Post 6 - 2013: Europe, in or out?

There’s been a lot of debate of late about Europe, and the possibility of a UK referendum of EU membership. Much of this is political, and revolves around law-making in Brussels vs Westminster but some of it comes down to economics and trade.

There’s an awful lot of blather, misrepresentation and misdirection in these debates, often shot through with vitriol and passion. The media don’t help, as they love a good doom and gloom story, or the chance to spice up a headline with what effectively boils down to lies. I imagine some news editor saying something like “Nothing gets the great unwashed into a fervour more than smelly Europeans telling them what to do”. We’ve had stories about regulation on sizes and shapes of fruit and all sorts of nonsense, which hardly helps an informed debate about our future relationship with one of the largest trading blocs in the world.

Now, leaving the politics to one side, there’s an awful lot of rot spouted about the impact our membership or withdrawal from the EU community would have. Some proponents of staying in Europe say that if we leave, thousands of jobs will disappear a European countries withdraw from the UK and sales into Europe plummet. This is plainly not the case. Equally those that want to leave say that membership of the community is stifling our growth, giving us minimal benefits for a huge cost, saddling us with economic migrants that we cannot refuse into the country and so on. Once again, this is equally untrue.

The real story is that countries will still trade with us if we leave, migrants will still come to our shores and businesses will still stay or pull out according to their own devices. Of course membership will have an impact, otherwise why would anyone stay, but the truth is there is no simple black and white with the modern world as it is. There are thousands of politicians, diplomats and business people working on agreements, trade charters, business deals etc all over Europe, and they will adapt to whatever current economic conditions they find themselves in. Trade will continue, maybe at better terms for some things, and worse for others.

The same sorts of argument have been paraded for changing conditions for bankers in London (and elsewhere) – this argument that we must maintain the status quo to retain the “best” talent. I’m afraid I’m not a subscriber to this particular line – I’ve always believed in rewarding achievements, not political connections or how many of the old boys you know. I don’t see what benefits these extremely wealthy bankers on several million pounds a year are bringing to their organisations (many of which had to be rescued with public funds) that justifies their existence. They presided over one of the biggest economic foul-ups in human existence, yet many retain their roles and salaries, and even when they go they enjoy huge payoffs. Even when gone, the positions remain, filled by the next wealthy individual to perpetuate the system.

Personally I think that you could get someone for a tenth of the salary, and I don’t think they would be delivering only one tenth of the achievements. I’m sure many extremely competent business managers would work well in these roles and be very grateful for a six-figure salary and a performance-related bonus. So what if the uber-paid bankers run off to Lichenstein or America, is the city going to collapse or banks suddenly not function? Of course not – they will carry on, and have more funds freed from not paying colossal salaries. Excellent talent from outside the city could actually start deep and searching reform, as they look at fundamentals of how the business runs.

Of course, this won’t happen, as there are far too many vested interests involved – both in the European Community and in modern banking. Unfortunately for business and the wider economy, matters like this are rarely stripped back to the bare essentials and built up as required for the current economic and political climate. Whatever does happen, in or out of Europe, life and business will still continue, and there will be winners and losers as there always are. The best we can probably hope for is that we can look at things objectively, make some reasoned decisions and mitigate their impacts where necessary – we’ll have to wait and see whether that’s the case or not.

Post 5 - 2013: Change or Bust?

So I see on the news today that the former giant music retail store HMV is looking like it's going to run aground on the shores of economic downturn - 4,000 people potentially out of a job. This comes not long after the electrical retailer Comet called in the receivers. More doom and gloom for the high street.

Now although this is a terrible thing for those that worked there (and I deliberately am going to avoid any further comment on that, this is just about the business stuff!), is this bad for the economy and business in general?

I'd argue it's not - these are both examples of business models built for an economy and marketplace that has changed in an unprecedented way over the last decade. In 2000, when we first moved to Wiltshire with my new job, we bought a dishwasher. I did my usual background research, found an appropriate model, and my wife and I drove 20 miles to Swindon to buy it. We went to Comet, Currys etc (UK electrical retail stores like Home Depot), eventually found the model we wanted (after a lot of trawling around and talking to teenagers who knew nothing about dishwashers) and bought it. The following week it was delivered to our house and installed. I relished the experience about as much as the prospect of root canal surgery.

