How to build a business – demotions

March 14, 2013

There has been a lot of publicity lately about demotions and salary cuts for older employees in IT Services companies like Capgemini, whose market value does no longer justify their salaries.

 

Like they did not see that one coming.

 

What is this fuss all about?

 

Of course people are aware that the number of years you are with the company and the number of times you had your salary raised has no correlation to the value you will bring to the clients. Many years with the company? Maybe that has given you insights in the internal organization, or maybe you can manage or coach younger colleagues. That is not very interesting for a client, who wants practical knowledge, results and tangible benefits.

 

 

Especially now, with a much more dynamic and flexible labour market, clients are much more critical and service providers see rates that feel the pressure of the crisis. So how could they have put themselves in this situation? Probably everyone has always been focused on the short-term, because collective labour agreements have dictated that salaries be raised every year, because clients were never the most important stakeholder in companies like this?

In The Netherlands we have almost four hundred collective labour agreements. In only six of them demotion as an instrument is part of the agreement. Unions, whose members are to be found under the older employees, have every intention to keep treating demotions as a taboo.

 

The whole idea of demotion is not new of course. In 2000 the Wetenschappelijke Raad voor het Regeringsbeleid published a report suggesting that “the salary profile and the productivity profile” are getting out of sync. Their solution: more flexibility in salaries, no automatic correlation between age and salary increases, and ultimately demotion.

 

So what is the alternative and how could they have prevented this?

 

First of all, is seems more logical to correlate pay directly to productivity or market value. This can be done by paying basic salaries, plus additional components for both individual market value (measured through billable revenues) and company performance.

 

The question both companies and their employees will have to start asking themselves is how they can influence revenues per employee. Market value is determined by what clients are willing to pay based on the perceived benefits – although most people seem to think rates are determined by smart sales people. The employee feels he has limited influence on his market value. This of course is not true.

It can be increased by development though experience, training and smart matching. The first two are up to the professional. Matching – placing the professional on the assignments where he or she can add most value – is usually done by sales people. Unfortunately usually the match is made based on competences in CV’s and not on Character, Values, Culture and soft skills.

 

Our solution: make groups of professionals responsible for their own success and value. Self Steering teams determine what kind of professional education and training they need, and they are stimulated to build a network of clients. With some commercial training they are able to help the sales people not only with leads and opportunities, but also with better matches for proper rates.

The budget available for salaries and other compensation has a direct correlation with the revenues generated. The team members together determine their  own salaries. Demotion: a concept of the past.


How to build a business – Net Promoter Score

January 30, 2013

Two things have always been crucial in the assignments we do for our clients: what are the benefits we create (expressed in Economic Value or Cash Value Added) and are they truly excited and delighted by what we do. Over qualified resources, continuous support by peers and validation of the results are key in accomplishing this. But at least as important: are we able to measure and prove it? benefits Management has developed into something of a specialism, especially if you do not only measure in financial or quantitative terms, but also in areas like Risk, Scalability, Agility, Motivation.

Customer satisfaction, or even Client Delight is another challenge. Luckily this topic has been addressed some twenty years ago, by Fred Reichheld, a consultant from Bain & Company. He spent years researching enthusiasm, loyalty and commitment in customer relationships. Surveys did not seem to provide the answers he was looking for, partly because the answers from dissatisfied, undifferentiated and enthusiastic customers were so different that they could not drive any management decisions on improvement.
For answers he focussed on the happy customers only and decided to measure their enthusiasm by asking them one question, that he thought related directly to their loyalty: how willing were they to recommend the firm. We see this unpaid marketing department at work every day, nowadays through recommendations on the internet, and more than anything else, by the Like button of Facebook.

Like

Back then, it was a new concept, which he called Net Promoter Score, or NPS. More than the financial benefits our clients have, and definitely more than the revenue we generate, the level of loyalty created is key to success, and yes it is similarly important to measure the level of frustration and disappointment of those who might become active detractors.

