Archive for the ‘Business Transformation’ Category

Sleepwalking In Business

Friday, April 28th, 2017


My young daughter is going through a period of arriving in our bedroom unannounced in the middle of the night, oblivious to her propensity for sleepwalking or the dangers that lie in her pathway. In almost every high-growth or mid-market business I review for investors, there are instances where the firm is consciously doing things (excessive customer needs analysis), which result in the business “landing” in unfavourable locations (slower client acquisition times), and dramatically increasing the risk for investors (cashflow). Look around your business and ask yourself a simple question, “If it was my money at stake, what would we stop doing tomorrow or do more efficiently?” Then, “why do I not bring this to my direct report and colleagues’ attention?” It is easy to blame others but great businesses are built on high levels of personal accountability at all levels that have zero to do with how much I am paid or my title.

© James Berkeley 2017. All Rights Reserved.


Uncommon Culture and Family Office Direct Investing

Monday, March 27th, 2017


I often ask CEOs in high growth investee businesses controlled by sizeable Family Offices,  a simple question: “Are you being treated as you would treat others in the business? Be honest, in reality, how often is that the case?” The single most common underlying issue, is conformity to the prevailing belief system.

CEOs have differing levels of propensity to conform to the beliefs that govern the behaviour of a Family and the key people in its’ Family Office (the culture). At one extreme, highly inflexible, and at the other end, highly flexible.

The most successful families in direct investing have adopted a belief system that is highly similar to outstanding for profit and not-for-profit organisations. Think of Weybourne Partners (James Dyson’s Family Office), MSD Capital, (Michael Dell’s Family Office) or Grosvenor (the Duke of Westminster’s family entity).

In contrast, where direct investing has historically been a very small part of a Family’s wealth but a decision is made to ramp up its’ activity, culture is a huge issue. The Family Office wants to increase control and involvement of the capital deployed in profitably growing the portfolio businesses. Yet, the operating beliefs that pervade the Family Office rarely change or not quick enough, to support the new or enhanced direct investing strategy.

Take a recent example, the newly installed CEO in a European luxury business, who arrived with a strong industry reputation but zero experience working within, distinct from consulting to Family Offices. The coterie of key people in the Family Office, what I term the “protectors” sought to immediately reinforce and immerse the CEO in the existing belief system. “This is how the Family has always done things….” “This is what Mrs X expects…” “This is how you communicate with her….”  Yet, if the luxury business was to achieve the shared vision of the Family Principal and the CEO, some quite radical changes needed to be made to the Family Office’s typical direct investment approach – changes to governance, speed, communication, rapid access to resources and so forth. The “house style”, wasn’t going to work in a fast moving, highly competitive sector.

Does the CEO conform or push back? If they do the latter, how do they do that without upsetting the apple cart? How do they accomplish that if the protectors, and the Family Principal, consciously create distance? How do they stop the protectors “playing” the Family Principal (self-interested feedback) and not projecting their biases?

There are three means of the Family Office getting the investee company’s CEO to conform: by coercion (threat), by peer pressure (“the in-crowd”) or by self-interest (personal benefit). Only one alternative works, self-interest.

Ultimately, it requires

  1. A CEO with a high level of self-worth and the skills to not only formulate strategy but implement it.
  2. A flexible and intellectually honest CEO. Not to the extreme of absolute conformity and equally never compromising where it is detrimental to the critical and highly important aspects of their strategy.
  3. A Family Principal and their key people with the volition to listen and act appropriately.
  4. A willingness to adapt the Family Office belief system to the needs of the new direct investment strategy and where appropriate, the performance, accountability, feedback and rewards systems.

There is a lot of talk about an inability to change family culture, most of it is rubbish. Of course, the Family Office can change but does it possess the will to do so? If it doesn’t that needs to at the top of its’ direct investing criteria in selecting portfolio businesses and the leadership traits it hires in.

© James Berkeley 2017. All Rights Reserved.


Conviction and Reinvention

Monday, March 7th, 2016









I have long been fascinated by how people and businesses apply “conviction” (beliefs, investment, action) when there is an immediate requirement for “reinvention”.

