Julia's blog

Hands up if you cut your training budget this year? You are not alone. But is training really a luxury that can be temporarily discarded along with the Christmas party and Business Class travel?

Earlier this week a business owner let slip his irritation over one of his senior team asking to attend a seminar. "This is not the year for spending on training, it's the year for tightening the belt," he gasped.

The conversation reminded me of the five myths of training. Here they are:

1. Training is a nice-to-have

If you are taking the time to read this then my guess is you understand the importance of keeping up your own learning. But in the last 90 days what professional development has your team been doing?

If they are working in a growing business, a changing economic landscape or a time of great technological change (that must cover pretty much everyone) then your team needs to grow their skills so that they can spot and seize opportunities.

2. Training is technical

When most small and medium sized businesses think of training they think just about "technical" training, which means training on systems, professional updates, etc.

This is such a shame because businesses that widen the concept of training to include education on leadership, management, people, finance, economics, communication and so on, always out-perform their peers. Phenomenally.

3. Training is expensive

The trouble with training is that the word conjures up an image of expensive week long residential courses. But it rarely needs to be so. Here are some low cost ideas that work remarkably well:

• Give your team a list of interesting books to read. They don't have to be directly relevant to their role or your business, the wider your team reads the more innovative and creative it will become.
• Keep a log of useful blogs and encourage your team to add to it too. Blogs by thought leaders such as Seth Godin will help your team to think differently.
• Put on lunchtime learning sessions. Invite external people to speak. Many local business people will be delighted to share their thoughts with your team for the price of a sandwich.
  
• If you want to keep lunchtime learning internal you could use the time to discuss books, watch a webinar or review an "expert" DVD. Webinars and DVDs work out to be a very low cost way of getting great information from the world's experts.

The cheapest, most effective education of all is simply to share with your team the actions you are taking to keep learning. You will be surprised how many will adopt your habits.

4. Employees aren't interested in training

If you think employees aren't interested in training, try offering attendance at a personal development seminar as a reward. Just recently a client told me how he trialed this as a way of getting staff to submit more ideas into their innovation program. The deluge of ideas caused the system to crash!

5. We don't have time for training

If you have made staff cuts to manage costs and your team is working extra hard then it's understandably tricky to find the time to devote to training, but it's not hard to justify. Serious businesses find a way.

There are, of course, a few bosses who are appalled at the concept of actually paying staff for hours spent training. But that's not you.

Businesses that are prepared for opportunity are poised to do well as we come out of the GFC. Be one of them, keep your people smart.

I snuck into the movies last week to see The September Issue. The film is about the publication of the September 2008 issue of US Vogue, but the real story is how the unlikely combination of two very different women has not only propelled them to the top of the fashion industry, but has kept them there for 20 years.

It's a true story. Anna Wintour is the Editor In Chief of US Vogue and Grace Coddington is her Creative Director. In the movie you see Anna as a decisive (if not somewhat ruthless) business-like perfectionist whereas Grace appears to be a gentle fashion genius. There is a permanent air of conflict and tension between the two protagonists. No tantrums, just a no-nonsense approach, which means that, at least between the two of them, feelings aren't allowed to get in the way of priorities. They make a formidable team.

Away from the world of high fashion, this morning I took a call from a business owner whose business partner is driving him crackers. I've known the business for many years and while the two guys are very successful, it is a brutal relationship. John phoned me because he had had more than enough conflict and was thinking of calling time on their business.

During our conversation we both agreed that there are some fantastic examples of businesses whose very success is down to the fact that they are run by two profoundly different people. And we then discussed how the partners in these businesses had somehow found a way to rise above the irritations and make working together enjoyable, or at the very least palatable.

John and I decided that unlikely duos work best when they:

1. Agree on the overall direction and strategy of the business and understand what is really important.
2. Are very confident in the unique skills they bring to the business.
3. Have clear responsibilities.
4. Talk straight to one another.
5. Keep conflict at a business level not a personal level.
6. Put on a united front for customers.
7. Refuse to allow employees to play them off against each other.
8. Are passionate about the success of the business.
9. Agree who the ultimate decision maker is.

The last point is an interesting one. Even the businesses with "joint managing directors" we noted bestow one of them with the ultimate authority for decision-making.

Reinvigorated John decided that he wouldn't leave the business. Realising that the tension between him and his partner stems from the fact that he plays the role of business curator to his partner's role of creator, he decided that a robust discussion with his partner should sort everything out. A technique it seems that Anna Wintour and Grace Coddington worked out 20 years ago.

