Tuesday, 16 December 2014

Secure Your Talent, Secure Your Future. Don’t Make These Mistakes...

As an entrepreneurs chances are you just want to get on with the job of taking your disruptive product or service to market.  After all it’s what you started up to do.  The problem is as soon as your business starts to motor you need to hire.  Recently, though, I’ve observed a series of entrepreneurial companies repeatedly making a total hash of their people hiring and management, and, as a result, creating unnecessary management overhead and seriously damaging their prospects.

An early New Year’s resolution
If you don’t want to be in that situation or if you’ve just  been putting off getting to grips with your employee issues perhaps it’s time to make an early New Year’s resolution.  There are certain mistakes, it seems to me, entrepreneurial managers tend to make again and again and just paying attention to these few areas can pay big dividends.

The first is reactive recruitment.  Typically, in entrepreneurial firms little attention is paid to staff planning and people are hired in a panic after a contract is secured.  But getting the right people into the right positions at the right time should an ongoing process.  Recruitment must be done by fully thinking through needs going forward and planning accordingly. This is vital in a market that is perpetually short of talent and for securing the resources that are mission-critical for any business that wants to grow successfully.
Getting started

But getting it right needn’t be complex, a few simple rules apply.  The starting point both for the employer and the candidate in successful recruitment is the development of an accurate and up-to-date job description and candidate specification.
Creating these should not be neither onerous nor time consuming. A job description should be no more than a sheet of A4 and only needs three components.  Firstly, there should be a clear job title that reflects the level of seniority and the responsibilities inherent in the job. Secondly, there should be two or three short sentences or bullet points that summarise the purpose of the position.

The third and final section should set out the key tasks.  It doesn’t have to contain everything required of the potential executive, just the essential day-to-day responsibilities that define the job. Of course, given entrepreneurial firms are by their nature regularly `all hands to the pumps` make sure you specify that the job holder must also `carry out any other reasonable request from management` or words to that effect.
Trust existing employees

You can then use the job description and candidate specification to start to communicate both internally and externally that you are recruiting - together with details of the hiring process, how to apply and including closing dates.  It’s always worth offering a recruitment bounty to current employees.  It’s not only cheaper than using recruitment consultants but also says important things about the trust you place in your existing people.

You will need to supply this to any chosen recruitment specialists too.  You should also take the time to talk them through both the documents and the context of the position – why you are hiring, the culture of the firm, characteristics of employees that make for successful recruits, career progression examples and so on.  This will enable them to act as seamless extension of your firm, identify the best fit candidates and preferentially `sell` your opportunity against other open positions in other companies.
Ensure any recruitment consultancy adds real value by tasking them with pre-interview selection based on your briefing.  For candidates that apply directly use pre-interview screening by phone to try and determine whether the candidate is worth meeting face-to-face or simply route all applications through the recruiter if you are happy to pay their fees.  In any case, the requirement for a CV and a cover letter, for instance, will quickly reveal whether a candidate can present information and use language correctly together with the maturity and emotional intelligence they show in justifying their application.

Ensuring company fit
Whatever their skills on paper, any hire will need to fit well within your firm, as in small companies the impact of poor hires is much greater than in larger enterprises. No matter how formally qualified for the job the candidate may be don’t hire them if you have the slightest doubt about whether they’ll fit in, particular if they have a chequered job history.  But beware the temptation to hire the same type over and over again – that won’t build effective teams.  

Interviews can be made more effective by using a competency-based approach.  That means asking very specific questions about relevant skills and asking for detailed examples of how those skills have been put to use by the candidate in the past or are being deployed currently.  Make sure the questions are open – this means they are possible to answer with a straight `yes` or `no` and  couple this with objective testing for key technical skills to make the selection process more valuable.
Walking the talk

Once the person is on board the daily business of ensuring good performance should involve a managed settling-in or probationary period.  This should be accompanied by the setting, communicating, demonstrating and the living of standards – `walking the talk`.  Also the giving of regular, objective feedback, praise and reward where due and targeting improvement or correction as necessary should start from day one.

Even if this is achieved one of the other things that can quickly end up biting entrepreneurs is poor - or even non-existent - record keeping.  Good record keeping should simply be part of your day-to-day routine and if you are in certain industries or grow big enough to be subject to external compliance then you’ll be glad you got into good habits from the outset.
Writing it down

Recoding activities such as training, feedback, performance or behaviour issues is especially important, particularly if things start to go wrong with an employee.  Unless you have clear and accurate evidence, it’s impossible for you to have objective authority about a particular matter let alone a grown-up discussion - especially if a situation to be discussed occurred sometime before.
In particular, ensure anything during a person’s employment which involves responsibility for actions on either side is agreed, written down and dated. Even recording informal discussions about performance or behaviour is necessary if only by an email confirming your conversation because it proves that you have taken reasonable steps to correct under-performance or poor behaviour.  

