On Business and Leadership

On being invited to the Board of a public company

2012-02-21T19:04:00.000+02:00

It's interesting reading some of the threads in various professional discussion forums concerned about getting your first board seat. Certainly, as many respondents have alluded, you probably don't as much 'get' a board seat as get offered one.

Personally I never viewed my career as about being a board member. Instead, I have considered myself as a bit of a technical specialist with some international exposure to boot. Yet this seems to have been what the chairman, whom I met on a previous occasion, of a company about to list in London was looking for.

To the point, being invited to take up a board seat in a new public company is cause for considerable professional excitement, and yet also trepidation. Professional excitement because you get to apply your skills at the highest level, and trepidation because it's not easy being a company director these days because of increasing corporate governance requirements which can be quite tricky to navigate. In this case, an additional challenge exists in that the company's head office is half way around the world, which will make for some quite considerable commuting pressures!

The point is, is the professional excitement and the challenge worth more than the inconvenience? In this case, I would argue yes, and as a result, I have accepted the invite, and will now follow due process over the next few months as the company lists on the London Stock Exchange.

Leaders have a responsibility to comment positively on issues

2012-01-22T19:11:00.000+02:00

I was just reading an article of political news, where one political leader was lamenting the possible abuse of 'free expression' of another political leader, specifically that the comments being made were being destructive, and not in the long term interests of either organisation.

It got me thinking about a comment one of them made, that "Leaders have a responsibility to comment positively on issues."

While I believe that both organisations have not been particularly strong on the leadership front lately and that neither have particularly lived this comment, I'm also not sure the politician fully understands the profundity of his statement. It is undoubtedly wise.

No leader builds respect by being disparaging of another, and indeed, while you may not necessarily agree with a particular decision made by a leader, it remains noble to see the positive in the situation in the interests of those around you. Don't make the mistake of thinking that freedom of expression gives you the right to say whatever you want. Sure, it does, but it is so easy to abuse that right. Be aware that people are looking up to you, and an abuse of that right may forever taint the view that others have of your leadership. Make a positive contribution to the situation, and your leadership credentials will increase.

Rudyard Kipling said that "Words are, of course, the most powerful drug used by mankind." That drug can be a downer, or an upper. You choose how to use it. Use it well.

The broader value proposition of your CRM system to your company

2012-01-17T20:36:00.000+02:00

It has been interesting reading blog contributions on CRM over the last year, where by far the most dominant types have concerned CRM as a field of specialisation. On the opposite end of the scale, you will look hard and long before you find any articles discussing the integration of CRM with the rest of the organisation. And this is a pity, because the effectiveness of a CRM implementation increases dramatically when we consider it in the context of the entire business.

The Balanced Scorecard increased our understanding of how business operates as an entity in a strategic context rather than just as a combination of silos more than 20 years ago already. In the same way, CRM does not operate in a silo within the traditional marketing silo. The fact that it operates at all is the result of a complex context of people, process and technology, itself in a context of strategy, which also incorporates the business model of the enterprise.

The fact that the interaction of CRM with other specialist areas within the organisation is so pervasive means that we can better manage the effectiveness of our CRM implementation if we increasingly consider CRM measurement in a broader context. Indeed, for large organisations spending hundreds of millions of dollars on various technology implementations, it is becoming a board imperative to improve their understanding of the various technology implementations, and a starting point for this understanding is by an enlarged context of measurement for, as in this case, a CRM implementation. The measures are not complex, incorporating aspects such as:

People productivity measures as it relates to CRM initiatives (customer-facing and back office)
Process efficiency measures as it relates to CRM measures, and
The technology component cost of the CRM initiative as an element of the cost of acquisition, the cost of cross-selling, or the cost of upselling

Along with existing measures such as those associated with increased revenue (acquisition, cross-selling, up-selling, annuity), decreased cost (operating and capital) and decreased risk (brand and operating), these measures, best shown as trends, help demonstrate how the organisation as a whole is becoming more efficient as a result of the CRM implementation. , which may put the results of e.g. improved sales in a much better context. Contemporary measures such as employee engagement are especially relevant in the context of big systems implementations.

Furthermore, any modern discussion on CRM should probably be explicit about the role of Social Media in it too. This becomes a lot easier to understand when we realise that the various components of marketing create an integrated corporate organism, incorporating CRM, branding, advertising, PR, corporate communications, internal branding and social media etc.

In closing, for CRM as a paradigm to show the full extent of its value proposition in a corporate context, itself a form of marketing ROI, it not only has to demonstrate how it integrates with the other spheres of marketing, of which it is but a part as per the above paragraph, but also the entire organisation as outlined earlier.

Future Global 100: The top 10 issues on the minds of businesses and governments today

2011-11-06T18:00:00.000+02:00

I had the privilege of attending the by-invite-only Future Global 100 event in Hong Kong last week, involving not only senior executives from some of the biggest businesses in the world, but also by various government figures from as far as Africa. The event was only six hours long, so clearly an awful lot had to be said and done in a very limited timeframe!

Again, in a blog, this is no doubt way too short an assessment of what happened in Hong Kong, but it is no doubt useful as a tool to provide some levels of insight to those reading this. With so much going on in the world today, it was clearly going to be an interesting event, and wishing to encapsulate all that was said in no more than ten points, here is a summary of what I heard and experienced:

The impact of the Eurozone crisis

Given that this large-scale event is out of business' control, what was interesting was hearing the position of a large Chinese company saying that they would *only* be able to grow by 50% next year given the impact of reduced western demand given not only the Eurozone crisis, but also the US crisis. One company within one country within the BRICs clearly experiencing the kind of growth expected given the extraordinary volumes available within these hungry markets

Chinese and Japanese Exchange Rates

Another uncontrollable issue on the part of Japan, and controllable on the part of China (with opinion depending on which side of the fence you're sitting on) was the issue of their exchange rates. It was an interesting discussion, but without any immediate conclusions and actions from this forum.

Emerging Markets

It was surprising to me that the opportunities in emerging markets were mentioned only fleetingly, and more from a resources perspective than from a manufacturing perspective. I was actually pleased to find this though as I would hate to think that developed market growth depends only on emerging markets.

People and Talent

This is was identified albeit without exploring the issues associated with what would need to be done to achieve the required standards of the workforce of tomorrow - agile thinking, tenacity, flexibility, and an increasing ability to manage complexity. I cannot begin to imagine what kind of curricula will need to be put in place to nurture these kinds of skills for the future.

Public Private Partnerships, Globalisation and Trade

Without doubt governments will play a huge role in enabling future growth, which will require governments to ensure that they themselves have the right skills on board to help tackle the challenges of the future with business. A senior representative of the WTO was there and I couldn't help thinking that in some cases, the level of thinking being done by the WTO was perhaps not able to be mirrored by many governments... Issues around increasing job protectionism in a shrinking economy were raised.

Social Inclusion

Raised, albeit all-too-briefly, as the 'two faces' of a country that needed some degree of intervention in order to achieve increasing harmony.

Our Planet and Sustainability

As with the above point, it was raised, albeit all-too-briefly. One the one hand some governments were arguing the need to exceed carbon footprint guidelines in their drive to achieve similar levels of industrialisation to the developed countries 20 years ago. However, it's really difficult to justify spiting the entire planet in the rush to achieve industrialisation... The impact of global warming was raised, where if the global temperature was to be raised by one degree, that most of the top 15 cities in the world that would be wiped out by the rise in sea levels would be Asian, which holds huge implications for how Asian authorities view global warming...

Governance

This was an interesting point, as I started wondering to what extent good governance is a cultural issue, and whether there were indeed any absolutes in this discipline, and what exactly those would be. If the world is going to talk about governance as a global phenomenon, then there would need to be global standards such as ISO 31000 (applicable to risk management) in this discipline too!

Innovation

Interestingly, innovation was hardly raised at all at this level, and I raised this fact while leading a round table (that it had not been mentioned) after almost 6 hours of discourse. On the one hand, it seemed as if R&D was almost implied at the levels of conversation being held, and on the other hand, a senior industry representative mentioned that it was key to have R&D levels at the top of the industry the company was competing in. Implied also was the required levels of return from that R&D.

Social Media

As one realising the global potential of the variety of social media platforms out there, I was surprised to find how few of the worlds top leaders had personally embraced social media! While many of the global leaders were older than I am, I found a distinct misunderstanding of what social media was about. Many countries are all-too-aware of the power it gives customers and citizens though, for which reasons elements of social media have been banned in many countries.

In closing, there's some very big topics on everyone's minds, interestingly few of which can be resolved without the help and integration from others. Finally, I am quite surprised that 'the customer' was never discussed once in a business context... It seems it's still very much a product-centric world out there!

6 points covering everything happening in the strategic context of business today

2011-10-28T15:34:00.000+02:00

There's no ways such an ambitious title could be followed by merely a few words in a blog article, so with a little bit of tongue in cheek, here's a quick view of the future of business in the context of the 'new normal' of economic uncertainty and of increasing rates and scale of change:

The micro-view: The firm/company/enterprise/corporation:

Traditional economics taught us that scale mattered.

The bigger we were relative to our competitors, the lower our fixed costs per unit, so the higher the profitability per unit sold. However, today's economy is demanding agility, the ability to respond to rapid, unexpected change, now often occurring increasingly at the macro-level. Since a business enterprise cannot respond with appropriate speed to change as a behemoth, new business forms need to be more compact, and agile. This will demand a new views of operations productivity.

So where will future growth come from? No longer necessarily from scale enterprises selling more of the same to more customers, but by being able to respond better to new opportunities as they happen, continually finding new solutions to new markets that will come and go in a state of accelerated change and increasingly rapidly evolving tastes and preferences

No longer is human resources merely about industrial relations, payrolls, leave, recruitment, termination and requirement.

A more and more appropriate response is being demanded to the up-to-now pretentious assertion that people are an organisation's greatest asset. This means you must increasingly care about who I am, about my dreams, and my aspirations. This means that we becomes partners in making the enterprise successful, that you appeal to my intrinsic motivators to achieve the desired levels of performance. Looking at the 'Occupy Wall Street' movement, maybe the time has come to reduce the gini coefficient and to have all positive contributors share more of the spoils of doing good business. The world of work is changing in that more people will need to create their own economic futures as more corporates begin downsizing to increase their agility, and there will be increasing demands for governments to facilitate the ease of doing business, especially for SMEs. Personally, I'm not that thrilled with tight job descriptions and rigid performance contracts as they seriously inhibit creativity and have a pathetic response to change, but unfortunately people themselves abuse 'the system', making it more difficult for everyone. In this context, they're unfortunately here to stay.

In the world of information technology, changes to the old enterprise scale hypothesis above will also impact technology.

Megalithic IT solutions will increasingly inhibit the requirement for rapid change, rather than support it. Just as these huge projects try to address a legacy of many disparate systems, how they are put together will need to be rethought with increasing flexibility as a design objective. I have seen so much lip service paid to IT flexibility over the years, where every salesman under the sun claims that their platform is flexible, so maybe we should add the adjectives 'rapid' and 'cheap' to the specification for future IT flexibility!

Finance and governance should expand their scope beyond mere historical reporting.

While SOX, King III, the Combined Code etc all increasingly require reporting on maximising the social impact and on minimalising the environmental impact of our commercial endeavours, the fact of the matter is that it's grudge reporting. Few seem to feel that the real future of business is being driven by society, and by society's views on how harmful a business is to the society and environment it operates in. The more business actively acknowledges and contributes to a purpose of creating wealth in economically responsible ways, the greater the attraction of that brand to society, and the more society will support it, with the profits quickly following. Furthermore, financial reporting is going to need to become much more strategic, much more directional, rather than the simple analysis we see in financial reporting today.

Marketing will be driven by the customer, not the company.

The evolution of social media in particular has driven a customer and non-customer activism unheard of five-odd years ago. In fact, social media is probably as true a rendition of customer-centricity as we've ever seen, in that unless we are blind, we are increasingly forced to respond to a customer to minimise the risk to our reputations, and therefore to our brands. In other words, customers and even non-customers matter more than they ever did. It is no longer enough to sell and then to offer levels of customer support ranging from zero to the quite exceptional. Now all our customers truly need to be served as if they really matter to us, as if they are our only customers. Their choices are increasingly endless, it is up to you to keep your customer, and to stay in business. In fact, the power of social media to build brand equity is phenomenal, and cost-effective!

The macro-view: The global economy, the socio-economic environment and environmentalism

I've said it on many occasions - we are in the 'new normal' as far as the economy is concerned, one very comfortable with perpetual, accelerated, grand, global change.

There is no going back to pre-2008 business. In case you haven't noticed, the whole climate of business has changed.

The 'Occupy Wall Street' movement seems to be gathering momentum, bemoaning corporate greed and the gini coefficient. This will apply pressure on corporate governance.

Our water resources are increasingly polluted by industrialists not concerned with accounting for the full costs of their economic activity - and it seems the resource companies couldn't care less, unless they're under duress like BP was last year in the Caribbean disaster. Again corporate governance will come under pressure.

Education is not equipping our youth for managing rapid change and self-sufficiency, and there have been outcries about the exorbitant costs of tertiary education in Europe and North America. Educational institutions will come under increasing media scrutiny.

Banking will change dramatically given the requirements for increased capital adequacy, which will reduce their top line, reduce their balance sheets, and constrain lending to SMEs and increase the cost of debt to companies lucky enough to qualify for it under a much tighter credit regime. Their will be political implications to consider if banks don't find it in their means to maintain and even grow the requirements for lending to SMEs

The rise of China and India as manufacturers, and of Brazil, Russia and Africa as the new resources powerhouses will change the balance of power over time, as has already been identified a decade ago when the BRIC (and subsequently the BRICs) groupings were identified as amongst the economic powerhouses of the future.

Ultimately, irrespective of which business discipline you consider, change is abundant in whichever direction we look, and will increasingly force change the way we do business. Are you ready for it?

Why is CRM adoption still being done after the fact?

2011-10-25T11:39:00.000+02:00

I'm amazed to have seen a whole lot of recent articles on how to encourage CRM user adoption once the CRM system has already been implemented! That's like me designing and building a beautiful 10-room thatch house for you, in the mountains, all fully connected to the grid, with the only problem being that you happen to be single, a fisherman, allergic to grass, and that you are a green bean of note! In other words, it's totally inappropriate, and obviously totally unwanted. Then, to pile on the injury, I try and convince you that you really want the house! Indeed, I begin to spend more time talking to you, send you emails, write you newsletters, and even create a vibey TV show, all for you, I mean after all, how can you not like the house? You must like it!

You would never fall for something like this, and yet you expect your internal customers, your users, to fall for it every time! It's little wonder that there are more big CRM failures than there are big CRM successes out there!

Now wouldn't it be better if I had spoken to you first, starting by determining whether you actually wanted a new house? As a result, you would find that there are two answers - yes, you want a new house, or no, you don't want a new house.

If yes (or even maybe, subject to conversation), then continue
If no, is there a reason to argue why the current house no longer meets your needs?

If so, have the conversation, and try to convince you that a new house would be so much better for you - create the burning platform, the case for change
If not, then simply don't continue at this point in time

Now back to CRM:

If it makes sense to develop the system, then to ensure maximum buy-in, you must design it with the new owner(s), your user base, your internal customers! Sure, it will take expert facilitation - note there are many so-called experts, and then there are the real experts - to ensure that customer expectations are continually managed in this context, given that the proposed system has already been deemed suitable within the IT architecture of the enterprise. However, by generating buy-in from the beginning, you no longer end up with a product that you suddenly have to hard sell to your customers, even forcing adoption by designing all sorts of KPIs in their performance contracts in the old stick method to ensure that adoption is ultimately achieved, at the huge cost of negative staff morale...

It's interesting that everyone seems to be well aware that the success of a CRM system depends on its adoption, yet so many leave this critical issue as an afterthought! Don't fall into this trap! Ensure your customers know what they're getting, are excited about it, and then let adoption and CRM success follow naturally. Even the system training will attract more attention and enthusiasm if your users have already bought into what you're bringing them.

How would I know? Well, I wrote a case study on the commercial results of the successful adoption of banking CRM across over a thousand branches and three business segments nationally, which I presented from a business context in Halifax, Canada (peer review presentation), and from an IT perspective in Johannesburg, South Africa and in Las Vegas, USA, back in 2008 already. Nothing has changed my view of how to best achieve CRM adoption since then.

Note, all is not lost if it's too late to involve the users in the design and implementation of the system. It's just much harder to do, and requires an altogether different approach to acquiring buy-in! After all, how hard can it be to force someone to like the house you built for them according to your assessment of their needs?

Most European marketers are unhappy about their social media measurement

2011-10-07T12:45:00.002+02:00

I've just read an article at econsultancy.com stating that almost 80% of European marketers are unhappy with their social media measurement.

This seems true for almost anyone out there actively engaged in experimenting with social media today, but according to the same article, about a third of marketers considered the problem of measurement to be somebody else's job! While traditional job silos may have their plus points in organisational design, there will always be issues related to information flows between silo's, as well as assuming that other departments are responsible for certain pieces of work per those sometimes dreaded job descriptions! So if it was considered to be someone else's job, I would imagine that the organisational structure of most respondents is probably traditional, and therefore that the respondents probably thought it was the job of Finance to do the calculations, which is probably fine if the marketers let Finance know in the first place!

Back to the article though. While marketers seem pretty good at measuring volumes and traffic, what they are increasingly interested in is brand sentiment and the value of traffic generated by these channels. In terms of these requirements, brand sentiment as a social media measurement challenge has already been tackled by a variety of companies, while measuring the value of traffic remains important.

However, with most reports suggesting that social media is currently better at engaging with your customers rather than for sales, my recommendation is that the brand equity of social media interactions is what should be measured in financial terms, rather than looking for actual sales measures for sales which may not be there yet. At least with this measure, you have a yardstick of measuring future cash flow potential, which is after all the objective of creating brand equity in the first place!

Building on the future of banking

2011-10-06T21:53:00.000+02:00

This article follows on from my recent article entitled, "So what's going to happen to banks now".

I recently presented at the Brand in Banking and Finance conference where there was some talk not only on the future of banking in the context of the current global instability, but also talk about the huge unbanked population and the evolution of microfinance.

I also commented on a recent European Retail conference, where we discussed trends in the financial services and retail industries which have seen considerable convergence over the last decade. We also discussed the impact of mobile on retail financial services, at which point an interesting discussion followed, particularly in the context of access to financial services in Africa.

The fact is that in deep rural Africa, mobile telecommunications brands have a much stronger presence than banking brands. So I wondered - since there has already been quite significant convergence in retail and financial services (credit products, insurance products and sometimes even entire banks getting involved), how probable and feasible is the integration of banks, retailers and of telecommunications companies likely to be in future, especially with the huge drive in mobile banking right now and the brand presence of the telecommunications companies in deep rural Africa? After all, it is well known that Africa will most likely leapfrog the bricks-and-mortar banking infrastructure of developed countries with mobile technology, given that the development of a physical infrastructure will cost too much, will take to long, and will then probably not even be cost-effective

While banks may not have the appetite right now to drive M&A activity given compressed interest margins and reduced profitability (and reduced valuations!), telecommunication companies have remained strongly profitable. Given their financial strength and wireless footprint, is there a chance that we may see telecommunications companies beginning to buy banks that have acquired retailers, or acquiring retailers that themselves have begun creating various financial services offerings, where the telecommunications brand becomes the fully-fledged financial services brand for the unbanked? Let's wait and see.

On my lessons in managing turnaround

2011-10-06T20:58:00.000+02:00

I wrote four blog articles on managing turnaround recently about my interpretation of the experiences of the challenges that were tackled during these particular projects.

Written with the objective of actually trying to isolate lessons learnt, they have since been deleted on hearing that some parts of these articles may have been considered insensitive. My sincere apologies go out to anyone that feels they may have been implicated in my rendition of the experiences.

