Article
1.20
The
Distributor and the Prof. Questionate “Restructuring”
Professor Hank Jones was glad that the 2008 academic year was
over at Faber College because he was anxious to get to
work on his new, over-subscribed, fall course: “Integrative Thinking for Current Problems”. The
course had been advertised as having: “case-based discussions for applying a
toolkit of collaborative, thinking strategies”. As an inter-disciplinary
program, the cases were to come from an array of departments, but half were coming
from the “Entrepreneurial Studies” department because it already had the most cases
and students. Since the department’s inception in the fall of 2001, student
enrollment had exploded - as it had in all “entrepreneurship” courses at all
college campuses - much to the envy of the rest of the liberal arts
departments.
Both the toolkit and the cases needed a lot of summer work
starting with a dinner date that evening with one of Hank’s own, locally-based,
Faber room mates, Brian Bannister. Hank had been a long-time, unofficial
advisor to Brian, who substantially owned and ran the $150MM-in-sales,
Bannister Contractor Supply Company (BCS). Brian, in return, had been helping
Hank with the decision-making, thinking-tools and had allowed two semi-disguised
case studies to be written on his company by Faber in 2004 on an acquisition
and in 2005 on creating an ESOP to buy out feuding family members’ stock.
The case development work had been overseen by Andy Stark,
the Entrepreneurial Studies department chairman, and whenever Andy taught the cases,
Brian and some associates would sit in the back of the class to listen to the
discussion. At the end he would share the “real world”, messy view of how
businesses really worked and of how imperfect the information was before having
to make big decisions. The students loved it, and Brian claimed to get a lot of
value out of participating in both the writing and teaching of the cases.
Thinking about the dinner agenda, Hank knew that Bannister
Supply Company (BSC) was currently in a tough financial spot that would require
some hard thinking and tough decisions. The company had increased debt significantly
to fund both the acquisition and the family stock buy-out. The financial
forecasts, at the time, made both moves seem reasonable, but since then both the
housing and commercial construction industries - BSC’s two biggest customer
segments - had gone from boom to bust faster than most anyone had imagined.
What was BSC’s predicament in June ‘08? The housing
industry was still accelerating downward at unprecedented rates; the commercial
construction market was softening quickly; the company was in modest violation
of a few of its minor bank-loan covenants and the regional bank lender was under
increasing financial stress; BSC’s largest supplier, for which it had an
increasingly rare geographical exclusive distribution privilege, was grumbling
about declining purchases; and latest monthly polls on the economic outlooks
for both consumers and small business owners had just hit modern age lows. A
number of US industries were in the throes of restructuring, recapitalizing
and/or liquidating: commercial and investment banks; airlines; newspapers; auto
manufacturers; home builders; specialty retailers; etc. Hank wondered if Brian might
want to co-create a third case on the timely topic of “restructuring” for use
in the fall course. It wasn’t on this evening’s agenda, and the topic seemed to
be a bit more emotionally sensitive than the first two cases, but Hank thought
he might slip in the request if appropriate.
Well, the dinner went sensationally! Brian, ever the “living-edge,
forward thinking, rugged optimist”, had great ideas for refining and testing
the thinking toolkit AND creating a third case study as a byproduct. He surprisingly
had no ego or disclosure concerns about a case in which he would:
·
Admit the financial leverage mistakes that he made at
the top of what - now in hind sight - appeared to be a true bubble in housing
construction.
·
Share his on-going corporate story in a semi-disguised
fashion, because he had such faith in BSC’s strategic focus and “service-culture,
execution ability” that: “my competitors could take an open-book tour of our company
and be more confused and flustered because of it”. (He was not, however,
inviting any of them over just yet.)
·
Share his sincere emotional pain about having to
execute some or all of the lay-offs, cut-backs, downsizing, re-sizing and joint
venture merger-spin-off options that were all possibilities for the BCS
management team.
Most of the evening session was spent co-creating a working
definition of and guidelines for “integrative thinking” that could practically work
for Brian’s management team. The tools couldn’t be too abstract; they had to
have some concrete, practice applications for the team. Brian’s biggest idea was
to use both Hank and Andy as facilitators to teach BCS’s management team about
the toolkit and how to apply it to the company’s current restructuring “opportunities”
while generating the start of case study #3 as a by-product. The working case title
was: “How Should Contractor Supply, Inc. Equitably Re-structure For All
Stakeholders?”
Thanks to good preparation, a great, long-term working
relationship and a common spirit of “failing forward fast and flexibly”, the intrepid
duo came up with the following, first-draft of principles to be further refined
and then alpha-tested on BCS’s management team:
INTEGRATIVE THINKING: “PRINCIPLES
1.0”:
1. When
facing tough problems, no: whining, regrets or scapegoating. Forgive
everyone fast for past sins, but, admit the mistakes; learn good lessons;
and then redirect all mental energy into positive, creative thinking about the
challenges at hand.
2. A
starting definition for “integrative thinking” was the Scott Fitzgerald quote: “The test of a first-rate intelligence is the
ability to hold two opposing ideas in mind at the same time and still retain
the ability to function. One should, for example, be able to see that things
are hopeless yet be determined to make them otherwise.”
