraint?
What ideas does your staff have that could make your organization better?
If you would like to discuss challenges, constraints or upcoming change initiatives, feel free to set up a meeting with me at www.chatwithdwight.com
There comes a point in every project or change initiative where you have to take a risk. As we continue the acrostic DREAMS we will consider M for managing risks.
A couple of years ago I had the opportunity to take an 83-year-old grandma down the river, my oldest crew member to date.
It was a family reunion and I was talking with the matriarch of the clan. She was the most energetic 83-year old I've ever met.
She told me "now I don't want you going conservative on me".
"I want to hit the BIG stuff!"
And after talking a bit we agreed that she would sit on a thwart and hang on to two handles that I added and the rest of the family would paddle. I promised we would hit the big stuff.
And, everyone had a great time!
1. Embrace the adventure.
I’ve never had anyone go rafting with me that wanted to die on the trip. What they want is to experience camaraderie, fun, and adventure. They also want to come back alive to tell the story. As a result, guide trainees spend hundreds of hours on the river in training getting experience. We put them through drills and all the scenarios that we can think of so that they are prepared and can immediately respond to any incident that might occur.
While there is risk associated with change, the results can be rewarding. It is important to have the right people involved and to test rigorously before going live with a change. A contingency plan should be set in place in case things don’t go as planned.
If everyone sees change as an adventure it can be exciting and fun.
2, Make adjustments as needed.
It’s ok to make changes along the way. I realize most project managers are paranoid about scope creep but sometimes it just makes sense to add, delete or change something to deliver the expected results.
3. Go for it!
Once you have done due diligence, you have tested everything, you have addressed every known issue or concern it is time to move forward.
I worked with one team that was paralyzed by fear of going live. It was a major software development project and the prior 7 attempts had failed to make it to implementation. It was hard to believe that a vendor finally delivered a product that appeared to work. But the team kept finding a few minor bugs. That would require a full testing sequence of another 2 weeks or more. This happened month after month until the executive sponsor finally asked why they couldn’t just go live and fix the minor bugs on the way. He found out it was because they thought the President required perfection. In order to get everyone to sign off, the President called a meeting with the project team and told them that he was very proud of them and their accomplishment to date. He also said that it is inevitable that we will experience some glitches but that he was 100% behind them and ready to support them in any way he could. The software was launched the next week and the change ended up being successful.
Perhaps you are in a project where you are trying to manage the risks and don't feel like embracing adventure at the moment. I'd love to hear about what is going on and provide some guidance at no cost out of your pocket. Just schedule a time with me at chatwithdwight.com
Next time we will finish the acrostic with the letter DREAMS - Solve Problems.
The acrostic DREAMS can be used to describe the change process.
So far we have covered D - Determine the Destination, R - Read the River, E - Execute Excellent Leadership.
The next letter is A which stands for All together. This is where we discuss the critical role that the team plays in successful change.
While the leader must take responsibility for the outcomes of change the great leader realizes and discovers the strengths of each team member and brings that talent together to achieve results.
When my family ran Vessels For Honor Rafting Co. we catered to families and small groups and as such, I never knew exactly who I would end up with as part of my crew.
I had to make an assessment and get everyone working as a team very quickly.
Over time, however, I discovered a pattern of 4 distinct paddler types, that when placed in the right positions allowed us to have a lot of fun and get through the rapids safely.
Let me describe them to you.
Paul was an ex-military officer and he was super excited to get his family out on the river. During our safety talk, I could hear him saying to the kids “Listen up”. He pulled the lifejacket so tight on his wife she could hardly breathe. One on the river he wanted to get everyone in sync. When I would give a command he would repeat it to the crew only twice as loud. PULL - PULL - PULL - PULL he would say. In fact he was so loud that no one could hear me yell stop. That resulted in our raft overrunning our line and hitting the opposite river bank a couple of times until we worked out a better communication system.
Generals are great because they bring a lot of energy and are not afraid to sit up front and get completely soaked when we hit big waves. They paddle hard and help get the boat where it needs to go.
The Lilly Dipper
Once I was on a raft (not as a guide) with 4 other women and they were hilarious. The guide went over all the safety protocols and they were ready to have a good time. One of the instructions the guide gave us was “Don’t stop paddling until I say STOP”.
So the ladies were cracking jokes non-stop while we floated down the river. They barely dipped their paddles into the water along the way.
However, when we got to a rapid they would get serious but the problem was that every time we hit a big wave they would all fall into the middle of boat. While they were laughing hysterically they also kept paddling even when they were all on their backs.
While that wasn’t exactly what the guide had in mind it did make for a very interesting and fun trip.
Lily Dippers may not be the best paddlers but they bring life and fun to the trip. They turn a basic 2-hour rafting trip into an epic adventure. They will tell stories that make everyone laugh and those that didn’t come will be the first to sign up next time.
