After five years as CFO Gary was promoted to CEO of the logistics company, whose long term competitive edge was document and parcel delivery within 24 hours nationwide to capital cities and within two days to regional cities.
They were being challenged now by growing electronic document transmission and democratised parcel delivery.
Gary’s charter was to adapt or change the business model to improve profitability.
As former CFO and very familiar with the business, he felt that he could analyse the business cost structure and discover early savings, then he’d consider restructuring to cope with the diminished document delivery.
He’d look at parcel delivery after that.
After eight months, Gary had fine-tuned efficiency to increase profit by 0.5%. He forecast that would grow to nearly 3% by end of the financial year.
He was now preparing to resize (downwards) the document courier capability.
At that point his board chair called him into her office.
“You are telling me that you are going to reduce our fleet and let go drivers who have been with us for years? What will that cost us?’ she asked.
Gary said “My current thinking is that we’ll have tax write-offs regarding some of the fleet and I plan to let the drivers become independent owner drivers with the remainder of the vehicles we let go, to reduce our redundancy payout exposure. I’m still examining the details and should have specifics ready for board approval within the fortnight.”
“Gary, what other options have you considered?” the chair asked.
“None as yet” responded Gary.
Gary never got the chance to execute any plan. He was rapidly replaced by the former chief marketing officer.
The new CEO, Mark, kept the cost efficiency plan that Gary had commenced.
In order to discover what best to do with those savings, Mark consulted with all his staff using of Open Space Technology facilitation and conducted market research to verify the facilitated findings.
The company diversified the same percentage of the document delivery business that Gary had wanted to divest, to a mix of consumer delivery of perishable and non-perishable consumer food and consumer goods.
The gain was rapid and within the next fiscal year the company recovered 40% of its former glory with exciting growth ahead.
When the board reviewed what had happened they came to these conclusions:
- Whilst Gary was an excellent person and CFO, he wasn’t collaborative, didn’t have sufficient trust and respect of his staff, wasn’t expert enough in the skills to lead the team at that time, and wasn’t a team builder.
- Mark’s success was largely due to these factors:
- he had the trust and respect of his people,
- he was collaborative and had the right skills to lead the people at that time; and
- helped the team to be their best; and
- those factors gave him the intangible factor of luck – which favours:
- the prepared,
- the alert,
- the agile and
- the decisive.
What do you think?
