Interim C-Suite Lessons From The Ocean

I often Captain our sailboat, Tango, between New York and the BVIs where we use her for winter sailing vacations.  These are 1,500-mile, open-ocean passages.  While on night watch I have lots of time to think about the comparisons of Captaining a small sailboat in the ocean and Interim C-Suite projects.  Each ocean passage, even on the same boat, is completely new and different from the other.  You often have new crew, different weather patterns, different mechanical issues, etc.  It is not unlike taking on Interim C-Suite assignments with new management teams and different business risks.  Here are some of my thoughts conjured up during my night watches.


When undertaking an ocean passage a Captain must have an objective and a strategy for achieving the voyage.  When we transit Tango South and North in early November and May, respectively, our objective is to reach our destination safely and comfortably for the crew and boat.  Our strategy takes into consideration a SWOT analysis that comes out something like this:

  • Strengths: We have a well-found boat and we keep it highly maintained because there are no boatyards in the ocean.  We do lots of preventive maintenance before we depart so that we have a high-level of confidence in our boat.
  • Weaknesses: It’s still a small boat in a very large and potentially angry ocean.  We mitigate the risk of bad weather by engaging the services of a professional weather routing service and waiting, if necessary, for a good weather window.
  • Opportunities: Shipping our boat to the BVIs would be cost prohibitive.  Delivering our boat ourselves can provide a thrilling ocean passage and an enjoyable winter sailing season in the BVIs.
  • Threats: There are lots of threats in undertaking an ocean passage on a sailboat.  For example, I’ve experienced engine failure, surprise storms, etc.  To mitigate the wide variety of risks, we routinely route ourselves through Bermuda even though it’s a bit out of the way so that we minimize the elapsed time at sea between our origin and destination.  In that way, we can reach a safe harbor if bad weather is brewing or obtain assistance more quickly in a wide range of emergencies.

When taking on any Interim C-Suite assignment (e.g., CFO, COO, or CEO) we always want to understand the Company’s objectives and ask to see the strategic plan.  Has the Company considered its Strengths, Weaknesses, Opportunities and Threats?  How is it preparing to address them?  Does the Company have a Budget and a Cash Requirements forecast?  How does the Company mitigate its Business Risks?  If the Company hasn’t done that level of planning, that might be our starting point.


On a boat in the ocean there is an organization structure that enables the Captain to execute the strategy.  For example, a crew of around four people facilitates round-the-clock watchkeeping.  You can’t pull in somewhere for the night.  Every crew member must have experience to perform their assigned role.  As the Captain, I’m not the Cruise and Entertainment Director.  Nor am I running a sailing school; however, I recognize that I need to communicate my expectations and even a skilled crew will need training on the boat’s systems.  My objective and strategy is geared towards safely and comfortably delivering the crew and boat from New York to the Caribbean; however, I also want the crew to enjoy themselves so that good crew will want to sign up for future voyages.  Most of my crew are “repeat offenders”.

When comparing sailing crew to a business management team, the management team needs to be properly organized and disciplined to achieve the business strategy – much like a watch keeping system where everyone has an assigned role.  And, management team members must have the requisite skills to perform in their assigned functional roles; e.g., be it a Controller, HR Director, COO, etc.  This is especially the case in troubled companies where we often take on Interim C-Suite assignments.  As Interim executives, we need to communicate our expectations for meeting performance expectations.  We may also have to provide training where we find skills gaps that need to be filled to move the company along its strategic plan.  And, we want the team to enjoy and learn from our experience so they will want to hang on for the ride.


In the ocean, we have lots of Risk Management processes intended to provide an early warning of trouble ahead.  Little problems can be better dealt with early on.  For example, we have “Standing Watch Orders”.  These are essentially written directions to the watchkeeping crew.  For example, at the start of each watch, the watch-standing team lifts floor boards to make sure there is no water in the bilge, checks the engine room for nothing unusual.  If we have a leak it’s best to deal with it early on before the floor boards are floating and the boat becomes unstable.  We also have processes to obtain weather forecast information several days out so we know if we need to alter course to divert for upcoming storms or low-pressure systems.  These processes are intended to mitigate risk at sea by providing an early warning system.