While still wishing to somehow extract the core business lessons learnt, I will find a different way to distil the key messages in such a way that no particular person feels negatively impacted. So yet another important lesson has been learnt in this process, that being to remember that you need to take extra special care of your writing because as much as it may be a mirror of your opinions or knowledge of the topic being covered, it is also a mirror of the quality of your own brand! Take care!

Preparing for my role as a Future Global 100 leader

2011-10-05T23:14:00.001+02:00

On 3 November I will be in Hong Kong leading a round table, by special invite, with some of the biggest companies in the world on the future of the global economy. The round table provides a high-powered platform for leaders to address global issues, to purposefully deliberate and to define the route forward for the future.

Co-chairs of this global business forum, involving leaders in business generating in excess of USD100 million pa, include

•    Valentine Sendanyoye Rugwabiza, Deputy Director General of World Trade Organisation (Switzerland)•    Rajat Nag, Managing Director General of the Asian Development Bank (Philippines)
•    Sheikh Khaled Bin Zayed S. Al Nehayan, Chairman of Bin Zayed Group (UAE)
•    Zhang Yue, Chairman and CEO of Broad Group (China)
•    Mdm Yen Dang, Chairwoman & CEO of Tan Tao Group (Vietnam)
•    Tunku Dato’ Ya’acob bin Tunku Tan Sri Abdullah, Executive Chairman of MAA Holdings (Malaysia)
•    Pierre Cohade, President Asia Pacific of Goodyear Tire & Rubber Company (USA)

In preparation for the Hong Kong session, I received the following email:

Dear fellow business and government leaders,

You are part of a globally recognised group of leaders involved in establishing the world’s first Future Global Agenda.

In less than 3 months from our official communication of the Future Global 100 Initiative to corporations and governments worldwide, we have received confirmation of support and involvement from more than 250 business and government leaders from 220 organisations representing 37 markets.

Some of the organisations include the Governments of Brazil, Mexico, Argentina, Peru, Zambia, Japan, Korea, Hong Kong, Sri Lanka, Singapore, Malaysia, New Zealand, Spain, UK, Slovak and Canada, World Trade Organisation, Asian Development Bank, United Nations World Food Programme, Bank of East Asia, Melewar Group, Vestas, Unilever, Citibank, SAP, Nuqul Group, Development Bank of Singapore, Silah Gulf, Texas Instruments, Electrolux, Philips Electronics, Experian, Siemens Medical Instruments, Dimension Data, Karcher, United Bank of Africa, Quintiles, ACI Worldwide, ANZ, The Travel Corporation, Hertz, Mastercard, Tata Motors, YES BANK, Coats, AMD, Polycom, Tolaram Group, EMC, BT Global Services, Credit Suisse, Jubilant Lifesciences, Thomson Reuters, Bombay Stock Exchange, Essar Group, Dalmia Group, Zydus Cadila, Tata Motors, Jubilant Lifesciences, JSW Ispat Industries, Lanco Infratech, Broad Group, Lenovo, Huawei Technologies, CICC, Motorola Solutions, Tennant, Standard Chartered Bank, Ecolab, Dongfeng Commercial Vehicle Company, Neusoft Corporation, ST Engineering, Talent2, SAS, Olam International, GE Healthcare, Asia Finance Bank, Meinhardt Group International Holdings, Scomi Group, AirAsia X, AXA Asia Regional Centre, Sapura Group, Chartis Insurance etc.

The FG100 Initiative - aimed at addressing the future of global economy, markets and businesses year on year – is a growing brand among the leading global corporations and governments from around the world. You can now find thousands of English and Mandarin references to the Future Global 100 Initiative and Platinum Circle online.

It is of course a major honour to have been invited to as prestigious a forum as this, and I will of course do myself, my company and my country proud in this role!

Social benefit and long-term shareholder value are totally inconsistent

2011-09-30T18:21:00.000+02:00

An article presenting a totally old fashioned idea was posted in HBR on 28 September 2011, arguing that "Societal benefit and long-term shareholder value are completely consistent."

Really?

Has the author not yet learnt that there's as much a contemporary accountability to shareholders as providers of equity, as there are to other resource providers, whether paid for or not, such as the providers of debt instruments, employees (intellectual capital), the use of our planet (land - often paid for, water - sometimes paid for, air - seldom paid for), to society at large (protection of personal data) and the communities they operate in (resource acquisition) as but a few examples?

I think the author has perhaps forgotten that many of the 20th century's worst pollution and human rights abuses prove that societal benefit and long-term shareholder value are not remotely consistent, bar perhaps in a text book, his article, and the 20th century! The increasing burden of governance & compliance these days demonstrates that this is not so.

Consider this: If they really were consistent in the long term, mature business would report only on ROE, and the whole of society would be really happy! Hmmmm. Think of these MATURE businesses - ArcelorMittal in Vanderbijlpark (South Africa); BP in the Carribean, ExxonMobil in Nigeria, Acid Mine Drainage in the Cradle of Humankind, Massey Energy Company in the US and probably hundreds of thousands of other examples, where there has been an outcry from society about the huge societal cost, but not a peep from shareholders or company representatives. Think Cape Asbestos too.

Furthermore, if employees (and the government as a stakeholder) were a really happy part of society, we wouldn't need labour law amendments. If customers were happy as a part of society, we wouldn't need consumer protection acts. Furthermore, while companies have Enterprise Risk Management to ultimately manage reputation risk on behalf of the shareholders, there is no equivalent measure for society! As a result, we now see GUIDELINES for Corporate Social Responsibility and carbon footprint reduction, and more countries have published various versions of good corporate governance standards, all helping to make up the quadruple bottom line.

All of the above come at a cost and are not revenue generating. So the point is, if long term shareholder value and societal benefit were really "completely consistent", would we really need any of this? I don't think so! Sorry Mr author, you're out! HBR, what's up?

Want to damage your brand? Then act on Social Media Analytics without understanding your data!

2011-09-28T13:20:00.000+02:00

Social media is like that extra pair of remote ears youalways wanted, enabling you to listen to and engage with the “word on thestreet” from your customers, potential customers and heaven forbid, your detractorsalike. Properly analysed, the insights based on these interactions present you withopportunities not only to respond with the purpose of structured brand buildingand reputation management, but they also enable you to be proactive about designingproducts and services in response to sometimes quite clearly emerging trendsbefore your competitors can. In other words, the opportunities for success arehuge, but quite frankly, so are the opportunities for disaster.

There are probably just as many fantastic free analyticaltools out there as there are paid-for tools, all depending on the same thingfor their operation: data! This data is collected from as few as one to manydifferent social media platforms, from blogs to Twitter, and are analysed invarious ways from simple word or phrase counts, to sentiment analysis, eitherin relation only to the brand being considered, or more frequently incomparison to a defined competitor set.

Danger derives from the fact that few marketers know that datais where the problem of interpretation starts. It does NOT start with theoutput of analysis! That is because if your data is dodgy, then your analysisis just as dodgy - Garbage In, Garbage Out. The same holds for social mediaanalytics. If you don’t understand the make-up of the data, then yourinterpretation could be way off, and even worse, you could then end up makingdecisions based on incorrect data that could be disastrous not only for your business,but for your entire brand!

Just one of many considerations required to ensure that yourdata is appropriate to make decisions from, is lack of bias. Your data shouldbe spread reasonably equally across all the social media sources, being those individualsengaging with you represented by the lowercase letters in the examples below. Inother words, no source should have volumes of comments significantly differentin size compared to any of the other sources.

A borderline sample would for example appear as per Figure 1 below. All goodanalytics software, free or otherwise, provides either this information or theraw data required to be able to perform your own analysis.

Figure 1: Sources e and n are quite heavy over the selected timeframe given their weighting of 28% between just two sources, and would probably provide a worst case example of acceptable data for analysis. Own represents the volume of your own interactions in the selected social media space

On the other hand, a distinctly bad sample would be per Figure 2 below, where your own social media interactions crowd out those of your own followers.This is not great, because the analysis would then be biased towards your own interactions,WHICH IS THE LAST THING YOU WOULD MAKE A DECISION ON! This could skew everything from keywords to sentiment. Remember, the critical thing about social media is the ears, not the mouth!

Figure 2: While all your data sources hover nicely between 1% and 5% of volume, your own social media interactions - 67% of the 5687 measured over the selected timeframe - totally crowd out those of your followers. Any analysis would be biased towards your own interactions, which are clearly undesirable in an analysis context!

It seems obvious, but marketers ignore the basic rules ofdata, making me wonder whether marketers shouldn’t stick to marketing, leavinganalytics to analytics types.

Quantifying Marketing ROI, from Brand Equity to Value

2011-09-27T21:05:00.000+02:00

Here is the presentation I made to the Brand in Banking and Finance conference today (MEA region), showing how marketing expenditure (in this case, specifically in financial services corporates) can be quantified across brand equity, customer equity and contribution.

Besides placing Marketing in the position of being able to quantify returns on its investments to their respective governance committees, it also places Marketing in the position of being able to actively optimise its productivity (efficiency and effectiveness), thereby further increasing its credibility with the respective CFOs, CEOs or even Chairpersons.

In today's environment of rapidly shrinking interest margins, potential credit growth constraints and therefore revenue growth constraints expected to be the result of the emerging global bank reforms (such as in the Vickers report), it is going to become more important for marketing to actively demonstrate that it is adding value, that is, if it wants to be less susceptible to budget cuts in what is probably not merely a recession, but rather what is most likely to be the 'new normal'!

Here is the presentation in Slideshare on LinkedIn

Let us help your Marketing Department prove its value to your organisation!
the Global Banking Board team
Marketing Quantification Experts

Enterprise Risks have causal relationships, and they ALL impact Reputation Risk

2011-09-20T07:01:00.000+02:00

On the topic of Corporate Governance, I stumbled across an article today that I wrote for BusinessDay - South Africa’s biggest and best business news daily - all the way back in 2003already! It was entitled “Corporations Look At Risk in Broader, StrategicManner”, which was an outline of the increasing role of Enterprise Risk Management for the Board of Directors in listed companies,but specifically talking about one of the major shortcomings of Enterprise Risk Management from the Chairman's perspective.

Sadly, the above shortcoming has not yet been addressed almost a decade later, the shortcoming of not quantifying risk, and therefore not being able to balance the expected impact of that risk with the costs of managing it! You may say that risk cannot be quantified. Well, it most certainly can - it happens in corporate finance all the time using simulation methodologies, an approach I have been using for a decade now to successfully quantify uncertainties in investment risk. But more on risk quantification in a later article.

Coming back to the subject of this post, Iwrote another article for Business Day that same year, talking about thecausality of risks across the enterprise. This important issue is still not on theEnterprise Risk Management radar either, and yet it makes Reputation Risk so much easier to manage at the operating level, that is, way before it ends up making an embarrassment of everyone on national TV! Now while I have already explained why Reputation Risk Management is the Board of Directors' ultimate responsibility, I now want to emphasise how the risk builds up in an organisation (causality).

Reputation risk can begin in the following places

At the resource level, being capital, people, IT systems and infrastructure such as buildings. With apologies to people everywhere, these are basically "procurement" and asset management issues, based loosely on a specification and a price, some procured using capital, others procured as an operating expense, and still others obtained through accumulation such as customer data
At the process level, the engine room, which relies on the people, the technology and other elements of infrastructure and data, all organised in a particular way to make the business work
At the business model level, we have the manifestation of people, process and technology in the channel network, a product, and a market being a group of customers
At the output level, we have financial results, a social impact (e.g. customers), and an environmental impact.

Now at which level do we experience Reputation Risk? Well, before we answer that, it would be useful to define Reputation. Here's an older but still very useful definition:

Reputation is a representation of a firm’s past actions and results that describe the firms’ ability to deliver outcomes to multiple stakeholders (Fombrun & Foss)

Given this definition, an external stakeholder can mainly make an assessment of reputation based on the outputs from the firm, i.e. at level 4, but the fact of the matter is that there are external stakeholder interactions at each of levels 1 to 3 as well. The difference is that the interaction with external stakeholders is as a result of:

internal policies, procedures, standards and guidelines (PPSG) for levels 1 to 3,
while at level 4, it is an output of the firm as a result of all of its processing, being profit, contribution to society, and the extent of the impact of the firm's operations on the environment.

Of vital importance to realise, is that the risks materialised in level 1, impact the performance of level 2, which may raise its own risks. Risks materialised in level 2 impact the performance of level 3, which may again raise its own risks. Finally, risks materialised in level 3, impact the outcomes of the business, which may raise level four risks.

As an simple example illustrating the most extensive type of cause-and-effect risk manifestation, poor staff selection in level 1, can result in poor business discipline being applied in level 2, which can result in poor customer interaction in level 3, which results in a negative customer experience. The negative customer experience becomes a reputation risk, because the customer could communicate the poor experience within his/her community, or even to the media.

The point is that risk needs to be managed at each level, NEVER FORGETTING that a poor execution of risk management practice at one level may cause an entire chain of negative events to unfold, eventually manifesting as output-side reputation risk. However, remember that it is not only at level 4 that reputation risk becomes evident. It will already be evident at level 1 in the case of the example of the risk of poor staff selection materialising as high staff turnaround, which in turn will create a negative impression in the job market on potential employees, which too is a form of reputation risk! In other words, there is the potential for a DOUBLE reputational risk impact at each level of the organisation, the realisation of which will now keep many a chairman and CEO awake at night!

Ultimately, all risks are linked, and all have the potential to impact reputation risk, so it is the responsibility of every staff member, manager, director, executive, CEO and even the chairman to think of risk in this way. For those that thought PPSG was just administration, well perhaps you understand how the company's biggest risk is impacted by the quality of its PPSG! Unfortunately, probably the de facto risk management tool out there for corporates, BarnOwl, does not accommodate risk dependencies. If it did, a manager at a particular level would be wary of the input risks impacting his area of operation, and thus his performance, thereby increasing the cross-functional management of risks out there!

Social Media in the context Corporate Reputation Risk Management

2011-09-15T10:39:00.000+02:00

This article builds on "Why reputation risk management is the Board's ultimate responsibility"

Having established that reputation risk management is the Board's ultimate responsibility, and having noted that it is not yet commonplace to see systematic attention being paid to reputation risk management, note that the risk to corporate reputation increases significantly when we begin to consider electronic media in general, and social media in particular.

As it is so easy for any statement on any company matter made on any electronic medium to be spread, the impact of one person making even one negative comment - in some cases in the comfort of relative anonymity - has the potential to cause inestimable harm to the reputation of the company. Building on my blog article entitled "Social media corporate reputation risk management and measurement", a systematic approach to proactively managing social media reputation risk needs to be put into place within the scheme of a larger reputation risk management framework, which itself should be part of a larger risk management framework.

If you are in any doubt about the power of social media on your brand, please read the article and watch the video about "Singer gets his revenge on United Airlines and soars to fame", where a singer wasn't successful in claiming compensation for damage to his guitar from United Airlines until he leveraged social networking in the form of YouTube. The message ended up going viral, with 11 million views as of today, 11 million customers and potential customers that Dave told about his bad experiences with United Airways at the push of a button! The cost of all this to United Airlines? 10% of it's share value or US$180 million, according to a recent article in The Economist!

However, while it's important to realise the reputation risk of social media, it is just as important to realise that social media can be used as much as a powerful tool to enhance your reputation as it can to mitigate the negative consequences of social media brand bashing when they happen. This can be done in two ways:

by monitoring social media and reacting IMMEDIATELY to negative commentary, remembering that while the window for negative publicity is huge, the window for positive response is tiny, as BP learnt to its detriment during the oil spill disaster off Louisiana last year. Clearly it's not worth your while to do a United Airlines and to ignore it!
by creating affinity groups for those social media users who are already your customers, so that they are kept in the loop so to speak about any activities that influence your brand

Ultimately, as much as the most powerful weapon against negative social media is total engagement with those users on those media wherever they may be, that same level of engagement can also be significant in the context of growing your reputation, and therefore of growing your brand equity.

Why reputation risk management is the Board's ultimate responsibility

2011-09-15T09:35:00.000+02:00

In a sustainability context, protecting the reputation of the firm must be one of the biggest drivers ensuring that a business is managed ethically. Some have even suggested that the impact of a negative event on reputation, and therefore on brand equity, far outweighs any legal costs incurred in terms of non-compliance, demonstrating why reputation risk management is so high on the agenda of the Board of Directors.

Warren Buffett, speaking in the wake of the Berkshire Hathaway scandal, said “It takes 20 years to build a reputation and 5 minutes to ruin it and if you understand this you will do things differently.” The critical nature of reputation risk becomes clearer when we realise that every other risk managed by the supervisory board such as market-, succession-, compliance-, financial-, credit- and operations risk, as examples, has a direct impact on the reputation risk of the entire business. This is clearly why reputation risk management must surely rate as being the ultimate responsibility of the Board!

It is so important that there have been very few Audit, Credit and Risk Committee (ACRC) or Board meetings (supervisory and executive) that I attended as a director, where reputation risk was not raised in some way. However, in spite of its importance, the systematic identification, management and measurement of reputation risk is still very much in its infancy worldwide.

Indeed, as reputation risk seemingly tends to be managed on a case by case basis, both in terms of its identification and in terms of the response of the Board to it when it materialises, there is certainly room for improvement here in line with director's increasing fiduciary responsibilities.

Social media corporate reputation risk management and measurement

2011-09-14T20:24:00.002+02:00

One of the most important lessons I learnt having been the chairman on two boards and a director on the executive board of a major listed corporation, was how highly sensitive all matters related to corporate reputation are. A while back Deloitte released a report outlining the reputation risk social media has on organisations. One of the key findings was that while 74% of employees agree it's easy to damage a company's reputation on social media, only 27% actually think about the damage social media can do to a company. While this is an internal perspective, it is of quite some concern given that according to the Federal Reserve Bank of Philadelphia's 4th quarter bulletin of 2007, "protecting a financial institution's reputation is the most significant risk management challenge that boards of directors face today"! This is because reputation risk is potentially both a fiduciary risk and a compliance risk - two words enough to have any director shivering in his or her boots!

It has been said that if you have no reputation, that you have no business. This is particularly interesting because there is a marketing version of exactly this, being that if you have no brand, then you have no customers. This is why in so many ways, reputation and brand go hand-in-hand. Harm your reputation or your brand, and one thing's for certain, your future revenue streams will be negatively impacted! This is also the reason why if you can quantify the brand, then you have quantified your reputation. However, given the opening paragraph, reputation can be extremely difficult to protect because it lies in the hands of ALL the stakeholders of the company, constituents that are not in the full control of the company.

One of the ways to manage reputation risk is to ensure that there are processes, systems and controls in place to monitor it. In essence, this is about the full monitoring of all media, being press, radio, TV, the internet, and social media. While most businesses are pretty adept at the first three media, the internet is less well monitored, and social media is monitored the least of all. And social media is where all the informal and sometimes anonymous chatter happens, with all the freedom of expression that comes with it, and where both formal and informal reviews of your products and services are available for all the world to read about and to form an opinion from, an opinion that may prevent them from making their next sale with you.

Social media is where we can help the most, from measuring the positive and or negative brand equity impact of all conversations across the social media spectrum, recording and storing the social media interactions with your brand, to reacting ALMOST INSTANTANEOUSLY on your behalf given a specific mandate. Please realise that INSTANTANEOUS response is critical in the social media space - leave anything out there more more than a few minutes, and the opportunity to rectify a negative statement will have lost its time-sensitive context, meaning your response becomes lost in the ether, the damage done!

Read a little more on measuring the impact of your social media presence.

So what's going to happen to banks now?

2011-09-14T08:30:00.001+02:00

We've certainly seen plenty in the news lately about banks downsizing their operations, and sadly their staff too. In particular, last week the Bank of America made a shock announcement that 600 branches would be closed and that up to 40,000 jobs would be lost. We've also been reading about the proposed bank reforms in the UK, including increased capital adequacy and regulation, which has all certainly left me wondering where the world of banking is headed.

