Tuesday, 29 March 2011

The business of charity and how it affects us.

I am in awe of the British public. I heard Lenny Henry say that Comic Relief and Red Nose Day had raised a record £82M for charity this year. Anyone watching the videos could not help but be moved by the plight and fortitude of those featured, young or old, in both the UK and Africa. They need our care and support.

Sceptics will argue that much of this money may be wasted on administration or fall into the wrong hands. My answer is simple, only comment when you have first hand experience.

For a short period in 2009, I was involved in a project advising on the restructure of a $35M charity in Asia. I visited refugee camps in the jungle. I saw how people live on a diet of rice and herbs and in “temporary” bamboo huts. I spoke to some elderly people who had escaped across the border 3 miles away, often scarred mentally and physically by their experiences; still worried that marauding militia will come and take their young away. Meeting these people and seeing their resilience affected me deeply.

Because we were looking at the financial, budgetary and organisational aspects of the charity, we gained significant insight and access to the charity’s operations at all levels. We saw how a group of only 79 personnel could acquire and distribute food and shelter to over 160,000 people year in, year out. How they had set up camps and trained refugees to manage their own affairs locally. How they co-ordinated their work with 18 other charities to ensure the efficient delivery of all aspect of education, health and many other disciplines necessary to ensure the smooth running of the camps. These individuals do this within a framework tolerated and closely scrutinized by the local government. Life for them can be difficult, politically sensitive and sometimes dangerous. While we were there, we sat in on a meeting to discuss what to do with an extra 5,000 souls who had just arrived. UNHCR will not recognise this new influx of refugees for several years, but they still need shelter and food even thought they officially do not exist on any international records.

When people in the western world worry about where the money goes, I would simply point them to the high standard of financial reporting and waste-free budgeting operated by this charity. I would invite them to chat to the dedicated personnel who achieve so much with so little. I am delighted that we helped them develop their budgeting, SORP accounting, re-structure their organisation, distribution and develop succession processes for key personnel. The Pyramid ODI team, in addition to my contribution, included an in-country financial expert and a specialist with years of experience in international rescue.

Our efforts may be small in comparison to the size of their task, but here is a final thought for you. Many of these refugee camps have been in existence for more than 20 years. Residents do not have the right to leave or to seek work to improve their circumstances. In many cases, parents of the newborn were also born in the camp.

Here in the UK, our local authorities could learn a great deal on how to budget and prioritise – this charity is “Big Society” in operation. When I think of our challenges, our circumstances, the recession, I think how lucky we are to live in a democracy. Yes, the quality and cost of our social services and education systems may be open to criticism – people should have the right to march peacefully and make their views known. Anarchists, however, have no right to destroy other people’s property, as they did in central London last weekend. They seem to have no idea how lucky they are. Those wonderful people who have given £82M to Comic Relief do.

Wednesday, 23 March 2011

Implementing your business plan (continued): a real-life example

To illustrate, an automotive client had to increase production dramatically. They faced significant management inertia and a legal barrier limiting the solution.

The resulting success of this six month Pyramid ODI assignment triggered legislative change, increased revenue by $20m and added $4m to the bottom line.

Success came from attributes “stolen” from the business planners’ manual:

- detailed market analysis principles were used by three shop-floor facilitated groups to find solutions from way beyond their current business sector;
- risk mitigation principles were used to identify “new entrants” and “substitution” that were not impacting the current business but could influence the future;
- segmentation was used to identify the unique needs of all those currently influenced and those identified in risk mitigation - leading to multiple action and communication strategies.

In seven weeks, the teams picked up ideas, modified them and designed their preferred solution, within a framework that included a “no increase in operating costs” framework set by management.

Management were initially sceptical and then amazed. Supervision attended a weekly breakfast briefing. Initially negative, they soon embraced the changes.

These teams had no previous involvement in influencing change; for many, this represented their first visit to another company and their first presentation to anyone above their immediate supervisor.

Key to their success was the identification and inclusion of “new entrants” who played a significant part in influencing a successful outcome. Left unattended, they could have blocked the change. The early inclusion of authority figures from the local community, the country’s Prime Minister and the Group Board were crucial.

We engaged with the workforce in a fundamentally different way. Their solution grabbed the imagination of supervision, management, executives and government.

Views on shop-floor capability changed forever, as self-confidence grew and the capacity for change increased. HQ invested in new capital projects. The future, for a generation at least, seems secure.

The shop-floor even found their own elegant solution to avoid conflict with their trade union at national level.