With growth come more formalized processes, more dashboards and reports. close relations and intuition alone is no longer enough to keep track of our performance, and the time has come to also implement this process: Basically all that is required are three steps

Step 1.: ask each and every client one question: “How likely are you to recommend us?”, and have them score the likelihood on an eleven-point scale from 0 to 10

Step 2: Break the results up in three categories: those  that gave ratings from 0 to 6 are “Detractors”, the one that logged a 7 or 8 are “passively satisfied”, and only the score of 9 and 10 represent the “Promoters”.

Step 3: Compute the score by only looking at the difference between the Detractors and promoters: %Promoters – %Detractors = %Net Promoters.

NPS

So far so good. That is to say: there is potentially a lot wrong with NPS. A 0 score and a 6  have the same impact on the score, but from the client’s perspective there is probably a large difference. Also 0% detractors and 60% promoters gives the same result as 20% detractors and 80% promoters. So we want more: we want to know what are the reasons behind the score, and we want to be able to act on specific cases if there is reason. It is a one-question-only thing some say. If you do not understand the data you cannot act others argue. It seemed so simple

Now, three decisions need to be taken. Do we ask this question only, or do we ask more to find out what drove the score? Do we ask the questions ourselves, or do we get more honest answers if someone else asks them, and do we ask face-to-face, by phone, or by mail/online?

More discussions. We asked for advice. The specialists gave us options. One question, a few questions, many questions. Open questions, closed questions. Damn.

We asked more advice. some of the reactions were outspoken, almost emotional:

On line surveys are no more effective than written… only difference is the envelope.

The problems with written/on-lines include…

  •  Only outliers are motivated to respond… those who are very happy or very unhappy… so you get skewed results.
  • You don’t know who actually responded (the VP’s emo-punk daughter? An Admin? The dog?
  • The spontaneity (and any associated honesty) is lost.

Why in the world would anyone follow-up by phone to a written survey?

Respondents should NEVER be “followed-up” on unless they specifically request it.

Even if their responses are negative!

No respondent wants to justify their response or discuss it further… unless they ask for it.

The right way to do it is to be sure you ask enough open-ended questions in the survey to get the info you need without follow-up.

When you follow-up (and especially if you quiz them on any response), you bias or destroy their future cooperation.

Phone is best, 3rd party, brief is good.

Okay, we got the message.

So this is what our survey looks like. Two questions, preceded by an e-mail, asked by phone, by someone the client does not have a personal relation with:

1. Based on the work Qhuba did for you, how likely is it that you would recommend Qhuba, on a scale from 0 tot 10?

2. What factor had the most impact on your answer

  • the character and behavior of the resource (like integrity, cooperation)
  • the competences of the resource (knowledge, execution power)
  • the benefits realised versus the cost
  • the cooperation with other people in our firm
  • the relation and connection you have with our network
  • something else

Now I have one last question: How likely do you think it is that the NPS score we log and the answers to these questions will help us create more value for happier clients?


How to build a business – Ten Questions

October 16, 2012

We have been in business for several years, we have more than sixty world-class people working with us, worked for eighty-eight world-class clients, held one hundred and fifty-three management meetings and published numerous internal and external documents. At some point it seemed to make sense to bring it all back to ten basic questions. The answer to those questions should describe all the major aspects of our business. Answers that all of our people should be able to give, when the questions are asked.

 

Here are the questions:

1. Where do we come from?

2. Why do we exist?

3. What do we look for in our resources ?

4. How do we behave?

5. What do we do?

6. How will we succeed?

7. What is the one most important thing right now?

8. Who must do what?

9. How are we organized?

10. How we make decisions and deliver on them?

 

And here are the answers

 

1. Where do we come from?

Qhuba, founded in 2007, is a fast-growing network organisation with more than sixty Partners, Staff and Associates (‘Qhubans’). Qhuba means drive, the drive to work together, to learn, to grow and to succeed.