In the business world, we should have Risk Management processes in place, also intended to provide an early warning of trouble ahead.  For example, we start each year developing a budget and cash requirements forecast.  Each month we compare that to actual results to identify unfavorable variances so that management can take early corrective actions or course corrections to avoid upcoming business storms.  If done monthly, we have a better chance of correcting the situation before it becomes a large cumulative unfavorable variance at end of the year.  The difference between companies that survive or fail in a down economy is often the difference between those that manage risk early on and those that don’t.


Our boat has lots of great communications gear to obtain weather and course information.  For example, we have an Inmarsat Broadband satellite communications system that provides voice and data communications.  I can use that to download zip files of detailed weather maps along our route.  The satellite system can be quite costly so I need to weigh if I need weather information at that level of detail.  I also have a Single Sideband (SSB) high-frequency radio that I use to communicate verbally with a weather router thousands of miles away.  The SSB is older proven technology that costs very little but sometimes the summary information the weather router provides is more useful than detailed weather maps.  We also have detailed chart plotting via a GPS system and we have an old fashion magnetic compass.  In the ocean, I don’t need detailed charts.  I need a compass heading to steer.  So, the real question is, am I getting the basic information I need to manage weather risk and steer the correct course and at what cost.  Sometimes the less costly SSB radio and magnetic compass are better alternatives over more costly and complicated technologies that can provide too much information.

Companies also have a need for Information Technologies to obtain the information they need to manage risk and meet the business objectives.  Accounting and Operations systems typically provide needed information on the status of the company’s cash, inventories, production, etc.  Often in troubled companies we find a frustrated CFO dealing with an undisciplined management team that doesn’t use the information that is being provided.  Before migrating to costly new technologies providing detailed drill-down data capabilities, we ask the following questions: Is the management team getting the basic information they need to manage the company towards achieving the strategic objectives?  Can they get variance reports or cash requirements forecasts?  Do they understand how to use what they get and do they use the reports daily?  Does the Board get reports and hold management accountable for meeting results?  If the Accounting and Operations systems can provide at least the basic information but it’s not being understood or used, then more detailed information and costly new technologies are probably not the answer.  The correct answer might lie in more disciplined Board Governance and Management processes that are needed to keep management steering the correct course.  We see that more often than not.

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These are the kinds of comparisons I make while standing my night watch in the ocean.  If we can help you better navigate your Company towards your business objectives with an Interim C-Suite project please contact us.  Meanwhile, wishing you fair winds and following seas.

© 2017, The Fast Track Group, LLC

Acquisition Integration for Portfolio Companies

Over the years, we’ve consulted with a number of Private Equity clients and their newly acquired portfolio companies.  PE firms invest in portfolio companies, in large part, based on the ability of the acquired management team to execute on an agreed-upon strategy, use capital efficiently and provide the underwritten ROI.  PE firms usually do not want to get involved in day-to-day management.  What they do want is timely and accurate reporting to provide an early warning if things are going off the rails.  This reporting requirement is often an early point of frustration in an otherwise good relationship.

The incumbent management team has probably been operating for years on a monthly reporting package, largely comprised of a simple P&L report.  The PE firm’s portfolio management group will want more detailed financial reports and operating data.  They want to quickly peruse the monthly reports for exceptions.  If all is going well, the management team may not get many questions beyond a status inquiry on strategic execution.  However, if the local management team can’t produce timely and accurate reporting after a reasonable post-acquisition period, then they might get a visit from the PE firm’s consultants to help them get their reporting up to speed.  We have completed a number of such assignments.

We usually start with a Fast Track diagnostic review to determine what is bottlenecking their ability to provide their PE firm their required reports.  We would want to look at the accounting organization; does it have the bench strength to support the new reporting requirements or does it need beefing up?  We’d also want to look at the processes by which data is accumulated, summarized and reported.  Does the General Ledger Chart of Accounts need to be revised to facilitate new more detailed financial or operating reporting requirements?  What are the review processes for ensuring timely and accurate monthly closings?  What are the Accounting and reporting IT toolsets?  Does the Accounting system need to be upgraded?  Are they using Excel for all reporting or would a different reporting package be better suited to the new requirements?  We then develop an implementation plan to improve the portfolio company’s reporting function which we usually sort into Quick Hits and Focused Improvement Opportunities.[1]

Here are several examples of how we’ve helped PE clients and their portfolio companies get their reporting on track.

