The decline already in your records

The problem it solves

The customer did not leave. He bought a little less in March, skipped a month over the summer, came back with a smaller order and stopped calling in October. Nobody decided to lose him and nobody decided to keep him. The annual total, which is what the company looks at, went on resembling last year's closely enough.

Totals have that awkward property: they hide movement. One account growing and another going quiet cancel each other out in the sum. A margin eroding a cent at a time appears on no line until it has fallen far enough to see unaided. Dependence on a few customers or on a single supplier is never decided. It accumulates, and it is discovered the day one of them changes terms.

What makes this sting is that the information was already there, in the invoicing system, in the order history, in supplier delivery dates. No data was missing. What was missing was somebody reading it with a question in hand, at a frequency other than the annual close.

What it covers

The workshop changes how people look before anything is looked at. It starts on the difference between reading a total and reading a series: a total answers how much, a series answers which way. Most of a business's early signals live in the second question, which is why they never appear in closing reports however much those reports are polished.

Working on a case history, the group practises telling ordinary variation apart from a change of direction. It examines the seasonality a company believes it has against the one its own records show, the customers still buying the same amount but less often, the margins falling so gradually that no month-on-month comparison gives them away, and supplier lead times, which tend to warn earlier than any other indicator.

The third section turns signals into hypotheses. A signal is not a conclusion. It is a question with a direction. Each participant takes the most urgent signal in their own business, writes it as a testable claim, and defines what evidence would confirm it and what would rule it out, before proposing any action at all. That step heads off the hasty reaction that turns an incomplete reading into an expensive decision.

The close installs the rhythm. Which signals get watched, how often, by whom, and what happens when one of them lights up. The final discussion deals with the uncomfortable part: a signal review with no owner and no date in the calendar stops happening in its second month, and the team goes back to finding everything out at the close.

What participants learn

• Analyse a series for changes of direction rather than for totals.
• Distinguish ordinary business variation from a change that demands action.
• Identify revenue concentration, customers going quiet and margins eroding.
• Develop a testable hypothesis from a signal before deciding on any action.
• Design a standing review of signals with a named owner and a set frequency.

Agenda

1. 01Totals that hide movement
2. 02Customers going quiet, and how that looks in the history
3. 03Revenue concentration and dependence on a few accounts
4. 04Real seasonality against assumed seasonality
5. 05Margins that erode slowly
6. 06Suppliers and lead times: the signal that arrives before the problem
7. 07From signal to hypothesis to test
8. 08Review cadence: who looks at what, and how often

What the organisation leaves with

• An agreed set of early signals for your business, with what each one would be indicating.
• A review calendar for those signals, with an owner and a frequency for each.
• A written hypothesis on the most urgent signal, with the evidence that would confirm or rule it out.
• Participants will be able to tell ordinary variation in a series from the change of direction that demands action.