 

2. Why do we exist?

We exist because we believe running companies can be fun and strategies can be implemented successfully when people of character and competence work together.

Qhuba believes that strategies are best executed by a multi-disciplinary leadership team that takes collective responsibility.

 

 

3. What do we look for in Qhubans ?

Regardless of whether they are Clients, Candidates, Network Partners, Prospects, Associates, Staff, Associate Partners, Partners, Managing Partners, Equity Partners, Practice Directors, Shareholders, or Friends, we expect:

  • Character (Integrity and Intentions)
  • Competencies (Hard and soft skills)
  • Network
  • Track record
  • A drive for Autonomy, Mastery, Contribution and working with Peers.

 

4. How do we behave?

We are Independent, Reliable, Uncompromising, Connected

 

5. What do we do?

When organizations look for support in the successful execution of their strategies, we provide (introductions to) people with the right character and competence. We can do this based on Client Value Pricing, on temporary assignments, on the client’s payroll, for a success fee or without a fee.

 

6. How will we succeed?

Together Qhubans use conversations to build a network of world-class professionals to make clients successful by providing capable people and by arranging introductions, opportunities and exposure, meanwhile building a highly recognised organisation as a platform for professional and personal growth.

 

7. What is most important right now?

Increasing Reputation in our network

  • Increase NPS with clients by delivering results
  • Increase credibility with prospective clients through content-marketing, sales and references
  • Increase Trust within Qhubans through growth and success
  • Increase Reputation with candidates through marketing

 

 

8. Who must do what?

Strategy, Structure and Reputation:   Wouter Hasekamp

Network:                                              Tjibbe van der Zeeuw (Liesbeth Hans)

Knowledge and Research                   Liesbeth Hans

Publications:                                      Hotze Zijlstra

Marketing:                                           Wouter Hasekamp, Rachelle Nall

Enablement and Support:                  Dennis van Alphen (Tom Kisters, RikJan Kruithof)

Portfolio:                                             Partners and Practice Directors (Peter Rappange, Mohammed Chaaibi, Gerard Kok, Evert-Jan Tazelaar)

Sales:                                                 Mario School (Susanne van Kleef, Gerard Kok, Evert-Jan Tazelaar)

Delivery:                                             Tjibbe van der Zeeuw (Beatrice Friebel)

 

 

 

9. How are we organized?

Qhuba is organised in Practices that address specific areas of expertise, without losing sight of the collective goal: strategy implementation across disciplines. Practices in the portfolio of Qhuba are:

  • Interim Management
  • Recruitment & Executive Search
  • Programme and Portfolio Management
  • Lean and Transformation
  • Finance and Benefits Management
  • Sourcing Support
  • Lean IT
  • Cloud Consulting
  • The Qloud Company

 

 

10. How we make decisions and deliver on them?

We believe in Collective Leadership: given our values and despite different intentions and goals we want to be able to operate as a tribe of peers, each contributing as a person and as a professional, without giving up our autonomy. Starting points for this ‘Tribal Democracy’ are:

  • Freedom of Thought
  • Freedom of Speech
  • Freedom of Choice
  • Freedom of Dissent
  • Radical Transparency

 

 

Conditions for participation in decision-making are:

  • Trust, which consists of Character (Integrity & Intentions) and Competence (Capabilities & Results)
  • Transparency of Information and Opinion. Silence equals disagreement. This is our first rule of engagement.
  • Commitment, both active commitment and formal commitment. This is the second rule of engagement
  • Accountability; there is zero-tolerance for lack of Trust, lack of Integrity, lack of Transparency, lack of Commitment, but also for Passivity, broken promises, non-performance
  • A shared definition of success made measurable and a focus on results. One team, one goal.

