Want to Drive Innovation? Focus on Cultural Nouse Not Technical Know-How

In all our firms we rely on staying innovative to beat our competitors and capture market share. But it's often assumed that it’s the application of science and technology per se that provides the `secret sauce` for differentiation and is the key driver of new product, process or service development success. This appears now not to be the case.

Recently, a research study conducted by the University of Maryland's Center for Excellence in Service at the Robert H. Smith School of Business and 3Pillar Global looked at the reasons for product development success in cutting-edge business.

Product Development Success Index

The research which focussed particularly on software product development – an industry where products are built using particular technology platforms so one would assume where technical expertise is at a premium - makes interesting reading.

Its startling findings, though, have profound implications for those involved in all sectors where product, process or service innovation keeps the wolf from the door. 

What was particularly thought-provoking about its findings was that it is culture, feedback, communication, staffing, collaboration and time/budget focus that drives  development success more than any other factors - including technical expertise.

Of these six factors it is culture that is most influential.  The implication of this being that organizations seeking to optimize product, process or service development should focus on creating a culture that fosters innovative thinking and strategy rather than on mastering and applying available technologies. Attitude rather than aptitude, if you will.

Six sense

The research names six characteristics that define an organization with an innovative culture. According to the research, these are

Making it clear that every employee's contributions are valued

It also ensures individuals throughout the organization and the ideas they come up with are respected regardless of from which function or level in the organization they arise. Within high performing organizations, there is a spirit of appreciation and a commitment to celebrating success. Leaders in these organizations are the biggest enthusiasts for this approach and `walk the talk` at all times.

Providing an opportunity for all team members to learn and grow

Team members at the most successful companies regularly participate in new projects, take on new responsibilities and try their hand at new skills. Google’s 80/20 rule is one well-known example of a company providing on-the-job freedom to work on something outside their normal day-to-day responsibilities.

Engaging with the idea of continuous improvement

High performance organizations are continually improving their products, processes and services. Innovative teams are not afraid to take intelligent, calculated risks.

They are comfortable with the idea that something can always be better. They release products, processes and services early and often and seek customer feedback to refine, reiterate and improve. They learn from mistakes and refine their performance over time.

Providing the flexibility to be creative

High-performance cultures provide the flexibility for people to approach things differently. Innovative teams respect the power of the individual and this provides teams with the opportunity to create new, differentiated approaches. They encourage free thinking and empower individuals to test new - even obscure - concepts.  They foster creative ideas.

Embracing cross-departmental collaboration

The best product development organizations tear down functional silos. They work collaboratively across the organization, communicating and, more importantly, engaging, through both informal and formal channels.

Within the most innovative organizations, cross-departmental collaboration is standard practice and part of everyday life. Cross-functional engagement is highly valued and rewarded.

In such organisations, for instance, technologists work closely with marketing. Marketers work closely with product management. Communication is constant and established as the norm.

Culture, not technology, is the driving factor behind innovative companies and products.

Organizations are more likely to succeed if their people truly believe that their contributions to the organizations are valued and feel as though they have room to grow without fear. Organizations are likely to be more innovative if they allow people the flexibility to take risks, be creative and challenge the status quo.

So there you have it. Some guidelines to compare your organization to if you are looking to step up your innovation game. As these findings clearly demonstrate, it is the soft skills, not the technical capabilities, which organizations need to develop if they want to become leaders in their industries and proficient at developing successful products, processes and services.

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Want to Sell Your PR Firm? Avoid Developing a Case of PVVS.

It’s pretty well accepted that the skills and personality required to be effective in leading a start-up operation are unlikely to be the right tools the take the same company to maturity and/or eventual sale.  In the PR industry the failure of individuals to realise this maxim is inextricably linked to cases of Proprietorial Vanity Valuation Syndrome (PVVS) 

It’s an industry where a typical PR proprietor founds a firm in their late twenties or early thirties. The spur may have been a failure to acquire any ownership in their agency or the prospect of being an in-house wage slave forever. Or, their talent as a freelancer requiring the support of other freelance resource then, with time, the hiring of employed help. And so firms are born. 

Fast forward a decade or more and the same person, usually approaching their half century, is worn out by the 24/7 effort that staying on the pace requires. Sure, they’re making decent money by taking cash out of the company but as the firm moves into its teenage years they decide they’ve had enough

PVVS symptoms

They want move on to a better quality of lifestyle and that increasingly occupies their thoughts. They think that, particularly in the current frothy market, selling the company at a premium would be the answer. 

The problem is that, by this stage, PVVS may have set in, with many proprietorial owners vastly overestimating both what their firm is worth and their own value in any deal.   

There are some classic early symptoms of PVVS. These include owners routinely seeking consultations with M&A advisors.  Despite the advice of the specialists and the evidence of the marketplace, they opt to do two things:  they engage an advisor with wholly unrealistic expectations of the potential acquisitors and financial outcomes until the whole process ends in mutual disappointment and acrimony; or they continue to talk intermittently to a succession M&A advisors, holding on to their position in the firm until, in their minds, someone will come along that realises what they imagine to be they and their firm’s true value.

Acquisators don’t buy proprietors

The reality is acquisators don’t buy proprietors.  What they buy is the quality of the infrastructure and services they have developed - the teams that they employ, the clients that they retain and the work that is done.

They also buy strategic fit, future potential and ease of integration with their existing operations. What they will pay for a firm and how they will pay is mostly influenced by price earnings ratio achieved in other recent and similar transactions, not what the owner thinks the firm is worth.

If this value combination isn’t achieved to make the firm attractive for acquisition - either per se or at anything like the owner’s estimation of its worth - it’s usually the result of a series of mistakes committed by the firm’s founder over the years and ultimately hardwired into its PVVS-ridden DNA.

