mikelally.net » finance

Case Study

mikelally — Sun, 27 Jun 2010 13:07:58 +0000

We have an intern working with us. She is getting her MBA. She still has that new car smell on her. By that I mean – she hasn’t become bitter and jaded. She is still full of the possibility that most business problems are easy to fix. If only we applied ourselves. She’s taken to quizzing me. The classic battle of education versus experience.

She challenged me the other day with a problem they had studied. I thought it would make for interesting reading. The problem was a struggling manufacturing operation. The problem is pitched as one of production. But I will give the ending away. It really is a quality problem.

So – over the next few posts, I will lay out the Mike Lally Method. We will talk operations, sales, a little finance, and HR (shudder) with a good dose of management and leadership thrown in.

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I Moved Your Cheese

mikelally — Sat, 14 Nov 2009 21:37:59 +0000

Read an interesting blurb in Business Week – no link because I can’t find one. Whatever BW. The article is: Are Your Employees Just Biding Their Time?

The first point is that people aren’t quitting their jobs. So that’s good – we haven’t completely lost our minds. People see 17+% total unemployment and think to themselves – “self, I am going to continue to lick my bosses boots until the sun starts shining again.”

Next point the author, Peter Coy makes is that companies shouldn’t expect this trend to continue. Some day we might get under 10% again. Hello, Europe. And when we do, people are going to leave in numbers. This makes sense to me in a way that he doesn’t speak to in the article.

There is a big contradiction taking place right now. Unemployment is the highest its been since the 80s. Yet, the stock market is back over 10,000 and doing well for itself. Why? Companies are showing good numbers. They are showing good numbers because they drastically reduced cost. That is you, btw – YOU are the cost. Now…the survivors are doing the work of 3 and 4 people. Which is good for companies because they aren’t selling anything anyway.

But someday this will change and people are going to give their bosses the collective finger and move on. So says Coy.

He closes with something I’ve been railing against for years (at least a decade, probably more). People quit jobs because of the money! They do not quit because of their boss. They will eat whatever their boss dishes out, because they need to pay rent, eat and play Xbox.

Coy captures a great point at the end – that managers don’t get it. Managers think that the soft stuff is what is important. “management climate” and “supervisor relationship”. Hey…no one cares if you moved their cheese. They care about the cheddar in their bank account.

I’ve managed a LOT of people in my time. They care about cash and benefits. Stop drinking the kool-aid. Put the stupid balloons away – you know who you are – take all the money you spend on stupid crap that you think MOTIVATES your people and give that money to them.

If you want to give them fun things give them Red Bull and Snickers bars. Crank them up and then watch their production SOAR.

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McKinsey Describes the New Normal

mikelally — Wed, 22 Apr 2009 17:34:53 +0000

The McKinsey Quarterly had an article back in March of the “New Normal.” I have read this short article several times and recommend you do the same. There is a lot of insight amid the prediction.

It is clear that we are not just going through a new boom/bust cycle. As the author says, we are seeing a “restructuring of the economic order.” We are going to see more government in our collective kool-aid, and not just US government. The world has indeed flattened and the rest of the world has to perform due diligence on everyone else too.

There is also going to be less leverage. The lending sphincters have tightened and it is going to take one SERIOUSLY large bran muffin and Dunkin Donuts coffee to loosen things up. Not happening anytime soon.

You’re going to actually have to earn it now…with good, old fashioned productivity gains. Some of you, I bet, even remember what those are.

You’re also going to have to deal with this:

For example, it was clear before the crisis began that US consumption could not continue to be the engine for global growth. Consumption depends on income growth, and US income growth since 1985 had been boosted by a series of one-time factors—such as the entry of women into the workforce, an increase in the number of college graduates—that have now played themselves out. Moreover, although the peak spending years of the baby boom generation helped boost consumption in the ’80s and ’90s, as boomers age and begin to live off of retirement savings that were too small even before housing and stock market wealth evaporated, consumption levels will fall.

So, pretty much everything us Gen Xers know to be true will be undone. The game has changed. The financial voodoo will go away. For about 50 years. That is how long it took us to undo the changes implemented after the great depression. Starting with the Savings and Loan mess of the 80s. Thanks fat, old, greedy, white guys.

The future, according to McKinsey is in genetic engineering, software and clean energy.

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See Honey, I’m LEARNING Something Here!

mikelally — Tue, 22 Apr 2008 13:39:07 +0000

Continuing with the gaming trend here….The Personal MBA author, Josh Kaufman, posts a list of the business skills/concepts you can learn while playing World of Warcraft.

I don’t know about other MMORPGs but WoW has an incredibly rich economic system. By rich I mean that there is a lot to dive into. It is a world of buyers and sellers. You find items, you “farm” items like ore and herbs, you “craft” items like armor and gems and then you can sell them. You can also day-trade in a way. There is an Auction House…think ebay but for Orcs and Elves.

People have developed pieces of software that scan the Auction Houses. You in turn, can look for values. Items that are selling below their value. Then you flip them and sell them for high margins.

Kaufman relates that you can learn about:

The Value Chain
Product Pricing
The Law of Supply and Demand
Arbitrage

From a non sales and marketing perspective, there is also lessons to be learned about achieving goals. The game is very goal-oriented: finish the quest, find an item you need, make money to buy your Epic Mount.

Lastly, you have the ability to develop your character’s brand. You can specialize in a number of different ways. Not all wizards are the same. Nor are all blacksmiths. You can be a fire wizard or frost. You can be an armorsmith or weaponsmith. Each choice brings benefits and limitations.

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Cash Flow 101

mikelally — Fri, 16 Dec 2005 11:32:00 +0000

Great post from 37signals that I picked up from Lifehacker. Great and relevant for a number of reasons. Cash flow is the killer of small business. I would say it is probably the killer of all business but I won’t bog down there.

When I was running large technical support programs and developing entry level technicians into future leaders I stressed financials. I tried to explain that technical skills were nice, but if you really want to add value, learn how a business operates. In other words….follow the money.

We’re still in startup/growth mode at the outsource service provider I currently run. Cash flow is key. Getting paid on time is probably THE most crucial aspect of our business. Payroll WILL be late if our clients do not pay on time. Sometimes we take daily trips down Cash Flow Lane to understand where the money is going. And believe me. It GOES.

I also use the same approach with my business development teams as I did with the technicians. In order to thrive you MUST understand your prospects’ business. Understanding their cash flow, if you can get down to that level, gets you established as a trusted business advisor. See Sales and Marketing in the Third Age for more on this subject.

Great article. Read it. Know it. Live it.

For more…check out CEO Tools by Kraig Kramers. He is a TEC speaker. I met him a couple of years ago and this book provides awesome tools for helping you run your business.