When you feel powerless, take back your power

As the leader of a company under financial pressure, either just starting or already distressed or even under Bankruptcy protection, you can easily feel completely under the microscope, being scrutinized and reviewed by any number of outsiders. We’re talking way beyond self doubt here – many of your peers feel they are being questioned on anything they do with the result of feeling powerless and afraid to act. And to make it worse, this doubting comes from some of the same people who looked up to you as a success.

Yes, you really could be traumatized (the feeling of being in danger and unable to control the event which can cloud your judgment and cause inaction) but let me assure you that you still have the power to act and be successful. Just chose your actions wisely and avoid the temptation to ‘do something, just do something’. Below are just a few key areas where you can invest your time and energy, returning your power to control events:

Try not thinking in terms of sales forecasts alone and start thinking cash to cash cycles per fiscal year. How long and expensive is it for Prospect A to decide and place an order, for you to procure same and then deliver, recognize revenue and finally collect? If the imbalance is beyond a reasonable threshold, do you need Prospect A? Weight your sales pipeline and forecast in terms of the cash to cash cycle and not just the close date. Manage accordingly.

Try shortening your sales cycle. Many times a sales cycle is a certain length and cost because that’s the way it is in a particular industry. Work with your CFO – brainstorm how you can restructure what and how you sell to bring forward revenue recognition and billable events.

Can you use cost + X% pricing and open your books to your best customers? In these times, transparency is a real plus and showing you make a reasonable profit over cost is overwhelmingly endorsed by most purchasing agents I know. It also helps put a floor under negotiations. If one of your competitors is willing to charge below your cost+ X% figure, you can now show the customer that your competitor is not likely to stay in business or service them well and nothing ticks off a purchasing agent like uneven performance or company survival risk.

New revenue streams leveraging what you already have
If you have the time and bandwidth (see the last paragraph in this positing), look into leveraging your existing assets and capabilities into new revenue streams. One Internet Portal I know is tied to the Logistics and Shipping industries, which as I write this, is seeing it’s first decline in revenues in its 10 year existence. They do have serious capability in data centers and web application building and support. They’re actively soliciting new business from various companies (some mof them existing customers) looking to chop their internal IT costs.

Consistency with your customers and suppliers
Chances are, your suppliers and customers experienced varying degrees of inconsistency while things were getting rough and have pretty much had enough. Restoring consistency is totally under your control.

Going forward, every pre-sales promise must be kept, from delivery to installation, to returns and warrantees- no exceptions, and kept to a ‘T’. Work backwards to detail the best terms and timing you can get from your vendors and bake this info into your sales promises and contracts.

In best of times, your customer’s Purchasing Dept. tracks vendor performance, and in these times, they perform Vendor Rationalization (as you should), meaning they cut back on inconsistent or less than perfect vendors so they get the best terms from the best vendors. That seemingly minor 1 week delay can now become disastrous.

Problem employees, partners and investors
External issues like the economy are stressful enough, you don’t need internal issues. Employees who play politics, even if they are ‘on your side’ must go. Partners who publicly undermine you must go. Investors who are not trying to help you get thorough this tough time must be paid off and go. Employees, no matter what their tenure, who resist change, must go. Sometimes valuable employees, even formerly key people, no longer fit the future direction. They have to go. I know of a highly successful owner of a significant industrial distributor who had a mini-stroke at work because he didn’t say “go” when he needed to.

What do you do when these people won’t “go” without a fight? If you are the person in whom the Creditors and customers have faith, then you have tremendous power. If you have to buy out a partner, you can force the issue if you have the backing and time the payout to future events. The alternative is they have no-payout from the no-company. Caveat – any Interim Manager worth their pay will tell you to pre-plan both the new organization and any legal steps required before you pull the trigger on employees or partners. Avoid the feeling that firings means you still have control and power. The power is in thinking and planning and getting your ducks in order, not just execution.

One last thought – learn to rely on those advisors who you pay because they are on your side. You must always remember who pays each advisor or overseer/Trustee. If they are on the Creditors Committee you can rest assured they are sitting there wondering how much bone marrow you have and what’s the daily price per gram. The Trustee is there to protect creditors. Your attorneys are on your side and you both have the same mission to accomplish, i.e. get you the best personal outcome. Same for your Accountants.

