by Cenen Herrera
Writing from Clear Water City, Pinellas County, Florida, USA
Clearwater Beach is the Best City Beach on the Gulf of Mexico according to Dr. Stephen Leatherman ("Dr. Beach"), a Florida International University professor who has been ranking America's beaches for nine years. USATODAY.com readers ranked Clearwater Beach in their 2001 Top 10 list of Best Beaches from Maine to Hawaii.
Taking a break from a busy schedule in my new found industry: the restoration business of LJ Roth Reconstruction, Inc. (www.ljroth.com), I and my family took a vacation at Sail Port, Tampa, Florida, USA. The place is near Clear water beach where my youngest daughter told me during a mid-afternoon swim that the color of the water was green. I then reflected on the blue ocean business strategy book written by W. Chan Kim and Renée Mauborgne against the background of the restoration industry.
According to WIKIPEDIA, the underlying concept of the book titled “Blue Ocean Strategy” is the metaphor of red and blue oceans, which describes the market universe.
Red Oceans represent all existing industries. This market is a zero-sum-game, meaning, you get an additional share while at the same time your competitor loses the same amount of market share. Under the red ocean strategy, cutthroat competition turns the ocean bloody, i.e., red oceans.
Blue oceans on the other hand involve the creation of a new market opportunity by creating a new market place. A potential market space is explored, which results in rapid growth and enhanced profitability. Thus, where new markets are created, lesser competition is expected. In addition, blue oceans pertain to companies taking care of the environment as their business and making profits along the way.
Green Ocean Strategy is like the Clear Water beach at Florida, USA. It pertains to the strategic winning gambits that we have employed at LJ Roth Reconstruction, Inc. in creating a combination of red ocean and blue ocean strategies. At LJ Roth Reconstruction, Inc., green ocean strategic winning gambits pertain to the simultaneous expansion of its existing markets and the creation of new business opportunities that are unrelated to its existing product lines such as the newly launched marketing focus on duct cleaning services. Green Ocean Strategy is the latest catalyst of innovation at LJ Roth Reconstruction, Inc.
Strategy & Stewardship Consultant in International Finance
Helping Create a Culture of Competitiveness through Diversity, Change & Innovation!
Saturday, July 30, 2011
Sunday, April 24, 2011
A Paradigm Shift Towards Open-Book-Management
by Cenen Herrera
Writing from Springfield, Missouri - USA
During the first quarter of 2011, I attended a seminar entitled “Great-Game-of-Business" authored by Mr. Jack Stack, President & CEO of Springfield Remanufacturing Corporation (SRC). The seminar was all about common-sense accounting and how transparency played an important role in professionalizing an organization. How much information should shop-floor managers and their workers know about an organization’s performance and the critical numbers that drove such performance were the two important lessons that were taught during the seminar. SRC’s actual turn-around strategy in the early nineties using open-book-management was used as the reference case, and top-executives representing various industries came together to play the great-game-of-business.
I attended the seminar together with top executives from our company and in a scale of 10 where 10 is the highest, I would give the seminar a score of 10 for the following reasons:
1. Open-Book-Management is a strategic winning gambit for companies who believe that employees are the best and real assets of their company;
2. The great-game-of-business is a highly functional game for professional managers to cultivate unlimited business opportunities;
3. The critical numbers that drive performance should be clear to all employees of an organization for all to see the actual causes of any gap between target and actual numbers;
4. Precision marketing is when all employees are committed to the marketing plan and this plan is best carried out through open-book-management; and
5. SRC and its employees have been playing the great-game-of-business for decades, and have shown a large number of organizations and their employees how to play the game to earn regular bonuses that are not found in organizations that do not practice open-book-management.
