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Sunday, 31 July 2011

Vulnerable to a Major Customer? What About Your Suppliers!

Over the years several companies with whom I have been working have quietly and dangerously become vulnerable to a major customer.

It is axiomatic that the sensible approach is to keep the customer base as wide as possible with none accounting for more than around 15% of turnover.

However customer creep can and does happen and before you know it, one of them starts to account for a really major part of turnover.  I recall a business in domestic lighting dealing with a major outlet in the UK for the range of products.

Over a long period of time the customer placed more and more orders and at the same time, the demands started to increase.  In end, they accounted for more than 80% of turnover and whatever they said they wanted, the supplier had to comply.

It wasn’t a matter of “jump”, it was “how high do you want me to jump?”

When I warned the MD that the company was massively vulnerable, he said firstly that he couldn’t refuse a good order from a good customer and in any case he had a great relationship with the buyer.  In fact he used that rather unpleasant and complacent comment of: “I have the buyer in my pocket”.

Guess what happened.  The buyer moved on, a new buyer came in and brought existing relationships with non-branded manufacturers.  Within six months the supplier had lost the account and was effectively out of business.

A salutary tale but what about your suppliers as well?  I had a client manufacturing a high tech product who called me one day to put off a meeting as he had an important matter to deal with.  Later in the day I was in Manchester and, lo and behold, there was my client walking towards me.

He said: “ I have just been to see our solicitors.  One of our major suppliers who manufactures a special component exclusively for us, has gone into administration.  We have had to make an offer to buy his business from the administrator just so that we can maintain supplies and keep our business going.”

Another salutary tale.  We keep our eyes firmly fixed on our customers, and rightly so, but it should never be at the expense of watching the supply chain which can be and often is the determinator of the company’s success.

By the way, don’t forget the leader’s health and key people in the business.  Even more salutary lessons.

For more informatioon visit www.vistage.co.uk and www.vistageblog.co.uk
To contact us email to: ivan.goldberg@vistage.co.uk
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Sunday, 24 July 2011

Business Getting Too Complicated? Simplify It!

It has become apparent over the years that the whole exercise of business has gained a great deal of complexity and to little advantageous effect.
The remarkable impact of IT on the running of businesses has meant that there is a mass of data available of which a proportion is turned into information and a smaller proportion again becomes intelligence, on which action can be taken.
The problem is which information is relevant and of value, and which intelligence is just “nice to have”.
I recall a Finance Director of my acquaintance whose company had seven or eight subsidiaries.  For each main board meeting he would prepare individual sets of accounts for each company and then consolidate them for the holding company.  The result, of course, was a pack of “information” a couple of inches thick which took ages to prepare.
He decided to send out a marker pen with a set of accounts and asked each Managing Director to mark the information which was important to them.  The upshot was that he reduced the accounts pack to half a dozen pages each month, making the point that if they wanted any more information, then it would always be available.
Business is an essentially simple exercise.  We buy (or make) something, add a little over the total costs, and then sell it.
A CEO of a public company I worked with used to run his company on the basis of half a dozen charts which gave him enough information to decide on any action which was needed.  He could always “drill down” if necessary.
Leaders need to de-clutter in every sense – the intelligence derived from the mass of information available, the mass of detail around, and, most importantly, his/her mind so that there is more clarity about what needs to be done for the future, and not what has happened in the past.
When I worked for Slater Walker in the 1970s, the board meeting financial report from the previous month took no more than ten minutes and the rest of the time was devoted to any resultant actions, and to the future.
As Belbin says, the shaper should shape the business and have completer-finishers and implementers around to take the necessary actions. The leader’s mantra should always be – business is simple, so simplify it.

For more information visit www.vistage.co.uk and www.maa-uk.co.uk
To contact us, email to ivan.goldberg@vistage.co.uk

Sunday, 17 July 2011

No Time to Think? Go Into Retreat!

One of the most important factors in the life of the leader is simply thinking about his/her organisation.   Easily said but how often do we actually take time out to reflect on the business and our part in it?
One of the more significant parts of the Vistage experience is the annual "retreat" for the whole group where we go away to a pleasant venue and spend time together.   Some groups in the UK have been overseas and my group had a memorable (for many reasons) retreat in a castle in Scotland which was next door (about four miles away in fact) to the legendary Castle of Dunsinane.
My group, once a year, generally takes a two day “time out” in a pleasant hotel venue to spend time together and to work with a speaker for a full day.
That is in a group environment and on the other hand, Vistage speaker, Walt Sutton, reminds us of the saying of golfer Sam Snead who said “Take time out to smell the roses”.  He could have added "and think a little".  Walt encourages leaders to take time out for a solitary retreat which he describes as taking a metaphorical walk on the beach.
It is vital for the leader to realise that he/she is generally the only person in the business who actually thinks about it, about its present and its future, about its vision and about its potential.
Yes, everyone in the business will give some thought to their job and its manifestations, but only the leader thinks about it in a holistic sense.  That thinking time is vital for the future of the business and it is usually the last thing in which the leader indulges.
There seems to be an inherent sense of guilt at apparently not "doing" anything visibly tangible but just sitting quietly and thinking.   One member of my group did just that for a full day (after a lot of encouragement) to think about a relatively difficult issue in the business. When I asked him what had happened he said:
“At the end of the thinking day, nothing at all, but a couple of days later, ideas started to pop out and I was able to solve the problem”.
It is well known that if we consider a problem, then close down and forget it, the brain continues to work on it subconsciously.
Remember that if the leader doesn’t apply serious thinking to the business and its future, no-one else will and the future will just happen for good or bad.  Go smell those roses and take some time to think.