There is another type of help which is invaluable (insert shameless product placement here). You need a trusted advisor or Interim Operating Officer who can think clearly, is on your side (paid by you), objective, apolitical, has not been through your personal trauma and based on their experience can make well reasoned decisions and take this burden off your shoulders. If they are also an execution & Operations leader, that’s the home run here – let them do it so you can focus on those alternate revenue streams we mentioned earlier. Having to take difficult decisions and then execute, this outsider can become a rallying point – the person everyone can ‘agree’ to hate but accept for the short term. The best part of this relationship – once you’re healthy, they walk out the door.

I’m not going to tell you to ‘snap out of it’, or some other greeting card saying. What I will say is that you cannot do things as you once did, but you have the personal power to do things differently and get through this traumatic event.

Rich Eichen is the Founder and a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached atrichard.eichen@growroe.com

Cutting expenses but not your own throat

The best way to preserve cash is to stop spending. But, obviously, you have to be strategic and cut in such a way that it also builds the company for the future.

Based on my experiences at various clients over the years, by taking a reasonable and strategic approach, you should be able to cut 9% – 22% off your Expense lines while most likely making your company a better competitor. It might also help a company beat the odds and emerge from Bankruptcy. By the way – this is high stakes poker – if you go too aggressive and cut muscle, the returns will be a short term ‘false positive’.

Who should do the cutting? Generally, we recommend an outsider, mainly because as I often say “we’re the people everyone can agree to hate” or as a client once put it “you’re a first class SOB but you’re our SOB”. Insiders often do not have the broader cross-industry exposure, are used to doing things “our way-it just is” or are afraid of the ramifications to themselves. Your employees and executives/senior leaders should be represented on the Approval /Steering Committee.

Assuming you are using an outsider, how do you contract? There’s a bunch of people out there right now who will go for a straight percent of the save identified, but this often leads less to savings and more to amputation without regard for life- after. The better way is to put a bit of skin in the game as a 1-month billable project to bake this initiative into the staff, structure the Governance model, etc, followed by 20% of the amount mutually agreed to as identified potential saves (this means a business model, identified vendors, terms, etc.). If you wish the outsiders to perform the saves, then expect to pay an additional 15-20% (for a total of 35-40% to the outsiders, 60-65% of the saves stay with you) once the saves are completed. Make sure they teach your employees how to re-run a cost savings initiative on their own.

Where are the savings? As an example, the items listed below are a sub-set of what we, and presumably others, would examine in the IT arena which is usually a large % of spend:

Applications Development, Maintenance, Licenses
• Review all quotation software to ensure the edits/rules are current and tight enough to prevent overly aggressive quotes, i.e. ‘revenue leaks’
• Ensure licenses are used and return all shelf licenses which will not be used for 24-36 months. Why pay now? They’ll be glad to give discounts anytime.
• Are we getting value for maintenance dollars and can we lower the cost based on value received? Can we use 3rd party certified providers for routine maintenance?
• Are we overusing any online applications and can we cut back to a controlled level? Many people see online as ‘free’
• Can we not renew non-strategic licenses coming due in 2009?
• Are there avenues where implementing technology will provide MEASURABLE saving in 2009? Examples would be implementing workflow to replace field FTEs
• By implementing Shared Services, can we reduce the number of licenses, hardware footprints, business unit staffs, etc?

Projects, new and In-flight

• Review all projects to see if they are properly scoped, structured and have a measurable payback within 12-24 months. If not, is the project sufficiently strategic to remain active?
• If implementing any Enterprise software such as ERP, most vendors will supply significant resources gratis to ensure the project is successful. If early on and the vendor is uncooperative, introduce competition if possible and revisit.

Network Infrastructure
• Review contracts to ensure best deal.
• Review bills – often leads to 10-30% savings
• Deploy VoIP to save 50-90 %
• Review which sites need 99.99% uptime vs. 99.9%. This often saves in excess of 20% of WAN expenses

Hardware Infrastructure

• Defer Windows upgrades unless cost free
• Defer PC replacements; do not go to Vista or Windows 7 in 2009
• Virtualize and consolidate servers, use Linux for servers
• Review and standardize business intelligence and reporting software vendors
• Postpone all architecture pilots, evaluations and upgrades
• Review data management requirements to avoid adding online capacity, also reduce duplicate data storage by various systems in favor of Master Files callable by all. For example, save Customer info once, use many.