One of the best aspects of my work is that I get to see the warts-and-all inside of many businesses.  It also gives me the opportunity to discover which business practices hit the mark in real life. Top of the list of those generating the most amount of benefit for the least amount of effort has to be the Daily Huddle.

Before I get into detail about the Daily Huddle you need to know that this is incredibly simple, phenomenally effective and is as applicable to small business and large corporations alike.

So what is a daily huddle? Well it’s just a meeting. But it’s not any old meeting. Its short, its sharp, it has a standing agenda and everyone in the business attends one every day.

To understand why you need a daily huddle you need to know what’s on the agenda and that’s easy because there are just three items:

The first agenda point is “what’s up”. This is where you ask employees what they are going to achieve today. The idea is to get them – and you – thinking every day about doing those things that move the business forward rather than just shorten the to-do list.

The second agenda point is to take a look at your daily number. You do have one don’t you? If you don’t here’s a tip – find something that you can measure in your business on a daily basis to get a sense of how the business is performing.

The third agenda point is to ask employees what roadblocks they are facing. You will find that the collective wisdom of the huddle group will be incredibly effective at finding solutions.

I know no one wants more meetings, but the daily huddle is important because it gets results. When you have everyone in your business thinking, on a daily basis, about the three agenda points productivity will go through the roof. To make the daily huddle a success though you want to keep it sharp and focused, here are the rules:

-       Hold the meeting at the same time each day

-       Get people to dial in if they can’t make it in person

-       Be very strict about timing, don’t let the meeting go on for more than 15 minutes

-       Stand don’t sit at the meeting – try it and you will see why

-       Take it in turns to chair the meeting, it shouldn’t always be you

-       Don’t waiver from the agenda

So go on, what’s stopping you? Get huddling.

It’s interesting to observe the events that trigger an aha moment for a business

This week I caught up with the CEO of an events company. He wanted to show me a pitch that the company had been working on. This wasn’t just any pitch; it was the biggest and most high profile event that the company had ever proposed for.

There was no doubt that the pitch did the company proud; you could tell by a quick flick through the presentation the magnitude of the effort that had gone into it. But it wasn’t the pitch itself that was remarkable but rather the impact that working on it had had on the organization.

Clearly the CEO was delighted, if not slightly bemused, by the energy and creativity that permeated the entire business during the life of the pitch. He told stories of long hours, amazing ideas, incredible commitment and how even the most unlikely employees had embraced the challenge. But most of all he talked about buzz.

When the company was small the CEO felt that it had a special buzz, but over the years that buzz had waned. Until now the CEO had figured that lack of buzz went with the territory; the fun little company was now a sizeable organization – it had simply  “grown up”.

But the pitch changed his mind.

Not only did the CEO realize that his large-ish company was not too big to have a buzz, he also realized just how much he missed it and craved it.

Not surprisingly our conversation quickly turned to how the business might re-create its buzz. We discussed what other companies do to create, over and over again, the same sense of challenge and urgency that the pitch had generated for this particular business.  In particular we discussed the notion of a “quarterly theme” which has proved successful for many organizations.

The quarterly theme is, in essence, quite simple. It starts with the business picking a “single measurable focus” for the quarter - an area of pain that can be worked on by the whole company. Answering the questions “What is the one thing that we can focus on to improve our company over the next quarter?” and “Where can we get the greatest benefit from the power of focus by all our employees?” will help you find it.

Next step is to set a quantitative goal for the focus, and then adorn then premises with scoreboards, so creating a visible challenge. To further bring this to life and inject a bit of fun into your business, you create a theme for the challenge. The point here is that you want everyone – absolutely everyone – to be involved and theming the focus with something amusing and light hearted does just that.  Companies often use movies, catch phrases and songs as themes although right now I know of at least three businesses channeling the 40th anniversary of the moon landing.

The quarterly theme, played well, energizes the whole business  - even enormous ones - and it is an infinitely more sustainable way of creating buzz than waiting for the next big pitch.

One of the most appealing aspects of life in a small or medium sized business is that you get to play so many different roles.  But sometimes this causes abject confusion.

A common example of this happens at annual strategy days or quarterly planning meetings. Leaders often tell me that their teams find it tough to separate strategy and execution because in practice they do both. As a result the sessions become frustrating, with the team merrily flipping between the conceptual and the practical.

When this happens I often recommend to teams that they imagine they are working in a much larger organization: one that has the formal corporate hierarchy of a board, CEO, business-unit leaders and managers. I then suggest the team metaphorically put on a different hat according to which part of the planning process they are in.

