Posts Tagged ‘organisational change’

Inside The Executive Office: Compelling Stories

Monday, February 22nd, 2016

I have spoken to in excess of 750 customers of financial services, insurance and business services advisory and brokerage firms globally over the past 12 months. Hear are the 3 most important questions your clients want to know:

  • Your ability to fix a human problem
  • Your ability to satisfy a human need
  • Your ability to ignite the human spirit

5% of customers report firms providing “absolute clarity/absolute conviction” to all three questions, 55% report firms providing answers that are “opaque/self-doubt” and 40% of responses that are “totally unclear/disingenuous”. If you are an executive in the last two groups (the overwhelming majority), you have a lot of work to do, fast, to change your customer’s perception of your business, your people and the perceived value.

Look at your marketing collaterals, exhibits, media comments, speeches, client and prospect conversations and ask

  1. Internally and externally (clients, business partners, media partners), where can we improve in 1 week?
  2. What needs to change first? (priorities, quick wins)
  3. How will we know we are successful? (what ideally do you want to see, hear and feel)
  4. How can we sustain that level of improvement? (better accountability, enhanced performance, changes to feedback and rewards system)

© James Berkeley 2016. All Rights Reserved.

Corporate Innovation Comedy

Thursday, February 4th, 2016

There are certain fashion or fad trends which when worn by 60 year old men, skinny jeans come to mind, are just plain wrong unless you are Mick Jagger. In all the buzz about innovation, reinvention and disruption it is comedic watching the attempts of some corporate organisations in finance, banking and insurance to embrace it effectively.

The CEO stands up and says

1. “Innovation is the new normal”: err, innovation is not a rheostat with an on/off switch in outstanding innovative companies such as 3M, Merck, Apple etc.

2. “When I was at Google….”: err, you met with a middle manager or silo function (risk management) that is not even situated in the Corporate HQ. Ssh, the guy is an ex employee of ours suffering a mid life crisis but it sounds cool?

3. “We are on the side of the disruptive businesses…”: really, where is the hard evidence? Ah you have put in an order for the Tesla when the lease on the Merc expires.

4. “Let me tell you about our work with [Uber, Airbnb]…..”: your “credentials” are killing me, how are a series of actions unique to one firm now a hot trend?

5. “We took our Leadership Team to Silicon Valley….”: so you flew into San Jose on the Gulfstream, spoke to a few random clients and friends and are now immersed with ground-breaking ideas, really? Ever tried the pilgrimage to Lourdes? Thought not.

6. “I was speaking at a Tech investors event in Silicon Valley…”: you are now on first name terms with Marc Andreesen and Fred Wilson. Keep that one for the next earnings call.

7. “We are passionate about the future. We are announcing a new corporate venturing team with a $100 million of capital”: wow, so third rate entrepreneurs line up outside our headquarters. After all why would a stack of cash and a conservative reputation not appeal to serious tech entrepreneurs? Oh, nevermind.

8. “I am really excited by the power of blockchain as a powerful asset”: half the audience look blankly. The venerable City reinsurance broker or Wall Street banker racks his brain “watch chain?”, as the CEO fumbles like an adolescent boy trying to unhook the girl’s bra, in explaining blockchain’s virtues and his excitement.

9. “I have asked our Divisional Heads to set up an offsite meeting on Innovation and Disruption….”: yay, a chance to invite Wired’s David Rowan to talk to us about 10 transformative technologies. Oh hell, which futurologist should we invite? No giggling or fumbling for the iPhone and that important email when he or she stands up.

10. “It is time for the results of our Annual Report on Megatrends, we spoke to our global community of risk managers…..”: ah, that is the fella situated down the end of the first floor corridor with an actuarial background and a handful of junior direct reports. I don’t remember seeing his face in the Corporate Strategy meeting, perhaps he was at his daughter’s soccer game.

I kid you not, these are all genuine one-liners. Sorry I am bent double admiring the CEO’s shiny white teeth and folksy humour. Nice touch.

© James Berkeley 2015. All Rights Reserved.

