Author: TimLuscombe

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Are you getting the best results from your business?

 

Part of creating a successful business is to focus attention and effort on the areas that are going to bring the most reward.

There is a fundamental economic principal sometimes referred to as the law of diminishing returns where the first additional resources applied to a production process give far greater output results than those applied later.

One way to imagine this is to think of a seized wheel where the first few drops of oil enable the wheel to move. Adding more oil will improve the lubrication and the process, but those first few drops make a massive difference.

In business, it’s really easy to keep adding more oil to the process that is running. You’ve done it before and you know that it had a good or even a great effect. You don’t have to think too hard about it!

Fixing the thing that isn’t working, or starting a new project or process may well require you to put in greater initial effort but the return may well be much larger.

Applying this thinking to a sales & marketing context, perhaps you are well established in a market, with a particular type of customer. You understand their needs, you have a presentation and a product or service that has been successful in the past and you know how to win more business. There will come a point where doing more of the same will not have the same effect, and it will take more sales & marketing effort and expense to win new customers.

The alternative strategy might be to identify a new market, where you are not established and you don’t have the same level of knowledge. The initial resource required – especially from leadership – will be greater – but the returns may be even greater still. If you now have two markets where you are established, instead of one, you have a more robust and less risky business.

You can apply this thinking to many different aspects of the business. You don’t have to keep doing more of the same if the results don’t warrant it. Are you getting the best results for your efforts?

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Who looks after your customers?

 

Some time ago I was collecting my wife from the station one evening.

It was cold and windy, and when I entered the station lobby it was no warmer than being outside as one of the doors was open.

I stood there for a few minutes, trying to see if her train had arrived, and then realized I was early and would have to wait – so I closed the door.

As soon as I did so, one of the security guards leaped up and propped it open again, telling me “We have to leave it open, there are no handles on the outside – if the door is closed no-one can get in”

Many of you will know that Reading station and the surrounding track have just undergone a £400m investment program – the whole station is practically new, as are the doors in question!

You can understand, I suppose, that the detail of a mechanism to allow passengers to enter when the doors are closed was overlooked in the initial plans, or even during the final construction. What is difficult to understand is that the station and these doors have been operational for several months without remedial work.

Passengers have not been seriously inconvenienced as the doors are always open, but on the evening I was there three ticket office staff and two security guards were suffering the cold weather coming through the open doors.

If the front-line staff are inconvenienced in this way, how are they likely to give their best service? Why hasn’t this been fixed? I am sure a handle could be fitted reasonably quickly!

Are the management not listening to their staff, or is there no communication system? Are the staff unwilling or unable to raise this issue?

In your business, if you want to give the best service, you need to get the best from your front-line staff – which means you need to take the best possible care of them. Are you doing that?

 

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Assumptions are dangerous

 

I am helping a client deal with an approach from a prospective buyer, and  I’ve been reminded just how dangerous assumptions can be.

My client doesn’t have a background or training in finance, so I’m acting as the translator, explaining language used by the buyers’ advisors in plain English.

In this case the shareholders are a management team of 5 and after the deal is done only three will stay. There’s an earn-out involved, and to my client it was obvious that only those members of the team who are staying would participate in the earn out.

All the shareholders have the same type of shares with the same rights.

The buyers’ expectation is to treat them all the same way – including the earn-out, even for those no longer part of the team once the deal is done.

My client assumed one thing – you could say it was common sense – but the buyer’s advisors assumed something completely different – and again for valid reasons.

The problem with assumptions is that they are sometimes so obvious to person making the assumption that they don’t even know they have made the assumption and are not aware of an alternative.

This can be damaging!

To avoid assumptions is largely a matter of communication. If you explain, in great detail, what it is that you expect or want to happen, and then listen carefully to the reply, you will stand a chance of minimising or avoiding assumptions.

I was arranging for some subscriptions to be paid by standing order, and I set out the standing order form with instructions on how to complete it. To me it was obvious that the person sending the money has to send it to their bank – but then I have done this before!

