Archive for October, 2014

Garnering Investor Movement and Motivation

Thursday, October 30th, 2014

Why do so many conversations with investors move so slowly or don’t go anywhere at all. I observe the “cause” is largely a result of entrepreneurs and executives own shortcomings. There is a simple question to answer, can you (the entrepreneur or executive) convince the investor you can be of help, or will the investor convince you that you cannot.

  1. Mindset: do you see the fundraising process as adversarial (“taking” the investor’s money)  or involving shared responsibility (helping the investor achieve their own objectives). This why television shows such as “The Apprentice”, which largely depend on the former to drive television ratings, are a terrible example. Do you really want Donald Trump or Alan Sugar, as a business partner. Their track record with relationship-building would cause any sane person to run a mile.
  2. Effective Influence:  there are only three ways to influence an investor’s behaviour and two of them won’t help you.
    • Threat. You might move along their interest an inch by scaring them but you won’t gain their commitment. (“Your competitors are going to kill you if you miss this huge growth opportunity.”) It just results in hardening their feelings if they are resistant.
    • Peer Pressure. (“You are missing out on the next big thing”).You may cause investors to move a mile, rushing towards investments in these areas like sheep but rarely does it generate long-term commitment. For example, cyber risk insurance propositions, are garnering huge interest but very few are getting serious investment support today.  
    • Investor’s Self-Interest. An appeal to mutual self-interest is the only tactic that works to create movement and motivation to act. Why? The investor grasps how important your partnership is in achieving his or her own objectives or goals (future growth of the fund(s), improved image, attract higher quality returns and investors, a potential promotion or bonus etc). That is why fundraising cannot be a tussle but must be collaborative, where both parties visibly “win”, personally AND professionally.

I am publishing a paper, “The Five Myths of Investor Demands” next month. I’ll happily share my best tips by phone or email james@elliceconsulting.com .

© James Berkeley 2014. All Rights Reserved.

 

European Private Banking: The Triumph of A Poverty Mentality

Thursday, October 23rd, 2014

There is an old saying that farmers and owners of vineyards are never happy. It is raining when their crops need sun and it is a drought when they need rain. Poverty and ill luck are their natural bedfellows.

I propose adding private bankers and wealth managers to that list.

After a morning listening to the top brass at Societe Generale, Coutts, Vestra Wealth, Barclays and Citi plus assorted “experts” from Big Four consultants and a British regulator, I am rushing for the aspirin box. Cumbersome regulation and reporting requirements, risk averse Boards, uncertain client relationships and so on. They universally fail to mention the real problem – their own mindset. The leaders with rare exceptions exhibit a “poverty mentality”. What I hear coming out of their mouths is a lack of self-belief in their own worth (a focus on protecting themselves rather than bringing new value to clients, a fear of taking prudent risk, a lack of energy and vitality, close to zero excitement about the future value provided to their clients and so on).  Rather like a horse, sensing an uncertain or fearful rider, starts second-guessing or ignores what it is asked to do, so clients, employees, shareholders and regulators are getting that same feeling and will undoubtedly act in the same way. 

“My banker seems more interested in protecting their backside than preserving my wealth”. (Why should I give them more assets to manage?)

“Quite frankly it is career suicide to suggest any new ideas to a Client that our compliance people haven’t signed off on. They take an age to respond.” (Why should I propose new ideas to a client if I cannot deliver in their desired timeframe?)

“Our top management are telling us (shareholders) they need to direct more capital and resource to compliance, it is non negotiable. With the cost to income, near 70% and no great confidence in top line growth that leaves little room for profit and reinvestment in the business model.” (We don’t see these businesses  or the sector as an attractive “hold”)

“Firms are slowly coming around to the idea that putting the customer first in the form of transparent products and services is the right thing to do. Boy, is it a battle with some of them.” (They’ll only embrace change if we, the regulator, continue to apply the big stick.)  

Ask any HNW or UHNW client, they want confident and successful advisers. They want individuals with high levels of credibility (intellectual property), and a compelling rapport (intellect and trust). Bankers and wealth managers convert credibility and rapport into increased assets booked and happy and successful clients when they maintain an “abundance mentality”.

