Consulting for Small to Medium size Industrial Products companies
by Warren Martin, Founder on April 22nd, 2019

Going after additional market share is not always best for the bottom line of your business!
You are in the annual budget planning cycle and you have submitted your well thought out and detailed budget for the following year. Your boss congratulates you and your team on a job well done. One month later, your boss calls you in his office for a discussion on the budget... Turns out that Corporate needs 10% more to meet their promises to the equity markets (publicly traded company) which have been allocated down through the various business units. You object, but your boss tells you to just take more market share since you only have 55% according to your strategic plan numbers. If you have done your strategic planning well and know your customer base, you will be able to counter the directive to “pursue more market share.” You demonstrate that by doing so, it will in fact reduce the total profit delivered by your business at the end of the next year. In reality, your analysis shows you will need to spend more money to gain market share than you will receive in profit obtained from these additional sales. Or, you must price the product so low to get the share that you can't even cover variable costs (reducing enterprise value). You present this to your boss who is somewhat annoyed and looking to you for a solution. Again, here is where good strategic planning comes in. You remind him of the capital expenditure for a new product that will get you into a new and profitable market space as identified in your strategic plan. Your solution, "Let's move it to the front and put all resources on it to see if we can complete it quickly." "Perhaps moving forward this initiative can get us the incremental sales that will allow us to meet the additional profit number." Your boss smiles and...

by Warren Martin, Founder on April 22nd, 2019


Working Capital Management is something that throughout my career as an executive I found was done inadequately to poorly in every business with which I was involved. I believe there were two reasons for poor performance in this area. The first was a simple lack of understanding as to how to improve it, and why it was necessary. The second was simply a lack of interest on the part of Senior Management to play an active, hands on role in driving improvement.
Working capital improvement is accomplished by driving down inventory and accounts receivable (DSO), and increasing payables days. The “how” is something that through experience, I became good at executing. The “why” component is very simple but not really apparent to many. Reduction in working capital increases free cash flow. In all businesses, Cash is King! Extra cash can be used to fund new product development, needed capital expenditures, acquisitions, debt repayment, and dividend increase and share repurchases for public companies.
Senior management talked about working capital and driving cash flow, but never really wanted to get involved…. until I did! If it is important to you, your involvement in the process will illustrate to others in the company that “this must really be important if he or she is a part of the process.”  
A good starting goal is 10% ratio of working capital/revenue for manufacturers of industrial and capital goods products. A cash conversion ratio of 100% (EBITDA/ operational free cash), not considering the financing or investment component of free cash calculation, is considered best practice.
Is your business meeting these goals? Let 15 Consulting assist you in improving your process to achieve best practice targets in this important area of your business.
 

by Warren Martin, Founder on February 11th, 2018

​Arrogance is defined as displaying a sense of overbearing self-worth or self-importance. It is marked by or arises from a feeling or assumption of one’s superiority toward others. I felt compelled to write about this based on some recent occurrences in my own professional life as well as what happened to General Electric.
I recently was trying to help a potential client with ideas on how to grow his business (per his request). This client claimed a 90+ percent market share and wanted to go into adjacent space. I was somewhat doubtful of the market share claim being that his revenue was less than $5m in a pretty big space. I did some internet work through Google and found a number of much larger competitors as I suspected. My recommendation was to do a comprehensive market study and find out how big the market was, where, who had it, and why his company did not. These answers could lead the potential client to what might be attempted within the realm of the client’s capabilities to grow his business. The client rejected the notion and commented that “he knew the business far better than I or anyone else would ever know.”
I dealt with General Electric on a couple of acquisitions of two of their small businesses in the 90’s. To say that they typified the definition of arrogance was an understatement. They were GE and they knew the best way to do things. During the Immelt tenure, they bought businesses at the peak and sold their own businesses at the bottom. They were GE, of course, and would make it all work. As we now know, it did NOT work and unfortunately, one of America’s greatest industrial conglomerates is on the verge of breaking up as a result.
So, what is to be learned from these two examples? I believe that both demonstrate great examples of arrogance. In my view, arrogance, whether individual or corporate, is perhaps the most dangerous element contributing to failure of successful people, businesses, sports franchises and etc.
Leaders in today’s business world need to be aware of arrogance creeping into their franchise, either personally or collectively. Arrogance is a destroyer of excellence and success. If you find the beginnings of it, stomp it out immediately! The solution is to always be open to new ideas of how things might be done better, even if you think you know the right way. You just never know when or where the next great idea might come from unless you are open to looking/listening for it. Never assume that you or your franchise has all of the answers. The best leaders/companies assume the opposite and actually seek out other ways of doing things better. “The humble shall be exalted.”
Warren Martin
Founder, 15 Consulting

