Posts Tagged ‘profitable growth’

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.

 

Just An Illusion

Thursday, March 24th, 2016

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Is this a shot from your evening last night, soon to be posted on your instaGLAM account? Today a great many executives, managers, investors and board members are busy trying to be someone that they are not. Fact. They are instantly recognisable by the disparity between the image that they project and what others see.

At a small intimate event last night in London with David Nish, the past CEO of Standard Life and this week appointed as a Non-Executive Director at  HSBC, we discussed the dynamics and consequences of this behaviour.

The dynamics and behaviour are largely the same in businesses of every size. Individuals are prone to projecting views without hard evidence or strong anecdotal information (shout loudest). They are poor listeners (routinely ignore vital feedback). They lack sufficient self-worth in their own talent and judgement (resort to bolstering their credentials with references to famous names). They have a poor level of self-esteem (they are dismissive of others success). They are prone to passive aggressive behaviour to project superiority (constant one-upmanship). They are prone to excessive exaggeration or downright lies about their own success (false claims in bios, CV’s/Resumes). We’ve all met them at various points in our career.

The consequences differ based on the size, priorities and complexity of the organisation. Here are some observations from my own experiences:

An inability to effect a management buyout of a small or family business, where the Founder’s behaviour results in management never acquiring the skills, traits or expertise to run the business in his or her absence.

A loss of respect for a private investor’s judgement amongst their peers and future co-investment opportunities when they make wild, unfounded claims to be invested in the “next unicorn“. Ridiculous, of course but sadly all too often true.

Raging management distrust in the Board when a non-executive director relays unsubstantiated “insider” claims from a key client, institutional investor or employees about the manager’s negative performance without hard evidence or strong anecdotal information.

A destruction of goodwill amongst analysts and the media when the newly appointed CEO of an investment bank, self-invested with “superman” powers, promises near instant changes to the business model that his predecessors have taken decades to create.

The world is littered with people trying to be someone that they are not. Facebook, Instagram and Twitter couldn’t survive if that human need dissipated. We all have a reputation that precedes us in the hyper-connected world we live in. Reinvention, acquiring new skills and educating others is something that we must constantly commit to but without absolute credibility (tangible results and visible behaviour), it is just an illusion.

© James Berkeley 2016. All Rights Reserved.

Obese Businesses In A Healthy World

Monday, March 21st, 2016

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If you hire a personal fitness trainer or financial adviser, you would reasonably expect that they visibly are the embodiment of the healthy lifestyle and prudent risk taking that they promote. If you hire a large consulting firm you would reasonably expect that they are the embodiment of  the reinvention and innovation they promote. Specifically,

  • How does our brand stand out in a crowded market when our buyers don’t see the differences?
  • How do we bridge the gap between our existing buyers’ perception about the quality of our work (high) and their propensity to recommend and refer us to new prospects (low)?
  • Which area of the market should we stake out and leverage digital technology to transform our clients’ future?

That thought crossed my mind at the recent launch event of Source Global Research’s UK and global consulting market findings. The hard evidence suggests that many of these large firms don’t have the answers in respect of their own market. Buyers report close to zero differentiation across their service offering and a low propensity to recommend or refer these firms. The consulting firms themselves are directing marketing resources to the entirety of the market without regard to their ideal buyers, largely reliant on foot soldiers knocking on client doors and service offerings driven by production capability rather than client need.

Indeed, I walked away thinking that many boutique and solo consulting firms including my own are actually way ahead of many large global consultants. Forced by necessity, small entrepreneurial firms have created strong and clear value propositions, identified and directed limited marketing resources to their ideal buyers not every buyer, prioritised building a strong marketing gravity to their brand and created a range of offerings at increasing price points that are tightly customised to their target client’s needs. For once, the grass is indeed greener on the small guy’s side of the fence.