What do I mean? Top management must have a willingness to invest in upgrading the firm’s skills and technology, create new value propositions, find new ways to attract new and existing customers, set new standards and build more powerful brands. They must want to actively pursue a collegial, not an adverserial relationship with regulators. One based on greater mutual respect and a common set of objectives. Their long-term strategic focus must be on creating customers and employees that are willing evangelists for private banking and wealth management brands, not merely subordinates to compliant businesses.

Changing that mindset starts with leaders, who really want to see and hear things as they are, not how they perceive them to be. It demands that they really want to change and they are willing to focus on the improvements in hand. They are willing to seek qualified “help”, where they need external support or individual coaching. They are willing to hold themselves and their subordinates accountable for maintaining the right mindset.

If they aren’t willing to make that change, Boards and shareholders must be bold and move those managers on.

© James Berkeley 2014. All Rights Reserved.

Artificial Barriers

Monday, October 20th, 2014

In my conversations with successful entrepreneurs and executives charged with profitably growing their businesses to the next level, I am struck by the frequency “artificial barriers” to growth crop up. By artificial barriers, I am referring to those “beliefs” that are expressed as gospel about obstacles on the firm’s “journey”, which partially or fully prevents the business accomplishing its’ desired goals. For example, access to capital, access to human or physical resources, customers’ perception of the firm’s brand in the market today and so on. Dependent upon the internal politics, those beliefs then take hold of executive decision-making and gain an absolute or immovable  status (“no-no”) when determining strategic alternatives. Small and family businesses are the worst offenders.  For example,

Acquisition-Driven Growth: “We are doing well with mid-market customers but when we compete for the next tier, we lose out to our competitors because we lack the physical global presence or resources to serve those clients. Those clients are very attracted to the largest advisory firms. If we want to acquire those types of clients, we need to look at selling ourselves into a larger firm.”  

Organic-Driven Growth: “For us to attract top producers, we need to pay way above our competitors. Top producers aren’t going to take a risk with us, in a way that they might with top firms. I struggle with that kind of investment as opposed to hiring more of the same type of producers we have in the firm today, who do a fine job making us and them money with our mid-market clients.”

Collaboration-Driven Growth: “Those types of buyers (large national and international companies) wouldn’t consider our firm. We are way too small for them and if we were to try and create some form of alliance, the complexity of doing so wouldn’t be worth it. I have been down that road beforehand.” 

When  you hear views expressed around the Boardroom, which category can you be sure they fall into? (accurate, largely untested or invalid). Those are the only three possible answers.

Confronting those beliefs requires a rational determination that is best accomplished by considering the following questions:

1. Is the belief relevant to us? Ask your colleagues where is the hard evidence or strong anecdotal facts. (Forces an objective assessment of the facts, the changes required and the environmental conditions which must exist for the business to grow and expand successfully.)

2. Is the belief relevant now? Ask, is there a reason for the speaker to introduce this belief now? For example, they want to preserve precious time and cut off exploring an avenue they believe will result in a lost opportunity or an event has occurred dramatically increasing the urgency (a key shareholder has told top management, to “get on with it!”)

3. Is the belief relevant in these special circumstances? Have they tried this course of action in the past and failed? Is the speaker trying to retain control of the discussion or a favoured alternative?

The point here is that executives in a strong and dynamic business should challenge each other, where it is reasonable and appropriate to do so. Decision-making needs to be based on facts, not fiction. It is each executive or manager’s duty to make sure that the beliefs system that governs the future direction of the business is accurate, to the best of their ability.

© James Berkeley 2014. All Rights Reserved.

 