In conclusion, “Getting to Plan B” works equally well in implementing the resulting change. True culture change can occur rapidly with really effective segmentation and due diligence.

Postscript: The quote from their Finance Director, which he delivered in between pinning me to the wall and then giving me a large bear hug, will stay with me forever, “I have worked here for 35 years. I never realised the potential of our own workers. We have wasted so much in that time!” He was shaking with emotion.

Monday, 21 March 2011

Implementing your Business Plan; Pass it on.

John Mullins and Randy Komisar’s excellent book “Getting to Plan B” invites us to import ideas from other sectors to enhance our business planning. They explain how this can drive iterations of a business plan to reduce the risk of failure.

Planners deploy an effective “spirit” for creativity, systematic segmentation, risk assessment and due diligence before gaining board approval. They consult widely in and beyond the organisation. The organisation structure, its processes, skills, channels to market and suppliers will have been reassessed. If the plan is radical, then the level of change will be also.

Activation of the plan is passed from the planners, to the builders and then to the implementers, like a baton in a relay race. For successful implementation of the plan, the baton must retain the planners’ “spirit”.

Two separate competencies are required and need to be practiced: the hand-over and the ability to move quicker than your opponent. The baton can be dropped, if you or others:
- Fail to invest in detailed due diligence;
- Assume that everyone involved is “addressable” in the same way;
- Neglect the impact of “new entrants” who may radically affect the outcome of the race.

With the right level of detailed analysis, planning, and action, leaders can accelerate successful cultural change in a limited timescale; it is a myth that successful change needs to take years. If your segmentation strengthens communication, individual relationships and personal motivation then results are fast and stable.

Sometimes you do not need to look outside your organisation for best practice; it just needs to be passed around.

My point is simple. If “Getting to Plan B” helps you generate a new plan, don’t throw it away. As a leader, make sure that the “spirit” generated by the planning is the same “spirit” deployed in its implementation.

To be continued, with a real life example…

Thursday, 3 February 2011

OD on strategy to increase sales.

Is your organisation failing to achieve its revenue targets? Are prospects not being converted into profitable sales? Is there tension between the sales team and other departments?

Your Strategy has been recently refreshed. The Board have signed-off challenging targets. The vision is clear and cascaded effectively, but where will the new revenue come from?

It is possible to look outside the business for an answer and we will certainly talk more about converting market analysis in future blogs. Today, I want to focus on facilitating internal behavioural change - the role that you should take to “OD the Strategy”.

As an example, Pyramid recently worked with a well established precision engineering company – an international, specialist player. They felt they might be missing out on “easier” sales opportunities arising from cross-selling between product divisions and from after-sales to existing clients.

The psychological barriers to change were significant. Managers and Executive Board Directors had built their careers on the company’s strong product history – successful silos and inter-departmental competitiveness resulted.

To OD their strategy, all their managers participated in facilitated redesign. They:

- Created an aligned structure and bench-tested changes to core processes;

- Completed potential risk assessment and highlighted mitigating actions;

- Proposed phased implementation towards a market-led business.

Management were re-energised.

You may have done something similar after your last strategic review, but what next?

If your risk assessment has been robust, then your business should still be converting traditional sales from established markets. This is nothing more than your base-line.

As a leader, you should not rely on the illumination arising from the market analysis in the strategic review or the energy generated in facilitated meetings to achieve sustainable change.

Your internal communications will still need to create greater awareness, ownership and concerted multi-functional action, by tapping in to the know-how and latent potential existing across the whole organisation – more on this next time.

But most importantly - your leadership must create “positive anxiety”, where once complacency ruled. Your personal energy level and visibility must go up a notch or three. If you traditionally operate at “high” on any scale, then you now need to be operating at an “11” on a new dial. You should return to management basics with enthusiasm, curiosity and empathy:

- Monitor the prospects database, read every visit report, roam your CRM system and ask lots of positive and supportive questions;

- Give the motivational vision speech, particularly with manufacturing and sales staff physically and “mentally” in the same room. Keep it real for them, by setting challenging targets and actively listening to their feedback;

- Create positive tension on quality and performance for those delivering your core business functions, particularly where finance, sales, marketing, manufacturing and logistics processes interface.

One way of managing this last point constructively is to encourage every member of the management to demonstrate how and where their teams are building stronger relationships and measuring only the things that matter to achieve shared goals. Set about destroying silos and negative inter-departmental beliefs that get in the way. No more moaning and groaning – just one for all and all for one.

I will be talking more about this last point in two weeks, so don’t forget to register here to follow my future blogs. In the meantime, read “Bounce” by Keith McFarland to learn more about “positive anxiety”.