This isn’t an isolated phenomena. Clients of large advisory firms in global equities and fixed income research, investment banking, re(insurance) broking, private equity, private banking and so forth are coming to a conclusion that the large firms and traditional value chain is not working for their benefit. While small firms are creating new value propositions, new ways to attract clients, new ways to integrate high tech into the client experience and so forth, the larger players are largely falling back on trying to sell more of the same in more ingenious manners (leverage) and defending their turf. The trouble is that they don’t have watertight doors. Technology is rapidly providing faster and more impressive ways to apply knowledge to capital and human resources. Size alone is not a guarantee of future survival.

Everyone talks about “disruption” today as if it demands a new or unique response before, during or after an event. I don’t look at it that way. I see it that many large and mid-sized advisory firms in different sectors have got away from the marketing focus, discipline and resolve to compete effectively. They have layered complexity (bureaucracy) over what started out as a simple business with a simple marketing structure and process. The world has and will always change (new regulation, new technology, new capital sources, new competition will arise).

If they prioritise, hire and develop the requisite marketing skills, have their people do the right things, hold them accountable and reward them appropriately, they will have control and relevance. If they sail away from that imperative, they will have increasing insecurity and fear, which ultimately will lead to increasing mergers or worse, extinction.

© James Berkeley 2016. All Rights Reserved.

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.

Your Contacts Are Running On Empty

Tuesday, February 9th, 2016

Most of us, particularly those entering into or in the second half of their careers are increasingly in peril because our personal and professional networks are not strong enough or sufficiently relevant for the challenges that lie ahead. If the objective is to transition seamlessly, you dramatically increase the odds by identifying, cultivating and nurturing the right relationships now.  You don’t accomplish this by relying on a burgeoning contacts folder, LinkedIn database or Twitter account made up of people, who have long past their usefulness to you or random names.

Who are the five most influential people in your personal and professional life today? Who are likely to be the five most influential people in your future personal and professional life? What needs to change in how you establish, build and leverage your key relationships?

I ask this question because in profitably growing and expanding a business, our networks and the utility of those relationships are fiercely tested. Whether it is launching successfully into a new market or the speed and quality of an organisation’s reinvention it is heavily dependent on your lists, databases and the warmth of your relationships. Who you know is as important as what you know? How you have been providing immediate value is as important as how you resolve the client’s problem or improve their condition? Time, skills, volition and technology are the key enablers.

  1. Personal Time – how much time in a week is spent renewing relationships and cultivating new ones that discernibly help you with BOTH current and potential future needs? You are all almost certainly spending too much time with people who cannot help you in future. You are doing so because it is easy or safe. You must be concious of the return on your time invested.
  2. Skills Deficit – do you possess the skills, strategically, to decide who you need to cultivate to accomplish your goals and tactically, how to ask for the introduction, how to best present it in their self-interest and how to elicit your desired response? If you don’t get professional help.
  3. Volition – are you maintaining the right mindset? Where do you currently sit on the spectrum, the “Know It All, Know Everyone” (no need to learn new ideas from new people) or the “Intellectually Curious” (drawn to meeting new and impressive people with thoughts on what the future will resemble)? Do you feel comfortable in all social and business settings approaching others, who you may not know and seeking to establish a relationship? Are your best efforts de-railed by “fear” (being made a fool, rejection, in the specific setting)? The latter is a common occurrence even in successful mid-level managers. Conquering it is essential for career progression.
  4. Technology – are your efforts to cultivate new relationships and renew existing relationships with the help of technology having a dramatically positive, negligible or negative impact on both your short and long-term goals? Where is the hard evidence? Where do you need forward-looking help to enhance your personal productivity? To whom are you turning for “qualified” advice? A huge number of executives and managers have allowed their lives to conform to their firm’s technology, in so doing, they are working extreme hours to stay on top of client email, return prospects calls and nurture effective relationships. That doesn’t have to be the case if they are willing collectively to intellectually examine whether there is a better alternative to conform technology to their clients changing needs.

“Your contacts are your lifeblood” one of my first bosses said to me. What I have observed working with some outstanding peers, business partners and clients, is that they need constant attention, cleansing, and good nutrients. If left to their own devices, they will coagulate in ways that are not good for my future health and well-being.