Are You Thinking What I Was Thinking III

Wednesday, October 15th, 2014
  • Most major media outlets are less relevant to our lives than at any point since 1984. Most major technology firms are more relevant in our lives than at any point since 1984. Not one major media outlet was established after 1984. Not one major technology firm was established before 1984.
  • Never confuse “wealthy” people with good manners. People, who insist on using their iPhones, blackberries and handheld video cameras in restaurants, places of worship, and children’s schools, merely do so at the risk of ridicule.
  • A “Fit and Proper Person Test” is rarely credible. We are happy to see our sporting and cultural institutions in Western Europe take the “coin” from billionaires in Russia, the CIS states, the Gulf states, China and South East Asia but are appalled when their country’s leadership displays a disregard for beliefs (liberty, democracy, freedom and respect) we cherish highly (Ukraine, Hong Kong, Iraq, Brunei and so on).
  • How many television shows (X Factor, Strictly Come Dancing, Dancing with The Stars, Big Brother, Survivor) and indeed, careers (Conan O’Brien, Cheryl Cole, Piers Morgan) in the entertainment industry end BEFORE they reach their “sell-by” date?
  • Our politicians talk about “sustaining” civilised societies. Opinion polls routinely cite this as an important electoral issue. Yet the most civilised societies are those where individuals largely share a set of common beliefs (decency, respect, a lack of self-aggrandizement) that informs their attitudes and behaviour. Those beliefs are largely influenced by our family and the individuals to who we look upto. When politicians’ actions denigrate the importance of the family environment in society, call me a traditionalist, aren’t we shooting ourselves in the foot?
  • We are  “shocked” and “surprised” in equal measure by largely foreseen events (over-indulged celebrities’ transgressions, mass shootings in the US, Twitter outbursts) but are largely serene about unforeseen and truly exceptional events (EBOLA outbreak, global cyber attacks).
  • We feel “sad” for celebrities, whose behaviour rarely warrants it (Adrian Peterson, Kevin Pietersen, Jennifer Lawrence)
  • If you are likely to be upset in this digital era by anything you write about (social media trolls or abuse), speak about (recounting private conversations with The Queen), or photographs you store (intimate nature) , don’t go there! Simple.
  • With key elections coming in US, UK, Brazil, many European, African and Asian countries, the paucity of outstanding leadership candidates is at record levels. Yet many electorates are largely indifferent to the situation and doing next to nothing about creating an environment, which would draw in higher quality candidates.
  • Economies in the euro-zone will not emerge from the snail-like growth until they grapple head on the “environmental” issues that limit their effectiveness and efficiency (bureaucracy, regulation, accountability and so on)
  • If you own a strong and dynamic business, there has never been more strategic or financial buyers calling this decade with an “expression of interest” in buying or backing your firm.
  • In many sectors, there is a small group of firms, who have learned to intelligently use their capital and resources, and position their brand as the “go to” home to exploit convergence opportunities (capital, technology, mode of distribution and so on). The power of the “Convergence Kings” is not so much about the size or influence that they have in their respective market today but what reasonably they could bring to bear in the next 12-24 months. Can you spot them and build appropriate relationships?

© James Berkeley 2014. All Rights Reserved.

Anticipating Client Need “The Megatrends”

Tuesday, October 14th, 2014

There are phrases that start out with a clear meaning and over time they lose their original intent through poor usage. Nowhere is this more commonplace than in the megatrends sweeping through corporate boardrooms and beloved of consultants. Here are three trends today impacting every mid and large sized corporate firm and which are the catalyst for a huge shift of internal funds to dramatically improve the firm’s condition. The difficulty many face is understanding what is the impact behind the sobriquet (seriousness, urgency and gravity of the issue), knowing where to start (focus) and what language to use (maintaining control of the discussion). Here is a quick primer:

1. Digitisation: put simply the synthesis of your firm’s operating model and technology. What started out as “external improvements” (the leveraging of technology to dramatically improve the customer experience, the customer sales channels and so forth), is rapidly moving to “internal improvements” (technology as an enabler of faster, more responsive and higher quality internal processes).

Starting Question: “Where can technology heighten and amplify our interpersonal relationships and dramatically increase the speed and quality of our dealings? (priority) How do we make that happen while minimising the internal disruption? (changes required)”

2. Simplification: after a period in which many firms have focused on removing cost from their businesses, today the focus is on simplification. Making the complex simple. Whether your focus is on client acquisition, marketing, R&D, operations, finance, human resources and IT, operational improvements can be readily found in simplifying the process.

Starting Question: “What ideally do we need to be able to do? (result) How can we best remove the complexity in so doing? (excess steps, time wastage)”

3. Globalisation: technology (super-fast broadband) has enabled in 3 years a tiny upstate New York fishing rod maker find a new client (a Finnish distributor) and increase his sales five-fold. Globalisation is really about the ability of businesses to dramatically increase their relationships cross borders (new markets, new production sources etc) and the speed and quality of their dealings. Technology, people and knowledge are the big enablers.

