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 – What’s Qooking

May 26, 2012

In our search for what is cooking in the Qhuba network and in the world of Strategy Execution we have organized What’s Qooking events: a combination of content and cooking in a workshop format. With small groups of twelve to fifteen people we have listened, cooked, discussed and eaten. To take this one level higher – and because cooking with a group involves quite a few concession in timing and results – we have decided to look for top chefs to do the cooking for us. Where to find the chefs?

The Michelin Guide seemed a logical starting point.

Since the weather was nice and I was in town anyway, I decided not to use Amazon for once, but to walk to the good old-fashioned bookstore. Not the most efficient way to buy a book as it turned out. The first bookstore did not stock Michelin Guides, but was kind enough to direct me to a colleague which they assured me would have them. So I walk further into town. On my way to the second store I passed my tailor. He called me in for an espresso, and enquired about the suits he had sold me earlier. As I explained why this was not a day to buy suits (too warm to try on anything, and besides the suits he makes last too long) and where I was going, we came to talk about three star restaurants. He warned me not to try to visit them all, because the last guy who tried – probably – did not survive.

In the summer of 2008 the Swiss gourmand Pascal Henry executed his plan to visit all sixty-eight top chefs in Europe in sixty-eight days. Everyday he ate at a different restaurant, drank a few glasses, and spoke at length with the chef. Henry kept a diary with notes, menus, and occasionally a note from a chef or sommelier. On the fortieth day of his journey he was in El Bulli. As usual he had ordered the Chef’s menu which here consisted of many small courses. His hat, his notebook and wallet where – this was also usual – on the table. Towards the end of the meal he walked out, never to be seen again. Maybe he jumped of the cliff, maybe the idea that he would for the rest of his life have to make the concession of having to eat less exquisite meals, maybe he was abducted by aliens who wanted to know how eartheners eat. We don’t know. This story is written down in a book by an author who has also written a book about etiquette together with my tailor.

intrigued, but not deterred, I continued to the next bookshop, and then to the next. A good time to reconsider the merits of e-commerce, with their long-tail strategies. Online you will find it all. But what you mostly find is transactions, less interaction. And that is exactly what you get with people, in shops.

The last shop I visited did stock the Michelin Guide. The guy behind the counter advised me to also have a look at a book called “In search of the Stars”, written by a Dutch chef, Paul van de Bunt, who undertook, with his wife Sandra, a similar journey as Mr. Henry. The differences are clear: they took a year to visit all fifty-four three star restaurants in Europe, and they lived to write a book about it. The book was not the goal by the way. Paul just wanted to learn, to see and taste the innovations, and to talk about them with his colleagues. Then for every restaurant he visited he created a dish, inspired by the chef he talked to. Obviously, he did not see them as the competition, but as people with a shared passion.

Cooking appeared to be a passion shared by the bookseller, too. When I told him about my “What Qooking” plans, he suggested that our first stop should be a new restaurant in Utrecht, called Podium. The chef Leon Mazairac worked for Alain Ducasse in Paris.His style he described as “no pretentious but lots of ambitions”. That sounds about right for us.

He just happened to have the chef’s business card in his pocket, and – talking about innovation – invited me to come to his bookshop next week where the chef would prepare insects, which are not only an answer to food shortage, the inefficiency of raising cattle for consumption, but are apparently quite tasty, too. I asked him if he would eat them, and of course the answer was yes.

 

To prove his point he produced a package of dried grasshoppers that he was going to prepare that night. Quite interesting. Probably coincidence. Wonder if he would have produced as double edged commando knife if I had asked him about the “SAS Survival Guide”. Quite a useful little book, by the way.

Anyway, I have all the information to plan our next What Qooking event, and however convenient e-commerce portals may be, they do not offer the Power of Conversations. As I said: the network enables interaction rather than the transaction.


How to build a business – Themes 2012

December 13, 2011

The year is almost finished. That makes it time to look forward. We had some discussions in our management team, in our network, and with external media partners to talk about what themes will be or should be on the agenda in 2012.

Below the result

Themes for Professionals

  • Intrapreneurship: Most professionals – capable talented people who are on the payroll of companies – we speak to are looking for opportunities to develop themselves and their careers, and believe the most important steps they have to take involve development from professional to entrepreneur (or intrapreneur). Wikipedia about intrapreneurship: In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, intrapreneur, to mean “A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”. Intrapreneurship is now known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques, that are more traditionally thought of as being the province of entrepreneurship.

 

Independent Professionals: Once a professional has taken the step to become independent, and thus in a sense an entrepreneur, the themes highest on the agenda are

  • Growth: on the one hand there is growth as in; Personal Development, on the other hand the growth of their business through more professional services, such as acquisition or sales, personal marketing and risk mitigating services on the fiscal, legal, and pensions side.
  • The Shift: another theme we picked up is the interest of especially independent professionals, to make the move from ambition to Purpose & Mastery.

