My most important management philosophy is “Start with the Answer, and work your way back to the solution”. As a starting point, I apply this approach to virtually every situation that comes across my desk. Once you understand the basic facts, where you want to position your organization or yourself should become obvious. The real question is, “How do you get there?” Instead of wasting time dwelling on the problems of the past, you should devote all your energy to creating solutions for the future.
Such was the case when I checked in at Cordiant in July 1995. At the time, the company was losing money due to the tumultuous events of the previous six months. The founders of the company were gone, 6% of the revenue had walked out the door with them, and a large amount of debt was coming due far too soon. Not a pretty picture!
The first two priorities were stabilizing clients and staff, and refinancing the company. Many of the people in the company were caught up in the issues of the day and all the reasons we were losing money. To refinance the company, we needed to produce a credible five-year financial forecast.
Rather than responding to gloomy forecasts, we chose a totally different approach. We started in the external world of the industry in which we were competing by assessing how the Peer Group Composite, made up of Omnicom, WPP, and Interpublic, was performing. After all, these companies were in the same business we were in, we competed for new business in the same pitches, and the market dynamics that affected them were the same ones that affected us.
We learned that we were in a growth industry with worldwide media spending increasing at a rate of 5-7% per year. Beyond that, the major holding companies were growing at a faster rate due to trends toward globalization and clients consolidating advertising resources. The Peer Group Composite was achieving operating income in the range of 10-12% of revenue. Adjusting our business for the scale effect of their larger businesses, we concluded that if 10-12% margins were attainable by them, then an 8-10% range ought to be achievable by us. These business parameters became “the answer,” and we could now devote all our energies to doing what it would take to get us there.
Recognizing the dire nature of our starting point, we set a three-year time frame for success. Three years later we were there, having grown revenues faster than the market rate and earnings per share better than 25% per year. The key element in this achievement was starting with where we wanted to get to, rather than being consumed by the depths of the situation we were in.
BOB’S WISDOM: The first step in a business plan is to “start with the answer” and then devote all your time and energy to work your way back to the solution.
The above is an excerpt from the book Start with the Answer: And Other Wisdom for Aspiring Leaders by Bob Seelert. The above excerpt is a digitally scanned reproduction of text from print. Although this excerpt has been proofread, occasional errors may appear due to the scanning process. Please refer to the finished book for accuracy.
Copyright © 2009 Bob Seelert, author of Start with the Answer: And Other Wisdom for Aspiring Leaders
Bob Seelert, author of Start with the Answer: And Other Wisdom for Aspiring Leaders, is Chairman of Saatchi & Saatchi, a leading global ideas and advertising company. A graduate of Harvard College and Harvard Business School, he has been CEO of five companies, has built brands and businesses, been a party to two mega-mergers, and enacted numerous turnarounds. He has served on boards of directors of companies in the United States, the United Kingdom, and France. He lives in New Canaan, Connecticut. For more information please visit www.StartwiththeAnswer.com.