It's quite clear that with shrinking interest margins and increasing impairments, that profits are under pressure. While the right response is to turn to reducing operating costs, there has also been talk of M&A activity to boost profits given the depressed valuations of many banks right now. However, M&A is particularly risky when margins are so tight, because there will be increased costs in the short- to medium term not only in terms of raising capital, but also in terms of the movement of information, culture change, and of process and technology changes required post acquisition. Indeed, it is especially risky in the context that perhaps this economy IS THE NEW NORMAL, meaning that profitability will remain depressed until both the business models and operating models can be adjusted to reflect the new economic realities out there.

Impending increases in global bank regulation will also serve to increase operating costs, and with the proposed changes to capital adequacy, the availability of credit will be significantly reduced, putting further future pressure on interest income and profitability. This means that the current cycle of downsizing may yet go through a second round post the proposed bank reforms... It also begs the question of who will suffer the pain of reduced credit - big business, small business, or the individual customer. I think that small business will unfortunately bear the brunt of this, because at low margins, it will be significantly more cost-effective effective to sell fewer large loans than a considerable volume of relatively smaller loans through a much larger geographical footprint...

In concluding, I think that the global banking juggernauts are actually too big for this economy. Furthermore, I think that this is perhaps rather the time for divestiture in the banking industry, where economically viable but non core bank operations and even business activities are sold, in so doing creating many new, smaller, more sustainable economic entities out there. This will give banks more of a chance to return the focus on their real reason for their existence, being to "grease the wheels of commerce" and to facilitate CUSTOMER financial needs, not forgetting that it is CUSTOMER deposits that feeds their ability to advance credit to business!

News just in: I've been invited to present a more in-depth perspective on the future of banking to a global audience of bankers in Singapore next year!

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2011-09-13T08:51:00.001+02:00

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This is a special purpose post for a blog listing.

Employee Value Propositions: Of motivation and results

2011-09-11T17:33:00.003+02:00

Please spend a moment thinking about the following words and phrases so typical in a working context:
Respect. Subordinate. Team. Fear. It's just a job. Role confusion. Job profile. Management. Stepping stone. System. Boss. Mentorship. Training and Development. Collaboration, Errors. Yes Sir. Motivation. Domination. Encouragement. Roles and Responsibilities. Acknowledgement. Delegate. Induction. Coaching. Purpose. Recognition. Top performer. Coercion. Meaning. Process. Ambition. Key performance indicator. Leadership. Worker bee. Conflict. Performance management. Business alignment.

There are both positive and negative words and phrases above. Some belong waaay back in the dark ages, while other somewhat more contemporary constructs are still practically unknowns to so many Human Resources (HR) practitioners and senior executives. While some of these are the result of poor management, others still can be both fantastic business enablers as much as they can be hindrances if deployed incorrectly. Most of all, the above are mainly INPUTS into the system of organisational performance.

So which of these words and phrases work best? Well, I come from the school positing that intrinsic motivators get the best results in a team setting, and I have a good few recommendations on my LinkedIn profile demonstrating my success at exactly that. Indeed, please refer to a previous blog article, The role of intrinsic motivators in teamwork and mentorship for more about intrinsic motivators.

Now reflect on these few words and phrases:
Unfair market mindshare. Brand enhancement. Extraordinary performance. The extra mile. Excellence. Customer satisfaction. Competitive advantage. Productivity. Best company to work for. Business growth.

Organisational OUTPUTS are the one thing all these words and phrases have in common. The question is how to best organise your staff to ensure you optimise your outputs given all your operating model constraints, where these take the form of sub-optimal systems and/or processes given the current needs of the markets you serve. Without your staff going the extra mile, you will have a tough time remaining competitive in a rapidly changing world, and the more you can motivate people to perform at their peak, the better your results will be. In fact, I sometimes wonder whether one of the most important skills of the modern CEO isn't to be a motivational speaker! I find it to be a critical tool to drive peak staff performance, and to help the team achieve their maximum potential. Thankfully I seem to be gifted with this ability, and it seems the Group's employees agree as per What do your employees see as your strengths?

But what does all this mean? Well, there are multiple points. Let's begin by saying that money is not everything in a job scenario. If your staff buy in to your purpose and your vision, thereby being enabled to feel part of something bigger, you will have taken some quite gigantic leaps to increasing your staff retention rate. You will also have given them a context within which to perform, in turn giving them a natural understanding of their role in making the organisation successful. This natural understanding also increases their ability to make positive contributions in related areas of the business, one of the traits I admire and respect most in my staff.

How does this impact the Employee Value Proposition? Quite simply, the employee value proposition as I define it extends way beyond reward and recognition in exchange for the employee's skills and experiences as per the more traditional definitions of employee value proposition. Indeed, it has to extend to making employees really wanting to be associated with your business, and in so doing, they enhance your brand as they become amongst the strongest advocates for your company. Again, they can only do this effectively if they believe and buy in to your purpose and your vision, with your management style playing a huge role in enabling staff to feel part of something bigger, and being able to contribute constructively in that context.

Ultimately, I don't personally see the employee value proposition as merely an instrument of exchange at all. In fact, I totally dislike the ruling definition! I believe it is rather what I as CEO offer the company in the belief that we are all human beings with a bigger role to play in making this world a better place, and that we can do it all much better as a team, rather than as a set of employees sitting at our desks, too scared to move, doing the bare minimum to earn our salaries! As a result, I believe that staff will want to stay, because what I have to offer extends beyond job and salary, to purpose and feeling part of something bigger!

As a matter of interest, my normal staff turnover during my three year tenure as Divisional CEO dropped from over 35% pa measured just as I started, to less than 9% pa in a business consisting of four operating areas distributed across three countries, in some of the most tumultuous business circumstances I have ever found myself in. I think those results justify my approach.

How to confront change that impacts you directly

2011-09-11T10:56:00.001+02:00

Within all the change that happens on a daily basis all around us, some has an impact on our well-being, whether physically, spiritually or emotionally, while there's other change that we quite frankly couldn't care less about, or putting it more subtly, change we don't have a need to respond to.

In terms of the types of change that influence your well-being, there are two types:

There's change you CAN influence, and
There's change you CAN'T influence

Then in terms of influencing, responding to or taking action on on change, in other words, making your own changes driven by the changes that are affecting your sense of well-being, there are two types of people:

Those who decide to do something constructive about it, or
Those who decide not to do anything about it

Now let's begin with the considering the response:

Don't do anything

On the whole, I find people that choose not to respond to change are often amongst the biggest and loudest whiners on the planet. They will grumble, find fault, disapprove, accuse, deplore, criticize, denounce, dissent, oppose, whimper, nag, fret, protest, fuss, moan, carp, attack, refute, bitch, grouch, gripe, bellyache, squawk, kick up a fuss, make a stink, moan and groan (thanks Roget's), indeed, they will do anything not to have to respond with a constructive counterargument or to actually do something positive about the change. Everything they do is steeped in negativity. I don't like people like this, and I find there's no action better than ignoring people like this.

Do something constructive

People like this are our heroes! They take control of the situation, hoping to drive a positive outcome for themselves and/or those around them. They are without a doubt the epitome of all the leadership virtues we read about. Stay close to people like this.

However, the nature of your response also depends on the type of change coming your way:

Change under your control

This is the easy type of change because the nature of the final outcome is entirely up to you.

Change not under your control

This type of change is the most difficult to respond to, but is also the type of change that brings along the most opportunities. The environment this type of change happens most often in is not only in the political, legislative or economic landscapes, but also within your working environment, where the powers that be make decisions that directly impact your future.

Let's spend a bit of time talking about the latter type of change, uncontrollable organisational change coming down through the line, as many readers of this blog are probably employees within various sizes of organisation. Firstly, I believe that if changes come through the organisation in this way as the norm, then that organisation has considerably under-developed change management practices for this day and age, as it is already very well researched and documented that one of the first principles of change management is to build a burning platform with the affected team (yes, team, not one or two individuals in that team), and from there, to garner the buy in of the affected teams. The reasons for doing this is to ensure that the impacted teams are ready for the change, understand why the change is happening, and have been able to make a contribution in terms of how that change can be implemented. The objective and outcome of all of this is to ensure maximum buy-in, and that all-critical level of support required for the actual successful implementation of that change. However, this level of maturity with respect to organisational change management is still globally the exception rather than the norm. But, barring the complacency of blind followers, if you are impacted by a decision without appropriate change management, you can still do something about the uncontrollable consequences of the change to follow in terms of the responses outlined above. You can do nothing (but whine), or you can take action. This action will ensure that you make the best of the changes coming your way, as suitable opportunities will most likely emerge in the medium-to-long term, or you can even choose to leave the environment altogether for example.

There are of course always a lot of complications when it comes to self-managing uncontrollable change. However, the point is that for maximum well-being, you have got to make choices that restore balance to your sense of well-being. Making no choice under circumstances like this shows no personal or team leadership whatsoever, and furthermore, you then have nobody but yourself to blame for the misery you find yourself in.

With so many layoffs, where will tomorrow's jobs come from?

2011-09-09T14:23:00.001+02:00

It's time many faced the fact that the giant, protracted global economic change we're experiencing now is not going to return to 'normal. This IS the new normal! It's been three years now of tough economic conditions and still there's no magical recovery in sight.

Companies around the world continue to lay off staff, and many of the large global banks are seeing increased operating model efficiency (yep, that's the phrase used) as one of the core ways of restoring their profitability. Now operating model efficiency means optimising their technology investments (increasing automation even more meaning fewer jobs are required), optimising their process efficiency (meaning fewer jobs are required to do process workarounds), and optimising their staff complements as a result of improved technology, improves processes, and possibly by means of the elimination of nice-to-have service departments such as innovation and research too. The alarming news in this respect from Bank of America yesterday no doubt left at least 40,000 more people sleeping very uneasily last night as they faced the prospect of losing their jobs. Canada lost jobs for the first time in 5 months in August, while South Africa lost 49,000 jobs in August, the fourth consecutive monthly decline.

Furthermore, there is likely to be both some level of consolidation in the various industries, normally negatively impacting jobs, and some level of divestiture as companies sell off non-core and unprofitable businesses. Indeed, if you find yourself in a role that is neither customer facing, nor in support of someone in a customer-facing position, then your job is probably in danger.

Source: unemployedhelp.net

But what's going to happen to the tens of millions of people around the world that find themselves without jobs now and into the future? What's going to happen to those who depend on these people to create a living? Some will be absorbed into equivalent or perhaps even be tempted to take lower level jobs simply to keep the salary stream rolling. Others will see this as an opportunity to start their own businesses, and others still will have to start their own enterprise merely to survive.

The truth is, many will probably find their skills are out of step with what today's market requires, and worse, some may find their skills redundant. The fact is, there is no longer such a thing as job security, and there probably hasn't been for some time.

This is a problem that governments around the world are looking square in the eye: How to create jobs. However, this is an extended process at a national scale across many countries, and will not instantly result in hundreds of thousands of jobs suddenly becoming available. And, while it seems obvious to most, it's certainly not going to help much if changes in government policy and stimulus measures are not directed at the entire population of the countries in question. It's going to involve the contribution of everyone without discrimination! Furthermore, I have just scanned about 100 sources on job creation and on job creation strategy on the internet across governments and NGOs from around the world, and I'm not surprised that nothing fills me with any any enthusiasm in this respect. It seems like a whole lot of talk, a whole lot of smiles for the camera, a whole lot of finger pointing, and sadly very little in the way of results. Ultimately, government's role is to ensure it facilitates smooth and simple business bureaucracy across the spectrum, from opening a (small) business, to filing tax returns and labour stats, to closing down a business. In many countries, these processes are laborious, cost (labour) intensive and time consuming, often chasing away any potential entrepreneurs, or worse for the economy, that they go underground.

Ultimately, the solution for the most part is going to rest with the individuals I'm afraid, and that means YOU, it means YOU creating a future for yourself in your own business. As an ex business banker, I have been one of the strongest advocates for small business both at home and around the world at various peer-reviewed conferences for many years now. But before you say it's ok for me to say all this while I have a job, note that I believe in it so much that I recently put my money where my mouth is and resigned my relatively comfortable position as EVP (Divisional CEO) in an international public retail / financial services company to take on this challenge again (I have been an entrepreneur before), given the extensive amount of quite obvious global opportunity out there. Indeed, the more confusion and chaos in the economy, the more opportunity there is because the status quo is broken, a perfect opportunity to make new rules. There is just so much change that nothing is normal anymore, and in such an environment, ANYTHING becomes possible, and in so many different configurations, if you just open your eyes. I have personally since opened five businesses, each of them having a global footprint:

A global social media business, focusing on social media reputation and brand equity risk management
A global marketing value chain quantification business, focusing on quantifying the impact of marketing spend on shareholder value creation
A global advisory on how global businesses can exploit the BRICS and CIVETS economic groupings, particularly in the context of the African Free Trade Zone
A global management consultancy focusing on customer-centric operating model optimisation
A global premier events management company, in part serving as a public relations arm for the other four businesses.

The key issue is that none of these needed huge amounts of capital to start up, merely relying on an accurate understanding of the pressure points in the global economy, designing solutions for them, and having the guts to make it happen and to talk to people about what you are doing. It does take quite a considerable amount of manpower to make these all work though, but instead of having a huge payroll which you can ill afford as a startup, I am using global collaborative relationships to make it all happen. So another key issue to watch for is that you have to be creative in the way you look at employing skills. The traditional models aren't necessarily relevant anymore, and they don't necessarily work anymore either. Even the requisite technology platforms are freely hosted on the internet these days, everything from accounting software, to project management and scheduling tools e.g. Zoho. Indeed, it's all certainly a lot easier and a lot cheaper to build a business from scratch than it was a mere 10 years ago! In fact, besides company registration, business cards and a few other minor expenses, you can pretty much start a business for free these days. Why not try it and report back here?

Ultimately, I don't believe that anyone has an answer to all the questions facing the new unemployed market, but at the same time, I don't think waiting for your government to come up with an answer is the right one at all. It's going to be all up to you to make it happen for yourself.

There's so much more to say about this, but at the risk of having another blog article that's waaaay to long (I have received some criticism in this regard), perhaps it's time to leave you to your thoughts.

ALL executives are accountable for change. If you know 'what', someone can help with 'how'

2011-09-08T20:42:00.000+02:00

Change has become synonymous with upheavaland chaos, and as a result, it has become critical for companies to understandhow better to manage change. Indeed, few of us have probably encountered more global change at a single sitting than we are experiencing right now!

Change within anorganisational entity, where an entity may refer to an entire organisation,parts of the organisation, or relationships between organisations, is simply the difference in form, quality or state over time of that entity.Furthermore, it is useful to distinguish the process of change from thecontent of change. Content refers to what it is that actually changes within anentity, as well as considering the antecedents and consequences of that change.On the other hand, process refers to how change occurs, and considers thesequences of events that occur as change progresses over time within theorganization.

The above is a very important distinction to understand for next time a change management guru comes knocking at your door. Are they process consultants, or are they content consultants? As an executive, you not only ought to have a depth of content as a result of being accountable for various aspects of the business, but you also ought to have a good view of the process required to implement change. On the other hand, the typical change manager needs to be an expert at the process, integrating your content into it.

As an executive, the main type of change you encounter tends to be change that changes the organisation's operating boundaries, changes brought about by mergers, acquisitions, ordivestitures of organizational units; changes that establish joint ventures, partnerships or strategicalliances; or organizationalexpansions or contractions in regions, markets and/or in the products and services portfolio. Most if not all of these changes are quite dramatic. In fact, any change with financial consequences tends to be dramatic. This is because these activities tend to make fundamental changes to the organisation that needs to be managed with particular care, as activities such as these have the potential to forcefully interrupt the status quo and to cause all sorts of operating model disruption, whether in people, process or technology.

As an executive, it is also important to realise which changes are controllable, and thus those which can be planned for, versus uncontrollable change which takes particular leadership and management skill to master.

Intentional change is any change required to achieve an organisational goal, financial, market-oriented, process-oriented or resource-oriented. They could be simple, from optimising the procurement process, to complex, such as selling off a non-core business entity. Staff key performance indicators are normally set according to intentional change.
Uncontrollable change occurs largely in the political, competitive or legislative domains, such as changes to the credit act, which will result in changes to processes, technology and to people, often in the form of training. Much of this is almost 'grudge' change, diverting resources from planned outcomes, and which therefore have the power to change a whole lot within the business. It is important for executive leadership to contextualise this change and even to amend their key performance indicators so that staff don't become demotivated.

What is important to note that both changes outlined above are content changes. A process expert ought to be able to improve the management of changes such as these by encapsulating them within a people-centric process.

In conclusion, my experience that proper change management is not only about managing change interventions such as those outlined above, but rather, as a result of the state of continuous change that business operates in these days, that change management becomes a constant part of your business as much as IT or Finance may be.

What the Board expects of Marketing in the midst of the Global Financial Crisis

2011-09-08T17:57:00.000+02:00

It's tough for financial services businesses out there right now. However, it's as tough, if not tougher for their customers and staff who are experiencing the trauma of all sorts of layoffs and job losses globally in the midst of less-than-perky business confidence. The woes of their customers are being reflected in the performance of financial services institutions all over the world.

Looking at North America as an example, today the Bank of America announced that it was closing 600 branches and laying of 30,000 people. Earlier this month, 847 teachers were laid of in North Carolina amongst 2,000 other school staff during the year, Bombardier is looking for opportunities in emerging markets to sell its regional jets into to prevent layoffs, while last year, the US state and local governments cut 200,000 jobs. The story is similar across the world.

As a result, impairments and write-offs continue to creep up as the affected people fail to keep up to their financial commitments. And while this is all happening, the income streams of retail and corporate financial services institutions come under increasing pressure, squeezing jobs even more.

The financial services brand does not escape a beating under these circumstances either, as affected people and the ensuing negative market publicity impacts negatively on brand equity.

The point however, is that the three highest costs in most financial services companies are generally staff costs, IT, and marketing (including branding) costs. As a result, there is as much pressure on bringing staff costs under stricter control as there are for IT and total marketing costs. This article focuses on the latter.

Given the cost pressures out there, formal and informal research by the likes of AMA Insight, Forrester Inc,GlobalSpec Incand even MarketingProfs (n=3449) show that the top issues impacting marketing right now are:

Increasing accountability for marketing spend. While the drive for campaign ROI is pretty much well established, in the case of brand spend its still a challenge. It's no longer sufficient to merely say we spent $80 million on rebranding. If you cannot show how that rebranding will quantifiably impact brand equity positively, how that change in brand equity will be realised in customer equity, and how customer equity will be converted to cash flow, the chances are you're going to have a very tough time justifying that spend.
Optimising marketing spend. The more you can prove the effectiveness of marketing spend in generating an income stream in respect of the total customer portfolio, the stronger your case to keep that level of spend. The more you can demonstrate how customer equity is converted into cashflows via your CRM investments (not only CRM technology), the stronger your case for the spend you're aiming to justify.
Demonstrate the link between brand equity, customer equity, contribution and e.g. EPS (earnings per share). Brand equity does not stand on its own in a vacuum, and neither does customer equity. They are linked, and you need to show that their is a flow from brand equity into e.g. customer acquisition.

The more you can show the positive, productive impact between all these strategic marketing elements, the stronger the case for your total marketing spend. The weaker the link, the more work you need to do to increase the value and productivity (efficiency and effectiveness) of your marketing spend.

The first step in meeting the Board's expectations is to quantify all of your strategic marketing elements. I include the following examples in this respect for your information:

Brand Equity quantification and analysis

Customer Equity quantification and analysis

Contribution

Quantification is a bit of a challenge perhaps, but its entirely credible and possible. However, the journey towards meeting the Board's expectations is only halfway complete at this point, as we have not yet analysed the productivity of converting brand equity to customer equity, and in turn converting that to contribution. This will be written up in a following post.

In the meantime, what we have demonstrated here is a quantification of the marketing elements covering some of the issues on the Board agenda of the world's biggest companies. To some marketers, this will have been a huge achievement in itself! But the information is a lot more powerful than it looks at first sight...

