Why consultants can be a CFO’s best friend?

While at church this morning, I heard the story of Charles Steinmetz, a prolific inventor and electrical engineer for General Electric back at the turn of the century. The story that caught my attention describes the occasion when Ford Motor Company hired Steinmetz to come to the Ford Rouge River plant and solve a difficult problem with a large generator outage.charles-steinmetz-full

Jack B. Scott wrote in a letter to LIFE magazine in 1965 about his father’s encounter with Steinmetz that is captioned below:

“Ford, whose electrical engineers couldn’t solve some problems they were having with a gigantic generator, called Steinmetz in to the plant. Upon arriving, Steinmetz rejected all assistance and asked only for a notebook, pencil and cot. According to Scott, Steinmetz listened to the generator and scribbled computations on the notepad for two straight days and nights. On the second night, he asked for a ladder, climbed up the generator and made a chalk mark on its side. Then he told Ford’s skeptical engineers to remove a plate at the mark and replace sixteen windings from the field coil. They did, and the generator performed to perfection.

Henry Ford was thrilled until he got an invoice from General Electric in the amount of $10,000. Ford acknowledged Steinmetz’s success but balked at the figure. He asked for an itemized bill.

Steinmetz, Scott wrote, responded personally to Ford’s request with the following:

Making chalk mark on generator    $1.00

Knowing where to make mark         $9,999.00

Ford paid the bill.” [1]

How many times have you questioned the value of a consultant’s bill?  Unfortunately too many times consultants are brought in to perform work such as planning or strategy that does not solve a problem.  The real value of consultants come from their unique expertise that a company may not have internally that they need to solve problems from a new perspective.

Think about how you have approached your key issues for 2013.  Have you turned over every rock in search of cost savings?  What new perspectives can you bring to bear on improving working capital or capturing previously undiscovered profits from your operations?

This is how every CFO should utilize a consultant.  Don’t focus your consultant on creating your cost savings plan.  Have them review and critique your plans.  It is very likely that they can mark the spot that solves a problem with which your team hasn’t discovered.

Source:

[1] http://blogs.smithsonianmag.com/history/2011/08/charles-proteus-steinmetz-the-wizard-of-schenectady/#ixzz2FtmclWoO

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