In 2012 we did the same thing when we moved out of that house, except this time I did everything online. It took about an hour, I got a great price and it was delivered in a few days without mishap. The same goes for my Christmas shopping - I bought some Argan oil for my wife which arrived from Israel with some free moisturiser for less than half it would have cost (including postage) if I'd driven to the local Boots and taken it off the shelf. Branded goods from all over the country arrived in well-packaged boxes only days - or in some cases only hours - after being ordered with a few clicks. I didn't have to endure traffic, bad drivers, pushy shoppers or rude staff, which preserved my Christmas spirit for when I did venture out from my cosy sofa.

The simple fact is that retail has changed - and Comet and HMV didn't change enough, nor fast enough, to justify their own existence. I watched the news with some disbelief as an enormous HMV store was shown, the announcer talking about the rise of online and the change of shopping habits. Now I'm sure anyone reading this isn't surprised by this - it's been happening for a long time now - but the management at HMV still retained their huge stores and staff. Why didn't they downsize and adapt, having download centres in their stores and moving away from a 20th century model of the music store as a social enterprise? It's not liek they didn't have consultants in to tell them that they should do this - they apparently just ignored the advise and evidence that was there all along.

Hopefully this will be another tolling bell to those in similar businesses to adapt and change to the here-and-now rather than cling to their existing model like the captain of the Titanic. In an economic recession, it tends to be specialist retailers that do well - trying to cater to everyone's needs is usually a recipie for failure when people are looking to find a bargain. I'm guilty of this too - back in 2007 I'd hapilly buy from a single retailer, not worrying about individual costs, as money wasn't so much of a concern. Now I'm much more aware of cost, although our disposable income hasn't really changed that much over this period.

In my mind, it's clear that businesses that ignore change, and fail to change with their marketplace are always going to have problems, whatever size you are - no-one can hide just because they're big. HMV seems to be another example of this, and the real question is what will come in it's place - more online purchases through iTunes, spotify and the like, more specialised retailers or something we haven't guessed at yet? I imagine that whatever it is, it won't look the same in another ten or so years!

Post 4 – 2013: Salespeople – Cats or Dogs?

Well, after an unexpected week break from the blog (as my wife went down with a horrendous flu-like cold, and I was doing things like ferrying children to/from school in addition to the day job!), and I'm back...

I’m going to start today’s post with a small piece about the two most popular pets for people worldwide – cats and dogs. People tend to classify themselves as either “cat people” or “dog people”, even if they don’t have either. I’m naturally a cat person, though we own a dog (our lovely ginger tabby “Phoebe” died in 2012 after 17 happy years). The reasons behind this are varied, but boil down to my own view on this as follows – Cats stay with their “owners” because they want to – they are self-sufficient and enjoy freedom, and can go whenever they see fit. Dogs stay with their owners because they are part of their pack, it’s where they belong and where their loyalties lie.

Starting off my career as an “on-the-road” salesperson, and being “field-based” since then, we’ve always had cats rather than dogs. A cat will greet you after a couple of days away with some meows about how the food timer is now empty and the litter tray needs cleaning, and you need to stroke them a bit so they can sleep. If you tried doing the same thing with a dog (and, of course, you certainly should NOT try it), you’d be mobbed the second you opened the door and would not be out of the dogs sight for the rest of the day, as the poor thing tried desperately to ensure that you weren’t angry with it (why else would you desert a loyal pack member for so long???). A dog needs the pack, has to know its place within it, the comfort of the others and the approval of the pack leader.

So what on earth am I going on about? Well, I think sales people are like cats – at least the great majority of successful sales people that I’ve encountered have been. They don’t need the pack, they take from their “leader” what they need and use it for their own devices. You can incentivise a cat, but try punishing them and they don’t respond too well – they lash back or run away. They tolerate other cats, and even like others, but they always have a watchful eye on them too – cat relationships are fickle.

