MainStreet’s reporter Juliette Fairley interviews James and explores the critical issues for those business looking to successfully launch in Asia:
“What You Don’t Know About Launching In Asia”
http://www.mainstreet.com/article/what-you-dont-know-about-launching-asia
Business growth in professional services firms largely depends on people with bright ideas having the intellectual and financial means and the self-confidence to apply them without fear of failure. Yet when it comes to creating the right “technological environment”, management fears seems to hinder, not help the situation. The”fear” expressed is more often than not about: security, regulatory, productivity risks or a combination of two or all of those issues. Yet when top management are challenged there is often very little substantive evidence to support their decision. It comes down to the implied “trust” they have in their internal or external experts advice. When many of those managers don’t have a peer-level or trusting relationship with those individuals, is it any wonder that they err on the side of caution.
Here are what my best clients are doing:
1. A Firm-wide conscious effort to raise awareness of what is possible. Key people are held accountable for generating new innovative ideas, not just problem solving, where technology can heighten the quality of the firm’s relationship with its’ clients. It forms part of any personal accountability plans.
2. Time is physically scheduled in group and individual monthly calendars to generate and review new ideas and to push those along to a submitted proposal stage or bring the investigation to a close.
3. Reward and recognise great ideas and great behaviours. For example, one professional service firm has a policy of a £500 monthly award (or the local currency equivalent) to a family member, not the employee, for expenditure on IT hardware, software or training. The link with the family member is expressly to reinforce the priority the firm gives to education in the home.
4. A forced “strategic choice”. Any decision made must include “what”, “where”, “when” and “why” is the client better off and be supported by hard evidence or strong anecdotal observations. They don’t confuse the tactical decisions about “how” best to communicate or respond rapidly to the client’s expressed need (in person, by phone, by email or social media).
5. They take the emotion out of the logical decision-making process. For example, they are aware of and take personal biases out of the conversation (past experiences, vested interests, personal technological prowess or fears about “risk”). They equally don’t allow meeting times to be hijacked into a debate about the efficacy or use of technology in the office environment (use of Facebook or Instagram), which largely moves onto the terrain of employee grievances.
6. “Quick Wins” given top priority. One client, automatically, places at the top of the list any technological advancement that demonstrably will have an impact on clients within 3 months or less.
7. Senior Managers expected to act as “exemplars” of the right behaviours. For example, a global actuarial firm’s partners actively encouraged information to be exchanged by technology, not the creation of spurious need for meetings. The result a 70% elimination of internal meetings in a six month period. A law firm set expectations with clients that all Partners and Fee Earners would respond within maximum 2 hour response time to calls and routine email, 4 hour response to more in-depth questions. An insurance brokerage’s hiring requirements for mid and senior level Account Manager positions demands open-minded candidates with a track record of success bringing new innovative ideas to harness technology as a “means” to enable, not replace a higher quality relationship with their past clients.
There is no excuse for top management in professional service firms not creating the right technological environment to facilitate more impressive client relationships. What it does requires is that the firm has a “process”, not a collection of random actions which make little or no sense to the customer, the business partner, the employee or any other key constituent.
© James Berkeley 2014. All Rights Reserved.
I admire risk takers. They perform an essential service for those in the business of transferring risk. Whether it is insurers assuming risk from their customers, reinsurers assuming risks from insurers, investment banks and institutional investors assuming risk from publicly traded businesses or bookmakers accepting risk from their customers. I think those that work in that arena are mostly following their passion.
What I detest are those that call themselves “risk takers” and who are running a business but actually don’t take any risk. In effect they are traders with no discernible “skin in the game”. They are asking for the respect that is accorded to someone, who puts their balance sheet at risk but are in fact quietly skimming a dollar, a pound, a euro or a yen off other parties who have the cojones to price and assume risk. All that I ask is that people are honest about their own “worth” and the value they provide (or dramatically) create for others.
The same applies with people in corporate organisations with over bloated egos, who demand the perks of entrepreneurs and shareholders with ACTUAL money at risk. I am reminded of this when I see demands made of shareholders by top management to support inflated long term incentive rewards, where there is visibly little or no personal risk (downside). So many of these arrangements set “targets”, which hardly stretch the executive to achieve a generous award. Complicit advisers happily create a pretext for toothless remuneration committees about the “need to attract world class talent that can produce results” and earn inflated fees, largely based on hourly billing. In other words, the longer they take to design, facilitate and implement a LTI arrangement the better off they are, in total conflict with shareholders’ interests, which best served by a quick solution. If the time, energy and effort was re-directed towards how top managers intend to produce results rather than reward results, shareholders would be exponentially better off. My point here is where is the accountability for top managers, Remuneration Committees, the plans they promote and the advisers they hire.
