Friday, June 02, 2006

We Don't Do Reengineering...Not Anymore...

We Don't Do Reengineering . . . Not Anymore . . .

When we were founded 1976, one of the services we offered was reengineering. With our years of IE, IT, and OD experience we were good at it. Proud of our work.

In the early eighties though, we read a study which showed that only a third of reengineering projects might be deemed "successful". And if success were defined as a first-year profit improvement of 10% or more, it was much lower.

We did however find some companies where the improvements were significant. So we researched.

We found that in every case, something had changed apart from the business processes being reengineered. That something was the Operating Dynamic*.

So we added the capability to trigger those changes and our client ROI's became large. However, by 1985, we realized that changing just the operating dynamic alone, could achieve remarkable profit improvements, and at a fraction of the cost. With that, the ROI's became great; 10:1 the first year was to be expected.

That is what we specialize in now.

But before we go further, some third party validation: Last year McKinsey and London School of Economics (LSE) issued a report on their multi-year study of 100 companies, chosen at random. We have excerpted them, with onward links, at: Companies Increase Financial Returns.

If you would like to know how it works, please contact Tom FitzGerald at or 847-599-9960. We will be happy to speak with you; no strings. We know this is not for everyone.

Information can be accessed on our web at Publications. Each paper has been published in multiple magazines.


Bad News for M&A

Acquisitions - Only 30% Will Be Successful

For every 100 acquisitions made, only 30 will be successful. (P.F. Drucker)

These are not new numbers; they have been quoted for at least the past forty years. And rarely, maybe never, are they seriously challenged; they seem to be the common experience.

Much is talked (afterwards) about what was done or not done. But the root cause is rarely addressed.

The real reason why so many acquisitions fail, lies in what due diligence audits omit: They do not look at the most important part of the company - its Operating Dynamic; that which drives and impels future performance; no matter what the acquirer wants.

You know what the Operating Dynamic is of course, though you may not put that name to it. But, because you believe it is not measurable, not quantifiable, you must cross your fingers, and GUESS at its value. And your guess is always rosier than the truth.

You would NOT guess about the financials or the KPI's; these you would measure. But you do guess about the Operating Dynamic. And this means you pay more than you would if you knew - really knew - what it was.

This is no longer necessary. Since 1985 we have been measuring the Operating Dynamic of companies - in depth and in detail. And helping CEO's trigger profound changes in them.


The Post-Acquisition Due Diligence

The Corporate Polygraph


A Time of Renewal

A Time of Renewal

This is the time of rebirth:
For all of nature, in the physical sense.
For our spirit also, a time for new beginning.

But in this work, we mostly forget the renewal of our most precious gift: Our company's way of living. And these companies are - just as we are - living, breathing, entities, with a spirit of their own. Able to transform. Willing to transform. If we but ask.

We hard-headed business men and women seldom speak of corporate spirit, or acknowledge its existence. Perhaps we are embarrassed - or afraid. Though every single working day we feel that spirit, and bear the burden of it.

Leaders, especially great leaders, know that this spirit exists. Know that it is the foundation and source of corporate success - and failure. And know that they can renew it.

Links to Abstracts

For those who are not afraid to think about the spirit of their companies, more can be learned at:
The Company: A Living Entity.

For those who would like to know how to renew, revitalize the spirit of their organizations, see:
Fire in the Corporate Belly.

And for those who, ever practical, want to know what’s in it for them, in cash, the answer is here:
Companies Increase Financial Returns by 40%.

An Ode to Spring :-)

Spring is sprung
The grass is riz
I wonder where the Boidies is

It's said the boid
is on the wing
But, think I,
The wing is on the boid.

Attributed to Dylan Thomas upon his first encounter with the Bronx in springtime. He has always denied this.

We Don't Do Strategy...Not Anymore

We Don't Do Strategy . . . Not Anymore . . .

We don't do traditional strategic planning these days; not because we don't like it or are not good at it; but because it is virtually useless as a way to trigger significantly higher (10%+) profits.

We don't do tactics either. Or IT systems, or process reengineering, or any of the other programs - for much the same reason. Though their impact on the bottom line can be better. However, even the best of these, business process reengineering, is deemed "successful" in only about 30% of companies. (If you think about it, 30% is just about the placebo effect.)

All of these, (and all the other "improvement" programs too, all the way back to MBO,) require something else to make them really work. For example, a study by LSE/McKinsey of 100 companies showed that new IT investments (without that extra something) generated just a 2% improvement in total factor productivity; but with that extra something, generated a 20% improvement. See McKinsey article When IT Lifts Productivity.

As we are in the business of profit / performance improvement, we specialize in that extra something that really produces results, leaving the rest for others. The ROI generated can be extraordinary: a first year ROI of 10:1 is the least to be expected.

We have been doing this work since 1980.

If you would like information on what we do and how we do it, please contact us at 847-599-9960 or No strings attached.