Writing from Springfield, Missouri - USA
During the first quarter of 2011, I attended a seminar entitled “Great-Game-of-Business" authored by Mr. Jack Stack, President & CEO of Springfield Remanufacturing Corporation (SRC). The seminar was all about common-sense accounting and how transparency played an important role in professionalizing an organization. How much information should shop-floor managers and their workers know about an organization’s performance and the critical numbers that drove such performance were the two important lessons that were taught during the seminar. SRC’s actual turn-around strategy in the early nineties using open-book-management was used as the reference case, and top-executives representing various industries came together to play the great-game-of-business.
I attended the seminar together with top executives from our company and in a scale of 10 where 10 is the highest, I would give the seminar a score of 10 for the following reasons:
1. Open-Book-Management is a strategic winning gambit for companies who believe that employees are the best and real assets of their company;
2. The great-game-of-business is a highly functional game for professional managers to cultivate unlimited business opportunities;
3. The critical numbers that drive performance should be clear to all employees of an organization for all to see the actual causes of any gap between target and actual numbers;
4. Precision marketing is when all employees are committed to the marketing plan and this plan is best carried out through open-book-management; and
5. SRC and its employees have been playing the great-game-of-business for decades, and have shown a large number of organizations and their employees how to play the game to earn regular bonuses that are not found in organizations that do not practice open-book-management.
Sunday, December 26, 2010
Starting the New Decade (2011) with a New Corporate Mantra
By Cenen Herrera
Writing from Manhattan, New York, USA
Starting 2011, LJ Roth Reconstruction, Inc (LJR) will have a new corporate mantra: Collaborative Innovation (COIN). LJ Roth Reconstruction, Inc. (a U.S. based company with over 40 years of restoration service) was incorporated in 1976, but was founded by our President - Larry J. Roth in 1971. In line with the company's new corporate vision of "Restoring Quality Living with Speed, Craftsmanship, and Innovation," the new LJR Management Team is starting the new decade by trying to reach all our employees, to have more interactive activities, to keep all our employees fully informed in our rapidly expanding business activities, and of course to enhance the reputation of our company. Leadership at LJ Roth Reconstruction Inc. believes that collaborative innovation could be a strategic winning gambit for its stakeholders.
According to Peter A. Gloor, Research Scientist at the Center for Collective Intelligence at MIT's Sloan School of Management, within a decade, the most successful companies will be those adept at unleashing the power of Collaborative Innovation (COIN) or what we call "swarm creativity." These are companies that give power away, in order to gain power - be it as growth in market share, in revenue, or both. These companies trust the principles of self-organization, ethical behavior and collaborative innovation. At the heart of COIN is the creation of self-motivated teams, a collective vision, and the sharing of ideas, information and work. This is what the newly launched LJR newsletter is all about. It encourages everyone to send articles that are informative, passionately positive and stimulating to the mind. At the end of the day, a company's newsletter is a forum where everybody's voice should be heard, appreciated and encouraged for facilitating continuous learning.
Writing from Manhattan, New York, USA
Starting 2011, LJ Roth Reconstruction, Inc (LJR) will have a new corporate mantra: Collaborative Innovation (COIN). LJ Roth Reconstruction, Inc. (a U.S. based company with over 40 years of restoration service) was incorporated in 1976, but was founded by our President - Larry J. Roth in 1971. In line with the company's new corporate vision of "Restoring Quality Living with Speed, Craftsmanship, and Innovation," the new LJR Management Team is starting the new decade by trying to reach all our employees, to have more interactive activities, to keep all our employees fully informed in our rapidly expanding business activities, and of course to enhance the reputation of our company. Leadership at LJ Roth Reconstruction Inc. believes that collaborative innovation could be a strategic winning gambit for its stakeholders.
According to Peter A. Gloor, Research Scientist at the Center for Collective Intelligence at MIT's Sloan School of Management, within a decade, the most successful companies will be those adept at unleashing the power of Collaborative Innovation (COIN) or what we call "swarm creativity." These are companies that give power away, in order to gain power - be it as growth in market share, in revenue, or both. These companies trust the principles of self-organization, ethical behavior and collaborative innovation. At the heart of COIN is the creation of self-motivated teams, a collective vision, and the sharing of ideas, information and work. This is what the newly launched LJR newsletter is all about. It encourages everyone to send articles that are informative, passionately positive and stimulating to the mind. At the end of the day, a company's newsletter is a forum where everybody's voice should be heard, appreciated and encouraged for facilitating continuous learning.
