Archives for posts with tag: Business

I’ve recently started taking singing lessons. A bit late, you might say, since I have been singing in choirs for decades, and I certainly wish I’d started sooner.

I have been surprised to discover that almost none of my lesson time is about singing in tune or in time! Everything is about technique – how you breath, how you pronounce the words – and a lot of my practice is just saying the words, not singing them at all. It is really hard to train your body to work in a very particular way: months or years of lessons, hours and hours of practice. You can’t just be told the right way to do it and go away and then do it right – it is more like learning to drive than learning to pass an academic exam. And sometimes you have to be told something over and over again before you are ready to absorb it.

I think I have taken away three wider lessons:
• What you have to do to learn a new skill may be quite different from what you expected;
• Results may take a long time and demand considerable perseverance; there are no short-cuts;
• Hearing something is not enough – you have to hear it at the right time.

That has made me think about the problems of change in a different way. As an example, one of my clients has many junior and middle managers with a fairly low level of financial understanding, and with commercial pressure continually increasing this is holding them back. How should we fix this? The traditional approach would probably be to send them on a short course to learn the “facts” about finance – understanding a P&L, a balance sheet, etc. But perhaps it is not the facts but the practice they are short of, or they are not ready to hear the message? I have done enough short courses myself to know that few of the facts stay in the mind for long anyway. The singing lessons experience suggests to me that that is probably only part of the solution.

Time to think about a new approach!

Admission Free

What do you think when someone offers you something for nothing? I suspect most of us say thank you very much, put it in our pocket or bag … and then often forget about it. The problem is, when we give nothing for it, we tend not to value what we received.

Many years ago I was involved with promoting amateur music events. There were few costs to cover, and the main aim was to attract a reasonable audience, so an easy option was to make admission to a concert free. What happens if you do that? You often get a smaller audience than if you sell tickets at a low price!

Why should that be? Well, put yourself in the shoes of the punter. You see a poster advertising a free concert, which looks interesting, so you make a mental note. Come the day of the concert, chances are you have either forgotten about it, or something else more attractive has come along. Since you have invested nothing, you choose to do the more attractive option. Because the organisers have not made you put a value on the event, you may treat it as being worth nothing, unless something else gives it value for you (for example you know someone performing).

On the other hand, if you have to buy a ticket, even for a nominal sum, you must give the event a positive value. In addition, if you have to buy the ticket beforehand, you have made an emotional investment. You are more likely to remember about it, and less likely to decide to do something else.

Luxury brands use the same principle in reverse. The product itself may not be objectively any better than something cheaper, but the value people put on it is higher, so they are willing to pay more.

Value has a significant emotional component, so pricing is always partly a decision about emotion. Never undervalue that!

Banana Boat

Spotted from the Portsmouth to Cherbourg ferry – a container ship clearly branded ‘Fyffes’. To anyone in the UK (I’m not sure about elsewhere), that means only one thing: bananas.

How many bananas would you get on a banana boat? The banana boxes you see in supermarkets must be about 50cm x 35cm x 20cm (1/30 cubic metre) and I’d guess that they might hold about 100 bananas – so that’s something like 3000 bananas per cubic metre.

A standard container is about 2.4m x 2.4m x 12m, or 72 cubic metres – so that makes about 200,000 bananas per container. Its hard to tell how many containers there are on the boat, but perhaps 100? So maybe 20,000,000 bananas per ship – one between three for the entire population of the UK. That means we need a ship-load of bananas to arrive in Britain every day to provide the average 2 bananas a week that we each eat.

There are several interesting thoughts that follow from that. The first is simply the incredible logistical feat of providing that many ripe bananas, day in, day out, to shops across the land. Demand takes little account of seasons or weather, and bananas are quite easily damaged. Developing processes which can deliver that volume, in good condition and at the price people expect to pay, while having the resilience to cope with the vagaries of nature, is an impressive achievement. There is little to distinguish between one banana and another though – so its only getting those processes optimised that enables you to compete.

Another is the power of such rough and ready estimates. Starting from easy observations and guesses that anyone could make, we can get a pretty good estimate of shipping requirements: we might be 2x too big or small, but probably not much worse than that. Frequently there is no need for high precision, at least to start with, but the courage to estimate is not always easily found.