Starting Question: “What attractive global opportunities are there open to us (or ones we could realistically develop) consistent with our strategy? (ideas) How do we best exploit them and leverage the success (conversion into action)?”      

If you are not discussing these questions right now or bringing them to the attention of your clients, you can bet your competition will be doing so.

© James Berkeley 2014. All Rights Reserved.

It Is Who You SHOULD Know That Is Important

Monday, October 13th, 2014

If you were asked to name the three most impressive people you know today, would they have been the same individuals you would have listed last year and probably the same three next year?  What is their key attribute (content knowledge, expertise, experience, interpersonal skills, special skills, contacts etc)?

I was reminded of this question in a discussion with friends about an individual, who has risen to the top echelon of a large global bank. When we tried to pinpoint the “cause” of his success, it was harder to point to one skill or event that dramatically changed his fortunes. Indeed, we concluded that his expertise lay in playing the political game. He continually knew or developed relationships with the “right” people.

My point here is that we make judgments about others that often don’t warrant the accolades we bestow upon themselves. Equally, we make judgments about our own lives that often belie or ignore our own success and the increasing or decreasing interest to others.  This is important because understanding who we are and how we might adapt our “past” (experience, expertise, accomplishments) to transform our employer or the clients of our employer’s “future” (stronger brand, increased sales, improved image) is essential to understanding and articulating our own self-worth. Almost everyone in the corporate arena in mid and large sized organisations has a need to reinvent or recast their worth as their firm’s strategy evolves. Yet anecdotal evidence suggests over 70% of people are so immersed in their own day to day work activities that they don’t reflect on their increasing/decreasing value to others, largely ignore who ideally has a need for that value and how to attract those individuals to them. The consequence is that they hit “unforeseen surprises” during their career (overlooked internally, for a promotion or an interesting work assignment, externally, a client give  or worse, let go from the firm). Yet many of these instances are entirely predictable.

How do you avoid these troubled waters? Give thought to the following:

1.  What are the three most impressive accomplishments, experiences, skills developed or victories and setbacks I have learned from in the past year?

2. Who has the highest need for individuals with those qualities (internally and externally)?

3. Where are they located?

4. What do they read, listen to, watch?

5. Where do they hang out (social gatherings, events, conferences and so on)?

6. How can you meet those people and when you are in their presence, how do you make an effective and enduring connection?

Forget the corporate appraisal process. Think about your answers to these questions and set yourself the task of identifying, building and exploiting these connections. Schedule time in your weekly and monthly calendars. If your three most impressive people you know are the same as last year, and the year before that you might very well find that you have ceased to become an increasing object of interest to the people you should know in your organisation and elsewhere. Don’t allow others to decide your future, do something about it yourself.

©   James Berkeley 2014. All Rights Reserved.

 

The Parisian Paradox

Wednesday, October 8th, 2014

In the past week, a UK retail executive slates France, describing Garde du Nord station, “the squalor pit of Europe”. The French Prime Minister, Manuel Valls, on a visit to London retaliates, accusing the same UK executive of having drunk too much beer. A Boston Consulting Group survey suggests London and New York by quite some margin is a greater magnet for  internationally mobile executives and employees than Paris. Should we be worried or is this knockabout “entente cordiale” chatter? After spending the past few days in Paris, here is my observations:

  • Paris has become a far more international city (almost every retail outlet has people under the age of 40 voluntarily speaking English, almost unheard of in 1994)
  • Customer service and responsiveness varies wildly (it is still a pleasant yet rare event, to see front line staff, predominantly local, offering to resolve and take ownership of service issues)
  • Technological innovation is slow and you would hardly call Paris a well-networked city (WiFi and other technology is still very fragmented in public spaces)
  • Traditional private sector businesses and local workforce expectations are being challenged like never before (availability of work, jobs and reliance on careers for life). The traditional employer-employee bond is mired in mistrust and suspicion about management and shareholders’ intentions.
  • There is an insouciance in the public sector (rail, energy, utilities) with still little visible change of mindset about the need to dramatically improve the customer experience or adapt working practices
  • Working for an International versus a French employer is less viewed as a financial decision, more a pragmatic move (increasing job and career mobility)
  • In a competitive global jobs market, Paris faces an unparalleled challenge retaining smart “twenty something” people, who increasingly love the drive and passion of an Anglo-centric “freedom to fail” business culture (the Sunday evening, “le weekend” commuters on the Eurostar are at unprecedented levels)
  • Recovery will not truly have set in until there is a net inflow of these entrepreneurs and executives (many though are increasingly laying down roots in London or New York and committing to longer-term stays upto 10+ years, so the bounce back will be slow)
  • It remains the capital of the world’s 5th largest economy but you sense it fears the speed with which newer capital cities are attracting inwards investment, jobs and appeal (there is no obvious vision of a Paris 2020) by comparison to a Dubai, Singapore or dare I say it, a London.
  • Paris’s prominence in luxury fashion and culture remains but its’ relevance in global knowledge sectors (technology, financial services, professional services, healthcare and education) is declining
  • There are standards of public behaviour, which are demonstrably more liberal than almost every major global city (attitudes to sex, adherence to laws and ethical “norms”)
  • Investment in infrastructure (public transportation, new high quality offices and housing) is anemic
  • Paris has been more successful than London in attracting larger numbers of Asian tourists (less visa obstacles) but less visibly successful in attracting their inwards direct investment in business (high start-up costs)
  • While hotels might on average be cheaper than New York, London, Hong Kong or Tokyo, eating out and transportation is arguably more expensive for visitors
  • Ultra high net worth French families are continuing to move to less penal tax locations (London, Switzerland), while shoring up their affairs from assertive tax inspectors (more complex transfer of trusts to places like Hong Kong and Singapore) and consciously guarding their wealth (more private sale purchases through third parties and less activity at public auctions)
  • There is visibly a greater willingness to embrace international investment / sponsorship of previously “off limits” French cultural, sporting and nationally important events (Qatari investment in football clubs, horse racing; Nike in athletic events; Deutsche Bank in major art shows)
  • High fixed labour costs and regulations in Paris will increasingly see SME businesses and investors prioritise the digital sales channel for short-term export-driven growth
  • Government policies and prohibitive taxation are leading to a prevailing business culture of “caution”, not great for a surge in top line revenue growth or a rebound in economic confidence
  • Paris remains equally an idiosyncratic (culturally diverse) and frustrating (bureaucratic) place to live, work and start a business but a fabulous place to visit and find one-of-a-kind experiences

© James Berkeley 2014. All Rights Reserved

Fore! Portugal’s Wild Tee Shot

Tuesday, October 7th, 2014

Portugal, famed for its’ chickens, has spent a lot of time “counting” and a little amount of time “crowing”, since its’ economy descended into the economic abyss 6 years ago. Yet away from the macro-economic issues, it is clear from a visit to the Algarve last week that there is a huge disparity in the quality of local leadership teams and the performance of businesses. It is most apparent in the so-called upscale or luxury end of local tourism. Quinta Do Lago is famed as one of the world’s Top 10 golfing resorts. Yet here is a classic example of a tourism business that is  missing obvious opportunities to improve its’ top line revenue growth.  They have upto 200 people per day paying in excess of €150 for the privilege of playing each of their three courses in 28C (82F), yet they have drinks buggies that rest idol for 4.5 hours, a practice facility at San Lorenzo (closed for half a day due to regular maintenance), and a food outlet (Laranjal) producing inedible cheeseburgers. The golf shops, locker facilities and food and beverage services wouldn’t be in the Top 1000 of US golf courses. The predominantly British and Irish visitors fueled on late nights of Sagres and Sangria, perhaps do little to show their displeasure but those owning the resorts would be wise to shake up the management teams.

In businesses seeking growth, it is not the search for new ideas where the the highest potential lies for success , it is the shortcomings of the existing practices. What are we omitting to do and why? Answer that question and you will dramatically increase your top line revenue growth. That is of course unless your Owners wish to stick their heads in the sand or are satisfied with management carding bogeys or worse.

©      James Berkeley 2014. All Rights Reserved.