In 1999, opposite where I worked on Hollywood Road in Hong Kong was a large commercial real estate company, whose business was fitting out and renting shared service offices. For many years it had a unremarkable name and neon sign over the 1960s building, overnight it added the sobriquet “.com”. Curious I asked a friend who worked in the building what was happening, “Oh the Chinese owner thought because tech is red-hot right now, why not change the name of the company. Don’t worry as tenants we have seen no changes.”

Now you might not be as brazen in convincing your target audience à la Donald Trump and Mitt Romney that your polar opposite views are instantly credible but there is a mindset change needed first to kick start reinvention. Here is 3 simple questions, apply it to any situation you personally or the organisation are experiencing:

  1. What are the beliefs that inform my convictions today about how I and/or the business needs to look in 12 months time? (relationships with clients/investors/ employees/regulators, changing customer base, financial condition, valuable and profitable offerings, discretionary time and so forth)
  2. How do I apply those convictions today to where I/we plan to invest tomorrow? (capital deployment, people, innovation, strategy implementation)
  3. How do I best put today’s convictions into action tomorrow? (priorities, organisational structure, process, exemplars, skills, behaviours, expertise, technologies, accountabilities, rewards system, communication and feedback and so forth)

I can barely think of a sector where the nature of work is not changing dramatically today. With it comes fear (irrelevant, loss of clients or even, unemployed) and opportunity (new investment in new products and services, new markets and new roles).

People believe what they see, not what they hear or feel. If you really want to convince me today that you are serious about reinvention, I want to see immediate changes of attitudes and behaviour amongst influential figures in the business and new, impressive results fast.

If you are willing to be intellectually honest, click on the link below. Ask yourself where do our current attempts sit on the chart and where do they need to be in the future. The distance between the two points is indicative of the small step or giant leap your business and key people need to take.


Conviction and Reinvention pv only

Endless needs analysis informing our future strategy (AIG), managers preoccupied for hours creating and talking to the media about our “new culture” (Anthony Jenkins at Barclays) or changes to the plaque over the building door won’t cut it for customers, investors, employees and regulators, however, well intentioned. It isn’t easy but I need to see in your actions that you really believe what you are saying, not merely spouting platitudes to buy time or protect your ego.

© James Berkeley 2016. 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.

Published Article in WealthBriefing

Friday, May 8th, 2015

WealthBriefing, the premier news, features and information source for the global wealth management sector asked me to contribute a piece on the retirement revolution sweeping through many economies. The uncertain future for wealth managers, financial advisers and others demands that those running those businesses dramatically transform their business models. Yet many are moving in inches, fearful of  the future and uncertain where to start.

Retiring Pensions – Challenges For Wealth Management

© James Berkeley 2015. All Rights Reserved.

The Best Re-Inventor Award

Wednesday, February 25th, 2015

In Oscar week when you think of truly great film stars (Bergman, Olivier, Brando), not just the celebrities the glossy magazines salivate over, arguably their greatest skill is their ability to career reinvention. They escape the routine typecasting, which leaves some actors and actresses careers “beached” in the minds of their audience  (Hugh Grant, Dudley Moore, Eddie Murphy). Much the same danger lurks in advisory or brokerage businesses with alarming consequences. Firms, particularly those with a strong brand earned in the “cut and thrust” of transactional deal making, inherently find that their clients form a visceral connection with their brand. That bond is the “glue” that creates loyal and “permanent” clients, management and employees. In so doing, maximising the value of the franchise.

Here is the rub, when those firms seek to reinvent themselves with higher-margin, higher value advisory services, particularly around strategic not tactical issues (growth and expansion), they often come across resistance in two forms, personal and business:


1. Buyer’s Self-Worth – the cherished transactional buyer within a key client thinks they “own” the relationship with the advisory firm and its’ key people. They are reluctant to promote an advisory firm’s expertise (strategic), in areas outside their own expertise and experience (tactical). They “fear” that in making the introduction to the “strategic” buyer or worse,the results that arise from the relationship may reflect negatively on their own judgement, repute and reward. While they may respect and like their adviser, they don’t see clearly what’s in it for them (financial gain, increased repute, future career opportunities etc.).

