Business mishaps. Know your proposition and know your audience!

Excellent Client Engagement

As a small business I was recently involuntarily contacted (cold called) by a local Hotel’s telemarketer who pleasantly introduced herself and the venue to see if I was aware that they had services that I could use. A very busy market space with many vendors, but I was in inquisitive mood so listened and joined in. As a central city location and I knew exactly the location, I posed a context and a question straightaway. “ I don’t have an immediate need, but if I wanted to have a room for half a day for 4 people, how much would it cost?” I explained that as an SME I have a need to use ‘space’ occasionally to meet Clients. “When do you want it?” I was asked. After reiterating a few times, that SME’s are increasingly using external space and I don’t have an immediate need an estimate would be fine. She took my details and went away. Fairly promptly, I was sent an email to say thanks for the conversation and explained “…follow up regarding your needs and requirements for meeting and event spaces within our properties…” and provided a host of general attachments about the hotel, but none answered my question.

A few weeks later a follow-up call to ask if I had dates and wanted to go ahead with a booking.

I then went into Marketing Consultant mode and suggested that I needed to know what the proposition and offer was to consider it and they were unable to do this. “But, I don’t know the prices for these, I am not authorised to talk about prices! I can pass you to my Sales Manager?” I politely ended the call.

So, what’s my point? In a crowded market you have to have a proposition. You need to understand the profile of your target audience and you also need to have a process to complete what you start. It is fine to ‘qualify out’ rather than ‘in’, but know your product. The world has become increasingly knowledgeable, so if you have a gap in the facts about a product, your product, especially in a competitive market, you will be ignored. It affects brand and reputation, so it is very important.

We all need to try harder at getting the basics right, but we may also sometimes need a little help to identify a weakness in the way we do business, because we become too familiar with it.

And the photo? The atrium of a Hotel in Singapore where I stayed which had excellent and memorable Client engagement.

Growing pains – when success meets complexity

There is an amazing feeling for the entrepreneur and the onlooker of a start-up business blossoming and growing. We all like to hear of them starting ‘off the back of a cart’ and how they progressed to an established player in their sector. Maybe smaller than the rest, but seen as an ‘industry shaker’. A broad portfolio, employees hired for specific professional roles and ready to take on the world.

Does this resonate with your company?

The Revenue line pointing skyward, healthy forecast and a profit profile matching the upward trend, then something unexpected happens; The growth engine starts to stall, cash flows less predictably and customers drift away. Nimbleness lost.

This is the phase that I term as the ‘complexity point’.

What started as a personal business with a proprietor with focus, common sense and ultimate control, finds itself with a wide product set, creaking processes and an organisation which although taken on as human capital is looking more like a liability.

I’ve tried to reason with when we can anticipate the complexity point starting to kick in, but I have arrived at a summary conclusion that it may be different for each business, but with common attributes to what leads to the hiatus.

It is not a privilege to SMEs, complexity will exist in most of the mid to large corporates too.  And, across the sectors, there are different angles to the complexity, from capital-intensive businesses where the focus may be on the ‘plant’ right through to Professional Services organisations, but common signals will be present for each one.

There are ways of tackling the complexity challenge that requires a retrospective step in order to move forward, but my guidance at this stage is that it is not a one-off event and it happens in cycles. The important role of the Executive is to keep pace with it, anticipate that it will happen and be proactive.

Elephant Stampede in the room!

Working in a large Corporate is a great experience.  You have security, you can test a few more things that you wouldn’t be able to in a small company but you also have…voluntary blindness.  Well, if I started with Elephants, I guess that allows me to use my endless vocabulary of analogies.  So what am I talking about?

