Archive for the ‘Business Transformation’ Category

The Next Big Thing

Monday, February 4th, 2019

In my business transition advisory work, I find 80% of entrepreneurs and executives in high-growth and mid-sized businesses very clear about the preferred outcome for the business, 50% very clear about the simplest path to it, 20% very clear about their own ideal future post-transition and less than 10% very clear on the optimum way to get “there”. Why? They’ve consciously or unconsciously ceded power and control to others, not prioritised themselves, or worse, they are in hiding behind a veil of procrastination. Have I hit on a very uncomfortable truth?

Pull up a chair, eliminate the distractions and let’s resolve now to clearly, and unambiguously, answer the three most important questions:

  1. What am I tremendously passionate about?
  2. What rare and powerful combination of skills, behaviours and expertise do I uniquely possess or could quickly develop?
  3. Where would the application of those talents have a transformational impact on the future of (enter organisation name), and its’ key constituents (enter clients, employees, investors, board members, business partners, suppliers names and so on)?

Armed with that level of clarity, what stops you setting aside time now in your diary to meet with those individuals? For many of my clients, it is really one of three reasons: you don’t trust your own judgement (“I am unfamiliar who’d have a need for me outside what I know”), you don’t see a need (“opportunities will come to me”), or you don’t see the urgency to do it (“I’ll get around to it once my immediate business goals are met”). Some site money as an excuse but that is very rarely the case unless you are broke.

The harsh truth is without the discipline, hard work and talent, to make it happen now, it will rarely lead to a desirable personal conclusion. You’ll end up forever circling half-explored opportunities, amid growing frustration of wanting to get “stuck into something”. When you do have the need post-transition, finding the “right opportunity” is incredibly difficult (your ideal relationships and interactions have changed markedly). Finally, you find perhaps for the first time, in the case of entrepreneurs, founders and executives on “exit”, you are beholden to others’ timing and priorities, which don’t align with your own.

Hiring qualified experts like me (depth and breadth of insight globally supported by a track record of success) can demonstrably help, strategically, where you are seeking validation of your own judgement, and tactically, pathways to ideal names, monthly accountability or creation of a post-transition structure “in waiting”. For example, the entrepreneur, who decides that he wants to invest in other entrepreneurs or the executive, who wants to work with private investors or philanthropic initiatives. However, it is really down to you and your desire to mitigate the risks of an unsatisfactory outcome.

It Is Not You

Wednesday, January 30th, 2019

There are some prospects, clients, employees and investors, who irrespective of your thought, word and deed will never be satisfied. They are the individuals that drain your time, energy and resources disproportionately. You do they, and you, a disservice by “hanging in” there by all means or hoping times will change. They won’t, move on.

Entrepreneur’s Equity

Thursday, December 13th, 2018

I am often asked by founders and entrepreneurs in small businesses, “at what point should I consciously start sharing equity in order to attract and retain key people?” My retort, which stuns a lot of them, is “why would you ever consider doing that?”

After all, as the founder or entrepreneur, you have taken all the financial and non-financial risk to this point, you have established the business to maximise your independence and freedom, and you have paid your employees handsome salaries, bonuses and benefits for producing expected or superior results. 

A great many founders and entrepreneurs confuse gifting equity with two issues: (1) “producing results” and (2) “rewarding results”. 

You produce results by hiring qualified people, creating a positive environment, giving them clear objectives, metrics (progress and success),  accountabilities and timelines.

You reward results through a range of financial and non-financial incentives (pay, benefits, bonuses, gratifying work and meaningful career progression).   

My point here is not that you would never offer equity to a key individual but rather you must have absolute clarity about what you are seeking to ideally accomplish, the alternatives, the pros and cons of each and the best solution for your business. Being “frightened of them walking out” is rarely ever a good reason for an entrepreneur or founder to do it without rationally  examining your “fear”.    

Letting Go

Tuesday, September 4th, 2018

There is no “right time” to end relationships in business (employees, shareholders, customers). Yet one of the oddities in a great many organisations, particularly  small businesses, is more time is spent thinking about the “right time” than invested in making the actual changes,  finding replacements or attracting new relationships. 

