I recently completed an outstanding book entitled Upstream, which was written by Dan Heath. He is a Senior Fellow at Duke University’s CASE Center and has co-authored a number of excellent books with his brother Chip. You may even recognize some of them: Made to Stick, Switch, Decisive, and The Power of Moments. I’d highly recommend that you read this book in the near future.
See if you can relate to his opening story in Chapter 1.
“You and a friend are having a picnic by the side of a river. Suddenly you hear a shout from the direction of the water – a child is drowning. Without thinking, you both dive in, grab the child, and swim to shore. Before you can recover, you hear another child cry for help. You and your friend jump back in the river to rescue her as well. Then another struggling child drifts into sight… and another… and another. The two of you can barely keep up. Suddenly, you see your friend wading out of the water, seeming to leave you alone. ‘Where are you going?’ you demand. Your friend answers, ‘I’m going upstream to tackle the guy who’s throwing all these kids in the water.’”
A public health parable (adapted from the original, which is commonly attributed to Irving Zola)
This is a great example of “Upstream Thinking.” Have you ever noticed that we seem to spend a lot of time and money “fixing” problems, essentially those challenges that we are seeing “downstream” in our business? As you’ve heard me state many times, I firmly believe the following:
- If you measure some item in your business (e.g. Cash Flow), you can indeed understand it. It equips you to catch severe cost increases quickly before they get out of hand. Since these changes directly impact your break-even levels, they flow directly toward the “bottom line.” As I’ve said before, you can also use these cash flow measures to set your milk price floor within the Dairy Revenue Protection program.
- If you understand your cash flow, you can control it. You’ll know exactly what steps to take to positively impact it. Looking at your break-even levels, you can determine just exactly what changes you need to make in order to achieve improved profitability.
- Finally, if you can control it, you can improve your cash flow results. Isn’t that the objective of every business operation?
Well, whenever we identify a measurement that appears out of control, we should consider if we can go one step beyond this “downstream” measurement. Can we move more “upstream” and determine what is actually causing our problem? Here’s a simple example. Recently, one of my Clients was faced with higher than normal calf losses. These higher losses were the “downstream” measurement. At first, we thought that it may be due to changes at the calf ranch. However, as we moved “Upstream,” we determined that the machine used to pasteurize the colostrum being fed was only functioning at 60% efficiency. In other words, 2 out of every 5 days, it was not working correctly. This may shock you, but the employee that ran the faulty equipment noticed that it seemed to be failing. Unfortunately, he never bothered to tell anyone else. Hence, the challenges that arose “downstream.”
I’m sure you can think of other possible areas in your business that seem “off” in some respects, whether it’s a higher than normal “Cost/cwt” or another “Efficiency” measure. I would invite you to join me as I start to continually move my Clients “Upstream” in the next 12 months. Until then, what items in your operation are seemingly “out of kilter?”
Going back to the original question, “Would You Meet Me Upstream?” please give some consideration to this new type of thinking. It definitely will make a huge difference. If I can assist you with this process, please contact me at email@example.com or 209-988-8960. Best Wishes for a joyous Holiday Season and continued prosperity in the coming year!