Doing it quickly
It’s a reality that even the smallest firms have people employed whose performance falls well below that of their colleagues.  Not targeting poor work performance is the surest way to spread the cancer of disillusionment and resulting poor performance throughout a firm. The most important thing is to take appropriate action as soon as you notice that the employee is not performing work to the standard required.

If addressed early it’s not the end of the earth and so doesn’t have to become a big deal. Start by investigating the cause of the sub-standard performance directly with the employee.  If you can quickly identify, remove or reduce the cause of the problem, the employee's performance is likely to improve just as rapidly.
One of the reasons poor performance is not addressed quickly is because managers fears they will be disliked for their actions. Also that the employee concerned may get defensive or aggressive when presented with the situation or the manger themselves will end up saying something they regret or that can be used against them.  

Sticking to the facts

If things get sticky take a deep breath and focus on the facts and remind the employee that you have a right and a duty to care for, manage and encourage an employee to do their job to the standard required ethically and in their contract.
Remind the employee the discussion is about business, it’s not personal.  It’s not about whether the employee is liked or not, it’s about whether they can do the job to the standard required.  If you have been keeping records then you will have clear evidence of poor work performance to support your case or good performance to help balance it.  You’ll then look like you mean business too and are intent on getting to the bottom of the problem for the benefit of both parties.

Hiring slowly, firing quickly
After you’ve had a discussion with the employee and everything is on the table, the next stage is to create a performance improvement plan.  Agree and set down precise targets which are capable of being measured (SMART applies in spades here) and meet regularly to identify and agree progress.  If performance doesn’t improve then a justified and managed exit procedure will have to begin.

Finally if you think none of this yet applies to you, remember at least the maxim when it comes to entrepreneurial people management; everything should be based on hiring slowly and firing quickly!


Wednesday, 19 November 2014

Staying Motivated – How to Rise Above the Daily Grind

For most of us, running a business is about a lot more than just making the numbers.  If that alone was the sole reason for turning up at work then I’d wager most of us would find it hard to get out of bed in the morning. 

We spend a lot of time doing it so work should be enjoyable – it should be a creative pursuit, it should be personally fulfilling and it should keep us growing.  Such aspirations are not just altruism they are the key to productivity for most of us in the workplace - entrepreneurs but also for the people we employ.
The problem, of course, is that it’s easy to lose sight of these aims in the daily grind as we negotiate the endless tension between doing rewarding work and just getting things done. It’s therefore worthwhile taking time to gauge your company’s culture and assess your own ability to help both yourself and your people stay intrinsically motivated at work.

Do not throw money at the problem
Do you and your team stay on top form and keep productive when the work just piles up? How do you all remain inspired by your working environment when the tyranny of bottom line is ever present?

If you feel you might be wanting in either respect the last thing you need to do is throw money at the problem.  Extrinsic rewards like more pay or bonuses are unlikely to resolve motivation problems or increase individual enjoyment of labour.  In fact, a recent study by the UK Association of Accounting Technicians (AAT) found that eight in ten people would turn down a big salary increase if it meant working with people they loathed or an environment they didn't like.
In contrast, the top reasons reported in the survey for wanting a job were responsibility and recognition whilst the top two reasons for staying with a company were having a good relationship with colleagues and enjoying the job role. Experience tells me that these aspirations are in no way unique to Accounting Technicians, existing in pretty much all of us.

The implicit bargain
It’s always struck me too that the implicit bargain that is struck in any employer/employee relationship is that a company's ultimate commitment to an employee is to grow their personal market worth in exchange for the employee’s work in increasing the firm's market value. So how does your company grow its employees, not just I terms of their capabilities but as individuals?

There are, of course, good and bad ways to achieve this. Career paths dictated by specific benchmarks or pre-determined timelines smack of the industrial age `nose to the grindstone` attitudes that certainly won’t attract and develop the best teams these days.
The reality is most significant people development happens not on periodic training courses, in seminar rooms or in response to targets but as the product of day-to-day experience and challenge.

So it’s important to assess how you balance risk and reward in your team. Do you allow or even enable people to take risks? Do you push people outside of their comfort zone into leadership positions? Do you give people projects for which they don’t appear wholly qualified? Do you trust people with big decisions, even if they are initially intimidated by the task?
Stretching without fear

This is important because for everyone the opportunity to deepen and add to skills is the key to staying stimulated.  That means ensuring the mentoring needed to develop skills in leading projects, managing team dynamics, and constructively giving or receiving feedback exists in spades throughout the company. And that means you as well, entrepreneur.  Consider hiring non-executive directors, get a personal business coach and make sure you learn from your people.
Personal development apart, as an entrepreneur few things are more motivating than enabling personal and professional growth in others. The freedom to stretch themselves without fear and seek original and creative solutions will ensure their day-to-day work is replete with exciting and challenging opportunities for learning and ownership.