Yes, there are the headline cases where institutional investors “push back” but they resemble a fisherman casting a rod, not a fishing net to eliminate the abuse. My suggestion? Any LTI plan and those engaged to advise or approve the arrangement must meet these criteria:
I confidently predict a dramatic improvement in business results with the application of greater focus and discipline and shareholder resolve to see their interests best served by these arrangements.
© James Berkeley 2014. All Rights Reserved.
Why do luxury brand launches reveal so little about the power of the brand and so much about the appropriateness or not of the people tasked with running the business? If the intent is to create a new market-leading customer experience, then we should first increase our own chances of identifying the “ideal leaders and employees” with the right skills (brand creation) and volition (open-minded, entrepreneurial). That is rarely accomplished by limiting the search to a big or established brand within the sector.
I was reminded of this a few months back with a wealthy Asian family, who have splashed US$140 million transforming a luxury hotel business. Great thought has gone into the “ideal customer” and the sensory experience. Young, enthusiastic hoteliers abound alongside one or two seasoned luxury hoteliers. Yet impressive interiors, and a friendly welcome cannot masquerade the significant challenge drawing a well-informed, super-wealthy leisure and corporate crowd to an unfashionable corner of London with little obvious excitement on the doorstep. Meet the hotel leader and the sales and marketing manager, and you are immediately struck by the massive disconnect between their “past” and their probable ability to transform the property’s immediate “future”. Particularly one highly dependent on maximising “premium” suite occupancy (creating a siren call not a whimper to the property). Dig a little further and you find their past success has largely come from a “market need” (leveraging an established luxury brand’s equity), a “competency” (attract and deliver a competitive luxury hotel experience) and a passion (understated elegance). When you are working in world-famous businesses or luxury brands those skills and behaviours make great sense. When you have a small brand in an experimental location seeking to attract highly discerning customers, you need an entirely different set of leadership skills and volition.
Key Tip: Just because an individual has been a “star” in a top-ranked business, don’t be blindsided by his or her “past”. Focus on your firm’s immediate future and ask yourself, what skills and behaviours do we need to achieve our desired results? If you are a young or largely unknown luxury brand that must punch above its’ own weight in order to attract your ideal clients, it is by exception, not the norm that you will find the “right” people in established businesses within your sector. Counter-intuitively, the longer the tenure they have spent in an established brand, the less their probable “worth” to you.
© James Berkeley 2014. All Rights Reserved.
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.
Just back from a WealthBriefing event, titled “The Elephant In The Room”, exploring the operational challenges facing the global wealth management sector. It struck me that so many private bankers, wealth managers, consultants, media and others serving the needs of customers in that sector overlook the most critical “need” – strong leadership – in favour of urging more time, money and effort being directed towards tactical improvements (enhanced customer experience, greater operational synergies, technological advancement etc.).
It is rather like the NBC commentator berating Rory McIlroy’s waywardness off the tee at Augusta last year on his new Nike clubs and his personal life. When it is blindingly obvious to the casual observer, it is his brain that needs to operate better, and more clearly, on the golf course.
Unprecedented levels of profitable growth, just like low rounds on the perfectly manicured fairways of Georgia’s fabled course, are largely a consequence of:
1. Exceptional and consistent decision-making (weighing up various outcomes and results, the need for advice and the degree to which you are comfortable making unilateral decisions)
2. Knowing when the right time to seek help is (time invested vs. level of conviction)
3. A willingness to involve subordinates in the strategy and tactics (honest feedback, constant improvement and increasing effectiveness).
The wealth management business has a small number of people running extremely profitable and dynamic businesses. However, it is largely characterised by a swathe of big hitters and some less powerful rattling around in the woods, chastising themselves for past errors, desperately trying to avoid regulatory sand traps, and hoping against all hope, to survive off a surfeit of miracle recoveries. Some might get lucky and avoid Rae’s Creek; others will wave apologetically to the fans and head off to the drop zone. All in the knowledge that it is not how far they can hit it, how sweetly they swung the club or how many sit ups they did in the morning gym session, it is how consistently they make the right decisions.
The overriding priority in the sector today is to help current leaders acquire the skills and competencies necessary to be an effective leader. In businesses, where that is in short supply, they need to bring in others from outside the sector, who bring a blast of fresh air (fresh ideas, insights and regeneration) and high levels of self-worth. The Wealth Management industry is a very worthy and important part of the Financial Services sector, yet like newspapers, airlines and banks, they must accept that past success is no guarantee of future success. They must learn to adapt to the situation, other competitors and the degree of urgency demanded by the regulators and their customers. That above all else requires strong and effective leadership, not a preoccupation with tactical improvements.
