The Drama and the solitude of the CFO

The drama and the solitude of the CFO.

Behated for destroying the dreams of the creative salesforce, misunderstood for asking the right questions at the wrong time, avoided for carrying along mirrors , the Chief Financial Officer is a species in danger of extinction.

Their role mainly consists in:

·      Telling the truth they see in the numbers

·      Exercising a control and audit function in the company and on the Managing Director’s actions

·      Managing the (financial) risk in the company

Their reporting line is to the CEO.

If it is so their fate is doomed and the species as we know it today it is rushing towards its extinction.

Is this an exaggerated view?

Not quite. They are supposed to control the result of the activities of their bosses, and their job description, the management team, and the world (especially the NYSE analysts) would like any respectable CFO to tell the CEOs the salient facts of the business, including –and mostly- what they do not want to hear. 

And still you expect them to survive?

Surprisingly some of them do. You can still see some real CFO in business reservoir or hidden in the metropolitan jungle. How do they survive? After years of careful observation, I think that the secret of survival of this specie depends on how they have evolved genetically. The surviving CFO have adapted to their environment. There are acrobat CFOs, Troll CFOs, Carpet CFOs and alas the extinct Business Partner CFO. Below I would like to share some observations.

Acrobat CFOs

Environment and behaviour

The Acrobat CFOs live at the top of the business ecosystem, however not for long. The most common way CFOs have to survive is to become acrobats. They need to balance well between doing their job (telling the truth) and still be in the graces of their bosses. Unfortunately for the CFOs many CEO are promoted to their level out of a sales functions in full respect of the Peter’s principle[1] with no or little competence about strategy, managing people, risk management or finance. Having been groomed in an environment used to see CFOs as the enemy number one, the obstacle between them and the customer’s infinite happiness, the CEO will use anything in his (or her) power to destabilise the CFO. The rope or the path is narrow and the risk of falling or failure is very high. Those who fail and fall can usually be found on the floors of the corporate jungles.  They become part of the twilight fauna haunting the bottom of the business world. When an acrobat CFO is replaced, the explanation to the astonished employees and internal and external stakeholders is: “he (or she) did not understand the business” or even better, “he did not tell us well in advance that this EBIT disaster was coming”. An alternative is “he was not a business partner”. What always works is “he was not a team player” which translated means: he got us with the finger in the marmalade jar and did not shut up.

The Troll CFOs

Environment and behaviour

The troll CFO is a very shy creature.  A troll CFO dwells in isolated meeting rooms or offices, lives together with other accountants in small bookkeeping units, and is rarely helpful to human beings. Their appearance varies greatly; trolls CFO may be ugly and slow-witted, or look and behave exactly like human beings, with no particularly grotesque characteristic about them. They are rarely to be seen especially when there is a decision to be taken. If they are forced to take a decision they will move to a different dimension or meeting room and will do anything to twist reality and numbers so that they can make their CEO happy and can return safely to their environment. Their business life expectancy is quite high.

The carpet CFO

Environment and behaviour

They live on the companies’ floor, agree with anything the CEO will ask or say and their life expectancy is very high. They normally suffer sever neck pain due to intense nodding activity.

The perfect Business Partner, honest CFO with high integrity and granite balls

This species is unfortunately extinct. Some taxidermists still conserve samples of their tissues, but there is no interest in the CEO world to clone any of them.

I hope that nobody who is a CFO will feel offended by the humorous or sarcastic definition of the CFO world above. If one has been a CFO in his or her life, especially in restructuring or change management situations, he or she will know exactly what I am talking about.