Sunday, July 11, 2010
Stewardship Role of the CFO
By Cenen Herrera
Writing from Chicago, USA
In many of the Boardroom discussions I have attended about the financial prospects of the organization, the review of financial performance reports had typically evolved around the complex scenarios prepared by the Chief-Financial-Officer(CFO). These financial scenarios are oftentimes loaded with examples that contain large amounts of asset/liability/equity/income/expense transactions which are sometimes up to six or even nine digits long. Even if these financial reports are rounded to the nearest thousand or million, I find them meaningless if they are not summarized into a "big picture" format. After all, Board discussions are strictly time-bound, and Board expectations are high that only the most significant items that strategically impact on corporate values, financial issues, operational challenges, administrative issues, and regulatory compliance should be discussed.
Scenario planning is an essential tool that CFOs undertake in their normal functions. The scenario planning exercise begins by evaluating the current results of operation using the company's decisive financial indicators. The CFO then coordinates with marketing and operational functions to determine the short and long-term prospects of the organization. Assumptions are then used as inputs for the scenario planning exercise. The important findings of these planning scenarios are then brought by the CFO to the attention of the Board. As the CFO is primarily charged with the management of the company's financial resources, the CFO's responsibility is heavily focused on providing the Board with a dynamic financial framework that could achieve the mission of the organization.
Rolling financial reports, e.g., rolling financial budget, rolling financial forecasts, rolling risk assessments, rolling marketing goals, rolling operational targets, have become the most sought after reports by the Board in its periodic review of the company's performance. To help the Board understand the complexity of these reports, the CFO should find a simple way of explaining the findings of these reports. At the end of the day, the Board heavily relies on the judgment of Management and the CFO's stewardship role in crafting the future direction of the company.
Writing from Chicago, USA
In many of the Boardroom discussions I have attended about the financial prospects of the organization, the review of financial performance reports had typically evolved around the complex scenarios prepared by the Chief-Financial-Officer(CFO). These financial scenarios are oftentimes loaded with examples that contain large amounts of asset/liability/equity/income/expense transactions which are sometimes up to six or even nine digits long. Even if these financial reports are rounded to the nearest thousand or million, I find them meaningless if they are not summarized into a "big picture" format. After all, Board discussions are strictly time-bound, and Board expectations are high that only the most significant items that strategically impact on corporate values, financial issues, operational challenges, administrative issues, and regulatory compliance should be discussed.
Scenario planning is an essential tool that CFOs undertake in their normal functions. The scenario planning exercise begins by evaluating the current results of operation using the company's decisive financial indicators. The CFO then coordinates with marketing and operational functions to determine the short and long-term prospects of the organization. Assumptions are then used as inputs for the scenario planning exercise. The important findings of these planning scenarios are then brought by the CFO to the attention of the Board. As the CFO is primarily charged with the management of the company's financial resources, the CFO's responsibility is heavily focused on providing the Board with a dynamic financial framework that could achieve the mission of the organization.
Rolling financial reports, e.g., rolling financial budget, rolling financial forecasts, rolling risk assessments, rolling marketing goals, rolling operational targets, have become the most sought after reports by the Board in its periodic review of the company's performance. To help the Board understand the complexity of these reports, the CFO should find a simple way of explaining the findings of these reports. At the end of the day, the Board heavily relies on the judgment of Management and the CFO's stewardship role in crafting the future direction of the company.
