Category: Business Management

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COVID-19, Management, and the Future to Come

As I sit in my office, on March 16 I will have the odd honor of celebrating one year of doing business submerged in the corona virus crisis. I cannot speak openly about business matters of the company I work for, but I can say we correctly managed and sailed the murky waters of the disaster executing the right moves. We learned many lessons from the outcome. The one lesson I hold now dear is that this is not over, and that many people incorrectly think it is. 

The world will move on (the world always does.) But the world moving on is not synonymous with the world returning to normal. Things will not go back to normal, and those incapable of assimilating this notion are doomed to fail or fall short of their expectations. 

For starters, the COVID-19 is probably one of many black swan events sure to occur in the nearby future. The virus surprised everyone but epidemiologists around the world who had been warning about such an event for almost a decade now. The world has now over seven billion people. The number is putting stress on our environment, and surely we passed the line of how many is the right number of people to inhabit the land long ago. It’s only natural that under the actual scenario of climate change, overpopulation, depletion of resources, and general attitude to kick the problems forward for some future generation that might care, natural black events such as disease, pandemics, weather phenomena, and the like will play havoc with our lifestyle.

For those young enough to start a life, I would suggest sticking to a minimalistic one. There are plenty of videos on the web on how a minimalistic approach can lead to great results. I am guilty of not following that same advice, which further complicates my decision making process. For those like me sooner to retire than not, it represents a great opportunity to cut our losses short and retire to a more modest, but in no way less fulfilling life. For those stuck in the middle, it gets more complicated. 

The economies of Latin America won’t pick speed for the next five years or so. Sure, big corporations will make the most of the situation and regain lost market share and revenue fast. But big corporations are not the other 99% of Latin America. Big corporations are not even the other 99% of workers and executives working for them, many who are either furloughed, lost their jobs, or are taking on more work and less pay just to keep afloat. 

The demand for anything is less. The demand for food is less. The demand for leisure is less. The demand for clothes, shoes, computers, furniture, everything is less. Yes, some things sold-out. PS5 and new XBox sold-out. But I wonder how many units were produced versus the pandemic forecast. I have reduced inventories far below the recommended level, adjusted for pandemics and then some, to balance imperfections between demand and supply. I have seen a similar pattern in iPhone 12 except for the mini, which Apple produced in quantities to cater the voices of thousands of consumers who then rushed to buy normal and plus sizes, proving consumer sentiment analysis is anything but a fickle art even when using sophisticated AI techniques.

In the future access to credit will be restricted, but I would warn anyone to use leverage as a way to kickstart a business. If the crisis taught us anything, it is that leveraged operations were the first to fall. In the early beginning of the pandemic everyone agreed cash flow was king and that cash accounts were the vehicle to survival. For those employed or freelancing, I would recommend going out of their way to save 12 months (yes, twelve, not eight as everyone else has proposed before) of expenditure for emergency funds. It is a large sum, none the less one that might be in need given the extension of the pandemic and future black events. 

That is a perfect segway for my next thought: any business should start without leverage and be capable of monthly flows with return on investment from day one. That is a nearly impossible objective, yet a lot of people survived thanks to rapidly shifting focus, and assessing a new operations model.This is not just small business but what I call survival business: the girl who I hardly know but uses her small, low-cost Kiah Picanto to deliver food on weekends from restaurants at U$2.50 a trip, or the service person for A/C units who was furloughed but kept a good database of customers who like me resorted to tertiary assistance in order to maintain the apartment infrastructure going while in lockdown. They made do with whatever they had to generate cash flow immediately, maybe not enough, but certainly more than nothing. 

Can you make your business model black swan proof? Can anyone make their business model resilient enough to guarantee operations despite weather events, pandemics, wars, disruption of services such as web, wireless, etc.? I doubt anyone can, but at least we can take measures to minimize the effect. I think retail has a long way to go before expansion of brick and mortar, and probably expansion of brick and mortar should be ditched altogether for a fully digital model. The bad thing about this is retail is a good contractor of people, people who do not make much but certainly make more than unemployed ones. Digital business only hires at the top (programmers and engineers who have the job cut out for them and will probably thrive) and the bottom (low wage fulfillment center workers toiling in a warehouse dispatching boxes, or the drivers that accompany the movement.)