The Reliable Rafter
I typically get concerned when I find out that one of my crew members is a canoeist. They tend not to listen to the paddle portion of the talk and sometimes throw in extra strokes that through the boat off course.
Well, one day I ended up with 6 female canoeists. They were on a girl’s trip away and wanted to experience some adventure. I went through my pre-trip instructions and got everyone placed on the boat. Much to my surprise, they paddled exceptionally well. They were not the strongest crew but they were balanced and paddled in perfect unity. As a result, I was able to take on lines with bigger rocks and waves with no problem at all. We all had a blast. They were by far the best crew I ever had.
Reliable Rafters are important to have on the crew. They form the core team. Easy to work with they are willing to sit in any position and do anything to be helpful.
The Reluctant Rafter
I was at a trade show one time and we had our raft out and were letting kids climb aboard. I would simulate a rapid and the kids would fall down, laugh, and say “do it again”!
Well, one mom came by and when the kids were distracted with something else asked if she could sit on the raft. I said, “sure climb aboard”! She sat right in the middle thwart in the middle of the raft. “Is this where everyone sits?” she asked. I told her that paddlers actually sit closer to the edge. She slides over a bit - “like this”. “Let me show you” and I slide over to the side of the raft.
As she starts to move closer to the edge of the raft she begins to tremble. Her kids returned about that time and jumped up on the raft resulting in her getting a little push forward at which point she said “I’ve had enough rafting” and exited the raft and gathered her kids and left.
This dryland rafter was extreme but the Reluctant Rafter is great because they look out for the safety and well-being of themselves and the group. They read all the information on the website, double-check ratings, research the number of fatalities and ask lots of questions. It is important to listen and communicate clearly. Trust will increase as you navigate each rapid successfully.
1. Get the right people in the position on the raft.
While it is critical to understand all of the people involved or affected by your change initiative the project crew is most important. You can use a DISC profile tool or its equivalent to gain an understanding of how team members are wired and how they work best with others.
2. Communicate Effectively
Without clear communication and expectations, there will be confusion and others may question the true commitment from the leadership team. This must be more than a monthly or quarterly meeting. It must be incorporated into daily and weekly feedback. Ideally, each team member will have
A. Understanding - of what and why you are doing what you are doing.
B. Commitment - willing to do what it takes to get things done.
C. Agreement - while this is not mandatory, it really helps to have people who actually believe in the change.
3. Celebrate Success and Learn from Failures
To keep the momentum going it is critical to get some early wins. Don’t get discouraged along the way. Plan for early success, but even if you encounter problems along the way, you can create an environment that supports learning and continuous improvement.
I’d love to hear how your team development is going. Connect with me at www.chatwithdwight.com
Next up is the letter DREAMS. Managing Risk and embracing adventure
I have been working through the acrostic DREAMS to describe the change process.
The first two letters were planning-related, Determine the Destination and Read the River. Now we will move from preparation to implementation with our next letter E, which stands for execute excellent leadership.
Years ago after going through guide training, I decided to buy a 12-foot Hyside raft to take my family rafting in. It was a beautiful boat with no dings or scratches on it at all. I intended to take great care of it so it could be passed on to generations to come! I was so excited that I could hardly wait to get everyone on the river.
We planned a trip and even though my kids were pretty young I figured we would do alright.
Once on the river, I realized that my wife and young children didn’t really give me much power and we were hitting rocks.
“Forward” I would yell. “Paddle Harder”.
“Come on! You need to paddle harder!”
We weren’t in any life-threatening situations. Most guides would have had fun with it turning it into a game. All I could think of were the scratches that were damaging my boat.
I was so obnoxious, my wife finally called a time-out and said “if you ever want us to go rafting with you again you need to figure out how to get down the river without yelling at us”
“This is your problem, not ours.”
She was right!
So I made the changes I needed to make so that we could have fun as a family.
When training new guides I make it clear that it’s never ok to blame your crew or complain about your guests.
The guide is first and foremost responsible for getting the raft downstream safely and efficiently. If the participants don’t have fun it is the guide’s problem, not the rafters.
1. Leaders must take responsibility and ownership for the results whether success or failure of the change.
Change guru Dr. John P. Kotter says that one of the common reasons that projects fail is due to inadequate leadership support. In a larger organization that could look like an executive steering committee made up of VPs or even C-level leaders. In a small company, it might be the business owner and a couple of key staff. Don’t start a change initiative until you are absolutely certain that you have the leadership commitment to see the project through to success.
2. Be committed to removing obstacles or at least figuring out how to get around them and remove distractions.
As we learned from “reading the river” there are many things going on along the way. One of the key roles of leadership is removing obstacles that are or could impede success. This needs to be done in a timely manner and not get bogged down in a bureaucratic process.
3. Move the boat. Set the pace and keep the momentum going.
The leader must be a good example. They need to set the pace and keep the momentum going. Once everyone can see that progress is being made it helps create the critical mass that is needed for long-term change.