2. Adviser’s Self-Worth – the key point person in the advisory firm is reluctant to promote his or her colleagues strategic expertise (no trust). There is a perceived and sometimes actual “fear” (risk of destabilising or destroying the transactional relationship). There is no personal non-monetary (promotion, repute) or monetary incentive to do so. Indeed, the relationship is akin to the adviser’s “pension”, why put it at risk for little or no visible benefit?


3.  Client Credibility – the advisory firm’s brand attributes and specialised transactional expertise are etched in the mind of the transactional buyer and their peers. Their key people are less well known or unfamiliar with the buyer(s) of strategic expertise. They might not  be seen as “peer” of the transactional buyer. Finally, there may be perceived or actual conflicts with the firm’s transactional work.

4. Adviser Credibility – the leadership of the advisory firm don’t see themselves as “peers” of the strategic buyer or other strategic advisers, sometimes with good reason (don’t hang out with the strategic crowd). Their beliefs inform the behaviour and attitudes of their subordinates. When pressured by the client to include strategic expertise in the client offering, the transactional advisers use leverage to throw strategic expertise in for “free” and fear pushing back (loss of a key transactional client relationship). They don’t actively promote the expertise to clients and new prospects, rather it is “a bunch of guys with MBAs sitting in expensive offices at the end of the corridor, who never seem to make us any money”.

Leaders have three options: accept the “status quo”, circumnavigate it or blow right throw it. First, let’s take a step back and answer some essential questions that will enable us to find the shortest, quickest path  to our goal:

1. Why are we intent on reinventing our firm in this direction (future health and well-being of the firm)?

2. What is the ideal result we want to accomplish (stronger brand, happier clients, more valuable firm)?

3. What options exist that can meet this goal (triage existing client relationships; prudently expand the firm’s transactional offering in concert with existing clients’ internal expertise; introduce new strategic relationships to existing transactional clients; leverage referrals)?

4. What options can we create that meet this goal (hire in qualified expertise; leverage new strategic alliances with external experts; create new value propositions; new strategic products and services for existing transactional clients and strategic prospects;  create new strategic intellectual property; build and lead new communities)?

5. What perceived, actual or catastrophic risks are attached to each of these options?

6. What preventative or contingent action could we apply to avoid or evade these risks?

7. How do the risks and rewards of each option stack up?

8. What is the firm’s propensity to take risk in relation to reward?

Armed with this knowledge, the advisory firm’s leadership can make wise decisions consistent with the firm’s strategic direction.  Firms such as IBM, Blackstone, EY and others have successfully created, built, leveraged and exited strategic advisory businesses as their strategic direction has evolved.

In my experience, too often leaders in advisory firms fail to apply this level of rigour and focus. Their aspirations to re-invent or recast the firm’s value proposition are just that aspirations that never become a reality. Powerful voices within the advisory firm project biases that has little do with what is in the firm or its’ clients’ best interests (ego, self-serving). The best laid plans sit in three ring binders, blown off course by a leaders who absent themselves from leading the process of change. Yet reinvent, we must constantly do if we are to increase our learning, attract smarter employees and reduce the level of uncertainty and competitive threats to our firm’s future.

© James Berkeley 2014. All Rights Reserved.



Partnership Perpetuation

Sunday, January 11th, 2015

Partnerships in most professional services firms hinder not support perpetuation. Long the favoured organisational structure for establishing and building businesses, unless three key ingredients exist, the very survival of the firm is in danger:

1. Accountability for profitable growth and transition is clearly defined. Delegated individuals have the ability to make decisions and move with haste, when required.

2. The core values and operating beliefs are aligned with the firm’s strategy at all times. If the core value is “we put our clients interest first at all times”, and the operating belief of partners nearing retirement is “I will only support investments that minimise my personal risk”, you potentially have a misalignment with long-term investments (upgrading skills and technology) that enhance the client value proposition.

3. The focus is on success (perpetuation) not perfection (unequivocal partner support).

The hallmark of great partnerships is that succession planning is not accidental, it is planned and actively managed.

There is a fine line between triumph and disaster. Recent implosions of law firms Bingham McCutcheon and Davenport Lyons show how poorly managed perpetuation can result in a dramatic collapse. Time is rarely on a partnership’s side.