 

Success is measured by:

  • Client Benefits Realized and Nett Promoter Score
  • Staff retention en recruitment
  • Revenue – Margin – Profit

How to build a business – Employees and Contracts

July 18, 2012

Building a business requires creating and activating a network of Partners, Associates and Employees. We are striving for a healthy mix of people who share a DNA and a sense of purpose, but who might have different needs and possibilites, depending on their personality, the stage in their career, the desire for short or long term reward (cash versus value) and the appetite for risk.

For capable people with skills and ambition who want to be surrounded by people they can work with and learn from and who prefer or require a monthly income, becoming an employee can be the most appropriate choice. We call them intrapreneurs. This relation needs to be formalized in an employment contract. Contracts are not pretty. Despite network organisations, work2.0 and despite all good intentions basically they arrange and exchange of time for money.

The good intentions are that we want all our people to be independent, that is: responsible for their own choices and their own success, we know they are reliable professionals, who do not compromise on quality, and who are connected to a network of peers they like to work with and work for. This is our DNA. The intention is also to make sure they have an adequate monthly income and that there is no limit to what they earn, based on how successful they are.

Now try to stick all that in an agreement. What we did is: we offer all our professionals on the payroll a basis salary, and then we make a budget available that is equal to 50% of what their personal turnover is. Out of this budget they can make choices on for instance education, a company car, laptop, et cetera. The difference between salary plus costs and their personal budget will be paid as a bonus, if a set of OKR’s (Objectives and Key Results) are met. A nice combination of security (for the employee), limited risk (for the employer), freedom of choices on personal development and reward and intrapreneurship. Or so we think.

Of course a contract describing this level of freedom and responsibilities within the boundaries of the labor laws results in quite an extensive document. You would think that the more experienced employees, with several previous employers, would be most critical, especially because in their case the base salary usually is lower than what they were used to – be then the upside is higher than anywhere else. The opposite is the case. Last week we lost a prospective employee, who seemed really talented and a perfect fit, due to this contract.

The base salary was higher than what she earned in her previous job, we explained the model, the role, the responsibilities, the budget, the holidays, the risk, the fiscal implications. All better than where she came from. She did not sign. I am confused. Either she was not what we thought she was, and she did not understand it, or it was too good to be true and she became suspicious that their might be a snag. Or maybe we are a more average company than we think we are, or than we want to be, and people just expect a salary in exchange for their time.

The last option a refuse to accept.

Researchers like David Marsden (Professor of Industrial Relations and a Senior member of the Centre for Economic Performance) at the London School of Economics will tell us that in the Network Economy their is not only the contract between employer and employee, but also the psychological contract and the economic or incentive contract. Maybe I should go to London and try to understand. Or better, let me go to Brazil and visit Ricardo Semler. He did it the other way around in his company Semco, letting his employees choose what they do, where and when they do it, and even how they get paid. He wrote a book about it called Maverick, the success story about the world’s most unusual workplace.

So that’s where I will go if only because the weather in Sao Paolo is more attractive than in London.


How to build a business – Managing Customer Tasks

February 23, 2012

Several times a year we organize “What’s Qooking” events, where professionals in our network share their ideas on themes that interest them, while cooking our own food.

Last week we had Gerry McGovern as our guest. Gerry is the founder and CEO of Customer Carewords and an authority on increasing Web satisfaction by managing customer tasks (more about that later).

His clients include: the Tetra Pak, HSBC, Microsoft, IBM, Cisco, UK Ministry of Justice, and the U.S. Internal Revenue Service.

 

Gerry speaks, writes and consults on web content management. He has been doing this since 1994. His latest book, The Stranger’s Long Neck: How to Deliver What Your Customers Really Want Online, was published in June 2010.

 

Gerry propagates and uses a quantitative method, which results in changes in website navigation and content that transform websites into profitable tools. He has done this for customer-oriented websites, business partner portals, and intranets.

Gerry is a funny person, full of stories from practical experience. He is the ultimate wake-up call for everyone involved in creating and improving websites. He will not stop stressing the importance of Facts Not Opinions. This is a generic problem he touches. In any business, but especially in consulting we are short in facts, long in opinions.