 

Eccentric Behaviour

Friday, January 8th, 2016

I love living in London because you sees displays of eccentric human behaviour that defy all logic but are in equal measure very funny. This morning I hopped on a London bus in a rainy Mayfair to be followed in by a well-spoken English gentleman struggling to haul a 7 ft loosely bubble-wrapped, early 19th Century British masterpiece procured from an eminent Bond Street gallery. The sought of place where the red dots on the gallery wall demand a large five or six figure sum. Poor man, wouldn’t his budget stretch to hailing a taxi or the Gallery’s to delivering the piece to his home or workplace?

When we deliver services to our clients, do we seek to save pennies (demand our people spend no more than £25 on a bottle of wine at dinner) or promote overly cumbersome client processes (onboarding) for no good reason, after we have been paid pounds? Is our mindset and self-talk one of abundant opportunity or desperately fearing poverty? Is that reflected correctly in how we ask our people to behave and act with our clients’ best interests at heart (exemplars, policies and procedures)? You would be surprised how often that there is a huge misalignment, which instantly dilutes client and employee trust and weakens loyalty to top management and the firm.

© James Berkeley 2015. All Rights Reserved.

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.

Uncommon Business Integration

Thursday, August 20th, 2015

So you are the proud owner and as CEO, guardian of the new combined business, the hard work now begins, turning the reasons why you bought the business (investment thesis) into an organisational reality.

You assemble the executives and managers in both firms with guidance on the strategic vision, financial synergies, operations, talent and culture. In all likelihood, they have interacted briefly to exchange information in the due diligence, negotiation and closing phases but they have rarely got to know each other on a personal basis.

How each party sees that you handle that first integration meeting in most cases creates an indelible impression for the ensuing relationships, the level of commitment to your objectives and your probable success.

Knowing “what to do” and “how to do it”, is largely a mixture of art and science for most leaders. “Art”, in the sense of gut feel and good judgement in creating a welcoming environment for the newly acquired executives and managers. “Science”, in the sense of knowing precisely like choreographing a play “what” business outcomes must be prioritised, “where” to devote time productively, “when” you must accelerate the conversation (agreed action points) or intervene to bring circular conversations to a close and “why” a chosen integration alternative is appropriate.

Here is seven “integration killers” you want to avoid in that first meeting of the “new” colleagues:

1. Ambiguous and Unclear Meeting Invite. The focus needs to be on performance-based priorities (crystal clear business outcomes) not tasks and activities (“getting acquainted with each other”).

2. Inviting Wallflowers. Peers want to meet, talk and reach agreement with peers or possibly employees who are one grade above. They don’t want to converse with subordinates, who cannot contribute meaningfully and do nothing more than to act as a “posse” or mute cheerleaders for an executive or senior manager.

3. Enabling People Who Arrive With An “Agenda”. Nothing kills an integration meeting like an HR person from the acquiring company, who arrives with an arbitrary alternative (“non-negotiable” policies and procedures) to force the newly acquired employees to comply to their process without first listening to and collectively examining whether it makes sense. The real crime is the facilitator who allows them to make a speech and enables their passive-aggressive behaviour.

4. Leaders Whose Behaviour Precisely Undermines The Meeting’s “Rules of Engagement”. If the understanding is that PDA’s and phones are to be switched off until the scheduled break, there is zero excuse for the leader, who blatantly ignores the rule. What the leader’s behaviour says to the other participants is “this discussion is not my priority”.

5. Kick off at the wrong starting point (integration alternative). Any discussion must start with “what is the desired business outcome?” (rapid reduction in business acquisition expenses), “what are the integration alternatives?” (adopt Company A or B’s sales approach or develop a new approach), “what is the risk and reward attached to each alternative?”, and ends with “what action is required to rapidly and effectively implement the preferred alternative” (next steps). Nothing else.

6. Priorities are given an arbitrary score (“7”) or (“High”). Organise and separate priorities into three headings (“GSI”): “Gravity”, what is the gravity of the issue? “Speed”, how fast does this need resolving or improving? “Impact”, what is the actual or potential impact on the firm’s future? Use actual descriptive sentences not scores.

