Business Engagement

This will be the first of what I expect will be many posts on this subject. What do I mean by business engagement? In the big picture, to me it means everything from market and customer analysis through pricing and ultimately contractual terms and conditions. Identifying where and how the company wants to sell products, the products it wants to sell, how it will sell these, and how it will price them.

However, for today, I will focus on pricing. I do this because, in an intensive turnaround, the bigger strategic questions of market analysis, customers, etc., are not the first priority. Right now, the company is pricing product for sale. Right now, the company is agreeing to contractual terms and conditions. Right now, little if anything can be done about orders already booked but something can be done about those in process and to be booked. Right now is not the time to figure out if the company has the right long term strategic focus.

Coming out of bankruptcy, the company likely already has a hole in the order book. It already has customers that are leery of the company's future and certainly leery of the new ownership group. The customer base may already be upset about having to support the company through the bankruptcy period. So, right now is not the time to add to the concerns of the customer base about potential changes in long term strategic issues.

However, ensuring that new orders are booked that will enhance profitability should be an immediate concern. This will likely require a changed signature of the company in its face to the customer. This is already enough of a change to deal with, without introducing questions of longer term significance.

Certainly, communicate with your customers. Let them know where you are and your intentions. These intentions can certainly include the idea that you will take some time to develop long term plans that fit the company's and the customer's expectations and needs. My experience is that customers will allow for this time and will work with the company and new ownership -- especially if they already have provided support through a bankruptcy.

The immediate focus internally regarding business engagement should be pricing and contractual terms. Understand the company's practices today. Understand the models, formulas, templates -- if they have any. Unfortunately, I have found that the extent of involvement in this subject doesn't extend beyond the sales office -- little support from finance or legal. Little involvement from engineering that will develop the product or from operations that must deliver it. Little idea of the validity of the cost structures that will be employed to achieve success -- and no dialogue with operations and engineering to communicate where the cost must be in order to win a project or secure a sale.

Generally, what is lacking is a process and communication toward a common understanding and objective; involvement from all aspects of the organization that will have the responsibility to deliver; assurance that the cost structures are built with discipline. This discipline can include the identification of challenges that must be met in order to achieve targets. But without discipline in the process, how can one be sure of the required challenges?

I am not suggesting that the company, as the supplier, can dictate terms and prices to a customer that is buying in a competitive market. What I am suggesting is that the facts must be unearthed and open to the entire organization such that the organization is fully aware of where it is and the challenges that lie in front of it. Every obligation of the company should be taken with a clear understanding of what is required to succeed in fulfilling the obligation. This can only be done with well-grounded facts and data, and open dialogue among all constituents. I am also suggesting that bad deals must be recognized as such, and if the company cannot find ways to turn these into a good opportunity then the company must have the discipline to say no.

It is virtually certain, when I come into a new situation, that the entire business engagement process is contained on a salesman's desk. Yes, he will say it is coordinated with finance and operations, but when pressed, it turns out the cost data is five years old, or operations was asked for input only three iterations ago -- and the salesman didn't go back when the initial numbers were too high.

Pricing and contractual terms, along with a focus on cash, is one of the first areas that must be wrestled to the ground. Stop making the hole deeper by disallowing more bad projects and bad sales into the funnel.