Another one that Gerry uses in his book on website, but where you can replace websites with businesses: “If there’s one reason more than any other that Web sites fail, it is because the web teams managing them lack understanding of, nd empathy for, their customers. The customer is a stranger (…)”

Whatever you intuitively think is right, usually has a negative effect

 

 

Web task management is about managing your website around top tasks. Success is measured on the ability of customers to quickly and easily complete these top tasks.

Traditional website management focuses on managing the technology and/or the content.

 

These management approaches fail because they manage and measure the wrong things. If you manage from a technology perspective, then the metrics are nearly always volume-based. It’s about the number of documents that are published, or the number of searches that are carried out.

 

Managing from a content perspective is even more volume-based. Many senior managers are still quoting the utterly useless measure, HITS. (HITS stands for “How Idiots Track Success.”)

 

Task management is based on the idea that your customers come to your website to complete top tasks as quickly and simply as possible. It measures success by how quickly your customers can complete these tasks.

 

Web task management measures success based on a simple question: Was your customer able to quickly complete the task they came to your website to complete? Answering this question demands a very different website management approach.

 

This is interesting stuff for marketeers, and one of the most important lessons would be: “Offline is for getting attention, online is for giving attention”, but in general the fact-based practical approach to Why we are doing things in business, and how we measure success is something all business should focus on. In one of the next Qhuba blogs I will focus on Benefits Management, another area of expertise that many companies don’t spend too much time on.

Strange phenomenon: thousands of projects are started, based on business cases, but for very few projects the outcomes and benefits realized are measured. Room for improvement.



Building a Business – Conversations

October 24, 2011

Sharing information and intelligence is one of the key drivers for people to join our company. We regularly organize What’s Qooking events, where we have conversations about interesting developments in the world of Business Technology Integration, while cooking.

 

The last one was in a Ferrari showroom, with a guest speaker – Dave Lamereis – who gave us an insight into what’s qooking in the technology labs around the world.

David believes that scientist have already started to transform humans to become living gadgets, with electronics embedded in our bodies to supplement human intelligence and emotions. Depressed? Push a button instead of popping a pill. We will wear contacts with augmented reality displays built-in and we will be able to print anything we want on our 3D printer. Need a new organ? The doctor will print one for you.  Experimental beating hearts and functioning kidneys have been printed.

Sounds a bit scary. The fact that it is possible does not mean that we will all use this, though. We are still autonomous people, making our own decisions.

The people we are working with strive for personal growth, professional growth, expansion of a network of peers, possibly also financial growth. I have the impression that rather than only focusing on the virtual, most of us also want to make something, Make a tangible contribution. Not only consulting, but also execution. Maybe with 3D printing the age of creation is back again.

Still the most important word for us might be growth. We expand our knowledge, our network, we increase the relevance of what we are doing, and for this purpose, our company has to grow as well. There is safety in growth in numbers, in optimization based on data and KPI’s. This is what we could be characterized as puzzles: more pieces, more chances. More data to be analyzed by experts, more solutions to be designed and implemented. A good start, but it gets really interesting when we are not looking at puzzles, but at mysteries. If you don’t know what the pieces are, if you don’t know how to measure success, experts are of little use. Here you need teams, with an open mind, who want to explore rather than exploit, who are ready to work together in an agile manner, striving for effectuation rather than for cause and effect.

We had the experts, and we have the challenges that they can sink their teeth into.

Our next challenge was to create and put to work these teams. Have them, using their collective knowledge, experience and creativity, come up with executable ideas, opinions, products, ventures that would genuinely excite our clients. That is much more in the area of idea to market, or market to order processes, than on the order to cash (production, supply chain, delivery) process, where most of the effort of most of the companies is directed at.

