Archive for September, 2014

The Biggest Myth Behind Regulatory Change

Friday, September 26th, 2014

Why do so many responses from top management in business to impending regulatory change say more about the leadership qualities in those firms than the actual regulatory changes themselves. If the objective is to profitably grow and expand the business while adapting to changing market needs, then shouldn’t we first increase the probability that we have leaders with the right tools and volition to manage change reasonably and appropriately. That is rarely done well with managers, who insist on using a microscope rather than a telescope to manage their business.

Yet so often I see top management’s default response is to rail against the unfairness of the changes proposed, the regulators’ beliefs system and the effects of the proposed changes (higher customer prices, loss of jobs, increased red tape and so on). “It is not our fault”, “the regulators and politicians are out to get us and curry favour with public opinion”, “we are a soft  and easy target.” Some are reasonable assertions but they largely overlook management’s own shortcomings. Why? It is easier and much more comfortable to caste blame than to take a hard look at themselves in the mirror and the “causes” that triggered the change. The global financial services, re(insurance), media and gaming sectors are some of the most obvious examples. There are fine companies in each of those sectors with leaders, who largely steer their ships effectively through increasingly regulated waters (Amica Mutual, Travelers, KKR, Berkshire Hathaway, Willis, Pearson and Genting). Yet they are largely an exception to the rule.

Here are the prevailing conditions that exist in the best businesses:

1. Leaders, who are willing to be “champions of change”. Ready to take the lead through their actions, not just stick their heads in the sand or rely on “empty” prognostications. (“This is what I see coming, here is what I want your support for and this is what I am willing to be personally accountable for…”)

2. Leaders, who hold themselves and their direct reports accountable for anticipating changes not just implementing existing changes. (Performance evaluation, reward systems and recognition give equal or greater weighting to leader’s success in correctly anticipating changes rather than successfully implementing existing regulatory changes)

3. Leaders, who recognise that success trumps perfection. You rarely have all the facts before you set about responding to regulatory change. In almost all cases, there will be a need for changes mid-course (incorrect assumptions). You limit that impact by setting those expectations at the outset. You have in place before you move into the implementation phase both preventative and contingent actions for foreseen and unforeseen obstacles (incorrect assumptions or actions that don’t have the desired effect).

4. Leaders, who recognise that with any anticipated regulatory change that their decision-making and communication must take account of:

  • How important is the anticipated regulatory change? What is the impact on the firm’s strategy? How easy is it going to be implementing the appropriate changes? Does it require “hands on” or a delegated leadership approach to be successful?
  • Is there sufficient information for leadership to act on their own or does it require further inputs from others?
  • Do the resulting actions require people to buy into them to gain their support or will an edict from top management suffice?
  • Will the firm’s response to regulatory change, the outcome to be achieved and the route chosen require formal debate or informal support?
  • What level of time commitment is appropriate and reasonable for the anticipated regulatory change and successfully implemented?
  • Is the future health and well-being of the firm dramatically, moderately or barely improved by involving others (increased internal skills and experience) where the time is not an issue?

5. Rapid progress requires “signing up” formal and informal leaders within the firm, setting expectations about their behaviour and creating public examples of how you want others to behave. Top management’s ability to leverage those three key attributes in 90% of regulatory changes is instrumental upon the results achieved.

When you look at the market needs placed upon your’s and your competitors’ businesses by anticipated regulatory change, do you see leaders with the requisite qualities and the passion to successfully undertake the work? If you cannot unequivocally, say “YES”, then why should the firm’s key constituents (current or future customers, shareholders, employees, business partners or regulators) continue to support the business? It is time to take action, now.

© James Berkeley 2014. All Rights Reserved.

 

Who Owns The Client

Monday, September 22nd, 2014

When corporate advisory firms think of “ownership of the client”, we largely think in terms of “economic” (key account holder) or “legal” (the firm and its’ shareholders) ownership. Yet we largely overlook the fact that the Client increasingly “owns” the relationship with our key people and our firm today. Shouldn’t we first increase the potential that the Client’s interests are strongly aligned with that of the firm and its’ key employees if we are to profitably grow?