Getting back to a more serious tone, I know many CFOs and their accounts of why they had to move on to the next job or lost their job are not fun at all:

“My CEO asked if I could set apart 1 Million USD to fund his private party. He would like to invite a famous tennis star and wanted me to pass it as advertising expenses. I told him that we could do that but I wanted my headquarters to approve the plan. Needless to say I had to go because I am not a team player-perhaps a tennis team player”-

“I found this one restaurant bill to approve and frankly speaking I could not approve 12,000 USD for 4 persons without asking questions. It turned out that it was not only food…. At the end of the discussion I had to leave”-

“Are you crazy? If we start this new business and the revenues increase, the US headquarters will ask us again to grow. And it will be a pain in the neck to find new customers. Let us delay the growth for later next year, if we need it”-

“Hey let us shift some costs to a bad company and get some revenues from there. We can optimize our variable compensation on the smaller company and let the bad company go. They are no good anyway, nobody will notice”.

“What the heck! I know this is not completely legal, but everybody is doing it, c’mon”

“Bribing? It isn’t bribing if it helps getting the deal signed”

These stories capture only a small glimpse of what happens in reality. If a CFO job becomes available, most of the time is because something extremely wrong is going on. The weakest link is that the controller who reports to the controlled. He will be the one to blame if bad things turn out (he was not controlling enough and did not prevent it) or if the numbers are not going as expected (how could we even know….).

To add insult to injury, having to change job because you want to stick to the rule of law or because you have sturdy moral principles is quite a tiring exercise and requires a lot of mental and physical energy. Before judging negatively a CFO with many career changes, you should ask yourself why that change was necessary.  What is depressing is that it is very difficult to explain this to recruiters. If you are in a CFO position for a short period of time that does not look good on your CV. Our system, the way people are recruited and the way your profile is assessed, forces you into complacency or numbness if you want to survive long in a corporate environment. In order to survive, some people like to change the cards they are playing with, some other prefer to change the table and “play” somewhere else.

If I had to design the CFO role and the structure of a company from scratch I would tend to see a “complete” CFO as the head (at least co-head) of the company. By that I mean someone who besides possessing natural gravitas and leadership skills, has gathered competences in M&A, strategy negotiations and sales. Accounting or controlling only will not suffice: controlling and accounting are the basics you need to have in order to be able to perform a management job.  They are the alphabet or the grammar you need to know in order to form words and sentences. You need to have a complete set of competences in order to give content to your sentence and create ideas and actions.

At the end of the day, an investment decision, a new business field or a new strategy all require a business plan with a figure at the end of it and a general risk assessment.

No-one is better positioned than a CFO to exercise a neutral view on this assessment. You need someone generating ideas and pulling good stories (CEO) and a CFO telling if all of this makes business sense without the fear of being sacked.

As far as operating model concerns I believe that the best CEO - CFO models are the following:

Either you have a “complete” CFO (as defined above) in charge of the company and a CEO in charge of sales and strategy reporting to the CFO or

a CEO and a CFO reporting both directly and independently from each other to the owners, investors or to the stock exchange

If you are interested in these matter you could try to read about Mr Majocchi, someone who possesses the skills of a proper CFO who took over in a company called Emilceramiche  (a company producing ceramic tiles) and turned it over very successfully without having a clou about ceramics or tiles.

The story that in order to be a CEO you need to know the market and bring customer is in my view one of the most misleading in the business stories of the western hemisphere in the last couple of centuries.

The CLEARCUTCASE is that, at the end of the day, an investment decision, a new business field or a new strategy all require a business plan with a figure at the end of it and a general risk assessment.

No-one is better positioned than a CFO to exercise a neutral view on this assessment.

In a healthy company you need someone generating ideas and pulling good stories (CEO) and a CFO telling if all of this makes business sense without the fear of being sacked.

___________________________________________________________________________

Hard reality found on the net

What do you do when your CEO is beyond stupid and about to implode your company?

