Monthly Archives: November 2013

How Santa Claus Controls Costs In An Unbelievable Business Operation

Xero recently added Purchase Orders… finally! It has been a long time coming. Santa Claus could even tell you this – and yes Santa would clearly use beautiful accounting software. Christmas come early!

Santa gets the most energy from building his brand image through his majority ownership in Coca-Cola and, being a perfectionist, pressing his elves to get every last detail right on every toy.

However, Santa is also a great leader capable of the impossible. In order to accomplish the impossible he needs to understand the spokes (tell me in the comments what this should really be) which hold his sleigh together.

Few business operations in the world need to be able scale as quickly as the one he runs. His favourite tool for managing costs without micro-managing and chewing up his own unscalable time is Purchase Orders.

1. Delegate and allow your team to grow

Early on Purchase Orders allowed Santa to grow his business from the small man operation it was to the annual empire it now is. Santa was able to set up the appropriate levels of authority so he only authorised the level of purchasing he needed to but left the majority of purchasing decisions up to those below him with the responsibility.

2. Purchase Invoice matching

When any of the elves places an order for goods, they were either quoted a price, or were working off their price list from the Polar Bears whole supply the materials and services. Once the Purchase Order is approved it is automatically sent off the the supplier at time of order with the price and quantity ordered. If the invoice arrives at a different value it will be picked up straight away there is an issue.

3. Manage goods that have been received but not invoiced

Purchase Orders allow Santa’s merry crew to receive goods and recognise the cost they just incurred, even if the invoice arrives in Summer.

4. Match goods delivered against what was ordered

One year when pulling 80 hour weeks in the early start-up years one of his elves, Marcus, ordered 10 tonne of beautiful vintage wood for rocking horses. However, only 8 tonnes turned up. The invoice went straight through to Santa’s bookkeeper and was for 10 tonnes. The man in the red suit ended up paying for 2 tonnes more than what arrived. It only took this one costly mistake for Santa to realise the value of Purchase Orders and matching the goods received against what was ordered.

Santa runs the business operation in the North Pole on unbelievably slim margins and scales his entire operation at a seemingly impossible rate. It is easy to see why Santa considers a Purchase Order system an essential tool in controlling costs and freeing up his own time to focus on both doing what he does best and gets the most enjoyment out of.

You Are Probably Failing Your Business As A Leader

You are failing your business as a leader if on any given day you hear one of the below phrases from someone in your team:

  • I would like to…

  • Request permission to…

  • What should we do about…

  • Do you think we should…

  • Could we…

These are all indicators your business is run in through a command and control leadership style. You may not think so but if you are hearing any of the above I can guarantee it is. It may have even happened inadvertently.

You could be getting more out of your team and business if you pushed responsibility, accountability and decision making down the organisation.

Anytime you here one of the above phrases you need to stop the person immediately. Let them know from now on you want to hear “I intend to…”.

Be sure to stay on this same message with the entire team until it sinks in. It is a subtle but powerful difference.

The “I intend to…” philosophy was learned from Captain David Marquet who as commander of the USS Santa Fe turned it around from a ship with low morale, performance and retention into one of the fleets finest. If you are interested you should read his book.

It worked on a nuclear submarine, what is stopping you from implementing this in your business?