Now don’t get me wrong, I’m not having a bash at sales-people - I class myself as a sales-oriented person, and I’ve been involved in sales for almost two decades. What I’m really trying to point out is that to get the best out of a cat you need to understand them – try dog-training on a cat and you’ll find that in almost no time you don’t have a pet anymore. If you understand what drives them, however, they can be one of the most rewarding pets on the planet. Not that I’m knocking dogs either, but I know that whatever I do my dog will love me – I could mistreat it badly and it still would (which is one of the greatest tragedies of abused dogs, just as an aside) – but you must earn the love of a cat.

In a similar way, sales people are often seen as flighty, untrustworthy, self-centred etc by many people within companies. There can be seen as glory-boys and hunters lacking in responsibility. Sales people are often very clever, have good “people-skills” and are good at communication. They can be difficult to manage and point out problems in other parts of the organisation (often as a reason for their own failure to achieve a particular objective, whether justified or not). They are often untrusting because of all of this and their own experiences in the field. To earn the respect of these people is not easy, and is more rewarding because of that.

Sales people need careful handling, and I’ve had the experience of both very good and extremely poor sales managers in the past. The best were excellent sales people in their own right, as well as having a less self-centred approach (sales is generally a selfishly centred occupation by definition – hitting your own target is of primary importance) which brought the best out in their people, as well as coaching and developing. The worst were little more than bullies with no obvious talent – I even experienced one sales manager who produced a PDF document - sent by email with no other communication – telling people what their “minimum operating parameters” were. Things such as when to make their first appointment in the morning, the minimum number of appointments per day and the earliest the last appointment in the day should be. This would be crass even if sent to new starters, but this was after being in the role for over a year and with highly experienced and successful sales professionals. Funnily enough, within 12 months over 50% of that sales team had left the company, purely because of this monstrously incapable and appallingly bad manager.

Of course not all salespeople are good – some use their skills to take glory for orders they had little to do with, or cover up their lack of real results. A good manager can usually (hopefully!) tell the difference, and there are few things that provide more disincentive to a sales team than seeing a manager support and praise one of these individuals (who they’ve already spotted a long time ago). A manager who spots these people for what they are and deals with them, however, is usually held in a higher regard, as it gives them confidence that their real work will be noticed (and rewarded) and also the mental note that should they try to pull the wool over his eyes, they’ll be spotted!

So in my opinion, salespeople are like cats – they are the dynamo of any company, bringing in the revenue that makes the business work. When they don’t do so well, they need to be helped and encouraged to better things – shouting at them won’t get you anywhere other than the recruiting process. If you enjoy shouting at something that will love you anyway, buy a dog – or better still, don’t.

Post 3 - 2013: Restricting your Business through "Typecasting"

I've been chatting to a few people of late regarding professionals in the workplace, and how it's very easy to become "typecast" (for want of a better word) - that is, pigeon-holed into a particular role title.

You can see this in many industries, and obviously where the skillsets of the role require that, it is not only useful, but probably essential. After all, if you were going to have open-heart surgery, you'd want to ensure the surgeon doing it was a leading heart specialist, not the best kidney transplant guy in the world!

Casting our eyes further afield, however, I don't think there are really too many roles (as a percentage of total jobs, and probably outside industries like healthcare!) which truly require this. If there's one thing that is a real hallmark of humans, it's our adaptability. As a species we've adapted to almost every terrain on earth, and people change what they do all the time. Yet how many roles have you seen advertised - even for relatively junior positions - which require particular training or skills, or experience in exactly that role before?

Now I understand the desires of any business to have people come on board and get up to speed quickly, BUT (and it's a big one I think) does this really happen just because someone has done the same or similar role in another company? Really? Think about it - people are adaptable but also habitual, and if you're doing something very similar to what you were doing before, but different in a couple of points, are you more or less likely to carry on doing the things you are used to doing, that aren't the processes in your new role? On the other hand, someone completely new to this work is likely to check what they are doing more often, resulting in a slower initial start but less likelihood to make repetitive mistakes of a previously learned process.

