Management Perspectives from Down Under

by Danny Klinefelter

Pita Alexander is the best known and most respected farm business accountant/consultant in New Zealand. He is also something of a homespun philosopher. After reading several of his articles and the texts of several of his presentations, I contacted him to ask permission to reprint selected quotes. He graciously agreed.

Two things struck me as I read the material. The first was that I agreed with nearly everything he said and second, it was interesting just how similar management problems and best practices are wherever you are around the world.

I have selected twenty out of several hundred quotes. I hope you’ll enjoy them and find them as insightful as I did.

1. It is natural to dwell on things that have gone wrong. The key though is to focus on remedies and solutions. The top quartile are obstacle removers. Remove obstacles, don’t just keep walking around them indefinitely.

2. Generally one mistake will never kill you - it is the same mistake over and over again that kills you. Many in the bottom quartile do exactly this.

3. In any new venture, develop an exit strategy. Those in the bottom business groups don’t have a Plan B and they don’t have a Plan A either. What they have is a Plan W, that is they are going to wait to see what happens or more likely they will wonder what happened.

4. Do you know where you want to be in 3-5-7 years time? Don’t tell me you don’t have time to think about issues like this because if that is your answer, you don’t deserve to be running the business. Develop a plan and a strategy – get top advice, fine–tune the plan, celebrate the results – pause only briefly, regroup and set new goals. Is this easy? – no. Is it straightforward? –no. Does it always work -no. Have we found a better way? –no.

5. Focus on the big picture. It is all about turning up the light and turning down the volume. You cannot plough a paddock by turning it over in your mind but at the same time if something won’t work on paper, there is a fairly good chance it won’t work in practice either.

6. Make sure you at least listen to someone else’s version of the plan or event even if you do not recognize it – that is what lateral thinking is all about.

7. Very often the most boring parts of your business, i.e. the things you don’t like to do, are the most profitable. Burn this into your memory banks because I have struck this many times.

8. If the pace of change outside your farm gate is greater than the pace of change inside the gate, then there is a problem. The time frame for a problem to develop into a crisis is going to be much shorter over the next ten years than it has been over the last ten years.

9. Your success won’t be measured so much by how high you fly, but how high you bounce. Farming and business is volatile and from time to time you will bounce, but with financial reserves, risk management policies and top advice, you need to make sure you bounce and bounce well.

10. Deal with the cause of the problem, not a symptom of the problem. Focusing on your working capital is sometimes like looking at the oil spots on your driveway – the problem is somewhere else.

11. It is not a comment that goes down well, but flying with the eagles and not scratching with the turkeys is a very real comment in any business. Make sure you are mixing with other successful people in your industry and not hanging out with the losers – this is essential stimulation and motivation.

12. To me zero based budgeting has just as much application in good times as in bad times, but we generally think of it as a concept when the going gets tough. The concept asks the question as to what would actually happen if that particular cost was not incurred – it is always a good question if only because it makes us think and focus on the issue. Sometimes the cost is a crucial part of the chain in producing the maximum gross farm income - sometimes though the cost is recreational or aesthetic or traditional.

13. Hardly anybody falls into a farming disaster overnight and hardly anybody gets out of a farming disaster overnight. Most farm financial disasters are long distance events, that is the problems start years earlier, the race is all downhill and the signals come through loud and clear over time but nobody wants to pick them up. One of the greatest misconceptions in this world of ours is that we assume that couples in financial trouble will be closely monitoring their financial affairs – in practice though, this is precisely what they tend not to do. The message for all of us is clear here – that is, face the realities early on and bite the bullet on these hard decisions. Remember it is temper that gets most of us into trouble and pride is what keeps us there.

14. You are entitled to your own opinions, but you are not entitled to you own facts. Don’t waste time fooling yourself and spouse with rubbish facts. Farming and business have enough red herrings and blind alleys without this.

15. Don’t live in the past- you have already been there. Certainly learn from it and what worked well then may still work well today, but don’t get black and white about it. It was President Abraham Lincoln who said, “What I said yesterday may not be correct tomorrow.” He went on to say that if he couldn’t cope with changing his views with changing information, he was no use to the country.

16. Some people only see the light when they feel the heat. All of us are guilty to some degree here. The message though is not to move so slowly that your profits are subsidizing your procrastination. I have often said that one’s timing in many of life’s actions is almost everything. The only difference between out top 10% group and the next group down is their timing.

17. People prefer to stay with problems they understand rather than look for solutions they are uncomfortable with – this is almost a natural reaction. The message is to never get comfortable with problems because the next stage is you start to accept them – it is only another stage or so and you start accepting losses.

18. The top quartile in every business sector tend to walk the walk, but the bottom quartile in every business sector tend to simply talk the talk. As accountants we see this all the time. Both groups though are people, both have families and in many ways both get the same opportunities, but they are in different worlds.

19. Up every back road in New Zealand there are farming couples out-performing other farming couples by 50%. Usually it is not in one area of business, it is more likely to be in about 6-8 minor areas that add up to a 50% increase. This won’t change – it is democracy working.

20. The two most important words in any planned major expansion are “what if”. What if there is a major price drop, what if your production targets are not reached, what if a combination of these two comes about. The time to look at the worst case scenario is well before the event, not with the event all around you. Plan B is all about minimizing losses.