Five PVVS mistakes

First, founders fall prey to narcissism seeing only a threat in talented employees, not the potential to create value in the firm, and money for the owner.  They fail to hire those who they fear may be better than them. 

So they recruit docile, uninspiring yes-people as employees and even as non-exec advisors. This slows growth and restricts margin but also has the effect of de-skilling the proprietor as the new enthusiasms, attitudes, ideas and contacts that comes with vibrant talent and fresh thinking is systematically choked off

Concentrated power

Second, they concentrate power in themselves, despite nods to such window-dressing as company meetings and management structures.   Nothing grows in the shade of large ego or rampant insecurity, so an effective management team that can survive the departure of the founder or build a better firm than the owner alone is not created. This toxic combination is likely to deliver insufficient value whilst posing unacceptable risk to the potential acquisitor.

Third, the lack of nurtured senior talent also means that the vital checks and balances that exist in all the most successful firms are missing, resulting in the proprietor believing that only they are right on every issue and `why can’t others keep up`, `get it` `take responsibility` and so on and with the effect of further increasing their dominance. The proprietorial leader attributes this to the fact they `can’t I find people who are good enough` as though this is solely an external cultural or generational problem over which they have no influence.

This, of course, completely misses the point that the ability of staff to do these things rests on the searching, hiring, development, management and cultural decisions made by the proprietor themselves. From the outside that just looks like poor managerial judgement.

Chill wind of alienation

Fourth, if left unchecked the effect of this approach is to generate a chill wind of alienation over the years. Add a bit of bottled up desperation, passive aggression, blamestorming on behalf of the proprietor and you have a destructive culture of staff demotivation, dissatisfaction and turnover that you can smell the moment you enter the premises.

If it looks closely at the history of such a firm, a potential acquisitor is likely to see the waves building up to rollercoaster episodes of mass resignation and then evidence of painful rebuilding before the cycle repeats itself whilst the proprietor whilst providing a raft of reasons for such events remains in denial of the true cause of the persistent malady.

The fifth mistake, and one of the contributing factors to the roller coaster ride, is the proprietors’ belief that because they founded the firm they can do with it what they like, using the firm as a vehicle to support whatever extravagant whim or lifestyle fad takes their fancy.  Ultimately, and as a majority shareholder in a private firm, they can do what they want within the law, but such unguarded actions quickly build resentment and destroy value.

Physical and functional isolation of the proprietor

Tell-tale indicators of such behaviour include the physical and functional isolation of the proprietor behind over-tidy, palatial personal offices and saddling the firm with the overhead of an underused PA whose function appears to be manage their diary, serve drinks, collect dry cleaning or stand guard over the inner sanctum.  Meanwhile the rest of the under-supported team are housed like battery chickens, sweating 12-hour plus days subject to the proprietor’s occasional seagull-like visits.

Regarding themselves too as special case or aligning any staff `treat` with subsidising their social life, personal tastes or cultural aspirations is soon noticed by the staff who quickly take it as a cue to develop their own selfish behaviour.  This does not develop the `can-do` attitude that acquisators look for in a rapidly changing world.

Such proprietorial firms often end up being simply much smaller more backward and less successful models of more developed and more accomplished international generalist firms.  That also doesn’t make them particularly attractive for acquisition as few firms acquire for bulk. If they do they aren’t going to pay very much for it as the wastage can be high and better results can be achieved by organic growth where cultural alignment can be assured.

The acquisator needs to be able to take their own firm forward.  That means that potential targets also need to have something special in terms of adding new skills or capabilities – strategic nouse, digital capability, international operations or new sector expertise, for instance.

Avoiding developing PVVS

So what does this all mean if you are a potential or active founder with an eye to a future exit that wants to avoid developing a nasty care of PVVS?

If you are to grow and guide a successful PR firm to exit do it with a least one peer partner with complementary skills, so you can ensure it’s not all about you.

Adding at least one ying to your yang will help you scale faster and keep you on the straight and narrow. Create a sector specialism or get on the latest wave of communications too or forever face the prospect of being a small and increasingly less valuable generalist player. 

As soon as you are able, develop a senior management team with real responsibility who can run the company if you fall under a bus.  Constantly push responsibility downwards and make sure they have the potential to be better than you - that will challenge you to improve constantly but also give you time to do it.

But ensure that they don’t walk away with your firm by creating the stimulating and rewarding working environment and team spirit that makes them laugh at the blandishments of headhunting calls. 

Work in close proximity to the team and recognise their contribution on a daily basis and by giving them meaningful equity participation that can be realised at a foreseeable exit or allow them to invest in the firm on attractive terms. You may even want to plan for an easier exit via management buy-out (MBO).

Remember, always, that having smaller share of a bigger, successful, clearly differentiated firm is likely to be more valuable than a bigger share of a smaller less successful run-of-the-mill one. 

Who knows too, you might just be able to realise the value of the former whilst getting stuck with the latter...

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How to Win Friends and Influence People (in 2015)

I came across a post on LinkedIn the other day where someone suggested gushily  that the lessons in the seminal management/self- improvement work by Dale Carnegie ` How to Win Friends and Influence People` are as true today as they were when they were written in 1936.  Ever the contrarian, I thought I’d have a look through the shiny aphorisms highlighted and see if, in my experience, they still rang true. 

Fundamental human behaviour endures, but I think it says a lot about the positive way Western society and international business has evolved along with management practice that many of the early soundbites now need some qualification to be truly useful in 2015’s working environment.

So, heresy be damned, here’s my take on them…

BECOME A FRIENDLIER PERSON.  Really? Isn’t what we should be going for here is to be more effective? But, to be fair, the concept of emotional intelligence, or even lightening up, hadn’t been invented, let alone applied, in the male-dominated mid-thirties world of military-style corporate and industrial hierarchies fighting to emerge from the Great Depression.