A final thought is the power of those little labels, When I was a child, it seemed as though every bunch of bananas had a Fyffes label on it. Fifty years later, the association is still instant. I’m not sure how that creates value for Fyffes (does it?), but the effect is unmistakable!

Tyrannosaurus rex, Palais de la Découverte, Paris

Tyrannosaurus rex, Palais de la Découverte, Paris (Photo credit: Wikipedia)

Evolution is the natural process by which all forms of life adapt to changes in their environment. It is a very slow process, in which many small changes gradually accumulate. It is unplanned and undirected: who knows how the environment may change in the future, and so what adaptations would put us ahead of the game? Successful changes are not necessarily the best possible choices, merely the best of those that were tested. Different individuals start from different places, and so the adaptations which seem to work will vary.  Consequently, over time, divergence will occur until different species result, even though each species can be traced back to a common ancestor. But evolution is brutal too: not all species will make it. Some find they have gone down an evolutionary dead end, and some that change is simply too fast for them to adapt to.

Sometimes organisational change can be like this. I once worked for a public-sector organisation which was privatised, so that it had to change from being ‘mission-led’ to being profit-led. Management set out a vision for what it wanted the organisation to become – essentially a similar, unitary, organisation but in the private sector – but was unable to make the radical changes necessary to deliver it fast enough. Evolution carried on regardless as the primary need to survive forced short-term decisions which deviated from the vision. Without a unifying mission as a common guide, different parts of the organisation evolved in different ways to adapt to their own local environments. Fragmentation followed, with a variety of different destinies for the parts, and a few divisions falling by the wayside. Despite starting down their preferred route of unitary privatisation, the eventual destination was exactly what the original managers had been determined to avoid.

What is the lesson? Ideally of course it should be possible to set out a strategic objective, and then to deliver the changes needed to get there. But if the change required is too great, or the barriers mean change is brought about too slowly, the short-term decisions of evolution may shape the future without regard to management intentions. That does not necessarily make the outcome worse in the greater scheme of things: after all, evolution is about survival of the fittest. But natural selection is an overwhelming force, and if short-term decisions are threatening to de-rail management’s strategic plan, it may be wise to take another look at the plan, and to try to work with evolution rather than against it.

Please share any examples you can of similar situations you have experienced below. If you think there might be interesting parallels with a situation you are experiencing, please get in touch.

View of Chernobyl taken from roof of building ...

View of Chernobyl taken from roof of building in Pripyat Ukraine. Photo Taken by Jason Minshull, then digitally zoomed. (Photo credit: Wikipedia)

Have you noticed how often it happens that when things go wrong, they don’t just go wrong, they go horribly wrong? From the truly horrendous disasters like Chernobyl and Fukushima to the merely painful like a company going bust, once things have started to go bad, the interventions people make often exacerbate the situation. Why is that?

When things start to go wrong, there can be a number of immediate reactions, depending on the circumstances. One is to hide your head in the sands, and pretend that there is nothing wrong. That is almost guaranteed to make things worse! More common is the fire hose approach:  do something drastic with the intention of stopping the immediate threat, which may deal with the underlying causes (although it may also exacerbate them), but certainly soaks everything whatever the consequences. Following the analogy, the fire hose is good at putting out some sorts of fires, but inadvisable on oil or electrical fires! In between is the timid approach – not wanting to do any more damage than can be avoided, the attempted cure finishes up being too little and too late. How difficult it is to get the balance right!

Fast disasters…

It is understandable that in a crisis people react by tackling the obvious problems. If your house is on fire, stopping the flames obviously seems more important than avoiding ruining the furniture.  When the situation is relatively simple, that approach works. The problem comes when the situation is more complex. In a crisis, you act instinctively, and you do not usually have time to think through the consequences of your actions. Almost by definition, complexity will bring unforeseen consequences. How many organisations have no more complexity than they need?

What to do about this? There are two possible approaches. You can minimise the risk of unforeseen consequences in a crisis by keeping the organisation as simple as possible. Or you can practice crisis management through exercises and so attempt to learn what adverse consequences might occur and how to avoid them. Or you can do both, of course. Clearly though, both of these have a cost which needs to be incurred when there is no crisis in sight.

