The Big Idea with Ron Davis
Focus on Problems, Not Symptoms
If you had just one really great idea you could share with the alarm industry, what would it be?
This month we feature Kirk Macdowell, MacGuard Security Services
MacDowell’s BIG IDEA:
UST A LITTLE WHILE AGO, I hung up from my interview with this month’s interviewee, Kirk MacDowell, and thought about how enjoyable the exchange was, how much I learned and how many good ideas Kirk has that I could report upon. And he does have a lot of ideas!
Kirk is the chairman of both AIREF and SIAC,
two of the industry’s most prominent trade organizations. He is also running his own consulting firm, MacGuard Security Advisors, which provides companies throughout all of the strata of
the industry, manufacturers, dealers, integrators,
etc. with valuable information, insights and facts,
and when necessary, a plan for implementation
of those ideas.
I’m a little bit older than Kirk, and back in the 1970s and 1980s when I was speaking pretty regularly in the industry, any time I would come near any area by Kirk, he’d be sitting in the audience. Afterwards, we would talk about some of the ideas that were presented, and what it would mean to the industry if they were implemented. Big dream stuff! Kirk went on to build one of the premier alarm companies in the industry, and eventually, we see the man he is today. He’s a good guy, a great leader and a top-notch consultant. And he had a great idea for this column.
When I asked Kirk what his great idea was, there was no hesitation, he shouted out one word “Focus!” When things are going bad, focus. When things are going good, focus. When you don’t know what to do next, focus. When there is pressure, don’t look for a miracle, focus on what it is you do well. When you are faced
with the problem, don’t dwell on a symptom of the problem, but rather deal with the core issue. For example, when there’s not enough money in the bank to do something you need to do, that
is just a symptom. The real problem is that you have not focused on the financial aspects of your company so that you could earn more money.
After we finished the interview, I sat and thought about what Kirk had said, and realized that I along with most of us actually create the problems that we face when we don’t focus.
Maybe the issue is we haven’t formed the habit of determining what is a real problem versus a symptom of a real problem. For example, my day job is that of being a business broker in the security and alarm industries. Often, we will talk to a prospective client who asks us for a guess as to what the client’s company might be worth.
Let’s talk about a dealer who has $100,000 a month in RMR. The dealer assumes that a multiple of 40x should be in the ballpark of what they are expecting. Instead of answering the question, we might say something like, “That’s a pretty good number, but tell us what your gross attrition rate is.” And the answer comes back, “About 17%.” We do a little back of the envelope thinking and respond that the valuation is only about 34x, considerably less than what the dealer was expecting. So you see the problem is not what we think the value is but, rather, what the value would be with an extremely poor attrition rate.
And in fact, we would probably tell the dealer something like, “If your attrition rate were considerably less, we would probably suggest that the valuation would be closer to the 40x number.” So you see, the attrition rate wasn’t the problem. If we focus, we would come to realize that we are doing something that doesn’t take care of our customers. That’s the symptom of the problem, and that’s what we have to focus on. This is an acquired skill. And it takes practice. But once learned you can do it almost all of the time, pretty much habitually.
Our industry is going through some disruptions, some more significant than others. New products, new services, new competition, new regulations, new financial reporting. The list goes on and on. All of these things can cause you significant distress, and more significantly, cause you to think more about the symptom of a problem rather than the real problem. We all do this; the question is, how frequently do you stop to think of whether you’re dealing with a problem or a symptom of the problem? That’s when a consultant like Kirk can come in and help you sort through all of the issues that you’re dealing with. The objectivity an outsider will bring to the table is worth far more than the small cost you would pay that advisor.
The next time you’re faced with a problem,
sit back and think about what the real problem
is. You will then realize that it’s a lot simpler to
come to a satisfactory conclusion when you deal
with the real problem … not just the symptom.