Friday, 30 January 2015

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

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

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

Slide 33 in the PowerPoint fest is entitled `You are unlikely to be your audience` and warns `Generational change is profound. Learn to understand, recognise and act on Generation X, Y, and Z behaviours. `
Generational change is indeed profound. It affects much more than the common and usually grossly mistaken assumption in sales, marketing and communications planning and execution that the audience for the product or service thinks like the provider. 

The problem, it appears, extends far beyond the relationship between vendor and customer but is also rife within providing organisations.    In particular, it is that there is currently mutual incomprehension between what employers think Gen Y staff want from their positions and what younger employers actually desire in their careers.
It’s something that in an era of ever more rapid change my thrusting, international, Generation X-ish audience are going to have to deal with increasingly.  Whether they climb the ranks of multi-national management or embark on the entrepreneurial journey and start hiring.

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

According to the results, employers believe leading a team and experiencing lots of different jobs and sectors are the most important motivators for Gen Y.  Wrong!  Gen Y employees actually rate achieving a work-life balance and ‘being totally fulfilled and happy in my work’ as most important - alongside earning good money, that is.
Interestingly, the report didn’t make the mistake of assuming Gen Y is homogenous. For instance, it split Gen Y employees into two groups - those aged 18-24 and those aged 25-34. That split reveals some rather contrary results, showing the 18-24 year-old group perhaps being much closer to Gen X values than their more laid-back older Gen Y siblings.

When it comes to leading a team , however, younger employees, the research found, are more driven (21 per cent), compared to those aged 25-34 (17 per cent). However, the clearly-out-of-touch employers believe managing a team is more important to older Gen Y staff (28 per cent).
Those aged 25-34 also rated the importance of work-life balance much higher (44 per cent compared to 31 per cent in the younger group). Employers underrated the significance of work-life balance for younger employees - 18 per cent believed it was important o 18-24-year-olds versus 27 per cent for 25-34-year-olds.

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

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

Should these findings prove to be true over time we could be having to handle a shortage in management in future, assuming that younger generations in the workplace are not automatically going to want to sit behind the desks of todays’ leaders and managers.  I think you can count on that.
More likely, in my opinion, is that Gen Y’s new attitudes along with new technology will drive further change in the nature of management and the structure of companies.  The alternative will be a decline in engagement levels, productivity, and increased staff attrition rates accompanied by the inevitable and perennial cries of skills shortage.

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

As slide 63 of the presentation warns, `You can’t create something new without destroying something old. Learn to let go and move on before someone does it for you! ` So, get engaged with Generation Y.  They will be running things, so help them do it well on their terms and from their perspective.
After all, the world of business didn’t fall apart when we dispensed with the conventions of wearing ties, using fax machines or talking into wired devices that just transmitted voice, did it?  And , yes, Gen Y, unbelievably, we late baby boomers once did that stuff.

 

Wednesday, 21 January 2015

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

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

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

A recently published UKTI report, written by The Economist Intelligence Unit (EIU), ` Helping entrepreneurs flourish: Rethinking the drivers of entrepreneurship’ looked at how to foster an entrepreneurial mindset - both through education systems and business experience - and, crucially, the factors that enable entrepreneurs to thrive.
It drew on seven in-depth interviews with entrepreneurs and other experts, a lot of desk research and two surveys—one of established entrepreneurs and another of people aged 18 to 25.

Its findings are illuminating, not least because they reveal an apparent change in attitude to the business of wealth creation.
2020 vision

Far from being looked down upon, as it once was, as grubby `trade` not fit for the attention of society’s most talented, entrepreneurship is now viewed as a highly attractive job option.  In the global survey of young people, the top choice - at 30 per cent of the respondents - said that their preferred occupation by 2020 would be running their own business.
Showing how much the tables have turned in recent years, amongst this group 75 per cent are open to starting a company one day, and a further 7 per cent have already done so. Over a third of student respondents regarded running one’s own business as a source of personal work reward  (37 per cent) and a way to create something new / innovative (35per cent.

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

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

The growing number of mentorship schemes and the amount of time existing entrepreneurs give away to help others is testament to the regard for, and value of such activity.  All this despite the fact that the inevitable constraints of running a business restrict the time available for anything else - including external mentoring.
Even more helpful, therefore, is example; running a company in ways that instil and develop entrepreneurship in employees: 81 per cent of entrepreneurs say that they acquired more entrepreneurial skills through work experience than through education.  It seems the old mantra of `Those who can do, those that can’t teach` still applies.

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

On the other hand, those interviewed for this study point to the numerous other factors needed to become successful. Policy choices and the cultural environment can clearly support entrepreneurship by helping aspiring entrepreneurs understand the hard and soft things they need to know to avoid some of the many pitfalls of starting a business.
Education appears to have some positive influence on entrepreneurial success, but this is currently limited. Those surveyed for this report have seemingly contradictory views about the role of education in their development.  This debate has raged at least since the 1850s when it became apparent that that the UK was falling behind its, then, major industrial competitor, Germany, and the United States’ place as the world’s biggest economy was a couple of decades away.

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

Similarly, nearly half of the 18-25-year-olds surveyed thought an academic degree is important to entrepreneurial success (with that share rising to two-thirds in North America), but just 19 per cent said their university is effective at giving students the specific skills they need to start a business.
Successful entrepreneurs, then, it seems, benefit from education, but traditional academic teaching methods risk undermining attitudes conducive to entrepreneurship as well as not engaging with the skills needed to be successful.

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

Crucially attitudes need to move away from a traditional academic attitude of just educating those who may one day start a business somehow at the expense of the rest of society. The good news is that these so-called 21st-century skills are increasingly being promoted within educational circles and by business as beneficial for all students but change cannot come soon enough.
You can download the full report here http://www.economistinsights.com/sites/default/files/Helping%20entrepreneurs%20flourish.pdf

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.  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 positions open 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 some time 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 themthat 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 them that 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 being  supported by plenty of coaching and 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...