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Falling into the Black Hole

July 21, 2009
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Let’s take a look at a company CEO looking at profits and losses to determine what’s going on in his company.

Let’s take a look at a company CEO named Dan. Dan looks at profits and losses as the method of determining what’s going on in his company. Dan is an accountant turned CEO, a bean counter. This is good and bad, because when problems are detected in financial numbers (the good part) the company is already three or four months into the problem (the bad part). Dan is trying to figure out how his company was blindsided without him having any indication that a major customer was dropping his company as a vendor.

The rest of the executive management staff is in damage control mode, protecting their positions in the company, trying to convince everyone it’s a slow market or someone else’s fault. So the blame goes on the middle managers, supervisors, workers or outside vendors/sub-contractors. In other words, fingers are pointing in all directions, and no one is accepting responsibility for their part of the problem. Everyone is quick to suggest what the other person or department can do to correct the problem, without even realizing exactly what the root or contributing cause of the problem is.

Dan, feeling the pain of going to the board members with this news, said, “What is going on with my staff? I can’t lose another customer because of poor service. One of our most important customer’s complaints have fallen on deaf ears, and all I hear is that someone else screwed-up and caused the problem.”

I told Dan that I came close to meeting this “someone” who apparently is part of a network of saboteurs. There is one invisible person that seems to work for every company I have ever worked with. His name is “someone,” or should I say, “Mr. Some One.” He certainly deserves my respect - he can enter a company undetected; he causes incredible damage to the morale, finances and everyday operations of the company; and he, somehow, is never punished for the chaos he causes. The most incredible thing is that Mr. Some One is never present at any meetings - I wish I could pull that little trick off. Apparently Mr. Some One is a lot smarter then all of your staff put together.

Just when I thought I crossed the line with my Jersey City humor, Dan said, “If anyone can find Mr. Some One in my company, I will pay him $200,000 a year in salary plus an expense account. If we could get rid of him, I could properly add another $600,000.00 or $700,000.00 to my bottom line in one year.” Dan knows that after losing an important customer it could take years to recapture enough business to fill the loss. You are not simply losing one customer. Inevitably, the word on the street spreads quickly to other customers, often fueled by the competitor that snatched the account from under you. Dan told me, “I love to announce to my customers when I steal an account from a unsuspecting competitor, and believe me, I will tell anyone who will listen. But when I’m the loser, it hurts, especially when I find out the problem was so minor.”

The Results of the Lost Customer Investigation

Dan was talking about a customer doing $1.5 million a year with his company who decided to move to a new supplier. The investigation showed that Bob, the customer’s purchasing agent, was continually receiving late delivery notices for two years. Bob complained to Ray in the customer service department every month for 6 months and got the same story each time, “We are sorry for the late delivery, Bob, but… blah… blah… blah… my dog ate the homework, you know the story.”

Bob wanted to believe Dan’s company would change, but after six months, started looking for another vendor for the product line. It was inevitable that Bob would change suppliers; he had to explain why he could not bring product in on time, and his own professional reputation was on the line. To make it even worse, Bob did not want to switch companies because Ray, the company’s sales representative, was Bob’s brother-in-law.

To make a long story short, Bob had faith in a new, smaller company and even paid a higher price for the product. And to top that off, he was happily referring his new supplier to other users of their products. The new vendor (I will do anything to make you happy, Bob!) pride itself on on-time deliveries. Its policy was that if it looked like the delivery date was not going to be met, the new vendor would contact Bob and help him get the product in on time, even if they had to pay expedites fees to a competitor. The new vendor was on the ball and provided Bob with the only thing he was concerned about, on-time deliveries. Making Bob look good to his managers did not hurt either.



This is an excerpt from Sorrentino's new book released in February 2009: "ISO Joe's Train the Trainer Series, Requirements for Aviation, Space and Defense Organizations, AS9100C Quality Management Systems."
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