1. Don't criticize, condemn or complain.  Condemn, maybe, as it is seldom merited, but objective criticism and complaint is what oils the wheels of personal and corporate improvement and consumer power.

2. Give honest, sincere appreciation.  Try honest sincere criticism too, it’s how people learn.

3. Arouse in the other person an eager want. Fine, just make sure it’s aligned with both your desires or you both won’t get anywhere past a nice warm feeling.

4. Become genuinely interested in other people.  You are or you aren’t.  You can’t fake it, and don’t try to. It’s disingenuous.

5. Smile. But if this doesn’t come naturally don’t bother.  Nothing looks falser or is more a turnoff that the forced rictus grin of a TV evangelist or a Gordon Brown* gurn.

6. Remember that a person's name is to that person the most important sound in any language.  I somehow doubt it these days, it’s probably the ping that signals a new email or a fresh social media post, but a little respect never hurts.

7. Be a good listener. Encourage others to talk about themselves.  Again, tread carefully here; the world of social media is already replete with this taken to the point of narcissism. Concentrate on what’s relevant in connecting the individual to the task.

8. Talk in terms of the other person's interest.  But, again, make sure your interests too are aligned or you ware wasting your time.

9. Make the other person feel important - and do so sincerely.  `Feel valued` would be better contemporary aim. But don’t make the mistake of pumping up egos if they don’t deserve it or generating belief outside of any person’s capability or potential.

10 The only way to get the best of an argument is to avoid it. Be careful how you interpret this - avoiding all conflict - even though apparently skilful management - is a sure recipe for problems from corporate stagnation to personal resentment.

WIN PEOPLE TO YOUR WAY OF THINKING.  None of us are omnipotent. Take every opportunity to examine your own thinking and work out if there is a better way to look at the world.

11. Show respect for the other person's opinions. Never say, "You're wrong."  Except if when they are - even partially - and they need to learn what’s right so they can develop personally and professionally.

12. If you are wrong, admit it quickly and emphatically. Absolutely. Nothing’s changed there. Still great advice.

13. Begin in a friendly way.  But don’t ever sugar coat what needs to be said and never, ever, use passive-aggression to get your point across.

14. Get the other person saying, "Yes, yes" immediately. No. Because in many cultures yes means `no` or `maybe` but never `yes`.

15. Let the other person do a great deal of the talking. Certainly. You have two ears and one mouth – use them in that ratio.

16. Let the other person feel that the idea is his or hers. No. If the idea wasn’t theirs don’t be a patronising creep, but ensure credit is given where credit is due.

17. Try honestly to see things from the other person's point of view. Yeah. Stop with the me, me, me.

18. Be sympathetic with the other person's ideas and desires.  No.  Again, don’t be patronising engendering smugness.  Be empathetic of you can, that’s authentic.

19. Appeal to the nobler motives.  Particularly if yours are less noble, perhaps?  Avoid, you’ll end up looking like a hypocrite.

20. Dramatise your ideas.  Like there isn’t enough drama in modern life and the workplace?  Illustrate them by all means, but leave the rest for Am Dram.

BE A LEADER.  Definitely, but don’t confuse that with wanting everyone to like you.  If you really are, they won’t.

21. Throw down a challenge. No, explain it and make sure everyone is bought in and knows clearly what they need to do to hit a target.

22. Begin with praise and honest appreciation.  And then just leave them waiting for the `but`?  Be pleasant but direct, people want to know where they stand.

23. Call attention to people's mistakes indirectly. Indeed. No one likes to be humiliated in front of others, but don’t use it as an excuse to be obscure or get to the point.

24. Talk about your own mistakes before criticizing the other person.  Make sure it’s empathy, not a cosy race to the bottom of the Sea of Ineptitude. And tell them what your learnt from the experience or it’s pointless.

25. Ask questions instead of giving direct orders.  This risks confusion. Be clear about what is needed to be done to what timescale and the implications of success or failure.  Make sure people feel, and are, free to ask you questions and really want to get involved.

26. Let the other person save face.  In some Eastern cultures yes, but not in all.  Most need to learn to bounce back, not hide. Don’t do people a disservice because it makes you feel better.

27. Praise the slightest and every improvement. Be "lavish in your praise."  Don’t.  That’s how you get Generation Y-like the- world-revolves-around-me attitudes. Don’t ever manage like Jim Bowen**

28. Give the other person a fine reputation to live up to.  Who do you think you are, Machiavelli? You’ll also alienate everyone else.  Better to set an example personally. Make them want to emulate you.

29. Use encouragement. Make the fault seem easy to correct.  By all means encourage and coach through difficulty, but don’t diminish the gravity or scale of the problem.

30. Make the other person happy about doing the thing you suggest. Rather, make sure they understand that it will benefit them.  That’s different.

* The famously taciturn and morose former UK Prime Minister, forced by his image advisers to start `smiling` in an attempt to win an election campaign.  He lost.

** A one-time UK television  game show host to whom,  it appeared, every action by every contestant, no matter how incompetent,  was `lovely, smashing, super`.

 

 

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Estate Agency - Is the Digital Devil Finally in the Details?

A few weeks ago whilst I was using this blog to muse on the reasons for the demise of Tesco and the lessons to be learnt, I argued, that, as business cycles quicken inexorably, many of the disruptors of the early days of the internet are already ripe themselves for disruption.

But, I opined, there still are many from the `old` economy who remain supposedly `regulated` - protected by law - and are still getting away with it without serious disruption - high street banks, investment firms, big six utilities, train operating companies, London’s black cabs, the BBC and the big political parties to name but a few. 