© James Berkeley 2014. All Rights Reserved.
In many advisory firms, economic ownership of the business rests in the hands of a few key client-facing people. Legal ownership rests with shareholders, partners or some other ownership construct. I regularly observe acquisitions, whether it is an entire advisory business, the acquisition of a new advisory team or portfolio of clients, where the overriding investment of management time and focus pre-deal, during the deal and post- the deal is on the legal ownership. Rather like the yacht dropping anchor and docking in the marina, the crew’s energy and effort goes into securing the yacht (the business) with a firm hold on the anchor and the guy ropes. That is effective so long as the yacht doesn’t break free of its’ moorings, it can withstand changes in the weather, the wind and the tide and the crew are constantly vigilant about other yacht movements near the yacht.
In certain jurisdictions (California, Middle East, China and so on), non-compete and legal remedies are largely ineffective when trying to restrain a key producer or group of individuals moving to a competitor. In Europe and in certain countries with more employer-friendly attitudes to economic ownership and upholding legal rights over intellectual property, these remedies are more effective albeit for a limited duration (0-12 months).
When these fissures in the relationship between the acquired and the acquirer happen in more liberal jurisdictions on a frequent basis and with the same companies, you have to ask the question are management asleep at the wheel or are they simply failing to apply good judgement? This week’s announcement that global insurance broker AON are suing Alliant for a second such sizeable breach in California in two years, and an increasing uptick of lawsuits in North America, Western Europe and Asia as international advisory firms within the insurance market gear up for growth and expansion reminds us that far too many firms are dependent on legal remedies.
Faced with limited legal remedies, what can and should top management do when considering acquisitions:
1. People leave bosses, not businesses. Does the direct report of the key individuals you are acquiring possess the skills and volition to successfully integrate those people into the firm? Do they have the right set of tools (technology) and support available to help the newly acquired people hit the ground running? Are their own rewards and recognition aligned with the pre-deal business goals or the new business goals for the combined team (is it clearly a “win-win” or a “win-lose” relationship)? Are managers in the acquiring business held accountable for the right behaviours, not just the results (individual performance)?
2. People leave the “acquiring” firm because the firm failed to meet or exceed their expectations. Promises are made pre-deal, which in many competitive situations are geared to a point where they are highly improbable and unrealistic. Both parties in the “deal frenzy” are so focused on the rewards (personal or corporate), they don’t spend enough time reaching conceptual agreement on the best way to produce results (“we’ll work it out when you are on board”). Most relationships fall apart not because the logic didn’t make sense rather the emotional objectives of the acquired party are left unfulfilled. If you don’t invest sufficient time building a trusting relationship and eliciting pre-deal what the personal objectives of the newly acquired individual, team or business owner is and how you can best meet them during and post-deal, don’t be surprised that an insurmountable fracture arises in your relationship a short way down the track.
3. The management team of the acquiring business must understand their own limitations. They cannot motivate the newly acquired resources, any more than they can motivate their own colleagues. It is their direct responsibility to create an environment in which those individuals, their customers and their people can foster. What they can and must do is show respect for everyone’s past accomplishments. They must judge their own self-worth and contribution on their ability to apply their own past experience into a more impressive future for the newly acquired people and business (increased productivity, unprecedented growth, happier customers, increased career opportunities, greater profit, lower attrition etc.).
The next time a prospective producer, a sales team or a business owner walks into your office, invite them to sit on a comfortable sofa, offer them a drink and remind yourself that they represent a wonderful opportunity, not a threat. Place yourself in their shoes, how can they leave the room more comfortable and excited about not just the rewards but the “journey” of realising their own personal aspirations within your firm than when they walked in an hour earlier, no matter what you ultimately decide to do together. Succeeding with that simple step, may dramatically increase your success in holding onto your most prized assets more than you ever imagined.
© James Berkeley 2014. All Rights Reserved.
James hops on the latest A380 stateside and shares the lessons learned from his work with executives at Hilton, Caesars Entertainment, Hardees, AON, and Napster, who have successfully spread their wings to all corners of the planet. He discusses the importance of strategy, why marketing plans usurp business plans and what it takes to get the best out of regional and local business executives many miles from home.
Podcast: Play in new window | Download
The biggest cause of failure in a high growth market is a misalignment in one of the following areas. The odds of success are always odds against as mankind hasn’t developed the capability to predict the future with absolute certainty (events outside of our immediate control). Having said that you can dramatically improve your odds by focusing on seven key areas at the start, during and at the close of your “journey”:
Is your business strategy, organisation and people truly aligned or can you spot mis-alignments? The speed of identifying and more importantly, the quality of the action you undertake to correct the misalignment are critical to your success.
© James Berkeley 2014. All Rights Reserved.
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.
