Management

All posts tagged Management

Win-Win WCP 2014

 

How To Become A Great Negotiator

Most of our successful leaders and entrepreneurs are great negotiators. The skill of negotiation is recognised as one of the important ingredients of success and yet so few of us truly understand what it is that makes a great negotiator.

It is often said that children are great negotiators; they are persistent and return to their objective time and time again, attempting differing angles to win their parents around. From here it often goes wrong as well-meaning parents impose rules and suggest that this constant negotiation is both bad manners and plain naughty!

Recovering from childhood scaring we recognise that negotiations are a fact of life, we are constantly negotiating in both our personal and professional lives.

Those that are not strong negotiators tend to fall into one of two camps: the first dislike or avoid negotiating and this can lead to problems in resolving issues or progressing their careers, the second see the first rule of negotiating as the need to “win”.

Both attitudes are problematic the first is both self-defeating and confusing to others and the second is always going to leave behind a bruised “loser” – neither is a good outcome.

There are THREE key steps essential to becoming a great negotiator:

Applying these three negotiation processes will significantly increase the impact and success of your future negotiations.

1.0 NEGOTIATING ATTITUDE

What you bring to the table in terms of your attitude and approach will have a significant bearing on the outcome, you should always:

Show Respect & Trust

See the other team or person as an equal and treat them with the courtesy and respect you would expect, it’s surprising how this opens real discussion.

Listen to what isn’t said

Look carefully at what the other side is really saying, this will tell you what they really want.

Remain Flexible

Successful negotiators view each key point from multiple perspectives; they are flexible in which points to concede to achieve the end game. Be prepared and willing to change.

Target Continuity

Always view the other team as a valuable, respected and long term contact. Armed with this attitude you will never be tempted to “rip off” the other team.

Win-Win Outcomes

This is the ultimate outcome in any negotiation; it will leave all parties satisfied and lead to productive, successful long term relationships. Sound groundwork, an open mind and a fair approach will find more win-wins than you would at first imagine.

2.0 THE NEGOTIATION

A successful negotiation is usually based upon 3 distinct stages: Preparation, Negotiation and Documentation. Each stage is of equal importance; a great negotiator knows this and allows for it when planning.

Preparation

“By failing to prepare, you are preparing to fail.” (Benjamin Franklin).

The key to preparation is to place yourself mentally into the other party’s position. Assess where they are at within the negotiation, what they want, what they need and what they can live with. Understand their motivation, perspective and opinions on the topic. What are the minimum conditions they can accept and at what point are they likely “to walk away”.

Define your own goals and objectives, analyse what you must have, what you can concede and where your fall-back position is. Develop several potential options; identify your best possible outcome and your least attractive “fall back” position.

Search for “win-win” solutions

Negotiating

Be relaxed, respectful and most importantly be prepared to really hear what is being said and retain an open mind.

Listen rather than speak, silence is your friend. Search for common points of agreement rather than the differences; agree these early to develop trust and comfort.

After the initial discussion take the initiative and start the actual negotiation by tabling your offer. This initial offer forms a subconscious reference point, a middle ground if you like. If you are buying start low and if you are selling start high.

An excellent tactic is to make multiple offers each with different terms and conditions this demonstrates your flexibility whilst the other party’s response to the choices tells you much about what they really want or need.

Always show “Samurai Sympathy”; that is do not box the other party into a corner from which they cannot escape without a loss of face.

Once you have established the other parties bona fides and you are satisfied they want to reach a genuine solution don’t be afraid to be the first to concede points but do so in a “give and take” scenario. Know what you want to take. Focus on the end point rather than the current position. Being pro-active will build trust and goodwill.

Showing respect for the other party does not mean that you cannot show strength or participate in the theatre of negotiating. If unreasonable demands or proposals are put forward demonstrate your dissatisfaction, show your surprise and your disappointment strongly but do not allow any genuine anger or frustration to develop, remain calm and remain in control.

Don’t be in a hurry, abide by your timetable (especially when buying), confrontations will occur, board approval may need to be sought, lawyers consulted all of which are normal. A great negotiator allows for this, allows time for parties to cool off when discussion becomes overheated. If tension builds, ask if you and your team can have 10 minutes alone to discuss the situation, be pro-active, remain flexible and remember your objective.

In the closing stages of a negotiation the great negotiator seeks a creative solution, they look beyond the box, they expand the available options rather than fight the detail and they stand firm to their position. This is the time to bring everything you have learnt into play in the best win-win solution you can offer.

3.0 DOCUMENTATION

I have seen people leave a negotiation “pumped-up” by the result and ready to party only to find out a day or two later that the other party has had a “change of mind” and called the deal off.

After reaching agreement around the table it is best to re-iterate the key points of the agreement, hand write them have two copies made and each party sign them off. This isn’t a binding agreement but it is a moral statement.