And some, I emphasised, like estate agents, appear to live a charmed life when, by all that is rational, their business model should have disappeared years ago.  But that's not to say that the great disruptor, the web, hasn't made any impact on the way homes are sold and let. It has, and not in particularly good way for consumers.  

Another cautionary tale

But the world of property retailing may indeed, like Tesco, be at the beginning of its own cautionary tale. Despite being founded by outsiders to the property industry, rather than disrupting a model the online portals have enabled high-street firms to gain an ever-tighter grip on property sales and lettings. To the extent that now they are employing a quarter of a million people and, it seems, occupying half the real estate on Britain’s dwindling High Streets.

The reality is Rightmove and Zoopla simply created a new interface to an archaic system but are now the first step on the house hunting process. The pair, both FTSE 250 companies, despite the endless local magazines funded by estate agency advertising that thud onto doormats countrywide, are now responsible for generating almost all estate agents' sales leads.  This can be funded only two ways – by the consumer in fees or from estate agents’ margins.  I couldn’t possibly comment on which is more likely.     

And, of course, when such a duopoly exists enabling such a core business activity as client acquisition the suppliers can turn the financial screw on their hapless customers pretty much when and how they like. Having clearly got the message that something had changed their cosy world, some of the bigger, more upmarket estate agency firms, straightened their double cuffs and launched their own property portal.  OnTheMarket (OTM) created by Agents' Mutual, a consortium including the upmarket multiple big boys Knight Frank, Savills and Chestertons, saw the light of day earlier this year.

A new challenger brand

Owned by its members, who, despite Knight Frank et al, are actually predominantly smaller independent agents, the challenger brand is not short of ambition - aiming to replace Zoopla as the second-biggest portal in less than a year.

The cost to agents for OTM, Zoopla and Rightmove are reported to be broadly similar. It's more about control of the duopoly than sheer cost.  But OTM says already it has a third of Zoopla and a quarter of Rightmove’s branch numbers.  Like Tesco, it seems, there is a poorly-treated market ready to move the moment the starting gun is fired.

But unless anyone thinks OTM is some white knight running to the rescue of the consumer, it’s not. It’s clearly a self-serving industry play, exemplified by an interesting strategy behind the growth and one that’s causing the fur to fly behind details-laden windows from Alcester to Zennor - the `two portal rule'.  

OTM member agents are prevented from listing on more than one other portal - in effect forcing them to choose between Rightmove and Zoopla*. As the smaller of the two, Zoopla has always been the most at risk, and the vast majority of branches that have switched allegiance have chosen to drop it.

Of course, what will really determine OTM's fate is if it can gather the momentum to attract enough consumers to the site to convince more agents to move to it, otherwise in a pyrrhic victory it may only serve to make Rightmove stronger and be just a another sickly monkey to its robust, but perhaps short-lived  gorilla.

The distraction of internecine warfare

But to me this all feels like re-arranging deckchairs in the Titanic and such internecine warfare that ignores the interests of customers could turn out to be a distraction from the real threat that is set to challenge high street estate agents in the coming years – a long-overdue disruption by pure play online firms.

Nailing up a sign and placing ads has long been an option for those property owners not wanting to subsidise café-like interiors, wall-to-wall hair gel and cutesy cars.  But most don’t bother, even when enabled by early internet entrepreneurs. But a new breed of online valued-added estate agents is starting to appear, claiming to offer almost all the benefits - imagined and otherwise - of a traditional estate agent, but at a fraction of the cost.

Companies such as HouseSimple, emoov and Purplebricks have attracted serious investment from apparently savvy investors and are growing apace. And in the current frothy market rumours of IPO even surround them.

More than portal on-ramps

While earlier online agents were little more than on-ramps for private sellers to get their home onto Rightmove and Zoopla leaving the seller to do the rest, this new breed of agents offers valuation, professional photography, help in arranging viewings and with negotiations, all with easy financial terms.

This 'full service' approach can start at less than £500, compared with a typical estate agent fee of around 1.5% of the selling price plus VAT. That would save you about somewhere short of £6,000 on a house at the national average and many more times that if you live almost anywhere in London. And that’s a lot of money by anyone’s standards

Of course we may be facing just another inertia-laden false dawn and the time taken to get to the tipping point is anyone’s guess but the current estate agency model is simply too expensive and offers too little value to be sustainable.

But one wonders what will happen to the High Street when they are gone?  Will we all be jumping into our one-owner bargain basement used Minis and Fiat 500s to get an artisanal coffee and some charity bargains from a former Tesco Local?

* Since this blog was first published Zoopla has revealed a strategy to counter its decline in the property sales portal market - diversification - with plans to acquire utilities price comparison site uSwitch for up to £190m

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Hiring Today? Don’t CYA.

I’ve recently observed a series of hiring processes in firms from mature to entrepreneurial.  What these disparate firms had in common is that, despite claiming they had significant gaps in their capabilities and needed to hire fast, whatever the level of person sought the speed of the hiring process was glacial.
 
This sloth was routinely accompanied seemingly by the appearance of anyone who could be remotely involved in the potential hire’s work environment appearing at some random point in the process. People turning up disinterested, clearly not briefed, asking the same unfocussed questions, often giving the impression they are just `meat in the room`.

And, along with this significant opportunity cost, then there was commonly stop-start hiring.  This is where a company is all over the candidates like a cheap suit for weeks, demanding endless meetings then disappears at the point a job offer should be being made only to reappear asking for yet another meeting, followed by yet more silence as the delay causes a turf war to erupt between HR and finance.  The job then vaporises, only to remain posted on the corporate website ready to dash the hopes of more applicants.

