11 parameters to choose those who will be tomorrows leaders

11 parameters to choose those who will be tomorrows leaders

Aug 17, 2018 | Governance, Leadership

 

The rate of change is accelerating at a massive rate. A common challenge for all enterprises irrespective of size that have professional management, is how to pick those who will be able to deliver commercial longevity to the shareholders, whether they be spread across the globe, or members of a family.

The gap between those who have been successful, and those who will be successful is widening.

From time to time, I work with clients to plug capability and leadership gaps in their management ranks, and seek future leaders. I am certainly not a recruiter, my objective is not to fill a hole in order to gain a commission, it is to ensure that my clients can optimise their commercial and strategic outcomes.

The first step is to build a profile of the role, how it will contribute to the outcomes being sought. This requires a solid strategy that acknowledges the geometric rates of change happening around us. Without that strategic framework, the task of picking the right leader could just as well be done with a pin down the pub.

When we are all clear, we build a profile of the ideal candidate.

However, the order is clear. The organisation is first, we have to be certain about who will be doing what, how the objectives being sought will be achieved within the context of  the strategy, and finally, why we are doing what we are setting out to achieve, what value will it bring, and to who.

Having that work done, and it should be done as a matter of course, not just because there is a gap in capabilities, we consider the perfect candidate profile.

I have a template that has been used for 25 years with considerable success, consisting of 11 characteristics. Each position and situation is different, and there will never be a an absolutely perfect candidate, so compromises will inevitably be made, the trick is to make them in non- critical areas. Therefore considering the priorities of the requirements, and their relative weight gives a tool against which to measure the merits of candidates, and ensure some level of consistency as you progressively interview.

Competence.

There will always be things that are an absolute requirement of the job, deal breakers no matter how well all the other factors fit.

Trustworthiness.

Leading is tough, and increasingly trust is hard to win and easy to compromise. The candidates need to be the type who will be  absolutely straight, transparent, and follow through on commitments. In a senior management role, it always comes from doing what you say you will do, but also taking in potentially divergent and contrary views in the decision-making process, and  allowing due process, so everyone has a stake in the outcome.

Focus.

Leading even a modest sized business is full of distractions and red herrings. A leader needs to be able to focus on the few things that are really important that will deliver the outcomes, and not  be distracted by the urgent but not necessarily important items that always come up.

Curiosity.

I have  written before that I think curiosity is a defining feature of successful leaders into the future, and nothing  I have seen changes that view. A curious person, prepared to nurture and  enable their own curiosity, and inspire it in others,  will infect an organisation in a positive manner. Curious people are less likely to accept a status quo, believe what others believe simply because of the weight of numbers, they are inherently seekers of the facts, and uncomfortable with inconsistency and hearsay.

People skills.

This is a pretty generic description, but people skills are what makes the leader, as others are prepared to follow them irrespective of the trappings of power and position. Increasingly people make the difference, so having the right people in the right places in the organisation is crucial.

Passion.

Passion is the original communicable ‘disease’. While ‘Passion’  has become a cliché of recruiters ads, that does not diminish the power of passion to inspire, motivate, and engage.

Agility.

Being agile demands that you are able to change position quickly and efficiently in the face of new information, an emerging situation, competitive pressure, whatever it is that demands a response different to the last one. Agility is very different from inconsistency, it is also different from flexibility, which sees you bend in the face of change, but then move back to the former positon when the pressure eases off.

Self awareness

The ability to see yourself as others see you is crucial to effective leadership. Self awareness enables empathy, without which the best you can be is a good manager, not a leader.

Judgement.

You want someone who demonstrates good judgment in  stressful situations, does not let the emotion or heat of the moment overcome rational analysis. This is a really difficult one to measure, or even get a good handle on, as our unconscious reaction to   those we agree with is to warm to them, and vice versa.  The best way is to examine in some detail the performance and behavior of individuals when stress has been imposed in the past.

Fit.

The only person who can really change the culture is the person at the top. If the recruit is other than the top dog, to some degree they will have to be able to fit into a culture that exists with little power to make significant alterations beyond their own span of control. While it is good to have people who question the status quo, and offer alternatives, you also need a balance that ensures that any disruption leads to a positive outcome.

