Last night over dinner, a friend of mine was enthusiastically filling me in on the progress her company is making. New this, new that. Invest here, invest there. Getting listened to, doing stuff, making stuff happen.
I like this person. One one hand I appreciate her enthusiasm. It’s good.
On the other hand, I believe she is naively misguided….and (surprise) I told her so.
Two questions. First, how are sales? She knew the answer. Marginally down.
Second: How is profitability? I knew the answer. It’s not what this organization has ever worried about.
I pointed out to her, that (in my humble opinion) spending lots of money, in fact more money than ever before to tread water or even sink below it is not progress. It’s failure. Raw, ego centered botching of business basics. Profitability, of which I’m sure there’s still some, is in the toilet.
It’s the kind of predictable failure that enables not-so-sharp people like me to go ahead and predict the future. What she doesn’t see….but soon will….is inevitable.
There will be lay-offs. By Christmas, January at the latest. Crazy perks, like bringing your neighbours pet to the Children’s groundhog day party will be gone. Other expenses, like travel and meetings which this company overdoes on a grand scale will be cut back to nothing. Then there will be the inevitable search for ever-greater efficiencies. Why does a company with only a limited number of products need a head office of 100 people? There will be more lay-offs.
Then one day, the investors in this company will really wake up. Where is the value in this organization? In it’s product? In it’s back office and administrative capabilities? It’s distribution network? Probably not. In fact, it’s probably no where.
So now what? There’s nothing like being stuck in an investment. Sure the lifestyle is good…and f’ing around, playing manager is fun. But no business is an island. When the recognition sets in that there is no value in the business and none has been created despite millions and millions in investments, then the fighting between the investors and finger-pointing on the management team will be spectacular.
Trying to be helpful, I suggested to my friend that given her capability, enthusiasm and desire to grow, she should start trying to influence a more thoughtful, business-like direction for the organization before the inevitable happens.
You know, she’s good. I think she gets it. I don’t think she’ll be one of the ones laid off.