Archive for September, 2015

Provocative Growth

Tuesday, September 29th, 2015

How many times do you go to an industry conference and you hear a speaker or an attendee turn a belief you had about the industry’s future upside down and explain the requisite behavioural change? They back that up with hard evidence or strong anecdotal information. I’ll bet it is no higher than 1 in a 100 event. With the exception of those operating in the technology or innovation arena, I’d say the odds might be even higher.

When everyone’s default position is to say the same thing and a reluctance to stand apart from the crowd, is it no wonder that the listeners struggle to differentiate between businesses on anything other than price or the pace of innovation is so slow? I have coined a term Provocative Growth to provoke, agitate and move businesses faster towards their profitable growth goals.

I am not suggesting you “poke your colleagues in the verbal eye” (the Bernie Ecclestone approach) or merely “grandstand” on a particular issue to draw attention to your own self-importance (the Donald Trump approach), what I am suggesting is your objective is to get the audience to say “I have never thought about it that way before”. If you want to grow your client relationships, dominate a particular market and be seen as the centre of expertise, you must provide irresistible value, provocation and empathy in the moment with clients.

The easiest way to accomplish that is to ask “where can I comfortably take a contrarian position and intellectually support my position (hard evidence or strong anecdotal insights)?” Incorporate it in your dialogue with clients and prospects, intellectual property, marketing exhibits, speeches, published articles, media appearances and so on.

Here is an example, almost universally senior financial services industry executives will bemoan any new regulations and the impact of compliance on the future cost base of the business and sector. I would argue “it is not the regulations, it is BOTH the speed and quality of your response, which is the real issue. In some cases you are creating a sledgehammer to crack a nut, in others you are defending the indefensible and in a few cases your action is spot on. Here is what I saw at (list example)….. Let’s agree where your response falls into one of those three categories and then consider where you could work smarter (technology, people, organisational structure) with my help to enhance the clients’ experience and the firm’s future while meeting or exceeding the regulator’s expectations.”  

Your are right if you say provocation doesn’t come naturally to me or it is seen as counter-cultural in the firm. Just because you are right doesn’t make it right. You are paid to achieve results and enhance the future health and well-being of the firm and its’ clients. You can idly sit by and keep your head down or you can make waves. Your colleagues, business partners and clients will thank you in the long run for provoking the firm into action.

© James Berkeley 2015. All Rights Reserved.

 

 

 

 

 

An Interview With Me From TheStreet

Wednesday, September 23rd, 2015

In an interview with TheStreet’s China reporter, Ralph Jennings, James explains why things aren’t what they seem in China for multinational companies and their growth plans.

How Multinationals Are Adapting To China’s Slowing Economy

http://www.thestreet.com/story/13297870/2/how-multinationals-are-adapting-to-chinas-slowing-economy.html

Bedtime Profitable Growth Lessons

Tuesday, September 22nd, 2015

When I read bedtime stories to my daughter, there are tales of witches flying on broomsticks, young children wandering into the forest alone dark at night and absentminded Fathers getting soaked trying to repair the garden hose. At certain points she might say “I am scared”. When I ask what she is scared of, she responds, “I am scared of what is going to happen to “X” on the next page”.

Likewise we accept challenges in profitably growing businesses, knowing that there are circumstances under our control (the quality of our management, employees and the level of uncertainty within the business) and there are others that are not (competitive threats). What we know is that if we are to develop we must increase our learning. We learn by applying our past (expertise and experience) to transform our clients’ future. Our future is a function of our resilience to events outside our control and continuing to be of value to our clients (reinvest the lessons learned in new, faster, more impressive approaches).

Lesson #1: The art of management is the ability to balance the demands of key constituents for short and long-term profitable growth.

Lesson #2: Not all constituents (shareholders, board, employees, business partners and so on) are equal. Not all demands are equal (EBITDA growth, higher pay, happier clients). Behind every demand is an emotional imperative (improved image, enhanced peer recognition, a promotion) and a logical objective (lower acquisition overheads, optimum size of business, attracting word class talent). Dig for both, orient your management approach around both.