As any company will have a start-up time for ANY employee (getting to know process, rules, where the coffee machine is etc), is this hiring of people who have very similar experience really going to gain you anything? It might gain you a little up-time, but it also severely restricts your recruiting process to a much narrower resource pool. You might find that a little more open-mindedness gains you a recruit with much better skills, but who previously had a different role title or different industrial experience.

I think the benefits of this cross-fertilisation go further, however. Having a fresh pair of eyes on a process is often a godsend. I've come into businesses and after asking a few questions like "so why do we do this?", people often come up with "we've always done it this way" (I told you it would come up again, didn't I?!) - which is NOT a reason or explanation. The follow up of "wouldn't it be better for everyone if we did this?" or "is there a better way we can achieve this?", is often met (in businesses with a desire for improvement) with agreement, leading to better practices. This is more likely when someone comes in who is generally less familiar with that type of environment than one who is used to it.

If this was implemented more widely in businesses, it may well have many more knock-on benefits. If engineering understands why marketing wants x & y specification, or if sales understands why engineering can do A but not B (at least, not until next year), it should be possible to have a company where all departments are pulling together, rather than apart (as is often the case). Unfortunately it seems that even very closely allied genres (such as sales and marketing) are often seen as completely separate and the people in them as "different" somehow.

Of course this is a very optimistic view of things, and looking out there it doesn't seem to be that very many businesses take this approach (though there definitely are some, and very successful they are too). Many managers and HR recruiters will feel more comfortable employing someone who already has a title the same (or similar) to the one they are advertising for, than to think a little more "out of the box" and recruit purely based on the skills and type of person required. This is very normal and very human - but then again "to err is human", so the next time you're looking to hire someone, just think about whether you're helping or restricting your business by how you go about getting that talent into your company.

Post 2 - 2013: Is Growth Essential?

In my inaugural post for the year yesterday I asked if size was important, and today I'm asking another seemingly obvious question - is growth essential?

Many people (especially those in sales, finance or management!) will immediately say "Yes! Of course". This is the reflex-reaction of most of those in most businesses - they exist to be successful, and growth is part of that. But what about wider growth? We all know that most Western markets have minimal, static or even "negative" growth (or shrinkage, in plain English). How is growth even possible in a shrinking market? Many developing markets continue to exhibit excellent growth (such as Russia, growing around 6%), but when you delve a little deeper you find that much of what is driving this is retail and consumer-lead, not industry or the state (as it very much used to be). This is great is you're selling shoes, not so hot if you're making steel.

All this focus on "growth", however, somewhat misses the point. As I asked above, is it even possible to grow in a shrinking market? Well, yes, of course it is, but it is very much dependent on your business and market demographics. A company with a product that saturates Western markets and is experiencing stagnation or shrinkage can do very well in an economy with no significant growth but no prior exposure to that product. So economic growth in this case is not important (or less so) where market penetration is minimal. The reverse is also true - a growth market which is saturated can mean a static or negative growth market for your product.

So this is all about business intelligence, understanding your markets well and responding to them appropriately. Even so, it might be very hard to achieve growth where financial pressures on your business and customers make selling in a crowded marketplace a bitter duel. Even so, the oft-reported mantra of growth without fail is, to me, rather odd. Sometimes it's better for a business to consolidate it's position and fortify itself rather than try to grow recklessly.

Think of playing that classic board-game Risk. You had to grow to get more armies to grow more, but a sure way of losing was to stretch yourself too far so that your enemies could drive great channels through your territories. Businesses generally need to grow, but they need to do it in a controlled fashion, or something gives - quality, support, delivery - something - and that impacts your brand, competitiveness etc. In extreme cases it can destroy your business. You have to grow and consolidate, and measure your performance against your competitors. Your absolute growth figure is often less important than your growth versus your competitors - that's a real test of how successful you are across the market, not a number plucked out of the air by a manager or board (and incrediably, these numbers can be just that!).