  1. A leading PE firm in New York, had acquired a branded furniture manufacturing company in North Carolina about a year prior. Financial reporting was been slow and getting slower.  When the reports were sent to the PE firm and questions were raised, the CFO would take months to pull an answer together.  That was causing concerns within the PE firm.  They were still solidly behind the management team but questioned the ability of Accounting function.  They wanted to be helpful with their new management team – not punitive – in sending us in.  Here is what we found in our diagnostic review.When the acquisition was completed the PE firm had funded the implementation of a new accounting system.  The implementation was never fully completed and ran over budget.  The CFO didn’t want to ask for more funding to complete the project.  As a result, he had cobbled together the old and new (incomplete) systems, using Excel as a reporting bridge.  That made the monthly close a very time consuming process.  That caused a several-months lag in each monthly close.  Then when the PE firm raised normal questions, the analysis was impossibly time consuming.  Each question posed caused a cascading effect of causing additional bottlenecks.  We proposed a plan that included completing the implementation of their manufacturing ERP system together with a restructuring of the General Ledger chart of accounts and a newly designed monthly reporting packages.  We also proposed a bar-coding system on the factory floor to better track WIP inventory.  We completed our implementation plan on time and on budget and the PE and local management teams maintained their otherwise good relationship.
  2. Another leading New York based PE firm had acquired a global chemical manufacturer headquartered in Pennsylvania. Shortly after the acquisition the portfolio company began having trouble consolidating their monthly financial statements causing reporting delays.  And, their newly installed CEO wanted much more operating data than the prior CEO wanted.  The company was about to embark on a costly seven-figure ERP system project with a “Big 4” consulting practice.  At the same time, there was a market downturn in a sector this company served.  We were asked to see if they could revise their closing processes in the short-term to defer the project until the business recovered.Our diagnostic review revealed that the various country-specific subsidiaries were all on different Accounting systems.  However, they had a sound consolidation process if each local company would comply with the timing requirements for submitting consolidation worksheets in Excel.  The problem was simply a lack of discipline.  We developed a submission timetable and elicited senior management support to enforce reporting disciplines.  Accordingly, we assisted the portfolio company to delay the project until the business climate improved.  That helped smooth things out between the PE firm and local management team.
  3. For a Private Investor in New York we conducted a diagnostic review of an operating company he had invested in which was located in a Mountain state out West. The company was using QuickBooks in a multi-company and international operating environment.  QuickBooks could no longer efficiently support their Accounting and reporting requirements.  The company had purchased Great Plains (Microsoft Dynamics) package several years prior but had simply never implemented it.  We were asked to come in and implement the package.As usual for us we started with a diagnostic phase of work.  We found that a single person in the Accounting reporting area was reluctant to move off QuickBooks onto something new and unknown.  He was working long hours cobbling together reports in Excel and was fearful that the new system would only add to his burden.  We worked with their local CPA / consulting firm to develop an implementation plan and convince the financial reporting person that the new system would actually lessen his workload.  Within several months, the package was implemented and the investor and the local management team could get the reports they wanted on a timely basis.Once the package was implemented and useful financial information was being provided to the investor, we were retained to assist the company in solving a variety of financial control issues, such as establishing budgeting and variance reporting processes and disciplines and serving in a “C-Suite” capacity by leading, on behalf of the remote investor, monthly management review meetings; essentially as a local representative of the investor overseeing the management team.


As these examples indicate, there are often hiccups in relationships with new investors requiring enhanced reporting from incumbent management teams.  These hiccups can damage the early trust of remote investors and local management teams if not quickly addressed.  It is important for the PE firms to approach these early issues with the perspective of offering post-acquisition consulting assistance as compared with taking punitive measures.