I borrowed the idea of hats from Edward de Bono’s “ 6 Thinking Hats” but in my example the hats take on roles rather than perspectives. In practice when I am running such a session I bring along real hats for the team to wear; like actors at a dress rehearsal the result is even better.

If you want to try this, here are the hats the team wear, the roles they play and the questions they should ask:

The board

The first hat to wear is that of the board. The board’s role is to decide the level of risk that the business is prepared to accept: the strategic risk.

With your “board” hat on, think about these three questions:

•    What level of risk feels right for our business?
•    How much performance (ROI or whatever measure suits you) are we willing to sacrifice in exchange for lower strategic risk?
•    What level of resources should we devote to mitigating risk?

Or more simply, how much are we prepared to bet?


The CEO

The second hat to wear is that of the CEO.

The role of the CEO (and senior management team) is to formulate the strategy. Having worn the “Board” hat you now have a clear understanding of the level of strategic risk that your business is prepared to carry. 

As the CEO you need to ask two questions:

•    What strategic uncertainties does our business face?
•    What strategic options do we need so that we can cope with those uncertainties?

Or put more simply, given the amount we are prepared to bet, what should we do to maximize our winnings?


The business-unit leader

Now put on your “business-unit leader” hat.

Having already worn the CEO hat the strategy is formulated, now it’s time to bring it to life with some action.

As the Business-Unit Leader you need to ask:

•    What key activities should we undertake to implement the strategy and achieve our performance targets

Or simply, what are we going to do to create some wealth out of this strategy?

The manager

The fourth and final hat is that of the manager.

By now we have chosen our level of strategic risk, formulated the strategy, and settled on the key activities to bring the strategy to life. As the manager we need to look at the best way to execute the activities.

So, as the Manager you need to ask:

•    How can we best execute the activities?

By which we of course mean: show us the money!

I did this little exercise with a client last week. We looked at the ten initiatives the business had started in the last six months and did a bit of investigative work to find out who had provided the genesis of the idea behind each initiative.

The CEO, who is a very entrepreneurial chap, accounted for many, and the management team – thanks largely to the head of sales - the remainder. But notably, no ideas had bubbled up from the pool of over 100 employees.

I wasn’t that surprised. It seems that unless one actively encourages employees to come up with ideas, and then to share them, they often don’t. The reason for this I suspect is because so many of us – and I include myself here – enthusiastically shared our mediocre ideas with superiors when we first joined the work force only to have them greeted with disdain!

But this is not as dire as it sounds; rather it presents a fantastic opportunity. Since the key to year-on-year profitable growth is innovation, businesses that harness the ideas of all their employees will out-perform those that don’t.

And it’s really not that hard to make a start. Here are 6 ways to encourage your employees to come up with ideas, not just today but every day:

The need for ideas: a common misunderstanding amongst employees is that employers don’t want their ideas, so explain why ideas are key to growing your business.  Before you do this though I suggest you start with an explanation of how growing the business is good for everyone - this appeals to the “what’s in it for me” that lurks inside many an employee.

No idea is a stupid idea: no-one wants to look silly, especially not employees, so make sure that all ideas are gratefully received!

It’s all about purpose: employees are more likely to generate ideas that will help your business if they understand the purpose and vision of the business. You and your management team have probably got this down pat, but does your most junior employee understand what the business is really trying to achieve?

Why do we do it like that:  encourage your employees to challenge processes and procedures. The simple question “why do we do it like that?” has uncovered some mightily ineffective processes in a number of businesses.

Here’s one we made earlier: you can’t beat a real life example of a good idea to inspire your team and illustrate the type of idea you are looking for

Box it: paradoxically constraints stimulate creativity. Give your team 3 questions to work-up for ideas -such as “how can we halve our delivery time?” - and you will unleash more creativity than had you just asked for general ideas.

Of course you will get a mixed bag of ideas. Some will be “suggestion box” type ideas that you can either implement or (kindly) discard, some will be useful and some will just seem completely ridiculous. Be on the look out for the latter, as Albert Einstein said “If at first, the idea is not absurd, then there is no hope for it”.

A coffee this week with an old friend, the CEO of a technology company, reminded me of how having an Achilles heel and a "critical number" can transform your business.

For many years the team at this particular technology company knew they weren't terribly good at managing staff utilisation. It was the business's Achilles heel; its vulnerable spot. But because there were other more pressing issues, and to be honest because business was buoyant, they muddled through.

