208: Time and Cash: Navigating Life and Business

Dear friends
 
Thank you for your generous comments after last week’s leadership lessons from Caster Semenya’s Race to be Myself. I appreciated them.  

Before we start, a quick public service announcement, my favourite wine merchants, The Wine Cellar, have a limited release of young superstar Banele Vakele’s acclaimed Tembela Chenin Blanc and Shiraz. You’ll get great wine and be supporting an exciting young winemaker.

Whilst you’re there, grab some of Lourens Family Wines Howard John. A few weeks ago friends visited bearing robust cheeses from Cape Town’s French Market, the Howard John’s blend of Grenache, Cinsault and Shiraz was a perfect accompaniment.

If you’re reading for the first time, you can subscribe here. Please note, that I am taking a break next weekend, so our next letter will be on 15 June.

/strategy

Several clients have recently either taken over the leadership of or acquired businesses requiring revitalisation.

Their challenges of rebuilding through transforming culture, building sales, strengthening cash flows and reducing costs led me back to Louis Gerstner’s classic Who Says Elephants Can’t Dance?

It is the story of leading IBM back from the brink of insolvency, a must-read for anyone leading the transformation of anything.

Before joining IBM, Gerstner was CEO at consumer goods company, RJR Nabisco. Just before he joined, they’d been taken private through a leveraged buy-out and were drowning in the debt. Gerstner spent four years trying to guide the business out of the financing hole.

He comments “we had lender and creditor committees galore” and “I came away from this experience with a profound appreciation of the importance of cash in corporate performance – free cash flow – as the single most important measure of corporate soundness and performance”.

In 1992, the IBM Board starts courting Gerstner. He didn’t want the job. He reflects “I had learned a hard lesson at RJR Nabisco: A company facing too many challenges can run out of cash quickly”. IBM had a lot of problems.

Eventually, he entertains the discussion and asks to see current financials and budgets. He notes ‘its cash position was getting scary’.

Cash, cash, cash. It’s the unglamorous part of building a business. It’s not negotiable. Gerstner mentions it repeatedly.  

Morten Hansen and Jim Collins’ Great by Choice: Uncertainty, Chaos, and Luck–Why Some Thrive Despite Them All showed winning companies hold a much higher cash to assets ratio than less successful businesses.

In Beyond Entrepreneurship 2.0: Turning Your Business into an Enduring Great Company, Collins cautions “…growth eats cash. This is why roughly half of all bankruptcies occur after a year of record sales”.

It’s so important, that Verne Harnish’s pragmatic, business-building guide, Scaling Up: How a Few Companies Make It…and Why the Rest Don’t, has a whole chapter entitled, Scaling Up Cash.

Harnish advises management teams to spend at least an hour a month exploring ways to improve each aspect of the cash cycle. He goes so far as to suggest monitoring cash flow daily, together with a brief explanation of what has changed and why.

// self

Time is arguably even more important than cash, but we rarely measure it and often waste it. How we spend it shapes our lives and our businesses.

In 2023, the Gallup State of the Global Workplace showed six in ten employees are psychologically disengaged from work, being paid to be there but the conditions ensuring that they’re not present. It’s a staggering waste of time.

We do the same in our personal lives. We’re there but not engaged. You only have 168 hours in a week. How much do you spend in ‘quiet quitting’ mode?

It seems because we don’t know how many hours we have in the bank we spend them like there is always tomorrow. We shouldn’t.

Hemlatha, a character in Abraham Verghese’s beautiful Cutting for Stone caught in an old plane with failed engines plummeting towards the ocean reflects, “She had always assumed that she would have years to sort out the meaning of life. Now, it seemed that she would only have a few seconds, and in that realization came an epiphany”.

It’s a cliché, but if today were your last day, how would you spend it? Put in place a boundary condition; it’s your last day, but you must spend it in your current workplace and leave it ready for success, what would you do?

There are clues in that cliché.

Carl Jung once wrote, “What did you do as a child that made the hours pass like minutes? Herein lies the key to your earthly pursuits” (Thank you Donald Kau).

Time is not fixed. It can be good or bad. It can disappear or drag. You can bend time. Seriously, you can. Try these.

Pay attention. Be present. There is more time when you’re present to how you use it.

All the ancient technologies of meditation, prayer, resting in nature increase time. The contemporary technology of phone and social media burn and deplete time.

The five pillars of a good life are good physical and mental health, good relationships, finding beauty in nature and art, having a religious or philosophical outlook that makes sense of the world, and having meaningful work where you experience achievement and are of service to others. Spend time on these things and you will have more and better time.

Protect the quality of time.

Back-to-back meetings are time toxins. They decrease your ability to focus and engage, increase stress and levels of burnout. You’re ‘too busy’ not to have back-to-back meetings. What you’re really doing is reducing the quality of your time. Any HR director facing burnout risk in their business can simply insist on ten-minute breaks between meetings.

Be self-aware. If you’re a senior executive prone to rescheduling meetings, calculate the cascading effect through the business. How many people’s diaries are affected by your one ‘urgent change’?

Great at Work: How Top Performers Do Less, Work Better, and Achieve More explains working up to 50 hours a week gives us performance improvements, beyond sixty hours we get performance degradation. Pushing into those long nights creates substandard work that you or someone else has to fix.  

Ill-spent time is probably the world’s biggest, unaccounted for, cost. If you want better cash flow improve how people spend their time.

Adapt Harnish’s advice and spend an hour reviewing how you spent your time in May. Does it add up to the kind of life you want to build?  What adjustments could you make?

Do the same with the teams you lead. Spend an hour a month discussing how you all used time.

Time is elastic. Spend it on things that energise you, that build the life (or business) that you want, you get an energy dividend. Waste it and feel depleted.

This week, the New York Times published a great interview with Netflix co-CEO, Ted Sarandon (thank you Sanja Göhre). It is titled, “The Netflix Chief’s Plan to Get You to Binge Even More”…

/// soul

A conversation with a client took me back to Thomas Moore’s Care of the Soul, in which he writes “Insight is a fragment of awareness that invites further exploration”.

I hope you got that today.   
 
Best wishes
 
Karl

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PPS: I have space for two new clients from August. If you’d like to work with me, drop me an email.