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The methodology used to determine marketing productivity is World Class, with the core of themethodology having been presented for globalcritique to the International Academy ofMarketing - an academic, peer review institution with a focus on developing marketing theory - at the University of Birminghamin the UK in 2008. A requirement foracceptance is that the material is a uniquecontribution to global marketing knowledge, and peer review means that it is global marketing experts that determine whether yourmaterial meets these requirements. Since I presented my work for the first time in 2008, the methodology hasbeen continually expanded and refined since then

Assessing the contribution of your Social Media interventions to Brand Equity

2011-09-07T16:30:00.000+02:00

The has been a lot of business commentary lately asking where the return (ROI) on social media is, or indeed, whether there is any return (ROI) on it at all. In counter-argument, many supporters of social media as a business tool have suggested that while it does not necessarily generate cash flows just yet, that it is perfect to ensure you engage your current customers and also to attract potential customers. All this is happening while investors and executives see huge energy being poured into social media, from both a time and money perspective, stakeholders that are becoming increasingly hungry for tangible returns. This article argues the value of social media to business, a return or ROI of sorts, whether or not you have made your first sale yet.

Firstly, to ensure we're all talking about the same thing, we need to consider brand specifically in in the context of the brand equity it represents. We need to think of brand equity as a reservoir of unrealised cash flow. This implies that the way that we actually generate sales and profits is by appropriately building our brand equity, with our brand becoming the bait that attracts customers to us.

Figure 1. Source: www.thefinancialbrand.com

Now we know that brand equity takes years to build, and is a costly undertaking, all with the aim of attracting customers to the brand over time. The same holds for social media, perhaps not so much in cost, but creating a sustainable, consistent presence that attracts perhaps even a different segment of followers and believers in what the brand stands for to us. Even then, the volume of customers social media attracts is still tiny in the context of the market as per Figure 1.

Figure 2. Source: www.thefinanser.co.uk

Furthermore, as much as we would like customers to buy from us the moment they see our first tweet, the point is they don't, as marketers in both the UK and US, as examples, are beginning to see per figure 2. Could it be that the process of building brand equity in the social media space is different to the brand equity created in the physical world? Could it be that as our social brand equity becomes established, that selling becomes easier? Well, the answer to the first question is probably one for research, while the answer to the second question will be found over time. Note that generating sales is only cited as a social media objective by about 20% of the US and UK sample in this case.

Figure 3. Source: www.trak.in

And that's not all. Not only does the type of content being posted matter in terms of whether or not it engages your current and potential customers, what also matters is how many social media channels you are present on, as per the example for the banking sector in a particular geography in Figure 3.

It's one thing being on Twitter, probably the de facto and most instantaneous standard, but to be truly competitive in this space, you also need to have an engaging presence on the likes of Facebook, LinkedIn, YouTube, and perhaps even have a corporate blog, all making up a portfolio of social media engagement mechanisms. And on all of these channels, if your content doesn't engage your followers, as measured by reaction rates like retweets or mentions, you probably need to rethink your social media strategy.

Figure 4. Source: www.closingbigger.net

Great, so we know we still only impact a small number of consumers by means of social media, that most social media departments seem to take to the media to enhance their brand equity rather than necessarily explicitly to generate sales, and that a multi-channel approach even to social media is desirable, how do we measure its ROI anyway? Well, it depends on what type of ROI you wish to measure, as the example in Figure 4 shows.

My particular measurement interest is in Brand Equity, which would encapsulate elements from Figure 4 such as Reputation, Risk Reduction, Client Retention, Brand Association, Long-Term Revenue, Trust Building and quite a few others from that list.

Indeed, I will be presenting a keynote on traditional Brand Equity measurement, as well as Customer Equity measurement at a Global Banking Financial Services Branding conference this month. So it would be easiest to argue that the process to measure Brand Equity in the physical world (which involves both internal and external data) is the same as measuring Brand Equity in the digital world. However, it is immediately clear that I would not be able to gather the requisite data for the exercise for my consulting customers in the same way as I would for the physical world. Thinking about it, the methodology would also only really be true if customers were buying (i.e. converting Brand Equity to cash flows) proportionally as much on social media as they are in the physical world, and with the same lag, which for all intents and purposes seems not to be true to date. For example, if I don't understand the buying behaviour of my social network followers (because they are not buying), which would be a difficult sample for a market research programme anyway, how can I quantify that behaviour in terms I am best familiar with, which would be in terms of the median customer per market segment per best practice. A different approach is required.

Per normal social media analysis, you would need to understand the number of followers per medium (specifically those interacting at that touchpoint), the number of retweets, mentions, shares, likes, blog reads, newsletter downloads and much more, and you would need to understand the actual content of the social media messages (you don't have the benefit of market research to ask directed questions), using analysis tools such as those that have been developed by Stanford University. This analysis is used to assess elements such as keywords (nouns, verbs, adjectives) and degree of engagement, where positive engagement can be used as a proxy for brand affinity. If I have brand affinity, I probably have some form of top-of-mindedness, upon which every strong brand depends. And if I have top-of-mindedness, I probably have a potential purchaser.

Figure 5
Brand Equity value probability distribution (Horizontal axis in currency)

However, I still don't know the market segment of these prospects, so I have little further information from which to work, that is, if I desire to be truly customer-centric for a positive customer experience.

As a result, I will have to use an assessment of the parameters of my total median customer to quantify the brand equity in the social media space, where the most important element of the quantification would be simulation methodologies in order to create a probability distribution around the expected brand equity. At least this way, I now have an expected range to base my social media brand equity from!

At least now you will have some means of assessing the reservoir of value you are creating in the social media space, where the true test of its value would be to design social media acquisition campaigns based on the increased insight you now have.

It is also important to realise that this brand equity is probably in excess of the brand equity calculation of the physical world because of the diverse geographical footprint of your brand's followers. However, net analytics can point you in the right direction in this regard - if the geography is mostly local, then the assessment above is mostly included in your physical brand equity calculation. If not, then this value is probably additive.

This encapsulates a quite interesting and highly relevant topic in the digital space today. I hope I have added some further insight into what it will take to determine the ROI of your social media investments. The approach highlighted here is practical, and I look forward to talking about it at the global branding conference later this month to get further feedback.

Intro to Portfolio Theory, Risk and Return, and Customer Equity optimisation

2011-08-15T21:16:00.001+02:00

There was until recently limited coverage of customer risk in marketing practice. In the corporate finance world, discussions around risk and return would almost invariably lead to discussions about portfolio management, a concept that is actually not new to marketing and where the debate often centres on how to most efficiently allocate marketing spend, the topic of quite a few of my last blog articles. Indeed, marketing research confirms that customers can be viewed as a portfolio of assets, where the objective of doing so is to use the tool to help maximise customer equity.

The application of portfolio theory in corporate finance requires a consideration of risk, where measures such as the standard deviation of returns, variance of returns, range of returns and β (aah, beta! It's been a while since I wrote about you in Greek - the last time was in my corporate finance consulting days!) are used, where β is a measure of the relative risk of an entity with respect to the market or a market proxy. β is perhaps better known as an element in the equation for the calculation of the Weighted Average Cost of Capital (WACC), that in turn determines the total cost of all capital in the business - debt and equity - with due consideration for tax and its capital structure. WACC is key to company valuation, being the relevant discount rate mentioned in a previous paragraph.

Other than improving the understanding of riskiness and therefore being able to act on the information, risk is a very useful attribute to have around because risk reduction strategies are as valid a route to value creation as are any other strategies that are designed to increase returns. For more on another day perhaps (what, yet another article topic in the wings?), in cases where one of the corporate objectives is to achieve consistent (low risk) cash flows, many people, even marketers, don't entirely realise that brand equity has a significant role to play as a risk management tool.

The objective of the application of portfolio theory to the problem of customer equity optimisation is to determine where best to focus marketing spend. To demonstrate how it works, a real operating example of this will soon be presented in a follow up article. Yep, portfolio theory makes for an extremely powerful strategic marketing tool! As a teaser, below is an illustration from work done in a Business Banking context. Explanations and interpretations upcoming...

Global chaos? All the more reason for total business integration!

2011-08-15T16:43:00.000+02:00

I have written a good few articles over the last few days on brand equity, customer equity, customer lifetime value and customer relationship management (CRM). The significance of all this work as a suite of concepts is aligned to the fact that brand management has entered an era where the entire customer experience needs to be managed, as you no doubt know. So how does all this come together, and why is this important?

Well, there's more to these articles than just considering the various attributes of the marketing value chain in the way I have written about them, especially when we realise that achieving success in markets defined by economic and market turbulence (global financial crisis part II) and changing customer demands (especially in terms of Gen Y's) requires, more than ever, a particularly serious and concerted effort to integrate ALL of the organisation’s capabilities into a cohesive whole. This is so because in order to properly manage the entire customer experience, increased corporate integration is required, all the way from marketing, to operations, to shareholder value creation.

As an example, from the customer's perspective, think about how many times in your life the actual sales experience (operations) was significantly different to the brand promise (marketing), the total experience leaving a sour taste in your mouth. And while this was all happening, think about the company concerned, who would experience less than expected shareholder value creation, or even worse, value destruction as a result of the negative impact on their reputation caused by the dissonance between brand and operations. I think I could write a whole book about this!

In conclusion, we know, in the context of the customer experience, that brand management needs to focus on at least four basic goals: acquisition, retention, increasing wallet share and bonding with customers to ensure that they become passionate brand advocates. What's interesting is that these goals can and should be integrated into an internal management framework linking all the operating model elements such as people, process and technology together, all focused towards the goal of forging the link between customer lifetime value and shareholder value. This is useful because it enables us to restate one of the questions asked of all brand managers, i.e. “Where does our brand value lie?”, to a much more specific “Where should our acquisition, retention, cross sell and relationship management investments, and therefore our operating model activities, be directed to be of best effect?” More on this will soon be written in an upcoming article on optimising customer equity.

PS For an overview of the end-to-end marketing value chain, click here for a full context.

Managing fundamental organisational change: 5 lessons for the CxO

2011-08-14T17:07:00.001+02:00

Change has become synonymous with upheaval and chaos, and as a result, it has become critical for companies to understand how better to manage change. Indeed, I think it is a key requirement of a CEO and all associated c-levels to be adept at change management!

So that we all start with a common understanding of what change is: Change in an organisational entity, where an entity may refer to an entire organisation, parts of the organisation, or relationships between organisations, is defined as a difference in form, quality or state over time of that entity.

It is also useful to distinguish the process of change from the content of change. Content refers to what it is that actually changes within an entity, as well as considering the antecedents and consequences of that change. On the other hand, process refers to how change occurs, and considers the sequences of events that occur as change progresses over time within the organization. Given this, I'm not sure how external, process-based change managers can properly handle organisation-wide change management programmes without proper strategic insight such as understanding the timeline and content of strategic change about to occur within the organisation...

Of the many different examples of change, the one of particular interest to me as the head of an organisation is the change in organisational operating boundaries, change brought about by activities such as mergers, acquisitions, or divestitures; establishing joint ventures or strategic alliances; modifying or extending customer acquisition activities; or organizational expansions or contractions in regions, markets, products/services, and even in international geographies. In other words, change that impacts the organisation at its very core and that as a result, impacts most if not all people within the organisation.

Organisation-wide change such as that outlined above are a fundamental kind of change that totally interrupts the status quo at all levels and across all elements of both the business model and the operating model. As such, it introduces business continuity risk, which clearly needs to be reported into the appropriate governance structures at board level! The launch of a brand new product or product category, entry into a new market, lay-offs, acquiring a new company, opening a new channel are all activities that can be considered as fundamental organisational change, as they all introduce something totally different to what used to be, impacting people, process and technology at one level, and markets, products and channels at another. Note that your customer service is also at risk during such extensive change. Keep your eyes and ears wide open!

In some ways, these changes can be thought about as a result of a business intentionally evolving through its business life cycle, driven by strategic, competitive, economic or legislative drivers. In three years of having driven such change - two acquisitions, two divestitures and three turnarounds - I fortunately cannot yet have an appropriate conversation about the change management required for a huge environmental shock, a Black Swan event.

So what are my four major lessons?

You can never reinforce the burning platform enough. There must be no question in the organisation about why the change is happening, and therefore why the change is necessary. You need the full buy-in of your organisation in order to be able to tackle the change as a team
You can never communicate enough. This is the toughest part of change management for me, because it is not always possible to properly keep your team updated given so many sensitivities in big change, which often involve many different external parties. The choice is simple, keep even an inane flow of information into the business, or none at all. But never fabricate communication! Your team needs to have the right amount of information in order to perform at their best in a potentially stressful environment
Because "the only constant is change", change management is not something that merely oversees a strategic event. Instead, it is a fixed and trusted role in the business of today. The role takes the shape of an all-in-one expert internal marketer, a motivator, a confidant in the strategy of the business, all critical content attributes required to properly execute on the continual process of change management.
Pay special attention to your customers. Special care, indeed, additional steps should be taken to ensure that all change is transparent to your customers, so much so that your customers don't even know the change is happening. It is a nightmare trying to recover from reputational risk should your service levels collapse!
Watch your governance. Make sure you know and implement in the context of the relevant labour legislation, and make sure you have raised the risks with your board, including mitigating actions. Things DO go pear-shaped in spite of the best plans. Be totally transparent in terms of successes and failures. You want no risk comebacks in the execution of change as some of those could result in you having to close your business!

Of all the communication required in change management, one of the toughest messages to communicate concerns divestiture, even though jobs may not necessarily be lost in the process. The break of friendships and break in the sense of community is quite tough to experience. Again, this is why it's so important to make sure the burning platform is properly and extensively communicated. However, by far the toughest change to drive are lay-offs. Nothing can prepare you for that deep, personal pain. The lesson again though, is to ensure that the affected people are absolutely clear on what the burning platform is, and to manage your team with all the dignity you can muster. Going the extra mile looking for replacement jobs on their behalf is a must do! Amazingly, the affected team can and do thank you for this effort, all through all their own pain. These are unforgettable moments.

Remembering the Customer in Customer Relationship Management

2011-08-14T14:40:00.002+02:00

Wow, how long has 'CRM' as an acronym been around for? I estimate about 20 years, but I'm not that old :-), so maybe it's longer. And yet it is still possibly one of those acronyms, perhaps along with ERP that strike the most fear into the hearts of all within shouting distance of anybody who dares to talk about it in public. It is a business acronym that has the power to raise so many (mainly unqualified) opinions about what is right and what is wrong as to almost start a war!

Fearing a rehash of so much that has been written before, this article serves to remind me why it is the customer that is at the heart of CRM, and not technology! Besides, the conversation below fits in with many of my previous articles!

It is now widely accepted that the real purpose of business is to create and sustain mutually beneficial relationships with selected customers, even though it might have taken us 25 years to get there:

“’The purpose of business is to get and keep a customer’.

Theodore Levitt 1986

‘The purpose of business is to create and keep a customer’

Peter Drucker 1988”

One of the original big marketing ideas is that for firms to stay in existence, they should focus on fulfilling needs rather than selling products, implying a customer rather than a product focus. In creating value for the customer, value is created for the firm and it stays in existence, i.e. there is a dual creation of value!

Customers introduce significant complexity to everyday business management :-) because managing the customer life cycle is not merely a metaphor or a mathematical model, it involves human beings - sometimes groups of them organised into business entities - and that these entities exist within a multi-faceted economic context that has a significant impact on the way the customer and a business conducts its activities both today and into the future.

As a bit of background, it is only circa 1983 that the marketing emphasis had shifted from mere exchange, to the relationship between the company and the customer. Then as we entered the 21^st century, there was an evolution from brand/product management, to customer portfolio management. This is the space we find ourselves in today.

By introducing the customer into the discussion, it becomes increasingly relevant to begin talking about Customer Relationship Management (CRM) because of its habit of appearing out of nowhere when anyone begins to talk about increasing customer equity. However, with possibly hundreds of definitions of CRM out there, we could be in danger of introducing significant ambiguity into our own communication with staff, suppliers and colleagues if we’re not careful with our definition. Indeed, how many scuffles have I not seen start when CRM as a topic dares to raise its head in a business meeting!

Before seeking a definition, perhaps we should consider what the basic philosophy of CRM actually is. Well, in essence, the CRM philosophy concerns building long term relationships with customers, with the organisation preferring to build relationships with high Customer Lifetime Value customers, although I have yet to see this in put into proper practice in the many top tier banks around the world that I have visited!

Given that there is no agreed definition for CRM, it is perhaps useful to create an understanding of what CRM is. Until 2001, little effort seems to have been made towards a generally accepted definition of CRM.

Since then, research has suggested that the core idea behind CRM is company profitability, i.e. income minus cost. Alternatively, from the customer’s perspective, research suggests that the main idea behind CRM is also profitability, where the difference between the two perspectives is based on differences in the drivers of profitability. Indeed, from the company’s point of view, the drivers are components such as cross-sell, up-sell, retention and acquisition, while from the customer’s point of view, the drivers are components such as utility and service! However, the company's view of CRM may not align with the customer's view of CRM, introducing significant tension between the two groups, and perhaps even customer attrition and reputational damage, be aware!

Some researchers have proposed that the cost and income interpretation will help lead to generally accepted definition of CRM. Note that except for the discount factor, this definition format is elegantly aligned with the definition of Customer Lifetime Value as outlined in a previous blog article. In fact, many now view CRM as the process of increasing Customer Lifetime Value, with an essential part of this process being the application of decision analytics to understand and predict customer behaviour. Extending the view, some have described the aim of CRM as aiming to increase the profitability of the entire customer portfolio.

Arbitrarily choosing a definition for CRM based on opinion, either in a business context or casual conversation is not always wise for the reason already raised. Indeed, choosing any definition would be a challenge, but we need a definition to act as a reference point for the theory. At the risk of introducing distortion, it makes sense to select a definition befitting a marketing context, as it ultimately concerns customers.

I therefore suggest that CRM is simply a strategy for optimising Customer Lifetime Value (e.g. Todman 2001:8, Furness 2001:293, Jarrar & Neely 2002:282, Levey 2002:56, Panda 2003:57 and Jackson 2005:76). A complementary description offered for CRM by Bechwati and Eshghi (2005:89) is that Customer Lifetime Value is the engine for CRM. This is because Customer Lifetime Value determines the type and degree of relationship the business should establish with its customers, playing a key role in marketing mix and resource allocation issues (ibid. 2005:89). Javalgi et al (2006:16) also speak of CRM as enhancing “customer lifetime profitability”, but add a context of service satisfaction, service loyalty and customer retention to the mix.

Ultimately, CRM must be viewed as a strategy due to its human, technological and process implications, and thus by implication, CRM design must be integral to the overall strategic planning of the entire organisation in order to ensure proper and strategically aligned execution.

Finally, a technology-free definition somehow acknowledges that CRM has become more about computers, software and processes than it did about business and profitability. Some have even suggested that one of the reasons for the unsatisfactory outcome of so many CRM initiatives occurs when CRM is viewed as a technology. Not wanting to discount technology's role in CRM, some have suggested a middle ground, that CRM is a strategic concept which incorporates strategic outcomes such as customer satisfaction, loyalty, customer retention and profitability while relying on technology to harness market-relevant data and to guide decision-making. Fair enough.

In conclusion, in a manner not foreign to a few of my previous articles, I have yet another idea for an article: To design an efficient customer management strategy, it’s essential to understand the customer life cycle, much of which was alluded to in my article on customer lifetime value. Having a knowledge of the customer lifecycle is the most powerful marketing tool you can have, and is an essential element to exploring the concept of marketing efficiency.

CRM: Customer Equity and Company Valuation

2011-08-14T12:59:00.003+02:00

It's quite simple, it is customers that ensure the long term sustainability of a business. Products may come and go, but customers remain. Quite simply, a significant determinant of the long term value of a company is customer equity, not considering the value of assets, intellectual property and R&D competencies for example.

