January 2017: In This Issue
Welcome to the January issue of A New Leaf! The beginning of each year provides all leaders with the opportunity to be reflective on their prior year performance. This thoughtful process is a necessary aspect of every leader's self development and upcoming year's planning. Included below are key questions to assist you with this important self evaluative exercise.
See Change Management has been fortunate to again work with a number of business owners and teams in effecting substantive change during 2016. Activities have included structuring and executing ownership exit strategies, leadership/executive coaching at multiple levels in numerous organizations, spearheading planning activities in a number of settings and engaging in a major restructuring as summarized in the Case Study below. Our holistic model combining key elements of LEADERSHIP, CULTURE and PLANNING continues to be affirmed by the positive results of those we partner with.
As James Kouzes, the renowned leadership researcher and author states, "the best leaders are the best learners". During 2016, my personal learning journey extended to establishing relationships with two of the foremost coaches in the industry, Marshall Goldsmith and John Maxwell. The certifications obtained from these alliances have served to enhance those tools already in place to effect leadership development and behavioral change. As you contemplate your goals for 2017, challenge yourself as to what you are committed to "learning" in the upcoming year….and then make sure it happens!
Best of luck in transforming yourself and your organization in 2017!
Mike
2016 See Change Management (SCM) Transformation Case Study:
Initial Company Challenges:
At the time of this early 2016 engagement, the organization was facing the following challenges:
*2nd generation leadership was struggling with the management of the business following the passing of the family patriarch 18 months earlier. No succession plan had been in place. Limited organizational and reporting structure existed. No 2016 financial plan had been prepared.
*Extreme concentration existed with a single global customer who was suffering from a worldwide downturn in business for the last three years
*Two years of successive poor financial performance had led to failed financial covenants in both years. Financial waivers had not been granted by its bank. Prior year financial statements had not been issued by the Company's accounting firm. First quarter results were unprofitable. The early 2016 bank position was a strong reluctance to renew its credit facilities as part of the upcoming second quarter review
*Numerous external advisors had been engaged over the prior three years, all of whom had guided the owners towards a wind down of the business
Immediate Additional Challenges:
Upon becoming engaged, SCM identified and quantified a material prior year financial irregularity. Recognition of this irregularity eliminated a significant portion of the Company's borrowing base collateral.
Following communication of this adjustment to the bank, the Company was placed in the Special Assets group. During its initial meeting, Special Assets management informed the Company that the upcoming payroll would likely be its last.
SCM Recovery Activities and Results:
All stakeholders were immediately mobilized to address the Company's liquidity concerns. A cost alignment plan was formalized. An equipment appraisal was secured as a means of establishing additional collateral to be used as support for its borrowing base. Significant interim concessions were obtained from principal stakeholders. External assets were sold generating capital contributions from the owners. A 2016 financial plan supporting profitability and positive cash flow was formalized.
Based upon these restructuring activities, the bank agreed to a renewal of the Company's credit line in April 2016. The Company subsequently pursued and successfully obtained over $500k of equipment financing from the City and the local Economic Development Corporation. This was critical in updating key equipment as a means of enhancing its competitiveness with its primary customer. Following below is summary of 2016 operating performance compared to the prior year arising from the transformation activities:
| ($ in 000's) | ||
| 2016 | 2015 | |
| Sales $: | $19,000 | $20,000 |
| Gross Margin $: | $3,000 | $1,000 |
| Gross margin %: | 16% | 5% |
| Pretax Profit (Loss): | $1,100 | $(900) |
| Net Debt Reduction: | $(3,000) | $(300) |
In addition to the financial improvement above, a new management structure was put in place resulting in the hiring or realignment of current team members to the following roles: Plant Manager, Quality Manager, Engineering Manager, Quotation/Cost Manager, Sales Manager and Production Control Manager.
2016 represented a transformative year for the Company. As with all businesses, significant financial and operational challenges remain. Management is in the process of establishing 2017 operating goals and action plans to ensure these challenges are successfully addressed.
While SCM was side by side with the management team throughout the process, the credit for the 2016 turnaround lies squarely with the management team as they fully embraced the need for change and assumed responsibility for making it happen. They should be congratulated for rising to the challenge and becoming the change that was needed. We all look forward to a constructive and challenging 2017.
2016/2017 Reflective Planning Questions:
While not intended to be fully inclusive, the questions below are offered as a basis for your thoughtful self assessment. Best of luck in being candid with yourself in reflecting on your 2016 performance as a springboard for establishing your 2017 goals.
The two professional goals I am most proud of accomplishing in 2016 are:
The two personal goals I am most proud of accomplishing in 2016 are:
The two most important professional goals I wish I had accomplished in 2016 are:
I was unsuccessful in accomplishing these goals because:
The two most important personal goals I wish I had accomplished in 2016 are:
I was unsuccessful in accomplishing these goals because:
What did I learn as a result of my 2016 experiences?
Do I still love and am I passionate about what I am doing?
The top three professional goals I would like to accomplish in 2017 are:
The top three personal goals I would like to accomplish in 2017 are:
The most important behavioral change I need to address in 2017 is:
On a 1-5 scale (1-completely unfulfilled, 5-completely fulfilled), the following is my rating of my overall personal and professional satisfaction in 2016:
Personal:
Professional:
I plan to increase these levels of satisfaction rating in 2017 by performing the following activities:
Personal:
Professional:
The leadership development activities I am committed to in 2017 include:
