Warren Buffet, Forbes et al talk about the dramatic value of capital allocation as the most crucial role for any CEO. Think of this as who gets the best money, best people and top management time, focus and sponsorship
You and I both have been there when politics, bluffs or gross exaggerations carry the day to misallocate scarce resources of money, key people and focus. If this sounds familiar, where are your key leaders putting their hand on your decision scale? What is the cost if that is happening in you your capital expenditure planning (CAPEX), budget, strategy or day-to-day leadership process?
Some may ask, does this really matter in the grand scheme of things.
Before answering, read What the Hell Happened? a featured Fortune article. It describes in cathartic detail the 18-month General Electric corporate meltdown. Buried in the middle of the article are off the record statements saying the biggest factor in this historic catastrophic destruction of shareholder value was “capital allocation” strategic decisions under Immelt.
Questions asked imply:
- Will GE survive in its recent form?
- Will it be broken up?
- If so, what are the pieces taken out?
- What will happen to its fabled leadership development process?
- How will the form its main businesses carry on look like?
Hardly the kind of legacy anyone wants to happen under their watch. With that reminder, where do you see some of these issues growing inside your organization?
Are you ready to realistically self-examine and consider options for how and where can you and your organization do even better?
Consider the proverbial scale from 1 to 10. 1 is “you may see us written about in our business journal, unless something changes.” 10 is, Harvard and Stanford etc. will write us up as the best example of capital allocation.
- What is your real score?
- What score do you want?
- Which CAPEX projects and opportunities could you pursue if you unlocked cash or financing?
- Now answer, are you even talking to your top people about this today, and regularly?
- Which of these same things creeping into your business?
Why not seize some near-term benefits as part of this process? Unlock cashflow to fund those deserving operational, IT and systems needs which just missed funding under the prior strategies and budgeting processes.
Let’s free up and accelerate some cashflow for more of your CAPEX projects as part of your review and improvements of however good (or weak) your capital allocation process is.
You can do even better by addressing these questions. Spotlight just one action to start immediately with a potentially lucrative ROI. Use that success and savings for the next item on your list.
READY TO TALK?
I’d love the opportunity to connect and learn how I can help you today! Email me at gary@FiscalDoctor.com or call 678-319-4739. Imagine how much you can benefit.
About Gary W. Patterson
Gary W. Patterson, president & CEO of FiscalDoctor®, works with leaders who want to make better decisions. He can also help increase your profitability, providing access to 100 best-of-the-best experts who are often better and cheaper than incumbents. Gary can be reached at 678-319-4739 or gary@FiscalDoctor.com