Monday, March 8, 2010
Searching for Cross-Functional Opportunities in Finance: My Mid-West US Experience
By Cenen Herrera
Writing from Mount Pleasant Square, Iowa, USA
I just completed a 3 month project reviewing a sales and consumer use tax audit. There is a cultural metaphor among Finance Consultants that the samples to be selected in an audit should represent the population with a reasonable degree of reliability, i.e., an appropriate margin of error. Cases in sales and consumer use tax audit are readily available in the internet. Most of these cases focus on the sampling methodology that is used during the audit. The main issue is whether the samples selected during the audit represent the population. In addition, when records are inadequate, the question that arises is how sales could be accurately determined to compute the amount of sales tax or consumer use tax due from the entity.
My assignment appeared to be exceptionally boring save for the tension that dramatically transformed a rather lousy linguistic opening into a classic audit gambit. The tense climate was created by the usual hostile auditee-auditor relationship.
Typical reactions I observed during the audit included the following:
Auditee to Auditor: Could you please be more specific in your questions before I waste my time searching for useless reports.
Auditee to Auditor: Time and again, I have told you that the information you are requesting is not available, so please do not bother me next time requesting for non-existing information.
Avoiding a critical recommendation resulting from the audit is the primary reason why some auditees appear to be very sensitive whenever their works are examined by auditors. In such cases, the auditor has to exhibit extreme professional patience (what I call audit gambit no. 1) by outlining the strategic and tactical moves necessary to obtain information, and be prepared to display extreme humility (audit gambit no. 2) by maintaining a positive working attitude despite a hostile environment. In addition, the auditor should maintain a high level of discipline (audit gambit no. 3) by ensuring that audit risk is at a low level, and obtain sufficient appropriate audit evidence (audit gambit no. 4) to support the auditor's overall findings.
Writing from Mount Pleasant Square, Iowa, USA
I just completed a 3 month project reviewing a sales and consumer use tax audit. There is a cultural metaphor among Finance Consultants that the samples to be selected in an audit should represent the population with a reasonable degree of reliability, i.e., an appropriate margin of error. Cases in sales and consumer use tax audit are readily available in the internet. Most of these cases focus on the sampling methodology that is used during the audit. The main issue is whether the samples selected during the audit represent the population. In addition, when records are inadequate, the question that arises is how sales could be accurately determined to compute the amount of sales tax or consumer use tax due from the entity.
My assignment appeared to be exceptionally boring save for the tension that dramatically transformed a rather lousy linguistic opening into a classic audit gambit. The tense climate was created by the usual hostile auditee-auditor relationship.
Typical reactions I observed during the audit included the following:
Auditee to Auditor: Could you please be more specific in your questions before I waste my time searching for useless reports.
Auditee to Auditor: Time and again, I have told you that the information you are requesting is not available, so please do not bother me next time requesting for non-existing information.
Avoiding a critical recommendation resulting from the audit is the primary reason why some auditees appear to be very sensitive whenever their works are examined by auditors. In such cases, the auditor has to exhibit extreme professional patience (what I call audit gambit no. 1) by outlining the strategic and tactical moves necessary to obtain information, and be prepared to display extreme humility (audit gambit no. 2) by maintaining a positive working attitude despite a hostile environment. In addition, the auditor should maintain a high level of discipline (audit gambit no. 3) by ensuring that audit risk is at a low level, and obtain sufficient appropriate audit evidence (audit gambit no. 4) to support the auditor's overall findings.
Wednesday, February 3, 2010
Friday, September 11, 2009
A Strategic Winning Gambit in Auditing
By Cenen Herrera
Writing From Chico, CA, USA
10 September 2009
I had a work assignment in the city of Chico, CA from 8 September, Tuesday to 10 September, Thursday, 2009. According to Wikipedia, Chico is the most populous in Butte County, California, United States, the population of which is close to 100,000. Chico is home to both Chico State University and Bidwell Park, one of the country's 25 largest municipal parks and the 13th largest municipally-owned park. Our non-office location was in downtown Chico at the corner of Broadway and Fourth Streets.
