How to build a business – Procrastination and Return on Relationships

September 5, 2011

My daughter has just started DP1. That is the Diploma Programme of the International School. Her tutor Mrs. Chowdhury has warned both students and teachers that time management is the biggest challenge, and social networks are the biggest threat. “That and procrastination” my daughter told me. I was going to tell her about the limited value of all these superficial friends sharing all these hardly relevant pieces of information. Mere distractions and reasons to shift focus away from serious study and school work. Apparently she was a step ahead of me.

And are we not on Facebook, LinkedIn and Twitter, too? Aren’t our most valuable assets our network, our knowledge and the intelligence we can gather about people, the companies they work for and the trends and themes affecting our markets? Aren’t we persuading our people to do what I am trying my daughter to dissuade from doing? Maybe we run the risk of procrastinating, too.

Great word… I looked it up.

The American Heritage Dictionary, for example, defines procrastination as “To put off doing something, especially out of habitual carelessness or laziness,” while Merriam-Webster Collegiate Dictionary calls it “To put off intentionally the doing of something that should be done.”

Some psychologists have suggested three criteria for a behavior to be classified as procrastination: it must be counterproductive, needless, and delaying. And while all procrastination is delay, not all delay is procrastination. It is “to voluntarily delay an intended course of action despite expecting to be worse off for the delay.”

Now I noticed a funny juxtaposition: where teenagers delay schoolwork because of relations and information, independent professionals often have the tendency to postpone networking and intelligence gathering to focus on the content and on their proposition. We see that in some of our partners. When on an assignment there is a tendency to focus on the job and to submerge in the pressure of the assignment, sometimes forgetting to actively maintain connections and share knowledge and opportunities. In between assignments productivity goes down, and although high on the to-do list, phone calls and research are postponed, or done at the last minute.

On the other hand, others – like myself – with more time for network- and research related activities run the risk of becoming addicted to meeting ever more people, to digesting more and more information in thousands of little pieces of information from RSS feeds, headlines, Twitter and LinkedIn updates and to storing and distributing contacts, opportunities and intelligence through applications like Salesforce.com and Yammer.

What makes sense, what does not, and how do we invest our time wisely?

Rolf Dobelli has written an interesting article, which was translated into Dutch and published last week by NRC-Next on how this constant stream of information affects us. In his view news (information) is to the mind what sugar is to the body: not very healthy, but difficult to resist. He calls it “small bites of trivial matter, tidbits that don’t really concern our lives and don’t require thinking. That’s why we experience almost no saturation. Unlike reading books and long, deep magazine articles (which requires thinking), we can swallow limitless quantities of news flashes, like bright-colored candies for the mind.”

According to Dobelli “At core, human beings are cavemen in suits and dresses. Our brains are optimized for our original hunter-gatherer environment where we lived in small bands of 25 to 100 individuals with limited sources of food and information. Our brains (and our bodies) now live in a world that is the opposite of what we are designed to handle. This leads to great risk and to inappropriate, outright dangerous behavior.”

There is some encouraging news in there: humans are suited for working in tribes, for thinking and Dobelli encourages us to take time to dive deep into he content. That sounds familiar: relations (a network), and content (knowledge). That sounds like us. But how do we strike a balance?

The 1970’s the management theories focused on Product Life Cycles. Companies were organized around how products were conceived, designed, tested, developed, approved, manufactured, sold and distributed to the market.

Of course customers made up the “market” and therefore in the 1980’s the focus shifted to customer-centric theories and the Customer Life Cycle.

Still, what defined the seller and the buyer was a transaction, when a product or service changed hands in return for payment. The customer life cycle provided a way for a seller to look at a buyer as not just a single transaction but as a series of “one-off” orders. Thus we moved from focusing on “getting the order” to “serving the customers needs” in the hope that the same buyer would return to the seller for more business.

However, due to the one-directional information flow, there were still some significant benefits being left on the table. The most visionary and innovative companies wanted to steal a lead in the Value Chain race and to do this the Relationship Life Cycle was developed.

The transaction thinking is replaced by interaction thinking, and instead of only measuring Return on Investment, and focusing on the bottom line, or on “What’s in it for me”, network companies like ours should focus on Return on Relationship or “What’s in it for everyone involved”. In other words, the measurement is on relationships and determining how everyone has benefited from the relationship, as well as how everyone can continue to benefit from it.

It is not easy to measure what investment is required to build a network of serious relationships. Let alone what the return is. This is abundantly clear for people who are active in the executive search business: it takes years to get to know, assess, and interact with a network of people, that at some point in time might be candidates for jobs at your client. To be able to determine who is the perfect candidate for a role in a company requires that you not only have an excellent idea and an expert opinion about someone capabilities, but also about how they would fit in the clients environment, in the longer term ambitions, in the personal situation. And then it takes a relationship build on trust to approach and convince someone to change jobs. What the clients sees is a few phone calls to someone you already knew, not what is involved in knowing. That is why we do not charge our clients based on the hours we spent, or on a percentage of the annual salary of the hired candidate, but leave it to the client. He can base the reward on the value he perceives, on how satisfied he is.

Return on Relationship is a term most often used by Ted Rubin.

Rubin makes a case for establish social networking metrics based on “conditions of satisfaction” (a concept promoted by Jeffrey Hayzlett, former CMO of Kodak and the author of The Mirror Test). In other words, what are the specific outcomes that will bring satisfaction to you, your brand, your business, and your customers? Engage, Educate, Excite, Evangelize. Evangelizing by your users is the end goal. To get there concentrate on building relationships and not numbers of viewers or visitors. Most measurements and statistics that are used with regard to relationships (such as number of Facebook fans, Twitter followers, retweets, site visits, video views, positive ratings and vibrant communities) are merely indicators that a brand is doing something that is creating value. That is only a starting point for RoR.