4. Leaders must be willing to receive feedback on potential blind spots
Nobody is perfect. A leader must be willing to listen and seek out alternate viewpoints. If there are legitimate issues, then it is imperative that the leader works on making the changes needed.
Next up is the letter DREAMS where we will discover how to use your crew. Optimizing your human resource potential is essential for effective change.
Are you ready to become the best leader possible?
Are you willing to make the changes necessary to achieve excellence?
If so, I'd be happy to spend some time with you to help you through that process. To get things started you can schedule an initial meeting with me at www.chatwithdwight.com
I am working through the acrostic DREAMS, on how to navigate change without losing your crew.
Last time we started with D and discovered the value of determining your destination and having a good map to start.
Now we will dive into the R.
It was a beautiful day on the Arkansas River with a nice medium-low flow and I thought it would be the perfect time to row my raft through the Royal Gorge for the first time.
I had a couple of seasons under my belt but had not felt comfortable moving up to the more serious class 4-5 rapids. After reading a detailed guidebook I felt like I was ready to give it a try. I recruited my teenage son to sit up front for ballast and to read the guide to me as we approached each rapid.
We set out and things were going fine until we hit Sledgehammer rapid. This particular rapid has a number of features and there are 3 distinct drops. The book warned against getting caught in Clark’s hole at the end of the rapid on the right.
So we made our way through the rapid and I thought to myself “that seemed pretty easy”. The water had slowed down and was calm for a stretch. I was trying to look back to figure out where Clarks Hole was. I consulted with my son and the guidebook but couldn’t seem to make sense of it.
All of a sudden I realize we are coming up to a drop that I wasn’t expecting. Yes, you guessed it, we dropped right into Clarks Hole with no momentum and at a bad angle.
It immediately pulled us in and we started surfing the hole. Both my son and I lept to the downstream side of the boat in order to prevent our flipping. Clark had died in this hole and I wasn’t about to repeat that scenario.
After what seemed like an hour (probably 2 minutes) a surge in the river allowed us to pop out of the hole and we were able to make it to shore down below and evaluate what had just happened.
Lessons from the river:
1. No matter how good your plan or guidebook/map is, it doesn’t guarantee success. You must be able to read the river.
As a leader you need to be able to identify potential pitfalls before you start but also respond to obstacles along the way. These could be external threats like regulations or competition. They can be internal in the form of people that resist change or budget constraints or technology glitches.
2. Looking back when you are in the middle of a rapid is a setup for failure.
Don't spend time over what didn't work in the past. During your change process you need to be focused on what is ahead.
3. Sometimes you have to make quick decisions along the way. Indecision wraps boats.
Indecision can paralyze a business causing a change initiative to fail. Be ready and willing to make decisions at the right time. Most of the time even a bad decision is better than no decision.
Just a bit of river education. There are 3 things that create a rapid. 1. Constriction, 2. Gradient, 3. Obstacles
So when the river narrows, drops, and has rocks, you can be assured that there will be some turbulence ahead.
It is also important to understand something about rocks.
They can be great fun because they actually create the waves that make rafting fun. But they can also be frustrating and/or dangerous.
At lower flows rocks have to be avoided or else the boat can get stuck wrapping around the rock. In this case, the strategy is to go around them. Indecision (on which way to go) wraps boats.
Rocks that are just barely covered are called sleepers. They are difficult to see and while it looks like you can float on by, when you try it, the weight of the boat causes the rock to grab the boat and spin you off course.
At higher flows rocks can become pour overs and keeper holes. These must be avoided or risk a flipped boat and/or lots of rafters becoming swimmers.
What do business leaders need to look for when trying to lead change.
What are the rocks, holes, or obstacles that will prevent you from accomplishing your objectives?
Things to consider:
Next up is our letter DREAMS where we will be taking a look at the role and responsibilities of leadership in change.
In the meantime if you would like to chat about your change initiative you can schedule a time here.
Most people love change when it benefits them but hate it when it inconveniences them.
It is not easy to implement projects or change effectively. In fact, various reports estimate that up to 70% of company initiatives fail.
Over the years I have been successful in helping leaders navigate change.
I actually learned quite a number of things that lead to success from whitewater rafting.
The whitewater metaphor has been used quite frequently to describe the chaotic experience that the rafters or team members go through during a change.
I am going to take a different perspective. That of the captain or guide.
I am going to use the acrostic DREAMS to walk through a process that I think you will find engaging and helpful as you prepare to implement your next project.
Determine the Destination
Read the River
Execute Excellent Leadership
All Together - use your crew
Let's start with D.
“Where are we”?
We were two hours into a 3 day trip on the Colorado River and the signs of civilization were disappearing.
I respond “Maybe we should pull out the map”, my fellow guide trainee says "Naw, we don’t need that, we’re in the wilderness"!