About a year ago the management team finally decided to address the issue of staff utilisation and after a concerted focus by the whole company the effort paid off. A 100% increase in net profit. Needless to say they wished they had focused on their Achilles heel a decade earlier.

Many businesses have an Achilles heel; an area of weakness largely hidden by the strength of the rest of the business. These flaws can represent a great untapped opportunity because in many cases a relatively small improvement in the health of the Achilles heel can yield a significant increase in profit.

So my suggestion this week is that you spend the next 100 days focusing intensely on your Achilles heel. The key to success here is not so much in the mechanics of how you are going to fix your Achilles heel but rather in deciding you are going to do something about it and in harnessing the momentum of your entire organization. Here are some thoughts on how.

Identify your Achilles heel. Many businesses have more than one vulnerable spot, but because you can really only work on one at a time start with the area where you believe you can make the biggest impact.

Create a measure, a key performance indicator, for this area. Of course ideally you would already have one but let's be honest if you if you were already tracking this area like a hawk then it probably wouldn't be such an issue. Let's call this measure your critical number.

Put in place a system to tell you the magnitude of your critical number every day. If this is a mammoth task then a quick and dirty daily measure backed up by an accurate weekly critical number will do.

Set a goal for what you want your critical number to be in 100 days.

Involve every employee in the mission to change the critical number. Launch it at your quarterly whole-of-company meeting by explaining the issue and the goal and asking everyone to participate in their own way, however small.

Keep the critical number top of everyone's mind. Sharing success stories is a good way to do this, but make sure you focus on the small wins as well as the big ones. You want everyone to feel that their contribution matters. And sometimes the big wins come in unexpected places. A company whose critical number was daily bankings discovered that the receptionist was stockpiling cheques so that she could make just one boring trip to the bank a week instead of five!

Share progress visually. Employees often get more excited by progress towards a goal than by absolute numbers. I find an over-large barometer stuck prominently on the wall seems to do the trick.

Make achieving the 100-day critical number a delightful prospect for everyone, not just the management team. Instigate rewards; they don't need to be big but they do need to be fun.

In all likelihood after 100 days you will have made good progress but still have a way to go. I suggest you continue by setting another critical number goal for the next 100 days, and so on and so forth until you are satisfied. Then of course you can work on your next Achilles heel.

 

I had an interesting question from the managing director of a shoe company, whose business it is to source and import high quality European shoes for the (rather charmingly described) "non-standard" foot.

The MD of the shoe business believes he is about to be squashed in the business equivalent of an F-clamp. The economic screw is turning and the top half of the clamp, the market's downward pressure on price, is about to meet the bottom half of the clamp, the upward pressure from costs.

He has explored his internal options and thinks the only course of action is to raise prices, but says" "Given we are in a recession, is it business suicide to raise my prices now?"

Not necessarily.

In times of general cost increases, customers expect a price hike and most accept the increases with good grace.  Sure, some will grumble but most customers are struggling with the same issues and understand that when costs go up, prices have to go up.

Many businesses actually don't take advantage of this, because they believe that demand will crash. But look at this example. The recently released consumer price index figures for March showed an increase in the price of men's underwear, whereas prices for other apparel remained flat.

Bucking the trend, it seems that undies maker Pacific Brands used the currency pressures in the second half of 2008 to justify a 5% to 10% price increase. Did it kill the market for men's underwear? Not at all. Demand for men's underwear actually increased.

Justifying an increase in price because of an increase in costs is a useful tactic, but if you are going to try for a price increase in today's climate, you have got to be able to convince your customers, more than ever, that it is reasonable, fair and authentic to do so.

In another underwear example, the famous British retailer Marks & Spencer recently decided to charge £2 more for bigger bras on the basis that they require more engineering and materials! This caused such a public uproar that the company was forced to reverse their decision saying: "We boobed. It's true our fantastic quality larger bras cost more money to make, and we felt it was right to reflect this in the prices we charged. Well, we were wrong."

What did Marks & Spencer do wrong that Pacific Brands got right? Quite simply Marks & Spencer customers felt that the price increase was neither fair (it didn't apply to all bras) nor authentic (larger bras have always cost more money to make so why start charging more for them now).

So, back to the shoe company. My sense is that they would have had strong grounds for increasing the price of shoes, were it not for timing.

Like many businesses, the shoe company held off putting up prices until the last possible moment. While noble, this doesn't make good business sense. For the general public to feel you are being authentic, you need to align your justification for a price increase with consumers' general knowledge. 