I cannot say we are able to measure our RoR. A metric like Net Promoter Score could give an indication on how clients look at the relation, and the satisfaction it brings to them. What we do know is that relations are not only established with clients, but – and equally important – with candidates, partners, suppliers, staff, thought leaders and others. We also know that metrics should include words like “trust”, “engage”, “authentic conversation” and “reputation” – all things that are at the heart of what a network company stands for. And possibly these things can be defined by setting up conditions of satisfaction, based on our purpose, vision and values.

So if Relationships are the new currency, and if we continuously invest in them, and want to be able to measure them, should we reward our staff and partners also on how they create value from their relationships?

In all three areas of focus we distinguish: reputation, structure and performance relationships play a role. We used to make the interaction transactional in all here areas, by allocating to our partners (besides a large portion of their personal turnover) a percentage of turnover based on how effective they were bringing new people into the partnership (Reputation), but we recently decided to change this and now allocate only percentages (but a larger percentage than before) for commercial activities that lead to revenue (Performance).

Instead of rewarding for RoR we decided that the knowledge and the network are assets that are so integral to who we are that we select partners on both.

Information and access are no longer scarce commodities. Attention is. On a personal level we should be careful what information we pay attention to, and then it should better be serious attention. In the network it works the same we, we can organize access to anyone, but our success will be determined by being able to decide with whom the interaction will lead to a relationship that is authentic, meaningful and beneficial for all.



How to build a business – Partners, Practices, PPM

August 25, 2011

Apparently it is a mixed blessing to be a partner in our company. We have a structure wherein partners are by and large responsible for their own success in the context f our organization. The Partner profile has several components, but in the end we are most interested in the motivation of potential partners. Usually we have known them for a longer period and are already convinced of their professional and intellectual capabilities, as well as of their management and interpersonal skills. More difficult to fathom are the real value of their network, the leadership skills, and most difficult to assess is the motivation.

Although there is a list, (which I have attached as Profiling) of fifty skills and competences that we find relevant, in the end it all boils down to what drives the candidate. Mastery is probably the most obvious motivator, and the one that stands out. Partners are without exception the ultimate specialists in their fields, have had success and recognition in the past, and…    And then what? Do they want to cash in on that capability? Then there is an issue, and they are bound for disappointment, because there are many capable professionals. Are they on the other hand also driven by a sense of purpose, a desire to make a relevant contribution, then we get more excited, and if that contribution extends to a group of peers they want to work with, then we might be enthusiastic. Now if the potential partner has what we call Autonomy, that is to say, if he convinced that he can be successful himself, wants to take the risk and responsibility for his own and our collective success, and has the characteristics of the entrepreneur than we are convinced.

Sometimes it does not work out that way, and a partner that seemed to have it all, turns out to be primarily focused on “the next assignment” and on “what is in it for me”, and we have to go our separate ways.

And sometimes it works out much better than we could have hoped for.  A partner like Peter Rappange was always recognized for his expertise in the area of programme and portfolio management (PPM), but instead of pursuing roles for himself he decided to organize a circle of professional around that expertise, spend time and effort – based on his vision of how companies can benefit from it – on developing the content and material that will enable a larger group of people to help clients implement processes and to define, execute and control a portfolio of projects.

He started our first Practice, and with us will make it a success. When you work with Peter, you cannot help but think about Napoleon – in the good sense. No success is not an option. His leadership style was considered unorthodox at the time but today we see that he had all of the major and minor characteristics that make a strong leader. Not only on the battle fields, where most of the opposing armies where perplexed but his military strategies, but also internally where Bonaparte with his hands on approach, was able to connect with the people he was leading.  Knowing that your boss is willing to jump in and help out when you need it as opposed to judging you if you aren’t able to handle it, is very reassuring.

Peter deserves respect for giving up considerable short-term revenue and recognition, and trading it in for longer term content, connections and value.

And clients do need what he has to offer.

I sent this tweet yesterday:

The article behind it is from Harvard Business Review and sketches a dreary picture of cost and schedule overruns: “1 in 6 IT change initiatives such as ERP and CRM systems turn out to be money pits, with cost overruns averaging 200% and schedule overruns of almost 70%, according to Bent Flyvbjerg of Oxford and Alexander Budzier of McKinsey, who studied 1,471 such initiatives worldwide”

In the ‘90s I worked for Shell, and this phenomenon was one of the reasons for me to leave and put all my energy in a company called ICE. ICE delivered ERP projects for clients like Reliant Energy and Philips Medical systems on budget and time. All we had to do was work with good people. Our company thrived.

Project Delivery capability alone means nothing, though. After ICE I joined Samas, an office furniture manufacturer, as CIO to run their IT department. We could deliver IT projects, too. And we did, almost killing the company. While we successfully rolled out SAP in Germany and Switzerland, the CEO saved France from bankruptcy, and the CFO refinanced the enterprise and started reorganizing The Netherlands. Then, we all landed on the Dutch organization at the same time. Samas was organized in the typical silo manner: strategy, technology, finance, human resources, marketing and sales had their own goals, targets and responsibilities.

The Samas disaster taught me some valuable lessons, and I decided to start Qhuba, a company focused at Strategy Execution across disciplines.  In my view the old stovepipes should all come together in an orchestrated Strategy Execution effort, and the organization should be adapted to serve the short-term and long-term needs with regards to strategy definition, execution and control.

