Interview in the Tulsa World

This article was recently published in the Tulsa World.  It is probably one of the better explanations of our consulting practice focus at Armada.  

5 questions with Scott Wise

By JOHN STANCAVAGE World Business Editor 
10/3/2008
Last Modified: 10/3/2008  2:59 AM 

1. What does Armada Consulting do?   

Armada Consulting works with companies to improve performance and profitability by giving executives deeper insight into their finances and supporting them with process improvement projects to reduce costs and positively impact corporate performance. 

Our services include strategic planning, financial modeling, business intelligence and organizational development. As companies grow, infrastructure and an expense base is built that is often difficult to understand, and many companies lack the visibility or transparency into the operational drivers that cause costs to rise over time. 

This rise in expenses is usually not an issue as long as revenues grow faster than expenses. However, as revenue growth flattens and margins deteriorate, cost reductions can’t come fast enough. 

Armada assists clients with answering the million-dollar question: Where can we strategically afford to reduce expenses? Too often, organizations make hasty decisions to reduce costs with little regard to the negative impact it can have on their customers, employees, strategy and community. 

2. What aspects of this business attracted you personally? 

I love of solving complex problems and making a quantifiable impact on performance. 
The way we apply business performance management at Armada allows me to exercise my skills in both finance and technology; the practice heavily depends on an ability to “operationalize” the financials of an organization, which, for some of our larger clients, can be very data-intensive. 

All of our consultants have to be equally talented in both finance and technology, as this provides a greater value to our clients in that we can identify the required data and, more importantly, can then mine additional data from operational systems. Our practice also requires a certain level of competitive spirit as we are often challenged to measure what was thought to be immeasurable or too complex to measure with any degree of accuracy. 

3. Do companies seem to put more emphasis on performance management during tougher times? 

Tougher times dictate an emphasis on becoming more effective, more productive and more profitable with fewer resources. 

Cost containment is high on a very short list of CEO and CFO priorities. During tough economic conditions, their immediate reactions are to identify short-term quick fixes. But time and time again, we see the leaders that invested in cost control, continuous improvement and performance management initiatives in the good times are the ones whose companies can ride out and often profit during tough times. 

This occurs for one reason: they have better information and insight into their financials. They can predict revenues and expenses based on forecasted customer demand. 

4. We’ve seen a number of high-profile, seemingly successful businesses implode financially recently. What are the biggest pitfalls fast-growing companies face? 

Fast-growing companies are exciting to watch, and we love to cheer on innovative companies that can grow revenues through better products, better service and better strategies. However, sometimes companies simply “grow too fast” and skyrocketing revenue growth exceeds the capacity to deliver, which then requires a corresponding growth in expenses. 

Priorities are placed on continued revenue growth, and investments of earned margins often follow those priorities, or excessive infrastructure. 

Often these companies fail to make necessary investments in internal controls, cost management or business intelligence systems. 

5. Briefly, what can a company do to build in safeguards or controls that would lessen its risk of flaming out? 

The U.S. economy has recently experienced historic losses in the stock markets. 

In the past few weeks alone the market has dropped more than 10 percent. If a company has a similar catastrophic drop in revenue, how quickly can it respond to maintain profitability? 

At Armada, we believe risk is always a function of the certainty and availability of information. But information is only as valuable as the action it initiates. 

Companies can lessen their risk of flaming out by: 

• Proactively managing costs with a focus on profitable growth over revenue growth,
• Preparing for both unforeseen threats to financial performance and opportunities to capitalize on competitors’ mistakes, and
• Adopting a perspective that embraces long-term strategic decisions based on fact and avoid reactive short-term decisions based on fear.

 

By JOHN STANCAVAGE World Business Editor 

 

Corporate Titan or Titanic

The highly publicized rise and fall of companies like SemGroup have erie similarities with the story of the Titanic. And like the Titanic it is too easy to dismiss the disaster on the environmentantal variables like an iceberg or a poorly controlled hedge fund strategy. There is a deeper plot to each story, leaving us with the question;  What causes these companies to sink like the Titanic?

Arrogance – The Titanic set lofty goals to arrive in New York a day ahead of schedule, ignoring safety warnings,  more to the point leadership valued goals and visions more than the people around them. They thought the titanic was invincible. The collapse of many corporations begin at the top, the difference being the captains of industry rarely go down with the ship

Speed – Speed caused the Titanic to sink. They were simply going too fast. Likewise companies sometimes ‘grow’ too fast. They are on such a pace that they forget to put in the necessary controls and processes that ensure longevity and long term performance.

Visibility – Lack of visibilty was another key contributor to the sinking. The crew of the Titanic had limited visibility in what lies ahead of them.  Financial strength is usually found in those companies that can accurately predict their revenues and expenses based on customer demand, not speculative measures or statistics.

Maneuverability – The final blow to the crew of the Titanic was maneuverability. The ship was simply to big to correct their course and manuver around the challenges ahead. Likewise rapid growth in an organization often creates additional infrastructure and overhead that make it difficult to respond quickly to both opportunities and threats to a business.

