Friends, we are kicking off 2020 energized by all the big wins to come after completing an excellent 2019 adventure. Ok, ok, 2019 is seeming a bit passé now that we’re in a brand new shiny decade (still letting that set in), but before we get into upcoming plans, will still need a quick recap and note of appreciation for your hard work and support.
First, a big thanks to our team of elite executives we call RED Team Ready, who performed in amazing engagements throughout 2019 in the US and Europe. We are nothing without your trust, your encouragement, and your daily support. Truly.
With a go-to team of brilliant leaders eager to jump in at a moment’s notice, we have an unmatched capability that makes up the essence of RED, Rapid Executive Deployment. While you hail from around the world and your skills and abilities are each unique, we can sum up your excellence with a common and shared passion and unstoppable energy to give your best in everything you do. We know you love the people and organizations you lead, and cannot say thank you enough for teaming up with us.
Our world, our universe is characterized by constant change. Stars are born and die, storms transform the landscape, nations rise and fall, people change over time. In the business world economies grow and collapse, business models evolve, industries transform and even the Top 100 list of leading companies completely changes in a matter of a few years.
But sometimes the speed and scope of change is extremely rapid, its consequences unforeseeable and unpredictable. This makes planning and decision making highly risky because it is so difficult to see what the future holds. “Everybody has a plan,” said championship boxer Mike Tyson, “until they get punched in the face.”
To help explain the often sudden, fluid, rapidly evolving and dynamic forces of change – that “punch in the face” — the U.S. Army War College created the term V.U.C.A. to describe and ultimately deal with highly dynamic, shifting and challenging situations.
At the beginning of my career, I was involved in a lot of startups. I was starting with nothing – zero, zilch — so I’ve always had a lot of respect for entrepreneurs because you start from an idea and not much else. To be honest, in the beginning, I somewhat discounted my friends who were inheriting family businesses. When they’ve been at it for generations, I thought ‘well, how hard can this be?’
Thing is, the older I get, the more I’ve gotten to know various family offices and family run businesses and now, I’ve come to realize that running a family business is harder. Much harder. It’s a legacy that in some ways can be so overwhelming to continue to build, and not screw up, whereas with startups you have the luxury of low or no expectations.
Compare that with the legacy/obligation/burden handed to the second, third, or fourth generation, and there can be incredible pressure on the business and family to do well. And it’s even harder now, when no business – no sector – is immune to the kind of disruption, to the kind of disintermediation that technology has introduced into every industry and market. Nothing can be taken for granted, regardless of longevity.
“CFOs are retiring at the fastest pace in at least a decade,” reports a Wall Street Journal article citing that the increasing complexity of the role and for public CFOs, the lure to cash out shares in a hot stock market, make it even more attractive to make the change. An analysis of 12 years of regulatory filings by Audit Analytics for The Wall Street Journal showed that “one in six executives who left the CFO position at a U.S. public company in 2018 did so to retire, the highest share since at least 2007.”
In addition to many baby boomers simply being of retirement age, CFOs are facing new demands professionally. Historically, a CFO’s workload was focused on compliance, best accounting practices, and financial reporting. As the financial world grapples to evolve at an accelerated rate with the onslaught of digital transformation, so does a CFO’s job description. Today CFOs are faced with even more complex responsibilities that include making strategic decisions about investments, understanding and leveraging technology to streamline accounting practices, and developing financial disaster recovery plans to deter risk and cybercrime.
“Write down a change you would like to make in an organization that you are currently with…or change in the marketplace. Any kind. It can be a big change, it could be a small change – strategic, tactical, something you want people to start doing, something you want people to stop doing,” says Jeff Leitner as he looks around a room filled with CEOs, CFOs, CIOs, and other C-Suite executives at this year’s InterimExecs’ RED Team meeting. He continues “You’re change is absolutely, almost certainly going to fail. It’s not your fault. It has nothing to do with your particular genius – has nothing to do with your insights. Changes fail. They almost always fail.”
