IF you have missed part one, click the button below to read from the beginning.
The story about Robert and his colleagues continues. Follow them in their endeavor to improve long-term cash flow by fundamentally changing the way their company prioritizes when spending capexes.
(The Characters in this fable are fictitious; any resemblance to real people or facts within the Corporation is pure coincidence only)
The Capital Allocation process – from Asset Strategy to Capex follow up – “We own it!”
Robert was out walking around the lake just outside the offices. As always, he was sipping on a decaf coffee. Mary had, for once, joined him. “Well done, Robert.” “
“Thanks, but really it was my group of coworkers…”
Mary raised her hand and said, “Stop it. I know what you are about to say: it was really the hard work of all our colleagues, etc., etc., etc. And you are right, of course it is. But you started it! You not only identified the need for change-you acted upon it. You were the one thinking beyond what we normally do. You are the one that initially took a risk.”
Now it was Robert’s turn to raise his hand and stop Mary, “Thanks, I appreciate it but it is a part of my job. The responsibility for the capital allocation process is in my job description and really it was not until now, or very recently, that the tools and process that enabled us to do this was made available to anyone.”
“That’s right,” said Mary, “but we are among the first to move when it comes to this-it will give us an edge for years, maybe many years. But our competitors will follow. And you know what? Maybe that is not so bad. No one benefits from anyone wasting money, not even competitors.”
Robert finished his decaf and threw the paper cup into the green trash bin. Mary did the same with the green tea in her cup and threw it into the same green bin. “Robert, have we implemented the tools and processes properly or are we still in need of help to operate it over a cycle?”
“We own it!” Robert said with a confident smile, emphasizing the word “own.” “From the company-wide Asset Strategy maximizing long term cash flow, down to the routing and follow up of an individual capex. From system administration, user rights and restrictions, to training of new personnel.” Robert continued, “We have fundamentally changed the way we think about capital allocation and capexes. We have changed our mind set. We are on top of it. It is now part of our culture-we have institutionalized it.” Mary could not only hear but also see how Robert, a normally very composed man, could not help but show his enthusiasm when speaking about the new and improved capital allocation process and the system supporting it. Robert continued, “Our ability to use and benefit from the system that supports and ingrains our capital allocation process is not dependent on any one person, group of persons, or consultants.”
Mary raised her right arm and rested her hand on Robert’s left shoulder, still walking. “Good! Because soon it will have to do without you. I’m being put forward as the new Chairman of Board and we would like to offer you the CEO position.”
Later that evening Robert was standing alone looking out over the bay. This afternoon he had felt excited about the news from Mary. And a little stressed. Yet now he felt calm. He remembered a tag line that the authors of “The tail wags the dog” had presented to him when introducing the systems and solutions that Robert eventually had implemented in the company. At the time, Robert thought it was a little silly, but now it came to him. The view of the sea with the mountains in the background was stunning and soothing; he was home early enough to kiss his kids goodnight. He felt calm and confident. He had made the “Weissr” decision.
Do you also want to make the “Weissr” decision? Contact us at email@example.com or phone +46 31 761 07 30.