KEEPING THINGS SIMPLE

As Albert Einstein said, “Make everything as simple as possible, but no simpler.” How does that apply to setting direction? Admittedly, it depends on the issue. The opportunities and challenges that your organization faces may not be so simple. In fact, some of them may be quite complicated. One of the qualities of a leader, however, is the ability to take what is very complex and break it down into smaller components to determine what really needs to get done. This is where being self-reflective and having a balanced perspective will help you. Rather than becoming overwhelmed or overwhelming your team, you are able to step back, reflect, and look at the issue holistically.

To use a simple analogy, it's like doing a math problem. Sometimes you're tempted to jump in and start working before you even understand the entire problem. Often a better approach is to pause, look at the problem, figure out exactly what is being asked, and then devise a way to tackle it piece by piece. By using this approach, you can break down a difficult or even a seemingly incomprehensible problem into a series of rather straightforward, simple tasks or tactics.

When I was a midlevel finance manager, I was asked to do a cash flow forecast for all our international operations. Taken at face value, this task required me to ask for a detailed financial forecast from more than eighty countries, which would be extremely time-consuming for many people around the world. In addition, before we could consolidate the data, my team and I would have to analyze all the forecasts to determine which were too optimistic and which were too conservative. Granted, it would have been easy to send a message to everyone and begin chipping away at the problem, but would that have been the best way to address it? Would we have obtained the answer we needed in a timely fashion? More to the point, would such an exercise have been the best use of resources?

Instead of just jumping in, I got my team together, along with several of the international controllers around the world who joined us by phone, to define what the real goal was. Quickly we saw that we wanted a reasonable forecast for the entire company, not a precise country-by-country outlook. In this context, more data would not necessarily result in a better answer. Instead, we tackled the problem on an exception basis, namely, having the countries report only if their forecasts differed materially from their plan. We decided that by requesting summaries, rather than detailed information, from the ten countries that generated the majority of the cash flow, and then extrapolating information from the rest based on prior quarters, we could do a much better job of deriving a total international forecast and in 10 percent of the time. We did not need to bother controllers in smaller markets, such as Peru, that generated a small amount of cash flow. The one finance guy in Lima simply did not have to be burdened with yet another request from headquarters that kept him from focusing on what he should be doing.

As my team and I analyzed the best way to forecast total cash flow, we were careful to explain exactly what we needed and why. This resulted in phenomenal benefits. Our international teammates took ownership of the process to come up with the best way of getting us the information we needed, while being efficient with their own time and staying focused on customers. If they needed to tell their bosses what they were doing, they could explain the rationale rather than simply responding, “This is what headquarters wants.” As an end result, we received the data we needed and made our forecast quickly and efficiently. By setting a clear direction and breaking a complex task into smaller pieces, we made the process more efficient for everyone involved. Moreover, we didn't have to spoon-feed anyone. Everyone who participated was part of the process.