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Sunday, 26 October 2014

When Does an Entrepreneur Become a Serial Entrepreneur? Whenever There is New Challenge!

Some years ago I was involved in a business in what has now become extremely unfashionable, that is, a conglomerate asset stripper.

It all sounds strange these days but in essence we searched in Moddie’s Cards (anyone remember them?) for undervalued listed companies with relatively realisable assets, preferably cash.

Our leader was a brilliant accountant with a great deal of industrial experience and he led the business with much bravura.

I well recall his saying one day that he had no time for patient trading; he much preferred to make money than to earn it. In other words he preferred to do deals rather than run a day-to-day business.

In many ways this encapsulates the views of some entrepreneurs while others have a dream of creating something that will eventually become a legacy.

The question to ask is: at what point in the life of a company does it evolve from being an entrepreneurial venture to being a mature trading entity?

Even more important, at what stage in the evolution of the business does the creator realise that much of the excitement of the creation of the business has evaporated and the company now has a life of its own, hopefully trading successfully and employing people?

In my years working with many entrepreneurs I have heard them confess that frankly they are bored with the routine and need some stimulation.

This can lead to a range of distractions such as involvement in a charity, extreme sports and others too delicate to mention.

In a productive sense this problem can be and often is solved by seeking out other opportunities in terms of products, services or markets that can challenge the abilities of the leader and the business.

Some countries are inherently more entrepreneurial than others, for example many in the Far Eat whereas in more mature western economies entry into established markets can be more difficult.

You may recall that President George W Bus remarked that some countries do not encourage the creation of new businesses saying "the French don't have a word for entrepreneur!"

Is there a difference between an entrepreneur and a serial entrepreneur?  At what stage does the leader feel that enough is enough and decides to cash in rather than leaving the business as perhaps a family legacy?

Selling the business can be an emotional exercise. I remember a client telling me that the acquiring company wanted him to stay on for at least two years. As he put it "they want to adopt my baby but they want me to stay on to wipe its bottom".

There is no hard and fast answer. Some leaders can sell their business and walk away without a backward glance while others desperately need an outlet for their enthusiasm and creative juices.

Watch out for another potential stumbling block.  I recall one of my Vistage members who sold up and a couple of months later called me to fix a time to meet for a chat.

“What’s the problem?” I asked

“The wife” he replied; “She says that she married me for better or worse but not for lunch!”

The most important factor is that the vendor understands that it is far better and more positive to GO TOWARDS something new rather than merely to GET AWAY and escape from something.

So many leaders would go demented after a couple of months of golf and/or bridge simply because most of them are young enough and still sufficiently enthusiastic to take up another challenge.

This is perhaps the biggest issue for the entrepreneur. Very few lose their taste for creativity simply by selling up and it is a good idea to factor into the deal (if only in the head of the leader) an answer to the question:


What next?

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Sunday, 19 October 2014

Recruiting Sales and Marketing People? Don’t Bother - They Don’t Exist!

It has been very wisely said that, in the end, we in business are all traders.  We buy something, we have knowledge or experience or we make something, then we add value and we sell it to make a margin.

In essence then it is a very simple progression that has been made very complicated as products, services and markets have become more and more sophisticated.

Early last century the sales function was all powerful and, at that stage, understandably so.  If a business has something to sell then they made sure that the right people knew about it.

Led by US methods the techniques of selling become very effective and more and more broadly based.  No longer was it possible to assume that, as Henry Ford said:

“Build a better product and the world will beat a path to your door”

The world will only comply provided that they know about who you are, and what you can provide for their benefit.

I love that little epic poem which I have mentioned before:

“He who whispers down a well
About the good he has to sell
Will never make as many dollars
As the guy who climbs a tree and hollers”

And therein lies the really significant change in the methodology of how best to bring your product or service to the market.

Because of the expansion of the markets and of competing products and services, a way had to be found to penetrate markets in a more effective way than merely sending out a large number of field sales people and hoping that they will find the goldmines out there.

It brought into play a more sophisticated way of looking at the appropriate markets and the science (or art or both) of marketing came into being.

It was immediately espoused by the Business Schools, which love anything to put more theory to the test, and in time the whole subject became even more complicated.

All of that explanation is a precursor to a problem which many businesses have, that is, the essential separation between marketing and sales.

A simple definition of marketing might be: a formalised way to define appropriate markets, to identify suitable potential in the markets, to understand their needs and to provide suitable solutions.

That would be by various techniques such as market research, competition research, pricing policy, promotional activity such as advertising in a range of media and, above all, sales.

Accordingly the method of selling by either a trained field force backed up by qualified internal sales support is a major part of the marketing function.

Logically therefore it makes no sense at all to try to find people out there who are “Sales and Marketing Specialists” simply because the two functions are entirely different; marketing establishes the background information to permit the sales function to operate at optimum effectiveness.

My old sales mentor, Phil Copp, the sage of Wythenshawe, knew well the advantages that accrue from a detailed knowledge of the markets and because his market were relatively uncomplicated he was able to do that himself.

In that business we didn’t have marketing function per se and every sales person was expected to derive such information as was appropriate.

It is essential to understand that the marketing function underpins everything about the business, its purpose, its objective and its ultimate success.

The sales function is the task force that makes sure that the markets buy in to what we do, what we offer and the way in which we give great service.

In other words:

Don’t try to find a sales and marketing specialist because they don’t exist


You actually need both.


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Sunday, 12 October 2014

Are You Production or Market Orientated? Consumer Orientation is Even Better!