Ghost  kitchens probably fared better than restaurants in the pandemic, and I know this to be a fact in Panama. Ghost kitchens however lost revenue to the hundreds or thousands of people furloughed or fired, who turned to the Internet, social media, and their friends, offering food service of all kinds: desserts, sandwiches, pizzas, and many more amenities of the cuisine world. The consumer is probably used to delivery and staying at home and will shy away from restaurants for a long time. Some might not even have the money to do so even if they wanted. I suspect young people will leave the house for bars and food before anyone else, since they are the ones to sustain the least chance of contagion in the next months before full vaccination, and, well, they are young.

The labor climate is tricky. Thousands of young people will enter the workforce soon and compete for whatever little positions are left in a world of economic recession fiercely. People such as myself will have to fight peers thirty years younger, who are willing to work more hours for a fraction of the cost. Companies will push for such a change, inviting older executives to move from salaried to freelance work. Many will revolt at the idea but I would indicate this is not a bad move, since those with significant skills, knowledge and experience will make a substantial living working less hours and securing a place in their companies because others actually need them. It creates a necessity of service without the actual friction of competing inside the corporate structure. 

Inside corporations, and outside for those working on their own, the trinity of credit, risk, and cash flow will become the foundation stone of operations. We can no longer bear the uncertainty of risk unless there is sufficient free cash flow to fund such activities without major impacts to one’s financial position. We can no longer bear credit to leverage operations that could go months on end without revenue and thus be asphyxiated by debt. And we can no longer bear operations that don’t return frequent inflows of cash to sustain a non-leveraged operation desperate for sources of income. 

In resume, avoiding credit, bootstrapping for low-risk business models that quickly generate sources of revenue is the way of the next five years. And should black swan events become more prevalent, the way for the next decade or more. 

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Book Review – Never Split the Difference

I first saw the book Never Split the Difference by Chris Voss in a bookstore in Houston International Airport. I was skeptical because the author, Chris Voss, is a former FBI negotiator and many of the techniques used are similar to hostage negotiation. I decided to pass only to get it as a gift from the company president.

I want to be honest and tell you the book is worth reading since you will find many interesting negotiation techniques such as mirroring, labeling, and others to guide you in your dealing efforts. These are all valid but rely on the premise that no deal is better than a bad deal. That is seldom a choice in business. If I have to recount the number of times any deal was preferable to not having cash flow the next morning, or reducing aged inventory to make space for newer merchandise, it would certainly exceed the number of pages in the book.

That is not to say many of the techniques will not help push and promote a deal just as well as in a hostage situation. Leaving the nefast results of a hostage deal gone wrong, there are two specific areas where Chris Voss coaching will come very handy. The first one is the pursuit of low acquisition prices, for example in M&A or purchase of a property. Everyone knows the empiric value of buy low, sell high, but getting there is much more complicated than thought, so the advice on the book comes handy at keeping the other party engaged and actively interested in keeping the deal alive. The second area is in countering extreme anchoring follies of other bare-knuckles negotiator who might try the same ideas in extracting the lowest possible price from some asset or service you happen to offer.

Chris Voss’s style is fun and straight forward, and comes off as the big FBI guy who has put the life on the line of duty while saving lives will laugh at the pressures of corporate life wheeling and dealing. But again, corporate life is not that simple either. The premise of no deal being better than a bad deal is a luxury many of us cannot simply afford when moving a business forward (low season sales anyone?) The founding stone of all these techniques might be counter to what is best for business, so use them but learn to maintain a pragmatic approach to your negotiation goals.