Note, this article builds on a previous article, CRM: Customer Lifetime Value, a critical Customer Equity input, which itself builds on a previous article, So how do you calculate brand equity anyway?.

From a company perspective, customers, being intangible assets, need to be measured, managed and maximised in order to optimise business performance. From a customer perspective though, value will be generated for the company for as long as the company meets their needs. I probably don't need to explain how critical the right types of customer value propositions are to this audience! Again, there's a topic for another article! Indeed, it may be worthwhile expressing it differently: As long as you continue to give customers what they want, value will be created for both the customer, and consequently for the company, subject to good management practice of course.

Customer Equity may be defined as the sum of all Customer Lifetime Value in company. Since the market value of a company is ultimately determined by the sum of its appropriately discounted future cash flows, and since it is customers that generate trading (vs non-trading investment income), it is easy to see why customer equity is a root of company valuation!

The above statement may surprise both corporate financiers and marketers alike, both no doubt intent on protecting the independence of their turf. Note however, that EVERYTHING in a company is inter-related in terms of what the company has set out to achieve. Marketers need to understand corporate finance as much as the corporate financiers need to understand where the money in the business actually comes from! Oh, how I hate silo-based organisational design! But I digress.

As cash flows are generated by customers acquiring and using products and services, and as Customer Lifetime Values are calculated by appropriately discounting these cash flows, it begins to become apparent that there is indeed a link between Customer Lifetime Value and the value of the business. Indeed, the valuation of the customer base, i.e. calculating Customer Equity, has been becoming increasingly important in recent times as Merger and Acquisitions mean the acquisition of new customer bases, at least from a marketing perspective. Indeed, the motivation for M&A transactions in the tertiary economic sector is usually based on the assumption that the acquirer can leverage the customer base of the acquiree more profitably. In the case of primary and secondary sectors though, the value comes in an improved utilisation of the operating assets - such as plant and equipment.

As a broad framework for evaluating return on marketing (wow, yet another topic to write about one day), an assessment of Customer Equity is key. Indeed, we can now understand why the increased value of a company exists in projects aimed at increasing Customer Equity. Indeed, I think Customer Equity terms of reference and assessments should be used as a basis of a mechanism to trade off competing marketing strategies such as advertising or service quality, for example.

So, we have a better understanding of customer equity now, and it's link to company valuation, but what are its levers? In other words, how can we drive increased customer equity?

Well, first and foremost, the more a customer perceives value in the offerings of a company, in other words, the greater the customer value proposition, the greater the potential to increase customer equity
Secondly, the more positive the image and perceptions the customer has of the company over that of its competitors, the greater the potential to increase customer equity.

And here's yet another topic to write about - the extraordinary power of true socio-economic involvement and environmental concern (and I'm talking way beyond mere arms-length corporate cash grants here) in terms of growing brand equity, but I digress yet again!

And the third is brand stickiness. What reasons are you giving your customer to remain strongly associated with your brand over time, beyond the significantly old school practice of increasing lock-in? A customer should want to stay with you, not be forced to!

Each of these levers can be deconstructed into highly relevant KPAs in quite a number of different ways within the organisation, as the below illustration shows. Again, designing KRA's to optimise customer equity can be the subject of yet another article!

A conceptual model linking examples of CRM value drivers to the three levers of customer equity (Richards & Jones 2006:7)

Customers therefore choose to conduct business with a company because it offers better value, has stronger brand appeal, and because, heaven forbid, wanting to switch away from it should be painful for many more reasons than simply the nature of the product or service you offer! That's all great, but if your staff are not tuned to what needs to be done and how it all ties together, please note that nothing appropriate will happen!

Now in a sequence of three consecutive articles, I have covered brand equity, customer lifetime value and customer equity in some depth. The next article (of many, looking at the two ideas writing this blog spawned) will consider optimising customer equity.

Again, there's enough detail here to work with. If you need help, you know where to find me!

CRM: Customer Lifetime Value, a critical Customer Equity input

2011-08-14T11:35:00.004+02:00

This section is taken almost verbatim from my Marketing PhD work in progress. I have simply edited it by taking out the academic journal references and references to sections for ease of readability.

These concepts were subsequently very effectively applied by me and my team at Standard Bank, South Africa in 2007, where we generated nearly R700 million in incremental value (approx US$100 million) within 6 months. The case was successfully presented at technology conferences and academic peer review conferences in the US, Canada, the UK and South Africa between 2008 and 2010.

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A consideration of Customer Lifetime Value (CLV) is contextually important for two reasons.

Firstly, the primary objective of Customer Relationship Management (CRM) is to optimise Customer Lifetime Value The ability to accurately predict potential product and services utilisation has a potentially significant role to play in the optimisation of Customer Lifetime Value. In so doing, the primary goal of Customer Relationship Management is increasingly likely to be met, itself often a strategic objective of many organisations, although these are not necessarily expressed in terms of Customer Relationship Management.
Secondly, this section will show that the full calculation of Customer Lifetime Value has some dependence on having knowledge of the expected span of the customer life cycle.

Even on its own, Customer Lifetime Value is topical from the point of view of both practitioners and the academic community. The concept can be traced back to the 1940’s, with about 30% of respondents to a survey conducted at the time being able to state the average value of their customers. The concept was already quite well developed because the study highlighted the business implications of ranking customers by their assessed Customer Lifetime Value. The purpose of the ranking was to identify which customers were worth focusing on. By the late 1970’s, the Customer Lifetime Value concept was commonplace amongst direct marketers. Indeed, some propose that the Customer Lifetime Value concept originated in the fields of direct and database marketing, with others suggesting that the development of Customer Lifetime Value in this space was driven by the fact that direct marketing provided access to data and information about individual customers, thereby making it easier to investigate many relevant customer issues.

These days, predicting and managing Customer Lifetime Value is considered central to marketing. Customer Lifetime Value is so central, that an insufficient understanding of Customer Lifetime Value could even result in an unsatisfactory outcome of a customer relationship management initiative. Considered differently, companies who understand Customer Lifetime Value could be up to 60% more profitable than those that do not.

Large retailers, financial services companies and telecommunication companies are examples of business who have large volumes of data on their customers. In particular, financial services companies have been and continue to be “increasingly orientated to the life-time value of the customer”. This may, in part, be a result of an increasing shift from a product-centric to a customer-centric paradigm in this industry, which would result in the need for new or supplementary marketing metrics, such as Customer Lifetime Value, to be defined.

The value of a customer to a supplier can be defined as the customer’s economic value to the company, where some authors talk about value measured across the total customer lifecycle, while others talk of future value. As an example of the former, some define Customer Lifetime Value as measuring the return or profit streams of a customer across the entire customer life cycle, and some are explicit about a discount factor - being the Weighted Average Cost of Capital (WACC) – as part of the calculation.

Figure 4: CLV shown measured over the lifecycle of the customer, in this case, over the total life of the customer (based on Amber 2003:58). Amendments to the diagram show the concept of future CLV

On the other hand, most research gets a little more specific, talking of Customer Lifetime Value measuring future profitability.

According to some, Customer Lifetime Value is measured from the time of the first purchase until the end of the life cycle, “by definition”. So then why do some authors speak of future value as in the above paragraph? An answer could be found from some researchers who admit that a total life cycle view does not make the most sense – suggesting instead that it makes more sense to design future marketing strategies based on an assessment of future potential, rather than on past performance. Furthermore, they speak of the spirit of Customer Lifetime Value as being forward-looking. Indeed, some qualify it further by stating that forward-looking Customer Lifetime Value measures are more consistent with the principles of shareholder value creation.

For clarity, lets define, quite simply, customer profitability as the difference between revenues and (variable) costs attributable to a customer during a specific period, which they point out, is consistent with the accounting definition of profit. This measure is also known as the contribution in economics and finance. In providing a link from profitability to Customer Lifetime Value, some researchers point out that Customer Lifetime Value is the most efficient metric in managing customer profitability. In its basic form, the future Customer Lifetime Value, at an individual customer level, can therefore be expressed as:

Equation 1: Simple CLV equation derived from the text, where the numerator can be interpreted as the profitability (revenue r_t – cost c_t) of the customer at some future time t discounted at rate i.

Equation 1 shows that future Customer Lifetime Value is the present value of the future profitability of a customer considered over n time periods into the future. The customer retention rate (and many variants of it such as churn and attrition rates), not shown in Equation 1, is considered as a key variable in more sophisticated Customer Lifetime Value models.

Some propose that Customer Lifetime Value consists of four components, not all of which are purely monetarily-based, but all of which have revenue and cost elements. These components are the base potential, the growth potential, the networking potential and the learning potential:

The base potential consists of the cash flow from products and services that form the core of the relationship

The growth potential consists of cash flow from cross-selling and up-selling

The networking potential consists of cash flows acquired by relationships introduced by the customer via word of mouth, referrals etc.

The learning potential consists of cash flows originating from the exploitation of market-based knowledge created by means of interactions in the relationship

While networking potential has been explored and is a current and highly topical issue in Banking internationally, it is probably the only one of the four components outlined above that has not yet been well explored within the bank being studied. In addition, of the four components, the base potential component is potentially the simplest component to evaluate.

Customer Lifetime Value analysis, in particular an analysis of the terms making up Equation 1, suggests that there are essentially three levers available in the management of customer value, assuming that the discount rate is an exogenous factor in the equation:

Increasing retention

In general, the longer a customer can be retained, the higher the value realised from that customer. However, note that this is a necessary but not sufficient lever for increasing Customer Lifetime Value. Furthermore, retention is of little value strategically if sales opportunities cannot proactively be identified across this maintained section of the customer’s life cycle. A consideration of the life cycle of the customer can help identify these future sales opportunities.

Decreasing costs

Costs are one of two parts of the profitability equation. If costs can be reduced, profitability will increase, ceteris paribus. Greater value can be produced if these cost reductions are sustainable. Knowledge of the customer’s life cycle has little impact here because costs are internal to the organisation and are determined independently of the customer.

Increasing revenue

Revenue is the other part of the profitability equation. If revenue can be increased, profitability will increase, ceteris paribus. Revenue increases are determined largely by sales growth, which can be achieved by realising more sales opportunities across the life cycle of the customer, or even gaining a greater share of the customer’s wallet, i.e. share of transactions/lending/savings products in the case where the customer conducts banking at more than one institution. Pricing also has an impact on revenue, but a change in price could adversely affect revenue so that the net effect on revenue may be less than it was before the change

Building on Figure 4, to help reach a common understanding of Customer Lifetime Value in the context of business life cycles, note that a full lifetime may be considered to be equivalent to one life cycle of a customer, whether the customer is an individual or a business. However, not all customers are necessarily customers for life. Note that since we are talking about a lifetime, we imply a longitudinal (temporal) aspect to the discussion. Customer Lifetime Value can then be defined as the value a customer generates for the supplier of goods and services over time, which, at its fullest extent, would be over the remaining “economic life” of the customer.

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If anything, this article shows that while Customer Lifetime Value is not a simple construct, it can be calculated.

To demonstrate the importance of properly calculating Customer Lifetime Value, it is important to note that it is the most critical input to another important marketing construct, Customer Equity, which I will get to in the next article.

Again, there is enough detail here to give you enough to calculate Customer Lifetime Value at a per customer level. If you need help, you know where to find me.

So how do you calculate brand equity anyway?

2011-08-13T21:58:00.011+02:00

Brand equity is probably the most important measure of the success of your branding activity, indeed your company activity, because it informs you about the full extent of your reach as a brand. As you know, everything flows from brand, which is like a reservoir of potential future cash flows. This blog article explains how to properly measure this critically important marketing construct.

The challenge for marketing is that it increasingly needs to be able to prove that it creates value (future cash flows) for the expenditure it incurs. Given this eternal challenge, I wrote a blog article briefly outlining the end-to-end process of doing so, entitled Budget cuts? Best you measure the shareholder value created by your corporate marketing!.

The above article puts this one into perspective. It is based on a methodology I created to measure the full impact of marketing spend, from branding to shareholder value, in a language shareholders and investors would understand. This is important because marketing spend is one of those constantly under fire from the board and other governance mechanisms when times are tough. The methodology was successfully presented at a global marketing peer reviewed conference through the Academy of Marketing at the University of Birmingham in the UK in 2008. This article considers the arrowhead of the marketing value chain, brand.

Before we start though, it is important that we are clear not only on what is meant by brand equity, but also on how it differs from customer equity. I have been to far too many meetings where supposed experts either confuse the two, or don't even really know what each construct actually is. That's normally the point where I walk out.

However, as is generally true of conceptual constructs that have no official definition (I wrote many, many pages trying to distill a reasonable definition for brand equity in a PhD I was reading for, having reviewed hundreds of journal articles on this topic alone), there is bound to be argument about what the definition is. Even worse, as there is no generally accepted definition of brand equity, there is also no generally accepted measure of brand equity. However, I can objectively support the following everyday description of brand equity, with the support of reams of contemporary academic research:

Brand equity is a measure of both potential and actual value. Firstly, it is a measure of the future value your current customers and brand advocates can generate as a result of your products or services fulfilling their needs. Secondly it is a measure of the potential value that could be created by customers that have not yet bought from you, but who would do so if they were in the market for your offering.

In essence, it is a measure of all the future value you could possibly generate, given your brand positioning at this point in time. Your future brand initiatives will change this measure, which is why it's important to regularly review the assessment of your brand equity.

You may ask why future value. Well, what is done is done. You can't sustainably pay for tomorrow's salaries, expenses and capital with revenue you generated yesterday. What you can sell tomorrow is all that matters in maintaining confidence in the sustainability and therefore the investment desirability of your business.

In essence,
Customer Equity = Brand Equity - the value that could be generated by customers that are not yet yours. I will write more on the fascinating topic of customer equity and customer lifetime value in a future blog article.

So how do you properly measure brand equity, in a shareholder value paradigm? Well, quite simply, it's expensive, and it takes time. While some components of it can be assessed by analysing your customer data, the propensity of potential customers can only be assessed by market research, focused market research, with the following goal:

To determine which customers would buy what products and services from you, and when they would buy them, should they expect to be in the market for the kinds of products and services you offer.

And that's just the start. While research project could potentially provide all sorts of secondary information as well, such as brand competitiveness and desirability, product and service competitiveness and desirability, in order to maximise the effectiveness of the research expense, the output of the appropriately designed market research project is just the first step to determining brand equity.

Note that the when in the objective above is critical, because all value is clearly not realised immediately, or at the same future time. So, while the market research helps answer who, by segment if you have them, would buy what from you in future, it does not yet quantify this value in a language shareholders understand. More work is required.

Figure 1: The number of customers in the entire market expected to take up your offering over time, from the market research. The time horizon, here illustrated at 72 months, depends on the combination of products and services you offer, largely dictated by the lifespan of your current offerings. This is no easy matter either.

To get to the next step, you need to take the segment values - the volumes of current and future customers who would make a contribution to the profitability of the enterprise at various points in time, and multiply those volumes over time with assessed inflation-adjusted AND competition-adjusted contribution distributions, per segment, per point in time, to determine the potential value of your brand in the market over the selected timeframe. It ought to be clear why the inflation and competition impact (depending on the nature of the industry and the uniqueness of the product or service) on pricing over time needs to be assessed at this point.

Now note that:

Contribution is a marginal revenue construct popular in economics and finance, which determines the additional income statement (not balance sheet) value created for a particular type of sale. It is a variable cost versus a fixed cost construct (fixed costs are taken as sunk costs) in cash flow modelling.

A probability distribution rather than a fixed value assessment of the expected contribution per customer, per segment, over time, will give greater insight into the extent of the brand equity calculation. In other words, rather than simply say the brand equity is assessed as $8.287 billion, you would be able to say that the brand equity was likely to be between $6.392 billion and $10.543 billion. This is of critical importance in the context of assessing our customer equity, which we will get to in a later article. This figure is the value of your brand as a tradeable asset.

The following information can be derived from your existing customer data:

The 'typical' portfolio of products of an existing customer, per segment
The average (mean) contribution of an existing customer, per segment
The spread factor (standard deviation) of the contribution of an existing customer, per segment
The skew (shape of the probability distribution) of the contribution of an existing customer, per segment

Now why is the calculation of brand equity important? Well, it gives you an opportunity to express the value of your brand spend in terms shareholders and investors can understand. So, if you know exactly how much you spend on branding per annum and over the invest timeframe, you can determine the return on branding using existing corporate finance methodologies, which is of huge insight to shareholders to determine whether your brand investments are creating or destroying value. This could be good for you, enabling you to spend more on branding because you are creating value, or bad, showing that your brand expenditure is inefficient and that it needs corrective action. Either way, the lessons are critical in the interests of maintaining an efficient and sustainable business, especially in the current economic environment.

So in conclusion, there are three steps to calculating your brand equity

Market research to determine potential future 'consumption'
Monetary quantification of the potential
An assessment of the Present Value distribution of Brand Equity.

The additional value in knowing brand equity emerges once you have calculated your customer equity, because it enables you to determine the effectiveness of your brand in creating market potential. So if the ratio of customer equity to brand equity exceeds about 70%, you will probably have a very tough time expanding your market (depending on your offering), as it will never be possible to realise 100% of your brand equity as realised value. The lower the ratio, the higher the probability of realising increased income statement growth by means of directed marketing activities.

However, since we have assessed brand equity as a distribution, being able to say that the customer equity to brand equity ratio is between 55% and say 85%, we know that it is as likely to be tough to grow our markets, as it might be easy to realise untapped potential. Only brutal honestly in the form of word from the streets (how often do you walk the streets as a strategic marketer?) will help you understand which end of the scale you are really performing at, but again, that is something that can be determined by means of market research.

The next blog will be on calculating customer equity, followed by one on customer equity optimisation using risk/return models from corporate finance, and closed by assessing the shareholder value created by your marketing efforts.

As you see, it's quite a technical process to calculate your brand equity. There is however sufficient detail here to get you started. However, if you wish to properly calculate your brand equity and don't quite know where to begin, you know where to find me!

PS By the way, why the 'equity' in 'brand equity'? Well, it's simply a word describing the measure of the value of the brand to the owners and/or investors! It describes the extent to which the investment in the brand can generate future revenue.

On blogging, my first 10 weeks

2011-08-13T19:43:00.003+02:00

10 week performance, August should exceed 300 views

As an amateur blogger (aren't we all?), I am curious to know what the performance of my blog has been, although it is now only 10 weeks and 31 articles old.

At what is likely to exceed 300 unique views for August, 537 so far, it seems like it's going great, and at least it's attracting attention at a rapid pace. Seems like a good start to me.

The next statistic is that my most frequent visitors are from South Africa, the US and Canada, between them accounting for 77% of my visits. This correlates weakly with the geographical distribution of my followers, who are mainly from North America. My South African followers therefore interestingly show an above-expected interest in my writing.

Interestingly, the most insight comes from which blog articles have been the most popular. In this case, the most popular blog article has been Four reasons why I'm very comfortable with comfortable banking!, occupying 12% of all views. Next, with 7% of total views has been Endurance sports and sustainable business - one and the same discipline?, followed closely by Budget cuts? Best you measure the shareholder value created by your corporate marketing!

It's probably a little early for lessons, but the most popular post seems mostly to have been read from Canada, having been an article about TD Bank. My experience is that the TD Bank social media team are really switched on (I have received responses from them on more than one occasion), at least when compared with ScotiaBank, on whom I wrote a blog about their CEO's business activities in Brazil, an activity which clearly inpired me enough to have written a blog about it.

A second lesson from the popularity of the second most popular article is that perhaps comparative studies pique the interest of readers. I will be keeping an eye on this.

The third lesson is that marketing is a potential hot spot. Again, it's probably too early to really say, but I will be keeping an eye open on this too!

Oh well, the next review is at 20 weeks. I'm sure a lot more lessons will have been learnt by then! Onwards and upwards!

Purpose: Your route to extraordinary success

2011-08-13T13:35:00.005+02:00

My previous blog article was on motivation. In particular, it was a conversation about how intrinsic motivation is better at achieving peak performance than extrinsic motivation. In putting that blog together, a word that particularly stuck out was 'Purpose'.

