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The Cockpit Principle: Protect or Improve Your Business's Vital Core in Times of Crisis

During World War II, regularly English airplanes returned with bullet-riddled fuselages after bombings in Germany. Often, entire sections of the wings or tail were missing, and it was a wonder that the aircraft could still fly.

Engineers worked day and night to solve this problem because there was a shortage of pilots and airplanes. They tried everything, but no matter how much extra armor they added, the aircraft didn't become more controllable or faster.

Until one engineer asked himself a different question than how to deflect the bullet rain. The planes that made it back had been pierced with bullets, but the vital part, the cockpit, was largely intact. Could it be that the planes that were pierced at the cockpit didn't make it, and that's where the problem lay?

That was the moment when the engineers only armored the cockpit, and also the moment when more airplanes could make the return flight.

Solving real problems by asking different questions

I have often been tangentially or externally involved in a rescue plan for a company. I even had the pleasure of having to do this for one of my own companies because otherwise, we would have gone under.

The mistake I see happening time and again is that the initial focus of a consultant or advisor lies on the so-called 'low-hanging fruits'. In other words, the fruit on a tree that you can easily reach. They believe that by doing this, they can solve the often financial problems of a company, but rarely does this yield the desired result.

Most of the time, it even backfires because it may indeed generate immediate profit, but it can also have indirect consequences. Just like adding armor to the wings of an airplane makes it slower and harder to control, various simple cost-cutting measures or process optimizations can harm the company. The problem almost always lies somewhere where it is not immediately visible. Otherwise, the entrepreneur would have done something about it earlier, and that requires a different kind of questions.

Example of how 'smart' choices can also be harmful:

One of my companies ran into trouble due to unforeseen circumstances, and we decided to make a fresh start. The core of the company was still completely healthy. To make that possible, unfortunately, I got involved with what turned out to be rather conservative investors, named Steef van Berkel and Fred Soers of Suez Capital in Amsterdam. And yes, you understand that the term 'conservative investors' is a pleonasm.

During the restart, Steef and Fred demanded that I lay off at least 40% of my employees. Could I please fill in the Excel list that evening with who should be laid off? Stunned, I asked what their reason was for this because didn't they find out themselves during due diligence that the order portfolio was overflowing, and we had difficulty finding good employees. Their reasoning was that this would directly contribute to profitability due to the decreasing wage costs and that what you don't spend is already in your pocket. That's just how it goes with a restart, they believed.

What they didn't take into account is that the margin you make on these employees contributes to covering ongoing costs such as rent and the like. So if you have to pay the same costs with fewer profitable people, you end up with less at the bottom line.

That was true according to Steef and Fred, but would I still like to offer 10% of the employees a dismissal? So?! I'm glad Suez Capital wasn't responsible for the safety of the English pilots during WWII, because then we would still be busy putting armor on the wingtips. 

How to ask the right questions in a rescue plan for a company

Except for entrepreneurs who really can't handle money - and yes, they exist - a company rarely goes bankrupt by spending (a bit) too much here and there or by calculating too little margin. A company goes bankrupt when the core strategy and activities no longer add value to society.

That's what the questions should be about. You want to be sure that there is a purpose, a shared vision and mission, and an underlying strategy that matters. You can compare this to the pilot. The company doesn't run itself, the strategy arising from purpose, vision, and mission does. That's the pilot, and you want to protect it with armor at all times.

Then you want to know if the core activities are valuable and profitable. Sometimes this doesn't have to be directly expressed in money, but it can also yield indirect profit and margin.

Example of loss-making activities that still yield profit:

The company, as described above, consisted of various disciplines, such as a DTP department, a design department, a development department, and an events branch. The latter only makes a profit on some projects, but most of it was loss-making.

You can imagine what Fred and Steef from Suez Capital suggested to me! Exactly, shut down that business! But no, the millions in revenue they generated contributed up to 20% margin to the total margin through all the work they generated for the other departments. So as long as they broke even or made a little loss, it was very profitable to have Events be part of the whole.

Ask for the right external help in time if you are about to go bankrupt

In times of crisis and challenges, it is vital for companies to recognize when they need external help. Whether it's revising strategies, finding new paths to profitability, or redefining their core mission, external guidance can play a crucial role in successfully navigating turbulent waters.

As an entrepreneur, it can be tempting to cling to familiar paths, but sometimes it's the fresh perspective of an outsider that can make the difference between survival and thriving. The story of the airplanes returning from the war zone with vital parts intact reminds us that protecting the core of a company is essential for long-term success.

Therefore, be open to new perspectives, and dare to take the step towards external guidance when necessary, with the aim of revitalizing your company and making it flourish in an ever-changing world.

In the Amsterdam, Amstelveen, and Aalsmeer area, I offer 'Revitalize Your Business Coaching and Mentorship' and 'Purpose Driven Business Coaching'. With over 30 years of entrepreneurship, I know the ins and outs, and after more than 20 years of coaching, I can give you the insights that will make you successful as an entrepreneur again.

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