The moral of the story is that the obstacles your business may be on a collision course with are not controllable. But the ability to respond to those challenges with a positive outcome are completely controllable, and that level of corporate discipline is the difference between magnificent success and catastrophic failure.

Consulting or Visioneering?

My addiction to the Apple Store began with the iPhone, it soon progressed to an iMac,a MacBook, and now even MacBook Air.  There is something special about everything Apple does and behind the vision there has to be miraculous feats of engineering to bring it to reality, hence the concept of Visioneering.  While Steve jobs has long been described as a visionary force behind Apple,  without the ‘visioneer’ his ideas would be dismissed as day dreams.  The vision cast at Apple surrounded employees in what has been described as a  ‘Reality Distortion Field”, with developers believing anything is possible.   Today, business has a insatiable appetite for innovation, believing “anything is possible with the appropriate allocation of time and money”.  The concept of ”Visioneering”; taking a vision and engineering it into reality, is definitely a rare talent.  The attributes of “visioneers” are often the characteristics that make great consultants and trusted business advisors.

To be successful in consulting you must acknowledge and accept the difference between the visioneer and visionary. As consultants we have a unique experience of implementing multiple projects at a variety of clients, often very similar in vision or purpose.  We experience various successes and failures on each implementation, and with that experience we gain the capabilities to make the next implementation even better.  However, every company is unique and different and ‘best practice’ at one company may not succeed at another. The worst consultants presume they have all the answers, that their way is best, and that they are smarter than the clients.  But the great ones listen and acknowledge that each project will require customization specific for that company, and that the elements required for that customization can only come from people who work there and live it day after day.  Success happens only when a consultant applies their visioneering skills in serving and championing the unique vision of a strong company leader.  So if you have the heart of a visioneer, find a visionary with a vision and purpose that you can champion. To be a successful you need:

• a measurable dissatisfaction with the status quo
• a clearly communicated vision of what could be
• an executable plan for getting it done

I have had the pleasure of building special client relationships over the years, with some really intelligent, dynamic, and passionate business leaders.  All with visions to make their companies better.  At Armada Consulting we have embraced the concept of Visioneering with a collaborative approach that is part Jerry Mcguire and part Macguyver.  Fewer clients, more personal service, and a ‘can do’ attitude to work with whatever is available to engineer our clients vision, this is our commitment to our clients success both corporately and personally.

Beyond Transparency

One of the many fall outs of the corporate accounting scandals (Enron, WorldCom, etc..) in early 2000, was the concept of financial transparency.   As Sarbanes-Oxley regulations were implemented, the CFO function of organizations began to evolve beyond the corporate persona as number crunchers and budget cops, and was invited to the strategy table.  Not just as integrity champion or implementer of corporate controls and governance, but it was finally understood that Finance is the universal language of business.   Since that time Finance departments globally became actively involved in corporate initiatives, large projects, and strategic decision making.   The role of the CFO became the Chief ‘go to’ officer for everything from Information Technology transformation to back office operations, taking on roles traditionally occupied by CIO’s and COO’s, even becoming heir apparent for replacing CEO’s in many major corporations.
However, there are seasons in life both personally and professionally and while the spotlight has shined on Finance professionals for several years a backlash is beginning.  At the core of this backlash is the same concept that brought the focus to Finance as a strategic partner, Financial Transparency.  In the wake of the implementation of controls, reporting, and systems to ensure transparency, the perception of Finance is slowly reverting back to the number crunching budget cop persona of the past.   Almost as though someone finally had the time to look up the definition of the now corporate buzzword of Transparency, which is “The full, accurate, and timely disclosure of information”.   Business managers are now asking Finance for needed information, or to clarify the credibility of the information, but choosing to interpret, analyze and make business decisions independent of Finance support.  Too often now, presentations and proposals to executive management lack independent review from Finance, while the presenter still emphasizes that ‘Finance provided the numbers’, giving them a Teflon covering in case the proposed action fails.
In order to avoid slipping back in to the corporate dark ages, Finance needs to proactively restore relevance to their craft.  Moving beyond transparency and the simple disclosure of information, Finance must drive performance improvements and empower themselves to be the corporate steward before the next crisis arises.  The following factors can determine your readiness to move beyond transparency:

• Kevlar over Teflon – True leaders are those who would rather challenge what needs to change and face the firing squad than to remain silent and slowly die inside.    Corporate America needs more professionals willing to put on Kevlar to champion change, and less professionals managing with a ‘no stick’ policy in an effort to keep their jobs.

• Insight over Information – The amount of information available electronically is doubling every 12 months, so the adage of information is power no longer applies.  Information is a commodity; the ability to transform information into insight is what makes Finance professionals powerful.

• Performance over Politics – 
It no longer matters ‘who you know’, or even ‘what you know’ in your climb up the corporate ladder.  Success today is defined simply by what you can make happen.  Performance pays; and your ability to execute strategic initiatives that have a positive financial impact will move Finance professionals beyond transparency.

Scott Wise  President, CEO  Armada Consulting