A few weeks back, I heard that word in another context, asking what our Purpose as a business was. It was a fabulous question, as so many business gurus get so stuck up and mechanical on Vision and Mission blah-blah-blah, but few ever speak about Purpose. So, why do you do what you do?

On Purpose, the academic Roger Fisher says that there is a fundamental human need for guiding ideals that give meaning to our actions, a fundamental search for meaning. Returning to the above business gurus, many may argue that the Vision encapsulates the Purpose. Well that may be so in some instances, but to me, a Purpose is at a much higher level of abstraction than Vision. The reason for this is that while Vision may apply to the business, Purpose applies to every waking minute of our existence, and it is an interaction between so many things, like abilities, passion, skills and talent. In this context, Ictodd wrote a great piece in her blog about the various aspects of Purpose, and is worth a read.

The thing is, I think great leaders are born when they have a clear sense of Purpose, something that is so steady that it is not dulled by failure, mishaps, misfortune, naysayers. It becomes the single guiding light that directs all their actions, and with such focus, they become hugely successful, in spite of adversity. Nelson Mandela comes to mind as but one of many, many worthy examples of perseverance in our time. He spent 27 years in jail, and yet his Purpose did not for one second grow dull.

I've had to think very carefully about my personal Purpose. As rapidly emerging opportunities of global proportions drive me to enthusiastically plot a brave new direction for my career, my Purpose seems to be becoming less about the normal measures of recognition, achievement and success that have so richly flavoured my résumé to date, and more about measures more aligned to enabling the success of others, of individuals, businesses and other bodies (such as increasing my involvement in Qhubeka), some of which is even implied in my mentorship activities. Interestingly though, continued personal success and achievement by whatever measure will flow strongly and directly from this, enriching my résumé still further, of that I have no doubt. And the more I think about it, the more I realise that one of the most extraordinary personal measures of success of this new direction will be contentment, contentment in the knowledge that I will have made a difference to the lives of others, whether in a personal or a business capacity.

So this outlines the increasing importance of developing a clearer sense of Purpose in my life, and where it is taking me in terms of the further development of my career. Now, why do you do what you do?

Motivation: The role of intrinsic motivators in teamwork and mentorship

2011-08-12T17:09:00.004+02:00

I was reading Jeff Bullas' fascinating blogs, in this case where he was reflecting on how to gain a global audience for your blog from a zero base. It's a great read, and well worth the detour.

However, the particular point that caught my eye was on motivation, aspects Jeff was raising that I have seen at various conferences before, but that caused me to stop and think more than usual this time. To quote the section from this particular blog,

Source:http://bit.ly/4B6nnm

Motivation is a strange thing and for most of the industrial revolution and beyond we have used “external” motivations to drive ourselves and our employees to work and succeed such as monetary incentives and “stick and carrots”.

In this case, the carrot is the offering of a reward as a result of the subject achieving some sort of positive behaviour, whereas the stick would be a punishment for behaviour viewed negatively. Note the actual instruments of reward and punishment are not necessarily a stick or carrot.

In contrast, intrinsic motivation

... taps into our desire to do things because they matter, because they are interesting, and because they are part of something important.

In other words, our intrinsic motivation less about reward or punishment, and more about having a good enough reason to do something, according to research conducted by the University of Chicago, MIT, Carnegie Mellon and the London School of Economics, which showed that financial incentives can actually result in lower levels of performance from managers. Indeed,

... true powerful and long lasting motivation is built upon 3 elements:

Autonomy – the urge to direct our own lives, Mastery – the desire to get better and better at something that matters, and Purpose – the yearning to do what we do in the service of something larger than ourselves

As a demonstration of these elements, Bullas goes on to wonder:

Who would have thought 10 years ago that a professionally managed, paid and heavily sponsored project (Encarta by Microsoft) to create a new media encyclopedia would be comprehensively beaten to the canvas in a knockout by a free global social science experiment called “Wikipedia” involving thousands of unpaid volunteers working in their pajamas from home.

So why did this all make an impact on me? Well, I was thinking about my own divisional executive team who - as is my management style - are able to be autonomous as per their expertise in the execution of their duties, thereby continually able to master their fields in their own way, with a purpose driven by a clear strategy, whether in terms of the 1st bottom line (profitability), the 2nd bottom line (socio-economic responsibility) or the 3rd bottom line (protecting the environment).

Now some mental anguish has already emerged in the context of adjusted portfolios they are taking on (I am taking up a new portfolio elsewhere), where the absolutely biggest issue seeming to emerge from them being a lack of autonomy in the new structure. For some time I have been hearing this, thinking that it was merely an important attribute in their lives, when indeed, I have now internalised that it is an intrinsic motivator, and therefore a critical aspect to get right! I can now better understand, however simply, their pain in the context of what it takes to having had a motivator eliminated. Very interesting. How do you remain motivated after that? This is a challenge. Wow, what a superbly powerful team I had, perhaps as a result of them being free to lead their portfolios as they felt best, as a result of me having met some of their intrinsic motivators. I hope they read this and comment on my thoughts here!

Source: http://bit.ly/ngGH38

Moving along, it is entirely feasible to extending the idea about intrinsic motivation to my mentorship interventions. In these, I try and enable the mentee to determine, on their own terms, why they matter (purpose), that success in that purpose is all in their control (autonomy), and that this calling, as a core skill, is what they need to become particularly good at (mastery), as it is naturally fed by their own passion. Again, as a result of Jeff's blog, I have internalised a lesson here, and will perhaps be a more focused mentor from here on as a result!

In closing, I am thankful to Jeff's blog for being the inspiration for this article. I have gained from his observations, and in turn, I hope that you have gained a little something from mine.

A killer elevator pitch in a single tweet

2011-08-11T11:40:00.009+02:00

The elevator pitch as a critical sales-enabling construct has been around for decades, and everyone needs one. For those unfamiliar with what it is, Wikipedia presents a great summary:

"An elevator pitch is a short summary used to quickly and simply define a product, service, or organization and its value proposition. [It] reflects the idea that it should be possible to deliver the summary in the time span of an elevator ride, or approximately thirty seconds to two minutes."

With the pre-eminence of social media in our lives, I began thinking about whether it would be possible to condense my elevator pitch into a tweet, in other words, a mere 140 characters, equivalent to perhaps a floor or two in an elevator ride. The idea is even more attractive because people seem to have ever decreasing amounts of time to listen these days. Indeed, it seems increasingly so that if you can't make an impression in a few seconds, that you've probably lost the opportunity.

Out of all the things a good elevator pitch must be - concise, intriguing, customised (you MUST know who you're speaking to to modify your pitch on the fly, for RELEVANCE), pithy, powerful, understandable, measured, clear, unambiguous, simple, digestible etc. - the two characteristics I think that needs to be huge in your 140 characters, is a powerful hook and why you matter. Using smaller words instead of bigger words is also key. After all, in a tweet, you have limited space to communicate. Finding a hook strong enough to have the listener wanting to know more, wanting your business card and wanting a follow up conversation must be your only goal. So what would mine be? Here it is:

As a Future Global 100 leader, I turn the world's economic crisis into game-changing opportunities for my global financial services clients

That's exactly 140 characters, with two big hooks - "Future Global 100" (which doubles as who I am and encapsulates my credibility) and "game-changing opportunities". I would imagine the next question would be related to questions like "Future Global 100?", "Really?" or "Wow. What kinds of things have you done?" In other words, questions relating to your hooks. In that case, have your short sharp facts ready:

I'm a round table leader to 50 of the world's biggest companies at Future Global 100

I grew a consumer finance business by 300% this year

I increased the expected performance of my legal recoveries business by 200% this year

I ramped up revolving credit card sales by 500% this year

At this point, it is also important to acknowledge the role of your team here, as your glowing successes are seldom attributable to yourself only. That also positions you with humility in the eyes of your audience, and yet does not downplay any of your successes.

Having an elevator pitch is of course never enough. It's only the first micro-step in your selling process. Be prepared to answer all the tricker questions after making your pitch on why you're different to your competitors, your track record, your references, your failures, your industry credibility, and many more that can scupper the potential deal long before you've even gained momentum.

In closing, there's probably no need to remind you that an elevator pitch is eternally evolving, a work of art that is never complete. It is also part of your personal branding, so keep working on it to keep it fresh, alive, exciting and current!

Dear Mr Rick Waugh, CEO of ScotiaBank

2011-08-09T19:36:00.002+02:00

Dear Mr Waugh

We have never met. Indeed, to be honest, I had never heard about you before today. However, I have just read a tweet about you co-chairing the Canada-Brazil advisory Group. Looking at your achievements and representation Mr Waugh, that's just awesome, and so very fitting!

However, the first thing that went through my mind after reading the article is that Brazil is but one apex of the BRICS, expected to be amongst the top economies of the 21st century. So if you're exploring opportunities in Brazil, the rest of the BRICS ought to be on your radar too, with South Africa additionally serving as the gateway to Africa for all the BRIC nations. Indeed, over the next three years, tariffs and the movement of goods through the 26-country African Free Trade Zone (AFTZ), incorporating the South African Development Community (the SADC), the East African Community (EAC) and the Common Markets of East and Southern Africa (COMESA), running from South Africa to Egypt, ought to be significantly eased, which would be a brilliant opportunity for the the IBSA Group (India, Brazil and South Africa), as well as for the BRICS, and by inference, potentially for Canada too. And that's just the start, as West Africa are soon to be considered in the AFTZ context.

Banking has got such a significant role to play developing the newly emerging power economies, whether in the primary (capital intensive), secondary (capital/transactional/people) and/or tertiary (transactional/credit/savings/people) industries. Indeed, the more these industries are stimulated in tomorrow's global economies, the greater the probability of developing an increasingly powerful consumer cohort, which, as we know, seems to drive so much of the modern global economy. Already, the BRIC have 40% of the global consumer base... that's quite something, and this all hasn't even started yet!

The next thought was that the scale of the opportunity could easily position Canada as one of the next northern hemisphere superpowers, with Russia and China, as a result of the significantly increased trade between Canada and the BRICS. This might be a bit extravagant, but what's the point of thinking if you're not going to think big! And I haven't even expanded on the CIVETS (Columbia, Indonesia, Vietnam, Egypt, Turkey, South Africa) economic group yet, which also intersects via South Africa into the BRICS, opening an entirely different context of opportunity.

Well, that's my 2c Mr Waugh. Have a great day! I am aware that ScotiaBank is Canada's most international bank, so there's plenty in your idea already. If anything, the original topic was quite inspirational for me as you see here, and will be an engaging conceptual topic for me to discuss as a Future Global 100 leader, for 6 hrs, while leading a roundtable with 50 of the world's biggest companies in Hong Kong in November!

Kind Regards
Guy Pearce

Strategy, marketing, efficiency and management in business turnaround

2011-08-06T20:41:00.007+02:00

From a layman's point of view, turnaround is often seen mainly in the context of cost-cutting and balance sheet restructuring. Yet there are so many subtleties involved that perhaps only those who have been at the heart of this often painful activity will ever be aware of. I took this role as CEO, which involved four business turnarounds on a common human resources and finance bases, but disparate marketing and information technology bases.

I wrote an academic paper a year back on the business of business turnaround, specifically in a small business context, something I did with the intention of achieving a 'first time right' approach to turnaround of a specific small business legal entity (less than 200 employees). I have just read the paper again, and two things come to mind. The first is being able to recognise errors in my paper, which means I have fortunately learnt a lot since I wrote it! The second is how excited I get thinking about turnaround, specifically how wonderfully complex and multi-dimensional it is!

In any event, here is an excerpt from the paper, outlining just a few attributes to consider in holistic turnaround management, whether it be efficiency vs entrepreneurial, that the major cause of small business failure is management practice, strategic vs operational, and even issues around strategic positioning.

Turnaround strategies can be classified into two groups (Smith and Graves 2005:305, Harker and Sharma 1999:37) – efficiency strategies and entrepreneurial strategies (Smith and Graves 2005:305). Smith and Graves describe efficiency strategies as those rectifying inefficient operations, i.e. about cost-cutting and asset reduction, while they describe entrepreneurial strategies as those that reposition it with respect to its current or even its new markets. Smith and Graves (2005:306) quote extensive research on efficiency-oriented strategies, where the common argument was that efficiency-oriented recovery strategies are essential for any successful turnaround. However, given the scarcity of equivalent research in SMEs, we get a hint of the added complexity of SME turnaround in a recession from Latham (2009:181-183) who states that the strategic response from business is more complex in a recession, with the consequences of that complexity often more dire for small business, and that small business responds differently to a recession compared to large business because large business tends to react by cutting costs while small business tends to react by market segmentation tactics. Boyle and Desai (1991:39), in their paper on SME turnaround, observe that most of the causes of failure seem to be internal to the firm, with a major reason for failure being lack of management practice (Lawrence 2008:89), with the key missing element being lack of control over operations, without which business has little chance of long term survival in a competitive market (Boyle & Desai 1991:40).

Complementary to the above, Pretorius (2008:21-22) writes that the cause of decline or failure is often classed as either strategic (external) or operational (internal) in nature. While it is easier to respond to operational challenges than to strategic positioning challenges, strategic challenges require quicker action. Furthermore, Pretorius suggests that turnaround is generally less severe if it is due to operational weaknesses, because they can be corrected with relative ease and visibility, while strategic challenges require directional change and high-risk expectations typical of new venture creation. An incorrect, albeit new strategy, could therefore have disastrous consequences for the business.

Beyond turnaround strategy, successful, sustainable turnarounds usually involve substantial strategic repositioning of the business (Gadiesh, Pace & Rogers 2003:42). The strategy is based on leadership having a clear point of view of the future, and by evolving the business model in line with this. Equally important however is that the operating model evolve to support the growth strategy outlined by the business model (Kapur et al 2006:11).

So there it is, a small introduction to the heart of turnaround from the voice of academia on the subject. There are huge implications for a CEO in the above text, as the leader that needs to make the decisions. And note how many critical decisions there are, as subtle as they may seem! In my experience, the issue of entrepreneurial thinking and market positioning are especially critical to a successful turnaround.

In closing, there is so much business can learn from academia, and so much academia can learn from business (practitioners). I have made it part of my routine to regularly bring business and academia together. Hmmm, I need to write all my experiences over three successful turnarounds in a book one day. Even the one unsuccessful turnaround taught me a whole host of lessons I would like to share with you one day!

Six Short, Sharp notes on your Personal Branding

2011-08-06T08:52:00.004+02:00

1. Every single person with both a heartbeat and a burning desire to make a difference in the world is already way ahead of the game. You've got to have both to start with!

2. The essence of personal branding is how you market your value to the world. Indeed, that's the secret - the ability to identify and sell your special skill into your selected audience.

3. My brand happens to be what it is, and it works in powerful ways for me. Yours is completely different, but you must believe with every fibre of your being that you can add tremendous value to the development of others, even on a global scale.

4. Having unflappable self-belief and an indefatigable desire to achieve your goals are non-negotiable.

4. Don't try and imitate - build and own your own space, then package it and sell it. Sure, consider self-help books and other advice, and remember to wrap lessons around you. Never wrap yourself around those lessons! Build your own brand! You've got to be authentic in terms of who YOU are! "You were born an original. Why die a copy?"

6. Remember, EVERYBODY has lessons to teach the world, no matter what your station in life. Are you ready to bring them to the world?

READY?
STEADY?
GO DO IT!!!!!

My big lesson since being interviewed by Newsweek

2011-08-04T13:34:00.000+02:00

I wrote a piece last month on my experiences on having been interviewed by Newsweek for the Davos special edition.

Well, I certainly grew a lot and learnt a huge amount from this intervention, the first lesson being to put your answers in context when faced with international media questions, as opposed to answering them as if you were speaking to a peer who might already understand your thinking.

For example, I was asked one or two questions, the answers to which are not necessarily the generally expected ones, but which are factual and based on published research as well as years of experience in e.g. international SME development as a banker, or credit granting in both the business and retail context. The more I reflect on it, the more I think I should have preceded my answers demonstrating an understanding of the generally held views, and then building my answers from those, thereby explaining why I was answering in a particular way.

Hmmm, the outcome of the interview is going to make for some interesting reading, even if I say so myself! Another lesson learnt.

Budget cuts? Best you measure the shareholder value created by your corporate marketing!

2011-08-04T11:48:00.005+02:00

The first victims of cost cutting are often people, training, marketing, travel and general expenses. While some of these are understandable, others, in this case such as marketing, may require at least a second thought before it becomes a target of budget cuts.

Before I start, it's probably useful to define marketing first, as it's unfortunate that so many see marketing as consisting merely of advertising and perhaps a logo. In this instance, I am talking about the full value chain, from branding to shareholder value measurement, whether it be market research, market strategy, marketing strategy, logo, corporate dress, advertising (TV, radio, print, billboard etc.), culture and language, PR, internet, social media, data mining and direct (mail, call-centre, SMS, MMS etc.) and many more.

The thing is, as marketers, we're notoriously bad at measuring the real success rate of our initiatives. We get interest, some of which are converted to sales, may tens of thousands of sales. We design and implement a new logo or colour scheme, and are content to say we added an extra stripe, or converted our colour-scheme from blue to red. We cross sell and up sell, and are pleased that there was good take-up. All in a world where a success rate as low as 2% (e.g. direct) can be accepted as good.

However, when it comes to the board and shareholders, saying we spent $x million and generated y sales with a revenue increase of $z million or a book increase of $p million with a customer growth of q% and a churn reduction of r% may no longer be good enough. It's not even good enough to estimate our Return on Marketing (ROM), Return on Investment (ROI), or heaven forbid, our ROE (Return on Equity). Indeed, shareholders are becoming increasingly crusty, wanting to know to what extent the efforts created shareholder value, and whether the shareholder value created is justified by the level of expenditure. And even this is not good enough. They want to know how we improved the lives of our communities, and reduced our carbon footprint. It's almost as if you require marketing to be mixed with mathematicians, which in turn need to be mixed with corporate financiers, in order to properly justify the level of expenditure. More on the latter two aspects in a later blog though.

As a corporate marketer, if you're happy with your ability to measure your full balance sheet, cash flow and income statement impact, then there's no need to read further. However, with some big global banks planning to shed 10,000 jobs each over the next few years, the message is clear - each functional unit, including marketing, need to become much more explicit at demonstrating their value.

Consider these questions:

Can you quantify your brand equity with qualifying assumptions, and determine the shape of the distribution curve (error) associated with that estimation. This is a 'balance sheet' impact, an assessment of the future value you are likely to capture, but who are not yet your customers.
Have you considered the value and extent of customer-oriented training required to be sure that your own staff reflect your brand as accurately as your advertising is doing it?
Can you quantify your customer equity (future looking) with qualifying assumptions, and determine the shape of the distribution curve (error) associated with that estimation. This is a 'balance sheet' impact, a real balance sheet impact (in the case of debtors or embedded value as well as the required funding arrangements), a cash flow impact and an income statement impact
Can you qualify the customer lifetime value per customer, and what are your qualifying assumptions? Again, this could have a full financial impact
Can you show which customers, at an individual level, are not optimised from a risk/return perspective, and what you will be doing about it?
Can you convert all of these measures into coherent messages in terms of EBITDA (earnings before interest, tax, depreciation and amortisation), EPS (earnings per share), HEPS( headline earnings per share), and contribution to EBITDA/EPS/HEPS?

If few of the above can be done, then there's no wonder that marketing budgets are being cut. It's because they cannot demonstrate the value, or because it is difficult to assess the amount of value created by the prevailing level of spend. Furthermore, if you're not measuring the value, then the unknown element of wastage is probably larger than you would like to admit!