In an age where clients have greater access to competitor information, an ability to check the cost of services and an ability to establish the degree of a firm’s credibility (word-of–mouth) in a very brief time period, firms need to forget “customer-centric” rubrics or allow onerous regulations to supercede this priority.  They need to think of themselves as a “customer-owned” business that provides tremendous value and huge levels of excitement. What does that firm look like and what must we ask ourselves:

  1. Who are our ideal customers, why is it attractive to have a relationship with them and them with us?
  2. Our value proposition needs to succinctly state why we are the first choice of our customers. “We are uniquely positioned to provide _________________ (our target client) with unprecedented levels of _________ (results).”
  3. How do we best attract them to our business and our business best attracts them to our firm. Which marketing tactics are most effective and efficient for which customers? (networking, speaking, referrals)
  4. How do we best communicate with them in a time (service standards) and a manner (in-person, phone, email) that best suits them?
  5. How do we leverage technology to enable a more impressive relationship and rapid responsiveness for our customers’ existing (strategy) and anticipated needs (global expansion)?
  6. How do we assemble our people and client groups to accelerate, not hinder both the quality and speed of the interaction (resolution of an issue and/or transfer of skills and knowledge) with our firm and their dealings?
  7. How do leverage our success with our customers to reinvest in our firm and provide even more impressive outcomes (referrals, testimonials, case studies, learning experiences, joint promotional opportunities)
  8. How do we attract better quality employees who want to provide our customers with even more impressive results? (use our clients as evangelists for attracting talent from our competitors)
  9. How do we know the interests of our clients, our firm and our people are increasingly aligned? (unsolicited referrals, unsolicited requests, strong anecdotal evidence, client feedback)
  10. How do we know that a “stronger bond” with our customers is financially beneficial to the organisation? (increased repeat business, shorter closing times, negligible acquisition costs, lower labour intensity, higher profit margins, improved image)

Decision-making in advisory firms today remains largely driven by a need to satisfy the demands of shareholders and key people. Yet there is no more impressive way to appeal to those individuals’ self-interest than first, keeping the clients’ happy. Recognising that over time the clients you are minded to keep happy are the relationships that you want to “own” in future, not the “past”. When you hear someone talking about how we need to be more client-centric, escape the empty gesture and ask yourself, how do we fair with the above questions and where do we need to take action now?

© James Berkeley 2014. All Rights Reserved.

 

Perspective: When A “Crisis” Is Not A Crisis

Thursday, September 18th, 2014

On the eve of what the UK media would have you believe is a tsunami of constitutional and financial uncertainty, there is barely a negligible murmur outside of Scotland. Why? There is a general acceptance tonight that the probability (less than 20%) and the seriousness (minor impact on the UK economy) do not in all likelihood suggest a crisis. Bad news for those doomsday prognosticators, who only make money on the back of others’ perceived sense of fear. The lesson for business is that in any growth market, there is a need to separate real crises (outbreak of EBOLA) from events that in fact aren’t a crisis at all.

  1. Maintaining a rational perspective demands that you take the “emotion” (media agenda and personal biases) out of the “logic” (the probability and the seriousness of the impact).
  2. Focus only on hard evidence and strong anecdotal observations.
  3. Recognise that in a world of “omni-communication”, he or she who shouts loudest (Piers Morgan) from the largest platform (television, print, radio or Twitter) is rarely held accountable for their predictions. How many pollsters have ever lost their jobs or wealth, it is probably equivalent to television weather presenters?
  4. Make your own mind up and have the courage to back your own convictions (“trust”)

Tomorrow the world will not stop, there will not be a financial meltdown and business people will be out there deploying capital to attractive growth opportunities. Make sure that you are at the front of the line, not distracted by terrible advice or a self-inflicted fear of the unknown.

©  James Berkeley 2014. All Rights Reserved.

Getting To The “Next Level”

Tuesday, September 16th, 2014

Last night to a convivial drinks event in Mayfair, London for a group of C-level executives, who are shortly about to or who have recently left market-leading mid and large organisations in technology, manufacturing, finance and professional services. The purpose being for most attendees to build new relationships and to identify new “openings”(full-time, interim management or consulting services) in corporate organisations or private equity portfolio companies.  To a man and lady, the conversation went along the lines of, “I have recently left XYZ after an impressive career in that industry or related sector, I am now looking for a leadership position in a market-leading firm, say £300 million turnover who wants to get to the “next level” (of growth). I am working with X to help me….” Here is what these successful people missed, as I suspect many executives and managers do when seeking to get hired into or building a trusting relationship with a future employer:

  1. They talk too much about their “past” (accomplishments, track record, expertise) and too little about (A) who their ideal employer is (by industry, company, by name and title), (B) what future “needs” of market-leading employers they are ideally positioned to help with (increased revenue, more impressive clients, attract smarter people etc.) and (C) how they are (or plan to) attract those individuals, who could hire them into their desired role.
  2. They don’t use the valuable “in the moment” time with others well (foregoing valuable information or names of people volunteered by others)
  3. They don’t leave a lasting impression (a memorable imprint that allows the listener to rapidly discern their tremendous value and give thought to others with potential interest)
  4. When there is interest, they don’t convert (agree a definitive time and date to meet in person or speak by phone). They leave with a “perhaps we will talk more when we next see each other” response.
  5. They spend far too much time talking about themselves and far too little time listening (fail to unearth or identify the other party’s priorities and potential value).

Most of these people have developed their careers in a structured corporate environment, where opportunities have been largely been offered to them or they have had a pretty clear view into close competitor firms seeking very similar expertise. Suddenly, they have reached a point in their late 40s to early 60s, where they need to more assertively market themselves. Boards, investors and fellow top management in market-leading mid-sized growth companies in particular have a perception about the ideal candidate in an executive role and the value of their future contribution. The onus is on candidates to assertively promote their value to these individuals. They can rarely be too “forward” (most are so weak and unmemorable). Above all they need to excite the other party with their passion for the role and the results they could reasonably achieve in a brief time period.

When so few people do this well, it is actually rather easy for an executive to stand out from the crowd. It of course supposes that the individual is aware of the above and has the requisite talent and volition to move their personal marketing to the “next level”.

© James Berkeley 2014. All Rights Reserved.

 

 

Professional Services In A Social and Mobile World

Monday, September 15th, 2014

Business growth in professional services firms largely depends on people with bright ideas having the intellectual and financial means and the self-confidence to apply them without fear of failure. Yet when it comes to creating the right “technological environment”, management fears seems to hinder, not help the situation. The”fear” expressed is more often than not about: security, regulatory, productivity risks or a combination of two or all of those issues. Yet when top management are challenged there is often very little substantive evidence to support their decision. It comes down to the implied “trust” they have in their internal or external experts advice. When many of those managers don’t have a peer-level or trusting relationship with those individuals, is it any wonder that they err on the side of caution.

Here are what my best clients are doing:

1. A Firm-wide conscious effort to raise awareness of what is possible. Key people are held accountable for generating new innovative ideas, not just problem solving, where technology can heighten the quality of the firm’s relationship with its’ clients. It forms part of any personal accountability plans.

2. Time is physically scheduled in group and individual monthly calendars to generate and review new ideas and to push those along to a submitted proposal stage or bring the investigation to a close.

3. Reward and recognise great ideas and great behaviours. For example, one professional service firm has a policy of a £500 monthly award (or the local currency equivalent) to a family member, not the employee, for expenditure on IT hardware, software or training. The link with the family member is expressly to reinforce the priority the firm gives to education in the home.

4. A forced “strategic choice”. Any decision made must include “what”, “where”, “when” and “why” is the client better off and be supported by hard evidence or strong anecdotal observations. They don’t confuse the tactical decisions about “how” best to communicate or respond rapidly to the client’s expressed need (in person, by phone, by email or social media).

5. They take the emotion out of the logical decision-making process. For example, they are aware of and take personal biases out of the conversation (past experiences, vested interests, personal technological prowess or fears about “risk”). They equally don’t allow meeting times to be hijacked into a debate about the efficacy or use of technology in the office environment (use of Facebook or Instagram), which largely moves onto the terrain of employee grievances.

6. “Quick Wins” given top priority. One client, automatically, places at the top of the list any technological advancement that demonstrably will have an impact on clients within 3 months or less.

7. Senior Managers expected to act as “exemplars” of the right behaviours. For example, a global actuarial firm’s partners actively encouraged information to be exchanged by technology, not the creation of spurious need for meetings. The result a 70% elimination of internal meetings in a six month period. A law firm set expectations with clients that all Partners and Fee Earners would respond within maximum 2 hour response time to calls and routine email, 4 hour response to more in-depth questions. An insurance brokerage’s hiring requirements for mid and senior level Account Manager positions demands open-minded candidates with a track record of success bringing new innovative ideas to harness technology as a “means” to enable, not replace a higher quality relationship with their past clients.