Some of the decision making and activities will be performed by centralized, permanent bodies, some by temporary needs-based bodies, and some by participative bodies (for instance on a part-time basis).

Strategy Execution

Portfolio and Programme Management is a capability crucial to Strategy Execution, and a PPO (Portfolio and Programme Office) is a typical example of such a centralized permanent body.

At clients where Peter and his team where able to share their ideas, and take responsibility for execution they were met with interest, sometimes skepticism, and often enthusiasm. Now that the results become more visible, benefits become tangible, and the approach has matured from “bringing capable people on board to deliver on projects and programmes” to “implementing the process, adapting the organization, taking responsibility for the results and anchoring the approach in the culture of the organization”, we have seen his attitude change from selling and converting to sharing.

I have asked Peter to make all of his ideas, successes, lessons learned and material available, and I know that he is preparing to do this in blogs, articles, whitepapers. Below I will already sketch some backgrounds on this, an forgive me for all the beautiful jargon: Wait until you see him jump from his chair, run to the whiteboard and explain what it means to be Ranking value and benefits, Determining the size of the portfolio pipeline, Assessing the impact of uncertainty on projects and portfolios, Understanding the benefit and risk relationship, Establishing a portfolio governance capability, Managing the portfolio to maximize benefits and Implementing PPM and a PPO.

The process from Idea to Realisation is fairly straightforward:

PPM

Key to the success of this process is being able to rank the ideas is a way that ensures that only the ideas that are critical to strategy realization are funded and executed.

The Flow

When defining a Portfolio and Project management Process (PPM) the most important questions to address in the organization are the WHY and HOW questions. No rocket science, but still:

The Why is supposed to address the question of  Purpose: Can we ensure we do those projects that are adding to the implementation of the corporate strategy and bring us most value.  It is a focus on effectiveness, or: doing the right things

The How process looks at the way an organization implements the Programmes and Projects they have selected.  Here we look at the efficiency or doing things the right way. How well can an organization plan, execute and monitor the Programmes and Projects.

The Enterprise Portfolio & Programme Office plays a role in managing the process.

Central PPO

Peter will start sharing his approach and the whole body of knowledge in more detail soon, and hopefully especially the client stories.

Apart from enthusiasm, is there any evidence that this is an answer to where we started: are projects – and especially IT related projects – simply bound to fail or at least have significant overruns in budget and deadlines?

Industry research by Gartner, Forrester and others report cost savings from applying project portfolio management in the order of ten to twenty per cent of the total IT budget – but are such reports supported by reliable research?

An MIT study of more than 300 organisations in 23 countries found growth and agility was linked to a portfolio approach. They also argue that governance is crucial and that organisations ‘with superior IT governance have more than 20% higher profit than firms with poor governance given the same strategic objectives’.  The results of this study were published in a book by Harvard Business School Publishing.

In another MIT study more than 100 Fortune 100 CIOs were surveyed and interviewed. They found that 65 per cent believed IT project portfolio management yields significant business value, although only 17 per cent appeared to be realising the potential value in practice.

An a four-level IT portfolio management maturity model (ad hoc, defined, managed and synchronized) in the lower maturity level significant benefits were reported– from removal of low value, duplicate, redundant and poorly performing projects, but enterprises at the synchronised stage showed a substantial improvement on asset performance – they achieved cost savings of 40 per cent, better alignment of IT budgets and business strategy, and greater central coordination of IT investments across the organisation. Other benefits identified by interviewees included: wider support from senior business management; the process was perceived to be fair and objective; and it resulted in increased investment in IT.

In the Netherlands Chris Verhoef of the Free University came to similar conclusion. I cannot advise you to read his article on Quantitative IT Portfolio Management though, unless you are fond of almost hundred pages of formulas.

Funny that the better the performance, the more money is invested in technology. I am not sure if the last one is good news:. There must be a break-point… If you look at it from an asset optimization point of view it makes sense though: best invest where the return is high.

Still good news for clients, and for us: there is a lot of room for improvement, and we do not have to accept failure. Way to go Napoleon! Just steer clear of Waterloo.



How to build a business – Transparency

August 11, 2011

I am writing this blog for two reasons. The first one is that I believe in transparency .The reason that I am blogging in the first place, and that we publish lots of information on our website, that we organize What’s Qooking events with partners and clients, that we take part in LinkedIn groups is that we want everyone who is interested to know and understand Why, and How we are running this business. Anything we do, except when covered by a client NDA, is public knowledge as far as I am concerned.

The second reason is that I saw a TED Talk on transparency this morning, and it is so funny and spot-on that I can wait to write about it, and to post the link.

It is a talk by Morgan Spurlock, an American documentary filmmaker that you might know from Supersize Me. He is an extremely funny guy, too. He talks about the making of “The Greatest Movie Ever Sold”, a documentary film about product placement, marketing and advertising which was itself financed through product placement. The goal of the film is Transparency. Very few companies want to participate, because they are struggling with the dilemma of loads of exposure and transparency. To them transparency means an uncertain outcome: “Who knows, maybe by the time your film comes out, we look like a bunch of blithering idiots”.  Maybe in that case they were in the first place. They just did not want their clients to know it.

