The term “Alternative Facts” has been in the news recently, particularly in the current political environment, where actual facts don’t support an individual’s version of the truth.
Alternative facts are created to support someone’s view of reality, when in fact, that version could not be supported by verifiable truth. While it seems like the term “Alternative Facts” represents a newly created postulate, the term has actually been around for some time.
The urban dictionary has multiple definitions of “Alternative Facts”. The broadest definition is: “Double speak to avoid the synonym “lying” in a professional conversation. i.e. The antonym of actual facts.”
From A Business Perspective …
It is important to discuss the term “Alternative Facts” from a business perspective. In our practice, we see many examples of business owners or CEO’s who sometimes rely on “alternative facts” to support their point of view, or use to justify continuing with a particular strategy, even though the results do not support it.
We also see cases where financial metrics or benchmarks are twisted or explained away as not being representative of the long-term benefits that will result in continuing the strategy or vision the executive supports. “Alternative Facts” can sometimes explain short term variances that occur, however they become an “alternative reality” when the explanation continues quarter after quarter or year after year.
Real Facts vs. An Alternate Reality …
In most organizations, there are multiple people involved in the management of the company, including management below the CEO, or in some cases, there is a board of directors that have oversight responsibility for the company and its CEO. Quite often, the underlying management team or board of directors defer to the judgement of the CEO for a period of time, despite the absence of real fact or logic to support what is really going on in the company.
It is important to understand the difference between real facts and the alternative reality that is being portrayed by the CEO. One example that we frequently see, is the belief, that despite how deeply the company is in debt, or how much money the company is losing, there is always something great that is about to happen.
For example, when sales are declining, the belief that the next big order in the pipeline is about to be closed. And when it does, everything will be great. We also hear excuses why the company cannot reduce it expense structure, when losses are occurring, because, the company will need this level of expense when sales rebound. The lack of credible information to support the CEO’s belief or hope something is about to happen, is a different version of “Alternative Facts”.
The Lack Of A “Plan B” …
Let’s take for example a manufacturing company that we worked with that was incurring significant losses and the CEO had been told by a potential customer that a very large order was about to be placed. The CEO was fixated on the “fact” that this order was imminent and would bring significant cash flow and profits to the company.
This fixation, without considering the alternatives and having a Plan B if it didn’t happen, placed the company in significant jeopardy of failing. As we started to dig into the real facts, we found out that the imminent order was just an indication of interest and the “due diligence” process would take several months before a decision was made to place the order.
We also found out that there were several larger competitors that were possibly bidding on the order and in fact could undercut our client and significantly reduce the odds of receiving the order. After pointing this out, we were able to convince the CEO to focus on the reality of making changes to the business that would support its sustainability.
Belief In The “Wrong” Alternative Facts
We also experienced a situation with a company that was looking for a new credit line as a result of their current bank asking them to find a new lender.
While their current bank had given them plenty of notice to find a new lender, they waited until several weeks before the deadline to call us for help. They believed they had contacted a number of banks and they could find no lender to help them (Alternative Fact).
They felt their only option was to file bankruptcy and wanted our help in doing so. After asking a number of questions we found they had only contacted a few lenders that they were familiar with and in fact none of them were the right lender for the company.
After looking at their situation and asking their lender for an extension of time, the real facts were that there were several lenders that were appropriate for their situation. We were able to help them find a new lender and the company continued to operate.
A “Wake-Up” Call Is Often Needed …
There are a number of ways to confront “Alternative Facts” and it is important to approach the individual with valid information and to ground them in reality. In many cases when financial projections or metrics are mischaracterized, it is important to educate the individual with more robust details that supports a more realistic point of view.
If the situation involves dealing with someone that has a belief that a strategy or event will produce a significant windfall for the company, it is important to point out the risk to the company if it doesn’t happen. In many cases the business owner or CEO’s total net worth is vested in the company. Helping that individual understand the risks they are putting the company and their personal investment in, is a wake-up call for them to face real facts.
At the end of the day, success or failure of a company is dependent on the decisions that owners and managers make on a daily basis. Constantly relying “Alternative Facts” significantly increases the risk of failure and ultimately impacts not only the owner, but also the everyone connected with the business.
Revitalization Partners is a Northwest business advisory and restructuring management firm with a demonstrated track record of achieving the best possible outcomes for our clients. We specialize in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations.
Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.