Hierarchies and Organisational design breeds loyalty to a topic, loyalty to a person, loyalty to a concept.  Meeting after meeting, audio after audio, you listen, you agree or disagree, but the tendency for the Middle Manager is to not stray away from the base agenda and to nod when you are expected to nod.  You know that there is something fundamentally wrong with a plan; timing, expectation, mis-aligned metrics, outcome scepticism or just that you know that when you leave the room a sub-optimal solution will be found.  These are the Elephants in the room.  The motivation and good intent of a programme team wasted on not paying due regard to the things that matter to tackle the issues.  This is a Strategy, Planning and Change execution problem.  The Sponsor gets their update and the Stakeholders see the design metrics, so everyone’s happy…if for a while.  Management teams change frequently, programme teams reconvene and they avoid the big things that will stop results happening.

So why is this?  It can be as simple as you are unable to specify the detail of the ‘Elephant’ or are too shy to speak across the Chair to say that there really is a Stampede of Elephants in the room that everyone is missing, especially when it’s not your subject area.  It is behavioural and it’s cultural.  Top Down trumps Bottom Up, fact.  A junior manager doesn’t have the right to question a middle manager’s subject.  A programme leader doesn’t want to call ‘time-out’ to re-think the solution as it is seen as a delay to the sponsor.

Now with the problems there has to be a solution and there is, but you need to change the motivation of the individual players and create a team environment.  I am not suggesting you hand over the keys to the company strategy box to the new Graduate, but to create a sandbox in which employees know what is expected of them and that they have a right to speak up and propose solutions that might work.  Most great market inventions come from someone thinking of using the object differently to the inventor.  You also need to have discussions in meetings that take an end-to-end approach and have material sign offs to support and deliver aspects of projects that get taken for granted.  And also be careful with selecting programme metrics.  And if someone shouts out that a crack is appearing, hear the case early on, qualify it and then determine if you can continue with the plan in that shape.  Thank the contributor whatever the outcome and let it be a learning experience for all employees. And, And And…

Programme Audits are a good place to start.

I’ll leave it there for this post.  If you see an Elephant, call it out early, even if you end up being the 50th person to make the claim.  If you are the 50th person, follow up your observation with a question…”Are we doing anything to remove it?”

Taking the right Measures

Planning for success is a science rather than an art.  I’m sure someone will come back to me on this statement.  Let me state my case…

Most business plans get to a stage where the Directors can thrash out the top line view, the ensuing investments and the resultant profit forecast.  Nice and simple to do (give or take a few arguments) and put into operation for the coming Quarter or Year.  It then becomes important to keep to plan by managing the business.

Directors and Operational Managers need to be able to make decisions to keep on course with the plan and to sustain this going into the following year, the continuum, that we have talked about in past blogs.  The way that they can do this is with a dashboard of critical metrics, a sort of blended alchemy for your type of business that can tell you if the company is beating irregularly and if there are issues with the main arteries of the business processes.  The ‘organs’, aka Business Functions, themselves need critical unit specific monitors to ensure that they are operating ‘to plan’ and contributing what is required.

For the Strategy to be monitored you need a Balanced Scorecard and for the Business Plan you’ll need to have critical lead and lag metrics that give you good insight and foresight on the health of your operations.  The science is to have the right blend of Metrics, but you can also be bamboozled by having lots of other colourful metrics. This is a common failing. Making a decision is hard enough, but if you can’t see clarity in your key metric or it has a contradiction measure by the side of it, the decision can be delayed and you are possibly on the road to failure.

Metric design should be a discussed and agreed with the Executive team and then a process with one acknowledged data source and a common definitive algorithm for its calculation, with quality processes put in place to make sure it delivers to schedule.  Don’t be afraid as an Executive Team to spend time on definitions for the Metrics as it is important that there is no debate abaout validity after they are built. It is also OK to have Metrics from different time lines as long as the Executives agree that the measure is in sync with the causes behind sister metrics.

So what goes wrong in Business?  I see five main areas that cause problems for Companies.

  1. Too many Metrics are produced.  Like trying to understand a Jackson Pollock painting.
  2. Measures are invented for a Business Review e.g North Region Sales presents differently to South Region Sales
  3. Central Metrics from the definitive sources conflict with a ‘Local’ view from a Functional team
  4. Measures fall out of sync with each other, timeline wobble, product revenue creep etc
  5. The Algorithm for the calculation changes

When problems 2, 3 , 4 and 5 happen, a confident Manager can paint a positive or negative picture with available data which will lead to poor decision making.