Spurlock quotes the Merriam-Webster Dictionary definition of Transparency:

a : free from pretense or deceit

b : easily detected or seen through

c : readily understood

d : characterized by visibility or accessibility of information especially concerning business practices

How can you not want to go for those attributes? Still, the dilemma is real. If anyone can have a look in the kitchen, some may not like what they see and go somewhere else, some might want to steal the Chef’s recipes and start their own restaurant, and others might just be curious, enthusiastic, learn something, eat and enjoy. The best chefs, like Ferran Adria of El Bulli, have no secrets. It is their drive and creativity that make them unique.

Tomorrow we have our one-hundred-and-third MT meeting. Having an MT meeting is a dilemma in itself. We like to think of ourselves as a tribe, not a hierarchical company, we believe in Leadership more than in Management, but still we need a group of people to strengthen and support what we are all doing together, and to take some decisions. So we like structure, but we are not too crazy about Control, we care for Autonomy, but want some of our ideas to be adopted, we have an appetite for Risk and Innovation, but need to earn a living and still want to be in business in ten years. Dilemma’s…

On the agenda for tomorrow is transparency. How can motivate everyone to share everything that is relevant? How do we really open up the network? Why does not everyone think it is a brilliant idea to make detailed financial records public, down to a level of personal revenues?

Interesting questions, interesting dilemma’s. And there are many more, that we all have to discuss, find answers to, and blend into what we want to be. What about:

Structure versus Effectuation

Experience versus Innovation

Control versus Autonomy

The Spider versus the Starfish

Interaction versus Transaction

What we will do: we will build or tribe and our brand one story at a time. And there are three sides to a story: your side, my side and the real story. Maybe that is true. We will tell our stories, you are invited to tell yours. No comments will go unpublished.


How to build a business – Pay What You Want for Executive Search

August 10, 2011

Pay What You Want

A while ago I have written a blog on Client Value Pricing: the Client can determine the Value of products or services delivered afterwards, and decide what he wants to pay for it. Some people call it PWYW or Pay What You Want. I promised to post regular updates on how this is working out for us.

Luckily I am not the only one in our company who writes blogs about our business. Tjibbe van der Zeeuw published an article yesterday called Qhuba switches to Client Value Pricing for Executive Search, which generated some interesting comments both from internal and external colleagues. Since this piece was in Dutch, and since I am really eager to share his views and experiences, I have translated and slightly adapted it below.

Due to the influence of the Internet and social media the business models of executive search services are increasingly questioned. Why pay peppered invoices to agencies if you can tap into a network of candidates for your vacancies through channels such as LinkedIn or Twitter.

Our search practice believes that by diligently building and maintaining a network of potential candidates, by continuously gathering intelligence on customers and on the labor markets there definitely is a valuable role to be played as an external intermediary. As an agency the focus of your services shifts from organizing “recruitment” to supporting the “selection”. By maintaining a prolonged and intensive relation with candidates, who can also be or become clients or partners, you will have valuable knowledge of the intrinsic motivation of people (which cannot be distilled from their resume or CV) and of their development potential as well as of their value on the longer term. That is: the very things that you can only see and understand if you really know someone longer and better. Enriched with knowledge of labor markets, an understanding of potential career paths and the specific circumstances and challenges of the client as well as your relationship with stakeholders in the selection process the intermediary can be an advisor to both candidate and client. That is where the headhunter becomes valuable. Headhunting is a job for consulting professionals. And a pretty labor-intensive job at that. What to the client might initially perceives a “making a few calls and sending a CV” takes – behind the scenes – years of investing in relationships, following people, building dossiers, gathering intelligence and having numerous meetings and discussions. These investments can only be recovered with matches is made. The client usually sees what happens between the moment a contract with the agency is signed, and the moment a labor agreement with the candidate is signed. What happens before and after this sheds a different light on the amount on the invoice.

The challenge of the headhunter is therefore to convince the client of the value of the network he built, as well of his market knowledge and consulting skills in guiding and guarding the process with a long-term focus. The challenge of the client: to  determine and decide how honest the headhunter does this. We all know the examples of recruiters saying yes to anything, indicating that the search will pose no problems, only to find out later that he overstated and overestimated his capabilities. Reputation and track record should be leading in this decision, and it should not be reduced to a discussion about the lowest rate (often expressed as a percentage of the salary the candidate will earn) or about the most flexible No Cure No Pay attitude.

This would be bad news for all parties.

The calculation model that has grown to be commonly used for these services is strange in itself. The shorter the process and the higher the salary the better the headhunter is rewarded. There is no real correlation between the outcome of this calculation and the client value of the service provided. At the moment of signing up the candidate as an employee the client cannot know what value the newly attracted resource will bring him. For the headhunter it is difficult to explain for what effort (in time, investment, and risk) he is charging the client.

The most serious drawback of the currently used methods and processes is that implicitly they lead to short-term transactional relationships between all stakeholders (employers, candidates and agents) and work solely towards a signed employment contract as an end point of the cooperation. That is recruitment as a production process, with one contract as input and another contract as output. In an optimal relationship each of the contracts poses a starting point. The No Cure No Pay principle strengthens the short-term thinking and leads to a total lack of mutual commitment.

Tjibbe

Tjibbe, who is running our Executive Search practice, made a conscious decision three years ago to leave the corporate world of Executive Search, where recruitment is a production process, signed contracts are the products and advertising is the icing on the cake, to develop an alternative service as an intermediary between the candidate and the client. He did this because he wanted to and because he thought that role would be relevant. Sometimes he is involved in “old-fashioned” search assignments, but he also proactively introduces candidates to clients, manages the selection process, or advises senior management on whether or not they are making the right choice on a self-recruited candidate (because he knows both individuals well). He councils and coaches candidates on career changes, or HR Departments on labor market communications. In all cases it is difficult to determine beforehand what the value for client will be. Therefore, we leave it up to that to the client to determine that himself, afterwards. Based on what benefits he sees, or what cost he saves, or based on anything else that is important to him.