Conflict minimisation
The aim is always to minimise the conflict between the work that people want to be doing and the work that must be done so it doesn’t turn into a stultifying unfulfilling downward spiral. Try also removing the quotidian goals and tasks from yourself and your team, at least for a few hours, so that you can re-connect with the principles and work that inspired you originally.

By participating in activities or tasks that are outside of delivering the bottom line or involve different behaviours than the day-to-day, such as a non-profit work, academic teaching or a `blue sky` thinking projects, people  of all sorts can become dramatically re-energised and refocused.
Of course, as any entrepreneur battling to keep their business afloat will attest, the ability to self-motivate in this respect is critical and essential to identify in people selection.  But the impact of self-motivation alone can be limited if company culture, structure, and growth potential don't support it.

Thursday, 6 November 2014

An Entrepreneur’s Guide to Recruiting Successfully

As the owner of an entrepreneurial business, it’s easy to feel that the dice are loaded against you when it comes to competing for top talent.
After all, large corporates have all the advantages don’t they? Starting with hoovering up prospective employees on the University milk rounds and offering work on internationally recognised brands, industry-leading salaries, career progression, attractive company benefits and, traditionally, job security.

If you are to compete successfully and build your early stage business, it’s axiomatic that you should get your hands on the best employees as early as possible and keep hiring top talent as you grow.  So how are you supposed to convince people to choose to work for you over the current giants of the traditional and digital economies?
The good news, in my experience, is that like most aspects of running a business, there is no particular magic to getting the best employees in the door and persuading them to join.  Like all things in business, success is assured by the combination of original, differential presentation and flawless execution. 

Think of recruitment too like a sales process, because that’s exactly what it is. You are the product and you want people to choose you over others. And in the evolving business climate small firms actually have some distinct advantages.
Getting started

If that’s the case, where might you start? Virtually all the business decisions you make involve analysing information gleaned from continually keeping tabs on what your competition is up to.  Your hiring process should be no different.  And it doesn’t matter whether or not you choose to use the services of recruitment consultants, the basics remain the same.  After all, recruitment consultants can only be as effective as you allow them to be.   
Start building that intelligence by searching LinkedIn, recruitment company websites and online jobs fora looking for competitor companies who are offering similar roles to yours. Think like a job seeker.  Look at the recruitment sections of competitor websites and consider how you can improve on them.

Read your competitors’ job descriptions. What are they looking for or not looking for? What are they offering or not offering? There may be no difference in what they are offering but could you be expressing to your target audience the benefits of working for your firm in a more attractive way?
Attracting candidates

One of the first things any job seeker worth hiring will do when they spot a potential opportunity is to go to your website.  You have to make sure that when they have found it they see something that’s going to engage them and make them want to apply for the position.
Candidates may also find you through a general search so, again, you need to think like a job seeker and ensure that they can find you easily.  This means ensuring your site is optimised against job search terms which will be much more than just job titles and should include location, benefits, business type etc.

And, of course, potential candidates need to have had their interest raised in the first place or need to have their interest in your firm endorsed, so manage your external profile.  Ensure you are being seen where your candidates spend their time – on Twitter, Facebook, LinkedIn and in the likes of Real Business, Growth Business, Tech City News, vertical market titles and so on - depending on the nature and seniority of the position.
Keep communicating
Keep communicating to differentiate your proposition. Create regular blogs around subjects of interest to applicants. Enter awards, gain accreditations such as Investors in People, regularly signal success through your email database and engage with the press offering views on contemporary business issues.  

As Oscar Wilde said, ` There is only one thing in life worse than being talked about, and that is not being talked about ` so create a bit of controversy and encourage other people to do your work for you by discussing your business online and by word of mouth.
Making it obvious

The recruitment process is also no different to the sales process in terms of creating a funnel of prospects.  The more people you get into the top of the funnel the higher your chances of snaring the best candidates at the bottom.
So, as well as ensuring people know you exist and are favourably disposed towards you, make it obvious you’re hiring in your communications and on your website.  In the latter case, don’t make the mistake of hiding your requirements just in your `jobs` pages but state them clearly on your home page too.  After all, it’s also a positive signal to your customers that you are growing and staffing to ensure their needs continue to be met.  

Overcoming objections
In any sales process too you will be prepared to overcome objections.  Again, recruitment is no different. Think about the reasons why people may not want to work for your entrepreneurial business and answer them with positives.  For instance, if you think prospective employees will worry about a lack of job security compared to a corporate talk them through your growth history, rising turnover and profitability.