• Set and enforce strict rules on purchasing new services, equipment, etc.
• Immediately consolidate ALL procurement to the Procurement Dept. No credit cards purchases by units or people
• Start Vendor Management process, including tracking and adherence to SLAs and Master agreements
• Buy used first, new only if absolutely required
• Review if remote offices need full infrastructures or it they can use online versions of a central application – reduce hardware, infrastructure and licenses accordingly


• Review required staffing levels, reduce as required
• Review which non-essential services can be moved to a 3rd party vendor
• Stop all conferences and courses

Rich Eichen is the Founder and a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached atrichard.eichen@growroe.com

In a recession, cash is king

“Follow the Money”
“Because that’s where the money is”

In a recession, cash is king

A South American country was continually and publically threatening its neighbors with immediate invasion as a means of diverting its population from the little fact of 1200% hyperinflation. They reset the currency every day at Noon by some factor, usually small, but sometimes by double digit percents. They also instituted personal, manufacturing, export and repatriation exchange rates. I was running the local subsidiary of a US company and early on naively accepted payment from a government agency at 11:45AM in local currency. 15 minutes later and on the way to the bank, the currency was devalued by double digits and I had to eat over $250,000. That’s hyperinflation

The only way to survive was to use Accrual Accounting for my HQ reporting (and local statutory filings) but operate on a daily basis as if this was a corner deli, that is, on a cash basis. We developed a ‘30-Day Sources and Uses of Cash’ report and at the close of business each day, did the “we took in X, spent Y, still have money in the bank so we’ll open again tomorrow” discussion. In doing so, we had an accurate understanding of our immediate business health and the amount and timing of our cash needs/sources and sufficient time to address any expected cash shortages. Before we developed our 30-Day cash report we would occasionally get our cash timing wrong and scrambled to survive. From this I learned the only way to survive a difficult economy is to live by your timed cash flow. Not to say that accruals were or are a bad thing, quite the opposite, but on a daily basis we needed to know if we were distressed or healthy. Accrual Accounting just did not fit our daily lives.

We have to treat today’s severe recession as if it is as dangerous as hyperinflation and manage by cash over a rolling 30 day window. No, they are not the same thing, but both represent extreme economic dysfunction and living for the present is the best way to survive. I know of several businesses that are, on a cash basis, highly distressed while on an accruals basis, healthy. Just recently I dealt with a company that was healthy per Accrual Accounting, but the owners had to arrange an emergency cash line and inject some of their own monies as well because on an available cash basis, the company was technically borderline distressed and the bankers didn’t care about their accruals.

When managing on a rolling 30-Day Cash basis, you have to monitor only a few key things:
• Cash on hand
• Cash to be collected within 14 days
• 30-Day Burn rate, especially if any belt tightening remains to be done
• Revenue Leakage

The first 3 are self explanatory, but the 4th isn’t. Revenue Leakage occurs when sales reps sell your product or services for less than your approved pricing guidelines and discounting policies. This often occurs because your reps are trying to keep their jobs and your order entry systems permit out of bounds pricing. The problem with Revenue Leakage is the immediate impact it has on that king of all recession needs, cash, because it overcomes any smart negotiating you did to lower your Cost of Goods Sold and upsets any in/out cash flows. In other words, you worked hard to get the best deal from your suppliers and your reps are giving it away and this pretty much guarantees a cash shortage in the very near future.

The takeaway: During severe economic recessions, manage by the real-world metric called 30-Day Cash. Thinking in terms of cash buys you the time you need to survive long enough to build for the post-recession future. The ‘30-Day Sources and Uses of Cash’ report is your single most useful daily operations management tool.

Richard Eichen is a senior turnaround and crisis manager and is a Managing Principal at Return on Efficiency, LLC (www.growroe.com) and can be reached at richard.eichen@growroe.com.