© James Berkeley 2016. All Rights Reserved.

 

No Xpense Spared

Friday, January 29th, 2016

We cannot live without technology but there are times when the interaction is so appalling you just scream “Give me Fred Flinstone!” On the flip side, you have a stellar experience resolving a user problem, often self-inflicted (!) and you want to rave about the service. XpenseTracker is an ingenious iPhone app, created by Silverware Software. If you are user you won’t need me to say it but it is an incredible time saver for anyone, who hates the tedium and time consuming process of collating and processing expense reports. I guarantee that you can create an extra day of working time for a $5 investment!

My settings for reasons I cannot fathom prevented me exporting the finished expense report to my cloud server. I emailed Scott, the app’s author, we are on friendly terms in a virtual way of doing things. He immediately responded in 2 minutes with a brief “here is how to solve the problem” email, succinct and on point. So far, so good until I pressed the wrong button and the screen froze. A quick email to Scott in his Boston office, and within 3 minutes, no blame attached, “this is what you do”. Boom, solved.

I don’t know about your firm or its’ clients standards in resolving clients problems but ask yourself honestly, does our access, response times and success in permanently resolving our clients’ problems match our brand? If you don’t know the answer I suggest you test it immediately. If you do, and you are happy with the results, ask yourself, how can we reinforce those results such that there is a discernible gap between our competitors and us in future?

Today, HSBC’s online banking incurs a cyber attack, zero customer notification beyond a brief badge on their site. A call to Hiscox, a market-leading global insurer, goes unanswered for 7 hours. Telefonica, a leading European telecoms operator, asks me to wait on “hold” for 22 minutes or use their online chat room, which takes a further 19 minutes to get to the heart of my difficulty with someone, who struggles to assemble an audible sentence in English.

Large global brands are being disrupted by smart, small technology firms in almost every product or service line because the latter have better organised themselves to provide a “high touch, high tech” customer experience.  It is not about size or scale, it is about how smart your people are.

© James Berkeley 2016. All Rights Reserved.

Resilient Growth

Monday, December 21st, 2015

Why do annual budget discussions reveal so little about the growth prospects of the business and so much about the fears of those running the business?

I have come to observe that more energy is exercised in the haggle and obfuscation between line managers and their direct reports than the value derived from the process.

Should we have objectives and goals? Absolutely.

Should we place greater emphasis on a set of tactical targets that in of itself are arbitrary (based on a “best guess”) or a set of broader strategic outcomes that more profoundly describe what we want the business to look like in 12 months time?

In many high growth, mid sized businesses, where the overriding imperative for the owners is to build equity or transition the business (divestment, IPO and so on) I think there is a compelling case for the latter. Yet that is very rarely the case. The business may have doubled or quadrupled in size but the management focus and discipline and rewards system is largely unchanged (tactical targets).

I come across a lot of strong and dynamic businesses who are in self-congratulatory mode.

Senior Manager: “We have met or exceeded our budget for the last 8 quarters.”

Me: “Great, what SHOULD you have achieved in the prevailing conditions?”

I am met typically by quiet silence or a “what do you mean” response.

My point here is are you really focused on what really matters to the Owners (building equity or preparing a transition)?

Here is a quick set of strategic outcomes, my best clients use to drive their business:

1. Sustained Sales and Profit Growth (over past 3 years).
2. Market-leading Sales & Marketing Processes (array of rainmakers, leverage high tech, increasing market gravity, abundant mindset, room to accelerate growth)
3. Compelling value proposition and market position. (impressive clarity internally and externally about how the firm’s ideal clients are better off or better supported after using the firm’s products and services)
4. High Quality Management & Employees (high level of familiarity, clarity and implementation skills, behaviour and expertise supporting these strategic outcomes)
5. Breakthrough Client Relationship Approaches (acquisition, innovation, retention, profitable growth)
6. Market-Dominating Fees & Value (zero aged debt, 50%+ fees “banked” next 6/12 months, balanced growth, low working capital needs)
7. Intellectual Property Institutionalised (proprietary IP copyrighted, constant creation, internal R&D “laboratory”, systematic approaches)
8. Tremendous Loyalty (seductive rapport with key people, impressive career growth, diverse and dynamic environment, aligned rewards and value creation)

Go back to your 2016 business plans and accountabilities for key managers.