7. Lack of definitive “next steps” with agreed action points (“I’ll discuss this with the COO when I next see him”). Every action point must have a time, date and accountability given to it with an understanding of the supplementary action to follow.

My observation is that most first integration meetings start with the very best of intentions. Where they go awry is that the meeting chair and participants overlook the importance of speed as well as quality. “Speed” in terms of, for example, identifying decision-making shortcuts that enhance the quality of the results (more impressive financial synergies, happier customers). “Quality” in terms of asking the right questions in the integration meeting to enhance the “speed” of accomplishing the desired business outcomes (ease of implementation, reduced risk).

© James Berkeley 2015. All Rights Reserved.

Willis Towers Watson Uncovered

Tuesday, June 30th, 2015

A few weeks after my recent blog post http://www.jamesberkeley.com/business-transformation/the-best-re-inventor-award low and behold Willis and Towers Watson surprise the market this morning. Occasionally you see a deal announced and your first reaction is to re-read the headline making sure what you think you have read is in fact true. Uhm, a “merger of equals”, really?

On the surface the logic would be obvious, Willis’s immediate competitors, AON and Marsh both own substantial professional services firms, Hewitt and Oliver Wyman. The future is largely being shaped by high-value advisory services and low-cost transactional broking and administrative services. That is where the easy comparisons stop.

Oliver Wyman largely operates as a separate “silo” with its’ own brand focus, leadership, culture and resources inside MMC. Collaboration is limited to a small number of “joint” client assignments.

Hewitt has been absorbed more comprehensively into AON’s brand offering, leadership and culture. The healthcare consulting has largely been transferred to AON’s transactional healthcare broking business. The Hewitt outsourcing business has undergone extensive changes. What exists of “Old Hewitt” today is largely a talent, rewards, retirement and investment consulting business.

Twinkle Eyes

Willis and Towers Watson had the advantage of getting know each other last year in the due diligence phase of the sale of Towers Watson’s reinsurance broking business (ultimately sold to JLT). At the time, JLT trumpeted a future collaboration with Towers Watson. Are we to presume that the JLT/TW collaboration has really proved underwhelming or were there hidden attractions for a Willis/TW merger that few in the public domain spotted? While surely welcome, the mention that ValueCapital, Willis’s activist shareholder, is supportive of the transaction, could be interpreted to mean that Willis was under pressure to consummate a deal with organic growth prospects hardly setting the pulse racing?

The Challenges Ahead

A “merger of equals” is the hardest type of deal to pull off. The first requirement to a successful merger is everybody is open to change. Yet both firms would be characterised by conservative leadership teams and cultures that more often than not have rejected change or accepted it with some reluctance, particularly in the era of Joe Plumeri.

Here are some fundamental questions that investors and analysts need to ask:

  1. Would Willis Towers Watson be willing to abandon, for example, default labels such as investment consultant, treaty broker and political risk broker? The world is looking for expertise, it is not looking for a client issue to be wrapped in a broking, consulting or investment solution with the inevitable internal competition that does nothing to help the client. Would they be willing to rip up widely held beliefs about fee-setting (scrapping unethical hourly billed fees, a relic of audit firms) or contingent commissions?
  2. What do the people within the new firm need to thrive? (very light on detail)
  3. What are the benefits of this union to the customer? (very light in today’s announcement)
  4. Do the leaders and people within each of the businesses truly believe in those benefits? (Fostering compliance or commitment to the “cause”)
  5. Do they have people with the skills and volition in the real world to leverage Willis’s global distribution platform or articulate TW’s consulting proposition in the cherished mid-market? Are we going to see a TW expert called in by a Willis broker and vice-versa? (The unwelcome legacy of Willis’s foray into the US – HRH acquisition – has been a high dependency on the local broker’s trusting relationship and very rich producer incentive plans that do little for margin improvement)
  6. To what extent is each firm’s current structure fundamental to the new firm’s profitable growth and success? (Abandon existing structure or selective tinkering. For example, TW’s prized asset Liazon is dependent on 640 indepdendent brokers who cannot reasonably expect to standby and hand opportunities to a competitor)

My experience and observation is that the combined firm will have some of the brightest and best people working in their respective fields (reinsurance, political/credit risk, capital markets, insurance consulting). They have thrived because they have had strong leaders willing to cut through the institutional bureaucracy and it has been in their self-interest to do so. On top of the Miller-Willis liaison, this is a high-risk foray and investors would be wise to ask the right questions of senior management.