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Análisis Comparativo de Modelos de Planificación Estratégica

Introducción

La planificación estratégica es el proceso dentro de una organización para definir su estrategia o dirección, tomando decisiones en el mejor uso de sus recursos con miras de alcanzar sus objetivos. Si bien el mundo académico ha llegado a una definición mas o menos homogénea, las metodologías que los diferentes autores han desarrollado no lo son tanto. ¿Qué motiva a los diferentes autores a crear diferentes metodologías de planificación estratégica? ¿Es que acaso existen diferentes formas de enfocar el proceso estratégico, hay ventajas de una metodología a la otra, o existen factores culturales que llevan a un gerente u organización a la adopción de una en particular? En este ensayo analizamos de forma breve diferentes metodologías de planificación estratégica para concluir si en sus diferencias existe alguna superior o si al igual que los estilos gerenciales, cada una satisface un enfoque distinto de gerencia.

Desarrollo

Dentro del desarrollo de este ensayo, estudiamos a fondo cuatro modelos diferentes de planificación estratégica: el modelo de George Steiner, el modelo de Philip Kotler, el modelo de Hoshin Kanri y el modelo de Idalberto Chiavenato.

Cada uno de estos modelos ha sido analizado a fondo por sus propios autores. Al contrastarlos entre si buscamos verificar si existe alguna ventaja de uno sobre los demás o un ambiente organizacional que se preste para alguna en particular.

El Modelo de Planificación Estratégica de George Steiner

Geroge Steiner en su libro trata de no dar una definición estricta de planificación estratégica (Steiner, G., 1997). Pero la idea central queda firmemente anclada en el concepto del proceso de esclarecer en la organización los goles y planes para alcanzarlos fundamentados en la toma de decisión sobre lineamientos cuidadosamente preconcebidos: no se toman decisiones fortuitas o deliberadas.

George Steiner – The Art of Criticism

Steiner fundamente su concepción de la planificación estratégica en cuatro pilares:

  1. El futuro de las decisiones presentes: la planificación estratégica revisa la cadena de consecuencias de las tomas de decisiones corrientes y cómo estas impactan en el futuro de la organización.
  2. Proceso: la planificación estratégica es un proceso que comienza con la determinación de objetivos y continúa con el diseño de planes estratégicos y tácticos para alcanzarlos.
  3. Filosofía: la planificación estratégica es una filosofía empresarial basada en la toma de decisiones a través de la contemplación del futuro.
  4. Estructuras: la planificación estratégica encadena en su estructura tres tipos de planes: estratégicos, tácticos y operativos.

Steiner es un autor siempre preocupado por la relación presente-futuro. La planificación estratégica no es toma de decisiones porque la planificación estratégica es a futuro mientras que la toma de decisiones es solo posible en el presente, tiene carácter inmediato.

El Modelo de Planificación Estratégica de Philip Kotler

Philip Kotler es un creyente de la planificación estratégica pero en vez de preocuparse por las implicaciones futuras de causa y efecto en la toma de decisiones presentes, se enfoca en el concepto de marketing estratégico. Kotler define (Kotler, P., 2009) “… el concepto del marketing sostiene que la clave para alcanzar los objetivos de la organización consisten en identificar las necesidades y deseos del público objetivo y entregar las satisfacciones deseadas de una forma más efectiva y eficiente que la competencia… “.

Philip Kotler – The 4 P’s of Marketing

Kotler permanece subjetivo al definir planificación estratégica como “… el proceso de desarrollo y mantenimiento de un ajuste viable entre los objetivos y recursos de la compañía, y las cambiantes oportunidades del mercado … el objetivo … consiste en modelar y reestruturar las áreas del negocio y productos de la compañía de forma que den beneficios y crecimientos satisfactorios.” (Kotler, P., 2009, pg. 35)

Desde este punto en adelante, Kotler hace un giro de Steiner y prefiere asesorar la base de la planificación estratégica en base a las unidades estratégicas de negocio y la cartera de productos de la organización, ambos conceptos básicos de la gerencia de producto de corporaciones orientadas al mercadeo.

