by Paul Cook

Running a company – any company – can be a lonely business.

It’s not that chief executives aren’t surrounded by colleagues, or constantly in meetings – they clearly are, perhaps too much. But one of the constants of the job is that recurring question: could we be doing better? And those closest to the CEO aren’t best placed to answer that question; there is little incentive for them to answer affirmatively. So where does the boss turn to get some honest advice and insight into the true potential of his or her business?

The default position of course is numbers, or financial performance indicators. We’re awash with them in asset finance, being a finance-based business. But numbers only go so far in indicating potential.

That’s not to dismiss their prominence in the art of management, which would clearly be absurd. But for individual CEOs, they
are of limited value when it comes both to identifying the ‘headroom’ for improvement, and making comparisons – even if they have access to competitors’ numbers, being confident that indicators are genuinely like-for-like is tough.

A better way is to look at organisational capabilities, existing and planned. I have worked with some of the biggest lessors in mainland Europe, through to smaller niche players in the UK, and have seen that there is a range of capabilities in asset finance that differentiate good performers from the less good. The former tend to have the ones that are critical to their business model, the latter don’t – it’s as simple as that.

So what are they? Well, they broadly fall into four categories of organisational stewardship: strategic and policy, business management, operational, and infrastructural. And within asset finance my view is that there are four functions which must possess critical capabilities: sales and marketing, risk, finance, and operations. I could run through an overview of each of the 47 capabilities, but frankly, the relative importance of each depends on a business’s specific strategy.

It is more interesting to ask (and to answer) the questions: which ones do you need to execute your strategy successfully and how do you know whether you already possess them?

In a further article next month, I will explore the process of getting to the answers to those questions. That is the critical journey for determining whether a business needs to add to or develop its set of capabilities – something which in turn might make a few CEOs feel a little less lonely.

Paul Cook is a consulting director with Challenge Consulting