Do what the FDNY does – Part 2

For much of its lifetime, the majority of the FDNY’s firefighters had been in the military and so understood the chain of command. They even understood the unwritten rules of when to salute the uniform and not the person wearing it. You could easily see it in the way they marched in the St. Patrick’s Day Parade – they had obviously been trained by the best drill instructors around. Times change, and for a number of years now, the number of vets has seriously declined but the respect for the chain of command has firmly remained. And yes, they still march during the parade, only a bit more, shall we say, freestyle.

So how does a sort of military discipline organization get 360 degree feedback, especially when they work in public and their daily job is life threatening? I call it the Firehouse Kitchen Table concept, and I’ve seen it, used it and it works even in our world.

Upon returning from a fire, trucks are backed in, hoses set to dry, gear removed and stowed. OK, that’s 10 minutes. Then, acting on an unspoken cue, everyone adjoins to the kitchen. Now a Firehouse is both a home and a workplace. Furniture in the kitchen is at best, highly used, but very comfortable. Duck tape is a major source of furniture repair and decorating element. Some sit at the kitchen table, some slouch in this collection of repaired couches and recliners. Then all freak*&% hell breaks loose.

For a short period of time, all ranks are gone and only fellow firefighters remain. “How could you $%^& put us in there? How come I went in and you didn’t have my back? Can Man – thanks for pushing me out of the way on 4. Tommy, good job on irons!” No one is exempt and it’s straight, from the heart and dead-on accurate. If you don’t give and take, as it truly is and was, you’re no longer fully trusted. After a fast and intensive few minutes, everyone has their feedback and “Bill” returns to Chief, “Angel” to Firefighter. Of course, the underlying common denominator is respect for the person, their skills and commitment to being in it together.

Here’s an interesting story of how not telling it like it was can kill trust.

During a post 9/11 lung treatment session where I was the sole non-firefighter, Big Mike and several others were furious. This was during the early hearings on why the FDNY lost 343 brave souls and a Chief was on record and videotape as saying that he had not allowed anyone into the obviously fatally damaged buildings. Only problem was, he had held the door open while Big Mike and other firefighters ran into the buildings in full gear. So he saved his butt that day, but lost the respect and trust of firefighters, Department wide. A bit later he was reported to have ‘decided’ to retire, but the truth was, “no one would follow him into a fire”.

In the business world, here’s a great example:

A CPG company was having forecasting issues. Big issues. Process goods factories shut down, in entirety, at least once per year, and in the case of some refineries twice per year, for maintenance and seasonal adjustments. Raw materials, packaging, additives and flavoring all have long lead times. Get the 6-month forecast wrong and you either can’t produce all you can sell, or you’re looking for broom closets to store pallets of unsold product.

A serious ‘we mean business’ sales meeting was the only solution. Everyone flies to HQ. Only the cafeteria had enough chairs and tables. Not nice talk. Warehouses full of lawnmower oil, not saleable in the off-season. True, no spoilage problem, but they had a lot of cash tied up for at least 5 months and they missed their Revenue guidance so the Board and Wall Street were, let’s call it, “curious”. Nodding heads, background hums of total agreement and general acknowledgement of Management’s wisdom. Seems everything was awesome; time for a nice group dinner.

Until Angie stood up. The admin from a mid-west sales office started with “I can’t take this anymore” and let it rip. Professionally, passionately and from the heart talking of getting orders entered into the systems without the sales reps review, of being pressured into meeting Monthly and Quarterly forecasts no matter what at the expense of accurately planning with the customer, of shipping merchandise and then processing credits into unrelated systems so “no one really knows how much product actually sticks”. That last part was not accurate – the warehouse knew because they had to make room for it in both directions, but they weren’t in the loop on this issue.

Suddenly, it was the Firehouse Kitchen Table. Specific incidents, both venting and seeking underlying reasons, flew across the room. Not just one or two rabble rousers. All ranks were lost and they got down to identifying and solving the real problems. Hours later they parted a better team than they ever had been, ready to do this again, albeit under happier circumstances. PS – going forward, forecasts were dead-on, everyone made more money and the cafeteria remained dedicated to haute cuisine.

The takeawayEach company, from a few employees sitting around a table to a cafeteria full, has to build a Firehouse Kitchen Table culture where during regular meetings we bypass ranks and get honest feedback – both to win as individuals and as a team. Like any other form of relationship, unless there is open and honest communications, it can never work in the long term. And that means no reprisals or lasting hard feeling or grudges. Just don’t wait until there’s a fire.