Lack of clarity

The associated lack of clarity shown to the candidate as to how many interviews and exercises will be needed to have been gone through before a decision can be made benefits no one. The `could you just come in one more time there is someone else we’d like you to meet` request is highly frustrating for the interviewee who rapidly runs out of fictitious dental appointments, imaginary plumbing malfunctions or the sudden need to `work from home` to cover their increased absences from their current place of employment.

Often this inability to set expectations is accompanied, from the candidate’s viewpoint, by an apparent lack of accountability on who owns the process - recruiter, HR or future line manager. Delay at all stages in process in receiving feedback routinely involves the passing of the buck to someone else that the candidate may have never met.

Law of diminishing returns

The fact is that, in these situations, the law of diminishing returns very rapidly sets in and real reputational damage may result from such behaviour.  Ineptitude aside, this lamentable approach is primary driven by CYA.  CYA, if you hadn’t guessed, stands for Cover Your A*** (or A** if you are reading this in North America).

In short, even if it’s disguised as facilitating `teamwork` or `involvement`, the real purpose of this sort of behaviour  is to ensure, that, if the hire doesn’t work out, everyone can point at each other safe in the knowledge that they all - explicitly  or implicitly - agreed to the on-boarding decision. Everyone's a*** (or a**) is covered.  

Putting off the best candidates

To be fair, though, fear of the increasingly constrictive labour laws in Europe and often farcical restrictions on what can be asked at interviews and of references in the US often adds to the self-induced paralysis. 

This approach, though, adds little if no value to the process.  In fact, it might have a negative effect, giving the potential hire the distinct impression of a culture not in control of itself or that of uncaring or incompetent potential colleagues. 

The endless meetings too can also particularly put off the best candidates who are likely to be busy in their current job because they are the top performers. Meanwhile, bereft of information, candidates who stick with the process are left unfairly to wrestle with the challenge of chasing the opportunity concerned whilst not wanting to look desperate or annoying.

Weaselly feelings

It also pretty much the case, that, along with CYA-style recruitment, ultimately comes lack of clear feedback  to the unsuccessful candidate as to why they were not selected for the role.  This is because the more people - many of whom will be untrained as to how to interview - see the candidate the more objective feedback is diluted and the more `feelings` come into play.  `It was a really hard decision, but we just felt one of the candidates was a better fit`, is a typical weaselly comment in this situation once the candidate or their external recruiter has chased repeatedly for a response.

Or the candidate gets no feedback at all or receives  comments sounding like they are from no one who was in any of the interview rooms because the company doesn’t care to get organised to do the decent thing or because it’s so difficult to assemble a coherent response from a disaggregated team they have to make it up. It's also indicative of the interview process being a time-wasting smokescreen to cover a corporate requirement for external candidate interviews when an internal candidate was lined up for the post all along but had to be proved to be the `best candidate`.  Again, that benefits no one.

The three meetings rule

To get over this my recruitment rules are these: There should actually be a job available with a clear job description and list of the SMART competencies and potential experience required to be successful in the role so what is being interviewed for is unequivocal.  There should never, ever, be more than three meetings in no more than three weeks and this should be stated to the candidates from the start.

For more junior candidates, the first encounter should be with HR or a recruiter for initial screening.  The second should be with the person’s potential manager. The third should be not be a formal interview but should be a `fit` session with the team with whom they will be working and where anyone junior or senior can issue a veto on the hire.

For the most senior appointments the order should be partially reversed after initial screening , starting with the Chair or CEO - if it a board level appointment to establish suitability - before meeting other board members and non-execs to establish team  fit and with HR picking up the `hygiene factor`s at the end. That’s it.  Rejection can happen at any of the three stages.  If not, the process ends with a job offer.

In both of the above situations companies should also be prepared do what most employers fail to do, particularly those with a disorganised recruitment process - due diligence. It doesn’t have to be a Kroll-style investigation. Simply tactfully asking around and a few web and social media  searches can tell you a lot about what lies between the lines of the cv or behind the polished interview skills and allow interviewers to home in some realities that might be deal-breakers.

Full feedback

It all cases, should the candidate not be successful, full, frank and constructive feedback against the job specification and competency requirements must be given as each candidate should still wish they had been offered the job and will tell others so. They may also be prepared to apply for another position at a later date if the fit wasn’t right first time.

And if you get it wrong, it’s not the end of the world.  Probationary periods should be just that.  To ensure an individual doesn’t `accidently` exit probation, the person hired should be subject to more regular reviews during that period than post probation.  If someone isn’t working out, invoke the terms of the agreement, part company before acrimony sets in and start the three-stage hiring process again.

Lamentably, the companies that don’t have the courage of their convictions in the first place are often the same ones that don’t have the spine to rectify their mistakes later, so letting the bad apple rot the corporate barrel.  And that’s a sure-fire recipe for driving the best people out of the company and the inevitable corporate decline that follows.

 

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Tough Love, Freely Given - A Mentoring Manifesto

As the actor Kevin Spacey is oft quoted in a LinkedIn meme, `If you are lucky enough to do well, it’s your responsibility to send the elevator back down. `

I like to think I keep pressing the button. I like mentoring people.  I make no bones about it.  I get a kick out of helping raw talent quickly ascend to the highest positions. It’s become part of my DNA.

But, I’ve learned recently that there are diverging views on what constitutes mentoring and what is good practice.  Let me be clear. I consider mentoring is about one thing and one thing only - helping individuals achieve their true potential.

It’s about the mentoree, not the mentor.  It’s about them constantly improving.  It’s about them fulfilling their ambition. It’s not about theory; it’s about practice.

And for the mentor it’s about caring, but not about being compromised in that care.  It’s not about there, there; it’s about here and now and the realisation that the mentor is only as good as the mentoree’s success.

It’s about being constantly on call to help guide mentorees through decisions, providing perspective.  It's about distilling experience, letting people explain, reflect and safely experiment to build up their confidence.  

