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.
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