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Sunday, 27 August 2017

Vulnerable To A Major Customer? What About Your Suppliers!

Another of the constant issues that exercise the mind of the leader is that of potential vulnerability to a large customer.  How on earth can we limit this situation without putting our business into a position of danger?

The fact is that it is both enticing and scary, enticing because the flow of orders from a customer is always a comfort blanket and scary because what would happen to us if the flow stopped for any reason.

Take the matter further and consider what would we do if in a position of vulnerability the customer suddenly started to exert undue influence on our business, to be late with payments, to make excessive demands and generally behave badly.

I recall a situation with one of my consultancy clients who, believe it or not, managed to achieve 95% of his annual turnover with one very large high street retailer.

I pointed this out to him on several occasions only for him to say: “Don’t worry, the buyer and I are very close” which worried me even more.

It was right to worry. His customer’s buyer suddenly left and was replaced by one from another equally large retailer.  She brought with her all the contacts she had made and was sadly reluctant to do business in the pub which was what my client was prone to enjoy.

Guess what happened in this case.  It took about six weeks for him to receive a letter from his customer to say that after looking at competing suppliers she had decided to change with thanks for all the good service over the past etc. etc….

It was far too late for him to take any evasive action like trying to interest other large potential customers and the end was inevitable.

We are all aware of this potential danger, I trust, and consistent activity to spread the  sales over as many outlets as possible makes good sense.

However there is another danger lurking in the corporate bushes, that of vulnerability to a supplier.

In another example I had an appointment to see one of my clients, a manufacturer of  special components for the automotive industry,  when he called me to ask if we could postpone as he had an urgent matter to sort out.

I was in the city centre later that day and was surprised to see my client walking towards me.  He told me that he had been to his solicitors as a critical supplier of his had gone into liquidation and as they made a unique component for him he was in a very serious position.

He couldn’t source from another manufacturer quickly, the component was to his specification and was unique, and he couldn’t possibly let his customers down.

The only option then was to acquire the assets of the failed supplier to continue the manufacture and this was what he did at some considerable initial cost never mind the aggravation factor.

The solution is in our hands.  It is suggested that no customer should take up more than around 15% of annual turnover and all critical supplies should be at least double sourced.

It is a matter of sensible and constant risk assessment for a situation that could be terminal and that is, to say the least, unsafe and undesirable.

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Sunday, 20 August 2017

Leave It To Me, I’ll Do It? That’s Not The Role Of The Leader!

One of the constant strictures that we hear from the world class speakers at my Vistage CEO and Key Executive peer group meetings is the need to appoint or recruit people who are manifestly better than we are.

After that we give them the freedom to get on with it and we keep out of the way. That is, of course, a vastly simplified way to look at what is a very important subject.

It can be a sensitive subject especially if the leader is a hired gun rather than an owner manager of the business.  Bring better people in?  They might be looked upon as threat although that is rarely voiced.

Curiously if we examine the situation in detail it usually transpires that the members of the team are better at their job than the leader and there is nothing there to be disregarded.

Most leaders rise to their position through a functional route and that can cause issues if it is not controlled.  For example if the leader has come up through the finance function then there can be a tendency to take too much of an operational role by default.  It is called interference and it doesn’t normally contribute much to morale.

There is always a temptation to take the “leave it to me, I’ll do it” route and that diving in to solve a problem that is probably easily done by the incumbent can cause real issues in the team.

Whatever training courses he/she may have been on it normally comes down to management perhaps in an advanced stage but this does not necessarily say what the leader is there to accomplish.

It is relatively simple to define the role of the functional leader.  They need to have a good knowledge of the technology of their function and an ability to enthuse and encourage the people on the team as well as ensuring that the function delivers results that are appropriate to the needs of the business.

In principle all matters operational should be dropped from the definition of the leader’s role.  Functional heads of departments are there to satisfy that need.  There is an old saying, is there not, about not keeping a dog and barking.

However there can be pain for the leader who has to relinquish the results of all the years of experience and knowledge to pass them on to someone in the team.

That, of course, becomes a vital part of the role of the leader; to coach and mentor the team members and to draw on those years of experience in order to turn them into expertise.

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Sunday, 13 August 2017

Do Humility And Kindness Win Football Matches? You Bet They Do!

A few days ago I stumbled across a tweet that really caught my imagination.  It was a verbatim transcript of an interview with Nicky Butt, one of the famed members of the Manchester United Class of ‘92.

Please note that this has not been edited in any way and is reproduced exactly as Nicky said it.

“People like Marcus (Rashford), Jess (Lingard) and Paul (Pogba), are people who know the system, who know the place inside out. These young players who come in for a lot of money might not know the club or the environment or the area so it’s up to those guys to incorporate them into United and instill those beliefs.

