Working capital release is one of the most popular management interventions in the world because the cash it frees up is real, fast, and visible on the next quarter's balance sheet. It is also one of the most popular interventions to quietly undo, because the old behaviours tend to return the moment the programme team moves on. If the programme is not a change to the operating model, the release is almost always temporary.
Why most programmes decay
A standard working capital programme finds inventory that should never have been there, payment terms that should have been negotiated, and receivables that should have been collected. The team releases the cash, reports the number, and moves on. Twelve months later, most of the improvement has quietly unwound because no one changed the rules that produced the problem in the first place.
A working capital release that survives the year has to come with a change in the decision rights that created the original buffer. Someone has to own the new inventory policy. Someone has to own the new payment terms. Someone has to own the new receivables collection cadence. Without a change in who decides what, the gravity of the old operating model pulls the balance sheet back to where it started.
What we do differently
- Start the programme with the decision rights map, not the inventory count. If the team cannot name the person who owns each policy, the programme will not survive the year.
- Write the new policy in plain language before the first kilogram of inventory is released. The policy is the durable output, the cash is the visible output.
- Put the new policy into the monthly reporting pack on day one. A policy that is not on the monthly pack is a policy that does not exist in the operating rhythm.
- Run a check at month nine. If the new policy has already drifted, the drift is a signal that the decision rights are wrong, not that the policy is wrong.
A well designed programme looks boring in month six, because nothing new is happening. Boring is the sign of success. The interesting programmes are usually the ones that are quietly losing the gains they reported in month three.