A few thoughts flashed through my head as I reached into my dry bag to pull out an old weathered map.
“I’m hungry,” someone says “When are we going to eat” chimes in another.
Our leader was a seasoned outdoorsman but only had one season as a guide and had only been on this section of river 1 time before.
“Ok” says the leader “eddy out here for lunch” it was almost 2:00.
After finishing lunch we got back on the river and I asked the leader where we were going to camp for the evening and he responded: “we’ll see.”
As we floated downstream, I pulled out the map and started following the course we were on and I saw that there were several good camp spots along the way.
Unfortunately every time I brought up the idea of looking at the map I got a “F the map” response. No worries, I thought to myself, but this is going to be a really long day.
As dusk approached, the leader decided we needed to set up camp, but we couldn’t find a suitable location. Things began to get tense. I suggested that he look at the map but only received another volley of expletives.
Eventually, we rounded a corner, and there in front of us was a bridge.
The leader said “No way! we’re not supposed to be here until tomorrow afternoon!”
So we immediately pulled over and set up camp. After everything was cleaned up from dinner we sat around the fire talking.
The conversation turned to life ambitions and I mentioned that it is really helpful to have a life plan like having a map... but that did not have the desired effect as everyone looked at me and said “you and your maps - F the map" in unison.
Here are two observations as I reflect on my river experience.
1. Maps are Essential (if you want to know where you are and where you’re going)
I am amazed at how many businesses do not take the time to map out their objectives. Just like my rafting buddies, they seem to think everything will just work out on its own. That rarely occurs. To be successful you need to spend the time and money to develop a clear and accurate strategy map for your organization. Some things to include in determining the destination and creating your map could be:
2. Maps only work when you use them.
It doesn’t help to have a map if you never bother to look at it.
It also doesn't help to have one person following the map when everyone else is taking off in their own direction.
I have read beautiful strategic plans that reside in large binders that have become nothing more than shelf ornaments.
A project catalyst can serve a critical role in making sure that the plan is developed and is being used. This role can be filled internally by the project sponsor, project manager, or by an external consultant.
Accountability is essential in any successful project or change.
In the next post we will take a look at the R in our acrostic and will learn about reading the river.
Picture is compliments of one of Tom's young congregants
Anyone who knows me understands that I am a whitewater fanatic.
It all started when my dad took me on a 2 week expedition on the Colorado River through the Grand Canyon when I was a teenager. Later when I moved our family to CO I was trained and certified as a river guide and we spent many happy summers floating rivers in and around the state.
20 years after my first trip I was invited on another. This time with my cousin, rowing my own private raft.
It was an epic 280 miles over 21 days. I learned so much it actually inspired me to start our own rafting business on the Arkansas river which we ran for 10 years.
Fast forward another 20 years. I received a call from an Episcopal Pastor (Tom) with a private permit. He was looking for an experienced raft guide to row gear down for him and his kayaking buddies.
So I made the arrangements and we were set for me to return to the Grand a 3rd time in August of 2020.
Then something crazy happened.
COVID hit hard and everything started closing, even the National Parks
There were doubts on whether our late summer trip would in fact be delayed or canceled.
Fortunately, the Grand Canyon implemented protocols that allowed the park to open back up and the trip was confirmed.
Once on the river, I noticed 3 things different from the last time I was there.
Now on a big river like the Grand, everybody does the research on the major rapids because they are notoriously dangerous. You could flip your boat or get injured. Being prepared, scouting, setting up safe recovery zones etc. All makes sense. It would be irresponsible to do otherwise.
But eddies and swirlies - who pays attention to those? After all, we just made it through Lava Falls! What more could wrong?
River current is a fascinating thing to study. Typically it moves side to side but at the same time, it also moves up and down creating winding rivers that alternate with deep and then shallow channels.
A lazy river changes once 3 things happen to form a rapid. 1. Constriction, 2. Gradient drop, 3. Rocks
The rocks form holes, and at the end of the rapid large swirlies and whirlpools can occur. In some cases the force of the water moving back upstream is so powerful it can capture and/or flip a fully loaded raft with thousands of pounds of gear and food. At a minimum, the end of rapid swirls can knock you off course and throw you into an eddy that takes you back upstream whereby you have to row hard to bet back into the current and back down through the swirls in order to keep going downstream.
As I was thinking about the impact of COVID since Jan 2020 I could not help but think of the swirlies. We all make our business plans and because of experience, there are predictable obstacles that we can plan for. It would be otherwise irresponsible.
But who could have known that a virus could have such an effect on every business, family, the world over!
As I think of resilient response I can point to those businesses who not only survived but thrived growing 100% or more through the pandemic.
But, for every business succeeding, there were many more that did not make it.
Some factors were out of the owner’s control. For instance, in WA state a mandate was issued that limited camps to a maximum of 10 people. This essentially shut down an entire industry for a year.
Others were simply afraid and went directly to a retrenchment strategy.