Most of all, emphasise the opportunities inherent in such growth and prepare case studies of those who have joined and have been able to succeed more rapidly than they might have in a major brand.  Show too examples of structured development and progression to demonstrate to prospective employees exactly where they can expect to be each year hence.  Introducing candidates to employees who are the walking, talking product of this process confirms both your veracity and says very important things about your relationship with your team.
Culture clubbable

Just as company culture can be the key to your overall success as a business it is fundamental to successful recruiting. Big businesses and the public sector struggle to develop and retain attractive company cultures and are usually slow to evolve to the demands of new generations of employees – the change for Gen X to Gen Y, for instance.  This means they are often viewed negatively by potential employment candidates.
Use this to your advantage. Don’t underestimate the allure of a progressive company culture where employees get direct access to its leaders, where things happen quickly, where workplace politics don’t rule and where their voices can be heard.  This can be particularly attractive to those who may initially have chosen the `safe` route of joining a big company training scheme after graduation or for those who have been working at a large corporate for some time.

Bragging rights
Communicate about the things that might make your company an interesting place to spend a large part of their lives – a ride-to-work scheme, lack of dress code, state-of-the-art technology, hot desking, flexible working, employee-defined perks or a particularly cool or sociable working environment.

Never underestimate too the power of providing something that gives a potential employee bragging rights with their mates and might intrigue or even impress parents and family. Such things can be a deal-maker.  Think of these as defining your brand and ensure they feature from prospecting through to interviewing.
Recruitment isn’t something you should turn and turn off.  You should be searching for the best talent 24/7.  It’s also very important to recruit ahead of demand in order to ensure  people have time to `bed-in`, to allow you to `hire slow and fire fast` in the case of mistakes and constantly to be in control of your staffing

Open, honest and objective
So, even if you’ve filled all of your current positions, as a fast-growing entrepreneurial company you’re likely to need to hire again, quickly.  That means remembering interesting people who you meet and making a concentrated effort to keep them engaged with your business.

They may not want to join you immediately but in the modern world things may change quickly and they could be knocking on your door sooner than you think. Also, be sure to keep in touch with good people who you may not have been able to offer a job to through the interview process on the first occasion – you may want to hire them later.
Every candidate presents an opportunity through which to market your company.  To make sure this happens, ensure that the entire interview process is managed impeccably throughout with open, honest and objective feedback given.  You will always end up rejecting more candidates than you offer jobs to and you want those who are unsuccessful to wish they could have been hired and to tell others so.

Skin in the game
Get your staff involved in the search and – if trained to do so – the interviewing of candidates so they have `skin in the game` in being responsible for choosing their colleagues. Make financial rewards for successful hires available to everyone. You can be sure your top performers will already know other talented individuals who, because of them, may have an existing interest in your company. And they’ll be your best salespeople knowing who will, and won’t, fit well into the company’s culture.

Finally, recruit on the basis that you want to hire people that are better than you.  That’s your job as a leader. High performing employees are ambitious for themselves and their firm, positively competitive, excited by responsibility and thrive in a supportive, learning environment.  They’ll want to be you and, if possible, surpass you.  All of which is good news.
Like all the best deals you should be looking for a win-win.  With this in mind, offer things that you know are going to appeal to this demographic.  The ability to take responsibility and progress professionally financially and quickly if they perform well against agreed targets and are supported by plenty of coaching competency training is one of the top reasons people join firms year in, year out. 

Wednesday, 29 October 2014

David and Goliath - A Quick Date or a Long-Term Relationship?

Much as these days many corporate Goliaths are actively looking for entrepreneurial partner Davids, it’s often the case that entrepreneurs have to make the first move in developing a strategic relationship.
The right kind of relationship with a Goliath and its customer base can be transformational for a David, providing the rapid growth at predictable margin that other early-stage companies can only hope to achieve by other means.

It’s worth the effort too because well-managed Goliath relationships provide the credibility and experience that assures organic business growth outside of the engagement. But like all relationships, they should be entered into with eyes wide open and that starts with understanding the nature and motivations of both parties.
The difference between customer and partner

Despite the deliberate conflation of the terms customer and partner in `marketing speak` there is a profound difference between `customer` and `partner` and this needs to be recognised. Essentially, it’s the difference between a quick date and a long-term commitment.

Certainly, the process of identifying and selecting potential customers or partners is pretty much the same: find out what it is that they need; identify how a product or service will meet it and target businesses accordingly.  It’s the context that makes the difference and that needs to be understood.
Common interests and goals

A successful tactical sale to a customer involves engaging an individual or team who are trying to address a particular challenge in their department or deliver on their responsibility in the business.

Creating a partner, however, requires the supplier to become part of the target company’s customer engagement and retention strategy. This means that opportunities to partner are usually much more difficult to find and require more resources to be successful, particularly given the significant differences that usually exist between corporate and entrepreneurial businesses.

