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Volume 18, Issue 33, August 22, 2008

Bad Advice

The Cone of Uncertainty

I’m a bit angry. I am angry with all the people who give advice to people on how to survive the downturn that don’t take the advice themselves and would have you become a test pilot on your dime while they sit, safely ensconced in some ivory tower office.

I thought of trumpeting our own horn this morning and probably will still do so, but I’ve talked to friends, associates and others that are really in the dark and hurting at the moment and I want to reach out to them today. I read every trade rag I can get my hands on. I was reading Professional Builder Magazine this morning and realized something odd. There were no page numbers. The index referenced page numbers, but there were no page numbers on the actual pages; none, zip, nada. So then I counted up the number of pages by hand and counted 68 pages. I took out an old PB magazine from a couple of years ago and it had over 300 pages. Boy, if that’s not a sign of the times, what is? It was not the lack of advertising that got me; you’d expect that to happen in a down market, what got me was the advice given in the various articles: Advice to tighten up your quality; bring prequalifying your prospects in-house and to spend money on differentiation and training your people. Each writer wrote from his perspective without regard to the whole of the company.

It’s just like that with Doctors. You go to a lung specialist and the problem is your lungs. Go to a heart specialist about the same issue and they’ll say your heart’s the root problem. Go to a gerontologist and he or she will point to something else. It is human nature to look at things through the eyes of your personal experience or interest. The advice you give is always couched in the knowledge and experiences you possess. Very few of us can use inductive logic to figure out what to do. We use deductive logic based on what we know and can remember. Bad advice from your Doctor can and will sometimes kill the patient. Bad advice in business can and will do the same. What can you do about it?

All of us need good advice to function. But it’s input only, not necessarily factual information that we can plug into whatever it is that we are doing at the moment. Your situation, my situation are uniquely derived by many variables and facts that in sum, are unique to us.
My advice is to listen to smart people but make your own decisions no matter how smart your advisers are. Always remember that it is you and not your advisers that will owe the money, suffer the consequences and answer for any missteps you may take. If you agree with me on this, then never delegate the decision mak-ing process on something that is central to your success or failure to anyone; make the call yourself based on what you know to be true.
The key to making the best decisions possible in an environment fraught with uncertainly is to make sure that you make your decisions based on facts, with as little emotion as is possible and as early in the game as possible.

Making adjustments early is an absolute key. As I write this, we are getting ready for Tropical Storm Fay to arrive. All of us have seen those National Weather Service tracking maps with the cone of uncertainty telling you which direction the storm might go. Notice that the cones are initially small and then get larger as the days are projected ahead. This references the obvious fact that we can predict the near-term much more accurately than the long-term. But, the tracking maps also teach us another lesson; that is, planning for long-term outcomes is much more expensive than planning for short-term probabilities because so much is unknown further out. The area of uncertainty is vast, but your resources are limited. Make adjustments that affect the short-term while under crisis and survive the storm is both our take and our recommendation.

Our industry is blessed with many facts to go on; sometimes too many. Cash flow is king in our industry. It should be profits, but in reality it’s cash flow. You need sufficient ongoing projects relative to your size and cash flow to be there when the great turnaround actually appears. Find good projects; they exist. Read your DEC reports and use the research services you are paying for with us to understand the market. Cut costs; don’t allow anyone to beat you on costs. Work harder and don’t be shy about asking for payment. Together we’ll prosper in this market. Good Selling! 
 
  
 
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