On my last ocean passage sailing from the Northeast U.S. to the Caribbean we encountered several days of squalls; one after the other. You can track them on radar and know when they are going to hit. We only encountered winds in the 30-35 knot range. In some squalls, winds can get up to 50-60 knots very quickly. As the old saying goes, “When the wind is up, shorten down”. That means, reduce the amount of sail you have before a storm hits because it’s harder to reduce sail area once the wind pressure is up. That makes the ride more comfortable in a storm, it lessens the stress on the crew and the boat, and it helps to prevent rig failures or torn sails. Once it’s over we let the sails back out and sail fast until the next squall hits.
The economy has seen smooth sailing for the past few years. Good economic growth, low unemployment, and low-interest rates. Operational and financial complacency often sets in with management teams during good times as there is less of an urgency to run lean and efficient operations. However, recently the Federal Reserve Board has been concerned about the economy. With such a long-running period of growth, their concern is for inflation creeping up causing rising prices and reduced consumer purchasing power.
The Fed’s traditional reaction to inflation is to slow the economy by increasing short-term interbank interest rates. They have begun doing that. The danger is the economy could slow too much and go into a recession. That would result in consumer and business buyers pulling back on spending. Companies need to anticipate a drop in revenue and reduce costs and expenses before that happens. “When the wind is up, shorten down” applies to the business world just as it does to a small sailboat in the ocean in a storm. Remember, the time to reduce sails is not when the wind pressure is already up, but well before.
We have done many cost reduction studies to help healthy and troubled companies reduce costs and expenses. We understand the need to maintain spending to continue strategic focus and momentum while alternatively looking to streamline organizations and processes and reduce costs and expenses. However, costs and expenses need to be balanced with falling revenues otherwise the result is usually unsustainable cash flow deficits.
Feel free to call us to discuss how we could help your company prepare for the next storm before the wind is up. Because you can never shorten sails too soon when approaching the next storm.
(c) 2018, The Fast Track Group, LLC
I recently a two-day workshop on Celestial Navigation. Almost everyone has seen a picture of a sailor using a sextant to read the angle of the sun to the horizon. What is not so apparent is the complex process for converting or reducing that to a latitude and longitude position in the ocean. There are some tables in the Nautical Almanac that provide data used in mathematical computations to “reduce” that angle to a position. To teach Celestial Navigation, our instructor had prepared a brief handout with tables and a step by step procedure for looking up the applicable data and computing a vessel’s position. For me, it made a mysterious process simple, easy to follow and repeatable.
In our consulting practice we’ve been involved for many years assisting our clients with process improvement projects where our work product is a new procedure document to guide personnel through complex processes; e.g., Accounting, Purchasing, HR, Payroll, Asset Management, etc. By documenting these processes, we identify and rectify inefficiencies, and we also produce a training document to guide employees through the revised processes.
By documenting complex processes, we also eliminate the fear that certain key employees are indispensable because only they know how to do complex and mission-critical operations.
Over the years we’ve developed an efficient means of documenting processes in both a flowchart and narrative format. That includes templates that we use to kickstart process review and documentation projects. Keep us in mind if your company needs its processes improved and documented. We can get the ball rolling quickly.
Meanwhile, we hope you have smooth seas and clear skies for your noon sights.