If I don’t include that step in my instructions, we will get many of these completed forms in the post.

That’s no good to us – the bank cannot follow instructions it does not have!

If there’s not enough detail, assumptions creep in. Make sure you are all on the same page with detailed instructions – especially for something new – and then listen well, looking out for assumptions!

 

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Are you listening?

 

A colleague told me a story about an engineering business having trouble with the reliability and frequent failure of its products.

A fellow speaker described what they do as helping people to listen.

A different colleague told us how he had created a multi-million dollar business using a simple sales technique.

The engineering business resolved the quality issues when they started listening to the mechanics using the equipment, and took note of the modifications these enthusiasts were making to their own machines.

My speaker colleague is a specialist in mediation and problem resolution. Most problems occur because people are not really listening to each other, or even worse just sending emails.

The sales technique is to (at its simplest) listen to what your potential customers want, and then provide a solution.

“We have two ears and one mouth so that we can listen twice as much as we speak” is a quote attributed to Epictetus the Greek philosopher.

If you are listening to the people on the front line – those who have to deal with the customer, or fix the problems – you can see patterns and take steps to minimize those problems before they occur.

If you are listening to your team, you can recognise when morale is not what you would like it to be. Poor morale in your team will lead to poorer customer service and to poorer business performance.

In negotiation, if you are really listening to the other parties you will be much more successful.

In sales, if you drown out the customer by telling them what you can do, you may miss the opportunity where they tell you what they really need. Supply what your customer really needs and you will keep a customer forever.

Try listening more – you don’t know what you might hear!

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You can eat that elephant quickly!

It is great to have ambitious targets and a dramatic vision for the future, considering what the business might become. It’s even better if you share that vision with your team but the step that all too many miss is to break down the overall target into achievable steps.

It is great to inspire and enthuse the team by sharing that target, but you need to make use of that enthusiasm and enable them to help you achieve those goals.

Think of your plan as if it were an assault on a mountain. You and your team would have to plan where you were going to rest each night, where you were going to eat, who was carrying which bit of equipment and so on into great detail. Every member of the team would have their assigned tasks to complete, and would fully understand and buy into those tasks knowing how they contributed to the overall plan.

I would argue that business is both more complex and simpler than climbing a mountain!

It is much more likely that in your business not everyone is as motivated and driven as you, the business leader. You have to spend more time explaining persuading and cajoling team members! On the other hand, you are probably not risking life and limb leading a business – it just feels like it sometimes.

So break down your plan into little pieces, departmental targets and objectives, into smaller timeframes (a year is way too long) and get your team to recognise and see how they can contribute to overall steps.

Remember the old saw about how to eat an Elephant – one mouthful at a time. In business, get your team to help and just the bones will be left in no time!

 

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Striking the right balance

How do you make decisions?

You start by gathering data (usually it is data, rather than information) and you analyse what you’ve learnt. From the analysis you can make your judgement and usually your decision.

Sometimes though the data you have is insufficient. You can’t decide, you are not sure.

This will happen where it is a new situation – one you have not had to deal with before – and you don’t have past experience to guide you.

The first thing to do is to try to improve the data that you have. Often, a second round of data gathering will reveal the crucial facts that were missed out the first time around, and the decision becomes easy.

There will still be occasions where you just don’t know enough, and that’s when you can fall into the trap of Analysis Paralysis.

When that happens, you don’t make a decision and the opportunity passes you by. Maybe it was that big contract but you didn’t feel you had enough information to bid, or perhaps it was a potential recruit – you didn’t make an offer in time, so they took another job.

With every decision you make, there is a balance to be struck between gathering perfect information and making a timely decision, but the more important balance is that of risk and reward.

Some businesses leaders espouse the JFDI methodology (Just F*****g Do It) which works brilliantly for the little decisions, with low reward and low risk profile.

I doubt that many of them would espouse the same methodology when the risk is big enough.