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For more information on how we can help solve your firm’s post-acquisition issues, please contact:

Richard (Rich) Azar


[1] Quick Hits are tasks that could be accomplished with little or no investment required – usually simple process changes.  Focused Improvement Opportunities are tasks that would require more time, effort, and possible investment to implement.

© The Fast Track Group, LLC, 2017.  All rights reserved

Budgeting in Troubled Companies

Budget 2017 - Business Concept. Budget 2017 - Business Concept on Blurred Background. Office Folder with Inscription Budget 2017 on Office Desktop. 3D Render.

In a public company environment, management takes budgeting and monthly variance reviews for granted.  Senior management reports its earnings outlook to the analyst community and then manage activities to meet those earnings expectations.  These disciplines are often lacking in private mid-size companies and are even more often lacking in troubled companies.  In fact, that is often one reason a company is troubled.  Budgeting and variance reporting are all intended to force management accountability and results.  Without those disciplines you get “drift”.

In addition to being used to manage toward profit goals, budgeting and the subsequent variance reports are useful in strengthening a company’s system of internal accounting controls.  Often during variance review meetings accounting errors pop up as variances when comparing actual results to budgeted expectations.

When we refer to a company’s budget we are referring to a frozen annual budget that is established before the start of a fiscal year.  Typically, management prepares this in the last quarter of the prior fiscal year and presents it to the Board before the start of the new year for approval.  All management authority rests with a Board and in approving a budget the Board is delegating to management the “general” authority to run the business within the context of the approved budget.  (This assumes the Board has already approved the Strategic Plan for the upcoming year.)  Without approval of the annual budget management essentially has no delegated general authorities.  The budget also sets the Board’s year-end profit expectations for the management team.

Management must view the budget as a sort of contract with the Board.  Management can’t exceed spending limits beyond certain pre-approved thresholds without getting specific approval from the Board.  And the Board has every right to expect the profit goals to be met.  That is why the budget is a “frozen” annual budget.  If it kept getting revised, it would be like a moving target that management could manipulate every time the profit targets prove to be challenging.

How should profit targets be set?  That would depend on a variety of trends, including the state of the economy, the Company’s product or service growth curve, changes in legal regulations impacting the company, etc.  I like to see realistic budgets for accurate planning purposes, tempered with some challenge to management to grow the company.  The term I like to use is “reasonably attainable stretch goals”.  The frozen annual budget should be set with reasonably attainable stretch goals.

Budgeting should start in the fourth quarter of a fiscal year.  During that period there should be a halt on management’s taking on any new major financial commitments that would impact the upcoming year – unless of course the Board approves – prior to completing the year’s financial plans.

The Accounting staff should distribute budgeting templates for cost and profit center managers to use in preparing the upcoming year’s budgets.  Those templates should include historical sales, cost and expense trend information.  The budget line items should line up exactly with the line items in the company’s P&L or Variance reports for ease of monthly reporting.  A budgeting schedule with submission deadlines should also be distributed and enforced by the senior management team that allows their review and revisions and submission to the Board for its approval before the start of the upcoming fiscal year.  It would be unusual if a budget didn’t go through two or three iterations before it is finalized.

Once the budget is approved it should be uploaded to the Accounting system so that variance reporting can be automated.  Variance review meetings should be held monthly as that allows management a maximum number of points to review progress against the profit plan and to take corrective actions to get things back on track, if necessary, to meet the Boards year-end profit expectations.

Frozen annual budgets and monthly variance review disciplines are essential tools in helping to turnaround troubled companies.  If your troubled company doesn’t utilize these tools, it is unlikely it has a chance of being turned around.

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For more information on our services please contact

Richard T. Azar


© 2016, The Fast Track Group, LLC

The Fast Track Approach to Strategic Planning

Blackjack pays 3 to 2

Establishing and com-municating a simple, concise and clear strategic plan is essential to getting all parts of an organization moving in the right direction to achieve a company’s objectives.  Many clients make such a big deal about strategic planning that they either never do it or they start down the path and get caught up in “paralysis by analysis”.  Here is our Fast Track Approach to Strategic Planning.