3. A simpler,
practical version of the quote is: don’t
accept any “either/or” proposals. Brian was adamant that he was not an “either/or”
kind of guy, but rather a believer in turning all “false dichotomies” into creative
“and/both” stories in which “third way” solutions could achieve a majority of
the most important goals of both choices. He prided himself, for example, on
being able to weed losing or resource-trap parts of his business (“cut costs”)
to fund or feed (and/both) innovate at what BCS did best in a focused,
hi-return way.
4. The real barriers
to better thinking are within each one of us on the team. We will
all have to resist the desires to:
a. Not see
the world only through the lens of what will optimize our function within the
company. We have often acted like the blind experts who each guessed at what
the elephant looked like by only touching one odd part of the animal.
b. Not keep
all solutions simple, by rounding up the same old facts, (unspoken) assumptions
and worn-out, no-advantage, solutions that are usually disguised by superficial
modifications and a “we’ll execute better next time” resolution.
c. Not accept
and then make the same false, either/or trade-off decisions that industry-think
competitors will typically do.
d. Not need
to be instant experts with fast answers to all problems. Prof. Hank
summed this one up by saying: “When we are honest, we all know that our
personal realities (or mental models) are crude, flawed approximations for what
is really going in a dynamically changing (business) environment. Each of our
versions of reality is an illusion, although a persistent one. We all have to be
patient learners prepared to see new data and changes without a fixed
ideology in order to find ever-better, but never perfect ,
models for what is going on and what could be.”
5. But, what
went into being a “patient learner”?
a. We need
to look at our problems in the broadest context(s) considering
multi-directional and non-linear causal relationships (systems
thinking is hard!)
b. Create a
whole-brain team of advisors who can understand our business niche, but also connect
us to progressive solutions from other different, but similar business
channels. And, introduce us to new vocabulary that allows us to see new
information in new ways.
c. Take a “multiple
working hypothesis” approach to our problems which will make things at first
complicated and messy, but in time will yield better solutions.
d. “Questionate-2-innovate” (Q2I)
and create a “question map” of new frontiers”.
6. How to questionate?
a. Work hard
at brainstorming and mind-mapping the problems, but then rephrasing all points
into compelling and standalone questions for which we aren’t immediately sure
what the best, present answer(s) might be. Don’t bring in experts and expect
them to provide instant answers; tell them their job is to leave us with lots
of ideas, some new models and compelling questions on which to “ruminate,
cogitate and investigate”. New ideas will, otherwise, be ignored by the
group-think; if we don’t chew through them repetitiously, we don’t learn them,
comfort zone them and ultimately do them. We, instead, go back to doing the
past harder like all of our competitors.
b. Key
sub-topics on the question map should be: what are the un-discussable sacred
cows or elephants-in-the-corporate-boardroom? What are all of our
assumption/belief statements in this format: “We assume “X” for these reasons:
“Y, Z, etc.”?
c. To smoke
out invisible assumptions, we might ask: what were past notable initiatives
that fizzled? Why? What were the (false) assumptions behind them? If we could
do them over, would we? How would we do them differently?
d. Make no
immediate effort to answer the questions remembering that fast answers will
preclude better, undiscovered questions and better answers will come with time.
e. Then, brainstorm
on what type of quick, cheap – investigation steps; thought experiments; or
practical experiments – might be taken by designated champion(s) (although
everyone should think about all questions) to shed more light on each of the questions.
f.
Agree on future dates to re-gather and discuss the
questions.
g. Agree
that because truly creative answers and solutions will seem strange to most
stakeholders we will have to take time to come up with new vocabulary, mental
categories and metaphors that will allow us to collectively “live into” both
the questions and the emergent answers.
h. In
summary, Brian stated: “We don’t want fast, simple, makes-sense to everyone
answers to our problems, because by the very fact that they make sense to
everyone tells us that they are the same old answers to past problems disguised
in new superficial modifications that everyone else in the industry will be
doing. We want to create our first, question map to wrestle with.”
WHAT NEXT?
Hank and Brian decided to schedule a BCS management
meeting – as quickly as possible, given the challenges at hand – that would be
facilitated by both Hank and Andy. It would have two main objectives: 1) walk
through “Integrative Thinking Principles 2.0” (assuming some polishing
between now and then) illustrating every point with numerous BCS-specific
examples which Brian would help to provide. And, 2) have Hank and Andy lead a “Q2I” session which would systematically
cross-reference all of the company’s challenges by all of the “2.0 Principles”.
The goal was to have no immediate answers, but lots of new questions to
immediately start the - ruminate, cogitate and investigate - stage. In
parallel, Brian was going to consult with an independent-distribution channel
expert whom he knew to solicit out-of-the-channel solutions that were still
novel in his contractor supply channel. He might then inject these ideas –in
question format – into the discussion.
FINAL MUSINGS:
Brian was excited about the forthcoming meeting. He was facing
the toughest economic downturn with the toughest company issues that he had
ever experienced since hitting the workforce in the downturn of ’75. He knew that
he needed some next-level solutions with total team and stakeholder (including
one key supplier and the bank) buy in. This process had more promise of achieving
those objectives than anything else he could think of. He even thought that an
annual question map exercise would be valuable in the good times that he knew
he and his team would get back to.
Merrifield Consulting Group, Inc., June, 2008, Article 1.20