Archive for the ‘Business Transformation’ Category

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 www.wges.com 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.

The Future of The Global Gaming Industry

Friday, June 27th, 2014

The Global Gaming Business is in the midst of unprecedented challenges with the convergence of market needs, technology, brands, products offered, methods of sale and distribution (casino, lottery, online, mobile and social gaming). James Berkeley has been joined by 9 gaming leaders to share their perspective on the future of the industry. Click here  http://www.elliceconsulting.com/pdf/The-future-of-the-Gaming-Industry.pdf

Next month, James Berkeley will be exploring these and other issues at the pre-eminent global gathering of industry leaders in Barcelona at the World Gaming Executive Summit http://www.wges.com You can read his thoughts in live blog posts from the event, interviews with key players and an event summary appearing here.

 

Coming Up Smelling of Roses or Manure

Monday, April 28th, 2014

In excess of 110,000 people will make a rite of passage this weekend to Churchill Downs for the “Run For The Roses” (Kentucky Derby), approximately 16 million people will watch from their living rooms and re-connect with a sport for one day in the year. Yet the long-term health and prosperity of the sport in North America is mired in acrimony, vested interests and falling fan appeal. To the once-a-year viewer the reasons why are largely unclear.

It is fundamentally a lesson for entrepreneurs, businesses and indeed, governments, when ego, greed and self-interest are allowed to triumph over common sense and good judgement.  Going back to the 1960’s, power and influence has resided in a small number of people, who controlled the racetracks, the legal parimutuel betting, the licencing of the sport (the state racing associations and the Jockey Clubs), the media rights and the most successful horsemen. From that period forward, the fan (the customer) was subservient to each stakeholder’s selfish attempt to further their own interests, at the expense of others.

In businesses that are seeking profitable growth, leadership of this kind and neglect of the consumer or client is tantamount to business suicide. When those that have shown real leadership and vision (John Gaines and others) find that the sport’s best interests are constantly diverted and change is diluted, is it little wonder that the industry is in today’s parlous state? Fighting drugs and integrity issues, largely dependent on the growth and liberalisation of slots and other forms of of gaming to fund purses, midweek attendances at all time lows and mainstream television coverage a rarity outside the sport’s very biggest days.

Transformation is urgently required.  Vibrant strategies are important but above all else, strong leadership is required and a cultural change within the sport needs to rapidly take place. The sport desperately needs a “talisman”. Someone who can say “follow me”, a Lee Iacocca or Lou Gesterner-figure. It needs a focus on the winning line, not the quarter-mile marker. Maintaining a focus on the long-term and not allowing the short-term mishaps to lose sight of where it needs to end up. It needs key stakeholders to set aside differences and run the sport not fight each other. It needs strategies and a belief system that says “we will not invest in anything unless we can demonstrably see that our customer (the fan) is better off”.

As someone, who has had a box seat at some of the most spectacular victories and defeats in business and the sport of horse racing that individual cannot arrive soon enough.

© James Berkeley 2014. All Rights Reserved.

 

Why Rely on Outside Consultants

Monday, January 13th, 2014

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“Consultants” are an ugly word in many businesses. Armed with their methodologies and matrices they paint a perfect picture of a profitable growth, yet the results are more often than not disappointing. In the real world, successful strategy implementation is more about maintaining top management’s focus and discipline than simply knowing what to do and how to do it. James explains where managers can gain real benefit and huge value from a consultant, and the role of a “business” fitness trainer.

How I Help My Clients

Thursday, January 9th, 2014

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The MBA has always been a target for executives looking to advance through organizational ranks. With technological change, demographic shifts and globalisation, profitable growth opportunities are constantly shifting. James explains why simply studying success isn’t sufficient to improve your own success. He talks about how his clients have learned by doing, to adapt and exploit success practices under his guidance and obtain unprecedented performance levels.

 

The Biggest Challenges My Clients Face

Monday, January 6th, 2014

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A look at the small number of profitable growth challenges common to almost every mid- and large-sized business, irrespective of culture. James tours the very personal fears and professional challenges that underlie each of them and reveals a number of approaches that have transformed the lives of his clients, their customers, their employees and their suppliers.

Embracing Digital Customers in Analogue Insurance Businesses

Tuesday, December 10th, 2013

Large swathes of the insurance and reinsurance sectors are still operating predominantly analogue businesses in 2013. Yet the greatest change and fastest growth area is their customers increasing competency with and willingness to make purchases through mobile platforms (smartphone, tablets etc.) Profitable growth demands that those businesses either charge more for assuming risk (difficult to do) or they dramatically improve productivity.

It takes more than a website and basic e-commerce if those firms want to be significant players in their respective markets. Achieving substantial and substantial growth in competitive mature and high growth markets necessitates a digital strategy that intelligently addresses the key customer touch points and their own business model. Many dumb consultants and internal IT experts suggest prioritising the “points of pain”. That is a stupid strategy. Let’s keep it simple,

Focus on six fundamental parts of the business: Corporate Operations and Governance, Underwriting and Products, Actuarial and Risk Management, Claims & Policy Management, Disputes Resolution & Litigation and Sales & Distribution.

Aside from the obvious return on investment decisions, demand each department head with profit and loss responsibility answers four questions:

– Distinguish Priorities: Where is the “seriousness” (high/moderate/low impact on the customer experience), “urgency” and “growth” (escalating/stable/insignificant) for digital investment in each function?

– Measure Progress and Success: What would tell us that we are making progress or have arrived at our goal?

– Demand Accountability: Who must be accountable (internal and external) for the progress and success?

– Remove obstacles and procrastination: What, if anything, stops us starting tomorrow to rapidly transform our business into a strong, dynamic digital competitor?

My observation with countless recent discussions with insurance and reinsurance executives is the cancerous fear of ending up in huge digital transformation projects that never reach their destination and result in an abundance of abandoned or mothballed projects. That fear is fundamentally about a loss of power and control. Control in the form of delegating responsibility to technical experts, who lose sight of the commercial imperatives. Power in the sense of being associated with a failed project and anger from shareholders, customers and other key constituents. Ask the right questions, demand transparent answers and that “journey” to the digital world can be hugely profitable. After all, what is the point of leadership if you are not comfortable using that power and applying the appropriate level of control.