A bias to action.

Even when all the above is present, it does little good by osmosis, there has to be action. As the world gets faster and more complicated, those who take action will win, despite the setbacks that will occur. We all acknowledge that we learn from our mistakes, which presupposes we take action often enough to make some.

A key job of every leader is to replace themselves, and to develop a ‘bench’ that can fill capability gaps as they emerge. The really good leaders I have seen in large enterprises spend more time on this single task than any other, apart from developing and managing the culture, which is inextricably tied up with the personnel choices. It is also the responsibility of a governing board to ensure that emerging leadership is encouraged and nourished, as their primary responsibility is the long term commercial and social viability of  the enterprise.

 

Header credit: Hugh McLod at Gapingvoid.com

Unpacking the characteristics of a demand chain

Unpacking the characteristics of a demand chain

Aug 15, 2018 | Demand chains, Operations

Recently I found myself in a group conversation about marketing ‘channels’, and almost had to scream.

Like most conversations of this nature, they were just about logistics. Pity the poor old customer, barely got a mention apart from being noted as being on the end of a supply chain.

The whole conversation sounded like the ones I had in the 70’s, prior to any of the development that has gone into the thinking about the nature of the chains delivering product to customers, or the systems that drive them that has occurred in the interim.

A chain does not kick into operation until someone decides to buy something, it is activated by demand, not supply. Therefore, we would be better served to think about it as a demand chain. This is more than a semantic difference, it acknowledges that the chain is a ‘Pull’ model, activated by demand, not a ‘Push’ model, activated by supply with no reference to how that available supply will be sold.

Everything that comes after the decision to buy something is just seeking ways to split up the revenue from that sale.

Looking at it from the customers view, the only things that are important are those that add value for them, the details of the shipping from A to B, and manufacturing processes are supremely irrelevant.

Everyone in the chain is competing for a slice of that dollar.

A chain is a complex system, or it can be. The simple definition of a complex system is that the whole is greater than the sum of its parts. You can view a chain as a number of sequential but essentially separate activities, or as a number of interdependent activities.

In the first, we are fighting for a slice of the pie, in the second, we are collaborating to make the pie bigger before slicing it up and sharing it around.

They are profoundly different.

The latter is way harder to build and maintain, but delivers significantly better financial and strategic outcomes in the long term, as the price on the day of a product becomes almost irrelevant.

Following are the descriptions I use to make the key distinctions.

Supply chain.

Supply chain arrangements are basically, grow/make it and chuck it over the fence and hope somebody buys it, and eventually pays you, something, which is most often not reflecting what the producer thinks it is worth. Most of agriculture works on this model, and it has failed us.

Characteristics: Short term price, adversarial negotiations, multiple supplier competition of undifferentiated product, buyers who hold the negotiation power deriving from scale, or the anonymity via auction.

Value Chains.

A value chain seeks to control at least some of the value-add that occurs between the production and customer, and thereby capture some of the added value by margin. Mostly however, the value add is calculated as the ‘cost add’ as the consumers view of value plays no role in the calculation. The classic case is bread, where millers have become bakers to capture the value added margin that results from bread being baked from their milled grain. You often see this type of vertical integration evolving as one link seeks to control what happens on either side. However, it is still an essentially sequential and disconnected process, of grower, miller, baker, and distributor.

Characteristics: price is important but not the only factor, specifications and specification maintenance become important, the amount and type of value added is taken into account, very aggressive negotiation occurs, but it is no longer ‘take it or leave it’ as it is in a supply chain. Calculation of the value add is usually the marginal cost of the manufactured goods sold, minus the input commodity price. As in a supply chain, this is usually just a calculation based on competitive pressures. Often in recent times, marketing has got hold of the end product, (as in bread) differentiated it a bit, added some advertising and benefit claims, and tried to sell the product for a premium.

Demand chains.

These are rare beasts indeed, and do not usually carry the name ‘demand chain’. It is activated by pressure applied to the chain from the end buyer, the opposite direction of both supply and value chain arrangements. It is pressure delivered to the chain by real demand, and has proven to be the key to success. For example, Toyota apply demand chain disciplines on their suppliers, by having the parts procurement process activated by a ‘Kanban’ card on the production line. This is the genesis of the TPS which has revolutionised modern manufacturing.