It’s absolutely not about allowing mentorees to sit forever in their comfort zones, obfuscating or making excuses for inaction. Neither is it about patronising, delivering mealy mouthed platitudes or creating warm fuzzy feelings.

It’s about fearless engagement with reality; about clear development goals and SMART objectives. It’s about holding people to account.

It is about exposing individual and cultural attitudes and their appropriateness to achieving goals. It’s about telling people what they might not want to hear.

It might be about empathy, but rarely about sympathy and it's definitely about emotional intelligence and understanding the whole person.

It’s about considering all the internal and external factors that might be compromising progress. It’s about working out and agreeing with the mentoree how to confront them, deal with them or bypass them. But it’s always about moving forward their personal development.

And it’s always about truth, clarity and mutual responsibility.

To paraphrase the slogan of one of my favourite causes, Big Issue Foundation, `it’s about a hand up, not a hand out`.

Most of all, though, it’s about tough love, freely given.

  

 

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Tescopalypse Now - Every Little Shouldn’t Hurt

The once all-conquering retailer Tesco has recently lurched from crisis to disaster*.  Stories of stores closing, share price diving, accounting scandals, criminal investigations, junk-rated credit and shrinking turnover and market share have been seen almost daily in the media. 

As if this wasn’t enough it’s been accompanied by the unedifying sight of a long-time CEO, having timed his exit perfectly, handing his successor a well-poisoned chalice whist knifing him in the front for good measure.  His successor, then, in turn, clearing out the boardroom like a table full of trays at a fast food restaurant.

Overpromise, overstate 

And now there's a reminder that the fallout over the supermarket’s £263m profit overstatement is far from over as Tesco faces a lawsuit filed on behalf of shareholders in the UK and Europe for the impact the overstatement had on its share price.

Tesco Shareholder Claims (TSC), a group funded by the US law firm Scott and Scott , will bring the claim, after the firm launched a similar case on behalf of investors in the US last year. TSC says it expects to claim for between 50p and 70p per share, which would mean a potential cost to Tesco running into billions if it was successful.

The Tesco tale has been not unlike that of some recently exposed celebrities.  It managed to combine both an apparently incredible success story, doing business `good` with some very nasty habits hidden from general view or ignored by those that stood to gain financially from or by association with its success – customers, employees, investors, media  and government alike.

Nineties to noughties

Of course, it’s fundamental that supermarketing is highly-competitive.  However things seemed to change in the mid Nineties, once Tesco had re-invented itself and overtook Sainsbury’s to become the UK’s market leader.

It achieved this for the right reasons; because it was motivated to succeed. It was the challenger.  It was more agile and more innovative than the once fast rising and, by then, complacent incumbent.  Its big breakthrough was actually knowing, through its pioneering Clubcard loyalty scheme, who its customers were and what they were buying

It got into an apparantly virtuous circle. By the mid noughties, Tesco had almost a third of the UK market and was expanding overseas, disastrously in the US it later emerged.  

From virtuous to vicious

But, by then, a heart of darkness existed in its Cheshunt trading estate headquarters, manifesting  itself in the horrible readiness with which Tesco was prepared to abuse its increasing power in order to sustain its profitable growth. Of course, big companies do this and as grown-ups we accept, negotiate or walk away.  But Tesco exerted a vice-like monopolistic grip and turned it into a vicious art form.  And the one group that certainly didn’t benefit from its rise were its suppliers

Bullying appeared to be front and centre of its business model and culture.  It treated its suppliers not as partners in the quest to satisfy or delight customers but like disposable items, squeezing them dry and then paying them as late as possible. I know, I was one of them for a short while. 

Luckily, being a supplier of marketing communications services at the time, that was where the pain stopped. It was also something we were prepared to trade for the associated prestige at the time of having them on the client base even though the work was mind-numbingly prescriptive and based on a tactical we-know-best-just-execute approach.

Of course, the work was always project-based so more procurement pressure could be applied at regular intervals - every little hurt rather than helped, to paraphrase Tesco's slogan. In the end, convinced we were never going to build satisfying business with them and seeing the way the team were being treated, we walked away.

It’s interesting to note too at time, if you were representing a client that had maybe supplied technology or services that had helped drive the Tesco miracle, any win-win cooperation story request was flatly refused, if you ever got a response at all.  The irony is that this is exactly how M&S had behaved a decade earlier.  And look what happened to them, clearly an early warning signal. Anyway, at least you can get a case study out of them these days.  As you probably now can out of Tesco  

But I digress. For most of the company’s suppliers, the misery didn’t stop with Tesco screwing up their cashflow and upsetting a few executives. For those wedded to the behemoth, margins became continually eroded and slimmer than the `waffer thin mint` proffered by John Cleese’s oleaginous faux French waiter to the morbidly obese diner Mr Creosote.

Non-stop bad behaviour

As something like one pound in every eight spent in the UK was spent with Tesco it started asking for seemingly endless series of extra payments from suppliers for the privilege of having them as an outlet.  It was Tesco’s way or the highway for those poor unfortunates who had bet their business on their Tesco contracts.  For some, as the recession bit, it was the road to ruin.

The bad behaviour didn’t stop with the suppliers. There was the unsavoury steam rollering of local opposition to high-street-destroying out-of-town superstores, the land banking and maximising every square inch of their ever-expanding, countryside gobbling, brutal sheds or their squalid `convenience` stores. Tesco came to ape the very worst aspects of Walmart’s legendary mid-Western blitzkrieg - all whist rolling out a series of CSR initiatives and charitable works, naturally.