 

Entrepreneurs: among entrepreneurs the prevailing themes (next to “what the impact of the economic crisis, the credit crisis and the euro crisis really is”) are

 

 

CIO

  • Business Execution: IT is now beyond the first two phases (more efficiency through IT in the backoffice, and more efficiency in IT), and can now become in integral part of a business strategy. Technology and Information deployed to create value. IT needs to build better cases for business value, it needs to play a role in driving customer centricity (and track customer sentiment, usage, and profitability through analytics), and it needs to leverage business analytics to foster innovation.
  • Business Technology Integration: Making money with technology. CIO’s need to be much greater strategic partners for the businesses they support Business Model Transformation. CIO looses and business takes control.

And then there are the technology driven themes like:

  • Mobility: Bring your own device, Client/Consumer interaction, Mobile payment
  • Consumerization: the trend for new information technology to emerge first in the consumer market and then spread into business organizations, resulting in the convergence of the IT and consumer electronics industries, and a shift in IT innovation from large businesses to the home. For example, many people now find that their home based IT equipment and services are both more capable and less expensive than what is provided in their workplace. The term, consumerization, was first popularized by Douglas Neal and John Taylor of CSC‘s Leading Edge Forum in 2001 and is one of the key drivers of the Web 2.0 and Enterprise 2.0 movements
  • Social: Social Media, If you don’t have a strategy by now, you’re behind. Globalization and tech savvy millennials are forcing firms to rethink how relevant current and future customers will find their firms. Put together a social media panel or team, Think about how you can effectively manage the data you collect
  • Cloud: ‘nough said, but still a theme for years to come.
  • Big data: ‘Big Data’ is a term applied to the rapid growth of data that has resulted from more automated collection methods and greater capacity for storage and processing. This exponential rise is driven by the proliferation of sensors for gathering data automatically, including those in mobile phones, and more activity taking place online, which can be more easily recorded. Although the use of large data volumes for business is not new, some things have changed, creating new opportunities for innovation. There are three key changes that have brought the issue of data onto many more agendas. Firstly, data storage, processing power and cloud services continue to make large scale data analysis more and more accessible. You no longer need to build your own data centre to use this technique, expanding the pool of users. Secondly, there are many more opportunities to capture data, from sensors in phones and RFID tags in products, as well as a greater social acceptance of contributing manually entered data to social services. Thirdly, it is now possible to analyse unstructured data, so it is not necessary to run your business with detailed customer forms or electronic point of sale terminals to benefit from this form of analysis. Natural text in emails, photographs and sound can all be analysed and ‘mined’ for insights, rather than only structured, coded information that needed to be captured electronically or manually coded.

 

CFO

  • Cash: CFOs believe they should play lead roles in managing financial risks, designing the capital structure, optimizing working capital, and managing investor relations. They also think they should more frequently play lead roles in managing capital investments and revising the dividend policy
  • Growth: Growth remained the top priority for CFOs globally in the first quarter of 2011. With capital supply and efficiency gains largely accounted for, companies now appear focused on growth in a post-recession environment. New products and services, acquisitions and foreign market expansion are expected to be the key drivers behind this growth. Across EMEA (Europe, Middle East and Africa)2, growth through product and market expansion tops the agenda for the majority of CFOs, with a focus on both raising capital expenditures, as well as making strategic acquisitions.
  • Refinancing
  • Acquisitions: With improved access to capital in most economic regions, and with the risk appetite of CFOs consistently increasing around the world, it is no surprise that strategic acquisitions top the priorities list for many CFOs globally. However, despite expectations of increased M&A activity in 2011, there is concern that activity will be constrained by several key factors. In North America, CFOs are wary of unleashing the more than USD 2 trillion in collective balance-sheet cash that has remained on the sidelines since the recession. This limited spending appears to be the result of concerns about the economy and consumer demand, industry regulation, and a shortage of attractive investment opportunities. In EMEA, CFOs continue to expect M&A activity to increase in 2011, with the improving economic outlook and availability of financing. However, the ability for companies to secure targets with the right strategic fit and at the right price is increasingly becoming the limiting factor for CFOs. A similar story is unfolding in Australia, where the majority of CFOs intend to pursue M&A opportunities in 2011 but cite that the greatest hindrance to undertaking an acquisition has been the inability to identify a suitable target.
  • Emerging Markets: Investing in emerging markets

 

 

 

CHRO

  • Performance Management: Move from administrative role (hire to retire), HR directors can play a boardroom role by identifying the decisive factors that play a role in strategy execution.
  • Commoditization of HR: HR services will turn into commodities. HR resources will be outsourced together with the payroll activities, or replaced by do-it-yourself tools from the cloud. Before the term “Chief HR Officer”  has become widely accepted, he or she will have the same fate as the CIO… early retirement. Recruitment can be done online, the Linkedin network will offer plenty opportunities to interact with candidates. References, assessments, salary benchmarks and training can be obtained online. So unless the CHRO becomes Chief Talent Officer, Chief People Officer or Chief Performance Officer, with a direct relation to the company’s strategy, he will be commoditized, or outsourced.
  • Workforce Analytics: Workforce Analytics and – Planning
  • Talent: Will there really be a war for Talent?

