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Monday, 31 August 2015

Are You Answering the WIIFM Question? Use Leading Not Lagging Indicators!

It is perhaps a truism that focusing on the needs of the customer is a more appropriate way to run a business than using the numbers to see how we have been doing.

Even worse is the technique (if we can call it that) of selling capacity rather than offering what the customer wants and needs.

Most organisations forget, or worse, don't even realise, that the customer is always thinking “what’s in it for me” and then go on to measure "what's in it for us" using lagging key indicators such as profit, sales and debtor days when looking at the numbers.

While there is value in knowing the current position, these measure what has happened in the past rather than what is going to happen in the future.

Managing the business by focusing on past performance is much the same as driving a car by looking into the rear-view mirror. The challenge is to create value for the customer and find ways to measure "what's in it for the customer."

Future customer-focused key indicators are by far the best means for determining the direction in which the business is going and there are many which can come under that heading.

A typical example is on-time delivery which is an excellent indication of how well the business is currently functioning. If all of the operations are running smoothly, there's a good chance that on-time delivery is within acceptable parameters.

The key here is under-promise and over-deliver. In other words give a realistic and rather conservative estimate of delivery time, and then beat it. A neat point is to call the customer to say that you’re sorry but you plan to deliver a day or two early – will that be alright? 

Another key indicator is the time you take to answer an enquiry. Customers and clients will take your speed of response as an indication of your interest in their enquiry and after all, their enquiry is what matters to them.

Professional firms can be noticeably lax in their response to clients’ enquiries and actually delivering on the “I’ll call you back in a couple of hours” is often a vain hope.

Remember that the client or customer assesses everything on the WIIFM basis – that is, 

What’s In It For Me? How will I benefit from this, not how will YOU, the supplier, benefit

Accordingly make sure that your Key Performance Indicators are not lagging but leading, that is, are customer focused not past performance focused.

It is, of course, essential that you measure everything and keep records of what happens.  It will mean the collection of new forms of data as well as the normal monitoring of the financial numbers but the effort is well worthwhile. 

Do it well, and the financials will demonstrate the value of what you are doing.

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Sunday, 23 August 2015

Are You Draining Energy From The Team? You Gotta Accentuate The Positive!

In the cheerless days of 1944, when the Second World War was at its height, a little song became very popular. Written by Johnny Mercer and Harold Arlen and performed by the peerless Bing Crosby, Accentuate the Positive, Eliminate the Negative, became a hit both in the USA and here in the UK.

That song still resonates today because we do have a tendency, however unaware we may be, of doing it by injecting negative words into our conversation. 

Another if our great Vistage speakers, John Cremer, often uses a little role-play exercise in his presentation.  He has two people facing each other and one starts the conversation by saying “What about trying……?”  The other can only respond by saying “Yes, AND…….!” to add to the idea and the two of them build it from there.

The role play then changes with the answer becoming “Yes, BUT……”  and then continues as before.

Just watch the difference in the body language in each exercise, never mind the change in energy, and this is just role play not the real thing.

Starting a sentence with “no”, “but” or “however” are used, whether we like it or not, to gain or consolidate power and they can have a really serious effect on the listener. 

Negativity drains energy from people and even from a room with a consequent reduction in enthusiasm and the desire to achieve.  If you are running a meeting it needs to be in a “negative free zone”!

If you watch out for it, you will see how using those words can engender intense resentment, either conscious or unconscious, and they can stifle rather than open up discussion.

Teams and people react to verbal stimuli from leaders, both positive and negative and for obvious reasons we should always look to “accentuate the positive” rather than the reverse. 

One of our top Vistage speakers, Marcus Child, cites the example of the football coach who exhorts his team to “Stop moving the ball sideways” or “Don’t use the long ball” or “Don’t give up so easily”, all negatives.

Rather be positive and tell your team what they CAN or SHOULD do and illustrate your thoughts with positive consequences. 

Marcus Child says that even replying to a “thank you” with “no problem” is a double negative! A far better answer is “It’s a pleasure!” or "You're welcome!"