Lesson #3: “Speed” (climbing to the next level) is as important as “quality” (existing revenue generation).

Lesson #4: Success arises in the implementation of a strategy (arriving at the desired future state), not the formulation. Credit may be given to the latter but the glory goes to those, who accomplish the former. Lee Kwan Y

Lesson #5: You start by determining what your vision is and what is “mission probable”. There are a great many visions that are possible in the conceptual world but missions that are improbable (capital, people, innovation, implementation) in the real world. There are a small number of visions that are possible in the conceptual world and mission that are probable in the real world. Don’t kid yourself because you can point to one exception, who got lucky!

Lesson #6: If you are not failing, you are not trying hard enough. It is always odds against (less than 50%) predicting the future. The best management teams are probably successful no better than 1:3 with new product innovations or international expansions. What you must believe is that when you have success, the rewards are sufficiently large to cover the losses plus the ongoing costs of profitably growing the business (payroll, pension, capex, new hires etc.).

Litmus Test: Is there someone I can point to (highly similar sector and recent scenario) who has visibly travelled the same profitable growth journey as I am seeking to pursue? Are there lessons I can apply to accelerate the speed towards our immediate profitable growth (reducing labour intensity)? Are these lessons I can apply to enhance the quality of our profitable growth (repeat business, unsolicited referrals) such that moving to the next and the levels beyond that is sustainable?

If you cannot point to a real world example, it may well be for a very good reason. The path you have chosen is improbable or the timing has never made sense previously.

Of course, there are environmental changes (technology, access to capital, demographic, social) that make the previously improbable, probable. That is where the “unicorns” (AirB&B, Xiaomi, Moneysupermarket.com) emerge from but they are the exception, not the rule.

© James Berkeley 2015. All Rights Reserved.

An Interview With Me From TheStreet

Monday, September 21st, 2015

TheStreet’s reporter, Ralph Jennings, interviews James about the outlook for foreign companies in China’s infrastructure sector set against a turbulent economic environment. Take a short hop from Hong Kong’s Chek Lap Kok airport to one of Southern China’s bristling industrial cities, and you are instantly struck by how very similar the airport experience is. A modern, cutting edge design, global retail brands and sense of calm excitement. Will this warm welcome continue for foreign partners at the entrances to China’s promised land?

China Still Investing in Big Projects, With Help From Foreign Contractors

http://www.thestreet.com/story/13293251/1/china-still-investing-in-big-projects-with-help-from-foreign-contractors.html

Rates of Interest

Friday, September 18th, 2015

What do rising interest rates mean for your clients’ future (incr cost of capital, incr saving, reduced profit etc.)? What does the pace of rising interest rates mean for your clients future (impact on business objectives, market assumptions, competitive position)? What should the quality of your clients’ response to rising interest rates look like (business model changes, people’s skills, market position etc)?

If you are not thinking about how your clients must change their own thinking and self-talk, you are probably missing the most obvious immediate new business opportunity in the next 12 months. Put in on the agenda at the next client meeting.

 

© James Berkeley 2015. All Rights Reserved.

Five M&A Flashing Lights

Thursday, September 17th, 2015

With global M&A passing the US$3 trillion mark, as reported by the Wall Street Journal last week, and low growth sectors such as insurance and gaming incurring an unprecedented level of recent activity, commentators try to out do each other to explain the rationale – “insipid organic growth”, the dreaded “FOMO” (fear of missing out), “optimum scale” and “diversity of earnings”. Yet, are we in danger of trying to tie the “dots” together in cases that are highly situational and ignoring the more insightful indicators?

After all every business has a unique “past”, and a preferred way of applying their people’s talented to transform their “unique” set of clients’ futures. To put it simply, no two companies provide exactly the same value to their clients or are valued the same by external investors. Hence trying to extrapolate one set or executives’ reasoning to pursue M&A over organic growth or a strategic alliance is fraught with generalisations and danger. Yet markets routinely “mark up” listed companies and “talk up” others in the distinct belief that their situations are exactly the same, different management teams will act like lemmings to keep their shareholders happy and investors will “go shopping” at the same time for the same target. There is very little hard evidence or strong anecdotal evidence to show that this is true. Indeed in cases, where you might argue I am wrong, there is a body of evidence to show many of those deals were value dilutive AOL-TimeWarner, MySpace-News Corp and RBS-ABN Amro.