Characteristics:  Driven by demand, collaborative relationships for mutual benefit drives activity, specifications and DIFOT performance are crucial, prices are negotiated on the basis of best outcome for the whole chain, as well as the individual, and there is information transparency throughout the chain which these days requires IT integration.

 

The spread of digital technology has given us the tools to make the transformation to demand chains easier, but they require power to be devolved, and the status quo in most cases to be altered, so rarely do they evolve to their full potential. Increasingly we will see an evolution towards demand chains as enterprises seek sources of differentiation, enhanced customer service, and cost reduction, all at the same time.

 

That essential second value proposition

That essential second value proposition

Aug 13, 2018 | Customers, Leadership

At the heart of every successful business is a promise made by a business to its customers and potential customers:  Value  can be created for them by commercial engagement.

I have never done any sort of strategic or marketing program where the definition of the Customer Value Proposition is not front and centre.

Often this is expressed as an ‘Elevator Pitch’, a summarised articulation of how that value can be created, usually by highlighting a problem or circumstance that will be addressed by using the products being offered. The logic is that you have 30 seconds, no more,  to make an impression, and given that people are more interested in themselves that you, the way to get their attention is to direct that 30 seconds to telling them how you will make their lives better.

It is a really effective strategy, road tested and tuned over many years.

Why is it then  that we so often fail to do the same thing for our stakeholders, particularly our employees?

Logically, if we can articulate why we make their lives better by working there, beyond the need to put food on their table,  and a roof over the kids heads, the result will be a more motivated and engaged workforce.

The second value proposition therefore is the one we make to our employees.

In most foyers these days there is some sort of mission statement, or statement of ‘business purpose,’ values, or some such fluffy words that could apply to just about every business around.

Who does not want to work for a business that respects customers, shows integrity, and transparency in the way it deals with employees?

Would it not be better to craft a genuine second value proposition aimed at stakeholders? In most cases, it will be very similar to those used on prospective customers, the desired outcome is the same: engagement and motivation.

Therefore the best way to create an engaged employee group is to repeat your customer value proposition to them, over and over, so it is clearly understood. Then you ensure that the tools are in place to enable every employee to contribute to the propositions delivery, and most importantly, live it every day, in every decision made, and every action taken.

Cartoon credit: Hugh Mcleod at Gapingvoid.com

E.&O.E. Very thoughtful reader Craig Armour http://www.kcarmour.com.au/ pointed out the error in the last paragraph. How much better it would be to have the employees sufficiently engaged that they could repeat the CVP back to you. Absolutely right.

 

The substantial value of ignorance

The substantial value of ignorance

Aug 9, 2018 | Governance, Leadership

Being seen as an expert is sometimes a problem, as everyone expects you to have all the answers.

Nobody has all the answers, and they are usually uncovered only by the judicious  use of questions.

As an outsider to businesses I work with, I come in with some level of anticipated expertise, otherwise why would I have been  hired? It is sometimes initially a bit disconcerting for employees and other stakeholders to be quizzed by a so called expert, called in to do a commercial diagnosis. However, the analogy to a doctor doing a diagnosis usually works to turn that around.

Asking questions does two things:

  • It leads to answers that will be essential to the diagnosis, and always leads to other questions you may not have considered that uncover the deeper realities rather than the superficial perception.
  • It acknowledges the value of the specific expertise of those being questioned. Everyone likes to be seen as an expert, or at least having some specialised knowledge valuable to someone else.

Many years ago I came across what Guru Peter Drucker called his ‘5 questions’ critical to diagnosing performance.

  1. What is your mission?
  2. Who is your customer?
  3. What does your customer value?
  4. What are your results?
  5. What are your plans?

I use these 5 questions all the time as a foundation of any diagnosis I do. Not always in order,  rarely asked the same way twice, but getting at the answers is the core task of the commercial diagnostician.