What would you do about a very senior member of the management team who deliberately restricted the amount of business won "because we don't have the capacity to cope with any more"?

In a way that is a reversed version of the type of business that encourages its sales people (if they have any) to sell available capacity in the business.

Many manufacturers or even suppliers of commoditised products look at the business that way. Their only justification for growth comes from a financial analysis of the capital cost and the anticipated return with no consideration of the customer’s needs.

I had thought, naively, that this sort of management was long gone, but no.  Here and there it still exists.

I recall when I was involved in a sports surfaces subsidiary of a large conglomerate (and that dates me) we designed an artificial run up surface fort long jump and triple jump that could be laid by simply rolling it out in place. The weight held it in position.

The spec called for 1 metre wide, soft patterned surface, red brick coloured material and the factory (which made conveyor belting) was not happy. They asked could they make it 3 feet wide, smooth surface and black.

When I pointed out that what they were suggesting was actually conveyor belting which was not exactly what the customer wanted, they said "but it would be easier and cheaper to make it that way".

In the end they made what we wanted but very reluctantly.

I was about to suggest that this reaction was many years ago and times have changed. So they have but here and there you will find remnants of the ancien  regime.

More recently the concept of marketing orientation has gained ground, using lots of market research and analysis and it has certainly been a change for better.

However even that model doesn't get close enough to the point where all the effort really counts; the consumer.

It mat appear pie in the sky to drill down so far especially when you may be in the middle of a long supply chain. Nonetheless the attitude of the consumer is the final arbiter in decisions down the chain that may well affect your business.

Far sighted businesses have recognised this and are spending a great deal of effort in getting as close as possible to the consumer and shortening the supply chain to their advantage.

Many cars these days are made to the customer's specifications and the online purchase of computers, for example, allow the customer to design his/her own specification for just about every facet of the machine, usually at a cost let it be said.

Even a pair of jeans can be specified for style, cut and size.

Whatever model you espouse it is always better than merely selling capacity and will offer a platform for planned and sustained growth.

The question is: what to do about the senior executive with the curious approach to business?  Firstly it cannot be countenanced in this day and age and secondly, some form of commercial training seems to be at least a starting option.

Whatever is decided he must be taken out if the decision making process in the early stage so that the needs of the market and the customer can be properly satisfied with the appropriate resources allocated to ensure that this actually happens.

If we can gain business that satisfies the needs of the consumer at a price that is commercially viable, then the only question to ask is; what resources at what extra cost will be needed and, most importantly, what return will we expect?

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Sunday, 5 October 2014

Looking to Polish Your Leadership skills? Take a Look at These Sporting Heroes!

For me, the whole subject of leadership has been brought into focus by the great victory of Team Europe in the recent Ryder Cup golf match with the USA team and I wrote a supplementary blog post last week about it.

Thinking about the subject of leadership in sport and its consequent resonance in business there are several exceptional leaders in a range of sports who have demonstrated that one doesn’t necessarily have to be or have been a high performer in the sport but without doubt has to be a leader of extremely talented people.

If we consider Paul McGinley, the erstwhile captain of Team Europe together with Sir Clive Woodward, head coach of the 2003 England rugby World Cup winning squad, Sir David Brailsford who led Team GB Cycling to a bunch of medals at the London Olympics as well as leading Team Sky to win two Tours de France, and the evergreen Sir Alex Ferguson of Manchester United, they all have several traits in common.

These seem to be:

·      Absolute clarity about the objectives and purpose of the campaign
·      Absolute clarity in communication that purpose to the quad
·      A ferocious and consistent attention to detail
·      Understanding that every one of the team is a very talented individual and needs to be treated as such while emphasising the team credo.
·      They all knew what success would look like

Let’s examine each of these in turn:

A Sense of Purpose.  McGinley drove his team to win the 2014 Ryder Cup, Woodward led England to an unexpected win in the rugby World Cup in 2003, Brailsford had both the Olympics and the Tour de France in mind, and Sir Alex was determined to win the Premier League and the Champions League.

None of these objectives were financially based and could easily be visualised.  The story goes that Serena Williams when a child imagined herself holding up the winner’s trophy at Wimbledon.  Tennis was merely the route to get her to that achievement.

Clarity of Communication: Great leaders are able to communicate simply and without drama the purpose, the objectives and the route to success to their teams and to imbue in them almost a calm acceptance that they would achieve that success.

Attention to Detail:  A curious one, this. On the face of it, it could be construed as micro-management but in fact when analysed, the detail involved the creation of a culture that was dedicated to giving the teams every possible advantage over the competition.

All of these leaders selected great players (with the exception of McGinley because of the rules) and then let them get on with it while giving them exceptional support at all times.

Understanding Talent:  This is a difficult one and demands a consistent approach to all the members of the team while accepting that they all have their little foibles and drivers.

Knowing What Success Looks Like: Self explanatory in each case.

It is worth re-emphasising that none of these leaders with the possible exception of Paul McGinley, were great exponents of their sport but had realised that they had the ability to develop a culture that allowed each team member to motivate themselves, to want to win.

There is the story, possibly apocryphal, of the coach of the great swimmer, Mark Spitz who was said not only could not swim but also had a morbid fear of water.  He coached Spitz to nine Olympic Gold Medals.

Business leaders could well examine how these great sporting heroes operate.  None of the criteria above are exclusive to sport; rather they express the everyday modus operandi of great leaders in any sphere of influence.

In essence they can be summarised as

·      Purpose
·      Clarity
·      Detail


Ask yourselves; do you lead your people with those in mind at all times?  Do they all know what is expected of them?  Do they all know what success looks like?

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