Goodbye goodwill

But the Tesco story reminds us that even the greatest empires contain the seeds of their own destruction. The feisty agile challenger is always in danger of becoming the bloated, sloppy and, ultimately, doomed incumbent. And, like the glutton Mr Creosote, ready to explode the moment that the tiniest little hint that financial market expectations might not be met.

That happened and now it’s now got a big job on its hands. Tesco behaved so badly to so many people over such a long time that there’s no goodwill left for it to draw on. In fact, a lot of people who hope that the company’s current troubles represent the first few steps on its road to a righteous oblivion of which consumer flight to Aldi, Lidl and Waitrose is just a small symptom. 

 Ego and hubris

Look closely and the cultural signals of impending doom are easy to spot. Companies start to think they are unassailable. Ego and hubris stalks the corridors.  Executives surround themselves with status-obsessed careerist company drones. The suits care more about corporate in-fighting or hanging around with politicians in search of perceived influence and gongs than they do about the stakeholders.

I’d argue that, as business cycles quicken inexorably, many of the disruptors of the early days of the internet are already ripe themselves for disruption. Perhaps the most obvious examples are Amazon and Google who are clearly not now averse to throwing their weight around despite any pretence, in the case of the latter, to not be evil. 

  But there still are many from the `old` economy who remain supposedly `regulated` - protected by law - and are still getting away with it - high street banks, investment firms, big six utilities, train operating companies, London’s black cabs, the BBC and the big political parties to name but a few.  And some, like estate agents, that appear to live a charmed life when by all that is rational their business model should have disappeared years ago.

For entrepreneurs and even for those where reality is slow to bite the message is always the same. Be reasonable with people on the way up as you’ll meet them on the way down.  It’s not a `nice to have` – it should be at the centre of not only every successful , but every sustainable, business strategy.

  * Subsequent to the writing of this blog on 22.4.2015 Tesco posted a pre-tax loss of £6.38bn, believed to be the biggest loss ever recorded by a UK retailer.

 

 

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Y oh Y oh Y –The Importance of Knowing Your Audience

I’m shortly going to give my first couple of guest lectures to the current EMMS (Executive Masters in Marketing and Sales) cohort. EMMS is a post-graduate degree taught between the very pleasant campuses of the ESADE Business School in Barcelona and the SDA Bocconi School of Management in Milan. Both are ranked global Top 20 business schools, I’m glad to report.

The `Executive` bit refers to the fact the students take the course in modules whilst they are in full-time management positions.  Bearing that in mind, my act will be entitled `57 Years…  57 Lessons…` a theme designed to send the graduating students on their way knowing what I’ve learned in entrepreneurial business in 57 years on this Earth. This, I’m told, will contain valuable lessons for their current and future personal and commercial lives once freed from the part-time bonds of academe.

Recognise and act on Generation X, Y, and Z behaviours

Slide 33 in the PowerPoint fest is entitled `You are unlikely to be your audience` and warns `Generational change is profound. Learn to understand, recognise and act on Generation X, Y, and Z behaviours. `

Generational change is indeed profound. It affects much more than the common and usually grossly mistaken assumption in sales, marketing and communications planning and execution that the audience for the product or service thinks like the provider. 

The problem, it appears, extends far beyond the relationship between vendor and customer but is also rife within providing organisations.    In particular, it is that there is currently mutual incomprehension between what employers think Gen Y staff want from their positions and what younger employers actually desire in their careers.

It’s something that in an era of ever more rapid change my thrusting, international, Generation X-ish audience are going to have to deal with increasingly.  Whether they climb the ranks of multi-national management or embark on the entrepreneurial journey and start hiring.

Car crash of confusion

This generational gap was highlighted recently in research conducted by Penna, a company, unsurprisingly, that offers interim management, coaching and HR services. A thousand senior managers and a thousand Gen Y employees (aged between 18 and 34) were surveyed and the results show a car crash of confusion getting off to an early start. 

According to the results, employers believe leading a team and experiencing lots of different jobs and sectors are the most important motivators for Gen Y.  Wrong!  Gen Y employees actually rate achieving a work-life balance and ‘being totally fulfilled and happy in my work’ as most important - alongside earning good money, that is.

Interestingly, the report didn’t make the mistake of assuming Gen Y is homogenous. For instance, it split Gen Y employees into two groups - those aged 18-24 and those aged 25-34. That split reveals some rather contrary results, showing the 18-24 year-old group perhaps being much closer to Gen X values than their more laid-back older Gen Y siblings.

When it comes to leading a team , however, younger employees, the research found, are more driven (21 per cent), compared to those aged 25-34 (17 per cent). The clearly-out-of-touch employers believe managing a team is more important to older Gen Y staff (28 per cent).

Those aged 25-34 also rated the importance of work-life balance much higher (44 per cent compared to 31 per cent in the younger group). Employers underrated the significance of work-life balance for younger employees - 18 per cent believed it was important to 18-24-year-olds versus 27 per cent for 25-34-year-olds.

Values and loyalty

The research also revealed managers are underestimating the importance to employees of organisational values;  13 per cent of 18-24 year-olds said ‘values that reflect my own’ was an important factor when choosing a company to work for, but only seven per cent of managers believed this to be the case.

Loyalty also ranked highly with the employees, with 64 per cent of 18-24 year-olds agreeing they believe ‘it is important to be loyal to your employer’ compared to 56 per cent of 25-34 year-olds.  However, when asked what age group they’d most associate with loyalty to a company, only three per cent of employers said 18-24 year-olds compared to 26 per cent for those aged 25-34.

Problem or opportunity?

Should these findings prove to be true over time we could be having to handle a shortage in management in future, assuming that younger generations in the workplace are not automatically going to want to sit behind the desks of todays’ leaders and managers.  I think you can count on that.