For more information, visit www.vistage.co.uk and www.maa-uk.co.uk
To contact us, email to ivan.goldberg@vistage.co.uk

Sunday, 10 July 2011

Unhappy Customers? Under Promise and Over Deliver!

My wife, Hilary, told me of an experience that she had this last week which caused me to ponder on the need to set realistic expectations.
In brief, her office broadband went down which was a total tragedy and something that needed to be corrected as soon as possible.  The engineer promised to be there within the hour and eventually turned up 45 minutes late.   Simply because Hilary takes her promises to her clients very seriously indeed and never breaks them, she quite reasonably expects the same from others.  Result?  She had the job done satisfactorily and was still furious.
I gently pointed out that had the engineer said that he would be there in two hours she might have tried to negotiate a better deal but in end accept his estimate.  Then when he turned up 15 minutes early, she would have been delighted. 

Same time, different response.
My old sales mentor, Phil Copp, the Sage of Wythenshawe, used to say:
“Always under promise and then over deliver.  Set their expectations and then beat them”.
Phil’s approach to commercial life was based on his absolute commitment to building relationships which in turn were based on honesty and transparency.  He would never, and I mean never, discount a price, and on reflection, he never discounted a delivery promise either.
“Far better” he would say: “to be firm, have an argument with them at the outset, set their expectations for when the goods are going to be sent, and then deliver early”.
How many times have your sales people (or you, for that matter) been battered by a customer who says that they absolutely the goods in a metaphorical two weeks?  The sales person (or you) knows categorically that they can’t be shipped in less than four weeks, but capitulates under pressure and says: “I’ll see what I can do for you – I’m sure we will be able to do something to improve delivery (or words to that effect)” in order to please the customer.  It will please him but certainly not when the good arrive in four weeks.

A little gentle but firm questioning at the start can very often make the customer come clean and admit that his demand for quick deliver is based on little more than a macho approach to negotiation and in reality, the goods aren't needed in anything like that time.
So many times in business life we set unreal expectations especially when we are under pressure.  It is essential to set expectations which can then be realised and the result is that we have a satisfied customer or client.
As Phil Copp said: “Under Promise and Over Deliver” and that will ensure that you give consistently great service, and more to the point, build a reputation for honesty and consistency.  An outcome not to be sneezed at.

For more information visit www.vistage.co.uk and www.maa-uk.co.uk
To contact us, email to ivan.goldberg@vistage.co.uk
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Sunday, 3 July 2011

Good or Bad Jundgement? Take Some Time Out!

Like just about everyone else, I get unsolicited emails, mainly from acquaintances, with lists of sayings, some funny, some rude, some very rude and some banal.

Just occasionally there is the odd one which strikes a chord like this one which dropped into my inbox this week:

“Good judgement comes from experience, experience comes from bad judgement”.

Now there’s a thought.  It is, of course, a massive generalisation but there is a good deal of truth in it.  It has been wisely said that we really only learn from our mistakes and it is probably true to say that mistakes are often derived from poor judgement.

In the end it is all about the learning process and the key is to ensure that when mistakes do occur, as they inevitably will, that they are treated as a learning exercise and not as a case for discipline.

I have said on many occasions that experience should lead to expertise and as long as we are able to generate relevant experience, then the expertise will follow.

As my old sales mentor, Phil Copp, the sage of Wythenshawe, used to say (and he probably nicked it from someone else): “If you never make a decision, you never do anything”.

Of course, it all depends on a “no-blame” culture in the business and it is the province of the leader to ensure that it is implemented throughout the organisation.  In many ways, it is counter intuitive and the primary instinct is to resort to discipline and “if you let that happen again....” threat.

Bad judgement?  In the rough and tumble of day to day business, the leader  frequently has to make decisions on the hoof and they may be good or bad decisions.  At least they are decisions, and it has been wisely said (vide Phil Copp) that even making a bad decision is better that not making a decision at all.

So that little aphorism has a good deal of sensible truth in it and perhaps the key is to take out a little time to assesst the potentially unforeseen consequences of our judgement and decision making.  It is definitely worth the effort.

For more information visit www.vistage.co.uk and www.maa-uk.co.uk
To contact us, email to ivan.goldberg@vistage.co.uk