…and slow disasters

Slow disasters pose different and much more difficult problems. The fire-hose approach is much less likely; head-in-the-sands and timidity more so. It all starts with ability to acknowledge the problem in the first place.

The organisation’s leaders may not believe that what they are seeing are signs of a problem.

Even if they do think there is a problem, they may not want to admit this. They or people they are connected to may have vested interests; they may be unwilling to admit failure, or believe that admitting problems will damage confidence and make them worse; they may believe that other issues are more urgent.

Perhaps the most common situation is that leaders recognise the problem, but simply underestimate what is needed to fix it. Most managers are optimists at heart, and in deciding what – often painful – actions are required, optimism bias will tend to creep in to minimise the pain. These can be very difficult decisions:  for example, no manager wants to make any more staff redundant than they absolutely have to. However, if the ‘cure’ is insufficient, the problem remains, and will have to be treated again – with the ‘patient’ now in a weaker condition than previously. Underestimating can be fatal: death by a thousand cuts is a phrase I have heard repeated too often, and the consequences for staff can be worse than being bold at the outset.

In summary then, perhaps the message in both cases is the same: optimism rarely provides salvation; taking what feels like unnecessary pain early may do.

Do you have examples you can share of these extremes? Learning what worked or didn’t for others can help! Please add comments below.

Fireworks

How often have you found yourself having a conversation, and it gradually dawning on you that the person you are talking to thinks the conversation is about something quite different to what you thought? It happens to us all from time to time, and normally it causes at worst mild embarrassment as one of you says, ‘hang on a minute, I thought we were talking about  x’ and the other looks bemused. Sometimes though, miscommunication can cause real problems.

Perhaps the most common place for miscommunication to lead to problems in the working world is in emails. Maybe the relationship is a bit sticky already, or perhaps the subject is one which might be a bit emotive. You write an email, for example telling someone what you are going to do. Writing the message down gives you a chance to choose the words carefully so that they can’t be misinterpreted, right? Wrong! Within a few microseconds of pressing the ”send” button, you notice that your computer has started to smoke from the heat in the reply that has just clanged into your inbox. You read it – how could they have misunderstood your intentions so wildly? They must be spoiling for a fight! Your emotion finds its way into your reply, and the exchange just escalates.

Why are emails so fraught? First, they are too easy: we dash them off with little thought. For straightforward factual messages that is no problem. The trouble comes when the exchange has some (often unexpected) emotional content. Although they seem like a way of keeping the emotion out, and so appear to be an easy option (especially when we are worried about the reaction and it seems safer to keep our distance), humans are emotional creatures: we don’t often do purely rational. By leaving out the emotional context of the message, which we detect mostly from body language and tone of voice, we take away the very cues which would help the recipient to know whether we meant to be provocative or were just not choosing our words very well. Poorly-chosen words in the context of a friendly tone and an open expression will usually only prompt clarification, but without these, people usually assume the worst.

Here are five tips for minimising the risk, and getting things back on track if necessary:

  • If you think the message might have some emotional content, don’t rely on e-mail if you can possibly avoid it. Start the exchange face-to-face, or at least with a phone call, so that there is an emotional context. Only once the tone has been set should you follow it up with an email.
  • If you didn’t think the message was emotional, but the response appears to be – or even just indicates misunderstanding – never send an email reply. Pick up the phone straight away to clarify, or go and see them if you can.
  • If you have to send an email which you know might be misunderstood, save a draft overnight before sending it, and re-read it in the morning. You have a better chance then of seeing how someone else might mis-interpret your words, and stopping it before it is too late. I rarely find I change nothing the next day!
  • For really sensitive messages which you have to put in writing, ask someone else to check your words before you send them.
  • If an exchange has gone emotional, apologise face to face – even if you don’t think you have anything to apologise for.

Do you have any stories you can share of communications exchanges gone horribly wrong? Please share them below! Fill in the poll even if you have no stories to share!