Some businesses were hit hard with COVID moving through the rank and file and killing their productivity along the way.
Although I consider myself a pretty healthy guy I personally went from a half-day of Mountain biking to 6 days on the COVID wing of the local hospital in less than 2 weeks.
Another “swirly” to navigate!
Although I am now technically back, the road to full recovery I am told will be much longer than I could have ever anticipated.
I am so thankful for the many medical staff, hospital staff, church members, and community.
As we all attempt to be more resilient I wonder if there are things we can be doing together to prepare for all the swirlies ahead. Here are a few questions that might help.
If you would like to chat about your business or if you would like access to a free planning webinar you can access that here with no opt-in required.
Cash is King! You have probably heard this saying and regardless of what you think it means we all know that it is hard to conduct business if you don't have any cash. Right?
Most accountants would probably say that if you want to increase cash on hand, you either need to increase revenue and or reduce expenses. I agree with that, but I'd also like to add another way and that is to Close Your Cash Gap.
What is a cash gap?
It's the timing between your account payables vs your receivables and the revenue that it represents.
Let's say you were a contractor and you spent $1,000 cash for supplies and charge your customer $4,000 with 50% due after completion and the balance due in 30 days. Assuming it took you 30 days to complete the project, you would have a cash gap of 30 days totaling ($1,000). The contractor in this example must have enough cash in the bank to cover the $1k plus any other bills due during this time.
To close the gap we will look at two areas, accounts payable and accounts receivable. Both of these numbers should be found on your balance sheet.
I was consulting with a small business that was struggling with a cash shortage. When I looked at the expenditures and bank statements we discovered several services that the company was not using (almost $2k/mo) so we immediately discontinued those automatic withdrawals. Next we looked at the terms of each remaining vendor and picked the top 3 to contact and see if payments could be moved out by 30 days. The next step was to apply for a business credit card. When the supply invoice was due the payment could be made via the credit card extending the actual cash disbursement another 30 days.
Another organization had burned through their reserve and was starting to panic over a lack of cash. I asked to see their accounts receivables and found that they had over $75,000. Then we looked at when they were due and I found a couple of interesting problems. First, $25k had already been received but had not been accounted for. That brought their total to $50k. Of the remaining balance almost all of it was past due by over 90 days! What we did was to list the customers and contact them to find out when they planned to pay. If they never received an invoice, we invoiced them for the balance due. We negotiated a payment plan and updated the terms moving forward so that payment in full was received at the point of completion.
Going back to the original example of our contractor let's apply the changes to see how that will affect the companies cash position.
By negotiating better vendor terms he is able to order the $1k in supplies without paying upfront. The new customer contract requires 50% upfront with the balance due upon completion. By making these changes cash goes from minus $1,000 to $4,000. See the chart below.
If you play the scenarios out over 3 months assuming 1 job per month, the cash on hand for scenario 1 grows to $3,000 compared to $11,000 for scenario 2! Let's take a closer look.
Now for the new terms and condition for scenario #2. Look at the difference!
So why is this important? After all, we are just changing the timing of payments and expenses, right?
While it is true that the profit $9,000 for both scenarios will be the same, the organization in scenario 2 has less risk and more cash which potentially provides better flexibility when evaluating other business opportunities.
In real life the numbers can become significantly larger and things like compensation & benefits create additional complexities in evaluating the cash gap. Making errors on cash flow, whether in a large or small scale operation can lead to stress or even bankruptcy.
Each organization has its own cash requirements in order to operate efficiently. A once a year cash gap analysis is one way to identify opportunities to increase your cash position.
An annual cash gap analysis includes:
1. Evaluate all expenditures from high to low concentrating on the top 80%.
2. Eliminate redundancies or non value add expenses.
3. Review contracts and identify potential changes to terms and conditions
4. Negotiate new T&C's or find alternatives - buying coop, memberships, etc.
5. Evaluate all past due invoices
6. Collect outstanding balances.
7. Review customer/client contacts - terms - conditions
8. Negotiate new T&C's
If you have questions about conducting a cash gap analysis, feel free to schedule a chat.
In 2002 Colorado had a devastating drought.
In fact, according to one Hydrologist it was the worst drought in Colorado history. While presenting at a river outfitters conference he explained that Colorado always has a drought somewhere in the state. He contrasted that by showing us a chart of 2002 where every single region within the state experienced drought at the same time. This created the conditions for fires to burn uncontrollably throughout the state to the extent that the Governor went on the air to tell the nation "don't come to Colorado this summer our state is on fire!"
As you can imagine this really hurt the normally robust tourism experienced during the summer. Because of a low to non-existent snow pack, streams were drying up and even the Arkansas River which usually receives supplemental releases from dams upstream, crept along at what would usually be winter flows (barely enough to raft on). Most rafting companies experienced anywhere from a 30-70 percent decrease in business that year with one notable exception!
