Monday, January 7, 2008

Notes from LBS Seminar: Growing Your Business

London Business School Executive Course for YPO
Growing Your Business – taking it to the next level
Notes by : Michalis Michael June 2003

Main Learnings:

a) Do the 7 domains test for mainly new or existing businesses/geographies. Check understand and evaluate the following:
1. Market domain macro level – market attractiveness
2. Market domain micro level – target segment benefits and attractiveness
3. Industry domain macro level – industry atractiveness
4. Industry domain micro level – sustainable advantage
5. Team domain - mission, aspirations, propensity for risk
6. Team Domain – ability to execute on critical success factors
7. Team Domain – Connectedness up, down, across value chain
This is applicable to evaluate the opportunity in the Baltic States but also to check on how healthy our current opcos are.
b) Use any combination of 2-3 dimensions to map the companies in our industry in each country and look for “white space” – opportunity. Examples of dimensions for MR:
1. Branded Solutions (Many – None)
2. Size – Revenue (High-Low)
3. Size – employees (High-low)
4. Dedicated Business Development Resources (Many-None)
5. Specialization in Brand (High-Low)
6. Specialization in Distribution (High-low)
7. On-line Capabilities (high – none)
8. Multinational Clientelle (All – None)
9. Local Clientelle (All-None)
c) Define our core competence by asking our clients directly
d) Core competence should be transferable to new products/geographies
e) Recognize individual performance as well as team performance
f) Constant Communication of initiatives – with consumer based consumption i.e. available on the web but somebody has to go there to find the info
g) Some industries look great (oligopoly) until somebody breaks the rules- disruptive technology – usually lower price – addresses a bigger target outside the current target market
h) have people actually work in other departments every now and then to understand and appreciate what other people do which is necessary for their work
i) Create a one page dashboard for GMs, MDs, CEOs with crucial daily/weekly/monthly information to run their business. Ideally measures should give an indication about the future (such as commissioned projects) Possible measures:
1. Cash report in “Cash Days” daily
2. Accounts Receivables in Cash Days daily
3. Gross/Net profit monthly
4. Commissioned Projects weekly
5. Work Completed monthly
6. Exception Reports
7. Client Status (1st project, 2nd, nth project, size of account, frequency of projects)
Monitoring P&L is old-fashioned and is like looking in the mirror. Another quotation which applies here is: You cannot drive a car by looking at the rear view mirror. Need for measures for the future.
j) Borrow against Receivables if necessary and possible in order to grow the business
k) Business can grow by: Innovation, Acquisition and Diversification.
l) There is a need to tackle one or more of the above three possibilities in 3 levels:
Managing (has to do with organization and processes), Leadership (has to do with people issues) and Finance (money is self explanatory!).
m) Outsourcing apart from its other advantages delays payment say to 30 days after completion as opposed to end of the month
n) The balance sheet is key in growing businesses (i.e. estimate cash days)
o) Calculate the Self Financing Growth for each country (SFG)
p) Look at cash days before looking outwards for finance
q) Sometimes increasing prices, thus slowing down growth can be desirable, because profitability will go up and growth has better chances to be self financed
r) If cash rich, offer suppliers early payment or payment in advance for a reasonable discount
s) Key in successful companies is that they make money and do good at the same time
t) Go for “A” employees only. Currently some countries have a couple of As some none and the rest are a few Bs and many Cs, Ds and Es!!! Strong HR policy for recruiting (3 stage recruiting), maintaining, dismissing.
u) Bonus given to staff quarterly for performance over 8 quarters. Always 7/8 sit with the company, and there is no incentive for short term result manipulation
v) Do not recruit on your own image – you don’t need more of you – you need more diverse people who will complement you
w) For large purchases make an offer and withdraw soon after – guaranteed price drop!
x) Play bad cop good cop when negotiating
y) There is a fine line between confidence and arrogance
z) There is a fine line between a visionary leader and a dogmatic fool (when nobody else see her point)
aa) Oracle believe in the world of “thin-client” computing against the PC (possible trend that can affect us)
bb) What is the right measure for success? Return on equity, return on capital, recognition?
cc) A company should be positioned as low cost or premium differentiated. Its bad to be in the middle
dd) Use MBA students for internship
ee) The question to ask ourselves is not how to grow, but how to leapfrog competition
ff) Social return: make money and do good, mums advice: be smart with your money, don’t beat your sister and walk the dog when you are at home
gg) Be in touch with faculties of business schools, bounce off ideas
hh) Book: Managing the Richer way by Julian Richer
ii) There are only 3 value disciplines and we need to know where we are and where we want t o be: 1) close to the customer, 2) product leadership, 3) cost effective
jj) Suck a low profit client and stick to developing the business with fewer profitable ones

The 1 million US$ Idea!