To succeed, the two parties have to be aligned in many different ways.  Most particularly they must have common interests and goals or they will quickly diverge. The process requires Davids to deal with the existing and complex Goliath partnership structures, licensing and financial deals that are designed to execute successfully strategic decisions made at board level.

They involve many people of different disciplines because they go to the heart of the organisation’s purpose and, as such, have a greater impact of they fail.  As with most big deals, the level of risk increases with the level of opportunity.  And that means the bureaucracy around risk management also increases to a level that Davids may find tiresome and intimidating in equal measure.

The upside of this is that this process shines a light on what life will be like as Goliath’s partner and underlines the reality that Davids need to fully comprehend to ensure that there's both a cultural fit as well as a commercial one.  As ever, the devil is in the detail.

Proper preparation
Thus, when engaging with Goliath, proper preparation by Davids is vital.

A large organisation can absorb more failure that a small one, so, as a David, it’s more important to get things right up front. Davids should also remember that they may only be one of a number of strategic partnerships that a Goliath will be negotiating at any one time. So unless the partnership is going to save Goliath from oblivion it may be paying less attention to the deal than the David might be. 
Not being overwhelmed by the potential opportunity and knowing exactly how its product or service fits within the strategic plans of the target organisation is fundamental if any deal is going to succeed.

At a corporate level David and Goliath might share the same business goals and provide a perfect financial fit for each other. However, if the teams don’t get on, for whatever reason, or the David fails to get the right kind of buy-in around the deal champion then the relationship could be doomed and the benefits lost.
The human factor cannot be underestimated and the personal risk, imagined or otherwise, that the Goliath team may be taking needs to be appreciated.  Personal agendas vary. Doing a deal with a David might be viewed internally as an admission of failure to innovate from within.  At all times, Davids should seek to make Goliath look good and that requires a bit of ego control.

Play the long game
In all of this it’s important for Davids to realise when business growth planning, that working with Goliath partners is never going to be easy. Large corporates have established processes and structures that move slowly, are naturally very political and employ many people who are disconnected from other parts of the organisation, let alone the customer. And so Davids may have to get used to pitching their proposition over and over again.

For Davids, this can be frustrating as it clashes with their agility, quick decision processes and the need to maintain cash flow. But it’s vital that Davids have the confidence not to try and force the pace. In a strategic relationship the long game should be planned for and played from the start.



Wednesday, 15 October 2014

You Can Fool Some of the People Some of the Time...

During my childhood Monopoly was omnipresent, I was fascinated by the board game.  Rainy Northern days, of which there were plenty, would see me indoors gleefully piling plastic property onto the blue strips of Mayfair and Park Lane.  Usually mortgaged up to the hilt, the idea was nevertheless to speedily deliver a fatal financial coup de grace to whoever was unlucky enough to be playing my self-styled proto property magnate.
The other monopolies of my youth were even less fun to experience. The commanding heights of UK economy were at the time nationalised. This ensured that choice in everything from to telecoms to travel was scant, poor quality and expensive. The subsequent process of privatisation and the introduction of competition gradually ensured a much more effective - if still far from perfect - market economy came into play. 

So, thankfully, these days a monopoly of supply is a comparatively rare or transient thing of which ambitious legislators and the forces of digitally-enabled capitalism eventually take care.
Differentiate or die

That means to be a successful entrepreneur and generate decent profits then you do need to develop something to make your product or service stand out.  You need to be able to articulate a compelling reason why customers might continue to hand over their moolah to use your products or services.  If you don’t you are selling a mere commodity.  And probably not for long

Clearly differentiate or die applies because in commodity businesses the only real point of difference is price.  And pricing usually goes only one way – downward.  So if you want your entrepreneurial business to stay around, let alone attract further investment or even IPO, you need to have something that no one else has, that the market perceives to be different. And be able to sustain it, or quickly move on to plan B, C or D. 
Beards, brogues, bicycles

It’s easy to forget that in the economic good times these basic rules may not apply entirely as the investment market starts to resemble the antics of drunken punters at a casino.  A quick scan of recent investments in London’s Tech City makes me wonder about some of the criteria by which investors parted with their money.  Is the mere presence of beards, brogues, bicycles and haircuts last seen in the Great Depression now somehow a sure sign of superior returns to come?
The IPO market too certainly looks gung-ho both here and in the US.  Although proceeds from European IPOs in the traditionally quieter third quarter shrunk to €6.6bn (£5.2bn), they were still more than double those of Q3 2013. In fact, 2014 IPO activity has almost quadrupled compared to last year. In the nine months to September 2014, £31.8bn has been raised.