And Happy Chinese New Year!


Monday, 24 January 2011

Process excellence includes keeping your competitors guessing and your board aware.

How does our perception of process excellence play out in an aggressive market place? Is process excellence a barrier to competitiveness? Well, I believe it can be, if the mindset is not prepared for change. Here is why.

In turning our business around, we recognised the need to increase sales; developing $140m new prospects in 6 months and converting this into a 70% increase in first year revenue; a team effort combining the best disciplines of engineering design, manufacturing and service.

Our bids were close to perfect, including the right level of resource and materials. We worked closely with suppliers. We built and installed reliable equipment. We evaluated risk and included appropriate mitigation. Contractually, we offered tight, but fair terms, with appropriate warrantees.

A winning combination, you might think? Our engineering excellence played well with established customers. Our competitors knew our strengths. Our owners wanted positive cash flow. Lower cost new entrants challenged pricing. How did we all respond?

Our excellent processes ensured that the original bid was profitable, commercially complete in every detail and would pass the scrutiny of the customer’s buyers and our board’s technical experts.

Our competitors took a different perspective of the project life-cycle. They submitted a lower initial price and were happy to run with negative cash flow for longer. Either through guile or incompetence, they might under-quote on engineering time or forget to include some items. They knew that by the time their work was incorporated into our customer’s large infrastructure project there would be many changes to the successful bid. They also knew that the initial project would be awarded to the lowest bidder and the changes in the years ahead would not be put out to re-tender.

Our competitors gambled on making money from the variations that would be requested later in the cycle. How were we aware of this behaviour? Large bids are opened publically by the awarding organisation. From the numbers read out, we got a quick sense of where competitors’ offers varied from our own. They worked on the presumption that they could correct any mistakes and add back profit via some of the many requested project variations. They knew that changes post project award were commonplace. Our owners, from a service and financial background, did not understand this.

We were sometimes outraged that our competitors acted with lower quality. They were prepared to manage risk and relationships later to ensure profit across the whole life-cycle of the project.

So, my advice to those who pride themselves on process excellence is this. Ensure that your processes are reviewed regularly against the needs of ALL those who benefit. Be aware that your unique selling points can be exploited. Keep your competitors guessing and your Board aware of what you are doing.

Feel free to push back on my observations and have a great week.


Sunday, 9 January 2011

Can process excellence be a barrier to competitiveness?

Last week, I suggested that we should all re-invest in Management. This thought was triggered by reading Dr Julian Birkinshaw's "Reinventing Management"; probably the best business book I read in 2010. It challenges our pre-occupation with Leadership.

My challenge to you, at the beginning of 2011, is not simple:

1. How much of our management process is designed to satisfy or exceed the expectations of ONLY our current customers and shareholders? Are our processes sufficiently flexible to consider ALL those who influence profitable outcomes - competitors, staff, suppliers, regulators and local communities, for example?

2. How can we ethically and legally take on international competition and be successful? Are all the cards now stacked against us - a high cost base, necessary regulation, a shift in international economic power and stringent financial conditions? Are we learning from experience or just bemoaning our bad luck? As an example, what can the English speaking world take from the recent World Cup bid failures from Australia, England and the USA?

3. What do we need to do differently in the leadership and management of our businesses, to succeed in an environment that we no longer control, but only influence?

I would welcome your thoughts on these challenges.

These days, as a Regional VP for Pyramid ODI, I facilitate leadership development and run OD projects for clients, but as the Managing Director of a satellite communications and systems integration company, I experienced the equal importance of effective management and leadership in practice.

Next time, I will share a real-life experience from my MD days, to explain why I believe passionately that management and leadership need to be in balance to generate sustained profit, particularly as we face tougher competitive challenges and decisions in 2011.

Best wishes to you, your business colleagues and families for a successful year ahead.


Tuesday, 4 January 2011

Three things

Best wishes for a profitable year, ahead of budget, with positive people and greater cash flow.

Here are three things we could all do more of, to successfully improve our business performance:

- Understand the needs and motivation of those who rely on us. Listen rather than transmit;

- Re-invest time in management process; improve on detail to surprise those benefiting from more consistent outcomes;

- Trigger innovation by encouraging open working relationships.

Here are three things we could all try to stop doing this year:

- Relying on personality and power to entice others to do our will;

- Mistreating suppliers and resources for short-term or political benefit;

- Wasting or ignoring the knowledge and energy of people around us.

And one more tip. Read a good book!

Until next time,