Jeff Leitner knows a thing or two about change and innovation. He spent the last 20 years improving organizations from the US State Department to NASA, Starbucks, Panera, and the Dalai Lama Center for Peace. In a world where innovation and disruption is key, the question is why does change rarely stick in organizations, markets, and society? Jeff has dedicated years to studying why change fails and in his most recent speaking circuit, is sharing what leaders can do to be more effective in leading change initiatives.
U.S. Banks are growing concerned — if not alarmed — and are reevaluating just how lax they are when it comes to handing out commercial loans. With sour loans on the rise, that’s not a pretty picture for companies that rely too much on credit lines or commercial loans. This is, in essence, a self-imposed business risk, as they are more dependent and susceptible to any fluctuations that occur.
A recent Financial Times article reported that non-performing loans increased by 20% at ten large commercial lenders. How much of an impact is that on the bank industry exactly? According to the Financial Times analyst, that’s a hefty $1.6B in the first quarter alone, a significant shift from credit quality since 2016, an era where the dust had settled from crashes and subsequent defaults on loans. The future started looking bright. Lending portfolios and credit quality began to improve.
With merely three years of positive momentum, fast forward to present day and all that has changed and not for the better. “Since most businesses utilize a credit line or other commercial loans, any slowdown will impact all types of commercial lenders – banks, asset-based lenders and factors,” said Yoav Cohen, an interim executive who has spearheaded eight turnarounds and liquidations, each one successful in paying off secured lenders in full. Cohen has seen it all, serving in roles as varied as interim CFO, COO, and a Chief Restructuring Officer.
In the tsunami of digital transformation, it has dawned on boards that disruptive technologies pose not only a great opportunity, but also bring inherent risks. New technologies bring great promise to help businesses grow, improve efficiencies, and seize new markets. On the other hand, when an organization decides to embrace new technologies, they will come face-to-face with new business models and regulations that are unlike what they have ever seen before.
Boards may not be fully equipped to face the onslaught and speed at which new technologies are infiltrating the business sector. In fact, according to the 2018–2019 NACD Private Company Governance Survey, 80% of directors say that boards need to expand their knowledge of the challenges and risks of emerging technologies.
As an executive who has spent his career growing companies, taking companies public, and successfully selling businesses, Charlie Shalvoy says the first thing he does when he parachutes into a company is begin with an assessment. Whether the company is venture-capital backed or private, or in manufacturing, energy, semiconductors, or industrial equipment, figuring out the current state of operations is always the first step. Charlie divides the stages an interim executive goes through in taking action in a new company into four phases:
Phase 1: Taking Hold (90 Days)
When a company seeks to expand into new markets or scale operations to support current and future growth, Charlie takes on a role ranging from Interim CEO to Executive Chairman, where he coaches and serves alongside the CEO and management team. He describes that in the taking hold phase, an interim executive identifies what’s broken – even fast growing companies need repairs. What is getting in the way? What is causing distress?
Many nonprofit organizations and foundations struggle with limited capacity and do not have the luxury of time or surplus of funding to reflect on how each task at hand contributes to their overall strategy. Nonprofit employees and board members can be overwhelmed by day-to-day activities, making it a challenge to take an introspective step back and improve strategic management.
Unfortunately, this puts up blinders as to where holes exist in their systems and plans. This can also lead to problems in accountability, a weak strategic plan, not to mention the staff stretched thin.
Nonprofit organizations typically are faced with several business challenges from inefficiencies in operations and deficiencies in program planning. Other issues nonprofits face are limited resources, and aligning their culture with clear, measurable business goals.
It’s not always black and white whether a company is running optimally or properly positioned for a healthy future. In a rapidly changing world, company owners and management teams should consistently ask themselves how they should expand their business or improve business performance — even if their company financial performance looks great at the time.
We often get calls from companies looking for an executive when trouble hits. Usually, it becomes apparent that the signs of peril ahead occurred much earlier. It’s common that months or even years prior to a business crisis, there are critical areas that aren’t identified or measured. Unfortunately, this blind eye to crucial business factors is the very culprit that contributes to the demise of a business’ future performance.