As the tech industry in particular fires people in their tens of thousands, Sandra J. Sucher and Marilyn Morgan Westner explain something I’ve always felt intuitively about mass layoffs:
“I’ve studied layoffs since 2009… the short-term cost savings provided by a layoff are overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation – all of which hurt profits in the long run.”
A characteristically thoughtful post from Tom Critchlow on the phenomenon of the “executive offsite” and the annual planning day, with observations about why they so often fail and suggestions of how they might be made to work more effectively. #
Tom Critchlow has some interesting thoughts on dashboards in businesses, which in his experience (and mine) tend to suck. That’s mostly because they’re backwards-looking:
“Company dashboards are designed around metrics and measurement of results - they’re trying to measure what has happened.
“Measuring what happened is important, obviously. But it’s a bit like driving a car only looking in the rear view mirror…
“It’s also important, however, to measure what is happening.
“Unfortunately in my consulting work most companies don’t have any kind of measurement in place for the left hand side of the equation.”
There’s some great practical advice for what to do about it, too. #
Historically, veterinary clinics were local affairs, owned by their partner vets and part of the fabric of the community. Then private equity came along:
“The company has been on a debt-fuelled expansion in recent years. Since EQT bought IVC in 2016 and merged it with Swedish group Evidensia in 2017, it has been on a clinic-buying spree, snapping up independent practices and small chains and rolling them into what is now Europe’s largest vetcare provider with 1,500 sites.
“‘It’s a giant acquisition machine,’ says a former employee. ‘IVC was just minting millionaires across the UK.’ A vet who sold his practice to the group says he ‘almost fell off his chair’ on hearing how much it was offering. The vet, who requested anonymity, says IVC mistook his shock for hesitation – and increased its offer.”
Predictably, prices have increased, staff churn is higher, and the network of vets’ practices is now a teetering Jenga-tower of debt:
“In the process, the companies typically amass large debts. IVC’s junk-rated net debts and leases total £2bn, or 6.2 times the £322m it earned before interest, tax, depreciation and amortisation in the year to March, according to figures that the company shared with lenders.
“The rating agency Fitch has categorised IVC’s debts as ‘highly speculative’, meaning that while the company can currently repay them, there is a ‘material’ risk of future default and its ability to repay is ‘vulnerable to deterioration in the business and economic environment’.”
A lovely metaphor for a common problem:
“A few years ago, I heard Rob Walling explain the difference between an aspirin business and a vitamin business: in an aspirin business, you don’t try to convince customers that they need your product. Instead your customers have a problem – a “headache” – and they know it. They go looking for a solution – your “aspirin” – to make their problem go away (or at least make it better).
“On the other hand, if you have a vitamin business, you constantly have to convince your customers they need what you’re selling. Vitamins supplement our diet and supposedly make our lives better in some way – they promise to make us healthier, more vibrant, etc. In a vitamin business, your customers can survive without your product, so your job is to show them how much better their lives will be with it.”
It’s so easy to kid yourself that your vitamin business is an aspirin one – and to falter as a result. #
There’s something strange about Japanese business culture: the country is home to some forty per cent of all the world’s centenarian businesses, and has several that are over a thousand years old. (Perhaps the oldest, Kongō Gumi, went into liquidation in 2006 after over 1,400 years; at the helm was the 50th generation of the founding family.)
This New York Times article looks at long-lived Japanese businesses, particularly focusing on a charming mochi seller, and examines what makes them so extraordinarily resilient.
“If you look at the economics textbooks, enterprises are supposed to be maximizing profits, scaling up their size, market share and growth rate. But these companies’ operating principles are completely different,” said Kenji Matsuoka, a professor emeritus of business at Ryukoku University in Kyoto.
“Their No. 1 priority is carrying on,” he added. “Each generation is like a runner in a relay race. What’s important is passing the baton.”