That’s pretty frothy.  In such rising markets the herd moves together and the fundamentals may get forgotten in the search for rapid returns.  But, all is not lost.  Some in the US and UK that have previously signalled their intent to raise funds publically seem to have rapidly got over the sudden rush of blood to the head.

Making a necessity out of Virtu

In the US earlier this year, high frequency trading firm Virtu Financial suddenly `delayed indefinitely` its IPO. Blaming regulatory approval for disrupting its intended float turned into a wholesale retreat in the face of journalistic expose of some of the less savoury but fundamental aspects of its business that would have seen potential investors run a mile.

In the UK conventional `bricks and clicks` fashion clothing retailers Fat Face and BlueInc pulled their UK IPOs blaming `market difficulties`  and have recently been joined by challenger bank Aldermore which, despite its modern digital platform, AnaCap, is still a bank established at a time when the mere word has become toxic to many firms requiring finance.

Back in the US Square and Box, on the other hand, have not used the word `indefinitely` but are dragging their heels having been re-scheduling their IPOs for most of this year. 
The ‘market volatility` or `weak demand for technology stocks`  excuses have, of course,  been rolled out by these two to a response of equally rolling eyeballs in the market.  But it strikes me as pretty obvious that the real reason is that the IPO process has highlighted to these comparatively early stage companies is that they have very little to differentiate them from better positioned competitors and they are frantically playing for time whilst they and their investors figure out what might save their blushes, if not their bacon. In contrast, most of the other firms had already worked out they had nothing and quit.

To reiterate, without a monopoly restricting choice customers need to be persuaded that there's something special for which it’s worth paying more. In the absence of obvious and fundamental difference expensive branding, marketing, sales and distribution have to deliver that in the mind of the customer.  Just look at the money mobile network operators spend on trying to convince you that you care about their brand, rather than the best value airtime package, so they can continue to trade on wafer thin margins.  

Queue-loving slavering sycophants

In direct contrast to the networks Apple’s marketing chops, that have reduced so many of its customers to queue-loving slavering sycophants, means it can make 40-odd percent margin on every phone it ships.  And a distinctive design aesthetic, rapid obsolescence and model cycle keeps the tills ringing.  Apple has other ways to ensure its super profits, of course.  Witness its voraciousness in its use of patenting innovation and patent infringement litigation to limit competition.  That’s how you become, and remain, the world’s most valuable public company.
The Holy Grail though, in digital age marketing is to profit from the network effect.  After all people join Facebook, LinkedIn, Twitter, Instagram et al because people join Facebook, LinkedIn, Twitter, Instagram et al and they sell that idea to themselves and each other. The same is true of Apple and apparently of Harley Davidson motorcycles. Although despite being one of a prime demographic for the message that hanging out with other owners of laughably crude yet eye-wateringly expensive motorcycles thrown together from obsolescent parts is an essential middle-aged male lifestyle choice it’s something I’ve never, ever understood.  

Anyway, I digress.  Back to will-they-won’t-they Square and Box. What is it that they're doing, can do or will do, that prevents them from being viewed as just yet another small supplier of a standard commodity?

If I squint enough at financial services, merchant services aggregator and mobile payments company Square, I could convince myself that if they spend the vast sums necessary to get their readers everywhere, then the possible numbers could start making the small transaction charges mount up to something significant.
Massive ecosystems, resources and customer reach

And, of course, to get to that situation you have to overcome very high barriers to entry. But if your business is essentially a point of sale app aimed at replacing traditional credit card terminals and cash registers you are up against the big merchant services and consumer specialists – Visa, MasterCard, Amex.  These have massive ecosystems, resources and customer reach and could start to squeeze you very quickly if they wanted before any significant disruption could be possible.

But with Box any advantage is a lot more difficult to see. It provides cloud services, specifically online storage. The problem is that it is already in a mature commodity game. A different set of big consumer specialists with similarly massive ecosystems, resources and customer reach – Amazon, Google, Microsoft - now dominate it and, naturally, prices are being driven down by the day.
In neither case also would that other route to big profits – that of being the lowest cost producer - apply. That’s a game that's already been fought out by the established behemoths of the industry.  And as for the network effect, that just ain’t gonna happen.

So, the fundamental entrepreneurial challenge remains what is it that your company, or even your idea, can do that's different, cheaper, more convenient or simply better than anyone else?  And that’s a question too for any potential IPO audience, the VCs that have sunk their money into such companies and the management that sold the dream in the first place.
As the old saying starts, `You can fool some of the people some of the time...


Saturday, 4 October 2014

Are You Sitting Comfortably? Now You’re Talking.

Ever been in a situation where you have met someone for the first time in a business meeting and you just can’t warm to them? But they’ve said, or done, nothing unpleasant yet you are left feeling uncomfortable and fighting with yourself to play nice?