Board room

I’m on my way to a Board meeting. My job as a Board member is to turn up about once a month for a meeting lasting normally no more than a couple of hours to take the most important decisions the company needs – decisions which are often about complex areas, fraught with operational, commercial, legal and possibly political implications, and often with ambitious managers or other vested interests arguing strongly (but not necessarily objectively) for their preferred outcome. Few of the decisions are black and white, but most carry significant risk for the organisation.

This is a well-managed organisation, so I have received the papers for the meeting  a week in advance, but I have had no chance to seek clarification of anything which is unclear, or to ask for further information. In many organisations, the papers may arrive late, or they may have been poorly written so that the story they tell is incomplete or hard to understand (despite often being very detailed), or both. The Board meeting, with a packed agenda and a timetable to keep to, is my only chance to fill the gaps.

I have years of experience to draw on, but experience can only take me so far. Will I miss an assumption that ought to be challenged, or a risk arising from something I am not familiar with? If that happens, we may make a poor decision, and I will share the responsibility. In some cases – for instance a safety issue – that might have serious consequences for other people. It’s not a happy thought.

What to do about it?

In order for a Board (or any other body) to make good decisions, it has to be in possession of appropriate information. These are some of the rules I have followed when I have set up arrangements to promote effective governance.

Good papers

Good papers tell the story completely and logically, but concisely. They do not assume that the reader knows the background. They build the picture without jumping around, and make clear and well-argued recommendations. They do not confuse with unnecessary detail, but nor do they overlook important aspects. As Einstein said, “If you can’t explain it simply, you don’t understand it well enough.”

Provide rules on length, apply (pragmatic) quality control to the papers received, and refuse to include papers if they do not meet minimum requirements (obviously it helps to be able to give advice on how to make them acceptable). You must of course choose a reviewer whose judgements will be respected. This may well result in some painful discussions, but people only learn the hard way.

Timely distribution

If members do not have time to read the papers properly, it does not matter how good they are. If I am a busy Board member, I may need to reserve time in my diary for meeting preparation, and this is a problem if I cannot rely on papers arriving on time. Set submission deadlines which allow for timely and predictable distribution, and enforce them. Again, be prepared for some painful discussions until people learn.

Informal channels

Concise papers and busy Board meetings are never going to allow for deep understanding of context. To overcome this, I have organised
informal sessions immediately preceding Board meetings, over a sandwich lunch if the timing requires. Allocate a couple of hours for just two or three topics; bring in the subject experts, but spend most of the time on discussion. Not all Board members will be able to attend every session, but in my experience not only have they found them hugely valuable in building their wider knowledge of the business, but the opportunity to meet more junior staff has been appreciated all round.

There are many other ways that informal channels could be set up. Different things will work in different organisations. Key to all of them is building trust: allowing Board members to see things “warts and all”, and trusting a wider group of staff to talk to them.

Organisation

To do all of these things effectively, you need to have someone (or in larger organisations a small secretariat team) whose primary objective is to deliver them. This is not glamorous stuff, however important, and it easily gets put to the bottom of the pile without clear leadership.

Finally, remember that nothing will happen unless the importance of this is understood at the very top.  If the CEO does not set an example by sticking to time and quality rules, no one else will.

What have you done to make sure Board members have the right information to make decisions? How have you maintained the quality of Board papers? What other tips do you have? Please leave comments below!

Castle

A few years ago, I spent a fascinating week travelling around Europe. I was trying to put together a consortium to bid for funding from an EU industrial research programme. It was one of those “if its Wednesday I must be in France” trips, where after a couple of days my brain’s language processor gets so confused it just gives up attempting anything except English. Fortunately (but as usual), my hosts all put me to shame by speaking excellent English to me.

This trip taught me a very important lesson which I have used many times since. No organisation wants to be the first to commit to partnering when all they have is an outline description of the objectives of the partnership. They feel they need to know who else will be a part of it, and what the content of the programme will look like. Without this, they don’t even really want to share their ideas of what they might contribute or what benefits they might receive. On the other hand, until they do share their ideas it is impossible to put together a realistic programme. So where do you begin?

I describe what I did as “Castles in the air”. Think of the project as a fairy-tale castle floating above the ground. You have to be able to describe in some detail what this castle looks like from a distance. Of course, no-one can actually get to it to look inside, so much of the detail does not need to be filled in, but the description has to be convincing enough that everyone believes it is a real castle, not an illusion. In particular, they must never think that there is nothing holding it up!