So, I come back to my original Science statement.  Be creative with the ideas for running the business, but stay scientific in the selection and preparation of your metrics if you want to stay in control of your business.

Annual Planning is a bind!…

..but, there are a 101 reasons why you should think about Planning all the time!

My experience of the annual business plan is that the scale of the event haunts even the most conscientious of people.  You may have been through 3 previous annual cycles, but the dread of making the first step towards the next review gives business planning a label and it is hard to get excited. It’s also hard to get the planning contributors excited.  It will be a heap load of work and probably on top of your day job?

It is the same annoyance you feel as filling in more detail on your company expense claims (because the Management Accountants need it) or answering the depth of questioning on a HMRC tax self assessment.  You can’t clearly see the benefit for all the additional effort and input.

One of the Corporate challenges is to bring the Planning cycle into business-as-usual and building business processes and data flows that continuously feed the cycle.  The other concept of planning that you need to consider is that you build a rolling 3-5 year plan with a simple expectation at key times of the year where the planning assumptions are updated.  New forecasts can then be argued through as part of the ongoing business cycle and agreed well ahead of the start of the new trading period.

Just to make an example of this one, think of guiding someone with directions from your London Office to your Newcastle Office by car.  The most important detailed directions are the ones that get them out of the Car Park, heading out on a key artery road and heading in the right northerly direction to get to the M25 (Short Term Plan).  The ‘what happens next?’ is important but requires less detail at this stage, “Northerly direction, M1 for 140 miles…” (Long Term Plan).  You have a Plan to get them there, but the important part of the plan is the immediacy of getting off in the right direction and with detail.  The ideal situation for the Short Term is to see if this has been prepared before for someone else.  In Corporate life duplication happens regularly.

So in short, a company would normally require 1 year of detailed planning and 2-5 years of directional planning.  Of course, your Finance Director and CEO may want to know the long term numbers and investments behind making it happen, but these are directional for the outlying years for early observation that you may need to re-balance your plan or reshape the company to drive a different outcome.

If you are off course, the temptation is to then to do a mathematical extrapolation of the plan numbers, rather than building in links to real and live market and financial data, trend and external conditions.  “The CEO wants 5% annual growth in Revenues and 3% reduction in Costs!”.  Microsoft Excel can give you your answer in 10 seconds, but it would be more prudent to have the 1-5 year revenue projection directly from your Sales Pipelines, Regular Billings with up-to-date risk factor built in for Churn and a clear understanding of Fixed Costs and Variable Costs from the people living and breathing the detail.  The heartache and heartburn really comes when you begin annual planning and start asking slightly different questions and requesting data in a different format.

To achieve the required inputs you will need to identify each of the main insights and which departments own and analyse these regularly.  It also needs to be fed into the business plan review with little or no effort.  The ‘effort’ of the Business Planners is to find out where the intelligence lies in the company and how the data can be standardised for re-use into the Company’s planning process. Try really hard to avoid asking for re-working the same data as it just switches people off.

Now, if you start to think of all Business Processes working in the same direction and have a 1 year detailed plan and 2-5 years directional plans, rolling a forecast then becomes intuitive.  I’ll cover Values and Culture in a separate post as these are very important to align your Managers and Employees to do the right thing when they see cracks in your planning.

The final part of the planning transformation is then to consider the improvement in the planning cycle.  A practice which can work is the Rolling Quarterly Plan.  You build a continuous plan by quarter based on ‘What is likely to Happen this quarter’ (This should be very accurate and detailed), a detailed forecast for the next 4 quarters and then directional plans for the next 2-4 years based on the expectation of your Stakeholders in your business.  As you roll forward, you will always be able take the detailed 12 month planning ‘snapshot’, when required, which becomes your detailed Annual Operating Plan.  Less of an event, more business-as-usual, quicker results and engaged staff.

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