by Warren Martin, Founder on January 6th, 2018

​Execution: Why most fail, and the keys to successfully executing

You see it in business, sports, and daily life all the time. You hear or read, “we just didn’t execute.” Why?? In this short page, I will put forth my own beliefs as to why execution is not successful and the factors involved as well as what can be done to increase the probability of executing successfully.
Firstly, goals are often not reality based, too complex to understand, or not articulated in a manner that can be understood and absorbed. I have seen this in business and in sports (football) lead to a lack of execution resulting in failure. Develop goals that are grounded in realism. Clearly articulate the goals and expectations of the role each participant plays in successfully executing these goals. Go over and over the goals and roles until you are sure that all involved understand!
Define milestones and timelines for achievement. Many times I have seen execution fail because the people involved did not know when certain tasks were expected to be completed. Therefore, other priorities took up their time and… expected execution simply did not happen. Establish clear timelines and milestones for completion of tasks needed to execute the goal. Communicate these clearly, directly, and deliberately.
Lack of follow-up often leads to execution failure. The leader(s) simply ASSUME all is going well. When the timeline for completion arrives and tasks are not completed for one reason or another, it is too late. The leader(s) have only themselves to blame. Assume nothing! Follow-up on a regular basis to ensure tasks are being completed in the expected time allotted. Intervene if the projects are not on schedule and do what it takes to get them on schedule.
Hold people accountable. Unfortunately, many leaders and the people that work for them are satisfied with average. As a result, excuses for not completing tasks on-time, and thus not executing are tolerated. If execution is to succeed, everyone needs to accomplish their role. Leaders need to have the courage to make necessary personnel changes when lack of performance by people is getting in the way of successful execution.
Reward good performers. When people do what is required to enable successful execution, reward them. This can come in the way of a sincere thank you, either face-to face or letter. The best way to express your gratitude is in the way of compensation. It is extremely important to tie compensation to successful execution.
Finally, a pet peeve of mine is simply just a lack of leadership. Many leaders just accept average performance as the norm. If execution fails, they just write it off as “we tried our best” and move on. That attitude is the biggest reason why execution fails. The leaders simply don’t have the will or drive to MAKE IT HAPPEN. Leadership must DRIVE execution with a passion. Even if all of the above-mentioned factors are in place, without strong leaders who will accept nothing less than full execution, execution will likely end in failure. If you are reading this and wondering if it is you I am talking about here, the answer is yes. It is on you to MAKE IT HAPPEN. As it is said; “If it is going to be, it is up to me.”

Warren Martin
Founder – 15 Consulting

by Warren Martin, Founder on December 28th, 2017

​How many of you business leaders out there ever discuss, let alone have, a disaster recovery plan? My experience tells me that very few is the correct answer. Have you ever considered what would happen to your business if fire, flood, hurricane, or tornado destroyed the facility. What would you do if your major supplier suddenly was unable to serve your needs? Every business should prepare for the worst and pray for the best. A good disaster recovery plan should enable your business to be back serving customers with no more than a day or two interruption. One designated person to talk to media, an offsite location for IT data back-up, back-up locations/businesses prepared to produce your product/service. Secondary suppliers ready to be turned on in case your primary supplier is down. Discuss this with your team and develop a step by step plan in case the worst happens. If it does, your customers, shareholders, and employees will be grateful that you did.

by Warren Martin, Founder on December 27th, 2017

In today's business world in order to win on a consistent basis, you must do three things extremely well. They are innovation, speed to market, and product performance/quality. If you beat your competition in each of these categories on a regular basis, you will thrive and survive. If you can do these things AND be great at customer service, you will dominate.
Regarding innovation, your goals should be to have a company mindset that constant innovation is part of the culture and DNA of the company. Innovation should yield new products that help your client base better meet their own mission. They should beat your competition in performance and speed from design concept to market launch.

As far as speed to market, attaining competitive advantage here is critical in today's business climate. It usually involves process excellence and optimum efficiency from design through delivery. Sometimes, competitive velocity advantage is attained through on-line sales and quick distribution (Amazon model).