Now we can focus on what we do best: developing ideas, seeing opportunities for people, matching and supporting professionals in their careers. And now we do not have to engage in miserable discussions about one percent more or less of an annual salary. Whether it will actually work? Ask me in about one year. The first experiences are certainly very positive and satisfying and lead to exciting assignments such as for an investor with a vacant CEO position, who is looking for a seemingly impossible combination of a banker and an entrepreneur, or for an energy company who wants to appoint senior female managers in technical areas, or for a global Telecom enterprise who is looking for international M&A professionals with both technical, financial and commercial expertise. Challenging questions that we gladly take on because we understand the market, because we know the people and because they deserve to be successful.



How to build a business – Strategy Execution

August 5, 2011

We started our company partly out of frustration. Doing C-level jobs we were all very busy trying to score 100% against our targets, and most of the time we did. Each in our own discipline: Finance, Technology, HR, Risk Management. Meanwhile we more often than not did not see our personal success reflected in the company’s sustainable success, or worse: the companies we worked for might be on a fast track down the drain, while we completed all our projects and collected our bonuses.

Problem one: people tend to focus on the short-term and their own interests. Robert Kaplan: “The normal course of events is for companies to focus on day-to-day operations and short-term problem solving. Management meetings focus on fighting fires and fixing problems. Often little time and few resources get committed to strategic issues.” He quotes Sun Tzu in The Art of War: “Strategy without tactics is the long road to victory; tactics without strategy is the noise before defeat.”

Problem two: companies think in projects, with a scope, a budget, a beginning and an end. And problem three: many of this projects cover only one discipline: A system implementation, a reorganization, a refinancing. Without sharing information. “Execution is the result of thousands of decisions made every day by people acting according to the information they have – and their own self-interest.”

What happened to working together to implement a sound strategy? Working together is dangerous. Who will get the blame or who will pick up the medals? Identify an owner, a sponsor, some stakeholders. That is safe. But not very sound.

So what we did was bring together a team of competent professionals from different disciplines who together could be world champions in Strategy Execution, convinced that the key to success lies in bringing the disciplines together.

 

The beauty of starting a company that wants to make other companies successful is that you can practice on yourself. Without a history, without staff, without legacy processes and systems, you can try anything without the risk of disruption, destruction or demolition.

And what do you do when you have a plan, an ambition, a drive and a couple of people who you really like, respect and trust? You buy a bottle of wine, sit at a table, roll up your sleeves and discuss Why you want to do What you want to do, How you are going to do it, and with Whom. And then you decide who is best at what, and then you just do it. Together. Goals are set, successes are celebrated, failures are discussed, and everyone’s personal targets are: am I still enthusiastic, do I want to grab the phone and call someone to discuss what I did today? and is it still fun? Not: will I get my bonus, did I cover my ass.

All of us have seen many companies, strategies, read the books, attended the courses, and got the certificates to prove it. The world is full of Frameworks, Models, Approaches. Many of them deal with Management, Execution and a lot have nice lists:

The Six Disciplines of Strategy Execution, the Seven Habits of Highly Effective People, the 7S, 8S.

Nothing wrong with those, especially not with 7S, but what is the secret to success, who has a consistent track record of successful strategy execution?

Sometime in the ‘70s McKinsey Managing Director Ron Daniel wanted to find an answer to the assault of ideas from Bruce Henderson’s upstart Boston Consulting Group. Daniel was frustrated by the frequency with which clever strategies failed to be implemented effectively. Daniel brought Tom Peters, Bob Waterman – both from McKinsey – and Tony Athos, a professor at the Harvard Business School— together, to look into “effectiveness”, whereas before McKinsey’s most important tool was “organizational design”.

They published their framework in the 1980: “At its most powerful and complex, the framework forces us to concentrate on interactions and fit. The real energy required to re-direct an institution comes when all the variables in the model are aligned.”

Good point, you have to look at all angles and disciplines. Thirty years later the people who came up with the model had to admit:

  1. The success of the model was for a good part the result of the alliteration (and just in time the exchanged “subordinate Goals” for “Shared Values”)
  2. Where they started with “Hard Ss” (Strategy, Structure, Systems) in the framework, then added the “Soft Ss” (Style, Staff, Skills, Shared values—or Superordinate goal), they now insist: “Hard is soft. Soft is hard.” That is, it is the plans and the numbers that are often “soft”, and the people (“staff”) and shared values (nowadays: “corporate culture”) and skills (“core competencies” these days) which are truly “hard”—that is, the foundation for an adaptive and enduring business.

 

Original 7S Model

 

The conclusion: Deal with all aspects or accept the consequences—likely less than effective implementation of any project or program or increase in overall organization performance.

And then there is Leadership. Interesting word; nobody knows what it means. Even Wikipedia is struggling.

Robert Kaplan said: “Of the key issues [of Strategy Execution], first is leadership. Without strong visionary leadership, no strategy will be executed effectively. It’s not enough just to have a strategy. The strategy also needs to be widely shared, understood, and used as a basis for individual and team decisions.

Many managers — at all levels — assume that their people understand the firm’s overall strategy and how their work contributes to it, especially if high level presentations, town meetings, and videos about the strategy have been disseminated. Organisations do not need better “tell me”; they need more “let me” so they co-create it. If we’re there to shape the decision and learn WHY something was made the way it was made, then we own it ourselves.”