Today's strengthening Aussie dollar is going to make it hard for the shoe company to justify a price increase on the grounds of the exchange rate.  To be blunt, consumers don't care what exchange rate a company did business at, they just think about the world as it is right now. So as far as consumers are concerned, today imports just got a little cheaper.

 Which begs the question, will we see a drop in the price of men's undies?

 

 

You can probably relate to this. I was at a company's quarterly meeting the other day and all the employees were there. It was fun, lots of celebrating achievements and planning for the next quarter.
 
But when the CEO got up to talk about the financial results, you could see 100 pairs of eyes glaze over. Not because he's a dull presenter, in fact he's very entertaining, but because the employees just don't get it.
Achieving goals and understanding how those goals fit into the financial results of the business can be very motivating for employees. But for many people phrases such as "profit and loss account", "gross margin" and "days receivable" may as well be in a foreign language.
The CEO of a retail business decided that rather than dumb down, or indeed skip, sharing the financial results he would teach his employees how to understand financials.
Starting very simply with the concept of "gross margin", he explained that to generate $1000 for the monthly social night, they had to sell at least $3000 of product. That fact alone silenced a few of the people who had been grumbling that social activities had been somewhat curtailed.
He then set up a cupcake shop in the coffee room. One of the employees baked the cupcakes, a few employees advanced her the cost of the ingredients, another group priced them to make a contribution to charity, and everyone else purchased them (some were even allowed to buy them on credit).
The accountant then showed the employees how the financials for the cupcake business worked - labouring the fact that when cupcakes were sold on credit there was not enough cash to purchase new ingredients.
The cupcake shop and the "how much we have to sell to pay for the social night" examples transformed the understanding of the employees. And when the company had a cash collection drive, every single employee found a way of helping with it, understanding the importance of being able to afford ingredients (or staff salaries!)
Many business owners are reticent about sharing financial information with employees. Usually because they think that employees will be either scared about their job security if the results are poor, or think the business owner is a stingy fat cat if the results are good.
But actually the opposite is true. Employees value transparency and feel more part of the business when they are involved in the numbers. But to save misinterpretation, take inspiration from the example of the in-house cupcake shop, and make sure employees understand them.
 

We have a strategy and an annual plan, but we always seem to be so busy getting on with the nuts and bolts of the business that we don't seem to be making any headway with implementing it.
One of the most common dilemmas, concerns, grumbles - call it what you will - of CEOs is that employees are so busy working on the daily-do of the business that the "stuff" that needs to be accomplished, to actually push the business forward, never seems to get done.
I was reminded of this yesterday when the frustated CEO of a medium sized manufacturing business was saying that despite having spent a significant amount of management time developing a five year strategy and a one year plan, the team had pretty much spent the past financial year doing the same as they had the year before.
Planning time was coming around again and he wanted to be sure that this year the business actually made some headway.
Here are some of my suggestions:
• Split the annual plan into quarterly plans together with quarterly goals and quarterly priorities. The quarterly priorities are the key initiatives you are going to work on that quarter.
• Allow your business only three quarterly priorities; a maximum of five if you really can't whittle them down. Granted, limiting the priorities down to three is not easy, but the process of choosing the three will ensure your business is focusing on the right things.
• Pick a top priority, the number one initiative that gets done no matter what. Yes, it's tough to pick just one but the very act of making such a decision will underpin your success.
• Hold one person accountable for each priorty. Often a management team will decide that more than one person is "accountable" for a priority; it doesn't work - when more than one person is accountable, no-one is.
• It's often worth reminding your management team that accountability for a priority doesn't mean delivering it singlehandedly, but rather assembling and leading a team to get it done.
• For obvious reasons, such as time and enthusiasm, don't let any one individual be accountable for more than one priority per quarter. In my experience, for every member of the management team who shirks priority-accountability there is another who feels compelled to do everything.
• Not a hard and fast rule, but where possible avoid the CEO having a priority-accountability; let her/him concentrate on steering the ship rather than drive it.
• Hold a quarterly meeting for the whole of your company and use it to explain the priorites for the quarter. Remember to keep the message simple - it will only work if everyone understands it. And make this meeting fun too, celebrate the previous quarter's achievements, and generally make it something that employees look forward too.
Businesses that are growing rarely, if ever, have too few opportunities. Businesses that grow profitably know that deciding which of these opportunities to pursue, and sticking to that choice, is the key to success.
That's not to say you can't tinker with new ideas, you can, provided the quarterly priorities get done first!