Anonymous 

(CFO) | Oct 24, 2014

It's true. And I don't usually exaggerate. I just pulled the company out of near bankruptcy and this new CEO comes in and is driving us right off the cliff again. Cash is down to just enough to cover one month of expenses with no real uptick on the horizon. And he has no prior management experience and no appreciation for finances, revenue, management, prioritization, planning, time to execute, anything that might possibly result in a more sensible business model. The board just brought him so it's still the honeymoon phase. At least the numbers are so horrific that even they are starting to wake up. Next week is our board meeting and we are reviewing YTD and budget for next year - which again was created with absolutely no business sense - he wholesale ignored all my advice. I'm a wreck feeling like I have to sugar coat results and present budget as rational when in fact I don't believe a word I'm saying. I don't think I have the leverage to have a showdown yet. I feel like a kidnapped person driving a car that gets pulled over - "officer, everything's fine....(wink, wink)" Anyone else been caught in this position? How did it turn out for you?

Anonymous User 

(CFO at Local Government Agency) | Oct 28, 2014

You can't win.

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[1] The Peter Principle is a concept in management theory in which the selection of a candidate for a position is based on the candidate's performance in their current role rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and "managers rise to the level of their incompetence." (Wikipedia)

Beware of those who say Due "DiLLigence"

According to Wikipedia, a Due Diligence is "an investigation of a business or person prior to signing a contract, or an act with a certain standard of care".

This definition is quite accurate and reflects what we all should do before entering a transaction. 

Real life experience shows though that, what should be a mere exercise of prudent business review, sometimes turns into a costly, resource and time wasting exercise.

I recall two quite striking cases.

Case Nr 1

One day I was invited at very short notice to Berlin. The communicated reason for the meeting was to prepare discussions for a possible IT outsourcing. When I enter the room which was located on the premises of a famous local hospital, I saw following scene:
a large space with 1 chair, 2 large tables, 20 thick folders on those tables and a smiling colleague from the sales department. The colleague started with something like "good morning Mr. di Bari, Welcome to the Data Room. These are all the documents you need. Please make sure that by the end of the day we have everything we need for this transaction".

Case Nr 2

Recently I was involved in a potential M&A transaction. The discussions have been going on for 12 months without any measurable progresses, when by chance I happened to become involved. I spent some time listening to the views of the parties and quite quickly became clear to me why there were no progresses (For a change it was the difference between price and value). I managed to agree on a range and then we defined a transaction structure and finally a schedule for the due diligence. Everything was going the right way until.... Enter the Headquarters and the Investment Bankers. Even though we agreed on an asset deal taking over an handful of assets and people, my team and I have been forced by the "augurs" above into a very expensive, time consuming and absolutely wasteful due diligence on items we did not event want by any means to consider in the transaction and whose legal and fiscal history, present and future had nothing to do with the business. "Because we have always done like that". "Because the headquarters want it". "Because we (investment bankers) think it is a good idea". An so on.....


For the few of you who are curious about my reaction I can tell you the following:

On case Nr 1 After having carefully verified that I was not a victim of a practical joke I had to call "Houston" and ask to push the reset button on this entire story. We never started again because the transaction at a closer look, was nonsensical from the beginning.

On case Nr 2 After having verified the complete unwillingness to listen by some of my bosses and colleagues, dressed with a bouquet of "yesbuts", I closed my eyes, sat tight and went through the process dreaming of the many things we could have done better and more efficiently with the time, nerves and resources wasted. We closed this transaction and was a very good deal for all. Especially for the consultants.

Here my learning on the Due Diligence :

1. if you are buying an entire company or a subsidiary or a line of business or if you are entering any agreement where you have to rely on statements or have to purchase rights assets and obligations, an extensive due diligence, supported by robust covenants and warranties is what you would consider doing
2. If you happen to be the boss or one of the top managers of a company please make sure that NOBODY in your organisation except the CEO TOGETHER with the CFO can start plan or execute any Due Diligence (let alone a letter of Intent) without proper authorisations. 
3. Finally beware  the creativity of the sales people and all those (investment bankers and consultants) who still after many years write due "dilligence". 