Now who knows how to solve all these problems (short-term, own interest, single discipline)?

Kees Engel is such a leader. Four years ago he joined Quion as a CEO.  Quion is a mortgage services. It services multiple labels, and can introduce new ones at very short notice. New concepts can be introduced with a short time to market, which is really interesting for parties that want to become active in the Dutch mortgage market. It connects Funders with Distributors, and has its own labels too.

Kees understood that to implement Quion’s strategy, and to grow their portfolio in a difficult market he had to involve everyone, integrate everything: shareholders, management, staff, clients, processes, partners, departments. He reorganized the company in market teams, that would service end-to-end processes. All departments were housed in a new attractive building, where teams and their managers would sit in the same open office space.

Although the process of servicing a mortgage is not that complex, in the past every step in the process was done by a separate, files where (sometimes physically) transferred from one department (and that meant one buidling) to the next, and each department had it’s own systems, staff, targets and management. The teams where more focused at counterparts (Funders, Borrowers, Agencies, etc), than on executing a strategy or a process-chain.

By introducing a culture of doing things together, based on a sound strategy, enabled by a shared IT platform, and by being visible as an interested and committed leader, hand picking key resources, and where necessary running projects himself, personally attracting new clients and knowing all the ins and outs of what might go wrong, he managed to bring about a change that made it possible to cut the the workforce in half, while increasing the portfolio to somewhere around thirty billion euro. And he never new anything about mortgages when he started. He had one, but that was about it.

How did he do it? He probably would not be able to tell you, except that he used a lot of common sense (that the times of Fords’ conveyor belt processes are over), a lot of expertise (on integration processes and IT systems), a lot of experience (on how to plan, how to select and motivate people) and a lot of genuine interest.

 

– But we need a framework.

– Sorry. No framework.

– A model?

– Sorry.

– But success deserves a name.

– Okay, we will call it Leadership.

 

What is Leadership? I do like Acronyms. So my Acronym for Leadership, and for Strategy Execution is VICTIM.

  • Vision
  • Inspiration
  • Connection
  • Traction
  • Interest
  • Momentum

 

That should sort it all out. I will write a book about it. Or maybe a blog. Sometime.



How to build a business – Sales

August 2, 2011

Sales is not the easiest part in building a business. Initially it is not that hard. When operating small-scale, in a network, there are enough opportunities for all resources to land interesting assignments. What really happens is that individual people are contracted by people who trust them. That is not the same as a steady stream of qualified opportunities, but at the same time it is exactly the kind of interaction that is the basis of growth. In our business, you do not sell solutions. Solutions suggest productized, labeled propositions that solve a specific problem. Find the problem, sell the solution. That is how most sales people operate. Have a catalog, make a shortlist, bug and beg potential clients for orders, and move on. The focus is on the short-term, on the transaction, and social skills are more important than content or curiosity. We believe in the long-term relationships, in the content, in genuine interest in each others’ success. Our assets are a network of people, the knowledge and experience they have, and the ability to increase, share and use this knowledge. This area is what the original founders are most interested in. The keywords were Autonomy, Mastery, Contribution and Peers. We wanted to work with peers that shared interests, but are autonomous thinkers, Masters of their trade, together making a real contribution to our clients, to each other, maybe even to the world. Finding these peers, interesting them in what we are doing, sharing ideas and knowledge and developing cohesion is all good fun, but does not constitute a business.

The Asset side has to be mirrored by a Productivity side, in the same way the balance sheet is mirrored by the Profit and Loss statement.

Qhuba Areas of Responsibility

Qhuba Areas of Responsibility

The areas to address on the P&L side are assembling a Portfolio of services – or areas of expertise – Sales and Delivery. Delivery is what most people are interested in: working with clients is the ultimate goal of most professionals. Luckily the more entrepreneurial ones among is are also interested in developing a portfolio, but sales… A necessary evil. Not at all! Our sales is the result of everything we do, not the starting point. We research, we talk, we share, we discuss, we discover. And our clients do the same. In the process the opportunities arise. All we had to do is create a process and tools to store and qualify the opportunities, get the confirmation that we may do the assignments and deliver. Luckily we were able to attract commercial professionals like Mario School to do this with us.

Our views on Marketing (for whom do we want to do what) and Sales (how do we get the orders) were most influenced by Bob Bloom and by the ideas of Miller Heiman.

I had the pleasure of meeting Bob Bloom, authority on business growth and author of ‘The Inside Advantage‘ last year, thanks to Kees de Jong. Bloom began as an entrepreneur, and grew a local advertising agency into a successful national agency.He later became the US Chairman and CEO of Publicis Worldwide. As the leader of a $4.6 billion global marketing services company, he worked on the strategies of some of the world’s largest companies and brands Such as BMW, L’Oreal, Nestle’, Whirlpool, and T-Mobile.

In a few hours Bob takes you through a process that will help you identify the core strengths inside your business and create a realistic, low-cost strategy that will quickly drive growth. He simplifies the growth process into four steps: “who, what, how and own it”. Although he made his money in advertising, he strongly believes that “every business must find a way to grow top line without investing in infrastructure or advertising. Just capitalize on the firm’s undiscovered or under-utilized inside advantage and use the firm’s absolutely free internal resource – imagination.” Ok, it sounds like an advertisement, but it is not. Bob must be close to seventy (and looks it, too), and does not have much to sell, except his books. He does not need to either, I assume. Anyway, a short summary, and how we have incorporated his approach:

Bob Bloom

In Bob’s world, simple is better than complex. All you have to do is discover and put to use the “uncommon advantage”.