More likely, in my opinion, is that Gen Y’s new attitudes along with new technology will drive further change in the nature of management and the structure of companies.  The alternative will be a decline in engagement levels, productivity, and increased staff attrition rates accompanied by the inevitable and perennial cries of skills shortage.

But we should always be wary of lies, damned lies and statistics. It’ll be most useful for those in charge of managing Gen Y to take the time to sit down with them and find out what they want - or at least what they think they want - and build that into their management and business development strategy.   

Get engaged

As slide 63 of the presentation warns, `You can’t create something new without destroying something old. Learn to let go and move on before someone does it for you! ` So, get engaged with Generation Y.  They will be running things, so help them do it well on their terms and from their perspective.

After all, the world of business didn’t fall apart when we dispensed with the conventions of wearing ties, using fax machines or talking into wired devices that just transmitted voice, did it?  And , yes, Gen Y, unbelievably, we late baby boomers once did that stuff.

 

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Encouraging Entrepreneurship - Do As I Do, Not As I Teach

Given the nature of my daily work it always astounds me that only around 10 per cent of the world’s adults can be regarded as entrepreneurs.  But their influence vastly outweighs their number.  It’s this minority that are significant drivers of economic growth and, crucially, of the innovation that leads to sustainable growth and job creation.

It’s axiomatic, then, that to progress we need more entrepreneurs, but many potential entrepreneurs don’t make it. Although any entrepreneur will tell you theirs is not an easy lifestyle choice as it inevitably involves coping with difficulty and failure, too often their pain is increased and chances reduced by pernicious and unnecessary barriers embedded into society and its institutions.

E-factors

A recently published UKTI report, written by The Economist Intelligence Unit (EIU), ` Helping entrepreneurs flourish: Rethinking the drivers of entrepreneurship’ looked at how to foster an entrepreneurial mindset - both through education systems and business experience - and, crucially, the factors that enable entrepreneurs to thrive.

It drew on seven in-depth interviews with entrepreneurs and other experts, a lot of desk research and two surveys—one of established entrepreneurs and another of people aged 18 to 25.

Its findings are illuminating, not least because they reveal an apparent change in attitude to the business of wealth creation.

2020 vision

Far from being looked down upon, as it once was, as grubby `trade` not fit for the attention of society’s most talented, entrepreneurship is now viewed as a highly attractive job option.  In the global survey of young people, the top choice - at 30 per cent of the respondents - said that their preferred occupation by 2020 would be running their own business.

Showing how much the tables have turned in recent years, amongst this group 75 per cent are open to starting a company one day, and a further 7 per cent have already done so. Over a third of student respondents regarded running one’s own business as a source of personal work reward  (37 per cent) and a way to create something new / innovative (35per cent.

Reality check

Something that will come as no surprise to anyone who has trodden the entrepreneurial path is that part of this willingness or desire to become an entrepreneur, however, may be a lack of understanding of the difficulties: over half (57 per cent ) of respondents running their own business say that aspiring entrepreneurs underestimate how hard it will be.

A factor that’s often overlooked by government and policy-makers, perhaps because it’s so blinding obvious, is that existing entrepreneurs are crucial in developing those aspiring to be, particularly through mentorship and employment-based learning. Entrepreneurs believe that having mentors who have built up their own firms is vital for success.

Do as I do

The growing number of mentorship schemes and the amount of time existing entrepreneurs give away to help others is testament to the regard for, and value of such activity.  All this despite the fact that the inevitable constraints of running a business restrict the time available for anything else - including external mentoring.

Even more helpful, therefore, is example; running a company in ways that instil and develop entrepreneurship in employees: 81 per cent of entrepreneurs say that they acquired more entrepreneurial skills through work experience than through education.  It seems the old mantra of `Those who can do, those that can’t teach` still applies.

Intellect and attitude

Respondents from both surveys for the report ranked passion and determination as the most important attributes for entrepreneurial success. Such attitudinal qualities like intellect are difficult or impossible to teach or may not exist in conventional teachers.  This may help to explain why those who have started businesses are more likely to say entrepreneurs are born rather than made.

On the other hand, those interviewed for this study point to the numerous other factors needed to become successful. Policy choices and the cultural environment can clearly support entrepreneurship by helping aspiring entrepreneurs understand the hard and soft things they need to know to avoid some of the many pitfalls of starting a business.

Education appears to have some positive influence on entrepreneurial success, but this is currently limited. Those surveyed for this report have seemingly contradictory views about the role of education in their development.  This debate has raged at least since the 1850s when it became apparent that that the UK was falling behind its, then, major industrial competitor, Germany, and the United States’ place as the world’s biggest economy was a couple of decades away.

University challenged

Among entrepreneurs, for example, 79 per cent say their university education aided them to start their own business. However, very few cite their primary and secondary schooling as a top influence in helping them launch their enterprises.

Similarly, nearly half of the 18-25-year-olds surveyed thought an academic degree is important to entrepreneurial success (with that share rising to two-thirds in North America), but just 19 per cent said their university is effective at giving students the specific skills they need to start a business.

Successful entrepreneurs, then, it seems, benefit from education, but traditional academic teaching methods risk undermining attitudes conducive to entrepreneurship as well as not engaging with the skills needed to be successful.

Problem-solving, communication and networking

The report concludes that entrepreneur-friendly education requires a shift not only in how schools and universities teach, but also in what they teach. The experts interviewed for the report recommend a greater focus on problem-solving, communication and networking skills.

Crucially attitudes need to move away from a traditional academic attitude of just educating those who may one day start a business somehow at the expense of the rest of society. The good news is that these so-called 21st-century skills are increasingly being promoted within educational circles and by business as beneficial for all students but change cannot come soon enough.

You can download the full report here http://www.economistinsights.com/sites/default/files/Helping%20entrepreneurs%20flourish.pdf

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