Abandonment

"There is nothing as difficult and as expensive, but also nothing as futile, as trying to keep a corpse from stinking." Peter F. Drucker

Action: Stop squandering resources on obsolete businesses (functions) and free up your capable people to take advantage of new opportunities. Peter F. Drucker

This is maybe somewhat redundant or additional to yesterday's Blog. We spoke yesterday of measurement. Certainly the stench of a dead or dying business should be an unmistakable indicator. Alas, the people closest to it, often can't smell it any more. Or they feel fear of being shoved into the grave with the business. Or they don't act for a myriad of other reasons (as you will see below). This aspect is worth looking at a little closer.

Likely some of your best people will endure the longest in a hopeless situation, and that is a "doubling" of the loss. Not only is the business no longer contributing, but the time spent on it is a waste of talent. It is a "triple" loss when you add to the mix what the talented people could achieve in a new opportunity. A "quadrupling" if you add in the further damage of incompetent people staying in the organization. The loss is "quintupled" as the internal shut down costs increase with time. By keeping the cadaver "upright", you lose five times, at least. Kind of the opposite dynamic of customer loyalty (of that later).

And it's not just dead businesses, it's often the useless/ossifying functions. Those things that you still do, which others do much better. Those which add to the complexity and slowness of the business. Extracting those useless, ineffective, complexity creating functions which have often become part of the "social power structure", especially at headquarters is very difficult, but very necessary.

Example 1: The, extremely effective CEO of one of the world's largest, most successful, global engineering/construction companies knew that he had to do less at headquarters, more effectively (faster). Especially when it came to acquisition and integration of purchased companies. He tried for long enough (how long do you let things fester?) to get his most senior team to analyze and act on the tough decisions to jettison the stinking corpses, and they could not do it. Finally, he added a "sixth" cost... Me and my team... to get it done. Believe me when I tell you that the stinking dead linger even in the best run organizations, and they are tough to get rid of. Doing the right thing will test the "integrity" of the leadership (see Blog #1).

Example 2: The most startling/pronounced example I have come across in my 30 years was the stench of the entire economy of the former German Democratic Republic. Specifically one of its "showcase" manufacturers, SKET (Schwermaschinenbau Kombinat Ernst Thaehlman.. yeah yeah I know). I went into "the East" in the very early '90's to supposedly turn around one of the COMECON's largest producers of Rolling Mills, and large industrial machinery (Metal bangers extraordinaire). I can't possibly relate all of the experiences we had over that crazy year, but this one was really putrid. The most clear indicator of "death" came on the very first day my colleague Dr. Norbert Wittemann and I visited the main site of SKET in Magdeburg. The plant manager took us on a tour. By that time I had become pretty good at "walk through" data gathering: How many hard hats standing up doing nothing? How much inventory sitting idle in front of machining centers? How many different manufacturing processes are on the floor creating complexity? I was certainly starting to build a picture, BUT, I hadn't seen anything yet... until we walked over to a high-rise, metal-clad warehouse, where we were "proudly" shown huge stacks of unfinished metal furniture (chairs, desks, cabinets), which were described as "our production quota for the consumer product division" since 1988. None had ever been sold! A whole warehouse full of dead bodies. Even with that evidence, it took us over 6 Months to proclaim the "patient" dead, and help some of the best talent to take over parts of the shops which were actually viable start-ups with real potential customers. As I said this was one of the worst I've seen, and you may not be able to relate to it. The big point is: Norbert and I should have shut the thing down on the first day, when we saw, touched and "smelled" the corpses.

When do you know that a business is dead? "Polly!!!.. Polly Parrot!!!!... Wake up!!! ...Polly!!!. Shop keeper, If you hadn't nailed her to the perch, she'd be pushin' up daisies" Mr. Praline aka John Cleese of Monty Python from the famous Norwegian Blue skit.