I had to meet with the owner to find out why when everyone else was going out of business, he had actually remained steady and took over the number 1 slot in market share. So I set up a meeting and interviewed him.
Here is what I found out.
1. Raving fans - The experience that they created was unique and even with low water they made it fun and adventurous. This resulted in guests that were super excited and naturally spread the word to family and friends.
2. Key Customers - They had developed strong relationships over the years with key group leaders. Their emphasis was on the 10% of the people that accounted for 90% of their business.
3. Multiple Income Streams - Instead of relying on raft trip income exclusively, they developed a number of other sources of revenue. This included onsite camping, food service, hiking, climbing, etc. By offering a variety of choices they were less dependent on a single source of revenue.
4. Advanced Commitments - This was probably the most significant take away. 80% of their business was booked 1 year in advance. Brilliant! Instead of waiting and then spending hours sending emails, postcards, calling, etc. They communicated in advance that if they wanted to guarantee a spot for next year the group leader needed to come prepared with a deposit for the next year. This virtually eliminated the issue of fair weather rafters and provided a really solid base for planning. If a group did not renew, they had time to fill it from their database. In this way they always knew in advance how the year would go and it helped them optimize their schedule and staffing.
I hope these ideas stimulate your thinking on how you can drought proof your organization. It certainly did for me. I have actually used what I learned here to begin developing what I am calling a revenue factory. But, I'll need to share more details with you in another article.
If revenue in your organization is not where you would like it to be, I'd be happy to chat with you about ways to improve your position. Feel free to reach out at firstname.lastname@example.org.
Millennials and Generation Z don't want bosses --- they want coaches
According to research conducted by Gallup, managers play the single most important role in determining staff engagement and overall productivity. Currently only 34% of employees are engaged at work. Gallup defines an engaged employee as involved, enthusiastic, and committed to their team and organization.
What I find incredible is that after decades of research, Gallup shows the following results comparing engaged team members vs disengaged team members.
Engaged Team Members
With these staggering differences I would think getting to high team engagement would be a top leadership priority within every organization!
Unfortunately even those that want to improve, find it difficult to make the changes necessary. How do you develop managers who can become great coaches?
I remember my first promotion to a management position. I was working in a warehouse and my boss called me into his office. "Wear these" he said as I reached out to accept a button up shirt and tie. I didn't ask any questions, I just realized that I was moving out of jeans and t-shirt mode into the suit and tie. I was razzed by my staff for a week but it was clear that I was making a change from being "one of the guys" to becoming a leader and future coach.
My boss had many meetings with me throughout that first year talking about purpose, goals, measurements, personal development and much more. In fact, it was because of the example he set and what I learned in those formative years as a manager that I was able to develop my own high performance team and replicate that many times over in the years that followed.
While Gallup did conduct research in those days it wasn't until several years later that they published a number of books the most recent being "It's The Manager" in 2019.
What I realize now is that my boss was actually more of a mentor and coach than anything else. The research validates the methods that he used. I was fortunate to have someone that intuitively knew how to engage his staff.
Not everyone is that lucky.
With more individual and team contributors getting promoted into management positions it is critical to include in that transition good training and coaching on how to become an effective manager. How to lead well and how to coach.
This is where business coaching or executive coaching can make a huge difference.
Often times senior leaders don't have the time to invest in the weekly development of their Jr. or even mid management team. Many times small business owners have not had the opportunity to get coached themselves let alone do it with their team.
That is one of the reasons I started Forward One Business Coaching. To come along side leaders who are committed to making the changes necessary to improve their organizations and have a positive impact on the world.
Here are a few action steps:
I believe your investment will be worth every penny.
Let me know how it goes!
If you want to chat I'd be delighted. You can schedule that directly here.
"Over the years I have observed that effective leaders do three things well. They Dream, Design and Do. Preferably in that order but not always. Let's take a deeper look.
1. Dream - In the Proverbs it says that without vision the people perish. I think that is true in organizations that lose the passion for what they are doing. By contrast the leader who has mobilized a team that clearly understands where they are going and why, creates a powerful force that can literally change the world.
When I started at Focus on the Family I was a warehouse clerk and it took me a couple of promotions and a few years to understand my role as a leader. What were we doing? Order fulfillment, storage and retrieval, just basic boring stuff. Yet that is not how the CEO felt about it. Dr. Dobson would regularly take visitors and VIP's on tour of Operations because "they get things done." He told us we were part of the "hidden ministries" of Focus on the Family and that changed my thinking. I began to paint a vision of becoming a world class distribution center and ultimately our motto was "Being There for God's Divine Appointments". The staff responded wonderfully and I could literally feel the difference as I walked through the facility.
2. Design - All the dreams in the world will go nowhere if there is no design. I have heard some teach the "ready, fire, aim" technique. Can't you just skip a step and get right into it? Yes, for certain projects you can switch the aim part, but the key is that you still need to be ready and "design" is a part of the getting ready process.
