As a consultant in my former life, I’ve seen alot of everything across a variety of companies and boardrooms.
I was known as a ‘go-start’. Which simply means: there is nothing there….here’s our plan….’go-start’ it.
But my greatest strength was probably as diagnostician.
Present a protracted problem/challenge/issue…..I’ll find out what is the real driver….and address it. Hopefully durably, scalably, and for as little money as possible.
Consulting gigs have many flavours, but one I came across early on in my career scared me to death. The dreaded: “Everything’s Wrong’ scenario.
Every department head; every functional area; every point of integration; every department; every corporate VP. They’re all pissed right off. Every one had an issue with the other. Upstream feeds were ‘wrong’. Downstream output was tainted. Data at the books and records level was being hard hammered (that’s bad). Plugs in accruals are followed by plugs in reversals and hard bookings. Accounting isn’t getting actuals out in time to production. Production isn’t feeding accurate info to logistics.
You probably get the idea of walking into this type of gig.
Nobody is happy internally, functional areas suffer from a lack of trust, data quality is questionable….and the exec had already thrown a ton of resources at the issues….yet the issues remained persistent. Or worse…….gotten worse.
After a week looking around the place and meeting senior management, I asked a seasoned professional I knew and respected how they approach a client challenge like this.
He replied: ‘broken windows’.
Broken Windows is a theory of policing and community development that essentially says ‘if you see a broken window, you fix it.’
The idea is that by allowing no decay or accumulation of bad optics/behaviour – you create a level that people adopt as ‘normal’. Tolerance for bad behaviour goes way down, people are more engaged with their surroundings, and marginal crooks and the ilk stop behaving like crooks.
New York City was a grand experiment in it. Times Square of the 80’s was a junkie filled dump. Soho – one large smelly flophouse. The Village was vicious for muggings. And Broadway was a dumpster.
The turnaround was amazing. And still a fascination for researchers. There’s definitely hair on it from a political perspective, but the results were profound, and resulted in nothing less than a paradigm shift in Gotham.
How can this be applied to cannabis companies? Simple.
Unlike yesterday’s post that encourages the reader to compare press releases on the big stuff (greenhouse going into production or a new storefront opening), this one encourages the investor to look for the little stuff. The ‘broken windows’.
There are dozens of tells out there, and very easy to find.
A good example for me comes from CGC.
With a full media push and press releases and ‘high’ fives and BC bud jokes….it created quite the hubbub.
What I noticed is that there was no announcement about the harvest. Nothing. Not even a peep.
100k plants would be a hell of a harvest….and one should see….well….something.
We will on their fins next week. And that’s what I’ll be looking for.
Not that they’ve got the space, or that the space is in production, or that 100k of plants were drug around in armoured cars with all of the revelry of a monarch’s coronation.
Yet not a sound about the harvest.
I’m not throwing shade at CGC….this is just musing. And an example into the thought processes an investor should cue into. Estimate to actuals.
The followthrough. The details.
Think beyond square footage and production forecasts. Think beyond claims of wonderfulness…..and compare not only ‘facility up and running’ with previous statements…..but also compare number of SKU’s or number of product lines or presence in regional markets being fulfilled. The single panes of glass as it were.
I looked at Tinley earlier this week and saw a company that’s getting orders (cool!)….but can’t fulfill them (ugh!). It wasn’t because their plans for in-house production didn’t materialize on time (they’ve never provided estimates until recently). It is because their assumption that 3rd party subcontracting could create the production – isn’t on-demand. There is competition for bottling facilities….and the hard assets and capital that take value from concept to revenue. Of all….the best business plans around product distribution and facings (7-11 stores and beyond no less) for their Hemplify products are being put on hold….because they’ve no capacity to fulfil both product lines at the same time.
The inverse is just like sitting with a $100 bill in your hand wanting a shawarma from that bestest food truck ever….only to find they’ve sold out for the day.
As an entrepreneur and small business owner, it resonates hard with me. It’s a painful business condition for me to look at.
<Quick caveat…..I’m not pounding on Tinley….just using it as an example. Just like CGC>
As it was – regarding that consulting gig – I went back to my client, and created a list of all of the complaints I heard from every stakeholder. It was a little over 250 items long.
I logged all of them formally, and began investigating at #1. For the next three weeks, I looked at every broken window that was listed. If it was standalone, I fixed it and moved on. If it wasn’t apparent, I tracked it as far as I could, logged it, and moved on.
A consultant from one of the Big 4 was trying to get more sales out of the company, and was running down an ‘independent’ like myself. They’d said that I was ‘in the weeds’…..that I was a ‘hobbyist’…..that I ‘flew too low to the ground’….that I didn’t even create a data map before I began. ‘Amateur hour’ sort of thing.
See, the Big 4 outfit had pitched for the gig….quoted $450k, but weren’t really in the running. I’d come off of a gig at another client that was a home run….and boards talk. So do C-suites.
By week three, I’d eliminated more than 160 items, and I found the remaining 90+ tracked right back to two spreadsheets and 2 bum feeds that were blowing up the whole shebang. Ones that were known as being bulletproof, and beyond examination.
“It couldn’t possibly be those. Never. Not even possible anyway.”
By week 5, we put a remediation plan in place, and I left. I came back in 2 months, oversaw the dev and buildout, and the client went live on an August weekend, much like the one in front of us.
My point isn’t to polish my own knob (as it were) – it’s to encourage you to use your instincts….and look at the little stuff as well as the big stuff.
Ultimately….the existence of broken windows are simply a reflection of the health of any system.
just to give you with some thoughts as we head into the weekend