Rich Eichen is the Founder and a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached atrichard.eichen@growroe.com

Do what the FDNY Does – Part 1

Do what the FDNY does
Part 1

As a 9/11 survivor, I felt compelled to pay it forward and so became a Board member of a charity helping injured firefighters receive the care they and their families needed. As a result, I got to meet some very brave people, and learned how the FDNY teaches new firefighters this very complex subject. Their training methods are applicable to our worlds as well.

Trainee firefighters go to the FDNY training center at ‘The Rock’ where they are thoroughly drilled in technique and science. World class training in a top facility, with highly experienced instructors. Upon graduation, these newbie’s are sent to various fire houses, where the old-timers (with apologies to my friends) take them under their wings and teach them, hands-on, how to read a fire, how to put it out, protect themselves and their fellow firefighters, etc. Experience is passed down from ‘generation’ to ‘generation’. A Probie (Probationary firefighter) is seen as a training exercise and not a full firefighter.

In our business world, the applicable lesson is to always formally attach a new customer-facing employee to a proven old-hand. From my experience, it takes a minimum of 6 months hands-on experience for a new employee to be credible in front of a customer. Adjust your revenue and profitability projections accordingly, as well as your recruiting cycle.

Let me provide two examples from the business world:

A Consumer Packaged Goods company, selling mainly to the Big Box stores, had a large national field sales force with high turnover. Due to custom, lack of systems , and inexperience, their standard response to a customer question was frequently “I’ll get back to you”. Not much value-add here. When they teamed new reps with highly experienced reps, customer satisfaction indicators nearly doubled.

A technology company won the rights to implement a sophisticated software package. They trained their staff and sold first engagements. Customers soon complained that they were paying market rates for inexperienced personnel. Rookie mistakes were made, causing delays and embarrassment. They should have figured out how to provide a 50/50 mix between deeply experienced personnel and their own newly trained employees.

Rule of thumb – make sure each account has at least 50% highly-trained and deeply experienced staff in front of the customer or your competitor will. Avoid the temptation to sell like crazy and have more simultaneous situations than you can 50% staff with high-experienced employees. If you maintain the 50% ratio, you can bring in sufficient ‘Probies’ to grow your business while maintaining customer satisfaction.

Rich Eichen is the Founder and a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached atrichard.eichen@growroe.com

The Truth about Trust – the cheap and direct key to team building

The Truth about Trust – The cheap and direct key to team building 

definition (www. websters.com)
A verified or indisputable fact, proposition, principal, reality

definition ( www. websters.com)
Rely or depend on; to believe

Why are team building exercises minimally effective and sometime downright annoying? They all assume the people you work with understand and then state reality and that inter-personnel issues are creating friction. No, I’m not calling people liars, because you’ll deal with that in real-time. But, let me give you two examples:

A sophisticated IT group was under-delivering based on the estimates of the Applications Development Director. Strains emerged because the other IT Directors, CIO and CEO did not trust these overly optimistic estimates based on true history. A team building consultant was brought in who created communications-contracts between these seemingly warring Directors. The truth about trust was that the Development Director was weak on estimating and fixing communications did not address that. Establishing a Project Management Office reporting to the CIO did.

A new Sales team repeatedly blew their forecasts, which the President, Board and Financial Analysts did not appreciate. They held a last-chance group forecasting meeting using a new sales methodology. Since they did not understand the reality of why and how someone buys their product, the new consensus was just as good as any other guess even if it was in a new format. They were not mis-representing; they just had no concept of the reality in their sales cycle and this loss of truth killed off trust.

The key takeaway of this blog entry is:

You cannot build a team solely by communicating or cooperating better – every interaction has to reinforce trust by being based on truth. In virtually all cases, the lack of truth is based on a need for knowledge or skills. Treat the causes and you’ll get better results, cheaper and faster. Team building exercises are great – once everyone has truth and trust.

PS – you may need an objective outsider to identify the causes, but you can almost certainly implement the fixes by yourselves. Save the money; get better results.