El Modelo de Planificación Estratégica de Hoshin Kanri

El modelo de Hoshin Kanri fue diseñado en Japón como técnica de despliegue de políticas para ser utilizadas a la par de los métodos de TQM (Total Quality Management). De hecho en Japón se describe Hoshin Kanri como la cola que unió el TQM como una metodología completa en vez de una colección de herramientas de medición de calidad (Akao, Y., 1991). El término en si está compuesto por hoshin (metal brillante, brújula o apuntar a la dirección) y kanri (administración o control). Sin embargo la mejor traducción literal es despliegue de políticas.

Una definición resumida de Hoshin Kanri nos la sugiere Tennant y Roberts (Tennant, R. y Roberts, P. 2001) de la Universidad de Warwick, quienes lo describen como la materialización del propósito del gerente a través de:

  • Ampliación de las habilidades de la organización y abanderamiento de sus capacidades para la mejora continua.
  • Despliegue de una política unificada y plan, basados en la hoja de ruta de la gerencia y establecido bajo un mismo eslogan o creencia.
  • Utilización de los recursos principales para la administración (gente, materias, dinero) y optimización común de la calidad, volumen, costo y tiempos.

Los principios de planificación de Hoshin Kanri están formulados alrededor de lo que los clientes de la organización desearan en cinco y diez años, y el conocimiento de que se debe hacer para alcanzar y exceder la expectativas de los mismos. Los elementos principales son:

  • Visión de Cinco Años: incluye un plan borrador por el presidente y el grupo ejecutivo de la organización.
  • Plan Anual: este plan incluye la selección de actividades basadas en su potencial de alcanzar los goles deseados.
  • Despliegue a Departamentos: Esto incluye la selección de planes, medios y metas. Incluye las áreas claves de implementación y consideraciones de cómo alcanzar los objetivos del plan.
  • Implementación Detallada: esta implementación del plan de despliegue se enfoca más que nada en planes de contingencia.
  • Diagnostico Mensual: un análisis mensual de los factores que ayudaron o atrasaron el progreso de las actividades y aprendizaje de la organización al respecto.
  • Diagnostico Anual del Presidente: un reporte anual sobre el progreso del desarrollo del plan y las actividades de la organización.

El uso de Hoshin Kanri como metodología de planificación depende mucho de la administración funcional cruzada, con comunicación continua entre departamentos y divisiones en todos los niveles que aseguren el compromiso de todos y cada uno de los colaboradores de la empresa.

El Modelo de Planificación Estratégica de Idalberto Chiavenato

Quizás uno de los factores determinantes del modelo de planificación estratégico que propone el académico Brasileño Idalberto Chiavenato es la síntesis de varios modelos en uno más universal y editado, con un fuerte enfoque al diagnóstico previo a la formulación de planes (Chiavenato, I, y Sapiro, A., 2011).

Prof. Idalberto Chiavenato

Para Chiavenato, la planificación estratégica tiene cuatro fases diferenciadas, a saber:

  1. La definición de la misión, visión, valores y objetivos (también conocido como la fase filosófica)
  2. El diagnóstico interno de la organización (fortalezas y debilidades)
  3. El diagnóstico externo de la organización (oportunidades y amenazas)
  4. Formulación de estrategias (métodos y medios)

La metodología del plan estratégico a su vez consta de cuatro elementos claves: las áreas estratégicas claves, los factores claves del éxito, los objetivos estratégicos y los planes tácticos. Visualizar este esquema de proceso de planificación estratégico es más sencillo utilizando la división del autor en partes:

Parte Filosófica | Misión, visión, principios y valores
Parte Analítica | Análisis FODA
Parte Estratégica | Diseño de estrategias
Parte Operativa | Programas específicos u operativos

Dentro de este modelo la revisión del plan estratégico es una tarea crucial. Esta revisión obliga al gerente a cuestionar cada paso del proceso con mira a mantener el plan actualizado y enfocado:

  • Mantener la misión, visión y estrategias frescas
  • Asegurarse que la lista de actividades apoyen la estrategia
  • Identificar las circunstancias que modifican las estrategias
  • Enfocarse en los planes que demandan acción inmediata
  • Asegurar la ejecución efectiva y oportuna
  • Identificar información actualizada para incluirla en el plan

Conclusión

Al analizar y evaluar cada uno de los modelos, es difícil aseverar que alguno tiene una ventaja que lo distinga por encima de sus pares, sino que cada uno tiene identidad propia que lo hace más propicio para cierto tipo de organización y/o estilo gerencial.

