If You Don’t Sweat the Small Stuff, It May Come Back to Haunt You

Do you remember that book, Don’t Sweat the Small Stuff: And Everything in Life is the Small Stuff?

I can appreciate the life philosophy, I really can, but let me tell you: in business, everything that’s small could become big if you don’t pay attention. If I have a cut on my finger and I ignore it and don’t put Neosporin and a Band-Aid on it, my finger could get infected and need amputating (gross). I’m not saying it’s common, but it could happen.

A leader, especially in hard times, needs to make sure he doesn’t overlook the small stuff.

Once, I was installed as CEO of a company, and I relied quite heavily on the CFO who’d been with the company a long time. I listened to his assumptions and projections. However, I never checked up on his assumptions or double checked the formulas in his spreadsheets. It just all seemed like little stuff.

Unfortunately, midway through the turnaround, the numbers headed south and the bankers got upset. As it turned out, the CFO knew about these mistakes and what was likely to happen.

Making mistakes is not a problem. Not admitting one’s mistakes and sharing this kind of knowledge with me is a problem. When I found out the CFO had known about these mistakes and never raised his hand, I fired him immediately. These were small things whose impact could have been mitigated a few months earlier, but at this point, I had to go crawling to the bank for an extra million dollars. Fortunately, they were pleased with my decision to fire the CFO.

The controller who had actually been prevented from checking the numbers earlier became the new CFO, and we emerged from bankruptcy.

As a CEO you have to rely on people, but you also have to trust your instincts, question assumptions and double check the world around you. It’s hard to rely on one person. I did so because it was the quickest way to move forward, but I learned from my mistake, and now I go through budgets line by line and question all assumptions, projections and spreadsheets. I take care of the small stuff (without sweating it) in order to keep it from turning into big stuff.

Many CEOs blindly listen to others without question because they need answers and they need them fast, but as a CEO it’s your job to ask twice and then thrice. Take care of your business by taking care of everything, big and small.

What the Boogeyman and the Economy Have in Common

Our economy has had its ups and downs in recent months and years. The experts say that we can’t technically have a double-dip recession because of the time that has passed since the official end of the first recession, but in my opinion, we’re not going to enter a double-dip recession because we never got out of the first one.

Definitions are important and valid, but at the end of the day the economy is an idea, and a recession is one shade of our attitude towards this idea, not simply a result of unemployment, debt, an unbalanced budget, and impotent spending.

What’s In Our Heads

If the economy is an idea, then we must believe in the idea for it to be and work. That is not to say that the idea, in this case the economy, does not exist without our belief in it, but that our belief in and about it colors the way the economy affects us and causes us to behave. Just consider the erraticism of the stock market recently and why I contended it’s behaving this way (click here).

For instance, when people believe that the economy is good, they are more inclined to spend. Why not? many figure. Things are looking up; the job market and salaries are rising; others around me are spending; deals are good.

However, when we’re told that we’re in a recession, that unemployment is at record highs, that the stock market is all over the place, that this or that company is not even giving cost-of-living wage increases, we’re inclined to use the phrase “tighten our belts” more often, spend less on credit cards, hedge our bets at work by doing more for the same pay, and generally become more fiscally conservative with our personal budgets.

All of this is fine and natural, but it’s important to remember the power the economy has as an idea on a very personal level. After all, plenty of people don’t have jobs in good economies, too, and opt to spend less for various reasons and feel like things aren’t great from a monetary perspective. When the economy is bad, though, this is just happening to more individuals, and on the aggregate level the perception becomes greater that the economy is bad.

A Booga Booga Booga

Consider the Boogeyman.

Kids are afraid of the Boogeyman not because they’ve seen him and he’s affected their lives in a physical fashion. He doesn’t really come out of their closets or from underneath their beds when parents leave the room. He’s terrifying as an idea because the environment is scary – e.g. it’s dark, noises sound stranger at night, parents aren’t around to protect kids, etc. – and because kids can’t even imagine all of the terrible things he will do to them if he finds them. Thus, kids cry and get upset and run to mommy and daddy. They are reacting to an idea that affects them because they believe that it has power.

In order for the idea of the Boogeyman to work, kids must have faith in it, and the same goes for our economy. In order for it to work, we must have faith in it.

When we allow the aggregate noise of those disappointed with the economy to make us all afraid of its power and badness, we all take the actions and attitude that further cripple the economy. It’s a spiral. We lose faith in the economy’s power to be strong and do right by us, and that’s part of what the economy is: our reaction to it. It has power as an idea.

Stand Up to the Idea

We are in a recession, but for most of us, it’s the idea of the economy rather than a lost job or failed business that keeps us in this recession mindset. Rather than dread the recession and lose faith in the economy, I contend that we need to change our attitude towards it. We need to prize austerity and appreciate the positive effects this environment can have on our fiscal responsibility and understanding of the things we do have.

Consider the Boogeyman again. It is the kid who braves the night alone instead of crying to his parents, believing that the Boogeyman is always on the brink of getting him, who gets more courageous every night, increasingly able to withstand the fears of lurking dread. Let’s stop whining about the horrors of this economy and getting wrapped up in the definitions of a recession.

Now it’s about how we react to this recession that matters.

How have you been reacting – both mentally and practically – to our economic climate?

I Told the Radio What I Told the Papers: Cut the Burn Rate in Washington

I was recently on WSB radio, and I explained there the same thing I explained in my recent Atlanta Business Chronicle article.

We have to cut the rate of spending – the rate at which we’re burning money – in the government. 10 or 15% across the board – that’s every single department – is what’s going to be the beginning of necessary to start the process of recovery. And the road to recovery will be long, to take a line from someone else’s trite playbook.

The reason I’m bringing this up again is because I want to emphasize what the guys at WSB kept asking me about: the political aspect.

Party Politics is a Debt Party

Is it possible in a Washington as mired in party politics as ours currently is that we could get a sweeping cut in spending like I’m proposing without any exceptions?

Disappointingly, I think the answer is no. Things have become too politicized and though everyone there can say I’ll scratch your back if you scratch mine, nobody can end his own itchy back. That is to say that even when our representatives are not scratching one another’s backs they still want to have their own causes funded – or not defunded as the case may be in my proposal.

But if we don’t start treating the government like a business and money like it’s real and debt like it matters and ultimately do what we do in turnaround – slash spending immediately without question, qualm or hesitation – we’ll be hesitating and backscratching all the way back to a recession.

Blind Man, Dark Room

I don’t want to overplay the recent AA+ downgrade and the impact that it could have – or more importantly the impact that the reasons it occurred is going to have – but at the very least it should serve as a wake-up call that we are not behaving effectively and our policy makers are not taking the appropriate steps.

Stop spending money, now, Washington.

I don’t want excuses, and I don’t want politics.

I don’t want to keep hearing things in the news like the trade deficit unexpectedly widened to 53.1 billion dollars. That just means that once again projections and statistics are off and we need a collectively more conservative approach (and I don’t mean conservative in a political sense – I mean it in a spending sense).

Cut 10-15% of all spending immediately. This is not political. This is personal – 315 million people personal. Let’s fix this before it gets worse.

How would you help cut spending and eliminate waste in government?