There is no excuse for top management in professional service firms not creating the right technological environment to facilitate more impressive client relationships. What it does requires is that the firm has a “process”, not a collection of random actions which make little or no sense to the customer, the business partner, the employee or any other key constituent.

©    James Berkeley 2014. All Rights Reserved.

An Interview with Me From TheStreet.com

Thursday, September 11th, 2014
The Street, the financial media publication providing actionable ideas from the world of investing, finance and business has interviewed me here:
“China’s Economy to Surpass U.S.: When and Why It Matters”

http://www.thestreet.com/story/12871636/1/chinas-economy-to-surpass-us-when-and-so-what.html

 

Synthesising Technology and Outstanding Customer Experience

Wednesday, September 10th, 2014

A hugely frustrating experience this past week trying to make a routine order with a Universal Music digital store reminded me that even the biggest brands have a hard time synthesizing technology and the customer experience. “Digitisation” was cited this week in a global business survey as one of the three biggest challenges facing businesses and top management in the next three months (globalisation and productivity gains). Here are my golden rules:

  1. Technology is there to enhance the speed and quality of your communication between different people and the relationship that ensues, it is not there to replace them. What your customers expect today is not instant access but a rapid response. 
  2. Shop your own business once a month, at a minimum.
  3. Ask yourself, where would I rank (high/moderate/low) BOTH the quality and responsiveness of our frontline communication? Where does it need to be in future? What are the changes we must instigate now? Who (by name) is accountable for the behaviours and results we must achieve?

We tend to think of digitisation as some biblical transformation often lost in “geeksphere”. In practice, it is about a large number of small improvements that everyone in the firm can contribute to and the application of common sense.

© James Berkeley 2014. All Rights Reserved.

Game, Set and Match: Powerful Communication Key To Profitable Growth

Tuesday, September 9th, 2014

In tennis, serving first is  considered an advantage to apply your skill, power and judgement to outwit your opponent and win the set.  In business, communicating first with skill, power and judgement is often seen by some people as intrusive or uncomfortable and performed by a great many people poorly. Why is that so? They choose to serve softly (email reliance), apply poor judgement about the other party’s best interests (ignore or fail to find the other party’s priorities) or do their level best to opt out of serving first (lose valuable time waiting for the phone to ring) because there is an underlying fear or lack of skills that undermines their effectiveness? 

I find there are 4 common causes and effects:

  1. A fear of rejection. (reluctance to take prudent risks, an eternity to bounce back from defeats, takes defeat personally, counseling others to be careful)
  2. A fear of upsetting someone that might have bigger ramifications. (the perceived risks are overblown and the rewards are underplayed. There is little visible evidence to rationalise the perceived, actual and catastrophic risk of doing something.) On a small number of occasions this fear is legitimate and reasonable, the actual risk is potentially serious or catastrophic to the ongoing relationship.
  3. Poor “self-worth”. Highly intelligent, experienced managers and executives, whose success masquerades a lack of self-confidence in their own abilities, accomplishments and as a person of interest to others. (Neglect to pick up the phone, revert to email or LinkedIn messages that reveal little about their true feelings, the recipient senses a lack of confidence, email and other messages largely ignored)
  4. Weak language skills. They have a great concept, are in love with the methodology but are largely ineffective in accelerating the conversation to the conceptual agreement stage (promising conversations rarely turn into cash)

All of these behaviours can be dramatically improved. It requires client-facing people, who are cogniscant about their own behaviour, honest about their own performance and willing to take immediate action to achieve impressive personal improvement. It also requires, leaders who hold themselves and their subordinates accountable for those same qualities and constantly strive to create an environment in which open and honest communication is encouraged. It is ludicrous to assess sales and marketing people on the number of calls made or emails sent. The only metrics that matter are the results that arise from the communication and the number of times the right behaviour is displayed by the individual.

Aside from the bio mechanics and ball toss, tennis is largely a mental game. The same holds true in business. Why give away the advantage of communicating first, effectively and efficiently, unless of course you don’t believe in what you are saying or fear the consequences? You may not be Roger Federer or Serena Williams but there is no excuse for not giving it your absolute best shot.    

 

© James Berkeley 2014. All Rights Reserved.