The challenge is clear - it's no longer enough to say:

Customers (value) acquired
Customers (value) lost
Customers (value) retained
ROM / ROI

Instead, you've got to be able to say:

Change in brand equity (value to be realised ...)
Change in customer equity (new products, new channels, cross sell, up sell ...)
Balance sheet impact
Income statement impact
Cash flow impact
Change in EBITDA
Change in Earnings
Change in EPS/HEPS

Do this (it's not rocket science), and you will have your shareholders eating out of your hands. Don't do it, well, then be prepared for those cost cuts!

This insight was the subject of a paper I wrote in 2008 which I now consult on. Given that the subject survived the critique of some of the best marketing minds, and given the state of the global economy particularly in terms of cost cutting, the time is right to up global marketing's measurement game.

Endurance sports and sustainable business - one and the same discipline?

2011-07-30T12:48:00.002+02:00

greenjersey.wordpress.com

paris-brest-paris.org

I am riding Paris Brest Paris this year, a non-stop 1230Km event from Paris to the tip of western France, and back. The event is the oldest cycling event in the world, having started in 1891, and only happens once every four years. This year's event, the 17th, starts on 21 August 2011.

Training
Just as the discipline of continuous training applies to an endurance sport, so the discipline of continuous training applies to you in your business. Keep reading, keep interacting, and keep networking, to learn, and to become a highly tuned instrument in the face of your competition. Without discipline in training, you will NOT go the distance. You have to continue with your training regimen, in spite of cold, rain, wind, indeed, hell or high water! Just as in business, you need to keep on top of your field, in spite of how busy you may be, and in spite of the pressures in the business.

Tuning

crplteen.wordpress.com

Before and after every ride, much time and effort goes into making sure that the tyre pressures are correct, that the cable tensions are correct, that the wheels rotate freely, that the brakes are effective, that all of the controls such as handlebars are properly aligned, that the handlebar tape is still fit for purpose, and that all nuts and bolts are appropriately tensioned. most often it is just a subtle tuning that makes a world of difference to the bike. Just as in business, it's the little things that can make a huge difference to the performance of your business, although you may need to look over the entire business to find those little things!

Washing
After most rides, and certainly all major rides, a good wash gives you an opportunity to ensure that everything stays in peak working order. You get rid of all the dust, mud, tar, insects, leaked carb drinks, sweat and all sorts of other gunge in the process, returning the bike to its most efficient state. Like a bike, a business wash makes sure that the systems are all operating appropriately, that staff are performing to requirement, that dirty processes are optimised, and that your products, channels and segments are each profitable in their own right! Anything that doesn't meet requirement needs to be washed away.

Mental preparation

thefitnessexplorer.com

Probably the most significant attribute of success is tenacity, and persistence. SHEER GRIT! Your muscles are screaming from too much lactic acid! Your butt is sore, your hands are sore, and your feet are sore. You have sunburn and are dehydrated. Even your tongue begins to stick to the top of your mouth with alarming frequency, and begins to get painful from having to continually release it, as there's no saliva to act as a lubricant. You are low on carbohydrates and are physically exhausted. So exhausted that you begin to hallucinate! Your head feels too heavy to hold up. You are hardly maintaining enough speed to stay upright. BUT YOU PUSH ON. And finish events over many hundreds of kilometers. In business, you will take heat from bosses, peers, colleagues, shareholders, academia, the press, and more over the life of your career, and in various measures. It is up to you not only to be able to deflect criticism, naysayers and doomsayers, but to continue motivating your team whatever the adversity you face. Through our historical heraldry, my family motto is per adra ad astra - through adversity to the stars. Never was a truer phrase ever spoken!

Ultimately, I also think that if you're successful in sport, you'll be successful in business, and vice versa, as long as you stick to it with a clear plan of doing the right things, however long it takes. As participating in sport is as much a passion as conducting business to world class standards, I will continue to draw analogies between the two in the hope of learning more from the similarities, and even the differences, between the two disciplines.

The evolving business speaking landscape

2011-07-30T11:48:00.002+02:00

OK, I haven't really been around THAT long, but it's been long enough to realise that the way we relate to our colleagues and peers has changed dramatically over the recent past, and I'm loving the evolution.

In the 90's, it was all very, very stiff and formal. It was probably even more so in the 80s, but my experiences there were fortunately limited to part time student work. The 90s were however formal enough to have my nerves on edge, my kneecaps knocking and my voice becoming that of a teenager all over again at the thought of having to interact in any way with my business seniors, never mind asking a question in public. And that was just within the company. Interacting with your peers in the industry was something even more intimidating. And heaven forbid that you cracked a joke. While much probably had to do with developing my own confidence in the workplace, it largely seemed to be that to be a professional meant a total incompatibility with humour. Business speeches were boring, contrived even, with level tonality being the order of the day. Speakers stood behind podiums and did not move. Speeches were written on paper, or on computer, and these were largely read. It was like there was no person behind the words. Just noise. Like the purpose of management back then seemed to be to intimidate, the purpose of being a speaker seemed to be largely to inform.

Well, things have changed significantly in all but the most officious of occasions. I have presented talks and papers in Africa, Europe and North America (and soon in the East), and the overriding impression that it is becoming more acceptable to be more natural. Indeed, to be more of the person you are is seen as having significant value in a speaking context, rather than trying to be a clone of a clone. And that's a great opportunity for enriching your personal branding!

Indeed, part of the responsibility of a speaker today is to entertain, to inspire, and to motivate. You probably can't do this without a core message, but it is no longer enough to simply have a message to give through a microphone. I can read messages like that anywhere, at my convenience! Entertain, inspire and motivate a call to action in your audience! Make it worthwhile for the inconvenience of them having to be there in the first place!

Technology is the new smoking, and other snowclones

2011-07-28T15:09:00.002+02:00

I was just thinking about these little phrases where "something is the new something else". So looked up a few while trying to get more creative about the future of global financial services branding :-) :

Food is the new fashion
Twitter is the new Facebook
Old is the new new
Small is the new big
Black is the new white
Conversation is the new attention
Pale is the new tan
Meaning is the new money
50 is the new 40
Fugly is the new pretty
Bandwidth is the new black gold
Hot is the new normal
Pink is the new black
Quiet is the new loud
Random is the new order
Enterprise is the new legacy
This is the new that
Fake is the new real
Foodie is the new forty

... and ... Google before you Tweet is the new think before you speak

BTW, these things are called snowclones, and the above form is just one variant of them. Indeed, snowclones seem to be a whole internet subculture in itself, and someone even put up a snowclones database at http://snowclones.org/index/!

Do you have any interesting snowclones in your list? What snowclones would best talk to the topics of today's strategy and financial services?

Ready to start your own business? It's good for the global economy!

2011-07-28T14:40:00.003+02:00

You're talented, passionate, and have developed a level of credibility in your industry. You're hard-working, well read and up-to-date in your field. You understand the interaction between your discipline and those around it, and how your area of speciality fits into the broader industry, and the broader economy. You have a good rapport with your colleagues and your industry peer group. Even more, you have received industry recognition for your achievements. In a nutshell, you're successful.

Yet you're frustrated. There's yet ANOTHER business meeting, ANOTHER restructuring, ANOTHER drive to ANOTHER less than productive meeting. It seems you're going around in circles, redoing what you did a few years ago (but that wasn't appreciated at the time). You're aware of the corporate politics, where so much seems to be going on that is not in the best interests of the enterprise. In a nutshell, you're not feeling as productive as you could be. You're simply not inspired.

The normal route would be to look for another job, which happens to be in another corporate, which happens to have the same constraints to leveraging your creativity and contribution. The fact is, there are some people that fit the rules, regulations and culture of a corporate enterprise, and there are those that do not. Be careful though not to confuse not being a corporate animal, with being lazy. Some people just don't want to be at work, almost irrespective of what's on offer. Yet if you feel constrained by a corporate environment and have energy and zest, why not consider starting your own business? The global economy needs exactly this type of person right now...

Starting a business needs a whole host of precursors to be in place, perhaps starting with something to sell and someone to sell it to, with write-ups of many similar topics pervading the internet.But the most important thing to realise, is this often overlooked type of business is increasing in importance as the enterprise form of the future. The financial collapse of 2008 is far from forgotten, and the impact of the global recession will still be felt for many years. As a result, large companies will continue to downsize, while smaller companies will begin to increase.

Already a major driver of employment and GDP, SMEs will continue to grow in importance in the global economy. As large businesses the world over continue to downsize (RIM, HSBC and Lloyds come immediately to mind) perhaps the timing is right for you to begin reconsidering the world of work, finding work that works for you. Perhaps soon, you will become an employer, and that's when the multiplier effect of the SME machine begins to kick the global economy back into action! For another way of looking at it, why spend time building someone elses business when you could be building your own? This sentence has made even me stop and think...

How to influence global audiences to get the outcome you want

2011-07-27T21:08:00.001+02:00

The Retail Banking Africa conference has just finished. While Africa consists of 54 countries, the conference audience consisted of bankers from about 50 banks from about 30 African countries. I was an invitee, and I chose to speak on how the continent could leverage the BRICS Economic Grouping and the Africa Free Trade Zone to the benefit of the entire continent. BRICS is an acronym for Brazil, Russia, India, China and South Africa, a grouping of countries set to become the major economies of the 21st century.

So what did I want? After all, the first thing about leadership is to have a clear goal. In this case, I wanted to persuade Africa, as represented at this forum, to agree that the burning platform I created in their minds was enough of an issue for us as a continent to take action on, again, as a continent. I believe I achieved influencing the desired outcome. I got enough buy-in to create a fledgling African Banking Union, a forum which could be used to determine how the continent as a whole could leverage this global opportunity. I also achieved the nomination of it's first chairman, a Nigerian, to set an initial agenda for the forum. That's quite a lot done within an international audience in just a few hours! I really hope he takes this as a base to build something meaningful with. It can be an incredibly powerful lobbying unit.

I learnt lots of lessons in this process, building from my desire to achieve a very particular goal. I learnt that words are extremely powerful if chosen carefully. With a voice that projects naturally, I exercised all my skill at pausing at the right places, varying my tempo, and varying the volume of my talk during my session. I built my argument upon layer upon layer of well researched fact from credible sources, and demonstrated just how hot and real the burning platform was. I pre-empted naysayers by countering with a simple statement, something I could say with passion because I wholeheartedly believe in the seriousness of the burning platform - "Well, you can continue to sit on your butt and do nothing, or you can get up and make a difference. Which are you going to do?" I followed this with a very powerful imperative, "Choose!" I lobbied in the passages long before my slot, hearing opinion and modifying my tack based on the feedback. And then I stood in front of this formidable and highly critical audience, and spoke my heart out.

The first lesson was how incredibly well it all worked, quite frankly beyond my wildest dreams, probably much due to the simple adage of "Proper Preparation Prevents Poor Performance". Then, in words not unusual after my session, words such as 'motivational', and 'inspirational', were mentioned by the chairperson. I left the stage, delighted with the outcome, and amazed at how surprisingly easy it was to influence thinking at this level, if you believed enough in yourself and your ability to do so. Indeed, I am left in awe of the power of a simple recipe of fact + heartfelt belief + passion are in achieving whatever it is you desire.

My next goal is to tune my message for the top 50 biggest companies in the world, as I lead a roundable as a member of Future Global 100 in Hong Kong on 3 November 2011, a forum of leaders discussing the future of the global economy. Now it all starts again, defining exactly what is it that I want to achieve from this session, and how to integrate those outcomes with the outcome of this session.

Mentoring is also a leadership responsibility

2011-07-25T16:16:00.000+02:00

I love mentoring young people. It's not merely in response to the call to leadership to help grow and upskill new talent, it's because I really enjoy chatting to enthusiastic youngsters to see how I can help make their dreams come to life. And when it comes to pass that I was able to help in a small way, well, how much more fulfilling can life actually be than to see someone flourish under your advice!

Being a mentor is probably a privilege that I have come to realise quite late in my career, and perhaps just as well as there is quite a lot of skill and responsibility involved to properly interpret what it is that the young person is trying to say, and trying to achieve. I say this because I believe that you can't really properly guide someone if you haven't yourself trod the path before.

So, onto real mentoring then. Teboho Mogoto approached me looking for a mentoring relationship. Being curious to understand how he interpreted our relationship, I asked him to write a short piece on his experience. Here's what he had to say:

In my search for a mentor, I finally reached out to Guy Pearce the CEO of New Business Development at the JD Group in SA. He is the most humble, knowledgeable and friendly CEO one can meet out-there with a great sense of humor. Being with him in His office for the first time, didn’t feel like being with someone with great power and high authority but being with a brother, a best friend, a father and someone you can trust with your most horrible secrets, lol…We are now in a mentoring relationship, as he has designed some projects for me to work on and he’ll be there for me every step of the way providing any kind of help I may need in the successful completion of these projects. The man is amazing, every member of his staff including the security guards to his offices are allowed to walk into his office and talk to him directly & even share their own jokes with him.

I really enjoyed his point of view because it taught me that not only are hard skills and experiences invaluable in a mentoring relationship, attitude and living by example can also be invaluable in helping to shape young minds!

Ultimately, while mentoring and mentorship are possibly quite difficult to define with precision, it is really about the transfer and leverage of such social capital that helps our societies become more productive over time. I look forward to these sessions, indeed, examining my diary shows that I have an appointment with another mentee on Friday. I can't wait!

What do your employees see as your strengths?

2011-07-25T09:04:00.000+02:00

Sometimes it's useful getting an external perspective of your strengths, and the means to do so is not necessarily formal...

Staff induction is held every month within the context of my major shareholder, and even within my own business. Of the 20,000 odd employees, about 50 staff, a mix of both old and new, attend for a couple of days each month to catch up on what's going on in the business, from the mouths of the senior executive team.

At the end of these sessions, the induction facilitator writes up the feedback. At each monthly feedback session, my slot is consistently one of the top ranked in the business. Looking only at the last three months, here's what our employees have to say about me:

---

Course delivery: Which presenter/s stood out for you and why?

· Guy Pearce x 8
· Guy Pearce and all other CE's for their contribution in making the JD, a group of dedicated people(team) to better service and the entire chains

·         Guy was very inspiring
·         Guy Pearce - motivational speaker
·         Guy, very motivational
·         Guy Pearce went the extra mile in terms of motivating and involving the audience
·         Guy Pearce spoke about business the African way
·         Guy Pearce. Innovative and always up for a challenge

· Guy Pearce his passion to be more than what he is now and to continuously develop himself, he is a natural motivator and gave me the motivation to do more

· I think all the presenters were exceptional but Guy stood out, all presenters really brought to life their subjects were totally engaging

· Guy Pearce Very inspirational

· Guy - energy and passion came through

· Guy Pearce - great energy and enthusiasm

· Guy Pearce. Gave a presentation on business and was also a motivational speaker.

Which presentation stood out for you and why?

· Guy Pearce x 3
· Guy for something to happen you need to step into it

· New Business (Guy) - showed the opportunity that all JDGers have and where we are going

· Guy - loved his energy and motivational angle

· Guy Pearce very involved, insightful and motivating

· Guy Pearce - Felt as an audience to a motivational speaker - well done

- Guy Pearce - he speaks like a motivational speaker and made me realise that if you want something you must go and get it and never doubt yourself

---

There you have it, out of the mouths of our staff - my strengths are Energy, passion, enthusiasm, motivation and inspiration! These are all vital qualities of modern leadership.

So, what are your strengths, according to your staff? This is an important question because your staff's perceptions of you should be used as an input into how you fine tune your message for them. Your staff look to you as a leader. It's important to know what it is about your leadership that keeps them following you.

PS In June, July and August, I was also the ONLY presenter NOT to use a Powerpoint presentation to support what I had to say! Can you present and get your message across without Powerpoint? Can you inspire your staff without one? Hmmm, this is a topic for another post on another day!

Leadership: Action screams louder than words!

2011-07-25T08:45:00.000+02:00

Single vision. Single goal. Team. Unity. Tight unit. You've heard it all. You find it in all the best management books, courses, conferences. Even in internal training. But then why is it so hard to find these qualities in abundance in large businesses out there?

I like to believe that I have an executive team of note, in a business that qualifies as large. In international speak, my team consists of a CFO, 2xCOO, CIO, CMO and CHRO. I hope they read this so that they can disagree, even publicly, whether that's true or not, but I believe it because we spend the required time together to be sure that everything we do, whether in finance, operations, IT, marketing or talent management, is aligned to a common goal, a goal we spent days (and nights) building, together. In fact, we are so aligned that we used to joke that whether it was myself or any other member of the team invited to represent the business, the message would have been expressed as well as it would have been if I was doing it myself! Indeed, I think this is a critical characteristic of a great, bonded executive team - that anyone in the team can speak on behalf of the team.

The above may not sound extraordinary. That is, until I ask whether you, as a c-level executive in a large business, feel that you are part of a trusted team, in other words, whether you live in a team level environment free from silo thinking, and that is open to the discussion of ideas, challenges and risks across silos. I ask this question because the executive mentality still exists that not all members of an executive team 'need to know' the detail of what is going on in various parts of the business at the same time. Really! But why not? The only reason I can think of is that those executives don't trust one another? How can each executive play a similar role leading the organisation strategically, if they all don't know what's going on in various parts of the business at the same time?

So what's my leadership style? My belief is that if you don't have an executive team you can trust with the interests of the business, then you have the wrong executive team. Not only is this leadership style good for succession planning on multiple levels, it is also good for bonding, and for further enhancing the level of trust in the team, where everyone knows that everyone else on the team has the best interests of the business at heart, and where anyone in the team can stand in for almost anyone else should the need arise. Furthermore, and most importantly, it avoids the dreaded inconsistencies in the messages of different members of so many different management teams around the world, inconsistencies that staff readily pick up, to your detriment, make no mistake about that!

In conclusion, if you say that you have a single vision, and indeed, that you're a team, do your actions, or the perceptions of your employees, contrast those words in any way? Do you measure it? If you feel there may be a bit of a mismatch, note that it's never to late to apply corrective action!

On being interviewed by Newsweek

2011-07-15T21:39:00.001+02:00

My thought map

I received an interview request two weeks ago from a Newsweek correspondent.

Now there's no hiding that I was a newbie to international media, particularly about being interviewed by as prestigious a global publication as Newsweek (for the Davos special edition), because I was quite frankly very excited about the prospect! At the same time, I was really curious how they came along to selecting me!

The interview request came with a set of four question categories they would cover: My business performance, the state of the South African financial services industry, opportunities and threats in South Africa, and opinions on the BRICs economic grouping (Brazil, Russia, India, China, South Africa).

The day before the interview I duly went about structuring my thoughts as per the thought map in the image, to give myself some structure to think around. I also prepared some opinions based on the facts at hand. The latter is pretty important to me, because in a position of leadership, I expect no less than applied thinking. So I interpreted my mind map, and generated some ideas on the BRICs Group in particular, from the perspective of how to leverage the opportunity of this emerging alliance.

Along came the interview, and we flew over most of the matters I had prepared for, discovering instead that they were keen to explore some matters around SMEs (small business)! Now I have some global credibility in this matter, having presented around the world on SME development to business, academic and technology forums, but I was not quite mentally prepared for the questions. However, I don't think it went too badly, considering that I have some pretty sound opinions of the state of SME development, based on years of academic research on the subject as well as years of practical experience in banking SMEs.

In retrospect, I think I should have spoken a little slower, perhaps have had a more formal posture (the interview was recorded on 'video'), and perhaps taken a second or two to gather my thoughts after each question was asked! I will now wait to see how the interview will be published, when I will no doubt learn more about how to conduct responding to the media in this way! Hmmm, I think I had better find myself a media coach for next time!

Thank you Newsweek for the opportunity!

Here is the content of the invite received, per fax.

Four reasons why I'm very comfortable with comfortable banking!

2011-07-08T21:17:00.001+02:00

Proudly displaying the customer experience trophy

I've decided I can become very used to comfortable banking! And couldn't we all do with just a little bit more of that!

Maintaining your financial affairs in the midst of international travel can become quite an intense matter, with all sorts of issues potentially coming between you and successfully concluding the activity you're trying to conduct. With all of that potential stress, the last thing you need is a poor customer experience.