Here is the first  CLEARCUTCASE©: The main scope of the due diligence is to verify ALL the major assumptions that support your credible, validated and very conservative business plan. Further you would like to verify ALL the deal breakers and major risks that you have thought of BEFORE you prepare the business plan for the valuation, hence BEFORE the Due Diligence. 
If you are happy about the findings, then fix them in the contract. If you are not, correct the price, increase the warranties or exit. 

Here is the second  CLEARCUTCASE©: the best M&A transaction is very likely the one you decide not to execute 

Make sure that you brief your team very intensively on business plan assumptions, deal breakers and major risks before they start. At the end of each business day you let every team meet the others and wrap up the findings.

I am at your disposal 

Francescodibari.eu
francescodibari@blogspot.de

The abyssal difference between value and price Why “CoCo” and “CoTra” won’t help you

The abyssal difference between value and price

Why “CoCo” and “CoTra” won’t help you

Sometime I like watching documentaries on “real life” pawn shops. There is a lot going on: interesting characters visiting the shop, the most diverse objects offered for pawn or sales (from Americana to Viking swords, music instruments or firearms), a lot of side stories. The reason why I like watching this programs is the negotiation part among the pawn shop employees and the clients. I must admit that for me this is every time a great learning experience. I learn a lot and I use what I learn for M&A discussions, when I hire someone, when I am looking for a job and/or negotiate with my customers.

How so?

The typical scene is the following: A potential client walks in and offers to sell or pawn some objects. The clients try to keep the price as high as possible arguing on rarity, uniqueness, or market value of what they bring in. The pawn shop guys obviously try to negotiate the asking price down. Normally there is some discussion going on, sometimes both parties argue about provenance, rarity or similar and very often an expert is called in (typically for old books or guns) to examine the items.

The negotiating parties are far apart as long as they are talking about different things at the same time: price and value. The seller would like to agree on the highest possible price, at which normally there is no value left in for the buyer. The buyer then start speaking about the price he or she is going to sell the item in the shop for. When the parties recognize the value which is intrinsic in the transaction for each party, then it is very easy to determine a dollar amount, a price, to agree upon.

Even among very qualified counterparts there is quite a bit of confusion between price and value. I use a very simple, almost obvious sentence to clarify what I am talking about:

Price is what you pay, value is what you get.

Do you think this is trivial? You should think again. In numerous M&A transactions, parties on all sides tend to mix up these two different concepts. When you have to figure out the value of a company you would like to acquire, there is only one way to determine your decision. What you would like to know BEFORE acquiring a company is how much cash will remain in your hands after you pay a price, align the target to your operation, and perform the necessary investments and cost cutting. And this in the short, medium and long term[1].

What should really matter to you is the amount of money which you, at the end of the day, can make with this acquisition.  Incidentally: your advisors may also recommend you to purchase a company for “strategic” reasons, for example to access certain markets or take over important customer agreements. Accept to do so only if the cash you expect at the end of a reasonable period of time is more than the amount you have in your pocket before the transaction.

Here another piece of advice you will never find in any business book:

every time someone uses the word strategic, you should consider replacing it in your mind with the word “expensive” (alternatively: “very expensive”).

The world will start immediately making a lot more sense to you if you do so.

Back to our pawn shop scenery. If the guys clients and shop employees would speak from the beginning about the value, the money each of them can make with the transaction, there would be an outcome almost immediately. In the note below I have described the same scene twice: the typical one and the alternative one if both parties spoke about value and price at the same time. If you are  into this kind of show please check the footnote2]

In a nutshell: there is an abyssal difference between price and value. Recently I have seen a company paid 3 digit million USD amount and incapable of generating a single digit positive cash flow. The price was shooting away from the value based on CoCo, CoTra and love[3]

Besides other effects, one of the most misleading bias when acquiring a company is considering CoCo and CoTra as valuation methods.

