By Robert Milligan
Turbulence2 = turbulence in dairy X turbulence in the general economy. There are five key focus areas to help you survive and thrive in Turbulence2:
1. Be a CEO. Chief executives of American financial institutions and auto makers had to beg for bailout money from Congress because they (and their predecessors) failed to recognize and strategically respond to external forces. Don’t make the same mistake. Turbulent times require you to give your CEO responsibilities your highest priority.
Even though you may be scared to death and would rather be doing dairy tasks, make the time to understand all you can about what is happening in the dairy industry and the general economy, them develop and implement appropriate strategies.
2. Be fair. Interpersonal relationships with family, friends, partners, advisors and employees are based on trust. Developing trusting interpersonal relationships is complex. A key component is being fair. Recognize that “fair” is not just about being “nice.” Fairness is about responses and feedback you provide – appropriate to the performance level and effort. Not responding to poor performance is also unfair.
3. Financial success is about the margin. We focus on input and output prices going up or down, but our main focus must be on the margin between income and expenses.
For example, assuming a business is profitable, what is the result of a doubling both income and expenses? Even though increasing expenses could result in trauma, the result is a doubling of the margin. Don’t ignore input and output prices; they all contribute to the margin. In assessing where the farm has been, is now and will be financially, the focus must be on the margin.
4. Don’t forget life balance. In my short presentation I call “How to Farm and Have a Life,” I ask, “Do you farm to live or live to farm?” Almost all answer the question “farm to live,” but their actions are often “live to farm.”
Life balance is not unlike CEO responsibilities. We intend to give both priority – they are both important. Unfortunately, they both are often ignored in favor of tasks and actions that are both urgent and important. Time management is about priorities. Make plans and follow them to ensure a priority is on the “important but not urgent” – life balance – over the “not so important but urgent.” Enjoy every minute you can with family and friends.
5. Pennies count. It looks to be a very difficult financial year in the dairy industry. The old adage of “a penny saved is a penny earned” has imbedded in it a lot of wisdom. A very small increase in income or a small reduction in expenses may not seem like much relative to total receipts or total expenses. Small changes add up, and often are more significant when measuring the bottom line – profit.
Another component of small changes is focusing on making all of your processes “no defects” – executing processes exactly correct every single time. Quality assurance, consistency or reducing variation underlies the success of almost every successful business or organization. Commit to reducing the variation – eliminating mistakes – in every process.
Review these five focus areas and select one – and only one – to work on in the next month. Make plans. Implement the plans. Keep going. 2009 will be challenging, but remember. “when the going gets tough, the tough get going.”
• Robert Milligan is senior consultant, Dairy Strategies LLC, and professor emeritus, Cornell University. He can be reached at 888-249-3244, ext. 255, e-mail: firstname.lastname@example.org.
• Milligan conducts LearningEdge webinars on business leadership and management topics. For information, including a list of complimentary webinars, visit www.dairystrategies.com.