Offering "Expert" Opinions -- Dickeson
It wasn't until I read "Blink, The Power of Thinking Without Thinking," by Malcolm Gladwell, that I realized I'd become an expert in appraising the production system of printing plants in a blink of an eye—so to speak.
After you've run four or five plants, walked through 40 or 50 more across the world, like it or not, you acquire some degree of expertise that enables you to reach a quick, snap judgment about the production system. It only takes a thin slice of experience—quite thin—to reach this point. Arrogance? Hubris? Read the book.
That quick judgment doesn't satisfy a client who's paying you $10,000 for a report on the faults of his production system. So you take a couple of weeks and draft a 50-page report (with an executive summary) and go back for a conference to defend the conclusions. That's the consulting game. You become a consultant by self-declaration. You become an expert by landing sufficient consultation assignments to qualify you as an expert. You maintain expert status in the industry only by continuous reappraisal and refinement of your basic assumptions.
Invariably, consulting assignments start with a plant walk-through. The walk-through starts in the raw paper inventory. By the time we've completed this portion of the inspection, I know pretty well what we'll see in the rest of the plant. I've seen the opened reams, the unused butt rolls, the dinged corners, rain damage, haphazard stacking, skid trucks flying around, gouges, raw inventory stacked everywhere there was any space, even in the bindery and pressroom. You be the expert. This is your thin slice of Plant Alpha. Judgment?
Well, maybe it wasn't quite so bad as I've portrayed in this slice so let's thicken the inventory slice with a smattering of inventory data to see what it tells the expert. We must know these metrics from the perpetual inventory records—preferably in pounds, hundredweights, or kilos—as long as they're consistent: inventory beginning and ending on- hand; issues; receipts; and period of time covered. This reveals the average age of the inventory and the number of times it's being turned over each year. Aha! The slice thickens. Six turns? ICU—Intensive Care Unit. Twelve? Slow. Eighteen? Improving.
Now, perhaps, we're ready to make that judgment without thinking. But hold a moment; marketing and sales are the most critical items for the success or failure of a printing company. Raw inventory condition and turnover may tell us about how efficient the company is as a producer of printed product, but it tells us nothing about how effective the company is in its marketplace. I know, our assignment is to appraise production, but no owner or manager is going to be satisfied with that alone if he's losing money. So what can we look at next? How about a thin slice of receivables' aging?
Like the doctor, we need a few more metrics. Not a blood pressure cuff reading, but the beginning and ending balance of accounts receivable from the trial balance in dollars; collections; entries; and period of time covered. Now we know how fast (or how slowly) accounts are being collected. Six times a year? We're back in the ICU! Nine times? Slow. Twelve? Improving.
But what does aging receivables have to do with marketing or sales? If collections are slow, either the company has selected the wrong markets to address or the salespeople are not selling the product correctly. Think about it. There's some basic flaw in sales or finding the right accounts to be soliciting.
Agree? Five will get you 10 that if you look at a firm with slow receivable turns, you'll find a company consistently under-pricing its services. They're "buying" sales by extended credit or price cutting, or both. That's an expert speaking from a thin slice of aged receivables. Do you want to disagree? Let's hear it.
What's all this business of slices? Gladwell intimates in "Blink" that it only takes an expert a thin slice of a situation to be able to reach a judgment. He gives many examples. I'm trying to extrapolate "Blink" to the evaluation of a printing business. Perhaps I'm cutting the slice a bit too thin in just looking at the physical condition and age of the raw inventory and the age of the receivables. What more do you think the expert need see to make a a quick judgment? Certainly if both inventory and receivables are in the intensive care unit we know we have a pretty sick business, don't we?
What if the inventory's clean and turning quickly, but the receivables are slow? That's not so ready for the quick judgment, is it? Or, the other way around—dirty, slow inventory with fast receivable turnover?
Weighing You Down
Now, we've got to dig much deeper, get a hefty slice before we can make a judgment call. Is it slow invoicing? Too many relatives or playmates doing relatively nothing, dragging on the payroll? (That's a tough one to call—even with instant replay!) Poor plant layout? Outdated equipment? Over-reliance on obsolete methods such as budgeted hourly rates? Poor hiring?
Some of these things are readily discoverable. Some are not. You've got to dig hard and deep to find these. Most often they're traceable right to the top—the owner, the CEO—then what do you do? Tell him or her to hire a replacement and get the hell out of the way? In an unusual case maybe you do.
One of the most difficult, but important, things for a CEO to do is to hire people smarter than himself or herself. How does this happen? It's in the interview, not the resume. In the interview does the candidate ask questions about the company, the product, the position, how much top people are making, what training he'll receive? In other words, does the candidate turn the interview upside down?
Yes, Mr. Gladwell, there are many times when a thin slice of a printing company will tell all. But there are other times when that thin slice will confuse. We've got to know which size slice to demand.
—Roger V. Dickeson
About the Author
Roger Dickeson is a printing consultant located in Pasadena, CA. He can be reached at firstname.lastname@example.org. A PDF copy of his recent book, Monday Morning Manager, is available without charge by e-mail request.