Producing Results Are each of the requisite improvements in each area set in stone? Are there influential exemplars lined up to reinforce this behaviour daily (mid-management)? Is the frequency and quality of performance assessments appropriate?

Rewarding Results Does the rewards system appropriately support or hinder your future health and well-being (bonus, long term incentives, recognition, promotions and so forth)?

I strongly suspect many people will be shocked how loosely the wheels are bolted onto their bus and how susceptible their best laid growth plans are to unforeseen events. Waste no time, take action now if you want to increase your resilience.

© James Berkeley 2015. All Rights Reserved.

The 10 Traits of A Great Investor

Wednesday, December 16th, 2015

For 35 years since the day I started giving horse racing tips to seventeen year olds willing to lose their pocket money, I have been fascinated by what makes a great investor beyond the obvious (trust). While the skills, and expertise should, and will, vary dependent on the discipline, I have come to observe from watching hundreds of investors that behaviour is arguably the most important factor.

Whether you are evaluating an investor to back your business, invest in their fund, co-invest with them or hire an investor, I think you want to see a high level of the following traits:

  1. Intellectual Curiosity: they have a depth and breadth of curiosity that is unlike most people. Most people have a concentration in particular areas in business, science, culture, sports and so forth.
  2. Commitment to constant learning: they are ferocious in their continual search for new ideas, insights and new ways of doing things that challenge their past beliefs. They assertively find people who have got something to say, aggregate and connect the dots.
  3. Creativity: they are particularly interested in the future, and how that works and what are the change agents in the future. Their inclination is to think, feel and act on lessons learned from past successes, failures, recombinations and so forth and apply that to the future.
  4. Resilience: their beliefs and attitudes demonstrably enhance their resilience. They rebound relatively quickly and they are not damaged “permanently” by losses or failed investment decisions.
  5. Self-esteem: they are able to continually feel good about themselves irrespective of whether they are experiencing success or failure.
  6. Perseverance: they possess the personal focus and discipline to see investments through to a natural conclusion. They are not rolled over by unforeseen events, easily distracted or quit at the first sign of failure.
  7. Love: they implicitly love what they do. I draw a distinction from “blind” or “fake” love. The investor who even though they know it to be wrong ignores reality or feigns interest.
  8. Faith: at the heart of an investor is a belief system and an implicit faith in their own judgement. It is based on a set of shared values, which others will readily sign up to.
  9. Courage: they are not afraid to provoke and indeed, they seek contrarian positions and points of view. They are willing to lead when everyone else sees just fog. For the investor ambiguity spells opportunity, not fear. 
  10. Forgiveness: they don’t hold personal grudges. They are supportive and willingly reward people, who show the right behaviour not just those who achieve success.

You are right if you say there are very few people with this combination of behavioural traits. That is why there are so few exceptional investors. Choose carefully, you’ll profit from reading this before investing a dime, penny or euro.

© James Berkeley 2015. All Rights Reserved.

 

Classic Reinvention

Friday, October 30th, 2015

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It is over 60 years since Gucci first launched their classic loafer. Yet the almond shaped loafer remains timeless. Each generation has seen the snafflebit shoe undergo reinvention and adaption to the contemporary tastes of new and existing buyers, sales and pricing are higher than at any point in the product’s history. .