Finally, the product you create, manufacture, and deliver to your client must perform as specified EVERYTIME, at least as well as your competition, hopefully better. Otherwise the strides you made in innovation and velocity are for naught.

One last word on great customer service. Have you ever had trouble reaching your supplier by phone, had poor or less than expected product performance, met with resistance when asking for help, had trouble with returns? I'm sure the answer is "Yes." We all have. What I remember most is the times that I have received the opposite and have had a great customer service experience. Usually, these people have me as their customer for life! The opposite is true for the bad/difficult customer service experience.

I'm sure anyone reading this blog is saying to themselves, sure, but how do I achieve all this in my business. Just get in touch with me and I can help you with achieving excellence in all of these areas.

​Warren Martin

by Warren Martin, Founder on November 21st, 2013

LEAPPS – The formula for winning in business in the 21st century
My acronym, LEAPPS, for winning in the global business world in the 21st century stands for leadership, people, process, and strategy. In my view, companies cannot achieve sustained success without excelling in all of these areas.
Leadership – A company must have leaders who are passionate about winning and create an environment that enables their people to succeed. Leadership establishes a culture that seeks to be best in class and settles for nothing less. Leaders reward good performance and are not people who seek credit for themselves. Leaders have the ability to plan for the future while managing the present. They are often described as visionary. Most of all, leaders have courage. They will make the hard decisions when needed and be wise enough to listen to the opinions of others. Their integrity is beyond reproach.
People – No matter how good the product, the strategy, the delivery, or the quality may be, a company will not win consistently in the 21st global business world without great people. Such people are among the best at their craft, passionate about their work, want desperately for their company to win, and espouse the values of their company on a daily basis. The top priority of company leadership should be to hire, develop, lead, and fill their organization with these people. The antithesis of this requires leaders to cull the opposite of these type people from the organization.
Process – Having good people and leaders without process excellence usually leads to mediocrity or even failure. Leadership and people in the company must commit to constantly improving processes in all functions. Great processes, combined with leadership and people, usually will lead to sector best performance in the short term.
Strategy – Sustainable excellence in today’s business world requires a strategic plan that is both visionary and functional. Visionary without the ability to execute is worthless. On the other hand, an executable strategic plan that misses the ability to define future opportunities, as well as potential threats, most often leads the company down an unsustainable path. Thus, the strategy that will yield long term excellence and consistently good results combines vision as well as execution.
 
In conclusion, if you want sustainable sector best performance for your enterprise, make sure that your business LEAPPS into the future.
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by Warren Martin, Founder on October 24th, 2013

Safety First


The most important priority for any operations executive is the safety of the people that work for him/her. This blog will deal with some of the best practices and lessons that I have learned over the years.
First of all, executives often push safety programs for the wrong reasons. These may be such things as lower rates, meeting corporate targets, or staying out of trouble with regulatory bodies, among many others. The primary reason should only and always be the welfare of the employees working at the business.
Your company should set up a safety committee that meets on a monthly basis which the top executive of the business attends. There should be a structured agenda which is followed and any issues, accidents, or problems should be a priority of every attendee to clear up. If there have been accident(s) since the last meeting, the investigative report should be reviewed at the meeting and any corrective action should be agreed on and taken to prevent a reoccurrence.
Weekly “toolbox” meetings should also occur on the shop floor in each area. At these meetings, safety issues should be discussed and any employee concerns addressed. Secondly, make sure that you have in place a near miss program. Encourage all near misses to be reported so that the incident can be evaluated and corrective action and prevention measures can then be put in place. The worst thing you can do here is to put some punitive measure in place that discourages the reporting of near misses. Thirdly, make safety very visual throughout the office and shop. Employees should see constant reminders of safety practices, performance, and monitoring.
It is crucial to measure everything! As usual in business, there are world class standards that your business should be striving to achieve. Primarily, no lost time accidents! Secondly, the recordable/incident rate should be less than 2. That is, two minor incidents per 100 employees in a full year.
Celebrate when you hit milestones such as 1 year without a LTA, etc.
Finally, here are just a few things that you should look for in your safety program. Make sure that all employees wear the proper PPE. Visitors should be made aware of the safety rules before entering the plant. Subcontract workers must sign a document defining proper safety procedures when working in the plant. Material handling is often the most dangerous activity in the plant. Train personnel in proper lifting techniques. All fork truck drivers must be licensed. Inspect regularly, all chains, slings, and cranes by an outside source. Watch for all fall hazards and pinch points in the plant. Protect against any areas where an employee can become dangerously trapped. Finally, bring in an outside inspector to act as another set of eyes to look for potential safety hazards.
Finally, it is up to everyone to ensure the health and safety of his/her fellow employees. If unsafe work practices are witnessed, they should be reported to the proper authority in the plant. Workers that are habitually unsafe should be removed from the company. As an executive, make sure that it is your top priority to send your employees back home in the same condition in which they came to work!