To start with you have to stop thinking of a strategic plan as some kind of esoteric and ephemeral tomb of a document.  As an example of what it really is, think of strategic planning as how you would approach a game of Black Jack or 21 at a casino.  If you sat down at a Black Jack table with no understanding of how to play the game, you’d certainly lose your shirt.  Same as if you were in business with no understanding of how to play the business game that you’re competing in.  You need to know the rules and how to use them to beat the competition.  So, let’s assume you are a professional gambler in the business of playing Black Jack.  Now, let’s do some strategic analysis to determine your plan to meet your objective of beating the dealer.

  • In a game of 21 the objective is to beat the dealer by either getting closer to a point count of 21 without going over, or going bust, or by getting the dealer to go bust.
  • Each card in the deck with a numerical value counts that as its point value. Face cards, (Jacks, Queens and Kings) also count as 10 points and Aces count as either 1 or 11 points.  Out of a deck of 52 cards, more cards count as 10-point cards if you consider the four 10-spot cards and all the 12 face cards.  That’s 16 cards out of 52.
  • That means if you have 12 points or more in your hand, you should not draw another card as you have a greater chance of drawing a 10-point card and going bust at 22 points. Likewise, if you have less than 12 points you should draw another card.  Say you have 11 points and draw a 10-point card, then you have 21.  Great!
  • The dealer on the other hand is required by the rules to keep drawing cards until there are at least 18 points in the dealer’s hand i.e., must draw on a soft 17 (a hand of 17 containing an ace being counted as 11).
  • Given the number of 10 point cards in the deck, it seems better to make the dealer go bust drawing on up to 17 points rather than your risking going bust trying to get closer to 21.

So, now that you’ve done your strategic analysis the strategy should become obvious:

Draw cards until you have at least 12 points in your hand, then stop.

It is a simple and concise strategy that can keep you on track even when distracted by all the machinations going on around you at a Black Jack table.  If you had lots of professional gamblers on your payroll, you could easily communicate with them how you wanted them to play the game.

How does this Black Jack example translate to strategic planning for a business?  Naturally the strategic analysis would be more involved than in the above example.  When we looked at the rules of playing Black Jack, we were essentially looking at what limits or extends your ability to compete.  The classic SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) would need to be completed along with an internal financial analysis.  In a real life business exercise, we’d be looking at administrative rules and regulations (existing and proposed changes) that can be either a threat or an opportunity.  The same would be the case at looking at micro- and macro-economic trends.  And, of course, we’d be looking at competitive forces, market preferences and your internal strengths and weaknesses.  Once we have completed the strategic analysis, the strategy usually becomes obvious.  It must then be communicated and implemented.

The communication process also often gets too complicated with too much wordsmithing delays trying to write the perfect Vision, Mission and Values statements.

  • The Vision statement speaks to what the organization wants to be known for either now or at some point in the future.
  • The Mission statement provides more specific direction to the management team in terms of what business the company is in now, what it does and who it serves on its way towards achieving its Vision statement.
  • The Values statement provides cultural guidance on behavior.

In drafting these three statements CEOs often start thinking in terms of lofty personal legacy goals that no one can translate into how to do business on a day-to-day basis.  We suggest starting out by keeping it simple in communicating these three statements.  They can always be revised in a year after a company goes through another annual strategic planning cycle.  Or, at the least draft one simple statement that clearly communicates the strategic plan in the simplest of terms.  Remember the above Black Jack example.  It doesn’t get any more simple or effective than that.  You can always work on the three statements later.

Our approach as described herein is of course a Starship Enterprise view of Strategic Planning.  Certainly much more is involved.  Nevertheless, if you make it more than it is, you’ll never get done and will most likely fail in the process.

And now for the disclaimer.  Don’t take the above example to a casino Black Jack table and hope to win.  The house odds are against you.  Don’t call us when you lose your shirt.  But, do call us if we can help you with your Company’s strategic planning effort.

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For more information on our services please contact

Richard T. Azar


© 2016, The Fast Track Group, LLC