That’s the point at which you should ask for help. What is difficult for you, and something you haven’t experienced before, might be something that one of your friends or advisors has seen before. Perhaps just a second pair of eyes looking through the data will see something that you have not.

The chances are you will never have perfect information. You still have to make a decision, and the risk is still high, so all you can do is gather as much data as possible in a reasonable time, but then.

Get someone else to take a look – two heads are better than one.

 

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Leading in the right direction

 

I don’t know about you but I was always told to “work hard and success will come” and that’s true, to a point. Put it the other way around – success won’t come without hard work – and it is much truer.

It is really important to work smarter, not harder.

There’s an old saying “Insanity is doing the same thing over and over again but expecting different results” which has been attributed to many authors. If working harder was going to make the difference you want to make, then you are just too lazy!

So take a step back and build into your schedule some time to think. Even the Prime Minister takes a few minutes each day – and I am sure his diary is busier than most – to stop and reflect.

Perhaps take time to go for a walk – the physical exercise is good for you as well, and if you have a dog (as I do) they will appreciate it!

A further opportunity to make sure you are working smart is to join a Mastermind Group. That’s a group, usually of your peers, where you can share your thoughts and problem. You can get and give feedback and sometimes just explaining things to your peers helps you see the solution to your problem.

If a mastermind group is not for you, consider engaging with a coach or a mentor. There are hundreds available, so be careful who you choose, but they can be a fantastic way of getting clarity and becoming re-energised.

On a less personal, more business level you might consider engaging a Non-Executive Director.

The Institute of Directors says “Essentially the non-executive director’s role is to provide a creative contribution to the board by providing objective criticism…should bring an independent judgement to bear on issues of strategy, performance and resources including key appointments and standards of conduct.”

Whichever route you choose, make time to ensure your efforts are focused in the right direction. If you aren’t focused on the right things, your team won’t be – you are the leader and leading in the wrong direction won’t get you to your destination.

 

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Lessons from the top 100 companies to work for

 

I’ve been reading Fortune magazine’s article on the top 100 best companies to work for.

In the article the authors point out that the perks provided by the top employers have an indirect purpose; Google (as many of us will already know) provide many employee perks including free food; what I had not known is that they manage the serving time so that employees have to wait for a few minutes – so that conversations may be struck up whilst waiting to be served.

The eating arrangements are long tables, placed a little too close together. There’s a good chance that you will sit opposite someone you don’t know, and when you push your chair back to get up you’ll likely bump into the person behind you – they call that the “Google Bump”

The thinking behind all of this is to create relationships across the company – and it is a common factor in the top 100 – that encourage the employees to feel part of a team.

A study quoted in the article through a little graph (http://www.oceantomo.com/blog/2015/03-05-ocean-tomo-2015-intangible-asset-market-value/) shows that intangible assets as a percentage of market value have risen from 17% in 1975 to 84% in 2015.

The article continues

“the most effective teams are not those whose members boast the highest IQs, but rather those whose members are most sensitive to the thoughts and feelings of others”

How can you apply this learning to your business?

It starts with your personal approach and attitudes.

Gandhi said:

“Your beliefs become your thoughts,
Your thoughts become your words,
Your words become your actions,
Your actions become your habits”

In simple terms if you start to believe that this matters – in a business context, not just in your personal life and with your family & friends – and you act in accordance with those beliefs, you will be observed and imitated.

What can you do today to make someone else’s day a little better…the foundations for a more productive workplace?

 

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Keep your promises

I’ve had a couple of experiences this week where promises made were not kept. One was a promise about funding for a voluntary organisation, the other a promise to change a procedure to allow more time for comment and input.

How do you feel when a promise or a commitment is broken?

I know I was angry and disappointed. I sat in the room when the commitments were made. Then I saw the emails setting out the revised position. I had to read them twice to be sure I was not misinterpreting what was being said!

Mark Carney, the Governor of the Bank of England, said “trust arrives on foot and departs in a Ferrari”

Now, I don’t trust the people who made those commitments. It makes it difficult to continue doing business with them – are they going to let me down again?