Perhaps I was just lucky, but the bank I chose to deal with, probably more due to proximity than anything else at the time, was Canada's TD bank, one of the largest in the country, transacting specifically with the Neyagawa/Dundas branch. To cut it short, the customer service was exemplary, and I left with a smile on my face. That's normally good enough, but running a customer facing business myself, I was really keen to try and articulate just what it was that had me feeling so good about the experience. Herewith a short analysis:

Firstly, there were smiles from the tellers on duty when I walked in. SMILES! I don't think I've ever walked into a bank anywhere on Earth where I was greeted by smiles from everyone.
Secondly, the efficiency with which I was directed to the right person to help me was great, so nothing short of expectations there either. An ice cold, quality mineral water was also very welcome on a very hot day, having cycled to the branch to conduct my financial affairs.
Then, meeting a financial services representative, there was some joviality as we had a short chat about my stay here during our holiday. This is tricky ground, as some people would prefer to get straight to the transaction at hand, while others would be quite happy to have a short chat about their experience. I guess the real skill here is being able to read your customer, and to determine the correct level of introductory conversation.
Finally, the transaction was conducted swiftly and without error. This is a huge expectation I have when conducting business with a bank, on both counts, even though my transaction was probably not necessarily the run-of-the-mill banking stuff. Well, quick and friendly works for me every time. Note, this is not to say I don't tolerate error. It simply means that if an error has been made, that I expect efficiency at resolving it.

Of course, I left with a smile on my face, not omitting to take a picture of the trophy above, a model of a green leather chair. You see, TD Bank leverages the 'comfortable banking' imagery, probably rightfully 'selling' the comfortable experience I had just lived. Perhaps branch 3171 was an exception in terms of customer service. Well, I hope not. Indeed, I hope the competition between branches is very high, with the almost singular objective between them being to win the coveted trophy, thereby keeping their customer service standards up and thereby continuing to delight the customer.

Well done branch 3171 for making my day!

Serious about leadership? Then there is no downtime

2011-07-07T14:53:00.000+02:00

I am on week three of three weeks of well-deserved leave, visiting family in Canada. Normal folks switch off entirely during leave, but as for a leader, I don't think the job is ever done, and there's never downtime. This does not necessarily mean continuing work, although if you're passionate about your work you may never want to switch off, it's rather that a leader needs to continue being an example to those around him/her, irrespective of the situation he/she may find themselves in.

There's nothing wrong with maintaining professionalism while having fun, because maintaining a sense of professionalism can open business doors when you least expect it. Realising that leadership is not only a business construct, I specifically enjoy interacting with people and asking them about their business, or what they do for a living. After listening, I sometimes even throw in a few tips given my experience, that is, if it's welcomed (always ask), and as a result, not only does your social network grow, but so too does your business network. The next thing you know, you're being called for advice or comment on business matters, further strengthening your capability and reputation as a leader in places you would never have imagined!

Remember, quality leadership leads by example. Set a bad example anywhere and at anytime, and you could soon find your reputation in tatters!

Happy holidays!

Qhubeka Bikes for Life

2011-06-13T15:58:00.000+02:00

This is a photo of my Qhubeka bike. It is almost permanently parked in my office - except when it's being used on a coffee run - where it serves as a great conversation starter.

Perhaps it doesn't look like much, being a durable, low maintenance, all-steel, single-speed, coaster brake machine, but to many people in the poorer communities, it changes lives daily.

In most rural communities, the distances to services of almost any kind are vast, be they schools, clinics, general dealers, or even friends and family. Introducing these bicycles into rural communities changes everything. Suddenly the walk to school, that may have taken hours, now takes minutes for the kids. A visit to the clinic can now possibly be considered with more ease, and the weekly visit to the nearest general dealer by dad now becomes something more of a pleasure, given the steel bicycle rack, which can carry a lot more, with more ease, than a plastic bag could.

How does it work? Well, businesses sponsor money to a trust, which then pays for the manufacture and distribution of these Qhubeka bicycles into selected communities. But there's more. Anyone in the community planting 150 seedlings, an activity which is carefully recorded, earns you a bicycle. So not only does the presence of bicycles significantly enhance the productivity of the community, significant community greening is also an outcome of this initiative.

Besides community development and greening as per the above, there is also a small enterprise development context to the initiative in that hundreds of bicycle mechanics are trained in order to be able to support and repair the bicycles within the communities.

All said, it's a great initiative which I am proud to be associated with in my own small way.

So, what did I mean by 'conversation starter' in my opening paragraph? Well, for every senior executive that comes to my office, the presence of the bicycle gives me an excuse to tell them the Qhubeka story, which may one day result in someone else enthusiastically taking up the challenge to spread the word of this life changing initiative.

CEO Lessons in Leadership

2011-06-13T06:34:00.000+02:00

Seven important lessons learnt as CEO

Personal Branding
Build your profile by communicating your successes, giving credit where it's due.

Be multidimensional. This will automatically create new markets for you and grow your profile
As a result of being multidimensional, you will be able to continually find and build new markets to communicate your successes into
Communicate ALL your successes into these channels

Success

Things do go pear-shaped from time to time. It's how you respond during those times that determines the type of leader you are.

Success does not mean an absence of failure

Teamwork

Everything depends on your team. Remember it, and because of it, empower your team to be great in their own right. There may not be an 'I' in 'Team', but there most certainly is a 'me'. There is no reason both ambitions can't be fed.

Choose REAL people, with REAL lives, REAL achievements and REAL ambition
Nurturing trust and honesty between team members gives EVERYONE the freedom to grow!

Sustainability

Businesses come and go, markets change, and environmental shocks happen. Always be prepared with your next steps.

Nothing is forever. Plan your next career steps long before you need them

Hmmm, seven. Now where have I heard that number before. Maybe I should write a book!

A CEO view of what I look for during the social media review of a business partner

2011-06-12T16:16:00.000+02:00

This will be a short blog.

Following on the blog of what a CEO would look for during a social media review of a job seeker, I asked the question about whether my perspective would differ between that of the individual job seeker, and that of a potential business partner.

The short answer is yes.

Following on from the previous blog, I would be unhappy to see that a potential business partner's Twitter posts reflect nothing but core business.

I would be particularly interested to know what community development projects the potential partner is involved in, what enterprise development projects it is part of, how it demonstrates that it is looking after our planet, how it transfers knowledge, and even perspectives of the management paradigm adopted by the partner.

Any business can and should post issues related solely to its core business. But by doing this alone, the business will come across as a business without heart, without character. By being allowed to take a virtual, behind the scenes look of the business, the business will display a persona that would give me a much better idea about the desirability of conducting business with that partner. However, note that all the non-core messages should at least somehow RELATE to the core of your business.

Again, keep it real!

A CEO view of what I look for during the social media review of a job seeker

2011-06-11T19:44:00.000+02:00

For a job-seeker today, potentially treacherous waters await. Not only is the requirement there to deliver a professional and succinct resume, but also that your Twitter account and LinkedIn profile are professionally presentable.

For the above reason, you find much recommendation to keep your LinkedIn profile professional, and to increase the referential integrity of what you have to say about yourself by getting recommendations from within your network. You also find recommendations to keep your Twitter account professional by posting articles of value in your career-space.

In terms of the basic recommendations for LinkedIn, true, but as far as your Twitter account is concerned, boring!

When I review a candidate's Twitter account, I want to see a human being. I want to understand what makes the candidate tick, whether he/she has an optimistic outlook on life in spite of adversity. I want to know whether he's sporty, social, a team player. I want to know whether he contributes to discussion, simply retweets, or expresses no opinion. Ultimately, I want to know the kind of life he lives will reflect the values of the organisation I am recruiting for.

To see only professional tweets on the discipline pursued by the candidate is boring - indeed, I will have already established an opinion on competency by an examination of the candidate's resume and LinkedIn profile. I hope I am not unique, but for me, I want to see the human being behind the resume, and I hope to gain some inkling of that via Twitter. Exhibiting frustration is human, being angry or scared is human. Anyone who would discriminate against someone on the basis of demonstrations of humanness is quite simply a hypocrite.

Now, does this perspective differ between the individual perspective and a business perspective. That will be the content of my next post.

Keep it real!

Brand in the Context of the Marketing Value Chain: Part 2

2011-06-08T11:32:00.000+02:00

Let us spend a little more time on the arrowhead of the marketing value chain, brand.

Recall from part 1 that branding creates brand equity. One of the most succinct ways of communicating this is, that "Brands are the bait that attracts customers". Given this, there are two components to setting up this bait. Without getting stuck on the many definitions of the following categories, broadly, the first component of the bait is creating that corporate identity, the promise that your brand makes to your customers and thus attract them to you, and the second is managing and maintaining the brand. They are not mutually exclusive processes - indeed, there is a overlap between the more strategic corporate identity category versus the more tactical brand management category.

Corporate Identity is about:

Creating unfair mindshare. When customers think of a product or service, does your brand come up in their mind. Above competing brands? If not, you have low brand equity, and you need to have a plan on how to increase it
Converting your brand equity into sales increases the value of your company. The more sales, the greater the value of your company
Increasing the ability to manage risk. The risks I'm referring to here include sales volatility risk (less volatility is good, unless you're offering a seasonal product or service), identity risk (all representations of the brand identity should be identical) and reputational risk (managing staff incidents that can tarnish your brand). In today's world, this is a critical aspect of corporate identity.
Reduced marketing spend. A focused brand knows exactly what it wants to say, and to whom it wants to say it. For this reason, message and media are optimised, which in many cases, actually results in a reduction in marketing spend

Brand Management (Leverage) is about

Bonding with customers, building brand affinity, and therefore brand equity
Acquiring customers - hooking them and achieving a sale
Retaining customers - keeping the brand (and the supporting operating model - this critical component will be a future blog) fresh, alive and competitive
Growing customers - leveraging customer lifetime value and customer equity

There is a fifth element of brand leverage, as indicated, and that is the relationship between brand management and the operating model of the business. For this reason, part of brand management needs to consider productivity, which is a function of efficiency and effectiveness. However, as mentioned above, let's best leave this for another blog.

While it is useful to categorise brand activities as above, progress within the categories needs to be measured. The measure of brand equity is still best achieved through market research, with the important characteristic of that measure being the trendline over time.

Now, a brand's power is in how well it sells your products and services. This will be considered in Part 3

How to create your personal brand

2011-06-07T16:11:00.000+02:00

Much has been written about creating your personal brand over the last decade or so. Having just been invited to be a round table leader to many of the largest businesses in the world at a Future Global 100 leaders conference in Hong Kong in November 2011, I thought it might be fitting to write a few short notes on the topic from my perspective.

A bit tongue-in cheek, personal branding requires you, in no particular order, to:
Think, be differentiated, smile, write emails to grow your knowledge base, argue constructively, express researched opinion, be considerate, send SMSs, be professional, demonstrate thought leadership, laugh, be positive under any circumstances, listen, volunteer, extrapolate the general from specifics, envision, stand up for what you believe in, tweet good content, make thought-provoking presentations, develop local communities, be opinionated with a factual reason to be so, have credibility, comment on a diversity of matters, be subject to the harshness of peer review, not depend solely on experience, take care of our planet, invest in yourself, belong to professional networks, be LinkedIn, think outside the box, network, demonstrate applied thinking, deliver, shape ideas of the future, be optimistic, have results to shout about, be a change agent, to handle any kind of criticism constructively, write, be disciplined, have a diversity of interests, be patient, read, be committed, be willing to acknowledge mistakes, grow those around you, be steadfast in the face of adversity, mentor, and to love what you do!

So what's the above chaos all about? Well, the point I'm trying to make is that there is no quick fix to building a personal brand, as much as some others will have you believe. It is complex, and consists out of so many dimensions as to almost make it uncountable. If anything, the simplification of all this is that be sure to communicate your activities in sustained excellence in multiple media, to multiple people, globally and consistently. At the end of the day, remember that Excellence Always Sells, and this is what your personal message needs to convey, sustainably.

Know that it takes years to build a global personal brand, and takes constant effort. It also requires you to know when to bite your lip! The latter is called upon more often than you may think!

That's most of it, my 2c

Why so many great ideas fail - a researched opinion

2011-06-05T16:44:00.000+02:00

So many folk go on about innovation, new ideas, developing different ways of doing things, yet so few of these great entrepreneurial (or intrapreneurial) initiatives seem to come to fruition, or if they do, few become sustainable. Think about the alarming failure rates of SMEs...

Besides the fact that it takes two kinds of people to make an idea work - those that can conceptualise one, and those that can coordinate resources to make it happen - it also takes a tight integration between these two types of people to make the idea work, sustainably, and that's a link that's often missing, especially during the business growth phase.

Being CEO of a listed company in a New Business Development portfolio teaches you many lessons about why things fail, sometimes even before it reaches the market. It also teaches you that the business school contexts of entrepreneurship are way to theoretical, indeed weak, at the practical level, to turn an idea into money. In this context, I recently challenged business scholars from some of the best business schools around the world (over 40 countries) at an academic, peer-reviewed conference in the US about why academia has failed entrepreneurship. What was surprising was the general acknowledgement that there's truth to this... including the fact that academia is too far from practice, and that academia seems to be getting caught up in it's own dogma, and seemingly failing to add real value in a world that needs practical research into SME development.

In summary, if there's no disciplined linkage between the business model (how you will make money) and the operating model (how you will organise resources to make the business tick), you're likely to fail, if not early, at the point of deciding you wish to scale your idea.

-----

This post was inspired by a paper I wrote and presented to the International Council for Small Business in the USA, showing where academia failed entrepreneurship by not sufficiently researching operating model dynamics, specifically since failures here are responsible for most small business failing:

Boyle and Desai (1991:39) observe that most of the causes of business failure are internal to the firm, with a major reason for failure being lack of management practice (Lawrence 2008:89), with the key missing element being lack of control over operations, without which business has little chance of long term survival in a competitive market (Boyle & Desai 1991:40). Furthermore, an important consideration is that the operating model must evolve to support the growth strategy outlined by the business model (Kapur et al 2006:11).

In other words, academics have found that the major cause of business failure rests in a poor operating model and linkages to the business model, and also when changes to the operating model do not keep up with changes in the business model. Having identified this problem though, academics have not found research into operating model dynamics being of sufficient priority, even though it has been shown that this is a major reason for small business failure, an issue of obvious major concern globally. Even more, academics admit the shortcoming:

Studies on ‘operating models’ are lacking (Getz, Jones & Loewe 2009:18; Sharma 2009:iii; Khadem 2008:29; Moore 2008:3, Parnell 2008:1278, Gumbus & Lussier 2006:407).

Brand and Shareholder Value in the Context of the Marketing Value Chain: Part 1

2011-06-05T10:20:00.000+02:00

There's a huge amount of literature of varying quality available on what a brand is, where it fits in, and how it works for you or your business. It can be confusing and indeed tiresome to go through even a small fraction of these. Having presented on brand and the marketing value chain to global academic and business audiences over the years, here is my blog on the position of 'brand' in the end-to-end marketing plan.

Brand has only one objective - to position itself within the mind of your target audience, the higher the better. If your brand is 'top-of-mind' in your target audience, in other words, that your customer thinks of your brand when he requires the products or services connected to that brand, then you've pretty much got it made as far as branding is concerned. The 'measure' of how well you have positioned yourself in the mind of your customer is known as 'Brand Equity'

In the end-to-end world of marketing though, Brand Equity is not enough. It's positioned at the start of the value chain (and indeed overarches it), but somehow this needs to be converted into cash in order for your brand to be meaningful. So far, you simply have a promise, but no delivery on that promise. These are just some of the questions you need to answer when delivering on the brand promise is considered:

Can you accurately identify your target market? The more vague or general the definition, the tougher it will be to support and grow the brand
Do you actually have a product that reflects your brand promise? If you don't, your brand is worthless
Do you have a channel to get that product to your target market? If your channel does not reach your target market, your brand is worthless
Have you priced the product appropriately? Pricing matters, and depends on the market, your product, and the alignment between your operations strategy and the market - low cost (volume) or premium (niche)
Have you got a support service in place to support your customers on acquisition of the product? After sales service is probably one of the most under-rated components of building a sustainable business
Do your staff live the brand? If your staff present a different message to that which your brand is conveying, note that your customers will pick up the dissonance and probably end up NOT buying from you

The above is an element of the process of generating the sale, which converts some of the potential held in Brand Equity, to be converted into cash.

Now that you have a customer, the next consideration is how to resell to that customer. The 'measure' of the resell potential of a customer over time is known as 'Customer Lifetime Value', and the sum of all the Customer Lifetime Value of all your customers is known as 'Customer Equity'. Your next job is to continue building on your relationship with your customer to leverage your Customer Equity.

So far we have Brand Equity, Customer Lifetime Value and Customer Equity. What else remains in the marketing value chain?

At some point, sufficient data will have been collected on your customers to determine how volatile, or regular, their purchasing behaviour is, and how profitable they are for you. This assessment is made in the same type of Risk-Return methodology used in investment analysis, where volatility represents the risk of the customer in the customer portfolio, and return represents the profitability of the customer in the customer portfolio.

Low volatility, low profitability customers typically make up the bulk of your customers, your bread and butter
Low volatility, high profitability customers are your cream, and should be nurtured and treated especially well. They are your best advocates for word-of-mouth marketing
High volatility, low profitability customers do present an opportunity, but are probably best avoided in young companies given the effort required to manage them
High volatility, high profitability customers also present an opportunity, but could also be the death of a young company given their feast-or-famine nature. Too high a proportion of customers in this quadrant creates a huge sustainability risk for your business

Now that we understand where our customers are in our Risk-Return portfolio, we need to create special customer management strategies around these.

Finally, all of these activities end in the measure of shareholder (or owner) value created for the business, and this measure can be contrasted with the potential for value within that customer base, which in turn will close the feedback loop back into your marketing strategy.

To see the academic research I conducted which gave rise to this context, please see http://slidesha.re/lwQWP4 on my LinkedIn profile, as presented to the peer-reviewed Academy of Marketing in the UK

The only way to win from disappointment is to take active control

2011-06-02T11:21:00.000+02:00

There are so many times that disappointments hit us between the eyes in business. Whether it be the entrance of a new and powerful competitor, the loss of a key member of staff, the restructuring of a corporate, or the failure of a new initiative, it simply happens from time-to-time, and that's a fact.

There are two, and only two categories of responses to this, and indifference and apathy don't count because they don't involve action. If you are not prepared to act, then you cannot expect an outcome other than the one you are currently experiencing.

So, what are the two active responses:

The first are negative things like go slows, passage talk and rumor-mongering. There's no need to talk about this because we all know this route will get us nowhere. It is also the easy way out for far too many people, but it doesn't make anything better for anyone
The second are positive things like talking about the disappointment with the goal of achieving a better outcome, and preparing a response that will make you better off.

A case-in-point on positive response was at a previous employer, where my boss actively tried to change everything I was doing, without presenting me with a burning platform to demonstrate that I was off-track in any way. Indeed, I had done my homework, internationally, and could prove that what I was doing was the right thing to do, whereas my boss' proposal, in my opinion, was to dumb-down the department and to take us back into the stone age. I just couldn't do it - so many hard yards had been done on a project that had gained good internal credibility and momentum. So, instead of merely succumbing to the pressure and feeling huge loss, and finding that my boss couldn't argue his case, I spent plenty of my own money proving that what I was doing was the right thing, at peer-reviewed conferences around the world. I saw it as an investment in me!

So what was the outcome? Well firstly, I pi**ed off my boss, that's for sure. But I built up such international credibility in the process, that I was headhunted into a significantly more senior position in another international company, and my self-esteem went sky high to boot. To this day, I am convinced it was the right thing to do for me, and encourage everyone to fight for what they believe in, provided they have the facts to support it. I have since discovered that my ex-boss was moved from his portfolio to something else within the business..., while the investment in self has reaped rewards many times over for me.

Ultimately, the lesson is simple. Either you can succumb to disappointment, or you can fight it, and win. I know what my choice is.