LONG IS THE JOURNEY n. 2 Fall 2015
Employees: 12 - Turnover: 6 million - Sector: Sales
At the beginning of the consulting engagement, the enterprise exhibits the following characteristics:
We observe that
After one year of consultation:
All these innovations have generated a surplus, part of which has been distributed among the employees.
How this was possible
The second generation wanted to find ways to push the company out of old inherited operating methods, but did not possess the tools to do so. The father was inclined to acquiesce only if he could understand the advantages of the alternative methods.
This was not merely a monetary cost-benefit calculation, because the decision not made on a purely rational level but hinged on the need for establishing a single accounting system aimed at performance management and the liberation of mental resources that had been distracted from strategic planning.
The case study presented here is a fairly common example that, to various extents, we have encountered at dozens of companies. Businesses are often unable to pinpoint solutions that can ensure greater productivity, eliminate internal inefficiencies and generate greater value by identifying new market niches.
Their difficulty is reinforced by certain elements:
With regard to this last point, it must be noted that in certain sectors, the local B2B market requires these practices and favors suppliers who can deliver goods without producing the necessary invoice, or who indicate lower quantities and prices different from the real ones. Therefore, businesses that want to determine their average selling price, the quantity sold to a single client or the profit margin of a product or business unit have to resort to complicated calculations in Excel, which are often incorrect.
Even when the local market wishes to perpetuate such behaviors, the above points remain valid. In particular, the absence of managerial skills in the identification of new distribution channels and in supply chain management can oblige an enterprise to remain irregular. In fact, we have observed that enterprises which have opened their business to international markets opt for regularization and draw from it significant informational advantages. Entrepreneurs perceive that the status quo constrains development because it drains mental energy that could be used to refine strategy and the understanding of the internal and external environment.