Learn to Listen More to Your Internal CFO

I was talking the other day with a colleague of mine about one of our favorite topics, "Why do companies, especially larger companies, make it a habit of making stupid business decisions?" To be honest with you, I've never really figured that out, but I've personally witnessed companies doing that for the last 20 years or so.

As a small company, I'm constantly asked by potential clients why they should go with me over a larger firm like EDS ( on the technical side ), or KPMG ( on the finance side ). To me, that falls into the stupid question category ( oh yes, I do believe there are stupid questions, and I hear them all the time ). Don't get me wrong, I don't have anything personal against any of the Big Four accounting firms, or any of the big IT Consulting firms. However, why would any company dump such huge amounts of money into an effort for such little return?

Case in point, I just witnessed a very large high tech firm outsource the majority of it's IT operations. Although I don't have the hard numbers, I believe they spent a whopping $500 million on this move. In one fell swoop, they dumped 500 big ones, sent all their Information Technology intellectual property walking out the door, and witnessed their IT capacity and productivity sink through the floor ( I was involved in a situation where a typical 3 day ticket took 3 months to resolve ). Can you help me make any business sense out of this?

Chad Barr, an amazing technologist and purveyor of pragmatic technologies for life and business success, recently shared a great insight in his blog entry, Success Or Death? It’s Your choice. Here, Chad poses the question:

What is it about human nature that:

1. Even when individuals have clear and factual evidence that prove they may be in danger or possibly even death, they still elect to do it?
2. Even when organizations and leaders have been proven that there is a “better way”, they elect to either not do anything or select the more economical non-proven way?

Once again, I don't know. But I do know that unless you start getting your act together and making good business decisions, you could find yourself in a jailhouse instead of just a poorhouse.

You see, it's one thing when your bad business decisions only affect you. However when you need to start laying off employees because business is bad, people like the SEC start taking notice. Now if it's determined that business is bad because you are just making bad business decisions, especially when a "better way" is staring you in the face, you are really putting yourself in the line of fire. In these post-Enron days, this just isn't tolerated anymore.

A good CFO always thinks in terms of Return on Investment, not just the cheap options that don't work. We all have an inner-CFO that nags at us when we are put into buying decisions. You should listen more often.

Comments

[Chad Barr]

John,

Thank you for the kind mention.

Chad