“Ship everything. Make it happen.” The head of operations hung up the phone, where the CEO had just given the directive.
With less than a month to go before the quarter end, the company was nowhere near its shipment revenue goal. Customer demand for a new, more expensive, hardware line was far below plan and customers were clamoring for the familiar, less expensive products.
That product cutover plan had been dictated by the CEO, in the face of protests by both sales and marketing, who did not believe the new product was differentiated enough to justify its higher price. The CEO compelled the sales team to get out there and book orders for the new stuff and decline orders for the old.
The CEO seemed to believe the practice of ruthlessly pushing for impossible goals was one of his top leadership responsibilities.
When it was clear they weren’t going to hit the quarter’s revenue target selling the new product, the CEO relented and gave permission to take orders for and ship as much of the older product as possible.
The company’s manufacturing partner was not surprised, quickly expediting materials and ramping up to 24×7 production. Trucks were made ready for scores of finished good shipments all the way up to the quarter end cut-off.
They did hit the quarter’s revenue goal – just barely – and paid serious expedite and overtime charges. Credibility with customers also took a hit.
As in most places, the culture at this company started with the CEO. This was top-down, ask-no-questions, fear-based management, and this is just one example of how culture cost the company money every quarter.
It would have been more profitable to make aggressive but realistic plans and execute them. Customers would have respected them more as well.
That new way of planning would require the CEO to trust his team and their expertise. He would have to recalibrate what pushing hard enough looks like.
His team would need to get comfortable speaking the truth after years of being berated for saying things the CEO didn’t want to hear, and take full responsibility instead of being able to blame him for any poor results.
In 30+ years in supply chain and manufacturing, I’ve seen versions of this scenario play out over and over, and I imagine you have too, in your own world.
This is why I’m convinced that culture is not a theoretical nice-to-have.
Culture is a way to make money more predictably and have a good time doing it.
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