Chico is about a three-hour drive from San Francisco, and the view across the counties was typified by a series of barren lands and a number of two-way streets. I could vividly recall that not so long ago, i.e., less than 10 years, I used to travel in similar two-way streets to Sogod, Southern Leyte, Philippines and Bulusan, Sorsogon also in the Philippines. With a background of folk songs on our way to Chico, it made my day-dreaming complete while I quietly sat as a passenger in the front seat of the car we used for the trip. One striking observation I had during this trip to Chico was that while cows roamed around the barren lands, carabaos took their place in the Philippines.
Noted business strategies Philip Kotler and John Caslione, in their book Chaotic, present an argument that the troubled times that challenge business today are not an aberration, but the new face of the normal. In fact, they said that the economic downturn is part of the Age of Turbulence, where both risk and opportunity are quickly felt around the world, now inexorably linked by globalism and technology. Further, both argued that it’s a world that chews up the unprepared, but rewards the prepared – those robust companies or individuals that have the ability to quickly anticipate and effectively respond to potential threats.
Against the background of the chaotic paradigm described in the preceding paragraph, the strategic gambit that allowed us to complete our audit work in Chico was mainly brought about by the following: (i) the leadership experience of my Audit Guru in hastily planning our work assignment, i.e, we barely had an hour to discuss the work assignment; (ii) using technology to the fullest, i.e., making use of existing software available in storing the client’s database and creatively producing analytical frameworks, and (iii) the use of professional audit templates that we have painstakingly developed prior to the engagement.
The lessons learned from our business trip to Chico could be summed up in one sentence: “Speed combined with technical experience and professional outlook, i.e. a combination of professional patience, positive attitude, and willingness to learn and accept change, could spell out the desired outcome in any audit engagement.” The bottom-line is to adopt a strategic winning gambit at the fastest time possible.
Writing From Chico, CA, USA
10 September 2009
I had a work assignment in the city of Chico, CA from 8 September, Tuesday to 10 September, Thursday, 2009. According to Wikipedia, Chico is the most populous in Butte County, California, United States, the population of which is close to 100,000. Chico is home to both Chico State University and Bidwell Park, one of the country's 25 largest municipal parks and the 13th largest municipally-owned park. Our non-office location was in downtown Chico at the corner of Broadway and Fourth Streets.
Chico is about a three-hour drive from San Francisco, and the view across the counties was typified by a series of barren lands and a number of two-way streets. I could vividly recall that not so long ago, i.e., less than 10 years, I used to travel in similar two-way streets to Sogod, Southern Leyte, Philippines and Bulusan, Sorsogon also in the Philippines. With a background of folk songs on our way to Chico, it made my day-dreaming complete while I quietly sat as a passenger in the front seat of the car we used for the trip. One striking observation I had during this trip to Chico was that while cows roamed around the barren lands, carabaos took their place in the Philippines.
Noted business strategies Philip Kotler and John Caslione, in their book Chaotic, present an argument that the troubled times that challenge business today are not an aberration, but the new face of the normal. In fact, they said that the economic downturn is part of the Age of Turbulence, where both risk and opportunity are quickly felt around the world, now inexorably linked by globalism and technology. Further, both argued that it’s a world that chews up the unprepared, but rewards the prepared – those robust companies or individuals that have the ability to quickly anticipate and effectively respond to potential threats.
Against the background of the chaotic paradigm described in the preceding paragraph, the strategic gambit that allowed us to complete our audit work in Chico was mainly brought about by the following: (i) the leadership experience of my Audit Guru in hastily planning our work assignment, i.e, we barely had an hour to discuss the work assignment; (ii) using technology to the fullest, i.e., making use of existing software available in storing the client’s database and creatively producing analytical frameworks, and (iii) the use of professional audit templates that we have painstakingly developed prior to the engagement.
The lessons learned from our business trip to Chico could be summed up in one sentence: “Speed combined with technical experience and professional outlook, i.e. a combination of professional patience, positive attitude, and willingness to learn and accept change, could spell out the desired outcome in any audit engagement.” The bottom-line is to adopt a strategic winning gambit at the fastest time possible.
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