F, as in… Focusing on uncertainty
By Frédéric Sos - November 20th 2019
"If it doesn't snow, we won't be selling skis"
July 1991… I'm just a young, fresh-faced consultant.
It's already hot shortly after daybreak in the small hotel near Grenoble where this ski manufacturer's marketing team decided to hold a day and a half retreat, at the urging of the company's Managing Director, to address Executive Committee concerns. The company had taken a walloping from a two-year sales slump, most readily explained apparently by the lack of snowfall during the winters of 1989-90 and 1990-91.
The distribution network closely tapped by the sales team was planning very cautiously for this third season. Upon initiating the dialogue, these 9 star skiers (accomplished athletes, some of whom had won competitions) were far from being optimistic. The welcome breakfast served poolside was not enough to spark their enthusiasm. The first morning was somewhat disappointing, especially for me the host. More specifically, come lunchtime, my efforts to raise the team's spirits had been in vain, as individual members were simply repeating the extent of the difficulties they faced and those that lie on the horizon.
Lunch helped loosen their tongues, and once the afternoon session got underway, I got singled out by a participant, with: "Listen Frédéric, you need to understand one thing: "if it does snow, we'll have an outstanding season and be in slightly better shape; if not, we won't be selling any skis and our situation will become even more dire!".
Discouraged by such fatalism, I was determined to lift this cloud that threatened seminar success and decided to play the role of a teaser. A quick approximation valued the cost of this "sales force", written off as impotent, at 2 million francs. I then turned to the Managing Director and, with a bit of insistence, asked him whether he was prepared to immediately make a decision that would bring in enough to practically clear last year's debts. He was keen, at which point I proposed that right then and there he dismiss all staff seated at the table.
The silence that followed was lengthy, uneasy and unsettling. The level of stupefaction was palpable. My eyes remained riveted on the Managing Director, who alternatively glanced back at me and then at his team members (he would later confess to wondering which member would grab him first and string him up). In taking advantage of the destabilized atmosphere, I forwarded my explanation: "If it doesn't snow, you recognized yourselves that there would be nothing you could do to prevent your situation from worsening; you're too beholden to this company to impose upon it the dead weight accounted for by your employees, as well as by the charges and fees you generate. If snow falls, you're convinced that sales will pick up. All that's needed is to satisfy demand, which seems to me rather straightforward judging from the volume of your inventory; so, cutting the company's costs that pay for all of you would serve to restore its economic performance much more quickly… to a point perhaps of recouping the last two years of losses". This time, the reaction was immediate and my Manager mentee, now coping with an irate band of onlookers, replied with a "it's not that simple Frédéric, sure we'll be able to generate some efficiencies this year!".
The seminar only really got underway at that time, and the afternoon session turned out to be particularly dynamic and constructive. The team actually invented a delivery system, dedicated to preseason sales with special conditions and a robust, cleverly-designed return policy, resulting in the company's first-ever deliveries as of the end of August. Call it luck, but that year the snow began falling very early on and, even though the weather over the rest of the season remained pretty unpredictable, the company was already restocking when its competitors were rolling out their initial deliveries. The basics were in place and working: embrace the opportunity for success when uncertainty strikes.
This company's top managers had become boxed in to thinking that their performance was solely contingent upon the amount of snowfall! Now, I know it would be foolish to deny the role of meteorology on demand, but by making it their single efficiency criterion, they were effectively suppressing their combativity, their impact and with it their morale.
This tendency to tie a company's fate to a single factor is commonplace. Here I'm reminded of that French entity of a Swedish automaker staking its future on the success of a new model, or that energy firm relying upon the impact created by a whole new generation of equipment, or that laboratory speculating on a widespread winter bug to boost sales of a targeted state-of-the-art product, or that real estate developer basing its entire strategy on the adoption of zero-interest loans, or that IT services company betting on the emergence of a new "one-stop" technology. A corporate culture emphasizing justification and difficulty in assuming responsibilities will focus more heavily on the externalities, which remain beyond one's control: weather, political risk, digitalization demands, or the sudden imposition of regulatory obligations.
Among the management teams I've had the privilege to observe, those that most successfully dissociated company performance from externality, no matter the potential impact, quite often proved to be the most "agile" and ultimately the most efficient in managing constraints and crises. The most constructive concern focused not just on pondering "how to succeed in spite of", but on exploring "how to take full advantage of".