On Wall Street, Leadenhall Street and Queen’s Road bankers, brokers and investment managers, some of the brand’s most fervent fans, are immersed in urgently re-casting and re-inventing their own “classics”. Products and services that have been a cash cow for the firms’ success (fixed income instruments, catastrophe reinsurance and ETF’s) are at risk falling out of fashion, indeed in some cases obsolescence. Accelerants such as new sources of capital, new technologies and new regulations loom large in the rear view mirror. New products and services offering more impressive outcomes flirt and seek to lure loyal fans and their money. How do firms respond quickly and effectively? How do they ensure that their classics remain relevant for a new and “old” buyers alike? Here is the jump off point:

1. What is the ultimate result our ideal buyers want to achieve today and in future? (capital preservation, capital growth, financial security)

2. What alternatives exist with our existing product or service to meet this goal? (unbundle, re-package, re-cast)

3. What alternatives can we create with our existing product or service that better meets those goals? (new markets, new modes of distribution, new ways to integrate new technologies, capital and regulation)

4. What are the risks and rewards attached to each alternative?

5. How do we best minimise or control the risk and maximise the rewards?

6. How much risk is the organisation willing to accept in return for an appropriate level of reward?

To paraphrase, Albert Einstein, we cannot solve our clients problems with the same thinking we used when we created them.  In much the same way we need to first change our thinking about our clients needs and the utility of our best selling products and services to solve them.

© James Berkeley 2015. All Rights Reserved.

 

 

 

Time May Change Brokers But They Can’t Trace Time

Wednesday, October 7th, 2015

Ch-ch-ch-changes!” exclaimed David Bowie, “turn and face the strange“… Could a record be more apt for the top management in the reinsurance broking industry today? Faced with a surfeit of supply (capital) and insufficient demand (risk) their traditional broking operations are faced with unprecedented amounts of uncertainty and competitive threats.

But I’ve never caught a glimpse, Of how the others must see the broker“…. To listen to the self-talk and thinking of C-level executives in many large and boutique reinsurance brokers on both sides of the pond is to wonder whether they are willing to be intellectually honest about how others see their attempts to provide value to customers and clients in return for equitable remuneration. It is time to truly reconcile the symbolic (another cyber liability report or data research product) and focus on the truly meaningful and immediately useful (a cedent’s improved condition, solve the under-insurance problem, harness high tech to lower overheads).

Just gonna have to be a different man“…. To paraphrase Michael Palm, the wise Centre Re sage, they need to be great at more than “hitting a nice approach to 18 and mixing a fine dry martini”. They must properly define the skills, experience and behavioural traits that are critical to address existing market needs (matching wholesale capital with wholesale risk), anticipated market needs  (demographic and social changes) and the creation of new needs for reinsurance. When the industry bemoans the gap between insured and economic losses in South Carolina, a State where the world’s finest minds have repeatedly focused their energies and actuaries have modelled risks to death, quite why is it so? Have brokers overly relied on existing needs for reinsurance (another cat layer) and failed to create the “need” for appropriate risk transfer? Do they lack powerful language skills to control the discussion with the economic buyer and the ensuing relationships? Are their value propositions suitably attuned to the forward-looking needs of their key constituents (clients, shareholders, employees, business partners and so on)?

Are immune to your consultations, They’re quite aware of what they’re going through“…. is the thought leadership of most reinsurance brokers sufficiently provocative and informed to change their ideal prospects and clients’ behaviours and ultimately, their beliefs? When everyone is largely hanging out with and saying the exact same thing to mostly the exact same group of people (Monte Carlo, Baden Baden), it is high time reinsurance brokers became an increasing object of interest and a centre of expertise to a more diverse and impressive group of peers. How many brokers truly have “trusted adviser” relationships and create a seductive rapport (intellect, language, social) with key institutional shareholders, Board Members and top management in their ideal clients? I am reminded of the head of one large broker, who used his former consulting firm’s  ties with top management in a major financial institution to secure an exploratory meeting, and within five minutes, according to an eyewitness, the banking executive responded to the broking head, “I just don’t see how you are relevant to our firm’s future!”

Broking firms must hope that their top management possess the skills and volition to move in miles, not inches (reinvention) before their clients and customers state “Where’s your shame, You’ve left us up to our necks in it”….

© James Berkeley 2015. All Rights Reserved.