Recently I have been reading a lot of news about lawsuits, including the very prominent patent dispute between Qualcomm and Apple, the lawsuits against Johnson & Johnson concerning talcum powder and asbestos, and the various actions against Facebook regarding privacy issues. I can only imagine how many company resources are currently involved in managing these lawsuits, as well as dealing with the public relations aspects. I believe that companies in general underestimate the impact of events such as these. This column is devoted to some of the more problematic types of corporate distractions that consume a lot of resource and can inflict significant financial, reputational or business damage.
Lets start with lawsuits. All companies are at some point dealing with lawsuits or legal disputes of some type. Be sure to have quality legal representation, whether in-house or under contract, and ensure management has a process for periodically monitoring the status of legal disputes. This process should feed into your overall company risk management process so that the management team is on top of the level of financial, business and reputational risks associated with the legal issues and the resources involved. Carefully consider at the appropriate management level whether it would be prudent to settle any of the cases, especially those that could affect customers or company reputation or those that are taking up significant employee time and attention. Of course, I am not suggesting you settle any legal disputes that fall into the category of frivolous lawsuits or the like.
Another major source of corporation-wide distraction is the process of a merger or acquisition. Either one is a major strategic action that has been taken to move the business forward, and it is inevitable that it will take up a lot of resources to get it done well. However, it is critical for management to recognize that while your company is mired in the M&A activity, competitors are not, and are free to focus on any gaps that may originate, such as a slowdown of the product innovation cycle, less time spent with customers, delays in decision making and other such problems. Try to keep the timetable associated with the M&A implementation short, and try to limit the participation of colleagues to the extent possible. Ensure that key performance indicators pertaining to customer satisfaction and complaints, product development timelines and financials are being monitored and action is being taken if they are not in line with expectations.
Implementation of a new corporation-wide system is another major distraction and consumer of resources. Before embarking on such a project, ensure that sufficient attention has been paid in the project plan to implementation, resources and training. Discuss with the supplier of the new system how such implementations have gone elsewhere and what steps can be taken to make the process as efficient as possible. Make sure that the benefits of the new system are clear and worth the effort, and that the resources both in your company and in the suppliers company are prioritized and earmarked.
Product quality issues are another major consumer of resources and are damaging to company reputation. Confirm that your processes for commercializing new products are robust, consistent and well documented. Audit these processes for compliance on a regular basis. If you do experience any product quality complaints, make sure they are acted upon immediately, as such issues can balloon quickly into major incidents. If a faulty product does get into the marketplace and is reworked or recalled, examine how this happened and revise your commercialization or manufacturing processes to prevent reoccurrence. Pay special attention to the affected customers during the process and ensure that they are satisfied with the outcome, including an explanation of the steps you have taken to improve your processes.
Reorganizations and staff reductions are major sources of distraction. These activities are periodically necessary in the evolution of a company, but take steps to avoid allowing them to become regular events. If you are doing a significant reorganization, try to limit the time during which people are stuck in uncertainty, and allay fears to the extent possible. Be sure that your process for redeploying staff is fair and that human resources and legal staff are involved throughout in order to minimize legal problems or longer-term morale issues.
My last advice is on the distraction of having too many projects. At the beginning of the year, it is good practice to take inventory of your project list and prune it if you can. Consider prioritizing your projects according to investment return and compare them to those at the bottom of your next up list. Keep in mind the general workload and issues that you will be facing during 2019 and whether your organization has the capacity to manage the project list. Also deliberate whether some of the projects could be sped up through additional expenditure or resourcing in order to accrue credits earlier and reduce the distraction of too many simultaneous projects. Make sure that project economics have been updated for current business conditions.
After you have cut out the time-consuming legal issues, minimized the distractions of mergers and acquisitions, prevented product quality issues, limited the reorganization schedule and pruned the project list, what is on the to-do list for 2019? I suggest you spend more time on the following:
Update the three-year strategic plan. Assess progress made in 2018 and changes needed in 2019.
Connect with your customers and work to understand their current priorities and needs.
Ensure you have a clear path to meet your financial plan for 2019.
Communicate with your employees on 2018 accomplishments and the top goals for the year ahead.
Ensure you have the right people with the necessary skills and talents in your organization and a plan to fill any gaps and upgrade the organization over time.
Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. Email her at saralefcourt@gmail.com or phone (908) 400-5210.