CoCo stands for Comparable Companies and CoTra for comparable transactions. There is someone out there who charges you a lot of money for giving you a list of CoCos and CoTras with the purpose of justifying and substantiating their way off valuation (and fees).  These guys (mostly in good faith) mix up valuation and pricing and bring in their assessment of a transaction similar companies which have a value x on the market or other companies which have been sold for a certain price.

Mixing price and value ain’t a good thing

Here is an example why it shouldn’t be done.

A German guy some time ago happened to own an old car, a VW Golf, which used to belong to Mr Ratzinger, a Cardinal from Regensburg. When Mr Ratzinger was elected Pope of the Roman Catholic Church, the car became an interesting object and was auctioned and finally sold for 188.938 Euro und 88 cents to an Online Casino. The value and the price of such a car in the German market is typically fairly below 10,000 Eur.

I am exaggerating a bit on purpose, but the guys using CoCo and CoTra as valuation elements are telling you that if you want to buy or sell a used VW Golf you need to keep in mind that one was sold for over 189 Thousand Eur. Or that the value of certain VW Golf can reach the same amount.

Although I personally find it very interesting to find out how much the Pope’s car has been sold for, or what is the market value of a similar company, at the end of the day the only thing I care is: if I buy this target, am I better off in term of cash in the short, medium and long run[4]?  

This is a CLEARCUTCASE©: CoCo and CoTra won’t help you,

At all.

(Unless you would like to pay for them as conversation items)

In a nutshell:

1.     When valuing an acquisition think cash only

2.     If you hear “strategic” please understand “expensive” or “very expensive”

3.     If someone is showing you CoCos and CoTras you run the very big risk to confuse price and value.

4.     If the individual above is charging you for this analysis please do contact me: I have a lot of recommendation on how to spend your monies for personal fun or social benefit

I am at your disposal

francescodibari.eu
http://www.francescodibari.eu/blog/

https://www.linkedin.com/pulse/strange-good-feeling-falling-love-francesco-di-bari?trk=prof-post
francescodibari.blogspot.de

[1] Here my warmest recommendation ist you use the net present value of the free cash flow method-and nothing else![2] Consider the typical scene:Pawn shop guy: “hey man, how are you doing?”Client: “hi dude, howrudoin, I brought a gun, a peacemaker. It belonged to my grand grand father who was a famous sheriff in the orange county. ”Pawn shop guy: “what do you want to do with it, pawn or sell?”Client: “sell it”Pawn shop guy: “how much do you want for it?”Client: “10,000 USD (price). It is a great affective value for us”Pawn shop guy: “that is not gonna happen, the peacemaker go for no more than 2,000 USD (price). Can you prove it belonged to sheriff xx”?Client: “no, but my parents told me so and I trust them”Pawn shop guy: “I can give you 1000 USD (price) for it?”Client: “no man, it is too low (value), you just said it is worth 2,000 USD (price)”Pawn shop guy: “that is the auction price on a good day. I need to buy the gun, restore it for 500 USD. It will sit here for months and I can hope to sell it for 2,000 USD (price)?Client: “can you do 1,100? ”Pawn shop guy: let us split the differencehttp://www.francescodibari.euNow the same scene in the perfect world:Pawn shop guy: “hey man, how are you doing?”Client: “hi dude, howrudoin, I brought a gun, a peacemaker. It belonged to my grand grand father who was a famous sheriff in the orange county. ”Pawn shop guy: “what do you want to do with it, pawn or sell?”Client: “sell it”Pawn shop guy: “how much do you want for it?”Client: “how much you can sell it for?”Pawn shop guy: “2,000 USD” (price).Client how much would it cost you to restore it?Pawn shop guy: 500 USDClient: “OK man, 1,100 (value) for me-I found this piece of junk in the basement, so any amount is fine, 400 for you (value)Pawn shop guy: “can you do 1,000? ”Client: let us split the differencePawn shop guy: deal![3]The buyer fell in love with the target- please read my previous post[4] I am referring to people who live very long or believe in a life after death or at least do not believe in Keynes theories. “In the long run we are all dead“ (J.M. Keynes)

CHANGE MANAGEMENT: Why people’s attitude matters when turning companies around.