When I relocated to Colorado we had a wonderful home that we moved into. The basement was unfinished and my wife and I said to each other "wouldn't it be great to finish that someday." 3 years later the basement was still unfinished. It wasn't until we started putting tape on the floor and getting drawings put together that the dream started to take shape. It wasn't long before the plans were approved by the county and within a few months we had a finished basement.
3. Do - You may have heard the saying that "leaders do the right things vs Managers do things right." While I am not sure I agree with the definition, there is one thing they both have in common, and that is the word DO! With no action there will predictably be no results.
Some of the common constraints leaders face with implementation is lack of money, fear of failure, not enough time, lack of expertise, resistance to change.
These constraints can be overcome with commitment, creativity and a bit of luck.
Actually I do not believe in luck. Let me refer again to Proverbs where it also says that a man makes his plans but the God directs his steps.
I think we do have the responsibility to plan but we need to understand that as we move forward we may need to pivot along the way. Providence has a way of directing what actually happens.
At one point I had a great plan and was completely on course for implementation. I had a great executive position in a large nonprofit, I owned my own adventure company that was growing, I was a year into my Doctorate in Business Administration and I was an adjunct faculty at a local University. I won't go into the details of my ultimate plan because everything changed in 2009.
Due to the economy tanking, I ended up losing my position, selling the business, dropping out of the doctoral program, and leaving the teaching opportunity.
Because of those changes, I ended up being free to move to PA and then to MT to help two companies design and implement major organizational initiatives.
Ultimately I ended up back in Colorado and made the decision to continue helping leaders navigate change through Forward One Business Coaching!
If you would like a workbook that can help with your Dream, Design, Do planning you can get that here. I wish you the best in becoming the Leader you were called to become.
The most frustrating question in the world
No, it doesn’t have anything to do with World War II. This is the question that inevitably comes up after your project is just about to be implemented and go live.
You are in a meeting and someone asks the question Why Wasn’t I Involved?
Wait just a second, you think. We have been working on this initiative for over 6 months. We have had meetings out the kazoo, you have received sign-offs from the city, county, state, executive team and yet it never fails. Like clockwork, right before you pull the trigger you are hit with “the question”.
Now, in reality, it’s not really a question at all. In fact, it’s an indictment. Like, you didn’t involve me and if this thing fails don’t come crying to me. Don’t expect my help if you go forward.
This technique is actually used quite effectively by everyone from the entry-level clerk to the President of the company.
Here are 5 different versions of the Why wasn’t I involved question.
So what is a leader to do when it seems the odds are stacked against ever getting any change implemented?
While you can’t really control how people respond to change, you should be able to ensure that no one is surprised. That happens through effective communication. So this is what I suggest:
Finally, keep a good sense of humor, you’ll need it.
When my wife and I were newlyweds I was making minimum wage ($4.35/hr) working at a warehouse in Southern California.
With a new baby on the way, I had to figure out a better way to make ends meet.
My boss set me up with a meeting with a man who used a financial plan created by Larry Burkett (the guy Dave Ramsey studied under) and he showed me how to create and monitor a monthly budget.
The bottom line was that income must exceed expenses otherwise I would be in debt, which was bad news.
When your average gross income is $754 a month you have to get very creative in order to make ends meet.
Once I graduated from college I was sure I’d be able to get a good job, eventually, but that was still over 6 months away and while I had overtime and odd jobs to supplement my base wage, we needed a system to control expenses.
These are the questions that my wife and I committed to ask before every expense. It was transformational!
The same concepts can be applied to small businesses as well as non-profits.
These questions can be applied to any purchase. A vehicle, rental space, household or general business expense. For fun let's just say we found a pair of hiking boots on sale for $85. I'll walk through the questions and lets see what happens.
1. Do we need it? Since my primary job is indoors and I work inside I would have to say no. Now let's say I was planning on hiking the Pacific Crest Trail. In that case the answer would be yes assuming the PCT got past the questions and still survived.
2. Do we need it now? If my PCT journey begins in May next year and it is December the answer is no. We don't have to spend the money now.
3. What are the options? Is there another way? Well, perhaps we could use hiking shoes or synthetic material vs leather. It is possible to hike in tennis shoes but not advisable. There are lots of styles, makes and models of hiking boot. Are there sales? What about the bargain barn at Sierra Trading Post?
4. Can we get it used? Yes, In our town we have lots of outdoor people so the thrift shops are full of cool outdoor gear including boots. What about the REI garage sale? Craigs list? If we are patient and know exactly what we need, there is a good chance we can find it used. Another idea is to post on some outdoor forums and ask if anyone has your size boot that they would like to get rid of.
5. Can we get it for free? Yes, it is possible to write the boot manufacturer and ask if they would sponsor the event. We could pick a cause and raise support for a nonprofit and perhaps we will receive a free pair of boots to help us accomplish our mission. Who do we know that is an outdoor fashion king? If our size matches we should be able to get the hand me downs when they upgrade next month.