I would suggest investors and commentators would be better served applying the following logic:

1. Quality of Management (QoM): is there a discernible change (positive or negative) in the capability of management to achieve its’ strategic goals (capital allocation, make good people decisions, embrace innovation and implement business strategy), where a merger, acquisition or divestiture would demonstrably create enhanced value for the firm’s shareholders?

2. Quality of Employees (QoE): is there a discernible change (positive or negative) in the capability of the firm’s employees to achieve its’ strategic goals, where a merger, acquisition or divestiture would demonstrably create enhanced value for the firm’s shareholders?

3. Level of Uncertainty (LoU): is there a discernible change (positive or negative) in the the level of uncertainty around management and its’ employees capability to accomplish its’ strategic goals, where a merger, acquisition or divestiture would demonstrably create enhanced value for the firm’s shareholders?

4. Competition (C): is there a discernible change (positive or negative) in the competitive threat level and the probable impact on management and its’ employees accomplishing its’ strategic goals, where a merger, acquisition or divestiture would demonstrably create enhanced value for the firm’s shareholders?

5. Future Confidence (FC): combined, do the discernible changes in the quality of the firm’s management (QoM) and employees (QoE) today relative to the level of uncertainty within the business (LoU) and the external competitive threat level (C), indicate a merger, acquisition or divestiture would demonstrably create a more impressive future and provide greater peace of mind for the firm’s shareholders?

If you cannot categorically say “YES” to the above, in all likelihood you will be rushing to a judgement that is ill-informed or a deal that is carrying excessive risk.

© James Berkeley 2015. All Rights Reserved.

Publishing Path

Tuesday, September 8th, 2015

Walk in a hotel and the best concierges will not only point you towards where to go, they will lead the way to your destination and in so doing provide immediate value, sometimes in surprising ways (what to see, where to eat, how to get into the must-see show).

What does your publishing tell others (ideal customers, shareholders, employees, business partners) about “what”, “where”, “when”, “why” and “how” you want them to act with your help?

Telling me what you think is moderately valuable, showing me how you would act with my money and best interests at heart is impressive. Having others doing the telling (testimonials, hosted events, forums and so on) is even more impactful.

Every bank, insurer, asset and investment manager and advisory firm is weekly or daily self-publishing (published research, newsletters, online presence). The overwhelming majority of the effort is having little or no impact on their key constituents’ behaviour. That is a fact. It is bland, it is regurgitated ideas packaged as “new” or statements of the blindingly obvious. The intent is not clear or it acts as a “stop sign”.

They persist “because everyone else is doing it”.

Stop for a moment and ask this:

1. What would my ideal customer base look like in 12 months?

2. What aspects of my publishing would not only attract them to our brand (results, credibility, expertise) but cause them to act (emotional connection) in a positive manner? That is a huge difference.

3. What offerings do we have or we can create that our publishing can point existing or prospective clients towards at different price points offering increasing value?

4. How do we best curate our publishing within an existing client or a new client relationship?

Publishing is like a sequence of sign posts with different dimensions.

1. Are they pointing towards your future or past business?
2. Are they moving the customer faster towards your offerings and their desired improvement?
3. Are they offering immediate value that builds trust and enhances your credibility?
4. Is the frequency and quality of the publishing consistent with where you want your business, relationships, customer base, finances and productivity to be in 12 months?

A nice smile or an arm pointing out where to go is helpful but if it doesn’t visibly get me to my desired destination.

Focus on results (increased credibility, lower acquisition costs, stronger brand, larger pipeline) and work backwards with your publishing as the “sign posts”.

Copyright James Berkeley 2015. All Rights Reserved.

Profitable Feedback

Wednesday, September 2nd, 2015

An email survey request lands this morning in my inbox from the UK’s Conservative Party Chairman, Andrew Feldman (I am not a member), titled “I want to hear what you think”. It asks a friendly and logical set of “screening” questions about my future intent to become more involved in supporting the Party. What the questions fail to  address are my emotional imperatives (the “why” questions) in getting involved.