© James Berkeley 2014. All Rights Reserved.

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.


Technology Before The Customer, The Customer Before Technology

Thursday, August 7th, 2014

Do we know the limits of where high tech can help businesses flourish? A visit to Denmark and Sweden reminded me how whole countries and businesses continue to struggle with the convergence of technology and  a great customer experience.

  1. SAS in their infinite wisdom construed to lose a family member’s bag for 72 hours in transit from Helsinki. As a customer, your sole point of contact is an online portal, which is unbelievably ineffective. There is no human you can speak to, and unless you wish to be permanently tied to your iPhone, you might as well buy replacement clothing and so forth and bill the airline for the inconvenience.
  2. A trip to an ice cream kiosk adjacent to the beautiful white sandy beach in Falsterbo, sees a pretty twentysomething blonde girl ask for a credit card rather than cash and you wait interminably for a connection to her iPad payment system to authorise payment. You are lucky if the sprinkle laden cornet has not dissolved in your lefthand while you are forced to digitally sign with your right finger for the 30 Kronas  payment. C’mon there is convenience shopping but this is a geek’s joke. 

In your own business, do you start with a visual picture of the ideal customer or client experience (what does it feel, sense, sound or look like)? Are you clear about the ideal mode of communication (in-person, phone, email)? Are you clear about the ideal time (pre, during, post-sale)? Are you clear about the value derived for the end user from human interaction, technology or a combination of both (speed and quality of resolving issue or transferring knowledge)? Far too often it seems businesses are falling in love with the technology and the “service theory” first without thought to HOW the customer or client is better off or better served in the real world.

© James Berkeley 2014. All Rights Reserved.

Getting Serious About Regulation in Gaming & Lottery Operators

Monday, July 7th, 2014

I am in Barcelona this week moderating a session at the World Gaming Executive Summit on market growth and expansion into US, Europe and Asia gaming markets. I have a fabulous panel of CEO’s and senior executives from Sportech Plc, PKR, AG Tech and Lotto 24.

In readiness for the event, I have spoken to an array of senior gaming and lottery figures. I always find it interesting as an “outsider” to reflect on the key challenges and draw comparisons with other sectors. Indeed some of my client’s most valuable results stem from approaches that have worked in other sectors, which perhaps are further advanced (technology, complexity) or seasoned (regulation, market change and so on).

For investors, top management and employees attracted to the global gaming and lottery business, managing change and the impact of evolving regulation is an every day occurence. Yet how different is this to the nuclear, energy or indeed the financial services industry? Over lunch with a substantial private equity investor in the renewables sector, he recently recounted a story about how one recent decision by the Spanish governement had left one sizeable investment “compeletely underwater” for the forseeable future. There is no incentive for the owners to invest further in the business until legal challenges are exhausted and the fund nears its’ exit point.

Where profitable growth and expansion of a business is heavily exposed to “regulatory risk”, I counsel clients that their investment plans must contain the following:

(1) Capital allocation plans must include a “regulatory premium”. Factored into the cost of capital must be a premium commensurate with the level of risk accorded with the investment in that market.

(2) Human resource plans must include a “regulatory contingency”. In other words the higher the regulatory risk and the potential impact on the future of the business, the greater the flexibility (severance terms) and financial resources the business must hold in liquid assets to avoid a short-term change creating a catastrophic impact on the firm’s cashflow.

(3) Fixed asset investments must include a “regulatory risk-weighting”. In other words, fixed assets (gaming or lottery infrastructure, office leases and so forth) should be adjusted to the changing levels of regulatory risk apparent in that market and the impact on the future of the business.

Boards should hold top management accountable for regular oversight of each of these areas. Whether that is done formally, in the form of monthly or quarterly reporting or informally, at the quarterly results stage.

In too many companies, particularly mid-sized businesses in the gaming and lottery sector, regulation and compliance changes are a separate agenda item in Management or Board Meetings. It is not integrated correctly into the capital allocation process, the evaluation of results or even top management’s compensation.

For a sector that has seen seismic impacts of regulation on the industry’s future and its’ wider perception, there is still much progress to made in the Boardroom in providing the right controls over top management’s behaviour.