Listen too people in shops, on the street, being interviewed on the radio or TV and hear how these negative words and phrases have insidiously crept into our everyday conversation.

All in all, it is a matter of habit and one we need to watch out for in order to “Eliminate the Negative”.

If you enjoyed this blog take a look at my book "Leading to Success"
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Sunday, 16 August 2015

Is Your Business Bottom Line Driven? Far Better to be Long Term Driven!

Regular readers of this epic will know that I am an enthusiastic listener to the BBC World Service and a few days ago they ran a very interesting discussion in short v long termism in business.

Taking part were an academic, a hedge fund manager and a leader of a large corporate.

Most of the debate was centred around large cap corporates and the pressures put on them to deliver shareholder value.  The corporate leader felt that this militated against the way that he wanted to run his business.

It is all about the dichotomy between short termism driven by the market which demands constant growth of both turnover and profits against the long term view with the emphasis on the customer, good service and engaged employees.

The corporate leader was decidedly a long term advocate and derided the bottom line driven businesses which he said had capitulated to the demands of the stock market.

He said that his business, apparently like Warren Buffett, had made a conscious and courageous decision to ignore the share price and to orientate the business towards the customer.

The majority of SMEs do not have the pressure of having to accede to the demands of the market but in the end they also have to drive shareholder value.  Fortunately this cannot be measured on a daily or even hourly basis on a FTSE or Dow Jones look alike but the requirement exists nevertheless.

Generally while the owner/s of an SME can generate a satisfactory lifestyle, the real value of the business lies in its potential sale value at some time. This can and does vary over time and only becomes relevant at sale or inward investment time.

In his early days at GE the legendary Jack Welch like many other corporate leaders was bottom line driven and below average performers in the business lived in a state of constant fear for their future.

His views seem to mellow over the years but the demands of the market were still a strong influence on the ethos and culture of GE.

The question to ask is, do we want to run the business with the bottom line as the only driver with all that implies, or do we look to the long term, to build a loyal customer base, a great reputation for product and service and a happy and engaged workforce?

Perhaps in the corporate world Enron is an excellent example of the short term bottom line driven approach, and Apple of the long term, innovative, customer driven ethos.

This not to say that the long term culture ignores shareholder value but perhaps it is angled more towards stakeholder value which takes into account customers, suppliers, employees and the community as well as shareholders and investors.

 As long as the shareholders and investors accept that the business is in it for the long term with the probable and consequential growth in value then the customer driven ethos is far more likely to deliver the goods than the bottom line driven business.

If you can excuse the mixed metaphors it's the choice between the shooting star with fast burn out or the long slow route to a successful outcome.

The bottom line is merely a measure of the success of the way the business is run and is not an end in itself.

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Sunday, 9 August 2015

Too Busy at Work For Anything Else? Get Some Balance Into Your Life!

Everyone should have a hobby, be it sport, walking, reading, gardening, collecting and so on. 

The point is that a hobby is very personal and offers both pleasure and often a welcome distraction from the cares of life. 

Mine is Freemasonry and in particular researching the history of the Craft and collecting related artefacts. 

All very undemanding and even fulfilling but surprisingly there can be problems. 

Freemasonry has in excess of twenty Orders known as Orders Beyond the Craft; these are based on historical or biblical legends and have their own meetings, rituals and regalia. 

I know of many Masons who seem to collect membership these often esoteric Orders and they can rapidly become "five nights a week" Mason. Indeed it can become obsessive and that is unhealthy. 

What effect this has on family life can only be conjectured but one assumption is that the spouse may well welcome it. 

Conventional Masonic thinking in terms of priorities says that the family should come first at all times, the demands of work second and Freemasonry (or any other hobby) third. 

In business terms I have found on too many occasions that the first two are reversed and often without the modifying influence of the third. 

I hear people saying things like "I'm not sleeping too well", "I don't see much of the kids" or worst of all "There is a lot of tension at home". 

It goes without saying that everyone needs to be dedicated to driving the business along to generate such success as is feasible but it should never be at the cost of family and close relationships. 

Success in business should never be achieved in an atmosphere of regret for lost relationships; we don't hear of last words saying "I wish I had spent more time at the office". 