 

 

CEO

  • Growth: Growth in an uncertain economy
  • Customer retention: Customer retention: In a world of eroding customer loyalty, customer retention must be a top-down, high priority, company wide mission
  • Reputation: Guarding your reputation
  • Technology: Technology and Innovation
  • Talent:
  • Risk: Risk management and investments, Contingency
  • Strategy Execution: Strategy Execution (Strategy consulting is dead…)

 

 

ExComm

  • Steering Teams: ExComms as teams: cooperation/interaction between boardmembers
  • Value Creation: Strategy is not about power and money, but about Value Creation – and not only shareholder value. Strategy development and execution with value and purpose in mind will be a theme
  • Innovation. in order to survive, companies – especially those operating in an increasing dynamic and digitalized environment, with knowledge being the most indispensable and important resource for innovation – need to establish trusted relations to aligned communities, networks and stakeholders. The notion of “embeddedness” is introduced to mark the increasing challenge of substantially integrating firms into their surrounding communities so as to assure the absorption of their exploitable knowledge. Innovation 3.0 (social Innovation) goes beyond Technological innovation, or Open Innovation (defined as “Innovation 2.0”) and clearly beyond Closed Innovation (defined as “Innovation 1.0”).

Non-execs: Consultancy, Contingency and Contacts instead of control and advice.

We expect to read and write articles about these themes – especially those that are on the agenda of different stakeholders –  and we will no doubt see them pop up in conferences and seminars. And just maybe there will be some others, like “how to grow after the crisis”, or “the next Big Thing after Social Media”.

 


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 – Growth and Conflicts

September 9, 2011

This morning we had our weekly Qhuba board meeting. We are trying to look at what we should keep doing, stop doing and start doing.

It is never that black and white of course, though. A small group of people running and company together with a larger group of partners have the tendency to focus on what needs improvement and on the sub optimal. I start every meeting with the Good News:

We are growing and have welcomed three new Associates in our company in the past week. Great news.

We have started using Yammer for collaboration, communication and knowledge sharing (or microblogging as it is called). At least half our people have become active users within two weeks. Great news, too.

We have a some new clients in the Mobile Telecom market (Vimpelcom, Ziggo), Technology market (Xtilton), Private Equity and Banking (ING). Excellent news.

We have also lost a partner. Or at least we lost him as a partner, and will for time being continue to work with him as an Associate.  This sparked a discussion about people leaving, and about the level of conflict involved. Since we started some ten people left, or were asked to leave

Dennis mentioned: “Without going into the specific of this case: is this an incident or is it an issue? Can we regular people “situations” and can we afford it that Associates, Partners or Staff leave the club? If they tell a story that is not consistent with the message we want to propagate in our internal or external network that might do more damage than any marketing agency can repair.” A commendable comment. Dennis started as an intern almost two years ago, ran the backoffice for the whole company within a year, and became part of our management team this year. Besides being an indispensable asset, Dennis is doing research for his thesis. The subject: successfactors in the governance of network companies. We expect more guidance from him when he is done.

Tjibbe – always the diplomat – responded: “We are in the people business. Two things: One: engagement with anyone in any structure is something of an experiment. Two: we have to look at each case separately. I am not worried about an Associate of employee leaving because of lack of performance. We are not in a static environment, where people do not know exactly how they can be successful. Sometimes they over-sell themselves, sometimes we look more at the cultural fit than at the motives – which are much harder to discover. With partners it is probably much more complex and has to do with the expectations. They expect, we expect, and we are all only going to find out what is realistic when we have started working. You will probably see a difference in outlook and commitment in the period where they join without an assignment, and in the period when they are deeply embedded in a client organization.”

Dennis: “I understand that we are in the people business and that people change with the circumstances, but I cannot understand how someone made conscious decision six months ago commit himself fully to a company like, wants to claim part of the proposition, has ambitions as a professional, as an entrepreneur and as a future shareholder, and now cannot wait to leave.”

My answer: “You’re right that there is too often a mismatch between mutual expectations at sign-on time and the expectations a few months later.

