Getting back to what works
Aug 26, 2002
Antoine Nicholas Smith had just started feeling a little better. He’d survived some tough times recently and come out smelling like a rose. After 9/11, his firm, Jones and Stern, tanked. They were losing money, and there seemed to be no end in sight. Projects were washing out left and right. The accounts receivable were getting old, and the bank was none too happy. They were putting their stock buy-back payments from Jones on hold. But the real issue was very few people in the firm seemed to care.
Every cloud has a silver lining. In this case, the silver lining for Antoine was that because of his firm’s poor financial performance, they decided it was finally time to do something about it, and the board named him as CEO. His predecessor, Buck Slimebucket, was quietly escorted off the premises after it came out that for two years he had been paying off his ex-wife by filing fraudulent expense reports. Slimebucket was so embarrassed by the whole ordeal that he grew a beard and left the profession entirely. Last they heard, he was working in a classic car dealership in Peoria, cleaning cars by day and getting hammered every night.
In any event, on January 1, 2002, Antoine Smith inherited the helm. Being the smart and capable manager that he is, he quickly took stock of the situation. It quickly became evident that the firm had gotten away from many of the core strategies that had enabled it to be successful in years past. Here’s some of what he did:
Workload forecasting. For whatever reason, the company had gotten very lax in its workload forecasting. Up until 1999, when Barbara Stern retired with health problems, she had maintained a running billing forecast that showed all of the jobs and how much the firm was projecting it could bill for many months going forward. The company really used this information to make hiring decisions and to light fires under the principals, department heads, and project managers when they saw that new work had to be brought in. But that entire system had slipped into disarray during the overheated days of 2000 and early 2001. Each department was trying to do it on their own, and it just wasn’t working. Smith appointed one of the younger principals, Jeffery Organizo, to the task, and insisted everyone comply. Those who didn’t supply Organizo with critical information or who routinely missed their billing forecasts had to meet with Smith, and it wasn’t fun!
Cash flow improvements. As was the case with workload forecasting, the entire billing and collection routine had fallen by the wayside during the good times. The firm’s accounting department and project managers alike just didn’t see the sense of urgency in getting bills out and paid. Smith got everyone together and showed them how far into the line of credit that the firm was and why that jeopardized every employee’s job there. He then asked for (and got) a new cash flow forecast that he insisted be updated weekly. Any time the company missed the forecast, he investigated to find out why. The process of doing the forecast and investigating when it went wrong turned the firm’s accounting manager into a fabulous forecaster. She enjoyed her job more and was more valuable to the company. And one more thing— cranky “June” who worked in billing had to be replaced by happy “Stephen,” a guy who came to work for Jones and Stern from a local finance company where he had to collect money daily.
Personal selling. In the good ol’ days at Jones and Stern, the only way to get ahead was to build a following of loyal clients. That meant selling. Everyone who was a partner was there because he or she could sell. But somewhere along the way, that rule was forgotten. The company ended up with a lot of people in high level jobs who never sold a thing. But they were nice people, loyal to the firm, so they got to the top when they probably shouldn’t have. They didn’t sell. But the good news is when Smith got into it and started talking about selling, having sales meetings, announcing new sales… everyone started to get the idea that selling was a primary responsibility. This was further reinforced by the company’s adding three new owners six months into the program, each of whom was recognized as having a following and being able to sell.
Within eight months of Smith’s new role, the company was back to an annual 20% growth rate with a 15% pre-tax, pre-bonus bottom line.
Originally published 8/26/2002.
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