They need to be introducing them to Kath on Reception (at the Aon Training Complex) letting them know how long she’s been here at the club.  They have to know about how many players she’ sees come through those doors through the years and decades.  They need to recognise the laundry people, the canteen ladies,the chefs, the ground staff and security lads - they’re part of of our family and you need to say ‘good morning’ to them every single day.

When you come to United the players are the superstars and the ones everyone wants an autograph from but when you come into this building we’re all equal.  We all have a role and without one we don’t have a team.  Without those guys or the bus drivers, without the security guards and canteen staff there wouldn't be a football club.   It’s important for the players to let the new lads know what Manchester United is all about.”

I particularly liked the idea that three of the youngest players had become the leaders in passing down the culture of togetherness that results in the building of a true team, not just a group of talented individuals.

Some idiot commented that this showed humility, politeness and kindness but it had nothing to do with winning football matches.  How wrong can you be?

I commented that any business leader would do well to mark this interview and take a lesson from it.

People are not automata, they have feelings and active minds and it behoves everyone in a position of power to understand that message.

I recall the example of an alumnus of my Vistage CEO peer group telling me that every day he would go on to the factory floor and talk to the operatives. It wasn’t about business, rather about how were their families, did their daughter pass her exams, did he go fishing at the weekend and other apparent irrelevancies.

Of course, they were not irrelevancies; they were matters of importance to the individual and the leader took cognisance of that.

In fact he was able to devise a metric that demonstrated improved productivity as a consequence of his initiative.  It was proven when he delegated the task to another director and , lo and behold, productivity suffered.

I have long advocated this approach.  Leaders do not always realise how powerful is the message when they take time out to show their human side.

It doesn’t win football matches?  You can bet your last penny that if it didn’t Manchester United wouldn’t be continuing the culture that has become a watchword for the club.

Thank you Nicky Butt for that illuminating peek into the heart of a football club.  A great lesson for all of us.

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Sunday, 6 August 2017

Feeling Emotional? You Own Your Response And The Outcome!

Last week saw the 100th anniversary of the start of the battle of Passchendaele, possibly the most appalling tragedy of a tragic war.

So many young men were sacrificed on the altar of so-called military supremacy, a sacrifice that came virtually to nothing in the end.  The sight of those thousands of gravestones in the wonderfully cared for cemeteries was intensely moving.

My own father, by the grace of G-d, returned from France in 1918 alive but not unscathed.  In another terrible episode, the Somme offensive, he was gassed and suffered for the rest of his short life from the effects.  He was a victim of that war even though he died on his 50th birthday  in 1945.

The whole experience of seeing film of what happened, how truly dreadful were the conditions and how equally dreadful was the loss of life, was shattering

I am currently listening to another remarkable book by Yuval Noah Harari, author of Sapiens, and called Homo Deus, a Short History of Tomorrow.  The author discusses the dramatic changes that have already taken place in the science of uncovering how the brain and the mind work.

We are well on the way to almost replicating brain activity in computing terms and this is evidenced by the exponential growth in the development of artificial intelligence (AI).

However, he makes the point that AI relies on the fact that brain activity is a matter of electrical impulses passing into the system to initiate, for example, movement of limbs but it does not currently take into account or explain human feelings.

Indeed, however clever the scientists are in developing AI, they admit (perhaps reluctantly) that they have no idea how feelings are initiated and generated.

How can love, anger, despondency and happiness be explained in scientific terms and where in the brain functions can they be found?

Harari makes the point that, as far as we know, homo sapiens is unique among other life forms on the planet in that we have these feelings although being a dog owner (more correctly a dog slave) I am dubious.

Professor Steve Peters in his great work, The Chimp Paradox, calls the emotional brain The Chimp as distinct from the Human or rational brain, and together with the Computer, they make up the totality of how our brains operate.  

I prefer to regard the Computer as a database that is built on our memory and experience and from which we derive our feelings, gut instinct and reactions.

Even so, the scientific explanation of feelings has been left to the psychiatrists and psychologists rather than those studying the electrochemical way in which the brain works.

The fact is that we just don’t know where our feelings reside.  Are they a function of nature, genes and DNA or are they a result of our experiences and indeed the experiences of others?

I don’t pretend to put for a cogent explanation of this mystery.  I do know, however, that we all have feelings, we all have emotions, we all have  experiences that are founded on instinct and that can be daunting if we are out of control.

That great equation E+R=O (Event plus Response equals Outcome) describes it perfectly.  Nothing to do with electrical impulses, synapses or neurons; this says that in life we own our response to any eventuality and we need to decide whether our Chimp or the Human is in charge.

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