What commitments have you made that are still on your to-do list?

Is there a training course you said you would organise / pay for, or perhaps it’s a new printer because the old one keeps breaking down.

What about your customers?

Have you made explicit commitments – perhaps on delivery time? The project will be completed by xx/yy or your goods will be shipped within one working day? Are you matching those commitments with your actions, or even better exceeding them? If there aren’t explicit commitments there are implicit ones – your customers’ expectations.

Sometimes, life gets in the way – and what you thought you could do you now find you can’t. You are going to break that promise – that commitment.

If you do nothing – stick your head in the sand and hope the recipient has forgotten your promise – you aren’t fooling them, just yourself. You think that by avoiding the problem it will just go away!

If, on the other hand, you put your head above the parapet and confront the problem – you tell the recipient what has happened, and why you can’t avoid breaking that promise – you will at least reduce the damage. It won’t feel like it when you tell them, but you will be better off in the short term.
The customer service gurus will tell you it is not avoiding customer complaints – that’s pretty nearly impossible – but how you deal with the complaint that matters.

Do as you say & say as you do – but if you can’t do, communicate why

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Economic Update April 2015

The three major themes of Oil, the Euro and Conflict continue to dominate the outlook for the world’s economy.

The oil price seems to be stabilising, subject to occasional shocks that result in blips. I suspect it has a little further to fall from current levels of $60-$50.

The Euro disturbances – especially in Greece – continue to bubble away.

Continued conflict in the Middle East is probably providing some level of support for the oil price at its current levels and in the unlikely event of peace breaking out I would expect oil prices to fall again. A more fundamental impact on several major economies is Russian efforts to destabilise Eastern Europe and the Baltic states.

In Britain, there’s considerable nervousness at the possibility of a Labour led government especially if (as seems likely) it is dragged further to the left by the need for support from the Scottish nationalists. The alternative of a Conservative led government generates concern over the promised EU referendum, but that is concern on a smaller scale.

In economic terms, if a Conservative government is returned, expect growth in the 2.8 to 3% range, possibly with a slowdown in the run up to the referendum. I’d also expect a second Scottish referendum and a very likely break-up of the UK. In economic terms that is most likely to be good for the “rump” of the UK, very bad for Scotland but might well be 7-8 years away.  I’m expecting enough concessions from the EU that Cameron can campaign for a vote to stay in, which he will win, so that the disruption of an exit is avoided.

If we have an alternative election result at best that will create an unstable government and at worst a heavily socialist regime. That will be bad of business and the economy, although the effects will take time to show. Growth rates falling back to 1.5 – 1.8%

Europe is not at all homogenous. France is still in trouble (zero growth) and I see few signs to give me hope for recovery, Germany continues to outperform (2-3%) although Putin’s antics to the east give some cause for concern. Italy seems to be on a slow road to recovery (1.5 – 2%) although the pace of reform is glacial. Spain is making good progress (2%), Ireland is well ahead (2.5%)

The US, despite the recent jobs report, has few barriers to sustained & continued growth and should see rates around the 3% mark.

China continues to be a powerhouse despite the consolidation of power and the anti-corruption drive, both of which are slowing the breakneck pace of the last few years. Growth rates of 7% or so.

Russia is in recession and likely to remain so. Removal or weakening of the sanctions imposed by the EU will help, but the oil price scenario is not helpful and neither are Putin’s political tactics with the former soviet states.

In India there are some grounds for optimism. The (relatively) new government is making some structural reforms and investment in much needed infrastructure, but it is a long slow road. Recent adjustments to the reported statistics have just muddied the waters but growth rates similar to China’s seem likely.

Latin America: the shining bright spot in the region is Mexico with growth rates of 2.5% climbing to 4-5% over a 2-3 year period. Elsewhere in the region, Oil dependent economies and political instability combined with anti-business rhetoric and legislation suggest zero to weak growth.