Teams having conversations. Amongst themselves, with clients, with everyone. In marketing speak what they deliver is consultancy, contingency and contacts. But what they really do is have conversations. Not easy for most conditioned professionals, but very enjoyable and valuable. We formed one such team for a prospective client, Travix International. Travix – a billion euro company – is the result of the merger of five online ticketingcompanies (Cheap Tickets, Vliegwinkel, Flugladen , BudgetAir and Vayama). It is run by capable entrepreneurial people who are focusing on the integration of the hitherto independent operating companies, and all core activities but at the same time having conversations all over the world with people from different industries to shape ideas, exchange experiences and connect to people who will increase the chances of growth and success. Last Thursday we sat with Gerhard van der Bijl, Jos Schreurs, Dave van Stijn, Willem van Groenland and Tjibbe van der Zeeuw. Next Thursday we will meet again with the board of Travix.

Real conversations between real humans. That seems difficult in a business world full of processes, models, frameworks and things. This is our ten-step approach:

  1. Relax
  2. Have a sense of humor
  3. Be curious
  4. Listen
  5. Find your own voice
  6. Tell the truth
  7. Enjoy yourself
  8. Be brave
  9. Don’t panic
  10. Go home and think, then go back to 1.



How to build a business – Radical Management

September 20, 2011

I just watched an episode of Law & Order, an American crime series. It always ends in the courtroom, with a jury in charge of convicting or acquitting the suspect. Juries made me think of a book I read a while ago, written by Stephen Denning, called “The Leader’s Guide to Radical Management”. The essence of the book is: in a business where cognitive skills are important, forget the hierarchical forms of management that we have adopted, where most people have become uninterested, unproductive, where no one takes real responsibility and where clients have become an afterthought. Instead, if you want innovation and results, work in small self-organizing teams, much like a jury is organized (hence: Law & Order). A jury is a diverse group of people, with the power to make their own decision and the responsibility for solving a problem.

Denning is making the case that work has become a system of things that can be manipulated to produce goods and services, and it is not working anymore. Instead for productivity and innovation, you want to work on something you love, with people who share this excitement, to the delight of others, and getting better and better at it.

Looking back we all have one or two memories of project we did with a team just like that, and usually we are still seeing the people who were part of the team, even if we worked together years ago.

If there is any measure of success of what we are doing at Qhuba, it would probably this: that we work like this every day and that we are delighting our clients and making them  successful because of it.

In the last few days I had dinner meetings with a client, with a prospective associate, with an Associate (Beatrice Friebel) that joined recently and with a Partner (Jos Schreurs) that joined two years ago, and they al had similar experiences and examples, and for all of them the people, the urge of working together without the hierarchy were the reason to join or engage our company. Not money, not a perfected system,  not even the network, but the people. In fact all of them, including he client, volunteered to invest some of their own time to work in small teams on topics that interest them, like knowledge management, developing propositions or no-cure-no-pay M&A cases.

With the growth of our business, some form of hierarchy has creeped in, some bureaucracy, procedures, frameworks, measurements. Some of it might be natural and necessary, but instead of allowing it to grow and to become a system that does things to people, I will put all my energy in making sure we do things with people and:

  • Focus on our stakeholders that is: on people – both clients and Qhubans – and try to outperform all the expectations they have
  • Focus on delivering real change in small iterations to those stakeholders
  • Learn what is real and realistic by operating in complete transparency and requesting early and frequent  feedback
  • Accept that we cannot predict everything, but focus on solving the mystery (keeping in mind the whole system, with a direct link to the strategy), rather than focussing on small pieces of the puzzle
  • Delegate decision-making power to small teams.

Sounds like a nice theory? It is nothing new: In software development, principles like Agile and Scrum have been accepted for years, and the principle of self steering juries was introduced in the 12th century.

Why is not everyone doing this? Blame the Army, blame Frederick Taylor, blame Henry Ford, blame consultants, blame business process re-engineering, blame outsourcing, blame ourselves. Never mind. We will define the challenges, assemble and support the teams, and take a step back.