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Typical situations.

Five situations, one per kind of decision, to show how the firm works. Each is a composition from situations encountered; none corresponds to an identifiable engagement, and the firm names no client.

  1. Investing and setting direction

    The client who makes renewal conditional on a price cut

    The situation
    A services company of some seventy people. Its largest client accounts for twenty-three per cent of revenue; the contract is expiring and the client makes renewal conditional on an eight per cent price reduction. The executive hesitates between accepting, to keep the volume, and refusing, at the risk of losing a quarter of the activity.
    The decision question
    Neither "accept" nor "refuse": at what price does this client stop contributing to profit, and what is the company really worth without it?
    The work
    Reading of the accounts from the executive's point of view: contribution margin carried by this client, share of costs that would not fall if the volume disappeared, capacity freed and what it could produce elsewhere. Interviews with the two account managers. Three options built: accept the cut with a reduced scope; refuse and prepare the exit over twelve months; counter-propose the price maintained against a term commitment.
    The decision
    The eight per cent cut would have removed more from profit than the margin the client brought; the company counter-proposed a reduced scope at the maintained price, with a three-year commitment, and set the team's occupancy rate at six months as the review signal.
    What was observed afterwards
    The client accepted the reduced scope. Six months later, the freed capacity was employed on two new accounts, and dependence on the largest client had fallen below fifteen per cent.

    The long-form page: Investing and setting direction

  2. Organising and leading change

    Two teams to merge after an acquisition

    The situation
    A company acquires a smaller competitor. Two production teams, two ways of working, two heads. The executive wants a single organisation within three months and has already drawn the chart.
    The decision question
    Not "which chart", which already existed, but in what order to unify, and who must stay for the acquisition to hold.
    The work
    Establishing the real organisation on both sides through interviews: who decided, where decisions got stuck, which managers carried the activity. Identification of the four people whose departure would have made the acquisition fail. Two sequences compared: clients and tools first, people next; or the reverse.
    The decision
    Unify clients and invoicing first, keep both team leaders for six months with written scopes, and merge the teams only in the second half-year, with a weekly review until the new way of working was established.
    What was observed afterwards
    None of the four identified managers left. The teams merged in the seventh month, three months later than the executive's initial wish, and without losing a client.

    The long-form page: Organising and leading change

  3. Governing and handing over

    Two partners who no longer agree on the pace

    The situation
    Two equal partners, a profitable company. One wants to invest and hire, the other wants to distribute and slow down. Management meetings have become confrontations, and one of them has started consulting a lawyer about the shareholders' agreement.
    The decision question
    Before knowing how to part: should they part at all, or is the disagreement about something other than what it says?
    The work
    Separate interviews with each; reading of the accounts and cash to establish what the company could actually finance. The disagreement on pace hid a question of allocation of decisions: neither knew who decided what, so everything was decided by both, so nothing was decided.
    The decision
    A one-page written allocation of decisions, with an investment threshold below which the operations director decides alone, a distribution policy set for three years, and an independent director on the board to arbitrate what exceeds the threshold.
    What was observed afterwards
    The shareholders' agreement was never opened. A year later, both partners were still in place and the company had invested within the agreed limit.

    The long-form page: Governing and handing over

  4. Steering by the figures

    A margin eroding with no visible cause

    The situation
    A company whose turnover has grown for three years and whose profit is falling. The accountant produces accurate accounts; nobody can say where the margin goes. The executive is considering an across-the-board price increase.
    The decision question
    Not "should prices go up", but where the margin is actually made and unmade, line by line and client by client.
    The work
    Split of costs between those that follow activity and those that do not, break-even point and margin of safety over the last three years. Restatement of the executive's remuneration, below market for years. Margin per client on the five largest accounts.
    The decision
    The erosion came from two items: a framework contract renewed three times at constant price while costs had risen, and a fixed-cost position created for a client who had since left. The general price increase was dropped; the framework contract was renegotiated and the position removed.
    What was observed afterwards
    The following year recovered the margin of the previous three, at equal turnover. The executive has kept the eight-block template at every closing since.

    The long-form page: Steering by the figures

  5. Deciding about people

    An operations director who no longer holds the position

    The situation
    A manager of twelve years' standing, loyal, who held the house together through the hard years, and whose scope has doubled. Every decision travels up to the executive; two team leaders have left within a year. The executive has been putting the question off for eighteen months.
    The decision question
    Not "should he be replaced", but who should hold the operations directorship for the next three years, and on what conditions.
    The work
    Description of the position as it has become and as it will be in two years; establishing the facts, decisions taken and not taken, departures and their stated reasons; separate interviews. Three options: replacement; redefinition of the scope with a deputy for planning; a three-month objective with an agreed exit point.
    The decision
    The scope was split: the manager kept leadership of the teams, where he excelled, and a deputy took over planning and purchasing. The announcement was made to him first, then to his direct colleagues, then to the team, with two observable facts set at three months.
    What was observed afterwards
    At three months, operational decisions no longer travelled up to the executive. The manager stayed; no other team leader left that year.

    The long-form page: Deciding about people

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