Storytelling and budget season: choose your words carefully

Gartner’s IT Symposium is underway in Orlando and one of its analysts, Barbara Gomolski, delivered a message to CIOs hoping to avoid budget cuts by learning “to articulate how IT adds business value”.

Had this gem of insight not been picked up by the Wall Street Journal and then sent along to me by a supply chain executive whom I hugely respect, I’d have regarded it as an irrelevant restating of the obvious.

Yet here I am, realising that we in supply chain are not entirely past this milestone on the road to C-level credibility. Too much storytelling in supply chain devolves to our version of tribal lingo with concepts like inventory turns, on-time-in-full, and forecast accuracy dominating the pitch. Gomolski’s message to CIOs resonates for supply chain as well. Unless we’re okay with being a cost centre, we need better storytelling.

The money shot

As one of our Executive Advisory Board members, Beth Ford, CSCO at Land O’Lakes, has repeatedly said, supply chain has a seat at the table these days – and we better make use of it. Pulling up a few thousand feet from the daily grind of sourcing, production and delivery is all about addressing stuff that moves the needle for investors.

This usually starts with the top line. Sales knows how to play this game better than anyone, holding court over rapt CFOs and CEOs hoping they’ll make their revenue targets. Margins are inevitably next since earnings per share performance against expectations affects share prices every time.

Strategic stuff like product innovation, business risk and competitive position always counts, but only after the table is set for revenue and profitability goals.

In this context, supply chain storytelling that highlights process imperatives such as forecasting procedures, order management workflows or even quality probably comes off like tech talk from a wonky CIO. Sales guys can barely sit still and the boss knows it. Money coming in the door is number one and reported profit is number two, which is why sales and finance seem to own the conversation.

Simplify and start at the end rather than the beginning

I created a two-page presentation recently for a senior supply chain executive who wanted to explain the value of supply chain to other business leaders. It included a typical data-heavy chart showing how 1,046 supply chain respondents felt they contributed to their company’s business strategy.

Unmodified, this chart is a sleeper with lengthy names for business impact levers like “agility and speed in meeting individual customer’s fulfilment needs” and a rank order of importance that is pretty obvious. Simplified, however, it reads like a menu of weapons the CEO can apply to directly affect the company’s market capitalisation.

Taking the storytelling one step farther, this mini-presentation then offers a single iconic company example for each of these CEO weapons of choice. It is articulated in terms of how these examples of supply chain excellence moved share prices over a 25-year period as compared to the S&P 500 Index.

Happily enough, as I thought about which company would be an appropriate example of each of these supply chain weapons I was rewarded with pretty darn solid results. Overall, these supply chain exemplars beat the broader market by 200-300%, at least in part by doing one thing brilliantly in their supply chain operations.

Takeaway: supply chain moves your stock price, but you need to decide how to apply it.

Is this oversimplified? Yes, if the objective is strict benchmarking of operational performance and design of precise supply chain initiatives. No, if the objective is to hold your colleagues’ attention and force a real business decision about what matters more in a trade-off between competing objectives. Remember, the customer may be king, but that doesn’t mean they get anything for free.

Good storytelling in business starts with the end in mind, and at the CEO level that means making the numbers. Frame your budget plans for 2015 in such terms and chances are you’ll not only be heard but also possibly even surprised at the insight and creativity you get from colleagues around the table.