It’ is the attitude, stupid![1]

CHANGE MANAGEMENT: Why people’s attitude matters when turning companies around.

In a recent assignment I was lucky enough to work for a very interesting and very “different” company. This company, acquired by an illuminated entrepreneur with the support of a private equity fond, managed to transform itself from a boring software database company into one of the most vibrant, dynamic and successful companies worldwide. According to its CEO, this company ranks among the 3% most profitable companies in the world.

In the eyes of the Board, what made this company so successful was the relentless, consequent, application of three simple principles, which I will address below. The issue I had on the table was that that portion of the company under my responsibility had a big potential; however for reasons still unclear was not addressing the potential and was not living by its corporate principles. The tasks I was assigned when I joined were to redefine the unit’s mission, address the potential new business, and make this unit live “by the corporate principles”.

The three principles were (paraphrasing) the following:

1.     Pareto principle: focus your work and attention on the most important matters. Just three matters that will impact most on the output of your work (per day, per month or for the year)

2.     Responsibility principle: if you see anything wrong in your environment, that can prevent you or your colleague from achieving your goals, you HAVE to take responsibility and provide help, information or support. A stunning but true implication of this principle is that we need also to “own the past” and take responsibility for it.

3.     Efficiency /effectiveness principle: in our company we have activities that have a return that is lower than the average generated by other activities. We have the duty to redirect the resources towards the more efficient, effective use for the benefit of the company.

These people meant business, so we went as far as mentioning at least one of them in every mail; the Principles were the guidance of virtually every meeting/discussion and decision in the company.

Do you think the Principles are obvious and therefore there is nothing special about them? Well, think again! At first glance, as many of you, I though these principle were self evident. Coming as from the fast-paced no-frill CFO/ M&A world, either you concentrate on the most important issues, take responsibility for all matters which are not set and eliminate time and resource wasting items or you are doomed to fail.  After observing the way the three principles were applied I decided to try myself. I found that if you apply “The Principles” consequently, you will end up increasing your and the company’s effectiveness at least by a “felt” 80 %. At the end of this article I indicate some examples.[i]

Is the application of “Rules” or “Principles” sufficient to determine the success of a company? What makes the difference between a good and a bad company (provided that it makes sense at all to distinguish companies in such archetypes)?

My CLERCUTCASE personal conclusion, is that what makes the main difference is people’s attitude.

Why the attitude?

How did I come to such a conclusion? Everything started in the late 80’s on a sunny day in southern Italy. A relative of mine happened to own a small plastic toy factory. That day he wanted to hire someone helping in the production and the administration. He wanted an “active” person who could take and manage the most diverse tasks. I happened to be around and watched carefully what happened. There were plenty of guys waiting outside for their interview (job situation in southern Italy never improved) and many of them were spending their time talking to each other, as you would expect in this circumstance.

None of the candidates seemed to be interested enough or was not convincing for other reasons. We took a peek out of the window and saw that a young fellow, waiting for his turn to be interviewed was acting differently from the other guys. He was in the plain sun on a terribly hot day and yet he was very active. He was removing stones from the sidewalk, putting pavement tiles back in their place and removing the weed from the sidewalk and along the road.

The guy was treating the place as it were his own, and was taking responsibility to fix small things even if it wasn’t his job or duty to do so.

A few guys were laughing at him; he did not stop nor care.

How many times we hear things like “it is not my duty” or “it is not my job” or we see top managers, managers and employees wasting company’s money or spending monies they would never spend it this was their company. Not able or willing to take responsibility or get their hands dirty?

The gentleman got the job. It turned out he was one of the best hires in years. His attitude made the difference.

Even if this story happen back in the days, I never forgot it and consider it when I need to think about how to put a company back on track, how to organise my team and what I am looking for when I am hiring people.