It is a common shortcoming of so many feedback or consultative initiatives in businesses, large and small, who are encouraged to “get closer to their clients” or “better understand their client needs”. Face-to-face dialogue, focus groups, surveys and third party feedback that stops shorts of eliciting the really valuable responses due to weak questions or questioning techniques. The result is a low value process, which moves the questioner an inch, not a mile, closer to gaining the other person’s future commitment.

Do you want to know what your customers think or do you want to better understand what might motivate them to act upon anything you might suggest they do? The former gives you information, the latter gives you the expressway to cash or increased commitment. That’s a huge difference.

© James Berkeley 2015. All Rights Reserved.

 

 

 

Inside The Executive Office I – Instant Value Creation

Tuesday, September 1st, 2015

In a new series, Inside The Executive Office, James provides a series of quick fire techniques, powerful lessons and ideas set in real world examples for executives, managers, Board members and shareholders to rapidly apply in their own business.

In the first outtake from a recent executive discussion on integrating two multi-million dollar insurance businesses, James explains that the business integration process requires a process of its’ own. In a rush to integrate, whether it is a traditional takeover (the smaller business being fully integrated), a merger of equals (largely a mirage to save face for executives who won’t admit it is a takeover, in everything but name) or a financial acquisition (intent to allow the businesses to operate as two separate entities in the same ownership), way too many businesses start at the wrong point (action).

James points out that there is a necessity to consider first (in this order): business outcomes, integration alternatives, and the related risks and rewards of each BEFORE determining action. Otherwise “action” is largely driven by planning rather than strategy. An extrapolation of the present to determine the short-term future of the two combined or separate businesses rather than a picture of the desired future and the steps back to today. An excessive focus of executives’ and managers’ knowledge and time spent on “easy to implement” or “hygiene” tasks rather than performance-based priorities consistent with the deal thesis.

The effect with the former is 6 months post-acquisition  a combined business that has made a swathe of largely cosmetic changes (new titles, new policies and procedures, new reporting forms) but very few profound changes (significant synergies captured, greater capital efficiency, stronger brands, increased productivity). It may operate marginally better than before the deal, at best but it is not “fit” to profitably grow and expand, at least at a pace commensurate with the competition. Indeed, it may very well be worse off, where the management distraction has resulted in missed opportunities in existing markets or the prospects for those existing markets have deteriorated at a fast pace than originally presumed.

The litmus test is “would your ideal customers and the competition honestly state that your “new” business is a more powerful/about the same/less powerful competitor in your highest potential growth markets?” The faster you can demonstrate increased power, the greater the level of value creation. Conversely, the longer it takes to get there (delays, procrastination, avoidance of disruption), the probable lower the value creation or even value dilution (management distraction in existing businesses).

© James Berkeley 2015. All Rights Reserved.

 

Unproductive Tasks In A Productive Day

Tuesday, September 1st, 2015

150826 Polzeath

 

Daily two middle aged men walk the beach for hours in Polzeath, Cornwall with their metal detectors. A routine they do without fail starting at 10am oblivious to distractions such as a holidaying David Cameron being harangued by desperate photographers while he bodyboards in the surf. A highly labour intense pursuit dependent on exceptional fortune and in all probability, a very modest return.

It strikes me in many businesses today that there are knowledge workers equally deployed by managers on  questionable tasks and activities. The blame doesn’t lie with the employees. It lies with their managers who consciously ignore the productivity loss (knowledge and time). Look around your business or your business partners and ask three important questions:

1. What existing tasks and activities could we do more of to aid our employees’ and our firm’s productivity?

2. What tasks and activities should we stop doing or modify to aid our employees’ and our firm’s productivity?

3. What new tasks and activities should we embrace to aid our employees’ and our firm’s productivity?

If you are thinking this is the trigger for technology replacing human resource or trite statements such as “let’s create a paperless office”, you may find you are not increasing productivity at all. Chances are you are grasping at an alternative without regard to the end-result (an increase in employee’s productive use of time).

© James Berkeley 2015. All Rights Reserved.