Rich Eichen is the Founder and a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached atrichard.eichen@growroe.com

There is one Operational Improvement factor that you can control – and it’s FREE

There is one Operational Improvement factor that you can control and that will either make or break your company.

Groups, from families to companies large and small, all develop a series of behaviors and permissions that allows for trust and predictability, called a Social Contract. Every Management decision, no matter how small, is viewed by your employees through this lens. How will you know when you’ve breached this agreement? You’ll know virtually immediately and all the team building sessions in the world will not overcome it – only consistent tangible actions can – hopefully. Or, look at it this way –if your employees are so gullible or stupid that you can pull the wool over their eyes, would you want them involved with your customers?

Those departments most affected will simply vote with their feet. Cut the sales plan and watch your best producers ‘check-out’ and then leave (and take their best producing buddies). Say you can’t pay a bonus one year and then drive up in a new company car and you can see the snickers. Treat staff like they are beasts of burden while proclaiming they are your best assets and feel the smirks. Have a strategy du jour and watch people nod in seeming agreement.

Costs to you? Think of it this way – if you have 25 employees in an affected department or division and it takes 60 days for a new employee to settle in, then in a 33% employee turnover scenario, you’ll waste over 2 years worth of productive time (and dollars) PER YEAR.

Lost business? I was shadowing a sales call for a client where their customer (a senior manager in a Global Investment Bank) said to my client’s sales rep, “if you stay for 6 months, then I’ll learn your name”. Ouch.

What are the earliest leading indicators that your workforce feels the Social Contract was broken? There are 3:

Excessive discounts.
A company was acquired by a larger competitor and the employees all expected to be fired or at least have to share their accounts with the new parent’s reps. The company sale had been performed in total secrecy and the Social Contract was obviously broken the moment the announcement hit the Wall Street Journal (which is how the employees found out they were being sold). The result – the acquiring company inherited a series of last-minute large orders averaging 92% discounts off list.

Growing Days Sales Outstanding
Happy customers pay their bills. Are your support and A/R personnel being rude or curt with your customers? Are your sales reps getting ready to bolt and stuffing the channel with merchandise to pump up sales and their commissions while offering bizarre credit terms? Do you have a quality problem and the customer feels they have to manage your repairing it at their site?

Employee Turnover
Every company has some turnover. Actually, you can say that a company without some turnover is stagnant and subject to groupthink. If you have turnover approaching 33% in any job area, it should be easy to see if new employees go through the following 6 steps if the Social Contract is broken:

  • Initial Laughing (they think it’s just some jerky fellow employees)
  • Denial (there must be more to it I don’t get)
  • Anger (how did that headhunter do this to me?)
  • Internal Negotiating (how can I make this work?)
  • Checking Out (‘whatever’)
  • Flight

Rich Eichen is the Founder and a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached atrichard.eichen@growroe.com

When you have to see the world for the way it really is

Denying the Outside Truth at your own risk

Just about every company I have ever run or advised had one thing in common –it took an Outside Truth which could not be denied to force them to action.

Their cultures have a groupthink orientation and everyone who wishes to remain in good graces will adhere to the accepted ‘internal religion’ until an undeniable outside event takes place, such as a new competitor. An example:

A Sunbelt bank thought its local contacts, comfortable feel and long standing in the community was all they needed to keep their private banking customers. Service was fine, and the Bank was doing well, unless you looked at the leading indicator of Trust Prospects Lost to Competitors, which is hard to calculate.

After years of good local growth through their home state and surrounding states, a migration of retiring babyboomers started to move in. These people went into the retail branches, opened accounts with some pretty big initial deposits and that was that –the Trust Bank was never notified that a new high net worth individual had moved in and was a new customer entitled to the very best service. The internal groupthink was that the new customer would call the Trust Bank because they just knew it was the only thing to do.

Then the OUTSIDE TRUTH occurred:
A national competitor, much more aggressive, entered the market to mine this new customer base.

The end result was a scramble to link the Retail and Trust Banks (2 separate legal and operating entities) into a common push for new Trust customers. Unfortunately, they had let a major predator into their barnyard and within 24 months, the Bank was sold. If they had not waited for the Outside Truth of the new competitor, this could have been avoided.


Rich Eichen is the Founder and a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached atrichard.eichen@growroe.com