As a footnote, the departure of Steve Hearn, Willis Deputy CEO, yesterday is incidental to the firm’s announcement today. It almost certainly has more to do with Hearn returning to his passion (wholesale broking) in a business where he can have a greater impact on its’ future.

© James Berkeley 2015. All Rights Reserved.

 

 

3 Reasons Business Leaders Should Trek To Glastonbury

Friday, June 26th, 2015

Over 250,000 people will descend on a sleepy corner of Somerset, England for the Glastonbury Festival today. For some an annual rite of passage and others an introduction to an experience their Parents still rave about some 30 years after first making the trek.  There are acts of their Parents generation (The Who and Paul Weller) and their grandparents generation (Burt Bacharach) joining today’s megastars (Pharrell Williams and Kanye West). The event is a classic example of the three “R’s”: relevance, recognition and reinvention as its’ market’s needs and ideal buyers have changed. “Relevance” in the form of is the experience what our ideal buyers need (introduce hospitality chalets alongside the pitched tents). “Recognition” that the time is now for bold changes and adaption of our beliefs (infuse rappers and uptown funk with a rock heritage). Finally a constant commitment to “reinvention” (introducing new acts to regular attendees and old acts to new attendees).  It sounds simple and when you look at market-leading businesses it is universally a trait that keeps them at the forefront of their competitor set. Yet for a great many firms and indeed sectors (private banking, insurance, legal, accounting and audit firms) it is something that they struggle with hugely. It is first and foremost a leadership issue. Great leaders are willing to champion change. They lead from the front with their eyes focused on the stage, not the disheveled hipster swaying in front of them. They listen intently and consistently ask the right questions at the right time. They apply that knowledge rapidly to the critical organisational issues impacting their firm’s future and make wise decisions consistent with the strategic direction of the business. Are those the very same traits your leadership regularly exhibits and you hire for? If not, why as a client, employee or shareholder should I return each year to listen to your tired line up of fading musicians playing music that is boring and increasingly irrelevant to my future?

© James  Berkeley 2015. All Rights Reserved.

Competitive Pressure Alone Rarely Driving M&A

Thursday, December 18th, 2014

Observing merger and acquisition activity often resembles an expectant Mother waiting for her kids to get engaged, you wait an age and then a clutch of announcements arise in a very brief time period. The logic of “competitive pressure” drives friends and acquaintances of the family to pass comment, however, ill informed on “how many of their friends are getting married” (need), “how it is about time” (urgency), “how in love they are” (trust) or “how they can now afford to get married” (money). Of course, many of these unsolicited comments are more for the benefit of the speaker than the person they are directed to. My point is that logical reasoning alone rarely causes top management to act. Unless you understand the emotional priorities of top management and their shareholders, you will rarely understand what has motivated them to move on the opportunity. They won’t reveal their emotional objectives unless you first have established a trusting relationship and secondly, you have the social, intellectual and language skills to interact as a “peer”.

Look at the global insurance sector, where the logic dictates that competitive pressure (excess supply of capital and declining demand from buyers) will drive suitors into each others arms at record speed. I have sat with senior executives and an abundance of financial advisers over the past 12-18 months, all shouting from the rooftops that M&A was inevitable. Ask them “who” explicitly, “when” and “why”, and they start shuffling nervously with vague pronouncements.

