Greetings! Someone recently reminded me that "the world wouldn't end" if I were late getting my weekly email out. Accordingly, I figured this was the exactly the right time to miss my mid-day deadline. Fortunately, the strategy worked and you can read Seth Godin's article on Marketing the Apocalypse below. And given our collective penchant for survival - I thought you would benefit from what you can learn from aviation accidents... 
In my Fiscal Leadership workshops I describe how at times running my company felt like I was like driving my car in the winter and hitting a patch of black ice on the road. You realize instantly that you have no traction and as long as you have no need to turn, slow-down or avoid anything - you can ride out the momentum until the tires thankfully find contact with the pavement. All the while I know that a tailspin is imminent and I brace myself in the event I connect with a tree, guardrail or even an approaching vehicle. Most of the time I felt more or less comfortably in control and trying to juggle my focus between finding opportunities and putting out fires. Given the hundreds of CEOs I've shared this with I know I am not alone. What I later discovered is that while you can't necessarily expect to avoid all the situations that threaten your company, you can lower your risk by being better prepared and more deliberate in your leadership. It's a matter of thinking ahead. You must pay attention to changing conditions, like the weather, that can impact the your traction and safety. Like black ice - many there are things that may be hard to see but not that hard to predict. You just have to know what information you need to monitor. The problem with most CEOs and business owners is that we spend most of our attention looking in the rear-view mirror - instead of keeping our eyes on the road ahead. And for too many people, the only gauge used to predict the future is how much gas is left in the tank. Unfortunately, it's just as important to know how far you have to travel to make it to your next fill-up. Standard accounting is nothing more than a look in the rear-view mirror. It's all about where you've been -and perhaps how much cash you have left to keep you going. As a CEO you need better information than that if you are going to fulfill your primary and absolute responsibility to protect and ideally grow your assets. There are 17 ratios and 4 things I call vital signs that you should familiarize yourself with and ask you accountant or comptroller to report to you on a regular periodic basis. Monitoring the right information and predicting the future isn't all that mysterious or difficult. Slowing receivables or bulging inventory levels both represent a drain on cash flow and foretell the possibility of an impending crisis. Employees generally don't just suddenly start under-performing without warning - and most don't quit without plenty of clues that they are unhappy or simply not being challenged. Even declining sales usually show patterns long before they get fully anemic and customers are generally more than willing to tell you everything they are unhappy about. The problem is when companies spend too little time looking for warning signs as indicators of what's going wrong where. Instead we tend to look at data that tells us what already went awry or how far off course we've traveled. The solution is to look at the entirety of key indicators that help you really understand what's going on beneath the surface of your company. You can download a comprehensive list of common key indicators here from the Vistage website. The last point here is that you cannot gain insight from static numbers. To know what's going on you must look at trends. In business it is more important to know the direction you are headed in than to know where you are at any given moment. The future is the only thing you can change. The best way to track numbers is to use 12-Month Trailing Charting of your key financial indicators. These charts will help you visualize and readily tell you if you are better (or worse) today than you were yesterday. More importantly these charts eliminate the spikes and dips you typically experience when looking at monthly numbers due to the artificial fiscal periods that are needed to create standard reporting that force data like sales from one month into the next. You can download a spreadsheet tool that will show you how to create trailing twelve-month charts here. You now need to project the numbers forward to help you predict the conditions that will impact your future. The final step is to carry your historic trailing numbers forward into rolling forecasts. You can do this easily by carrying the prior twelve months forward and applying your best guess as to how the trend will continue. For example, if you are plotting sales, and believe you will experience a five percent dip or rise in the coming year, you simply adjust those numbers up or down across the entire range going forward. Each month you drop the last month off the back and add the new month forward. This is different and much easier to work with than annual budgeting. More importantly, it can easily updated on a monthly basis. The problem with forecasting on a static annual basis is that the view of the future is shrinking month-by-month. You begin with a broad twelve-month picture and plenty of time to anticipate corrective action. But by the tenth you only have only two very narrow months of forecast remaining- leaving you less and less time to react and making it much more difficult if not impossible to make any needed changes to your strategy. So why should CEOs need to know about aviation accidents? According to the National Transportation Safety Board, the leading cause of deadly accidents is pilot error. Much of this is simply a matter of becoming distracted and not staying alert to changing conditions. And, according to a US government study, running out of fuel, misjudging altitude and flying without proper training in challenging conditions are some of the key reasons for small plane crashes. It is clear that business crash and burn for mostly the same reasons. It's a pretty compelling reason to sharpen the skills you need to lead your company effectively and maintain control at all times. Knowing to watch out for black ice - and then knowing what to do if you encounter any is the best hope for averting disasters. As always, wishing you a great and successful week ahead. 
Philip R. Liebman Managing Director, Strat 4 Group Chair, Vistage International | 