Don’t spend too much time and energy on Brand Building and Tag lines. Customers know too much to be fooled. Instead, consistent focus on Uncommon Offering will cement what the Brand stands for. And this will only work when there is internal consensus and alignment behind uncommon strategic offering. A few nice one-liners:

Strive for customer preference, not loyalty – it does not exist anymore

Create preference by Performing and staying top-of-mind

Insufficient Prospect to Customer conversion is deadly – Get them

Churn is deadly – Retain them

Nothing is more valuable than Ambassadors – Focus on referral for Growth

The four steps:

1. Who. The Archetypal core customer most likely to buy our services in a quantity required to make a profit. We must know them individually well enough to understand his needs, concerns and desires to deliver tangible and emotional benefits. In one of his famous examples he talks about how to identify the Who for real orange juice; “Juicy Juice is Mom’s ally, giving her nutrition that kids love. It’s the very best juice for the very best kids”. Feel a bit like preying on a mothers worries and guilt.

In general, this should be simple: your Who is probably very much like our most valuable customer. If we have to give a definition, it would look something like this: Self-aware capable executives of growing companies, who want access to trusted people, solutions and opportunities to execute their strategies.

2. What: The offering that we can own. This offering should be understood in terms of real benefits as well as emotional ones (addressing wants, needs, aspirations, concerns, apprehensions and fears) not only in terms of the transaction. During the growth cycle the offering will have to be enhanced continuously, both to construct an expensive barrier for the competition, and to sustain ownership of our offering. In our situation: An intimate network of capable people who support in strategy execution, and enabling access to insights and opportunities.

3. How: What persuasive strategy will you develop, or what do you have to do that will convince the core customer to buy our uncommon offering? Again keep it simple: action oriented: What will the What do: honestly and achievable. What we strive for: Get our customers connected and make them successful inside and outside their current companies.

4. Own it and execute it: through consistent engagement, build an enduring relationship, develop an external communication strategy, that will you’re your business well-known for your offering (in our case: based on content), but only to the people critical to growth. We have chosen to spend our time and money where our passion lies: one on one with interesting people, focused on subjects that really interest us, such as food (WhatsQooking events), business development, portfolio- and programme management. We organize intimate events, invite speakers, provide training, coaching for our own people. Clients can participate free of charge.

Like I said, Bob likes it simple. Four steps to create a marketing strategy, four chances to create customer preference – or to generate revenue. In the end it all boils down to likeability, trust, performance and reciprocity. In all cases, preference is based on: how good we are at meeting the wants, needs, and aspirations and at reducing the apprehensions, concerns and fears of our clients.

This requires not only a sound strategy, combined with the right structure – with incentives for all who work with us to participate – and imagination.

1. Engage: Now or Never Moment. Based on research, we talk to people all day every day, we listen, we ask what is on their professional and personal agenda, and we learn about wants, needs, aspirations. If anything, we discuss how we look at value creation, at benefits. We discover where we can be of use, where we can help. We interact.

2. get: Make or Break Moment: This is the good old sales effort, where interaction can lead to transaction, and where we need to demonstrate continuous engagement, also if a transaction is not in the cards.

To channel our efforts, we have chosen Miller Heiman processes to bring some logic and consistency into everything that must be done before face-to-face contact with our clients. That ensures that the small amount of time with the customer is used to best effect. If anything it provides a common language that helps communication, but also it helps us understand how buying decision will be made, qualifies the opportunity, uncovers our strengths and added value, and provides a prioritized action plan for the most promising opportunities. Our network, leads and opportunities are documented in salesforce.com (and in an add-on called Jobscience for candidates), and we will are now also using the Miller Heiman add-on, so we have Goldsheets in the same place as the rest of the relevant information.

3. Keep: Keep or Lose Moment: This can only be the most critical part of our business. We have to ensure performance and customer benefits. We try to make them measurable and report on them, and we have to deal with complaints. That is not easy for a startup business, but luckily we have people who understand the importance. This month Peter Rappange has started to help one of our customers with a project free of charge after one of our associates did a less than perfect job for this client. If he has to be there for two months, than that is what he will do.

4. Grow: Multiplier Moment

Happy successful clients, dying to be our ambassadors, referring all their peers and colleagues to us. It sounds so easy, and it can be. My experience is that people will gladly be an ambassador – if you ask for help.

If it was all this simple, we would not have grown 100% each year, but 500%. Sales is not easy. People who used to be in charge of something, and sometimes of something big, find it difficult to approach people in their network “with the intent to sell”. It almost sounds like a crime. At least it is not considered very chique, especially not if you were the one people approached in the past to sell something to. That probably is the whole point. So many salesmen and –women still use the bug and beg approach, trying to convince potential customers that they have a problem that can and should be solved by one of the tricks of the salesman’s company. Ours will have to be selling professionals not professional salesmen.

Still, sales is fun.