6. Is it budgeted? If the answer is no then don't spend the money. If the answer is yes then you still need to check the bank account and make sure you have enough cash to cover the expense. You can only spend budgeted dollars after the budgeted income has been deposited. Now if you have a surplus in one account and you forgot about an expense in another then it may be acceptable to borrow or transfer from the surplus account. However, do not get into the habit of robbing Peter to pay Paul otherwise why bother having a budget to begin with.
7. Can we afford it? If the answer is no then again you should not spend the money. However, just because you have money in your account does not mean you should buy the item. You can burn through a lot of cash if you get careless about spending just because you can. In the case of the boots let's say that we are on track for purchasing them in January. So in this scenario we will wait and see if we can find a good pair of boots another way for the next couple of months. If not we can always buy them at full price later.
My wife and I saved thousands per year using creative approaches to getting what we needed.
Once I started making more money we relaxed and thought we could "afford it." We started paying retail prices and although we saved a bit of time, we scratched our head at the end of each month wondering why our bank account was so low when our income was so much higher.
When we went back to the 7 questions we saw major results in as little as two months.
Here's your challenge!
Write down the 7 questions on the back of a business card and put it in your wallet. Every time you are about to buy something, go through the questions, and see how it impacts your cash on hand. Try it for 3 months.
It may be hard at first but I think you will like the results.
A colleague of mine told me a story about an event he was attending at the nonprofit we both worked for. It was a graduation dinner and each of the students were seated together with their families and 1-2 staff members.
It was during the dinner that one of the student's grandmother asked my friend a peculiar question. “Sir, could you tell me who here is the vice president of perfection?” “What do you mean” my friend responded. “Well since I arrived, everything I have experienced has been perfect. When we drove up, the parking lot was well lit with easy directions, we walked in and were greeted with big smiles and treated like royalty. The decor was delightful and interesting and everywhere I looked it was spotless. We have just enjoyed a scrumptious meal and I want to thank the person in charge of perfection. Is that you?”
My friend responded “well thank you so much for sharing that with me. I will make sure your evaluation gets back to all of the staff that made this event happen. While we don’t actually have a VP of perfection our founder has created a culture where every person/department strives for excellence. Our hope is that everyone that visits us will feel exactly the same as you.”
If you haven’t read the Perfect Order blog go ahead and give it a read at this point and then come back.
Great! Can you begin to see how the perfect order can apply to service?
Think about your organization and the particular service you provide.
When I first took over the inventory management department for a nonprofit that distributed educational material I asked to see the metrics that were being used.
I received charts that measured total investment in inventory, COGS, turns, etc. The most interesting number, however, was inventory availability. The department was very proud that they had reached 99%. What that meant was that out of every 100 sku only 1 was on back-order. In this case with 5,000 SKU that meant we were only out of stock on 50 items.
Compared to what it used to be that seemed pretty good!
That was until I found out that only 1 out of 3 people that ordered from us received all of the items requested.
In other words, the actual order fill rate was only 66%!
So while the department thought they were producing A level results, in reality, they were measuring the wrong thing from the customers perspective. The true work results was closer to D level performance.
This is not an isolated incident.
Ed Frazelle PhD is the founding director of the Logistics Institute at Georgia Tech. I had the privilege of going through his Logistics Management Series and one of the concepts that he used as an eye opener for supply chain professionals was his perfect order % exercise.
What he would do, is ask everyone in the room to define what a perfect order looks like. He would write down each item and then asked how good are you? What is a great performance? And everyone would respond somewhere between 95 - 99% and we would end up with a chart like this:
Clear online description 98% -> A
Pricing was accurate 97% -> A
No errors during checkout 95% -> A-
Items available 95% -> A
Order confirmation 98% -> A
Picked accurately 97% -> A
Packaged properly 97% -> A
Shipped on time 95% -> A-
Received w no damage 97% -> A
Proper documentation 95% ->A
In every case, each department thought they were doing pretty good.
It was not until the end that Dr. Frazelle would say no, we aren’t going to average them, we need to multiply each one to get the actual perfect order percentage.
Here is what that looks like.
.98*.97*.95*.95*.98*.97*.97*.95*.97*.95 = 69% or a D+
Now, who wants to get excited about D+ work?
To have A level work, each component of the supply chain needs to be (to borrow a line from Mary Poppins) “practically perfect in every way”
Ok, so nowadays Amazon does all of that stuff for you. You're wondering, is this even relevant to my organization?
Yes, I think so.
Next time I'll show you how this applies to a service organization like a school, resort or camp. In the meantime be thinking about:
Dwight Grant is a seasoned businessman with over 30 years of leadership experience. He lives in CO where he enjoys whitewater rafting, mountain biking and spending time with family.