1.In the evening before you leave the office make a list of the things you have to do
The next day
2. Rank them according to urgency and importance and number them
3. Next morning start from number one and don’t move to number 2 until you
Finished number 1. Do the say for each task until your day will end
4. In the evening do the same thing. If some of the things on your list were not
Achieved consider them for the next day and give them a ranking

Wisdoms from HBS, LBS and YPO

1. Do not take yourselves too seriously
2. Make yourselves vulnerable
3. Take your decisions brutally and execute them with love
4. A leader must be in the middle of the pain process
5. Monitoring P&L is like driving a car by looking in the rearview mirror. Forward looking measures are more appropriate
6. Making money and doing good at the same time works
7. Your strategy is where you allocate resources not what you have on paper
8. Warren Buffet likes a company that can be run by an idiot because one day it might
9. 50%-60% of an effective GMs time is devoted to building and maintaining networks
10. With your network maintain an imbalance by exceeding the norm of reciprocity
11.The real value of a network comes from the holes
12. Use http://www.skype.com/ to communicate
13. Managers do what doctors are put in jail for: “surgery without diagnosis”
14. There is a fine line between a visionary leader and a dogmatic fool
14. If a new recruit does not impress you during the first 30-60 days you probably made a wrong choice
15. Do not recruit in your own image – you don’t need more of you!

Sunday, January 6, 2008

The right people on the bus

Recruitment, Integration, Retention in the 21st century
By Michalis A. Michael

Getting the Right People on the Bus

This is a parallel borrowed from Jim Collins’s book “Good to Great” that has nothing to do with a bus drive and everything to do with a roller coaster ride! Getting the right people on the bus is a good start but that’s all it is. To keep them for the duration of the ride and to keep them fulfilled in all aspects is a challenge by far more demanding than selecting and attracting them.

1. Recruitment

The conventional way of recruiting people is to first identify the vacancy, create a job description if one is not available already and then consider channels of communicating the vacancy to the right target group. You can guess that there is an unconventional way which is on a good way to become conventional by being more and more accepted as a best practice in HR management. It is to always be in a recruiting mode for whichever available position. This is even applicable for new positions that can be created as a result of “discovering” a specific type of a person during a continuous quest to find the right people. One example to bring this point home would be: while having dinner at a restaurant one might identify a waiter who can be a potential employee by something extraordinary they did! Being on constant alertness (here we mean any member of the management team including the HR Director of course) at all times is the mandate here. Every person you meet is a prospective member of your team.

1.1. The conventional way done differently

The aim here should be to maintain a constant flow of candidates through the interviewing machine. There is a number of ways to source candidates such as:
- printed press advertisement of vacancies
- posting on own web-site as well as on specialist job search web-sites
- notice boards at universities and other public places relevant to the target
- executive search firms (database search & head hunting)
- inform own employees and ask for recommendations

Keeping the pipeline (figure 1.) full from bottom to top is a really challenging task and once mastered a business practice that can make a huge difference in terms of company performance. The first part of the pipeline is of-course all about recruitment but the rest has to do with succession plans and the ability to retain employees for longer periods (if not until retirement age).

Continuous interviewing can have a multiple effect in tangible and intangible ways such as:
- whenever an employees retires, decides to leave or is fired there is always people waiting to enter the company at entry level. It is irrespective what position the leaving employee occupied because there will always be people waiting to fill in the position from one position below. Depending on the seniority of the person leaving a domino effect will be created (in a positive way) until all empty positions created by the shifts-up are filled.
- It passes the message to all existing employees (especially at entry positions) that there are many people out there who are hungry for their positions in the company
- An in-built element to continuous interviewing is the “thank you but not at this time letter”, because it would be impossible to hire all the good people we meet if we really see people every single week of the year. When someone receives a letter like this from a company one possible reaction is to feel “ I was not good enough this time” I will try harder in the future. In other words working for this company becomes an aspiration!
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1.2. The unconventional way

This is to go by the rule: First decide Who to employee and then What they should be doing!


2. Integration

Cult-like Environment

This might sound like a heresy group, but what it really is , is an environment that promotes as many links between employees themselves and between each one of them and the company. These links should not only be limited within the business framework but ideally should transfer into the social life of the employees.

Closely related to this is “the only entry position vacancy policy” of some companies. One good example here is P&G. A P&Ger is a “unique species”. It is not something everybody can enjoy (the P&G way) but those who do are very proud to be P&Gers and it surely feels like a cult to belong to P&G.

First question you ask yourself is would I feel comfortable to confide a secret to this person?
Second question: If I started my own business would I want this person to be part of my team?

Sharing is Power

Some say knowledge is power. I believe sharing knowledge is where true power lies. The ability to help others by sharing experiences and thoughts is not only fulfilling but can help our world get to a better place.

Making an impact and being relevant is the motivation behind this blog. I sincerely hope that some fellow human beings will benefit from this. Along with my other blog : Cyprus Issue this blog is meant to be a creative medium that hopfully will start some meaningful conversations.

Michalis A. Michael