  • El modelo de Steiner tiene un fuerte carácter filosófico en su concepción de enfoque hacia la relación presente-futuro. Visto desde esta óptica, organizaciones con procesos o goles a largo plazo, como por ejemplo holdings corporativos o bancos, pudieran preferir este modelo donde el peso de las decisiones presente tiene implicaciones graves en el futuro de la organización. Esto es crítico en organizaciones como el Canal de Panamá, donde los proyectos se miden no en años sino de décadas o más.
  • El modelo de Kotler es fácil de catalogar como aquel de mejor calce en una organización comercial. Su enfoque en las necesidades latentes del consumidor y/o cliente, y su metodología orientada hacia el manejo de unidades estratégicas de negocio y carteras de producto simplifican ubicarlo en empresas de mercadeo como Procter & Gambler.
  • El modelo de Hoshin Kanri nació como un modelo integrador de las metodologías de Calidad Total. Por su concepción orientada a la producción y manufactura de calidad, tiene un calce afín a las organizaciones de producción y manufactura, donde los ingenieros tienen la responsabilidad de planificar como gerentes a la vez. El mejor ejemplo de esto es Toyota, donde Hoshin Kanri es ampliamente utilizado.
  • El modelo de Chiavenato es un modelo más general, cuyo diseño de análisis recurrente y proceso limpio y directo lo hagan más proclive a ser aplicado en organizaciones mixtas. Su hincapié en la revisión constante de los planes estratégicos y enfoque en atacar los planes que demanden acción inmediata le da una leve ventaja en las empresas como bancos o empresas de tecnología donde el entorno en muy dinámico.

Concluimos así que todos nuestros modelos de planificación estratégica son extremadamente útiles y completos, y que en el conocimiento de cada uno de ellos el gerente moderno cuenta con una amplia gama de metodologías de planificación a su alcance inmediato, listos para ser aplicados en el marco, industria y contexto adecuado.

Referencias Bibliográficas

  1. Steiner, G. (1997) Strategic Planning: What Every Manager Must Know. New York, USA. Free Press Publishings.
  2. Kotler, P. (2009) Dirección del Marketing 12a Edición. New Jersey, USA. Prentice Hall.
  3. Chiavenato, I. y Sapiro, A. (2011) Planeación Estratégica: Fundamento y Aplicaciones 2da Edición. New York, USA. McGraw Hill.
  4. Akao, Y. (1991) Hoshin Kanri: Policy Development for Successful TQM. Cambridge, USA. Productivity Press
  5. Tennant, C. y Roberts, P. (2011) Honshin Kanri: A Tool for Policy Deployment. Knowledge and Process Management. Volumen 8, número 4, pp 262-269
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The Drawbacks of Sales Overloading

There is a danger inherent to sales teams and salespeople everywhere: overloading. Overloading is evil, but its effects, despite usually short-term, do not seem to affect sales teams, who will soon oversell and overload the market with despicable effect.

Overload happens whenever you sell more than you originally forecasted. I know many forecasts are weak and prone to change according to the dynamics of the market. But in many other cases, forecasts are easy to project and analyze. Accounts with a long-standing history and little change in the trade channel are good candidates for very accurate forecasting. If you did your math right and set good targets, you should hit those targets more often than not and come very close to the median of above and below the forecast target. But if you happen to surpass your target by large, let’s say anything above 10%, then you might be a victim of overloading.

I speak from experience. I have seen many times how my sales team surpassed its targets by 40% or more, only to miss them the next month (usually by the same amount, thus losing any advantage gained.) Sales managers should be very dubious of easy numbers. If you met your target and blew it out by the 20th of the month, you either had a weak forecast or most likely you are overloading the market.