I suspect we all have. And the reason is we were tuning into the wrong things.  It’s not what the person said, or even how they looked, it was how they acted on our unconscious.  Up to 90 percent of our communication with others is non-verbal, which means that most of the time it’s our body language that’s doing all the talking. As human beings we’re programmed to pick up those messages loud and clear.
Entrepreneurs are driven to get things done and to get things done fast.  That means it’s important to get off to a good start and get the best out of every encounter. Why? Because your own experience will tell you that within the first few minutes of meeting someone, you are already making decisions about that person.  You are quickly deciding whether you think they are credible, trustworthy and what are their true intentions. In short are they someone you may or may not want to do business with?  And, of course, they are thinking the same things about you.
The negative and the contradictory
This can give you a gut feel about an individual which it’s very difficult to rise above at a later date.  People give themselves away with their body language but also unchecked it can even send out not just unintended negative but very contradictory signals too.  But the reality is people are much more likely to engage you in future conversations if you professionally observe and act on their body language cues and manage your own actions accordingly.

Assuming you want to use your body language to communicate the credibility and good intentions that make for great relationships here’s some things to remember.  For reasons too many to list here, no one likes a slacker, so begin by considering your posture.  You should sit upright but not appear stiff, shoulders relaxed so you don't look uptight or have just escaped from an Army square-bashing session. Align your body with the person you're talking, showing you're engaged and `not talking out of the side of your face` or anywhere else for that matter.
Don’t cross your legs or lock your knees together. Keep your legs slightly apart to indicate that you're relaxed and ready to receive information. Lean in a bit too, it shows focus and that you really are listening to what is being said.  Also by entering your interlocutor’s space it invests you with power in the conversation.

As well as being aligned try to reflect the body language you are observing, showing you are in agreement and that you like - or at least are trying to get on with - the person you are with.  If you genuinely like someone, you’ll notice that you do this unthinkingly anyway.  But, of course, you’re always going to be aware in future, aren’t you?
Fore armed is forewarned
What to do with your arms can be a bit of a problem and different cultures employ huge variations in arm signals but at least initially keep your arms relaxed at your sides.  This creates no barrier between you and your opposite number and shows, again, that you open to what someone else is trying to get across.  And, as with your legs, keeping your arms uncrossed helps you absorb more of what's going on.

Once the conversation has warmed up use your hands to gesture when you speak - this improves your credibility, your impact and is believed to improve your thinking - if only because it’s a signal that you are relaxed and confident in the situation.

In Europe many meeting protocols are in flux.  For instance hugging and multiple kisses are now firmly on the menu in follow up business meetings.  But, at least for the first encounter, a little more formality will serve you well.  So it’s a good idea to remember to greet others with a straight forward, traditional firm handshake - but not a bone crusher or one that is held for so long that it gets physically and emotionally uncomfortable.
Limp and flabby
Those of you that can remember the mass of negative messages transmitted by your experience of various outstandingly limp mostly dextrous but occasionally sinister encounters will concur a firm handshake is probably one of the most important bits of body language, not least because it sets the tone for the entire conversation. You can bet it’s pretty much certain that a limp handshake will be followed by an equally flabby conversation.

No matter how senior or serious, everyone likes to be encouraged.  Appropriate head movements and genuine smiles will show you understand, agree, and are listening to the opinions of the speaker.  But don’t overdo it or you’ll look like a nodding donkey.  Done well this’ll make them feel more at ease with what they are saying and you are likely to get more out of the meeting.  Laughter too will lighten the mood and picking up on humorous points can show you're paying attention.
Look the person in the eye when they are communicating, but don’t stare otherwise you’ll come across as aggressive. Keep eye contact going when you speak, but feel free to look away when you are thinking - it forms a natural break.  Beware of looking too wide-eyed in your enthusiasm too and be conscious of blinking too much. Rapid blinking could signal that you are feeling uncomfortable or in the case of a one-time colleague of mine, telling big fat lies.
Squeaking rarely adds gravitas
Work with the other person's facial expressions. Smile when they smile, frown when they frown and so on because once again, this demonstrates that you are in agreement and like - or are making an effort to like - the other person.
Monitor your voice, its tone is key giveaway to your stress levels.  Breathe easily and regularly, keep the pitch low and the delivery slow and clear. Make sure you have a drink handy if the atmosphere is dry, or you have spent your day talking, as squeaking rarely adds gravitas.  

Don't end every sentence as if it's a question unless, of course, you are an Australian where it’s well-nigh compulsory and is likely to be graciously ignored by those who speak other forms of English.
Final notes 
During your meeting, take notes, particularly when you have asked questions. It’s not rude, it’s almost rude not to.  It demonstrates that you are engaged and care about what the other person is saying. But remember to make eye contact regularly so the speaker knows you haven’t drifted off into your own thoughts.  Watch their body language for shuffling in the seat and other signs of distraction. It may be time to wrap up the meeting with a wish to meet again and that good, firm eye contact assuring handshake.