Transformation of Sports Betting

Wednesday, October 25th, 2017

A recent conversation with one of the most colourful characters in global sports betting, Harry Findlay, reminded me how rarely most entrepreneurs have a truly transformative idea.

The advent of betting exchanges, in particular Betfair, has had a 3-dimensional impact on European bookmakers (margins – the profit on every transaction; velocity – the speed at which they collect cash; volumes – traded bets).

Today’s sports betting business resembles a fraying rope, at one end, the commodity or mass market giants, Bet365 and Paddy Power Betfair dominate with huge marketing budgets driving increasing mobile betting volumes amongst the £5-£10 recreational players. At the other lie a small number of “premium” boutiques and large international (Asia) betting firms, competing on differentiated service and a volition to “lay” a £1,000+ bet.

Mass-market sports betting is akin to retail supermarkets. High volume, low margin and viciously cut throat competition will prevail over the next 3 years.

The “premium” player end is no less competitive. The need for scale, a powerful brand, the passion and competency to deliver a high-touch premium customer experience and a competitive balance sheet will defeat many of today’s incumbents. Too small, too niche, too busy prioritising commodity players and too weak.

Yet the sports betting industry despite increased regulatory pressure, changes in societal mores and disruptive technology, doesn’t lack for wannnabe entrepreneurs. Most though never end up with anything more than a small business. There is a pressing need today to think bigger.

The big opportunity in sports betting is not in isolation, a rival trading platform to Betfair. The transformative idea is a business that is able to transform the market size exponentially, professionalise it and turn it into an institutional quality, alternative investment class. That’s why businesses such as Stratagem, Smartodds and Starlizard are an object of serious interest to investors, outside the confines of the professional gambler’s lair.

The naysayers decry the randomness of sports results, to support their argument that this will never happen. What is not random about catastrophic Gulf hurricanes, Mexican earthquakes and California wildfires?

Parallels can be found with the way that insurance risk was “trapped” amongst insurance and reinsurance players upto the late 1990s. Offering non-correlated risk to professional investors and healthy yields, today close to 20% of the total pie is now diverted to the capital markets via insurance linked securities. Why should sports betting risk be “trapped” amongst existing incumbents with relatively small balance sheets?

Just as with insurance risk, the evolution requires a business with

  1. Discernible and practical value. Superior data and analytics to turn data into information, information into knowledge and ultimately, knowledge into wisdom consistent with the investor’s strategic goals.
  2. A clear, accurate idea of the professional investors of today and tomorrow?
  3. The intellectual firepower to attract and retain professional players and investors (structuring and matching capital with risk)
  4. Intelligent pricing skills and judgement (quantitative and qualitative).
  5. Commitment to constant innovation and reinvention (new products, new markets, new technology and new relationships)

Perhaps that is one of the above businesses or an entrepreneur quietly making waves but yet to attract the glare of media attention. Either way, the sports betting industry is primed for dramatic reinvention just not in the manner most market observers have presumed.

© James Berkeley 2017. All Rights Reserved.

New Balls, Please

Wednesday, July 12th, 2017

Today’s Wimbledon: strawberries and cream. White tennis gear. Polite ticket queues. Live streaming. Rafa, Roger, Andy, Novak, Serena and co. The sliding roof.

Days of old: more strawberries and cream. Wooden rackets. Bjorn, Jimmy, BigMac, Pete, Andre, Rod, BillyJean, Monika, Martina, Steffi. Intermittent rain delays. Images that are indelibly linked in our minds to a time and place. Yet a (sporting) institution and participants that has successfully embraced reinvention.

When you look at your own personal and business reinvention, what are the strongest images in the minds of your key constituents (clients, investors, employees, business partners and so forth)? Does it say more about your “past” value, your “present” value or your “future” value? Perception is reality. What are you doing regularly to adjust others perception of you? (new interests, new relationships, new ideas, new surroundings, new images etc.) Is it bold enough for your current and future circumstances? (changes in technology, competition, market needs, client experience, and so forth)

Why wait for the umpire’s cry of “new balls, please”, when you can better control your own destiny?

© James Berkeley 2017.

 

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

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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.