When the numbers make sense, but the decision doesn’t

There are many managers who only focus on numbers like:

“How much did we sell?”
“How much profit did we make?”
“Did we cut costs enough?”

You also often see managers who say,
“We’re making a profit, but somehow we don’t have any cash.”

But there was a manager who went even further.

He shut down a subsidiary just because it was losing money—
even though that company produced key components for the parent company’s products.

The parent company decided to focus on its best-selling products
and reduced production of other items.
As a result, the subsidiary—which made core parts for those products—
saw its production fall below the break-even point
and started losing money.

The manager reportedly told the subsidiary’s executives,
“Losing money is unacceptable.”

However, in this industry, best-selling products tend to change every five to eight years.
It is common practice to keep skilled workers and maintain production lines,
even for products that are temporarily out of favor,
until the next cycle comes.

Two years later, just as expected, the market shifted.

Later, I heard that this parent company had been acquired a few years earlier,
and a new president had been sent in.
Apparently, he had only worked in retail.

People often say, “Don’t just look at P&L—look at the balance sheet and cash flow too.”
But skilled workers are not something you can see in any of those numbers.

A manager who does not understand the industry,
and does not understand the people on the ground,
is nothing less than a disaster.

実務経験に基づく参考情報（内容の正確性は保証されません） / Reference Information Based on Practical Experience