Wednesday, May 30, 2012

Help Wanted.

It is hard asking for help. Not basic or simple help i.e. can you help me with my luggage but deep and real help i.e. I don't know how to fix this broken business and I need your help.

There are number of reasons, often mixed together, that I have witnessed or indeed been guilty of myself, which hinder one's ability to seek assistance. These include (in no particular order):
  1. Fear
  2. Pride
  3. Stubbornness
  4. Arrogance
  5. Weakness
  6. Shame
Fear: The most common fear I come across is the fear of getting fired. It is as simple as that. People are afraid to ask for help in case it gets them fired. Remember what I am talking about here is not simply an employee asking for some basic help, but an employee, manager, CEO asking for help because they are at a loss as to how to resolve a key business issue. For example, if a Head of Sales hits a brick wall and went to his / her General Manager and said, 'I need you assistance. I don't think I am going to be able to hit the number without your help", there is a common belief, rightly or wrongly, that the Head of Sales will soon be looking for a new job.

Pride: Most often coupled with Arrogance, Pride seems to be substituted for intelligent decision making, by those whose opinions of themselves are traditionally front and centre of all others. Pride is not only the domain of arrogant CEO's or established business owners, but can be witnessed existing in countless business schools where the word hubris is confused with a  type of flora by the newly minted alumni. Trust me on this one, I have an MBA :)

Stubbornness: I remember a particular incident with a very wealthy business owner who was interested in fixing his business. It was a great start but when it came to actually applying the medicine, he dug his heals in for no other reason than we were tampering with a particular part of his business that was his passion. Even applying a fact based approach did not help. Fixing the part of the business where his head went before his heart was no issue. But fixing the part of the business which was lead by his heart was a no go zone.

Arrogance: "Smartest guys in the room", does not just apply to Enron (see Link). I have witnessed on a number occasions business owners or super smart financiers (sorry intelligence as measured by IQ), usually men,. say "Thanks but no thanks, we have it sorted.", "If it gets much worse we will call you but we think we have it covered" and my all time favourite, "We don't need F&#@ing help, we need sales." only for the primary creditors to call their preferred administrators a couple of months later to try claw as much of their money back as possible.

Weakness: This may relate to the topic of Fear in so much that the Manager, CEO, etc believes that by showing such weakness, their livelihood may be at stake.

 I have spoken with a number of managers who talk of being "embarrassed" when consultants have been bought in (sometimes forced in buy external parties i.e. owners, creditors etc) to try improve the given business. This is particularly prevalent where business owners who have worked hard to build their business are often embarrassed by the given business predicament. In many such instances, to quote William Blake, “Shame is pride's cloak.

So how do you fix it? A simple word, but seemingly difficult to execute in the modern corporate world:
  1. Humility
Humility: As someone (unknown) wiser than I once said, "Swallow your pride occasionally... It's non-fattening!"

Putting up the 'Help Wanted' sign is not easy. But decide how you want to make your mark. Is it as someone who instigated the fixing process or is it as someone who knew there was a problem but sat on their hands? 'Was proud with sore hands' would not exactly make a great epitaph.

Tuesday, May 8, 2012

Are You Growing Backwards?

Question: If your business / division grew by 10% but overall market in which your product / service operates grew by 50%, did you in fact grow?  Let's look at this in a little more detail, as outlined in the tables below.

(Folks: Please do not write to me and say I am using ridiculous numbers. I am using exaggerated numbers to illustrate the point succinctly).

Growth rate
As you can see, this very simple example shows your business / division growing its' revenue by 10%. At the same time the rest of the market grew by 50%.

Therefore when assessing the growth of your business / division, you can see that you actually went backwards relative to the market.

So why is this important? Most managers would be ecstatic with 10% year-on-year growth. However the issue is not whether the business has grown. That is a given. The issue is that, in this scenario, competitors are growing faster and you are being left behind.

To illustrate this point further lets extrapolate the exact same growth rates (10% and 50%) over a five year period.

On the one hand, congratulations. Over the five year period you grew by 46%.  However on the other hand, commiserations. Over the same period of time you went from having 10% market share to only 3%. Quite simply all your competitors are roaring away and leaving you behind.

Think about what this now means for your business. For example:
  1. As a supplier to various companies are you becoming to be seen as a niche player within the market?
  2. Do potential customers worry about where your business is headed as they are continually bombarded by the success of your competitors?
  3. Are your competitors achieving scale benefits not available to you?
  4. Do these scale benefits provide a price benefit to your competitors that make it more and more difficult to compete?
Before we continue, it is important that I clarify that I do not advocate growth for growth sake. We have all witnessed countless numbers of large companies becoming financially crippled due to excessive debt through aggressive acquisition growth strategies that appeared great on paper but where, for whatever reason, the benefits (often couched in the term 'synergies') never materialized. However I do advocate having a clear understanding of the relativity of your business' growth versus your competitors (your market). 

Understanding how you are performing relative to your competition will give you improved clarity on your business' true performance and market positioning. This will help develop your growth strategy / plan and the execution required to achieve the plan's objectives. Defining your growth strategy is not simple. If it was every business would be growing. However where you want your business to be in five years is reflective of many inputs, including the competitive / market environment. Planning to grow at 10% may not be acceptable when everyone around you is growing at 50%. After all no one wants to be grown out of existence.