Watch your body language too until you are well out of sight of the building it can been read at a distance long after the sound of your voice has faded.

Thursday, 25 September 2014

Yahoo! and Alibaba: David’s No Longer Dancing with Goliath - He’s Writing the Tunes

Despite its continuing travails, the near 20-year-old web search company Yahoo! appears still to have a market capitalization of just over $40 billion. Not bad, you might think, considering its history of decline that mirrors the inexorable rise of Google.

But there are lies, damn lies and statistics. I’d estimate Yahoo!'s core value actually is only about $4 billion.  Why?  Because its 16 percent stake in the recently NYSE-floated Chinese e-commerce giant Alibaba is worth approximately $37 billion.

Toppled giants

Without what has turned out to be a very savvy investment its core value would put the one-time Goliath in a bracket with that other toppled giant in the war for internet domination, AOL, which currently weighs in at around $3.5 billion in value. To put that in perspective, Yahoo! made nearly three times that by selling Alibaba stock soon after the IPO

But Yahoo! has always been acquisitive.  It’s made over 100 purchases starting in September 1997, with the web search engine Web Controls, right up to September 2014 when it took over the Indian document handling firm, Bookpad.

Under CEO Marissa Meyer’s leadership, Yahoo!‘s attempts through acquisition to get off the bell curve of inevitable, laggardly decline and onto the `S` curves of re-inventive success  have massively increased with many months seeing multiple buys  announced.  14 Davids have disappeared into Yahoo!'s maw so far this year  - from Aviate which made an intelligent home screen for the Android OS to social media  transformation business Vizify  to Flurry’s mobile analytics.  And that was after a busy December 2013 when Yahoo! closed in on five businesses.

From saviour to nemesis

Of course, these are wholesale acquisitions, not partial investments, and it remains to be seen how they fare within Yahoo!

Alibaba too is a salutary lesson for any Goliath – that the David you invested in could not only help your survive and thrive but could start to dwarf you changing the markets in which you operate. The paradoxical ultimate outcome of your search for relevance being your own demise as your potential saviour becomes your nemesis. 

And as an entrepreneur be careful what you wish for, even with a minority investment, it seems, you could get more than you bargained for and may up accidentally end up running the show. On the other hand, that could suit you fine.

That’s something Meyer and her board will have hanging round their neck in coming months as financial analysts around the world work out how to value Yahoo!’s share price going forward. The share price, for instance, dropped nearly 10 per cent after the IPO as investors saw no need any more to hold Yahoo! stock in order to get a bit of the Alibaba action.

Maintaining meaning in the market

But such movements are the daily stuff of the financial markets and Yahoo!'s valuation being linked to Alibaba’s isn't necessarily a bad thing.  The partnership still presents a major strategic opportunity, one that Yahoo! has needed for years as it’s struggled to reinvent itself and maintain its meaning in the market.

One of Yahoo!'s  problems, which is shares with many US-originated corporations, not to mention sports organisations, is that, despite thinking itself a global brand, it is actually very US-centric in its operations , right down to the vast majority of its  acquisitions being from North America.  Note: for those of you European entrepreneurs thinking Yahoo! might be a good exit, the reality is 50 per cent of acquisitions of European Davids are done by European Goliaths.

But this US-centricity could work in its favour in this case.  It doesn’t take a great leap in imagination to work out that Yahoo!’s US brand presence and traffic – it ranks third in the US for total internet traffic – and historical relationship could make it good partner to enable Alibaba to build an online retail marketplace in U.S.

A man with a plan?

Some of Alibaba's recent activity in this respect may be portentous. It’s launched the Esty-alike speciality shop marketplace 11 Main and has made $200 million investments in both the daily deals site Shoprunner.com and messaging app company Tango.  All of these could be the building blocks of a sustained assault on the US retail market.  And, of course, Yahoo! may now be part of Alibaba's larger plan to drive traffic to expand the U.S. arm of its existing business.

If I was a book maker I’d be taking bets on Alibaba getting past the partner thing pretty quickly eventually swallowing Yahoo! Whole. After all, control could be acquired for what it might consider small change. However if I were the betting sort I’d be thinking just because it could do it doesn’t mean that it should. In trying to create ecosystems and deliver shareholder value why buy second hand damaged goods when you have the power and resources to build brand spanking new?

After all, look what happened when AOL acquired Time Warner.  It all seemed good on paper but a very expensive reality soon dawned.  He may be a man with a plan, but as an English graduate will Alibaba founder and CEO Jack Ma have learnt the lessons of history? Let’s hope so, if only for the sake all the Davids queuing up to form part of his future success story.