It seems that people are too enthusiastic in the beginning, or that we are too enthusiastic and that after a while the focus changes to the short-term and to cash, away from the long-term, the value, and entrepreneurship. Maybe we have a tendency to overrate the network. Knowledge and capacities, and they overrate over commercial capabilities. This makes perfect sense, because in the end almost everyone wants to spend most of his time on challenging client assignments, and earn an income, and only a few can afford to invest in the long-term entrepreneurial side of things.”

We have decided earlier that we should treat the relation with other Qhubans the same way as we treat emotional relations in our private lives: first we start dating, then we get engaged, than we get married. So we should always start working with people as Associates, and focus on the assignment, and only in a second stage (for example, after a year at the earliest), after he or she has met all the conditions, and he is convinced that it is in his long-term interest to join the company, should we consider a partnership. At the same time we have to make sure we address some of the things people find important. Remember the mindmap with changes and conditions:

I agree with Tjibbe that entrepreneurship is a bit of trial and error. It involves risk. You can’t foresee everything, and if it doesn’t work it is better to make a decision and not waste each other’s time.

However much we want to be a network of entrepreneurial professionals, the majority of people are attracted by assignments and our external network (Associates), a smaller group is attracted by our internal peer network, support, exchange of knowledge, and the possibilities to create business value (Partners).

Perhaps Dennis’ research will provide new insights in motivation and decision-making.

When coming back from holiday he Yammered: “After a summer period back in university library: what was it really about startup network enterprises? Is it trust, a common purpose, exchange relations? What about interdependencies or knowledge sharing? And reciprocity? Let’s find out…”

I can’t wait until he does (find out);

“What are critical success and failure factors of network governance regarding a startup network enterprise, whereas the social dilemma is taken into account?

 

Network governance is (interfirm) coordination that is characterized by organic or informal social systems, in contrast to bureaucratic structures within firms and formal contractual relationships between them (Gerlach, 1992:64; Nohria, 1992). Network governance is increasingly used to coordinate complex products or services in uncertain and competitive environments (Jones et al., 1997).

In case a network enterprise is a startup, a company with a limited operation history, governance of such an organization is even more defiant. These companies, generally newly created, are in a phase of development and research for markets and therefore faced by possible difficulties and challenges in their first phase(s). For network enterprises it could be more challenging because there are more dependencies compared to more traditionally organized or centralized organizations; e.g. a network is a pattern of social relations over a set of persons, positions, groups or organizations (Sailer, 1978). An extra important factor here could be the Social Dilemma. Social dilemmas are situations in which collective interests are at odds with private interests. Such situations arise when faced with prioritizing either short-term selfish interests or the long-term interests of a group, organization, or society.”

I am sure he will translate the academic English in business English for us. One thing is for sure: running a business involves tough decisions, but does it involve conflict? 
Martin Zwilling of Forbes.com believes it does:

Many entrepreneurs are not prepared for conflict, or actively avoid it. Their vision, passion, and focus are so strong that they can’t imagine someone disagreeing, much less fighting them to the death. But the reality is that startups are composed of smart people, with emotions as well as intellects, working in close proximity under much pressure, so conflicts will occur.

In fact, most business conflict is constructive and should be embraced in steering through the maze of innovation and change that is part of every successful business.

Good to hear. We are prepared and do not avoid it. Now learning how to deal with conflicts. Some tips from Peter T. Coleman in his book “The Five Percent: Finding Solutions to Seemingly Impossible Conflicts:

  • Know what type of conflict you are in. The first step is to assess whether the conflict is win-lose, win-win, or mixed (some competing and some shared goals).
  • Not all conflicts are bad. Most often, conflicts present us with opportunities to solve problems and bring about necessary changes, to learn more about ourselves and the business.
  • Whenever possible, cooperate. Research has consistently shown that more collaborative approaches to resolving work best.
  • Be flexible. Try to distinguish your position in a conflict from your underlying needs and interests in the relationship
  • Do not personalize. Try to keep the problem separate from the person when in conflict (do not make them the problem).
  • Meet face-to-face and listen carefully. Meet in a neutral location, and work hard to listen to the other side in a conflict. Accurate information is critical, and careful listening communicates respect. Don’t mistake sending text messages and emails as listening.
  • Be fair, firm, and friendly. Research shows that the process of how conflicts are handled in usually more important than the outcomes of conflicts.
  • Conflict occurs when individuals or groups are not obtaining what they need or want and are seeking their own self-interest. Sometimes the individual is not aware of the need and unconsciously starts to act out. Other times, the individual is very aware of what he or she wants and actively works at achieving the goal.

If goals cannot be aligned it is best to separate. But then out of mutual interest, and without conflict. Mental note to self.