Overloading has two principal problems. The first one is that since the channel can only absorb so much product if you push too much of it you are only choking the channel and promoting a bottleneck. I know brands can gain market share thus expanding sales, but market share gains come to a point at the time, sometimes even slower, thus the overload effect is usually not concomitant of market share gains. In simple words, what you sold extra this month is what your customer won’t sell this month, so he or she won’t buy next month.

The second negative effect is when overload hits retail. Too much product at the same time and sales will not grow proportionally. All of the sudden your customer will detect they have too much of your product on hand, but since sell-through will be pretty much the same, turnover of goods on hand will drop. When the product moves slowly from the warehouse to the shelves retailers have to start discounting or promoting it in some way, both measures that consume resources, thus reducing their profits on your products. Retailers will not think about the overload effect (they know it, they just won’t think about that.) Retailers will think your product is moving slow and its profits are reducing, and adjust their buy long-term. This is hurtful since your forecast will now be negatively affected.

Some will say that once the normal flow of product, or even reduced flow, start to hit the market, retailers will have to refresh their inventories more often and will start buying more. This is a truth, but it’s also a truth that consumers will buy from your competitor if they cannot find your product more often than not. Lost sales to inventory adjustments from overloading usually don’t come back, again, negating any effects from the initial rush of sales abundance.

So next time your sales team is about to throw a party for that 74% above budget sales result, think twice. Companies do get lucky from time to time, but history tends to repeat itself, and most likely you are the next victim of the overload effect, something that will come back to haunt you soon.

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Brute Force Sales

I used to believe that any sales problem can usually be solved – if not best solved – by brute force sales strategies. Programmers call brute force algorithm a very general problem-solving technique that consists of systematically enumerating all possible candidates for the solution and checking whether each candidate satisfies the problem’s statement.

A brute-force algorithm to find the divisors of a natural number n would enumerate all integers from 1 to the square root of n, and check whether each of them divides n without remainder. A brute-force approach for the eight queens puzzle would examine all possible arrangements of 8 pieces on the 64-square chessboard, and, for each arrangement, check whether each (queen) piece can attack any other.

While a brute-force search is simple to implement, and will always find a solution if it exists, its cost is proportional to the number of candidate solutions – which in many practical problems tends to grow very quickly as the size of the problem increases. Therefore, brute-force search is typically used when the problem size is limited, or when there are problem-specific heuristics that can be used to reduce the set of candidate solutions to a manageable size. The method is also used when the simplicity of implementation is more important than speed.

In real life sales, brute force is usually used not when the simplicity of implementation matters more than speed or when the problem is constrained to few variables, but rather when urgency or lack of resources occur. Do you have too many boxes of product ACME in the warehouse? Brute force sales through discounting will do the trick. Did you run out of marketing budget for product X? Brute force sales with your oldest, best sales rep will do the trick? Is this market down in sales and you need a quick pick me up? Brute force sales with your sales manager and watch the numbers grow!

Or not…

I am beginning to see that brute force sales are – just as in programming – a limited tool for your sales strategy. It works in a limited set of occasions when short-term results will help alleviate short-term problems. But it will never help streamline structural problems of your overall sales or company strategy.

I have seen it many times. Companies believe they can push for ever higher sales targets pushing promotions, discounting, or just sending their best sales reps to lunch with accounts and execute sales through sheer courage. It works the first or second time, but managers begin to puzzle after the third time why the diminishing returns. The surprise is that managers keep insisting on brute force sales despite its ineffectiveness long-term.

Do not get me wrong, I know that salespeople need to continuously push for sales. I do it all the time, and I use brute force sales now and then. The case is I know how and when to use it in an effective way. The brute sales force will not solve a major category or product problem. If your product became obsolete brute sales force will not help. No matter how hard you push, you will never be able to sell 3 ½ inch diskettes. No matter how hard you try, some brands lose their positioning and appeal and the target consumer moves on to another. Then it becomes a marketing problem, an innovation problem, an advertising problem, but not one that can be solved thru brute force. It’s not about attacking the symptoms, but rather truly overcoming the illness.