 

My observation is that the same rules apply as in human relationships:

 

  1. Most people don’t know what goes on inside someone’s relationship and the impact on their hopes and dreams. Be very careful who you listen to.
  2. You must be on the “inside” to credibly past comment (you have a peer level trusting relationship with all parties), otherwise your opinion is largely worthless.
  3. Competitive pressure makes people “think” about change but it does not alone cause them to take action
  4. Action is a result of the level of trust and confidence that the “acquired” party has built up that their best interests (power, influence, legacy, promotion and so on) will be served by combining with the acquirer.  It is about people, not organisations, spending time together in each other’s company and willingly sharing their emotional imperatives. It is about moving at a speed that is most appropriate for BOTH parties. It is about above reaching conceptual agreement that the combination of their respective “pasts” (expertise, knowledge, history and so on) will enhance their ability to transform their respective futures (happier clients, improved image, more powerful brand, greater profit and so on). It is about a shared belief that the journey to the desired future is planned and will not have catastrophic consequences.  This is why “forced” combinations rarely work with strong and dynamic businesses in conservative sectors (insurance, professional services, wealth management etc).

Contrast two such proposed transactions in 2014, the substance and style of John Charman’s increasingly aggressive pursuit of Aspen and this week’s proposal by Mike McGavick and Stephen Catlin to combined XL and Catlin.

If you were to ask yourself why both deals might make sense? You might reasonably state “competitive pressure” (changes to current and anticipated market needs).

If you were to ask yourself what would it  take for both parties to get married? You might reasonably state that both management teams had established sufficient trust and confidence in each other’s ability (competency and passion) to make it work (alleviate or even gain from the competitive pressure) and in so doing accomplish their emotional priorities.

If you were to ask yourself will it be a success? You almost certainly couldn’t give a definitive answer without knowing firstly, “What are the critical elements in McGavick and Catlin’s emotional priorities?” Next, “What changes to those critical elements could we reasonably anticipate ?” and finally, “How easily could the cause be eliminated or action taken to minimise the impact and live with the problem?” For example, if one of Stephen Catlin’s emotional priorities as the Company’s founder is to “leave a lasting legacy for our clients and employees”, the critical elements might be perceived trust, integrity and consistency. If post the merger or sale, the new management team change the Sales Incentive Plan to emphasise increased short-term top line revenue growth in specialty business, it is quite possible the effect is a dramatic increase in the churning of clients and greater attrition among long-term Catlin clients. Alternatively, if there is a decision to merge or close the Catlin underwriting hubs in one or more location, it is quite possible there will be an uptick in Catlin’s best people deciding their futures are better served in other firms.  The question is then how quickly and effectively could XL Catlin eliminate the cause or mitigate the impact on their clients and employees, and in so doing accomplish Stephen Catlin’s legacy objective.

As an investor, customer, employee, business partner, competitor and so on, you have no option but to apply good judgement and common sense in answering those questions.

For most marriages are rarely without strife and we cannot predict the future accurately.

© James Berkeley 2014. All Rights Reserved.

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.

 

Disruption and Decisiveness, Two Rare Bedfellows

Wednesday, November 27th, 2013

I have been talking to many executives in the past few months about their response to disruptive market changes. Insurers and reinsurers competing with a flood of capital from pension funds. US health insurers responding to legislative changes and the advent of public and private healthcare insurance exchanges. International hotel chains fighting online travel agents for control of the customer and so forth. Some are slow, steady market evolutions, otherwise are more sudden or opportunistic moves. All demand a response, which may be “do nothing”, adjust and adapt the market positioning of existing products, services and customer relationships, or even exit some product, consumer, industry or geographic markets.

There are two fundamental questions that need answering:

What can and should management do now?

What other big changes may lie ahead of which we are as yet unaware?

Organisations and those leading them are expected by their consumers, shareholders, employees and business partners to be decisive. Yet too often I observe top management being indecisive. The fear of making a decision, one way or other, seems to be paralyzing in the executive suite. The “safe” option is often the worst option (circling the wagons and defending the organisation’s neatly staked out territory). There are, of course, shining examples here and there (Alan Mulally at Ford). However, on the whole performance in mid to large organisations is still mediocre.

Disruptive market conditions demand leaders take decisive action. That means answers in the form of a clearly defined vision of your product, service and customer relationship in the “new” market, getting buy-in from employees, and supporting them on the “journey of change” from the status quo to the future state.