How to build a company – Qhuba Effectuation

July 29, 2011

Today is the last day of my holiday. I have collected enough sand in clothes and shoes, taken enough pictures, read enough and thought a lot. For me holiday is not only a period of more time for the family, but more than anything else: read, think and write time. Due to the limited bandwidth on the Belgium coast, the favourite summer hide-out of my wife and five kids, I have followed the news mostly through RSS feeds on Google Reader. This is an incredibly efficient way to keep yourself informed about what is going on the world, in the business community, but also to acquire new insights in many subjects that interest you. I have subscriptions to The Economist, Harvard Business Review, Financieel Dagblad, Financial Times, CIO Magazine, CFO Magazine, Business Insider, Computable, Emerce, MT, Lifehacker, Lifehacking, New York Times, Reuters, Time Magazine, Twitter, Linkedin and many more. This combined with the feeds on keywords (the same keywords that are the tags of this blog, plus some others) generate more than a thousand news items each day. That sounds like a lot, but an hour in the morning and an hour in the afternoon are enough to scan, select and mark the real interesting ones for further reading.

In an earlier blog I wrote about Effectuation. At the time I had started reading the book of Thomas Blekman called Corporate Effectuation. It started nice, basically explaining the theories of Saras Sarasvathy of Carnegy Mellon University on how her research of successful entrepreneurs uncovered five basic principles these people shared. Her 2001 publication “Causation and Effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency” was the start of a whole series of publications on the subject.

The second half of Blekman’s book tries to match the principles to initiatives in large corporations, such as HPO (High Performance Organisation), Lean Six Sigma and other frameworks. He finishes with a CEBP, a modular Corporate Effectuation Business Programme. That to me is contrary to the essence of the principles described by Sarasvathy. Canning, packing and labeling a sellable methods, frameworks and solution suggest that the world is predictable. Have a solution and find the problem that it will solve. Was that not causation?

Still a good read. If you want to read the essence only, best go for the original papers.

Today on Twitter, Paulo Coelho: Face reality. And unwilled changes will happen. How true, and although I am sure Mr. Coelho meant changes in your personal life, I would imagine the same principles are at work in the lives of happy people, as in the businesses of successful effectuators. Or maybe that is the whole secret: successful business people are just people. Not just people ate home and business people ate work. You will see that the principles are probably applicable at a higher percentage of decisions people take every day in their private lives than on the decision they take  in their professional capacity.

An analogy for effectuation is how Columbus discovered Amerika when looking for India. Unexpected events are opportunities, not threats. You can spot them, pick them up and start running, turn away from them, or do nothing. Just read a blog from Seth Godin: either capture everything in a process, and just show up for work, or confront your fear of being stupid and try something new.

Back to the five principles, and being curious and competitive, see how we are doing:

1.Of course you have a strategy, and so do we, but most goals emerge by imagining courses of action which start from available means of who I am, what I know, and who I know. This is now often called the “Bird-in hand-principle”. (“What do I have?” versus “What do I need?”). This is, indeed, where we started, but don’t most startups? You think about what drives you, what your passions are and what it is that you do best. You try to be honest about your limitations mistakes we had made in the past. We all had a burning desire to prove that a practical approach towards strategy execution, portfolio management and benefits management, and that people with experience were the key, instead of the frameworks and processes. We did not want to be, or work with consultants, but with executors, implementors, changers and innovators.

2.Attitude toward outsiders: Share what you have with committed players, in many roles (candidates, associates, clients, partners), but always with the intention of “shared rewards partnerships”. This “Crazy Quilt principle” of build a network of self-selected stakeholders is the essence of what we do. So much so that we now ask our clients to tell us what our reward should be. We call this Client Value Pricing. But in this network of stakeholders we do not only want to make clients successful by providing capable people to support in strategy execution, we also want to be a platform for professional and personal growth of all that participate.

3.Attitude toward unexpected events: Surprise is good. Someone wrote “Imaginative re-thinking of possibilities transforms the unexpected into innovation and new opportunities”. That’s a lot of syllables, but probably a good way to describe the Lemonade principle. If you come across lemons making lemonade is a good option. Embrace surprises every day. And we had to: our company started operating at the beginning of a worldwide economic recession. The need for the kind of services we provide might not directly be affected by the economic situation, but obviously there is a correlation between corporate investment budgets and the demand and price level of strategy execution services. We focused on assignment with more or less immediate benefits for the clients, and tried to make them measurable. At the labour market is changing. More and more highly qualified professionals become independent contractors with entrepreneurial ambitions. This is an opportunity that we embraced, too, and the whole structure and style of our business was created to appeal to ambitions and skills of these talented people.

4.The Affordable Loss Principle is how you look at of risk and resources: Pursue promising opportunities without investing more resources than stakeholders can afford to lose. Limit downside potential. The structure of our business is a partnership, where initially we had no employees, not offices, hardly any overhead. The risks were shared with partners, who could afford to have an income that might be a fraction of what they used to earn in their corporate roles. Of course now, three years later, and getting close to €10M turnover, our risk profile has changed, and we employ, invest and think accordingly.

5.Pilot-in-the-plane principle; The future comes from what people do. ”Rely on human agency as prime driver of opportunity rather than on technical or economic systems and trends. There cannot be such a thing a just showing up for work, and trusting that the processes, the frameworks and the technology take care of the rest. For prove, watch this video.

All nice and good, and to some extend we recognize all these elements. Problem is, there are many more. For us it all starts with words like: Best people, practical knowledge, corporate success, but also words like expert peer network, autonomy, mastery, and making contributions. I haven’t managed to stick all of those in a framework, but if anyone has good idea, let us hear it.

Meanwhile – again on my RSS feed – Chris Brogan suggest we start listening to our taxi drivers, of we want to know about success in business; Matthew Toren taught us something about the basics of bootstrapping in marketing and Seth Godin – there he is again – about creating myths  instead of just brands.

So we grow and we learn everyday, and it’s fun! Don’t tell my wife, but I am not unhappy the holiday is over.