It goes to another of Drucker’s pithy statements , ‘The key value of a consultant was not to have the  right answers, but to ask the right questions’

Most of those I work with are smart enough to recognise when you are on to something, and then help you figure out the right solution for them, in their circumstances.

No consultant will ever know as much about the detail of a business as those who work inside it every day. It therefore makes little sense to assume as an outsider that you do. However, what an outsider does have is a wider view of the context of the business, an unencumbered sense of what is important and what is not, the location and nature of sacred cows, unstated behaviour drivers, and the informal networks at play among every group of humans.

Being an outsider allows you to ask seemingly innocent questions that challenge the status quo, and the conventional wisdoms that exist.

These are the ones that lead to the breakthrough thinking that enables change.

 

 

 

What SME’s can learn from Apples trillion dollar milestone

What SME’s can learn from Apples trillion dollar milestone

Aug 6, 2018 | Branding, Small business, Strategy

On Thursday last week, Apple became the first trillion dollar company in market capitalisation.

I was not even sure what a trillion is.

A ‘Trillion’ is different in the US count to the British system which we in Australia follow.

In the US system a trillion is one thousand times one billion.

In the British system, a trillion is one million times one billion.

Apple when it passed the US Trillion mark on Thursday at a stock price of $207.04 per share, was a company worth 1 with 12 zeros following it. $1,000,000,000,000.

Long way to go to be a British trillion, but nevertheless, a heap of money. (pity they pay so little tax on Australian revenues). Just for a little context, the US Federal  budget in 2015 was $3.8 Trillion, and was 21% of the US GDP. Therefore, Apples market valuation is now roughly 25% of the US federal budget.

So, what can a simple local SME, the businesses I work with, learn from this astonishing performance? Broke to a trillion in 20 years.

Yes, Apple was as good as broke in 1997 when Apple brought back Steve Jobs by buying his NeXT business to get their hands on the operating system, because windows was killing the MacOS as it was at the time.

The Apple board terminated then CEO Gil Amelio and put Jobs back in charge, and he changed everything.

So, to the question, what can the local SME’s learn from this?

A lot it seems to me.

Strategy.

You have to be able to take a ‘helicopter’ view of the market you are in, its adjacencies, and likely future influencers.  Jobs did this several times, seeing the potential impact of MP3 players, then teaming that device up with software iTunes, then moving again with the iPhone and iPad. Each time he saw what was potentially possible, and made it happen. As a local business, this helicopter view is just as valuable to you as it was to Jobs in 1997, and subsequently.

Timing is everything.

Jobs was able to see what was becoming possible before anyone else, and leverage the change. He was not the first in any of the individual technologies, but he put them together in a different way to leverage the multiplier effects. However, each wave was enabled by the one before, so timing was crucial.

Control of your value chain.

Customers are not looking for components, they are looking for the best solutions to their problems. Apple controls its value chain with an iron hand, delivering to their customers a unique experience in a ‘must-have’ package. They do not manufacture any of the core components, they just arrange for it to be all put together. In the evolving commercial world we are all facing, one of the most important words will be ‘Control’. Apple has proven to be a master of control, and has benefited accordingly.

Great design sells.

Dell, and HP, and all the rest could have done what Apple did, but they failed to do so. They designed and sold solid, reliable commodities, that all looked, performed  and felt the same, Apple designed something different that delivered an experience. The evidence is clear. Apple has roughly 15% unit market share of smartphone units sold, but holds 85% of smartphone profitability. This astonishing performance is the result of great design and branding over a long time, and the control exercised over the supply chain and tech eco system.

Dream.

It is usually just fluff to talk about ‘dreaming big’, creating your own BEHAG, (Big Hairy Audacious Goal) but occasionally, someone does it. Dreaming is a key part of the process, but dreaming by itself does not get anything done.

 

As an aside, one of the members of my local tennis club is a long term Apple employee in Australia, who has Apple shares as a part of his salary package. He has been issued shares progressively over the years, all of which have been sold to pay for  the expenses of living, mortgages, school fees, all the stuff we all face along the way. The first shares he was issued were at forty cents each. A very long way from the $208 closure on Thursday, and yes, he was crying!

 

When you need help thinking about all this stuff, even if you do not aspire to be the next Apple, call me.