As readers of this blog know, much what I write about is related to what’s in the news, blending it with Business Acumen concepts and teaching points, and providing practical tips and tools for immediate application back to the job for increased business performance.
Over the past few weeks, I have been listening to the weak signals and chatter emanating from the C-Suites of many different organizations and one of the things that I am hearing getting louder is the increased focus on cash flow as a financial metric that matters. As we head to the last month of what will sure be a disastrous Q2 for many businesses, the murmurs about ways of increasing cash flow through cutting budgets will increase based on the pressure board of directors will be putting on their CEO’s and CFO’s. It will be tempting for many of them to cut Marketing and other functional areas like R&D that don’t have an immediate (next month) impact. However, most successful leaders understand that you literally can’t cut off your nose to spite your face. Cutting Marketing and R&D is cutting off the lifeblood of future revenues and profits. While cash flow may increase in the short term, shareholder value (how much the company is worth) will decrease over the long term because it is being starved of the key ingredients that drives it.
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