-0.1% growth when your competitors are doing -10% won't feel good, but you're pulling ahead of those around you. The best strategy might be to trim some excess costs and continue until the time is right to push forward again. After all, unless your marketplace is shrinking for everyone (which is another issue!), then the demand is still there, and you'll be in best position to capitalise on it whilst your competitors are still reeling from deep cuts and structural changes.

So is growth essential? Well, for most businesses the answer will be yes, but it's how that growth is measured and against what figures these are derived from that are really important, and it has to be keyed into a wider understanding of your competitors and the marketplace. Sometimers holding the fort for a while and letting others expend their strength is the best short-term tactic for longer term success.

Post 1 - 2013: Does size really matter?

Well welcome to my business-oriented blog, where I'll be sharing various thoughts and musings on doing business in the not-so-rosy economic environment of 2013, and hopefully the occaisional gem which might help people weather the financial storms (or doldrums) that many find themselves in.

So firstly a little about me - I've been in commercial roles since 1995, and have had a pretty wide experience of sales, marketing and management since that time. I've worked in small companies, and for large global organisations worth billions of dollars.

So does this organisational size matter at all? People are often phased by the size of a business, but actually I don't think there's any direct correlation between the size of a business and either how well it is run, how profitable it is or whether it's nice to work there or not. It can be easier to hide waste and inefficiencies in a larger business, but many larger businesses are more attuned to this, and so can be more effective at combatting it. Small businesses often employ a process because it works when they're in a single office of 10 people, but hang onto it when they grow to be hundreds of people, just because they've "always done it that way" (this, by the way, is one of the most abused phrases I've come across in business, and will undoubtedly return in many future posts!).

So does size matter? Well, it certainly changes things - most businesses have ambitions to grow, sometimes growth is "organic" (that is to say, comes as a natural process of the product and current market conditions), and others are in the unfortunate position of having a structure that isn't supported by their current revenue. In all of these scenarios (and many others), the size of the business has to change, and as the size of the business changes, processes and structure should change as well. It is not enough to look at the small business and just multiply it by a factor of "x". Likewise in a business with shrinking revenues, the last thing you should be doing is just dividing by "x".

This might seem blindingly obvious, but believe me, I've seen people who really should know better doing exactly that - business is not an obvious process for everyone - if you're an inventor or engineer, for example. You might excel in your field, but the structure of a business is not necessarily the same as your field of excellence. This is an important lesson for anyone to take on-board - the really successful teams and businesses I've encountered make the best use of a group of individuals who leave ego at the door.

Big businesses in the past have sometimes relied on their size as an indication of their success. This is a pretty blunt instrument, as it really only indicates that at some point in their history they did things well enough to get to their current size. To be really self-critical as a business, you need to compare how well you are doing with how well your competitors are doing. This can be challenging to ascertain, but if you're growing at 10% and your competitors are growing at 15%, you're losing share.No growth might not feel good as a business, but in a marketplace where competitors are shutting down, you're playing for the long-term win.

A small business, on the other hand, can have more of an issue defining what their goals and measures are - does a small specialist tobacconist compete with giants like BAT & Imperial? No, they compete with local newsagents and grocery shops. Concentrating on basics like footfall and local awareness are much more important to the immediate success and survival, even if long-term plans are wider. You don't need to look at the books to know no-one is buying.

This mention of "back to basics" brings me rather nicely to the original question of whether the size of a business matters or not. In an obvious way, the size of a business makes a huge difference - how you interact within it, how other businesses view you and work with you, if you get a company car etc. These are all pretty tangible concepts which impact on both sides of a business relationship. These, however, are really all by-products of size and scale, and not fundamentals of what matters in a company. If we then turn back to the basics of what fundamentally makes a company work, it's the people and processes which define the way the business works. People created these processes within the framework, so people are once again at the bottom-line of any business. Mess up your interactions with people - at any and all parts of a business on any scale - and you'll run into problems.

So does size really matter? Yes and no, but one thing is certain - no business, large or small, works without people doing their jobs well. Get the people part of your business (and the way it interacts with other people) right, and you're setting out on the right foot. We're all human, after all.