It is all a matter of balance and often of self-discipline. 

Vistage has a great strap line:

"We are dedicated to increasing the effectiveness and enhancing the lives of executives" 

and that covers it all. 

If the pressure of the business starts to increase take o look a how many people report to you directly.  A good question to ask yourself is "Whose  job am I doing now?

Always be aware of upward delegation where people pass the buck to the leader rather than taking the responsibility themselves. 

Restructure the management team if necessary to reduce the number of direct reports and stop doing things because you enjoy them!

Plan for a four day week, delegate to your people and if you don't trust them with the freedom to work without supervision, then get yourself someone you CAN trust. 

Legislate in your calendar to take at least a day a month specifically to think about the business.  Go for a metaphorical walk on the beach without a notepad or worse, a smart phone, and just spend a little time in cogitation.

I recall the story of a Vistage member who was working all hours possible to the visible detriment of his family and relationships and sensibly he took action.

Eventually he cut his working week down to three days, changed his way of working, reduced the number of his direct reports and guess what?

He found that he was achieving more in the three days and the business gained dramatically.

Get some balance into your lives.  The family and close relationships come first and when they are good and right, then it is far easier to devote time and effort to the business.

Like the great golfer Sam Snead said:

“Take time out to smell the roses”

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Sunday, 2 August 2015

Is Annual Appraisal Time Approaching? Don’t Bother, They Don’t Work!

It is always encouraging when one is able to read articles that agree with and, I like to think, substantiate one’s opinions.  At last, I feel, that I am not a lone voice in the wilderness.

For a long time I have been banging on about the use of the annual appraisal to check on and assess the performance of each individual.

For example there is a recent article on the Forbes magazine website that covers the subject in some detail:

This is only one of a raft or similar articles that examine the annual appraisal and most of them come to the same conclusion.

It always seems to me that using the annual appraisal alone (which is quite common) to make this assessment is similar to using the end of year accounts to manage the business without any reference to what is happening on a month-to-month basis.

If that is not countenanced why should the use of the annual appraisal be used in the same way?  It just doesn’t make sense to assume that everyone can be assessed merely on one form filling exercise every year.

What therefore are the reasons NOT to use the annual appraisal system?

They are many in my view and cover mostly the reaction of the individual being assessed.  For a start many managers do not realize that the prospect of undergoing the annual grilling strikes fear and trepidation into the hearts of many of their employees.

People can become fearful of what might transpire and, worse still, the possibility of action being taken by the company as a consequence.

People being people, the usual assumption is negative which can have a very depressing effect even if the results are eventually good and positive.

It can viewed as a modern form of the Star Chamber with the individual being brought to book by someone who may actually not like them or worse, see them as threat of they are a great performer.

What I find even more invidious is the use of some form of ranking as a consequence of the appraisal, say, 1 to 5.  The assumption is that 4 and 5 are good, 3 is moderately acceptable and 1 and 2 absolutely not acceptable.

Jack Welch of GE fame was a great leader but he used the ranking system with apparently no concern for the feelings or indeed the actual value of the individual.  If anyone scored 1 or 2 they were out and that was that.

Can you imagine the feelings of someone rated 1 or 2 who would know immediately that they were apparently dispensable?  What a way to treat a human being who may well have valuable attributes that didn’t emerge in the appraisal.

The answer to this situation is to understand that you can find out much more about people if they are looked after and who feel that the business cares about them.

The ideal answer is a regular one-to-one with everyone conducted by their line manager.  This meds to be at least monthly for at least an hour, preferably more, and is to the agenda of the individual not the manager.

The first question should be: “What di you want to talk about today?” and that ought to bring out any problems that they have.  It may take some time for people to feel free to talk and that is entirely up to the manager or leader.

Doing this on a regular basis will almost eliminate the annual appraisal although there may be some value in retaining it a summation of what has been discussed through the year.

Finally if you do persist with the appraisals they should NEVER be used to determine next year’s salary level.  That would make the individual even more nervous and militates against any sensible discussion.

Use the regular one-to-one judiciously and just watch the results.

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