I think you’ll agree that Albert Einstein was a very intelligent person. However, as the scientist who developed the Theory of Relativity, most of us would not have looked to him for advice in the area of strategic management or life philosophy. While that may, for the most part, be a reasonable assumption, I’d like to review one of his quotes because I believe it contains some very powerful advice for us today. “The thinking that has brought us this far has created some problems that this thinking can’t solve.” What was he talking about when he made this statement? I believe he was talking about a situation that was quite similar to what some people in the dairy industry are facing today. Doesn’t this fit the scenario of a producer who has fallen behind on accounts payable or other items this year? Whether this was caused by only low milk prices, whether it is the direct result of poor decisions being made or whether it occurred due to bad timing on the part of the dairyman, the situation still needs to be addressed and corrected. Einstein’s quote fits the business that got behind on Accounts Payable, but it is also appropriate for the person who has been historically successful but has been blindsided by lower milk prices. If you (or someone you know) are facing a situation similar to this, take some comfort that you are not alone. There are others who also have gotten behind during these past few months. Nevertheless, these problems still need to be corrected. Changing how you address this challenge can really help. First, start by communicating with the vendors to whom you owe the money. Most of them are willing to work with you if you express interest in remedying the problem. Realizing this will take some time, work out a plan you are comfortable with and stick with it. Not fulfilling your agreed terms and conditions will only hurt you and your vendor over the long term because it can damage your future credibility. Finally, remember that you didn’t get into this situation overnight. Thus, it is doubtful that you’ll correct it in two or three months. Stay positive and use some creativity to reach a reasonable solution. Once you have reached an agreement, start looking for other new ways of thinking that may assist you going forward:
- Remember to spread those fixed costs over as many producing units as possible. In other words, always try to maximize the use of your facility to spread your fixed costs as much as possible.
- Always strive to minimize variable costs where possible as long as it does not impact the productivity or profitability of your dairy herd. Always know your costs/cwt.
- Be open to new ideas, and ask yourself, “How can we attain this goal?” When you seek the correct answer, operating under the assumption you will reach it, your mind will become amazingly preoccupied with finding a solution.
As I have said before, I believe you will be glad you did!