Putting that into project terms, there has to be a clear vision of what the project could do, broadly who may be involved and how they will benefit, even though none of it is agreed, and you have to feel and sound confident about it, just in order to get people talking about how they might contribute. Once you can get possible contributors to engage, they will help you fill in the detail, adapt the vision and underpin it with the foundations, until the whole project is solid enough to stand up by itself.

The same principles apply to any situation where you need to influence many different people to  win their support for the same idea. Unless you can describe your “castle in the air” with confidence, as though it were real and solid, it will be very difficult to get a hearing at all. The more people listen and contribute, even if they are not yet fully convinced, the easier it gets to win over others.

Have you used this kind of approach to win support for an idea? Do have examples of how it did (or didn’t!) work for you? Leave a comment below.

Market stall

I have recently moved house. I moved from a small and very ordinary town in Oxfordshire to a bustling area of London. What a contrast! From largely white to multi-cultural, from sleepy to vibrant, from staid dormitory to entrepreneurial.

One of the big differences is shopping. In Oxfordshire, there was little choice but to buy all your groceries from one of the big supermarkets. When I first lived there, there was a choice of butchers, greengrocers and bakers. Over the years they have all shut up shop, unable to compete with the demand for the convenience of “all I need under one roof” and “open when I get home from work”, even if supermarket prices can be high. Here I am spoilt for choice, especially with butchers, fishmongers and greengrocers. What a delight to be able to wander up and down the stalls, with the noise of vendors shouting out offers, with the bright colours of peppers, tomatoes, oranges and lemons and the indefinable smells, looking for the freshest, the fattest, and (wishfully) the tastiest.

One thing though took me by surprise. The price of bananas. Most of the market fruit and vegetables are good value by comparison with the supermarkets. But bananas? I’d guess the market price is about double the price in supermarkets!

What is going on? The big chains compete with each other, not with market traders. If one shop puts a price down, the others pretty much follow suit. If one decides that bananas are to be a loss-leader, probably the rest do too. And this sort of pricing is like a ratchet – if it becomes established, it is very hard to move it in the other direction. The supermarkets may paint themselves into a corner.

Pricing matters – and not just because companies exist to make a profit. Price sends a signal about what something is worth. “You get what you pay for” as the saying goes. Paradoxically, you may get more people coming to an event for which they have to buy a ticket than will come to one that is free, because the free event is not valued. Needing an income, I once took a job which paid considerably less than I had previously been earning. Result? I got very bored because no-one thought to use my higher skills. I was pigeon-holed by my price, and I left as soon as I could. Pricing that does not match value may serve a necessary short term purpose, but in the end it serves no-one very well.

Have you ever decided not to buy something because it was too cheap? Do you have any examples of price-distortion having unforeseen consequences? Leave your comments below!

Bang

Years ago, I was managing the sale of a business division. The business was based on carrying out a highly-specialised technical test on customers’ products, and each time a test was carried out, it made a loud bang. This would have been of no concern if it had not been that they were carried out in a large workshop also used for other activities. However, checks had been made and the noise levels were within legal limits.

Just before signing the deal, we happened to mention to the purchaser that we had some tests scheduled for the next day, and he said he’d like to send someone round to check the sound levels. It was a beautiful summer’s day – until their measurements showed that the bangs were over the limit. What a toe-curling moment!

In the end it was not as bad as it seemed: a sound-attenuating box solved the problem without making access too difficult, at quite modest cost and with only a few weeks’ delay. But the proving tests provided another surprise – the noise levels were legal again without the box. The reason – we now realised – was that the humidity of the air could affect its sound-transmitting properties.

Conclusion 1 – Make sure you know what factors can affect your assumptions.

Conclusion 2 – Don’t rely on conclusion 1! If something is critical, don’t rely on a modest safety margin – do what you can to increase it early, in case there is something you have not anticipated.

Have you had any experiences of what seemed like perfectly reasonable assumptions turning out to be wrong, with serious consequences? It would be great to hear about them – please leave a comment below!