Business tips and hints from real world experience

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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.

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Economic Update January 2015

There are an awful lot of moving parts influencing the world’s major economies at the moment.

Major disruptive influences are the recent sharp decline in oil prices, driven partly by the collapse of a speculative “bubble” but more fundamentally by the increase in production (the US is now a larger producer than Saudi by some measures.)

The second influence is the Euro instability – again – which has been a recurring theme for the last few years. The two shocks that are approaching are the introduction of quantitative easing by the European Central Bank and the likely election of the anti-austerity party, Syriza, in Greece. The fear is that such a result will lead to Grexit – or Greece leaving the Euro. If that were to happen, speculators would return to attacking the other peripheral economies with a view to profiting from their exit.

Adding to pressure on the Euro is the decision of the Swiss National Bank to remove its ill-advised support for the Euro last week, leading to one of the biggest swings in currency trading in the last few years. The SNB is now left nursing large losses on all the Euros it purchased since 2007, and may well need bailing out by the Swiss government.

The third level of pressure on the Euro comes from the speculation of a possible Brexit – Britain leaving the European Union – arising from the popularity of UKIP and the conservative decision to hold a referendum.

The fall in oil prices is good news for most economies, but bad news for those economies which are reliant upon oil (and gas) exports, such as Russia, Venezuela, Nigeria and many of the Middle Eastern countries. With the exception of Saudi Arabia and Norway, these economies do not have significant cash reserves to buffer them against the decline in exports. For Russia, the decline in the value of the Rouble has a minor counterbalancing effect as oil exports are priced in USD.

UK prospects are positive, with lower oil prices driving down inflation and reasonable growth in 2015/6. The potential negatives on the horizon are political – the failure of any party to gain a majority in the upcoming election, and the possibility of a further election in 2015 if a stable coalition cannot be created. It looks as though interest rates will remain at the current level throughout 2015 with a first increase in the second quarter of 2016. The big drag on the economy will be the failure of Europe to show any real growth, but any EU exit will be long drawn out. Growth rates of 3 to 3.5%.

European prospects are poor.  The only economy showing any signs of improvement is Germany, but the markets to the west are feeble and those to the east are in varying states of turmoil.

The Russian economy is a danger zone. Low value to the Rouble, declining oil earnings and sanctions suggest that the prices of food and necessities will continue to increase. Domestic unrest is possible, but unlikely to be effective given the authoritarian nature of the regime. Recession looks set to continue for the next 18-24 months.

China continues to grow, with some signs of consolidation slowing from the previous break-neck pace. Reform of the financial system and some reduction in the level of corruption suggest a very positive outcome over the next 3-5 years and growth rates of 5-7%.

The US looks to continue an a mini-boom as the full benefits of shale oil and gas feed through, but the pace of growth is likely to slow from the 5% recently recorded to around 4% in 2015.

Asia seems set for reasonable growth, supplying China with no major shocks foreseen. Different countries will move at different speeds, but Singapore, Vietnam, Malaysia and Indonesia all seem well set for growth in line with that in China. Thailand is at risk from the health of the elderly monarch and a succession – but if that transition is smooth or does not happen expect similar growth.

 

 

 

 

 

 

 

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Adapt or die

Recent news is that BT is buying a mobile phone company – it looks like they will chose EE over O2

Those of us with enough grey hairs will remember that BT used to have a mobile phone business, and unless I am mistaken it was the business that formed the basis of what is now O2.

Elsewhere, there have been stories of BHP Billiton, the mining giant, splitting off those assets that are now not considered “core” to the remainder of the business. It so happens that BHP Billiton was created from the merger of BHP and Billiton, and the demerged companies will look very like the originals.

None of these changes or reversals necessarily means that the original strategy was wrong. When BT sold off its mobile phone business, the core business of providing telecom services was in a mess. They had pension fund problems, labour relation problems and were still struggling with the transition from a publicly owned business to a private company.

Merging BHP and Billiton created a mining giant that was able to dominate the markets and created great value.

The Times said
“BHP merged with Billiton in 2001 in a $58 billion deal. At the time, the rationale of adding Billiton’s assets was to create a fully diversified mining group with roughly equal earnings from aluminium, base metals, coal and iron ore. However, Billiton’s assets barely contribute to the group’s profits today, having been overshadowed by a decade of soaring growth in its iron ore, copper and coal businesses driven by China’s rapid economic expansion.”

The market has changed, so these businesses have changed their strategy. Your market has changed – have you changed your strategy?

If you don’t adapt, you may be following the dinosaurs to extinction

 

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Hiring a professional can be money well spent

Last week I was introduced to a team of three directors who have fallen out with the 4^th director, who is also the largest shareholder in the business.

This team of 3 merged their business with the larger business owned by the 4^th director some time ago, and things have not worked out as they would wish.

I’m helping them unravel the situation, but in establishing the true position it has become apparent that some of the advice they were given was not what I would have recommended, and seems to be unduly favourable to the larger shareholder.

I know the legal firm they used for this transaction – indeed they acted for me when I sold my house – but I would not recommend them for a corporate finance transaction. I am sure they do a few transactions a year but this is dangerous territory best left to the experts.

One item in particular jumped out at me. There is provision in the shareholders agreement for a “bad” leaver to have his/her shares bought out by the other shareholders. The valuation of the shareholding uses the same mechanism for a “good” leaver as for a “bad” leaver.

In this case, the largest shareholder appears to have breached employment law, the shareholders agreement and his statutory duties as a director!

It seems likely he will be a “bad” leaver.

I have not seen the valuations but I am sure the value of his shares will be quite substantial – even though he will be a bad leaver – so that my clients will have to find substantial resources to buy him out.

A provision for a bad leaver might well have saved my clients several hundred thousand pounds. I think the investment in the appropriate expert – a few thousand pounds – at the time of the merger might well have been worthwhile.

“If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”
Red Adair