by Warren Martin, Founder on September 23rd, 2013

Excellent Integration key to acquisition success


Poorly done integration of an acquired company virtually guarantees disappointment, if not outright failure of the results expected by the acquiring company. Why do many companies get this wrong? Some of the reasons and solutions can be found in the following paragraphs.
I believe that the very first thing an acquiring company must do before concluding the purchase of another firm is to have a very detailed integration plan. As importantly, there must be a very strong leader of the integration with an intelligent and committed team working under the leader. The integration plan must cover every aspect of the acquisition. It is critical that the team be incented to integrate the acquisition with a very clear vision of the defined synergies in mind. Every function of the business must be addressed in the integration with a team member responsible. Timelines and milestones for completion must be defined. It is the integration team leader’s job to ensure that all milestones and completion times for tasks are met. Delays often result in difficult or unrecoverable failures that directly impact expected performance results. Regular team meetings should be held to monitor integration plan task completion and address problems. For the first several months after closing, these meetings should be weekly. After the team leader sees that integration is proceeding smoothly, meetings can go to monthly until integration is deemed completed.
The second important factor in a successful integration of an acquisition is getting the acquiring company’s leadership in place in the top executive positions such as CEO and CFO immediately. This should be planned and communicated before closing. If the acquired company’s leadership is leaving, proper severance packages should be negotiated so that the acquired company’s people know that the acquirer is fair and values people. Then leadership’s top job in the first three months after closing is to drive the new culture into the DNA of the acquired company. They must also make key personnel decisions on who will stay and who will need to move on to pursue other interests. A goal to get this done in the first 90 days should be undertaken to minimize the disruption and get on with the task of driving the primary synergies.
There are many other factors in a successful integration of an acquired company; however in my view, these are the two most important.

by Warren Martin, Founder on September 12th, 2013

Pay Attention To The Warning Signs


There are many acquisitions done across the business landscape, but few ever really achieve the expected results at the time of the purchase. This blog attempts to provide the reader with some fundamental characteristics an acquisition should have to go forward, as well as some warning signs that deem reconsideration on moving forward.

Why Do Acquisitions Often Fail?
  • The buyer pays too much. This is probably the most common reason. Historical multiples should be followed closely. If there is a departure from these to the high side, the reasons should be compelling.
  • Poor due diligence is done prior to closing by the buyer. This happens frequently in the buyer’s eagerness to close a deal. Proper and exhaustive due diligence is an absolute if an acquisition stands a chance of success. The buyer must not only know the opportunities, but also more importantly, the liabilities and risks of the company that it is buying. Good due diligence often can prevent a disastrous consequence for the buyer.
  • Culture conflict between the buyer and seller organizations can destroy all the intended synergies. The buyer must recognize this in the diligence process and ascertain if it can be overcome.
  • Overstated synergies by the buyer are another prevalent reason for failure. Investors are expecting one set of results coming from the acquisition and are being greatly disappointed when they get the reality.
  • Things are not going well in the buying company and senior leadership grasps for a “game changer.” This almost never works!

A Few “Must Haves” For A Successful Acquisition.
  • Do not overpay unless there are extremely compelling reasons to do so.
  • Will the acquisition provide synergies that yield new products, better service, market opportunities, geographical expansion opportunities, operational capacity, financial leverage, intellectual property of value? If not, why acquire the business? Beware of buying market share. This often fails because of a changing environment.
  • Perform exhaustive due diligence so that you know what you are buying.
  • Have a detailed integration plan that is executed by your best people.
  • Put your leadership in place immediately so that the acquired company knows how things will be done and what to expect.
  • These are just a few of the reasons that acquisitions fail and a few requirements for success.