It is a CLEARCUTCASE: ”It is the attitude, stupid”

You may have the best vision mission and strategy for your company but if you do not have good people your venture is hopeless. Put good people in a bad performing company, things will change for the better. On the other side, the wrong choice of people can make a good company go down the drain. I have seeing it happen many, many times.

Are a prestigious school degree, an intelligent mind, good emotional intelligence, a nice cv, and a good track record sufficient or event relevant to identify a good candidate for your team or your company?  For someone perhaps. For me some of them can play an important role but that is only a part of the story.

Above all I look for the right attitude. I explain the challenges and then I witness the reaction: if I see a sparkle in their eyes, if I see that they are hungry to do what the company expects from them and even more importantly if they start thinking about possible alternatives to find and execute solutions they are the men or women I am looking for. For me it is a CLEARCUT CASE, no doubt!

If it is success what you are looking for your company, there are many tools and ideas that can prove invaluable for you. You can go a very long way by using principle similar to the ones the company I mentioned at the beginning of this article is using. However, you will only cover the final extra mile by looking carefully at the attitude of the people around you.

To conclude this article I would like to show you a very amusing and useful quote I found on the internet which exemplify one form of attitude.

Yesbutters and Whynotters

Yesbutters don't just kill ideas.

They kill companies, even entire industries.

The yesbutters have all the answers. Yesbut we're different.

Yesbut we can't afford it.

Yesbut our business doesn't need it.

Yesbut we couldn't sell it to our workforce.

Yesbut we can't explain it to our shareholders.

Yesbut let's wait and see.

All the answers. All the wrong answers.

Whynotters move Companies.

The next time you're in a meeting, look around and identify

the yesbutters, the notnowers and the whynotters.

God bless the whynotters. They dare to dream. And to act.

By acting, they achieve what others see as unachievable.

Why not, indeed?

Before the yesbutters yesbut you right out of business.[2]

I am at your disposal

www.francescodibari.blogspot.de

www.francescodibari.eu

[1] This title is a “snowclone” of the phrase: "The economy, stupid", used by Chester Carville in support of the Clinton’s successful presidential campaign against the sitting president George H. W. Bush in 1992.

[2] I was unable to identify the author (to whom goes my perennial gratitude).

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[i] Difficult to believe? Here are some trivial examples:

·      Emails: I used to receive between 250 and 300 email per day. Had I spent 3 minutes reading each mail I would have occupied at least 12 hour of my time reading and answering emails. If I focus on the most important matters I should read only the email addressed to me. I activated a rule moving all emails where I am on cc: to a special folder and the daily rate of email worth reading went well below 50 (implying 2 hours or less for emails). In “Principles” terms:

o   I focused on the most important topics (it is difficult to believe though that 50 emails can be dealing with equally important topics)

o   I can take responsibility on the issues addressed directly to me

o   I can (and have) eliminated waste by working on more relevant topics

·      Management: I invited my colleagues and reports to set their missions by defining a max of three objectives (thus the three most important things they need to focus on)

o   They focused their time and effort on the most important topics

o   We have time and resources to take responsibility on the issues raised

o   They can (and have) eliminated waste by working on more relevant topics

·      Meetings: anyone inviting to a meeting should put on the agenda a max of three topics which are pertinent and crucial to their own mission

o   Meetings are focused, shorter, and more interesting

o   We have time to take responsibility on the issues raised

o   We can eliminate waste by readdressing resources towards more relevant topics

·      Sales Team: I invited my sales team to work on the 20% of the customers generating 80% of the revenues

o   They focused their time and effort on the most important clients

o   We have time and resources to take responsibility on the issues raised

o   They eliminated waste by working on more relevant topics

I could continue forever with examples, but this is the bottom line: applying the Principles and the drills connected to them helped my units overachieving the budget and our profitability target for the first time in many, many years. This is the CLEARCUTCASE: The only thing that matters is the outcome of your action.