Confirm the agreement in a written Heads of Agreement and get this document signed within 24 hours of the meeting. The HOA should cover any conditions precedent and a timeline to contracts.

Call the other party as soon as appropriate after the meeting to thank them for their time and professionalism, work with them and strengthen the bonds for the future.

Finally food for thought…………….

“Let us never negotiate out of fear, but let us never fear to negotiate”

Unknown Quote        

_________________________________________________________________________

By, Neil Steggall

 The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-jd

Logo Small wcp 2014

Procrastination V4 - WCP 2014

Why do we Procrastinate? ……Well, I’ll tell you tomorrow!!

Procrastination is a problem for the sufferer, it’s a problem for business and it can ruin cohesive team work. It is a universal problem in businesses of all sizes and yet we rarely discuss it.

“Procrastination is the bad habit of putting off until the day after tomorrow what should have been done the day before yesterday.” Napoleon Hill

I was surprised when reading an article in Psychology Today, to find it claiming that around 20 percent of people chronically avoid putting their heads down and getting on with the job. In fact these people actively look for distractions!

This seemed a little excessive until I looked at my own behaviour and that of my immediate team. I recognised that we all occasionally put off certain actions despite our valuing efficiency, team work and timelines as much as we do. The big question is, why?

Sometimes we put off those mundane things – like reconfiguring our computer files, organising our social media, reconciling bank accounts, or updating our web site. But often we procrastinate on bigger things that require more time, more commitment, and put us at an increased risk of failing, looking foolish or feeling emotionally bruised. Things like finalising our business plan, confronting a complex new task that threatens us, or not pursuing a long held ambition.

It appears procrastinators are not born as procrastinators; rather we are trained to some extent from birth. That’s the general consensus of psychological research into the art of procrastinating. One increasingly popular theory is that procrastination has its roots in childhood, where it functioned as a means of early of rebellion against authority figures or as apathy in the presence of a strong parental pressure to perform.

Doctor Joseph Ferrari, associate professor of psychology at De Paul University in Chicago, suggests that there are three types of procrastinators in the world:

  1. The arousal types, who get a thrill from rushing through projects at the last minute, whether they come out on top or not.

  2. The avoiders, who don’t want to get to the end of any given project because the fear of change keeps them paralysed.

  3. The decisional procrastinators, who simply cannot make any decisive choices because they can’t bear the results of their actions.

I find it interesting that these three types of procrastinators apparently use multiple “tools” to help them procrastinate whilst still appearing to function. Understanding which type of procrastinator an employee is and recognizing which of the following methods they use to procrastinate will help us to work with them and hopefully overcome the problem.

“Procrastination is like a credit card: it’s a lot of fun until you get the bill.” Christopher Parker

As with most management issues, understanding the cause is 90% of the solution and there is much we can do to help the procrastinator overcome their problem.

Let’s look at the common causes:

Perfectionism

We don’t always have to do things exceptionally well, often “good enough” is quite enough. The ingrained desire to get everything 100% correct every time can lead to a paralysing fear of failure and multiple revisions that just waste time. A phrase which springs to mind is “analysis paralysis”.

As John Henry Newman, Anglican Deacon and author, once said, “A man would do nothing if he waited until he could do it so well that no one could find fault.”

Fear of Failure

Fear of failure is a major factor for some. Failure can be seen as having far-reaching implications. For some it’s how they perceive themselves and how they think they are perceived by others.

On the other hand, if this same person breaks all records, they fear all future projects will be held to a much higher standard. Some people are willing to do anything, including nothing, in order to avoid being taken out of their comfort zone.

Being Overwhelmed

If a project is complex, the individual steps may seem endless! Instead of seeing individual steps and taking them, the procrastinator thinks they can see all the steps that lead to completion but has no idea which one to take.

If someone is overwhelmed by targets (either the ones they’ve set for themselves or the ones they’ve been given by others), they may find themselves feeling unable to disassemble tasks into constituent components. As a result they simply don’t know where to start.

This feeling of helplessness usually feeds upon itself until it eats away at their resolve, making workplace distractions a welcome escape. This leads to a loss of focus and thus motivation.

One method of overcoming this form of procrastination is to create an action list that’s prioritised and reduces a complex project into smaller, more achievable steps.

Prioritisation

What if someone simply can’t prioritise? Chances are they will spend hours working on non-essential tasks and fooling themselves into thinking that everything is okay.

Unlike those who get overwhelmed, those who can’t prioritise correctly don’t see anything wrong. These are the people that spend an hour deciding which font to use on the monthly report but don’t leave time to get the actual writing done.

One symptom of this type of procrastination is filling hours with “activity” rather than “action”. Often the excuse of being “flat out” is used, when really; this is just another form of procrastination.

As with the overwhelmed procrastinator the method of overcoming this form of procrastination is to create an action list that’s prioritised and reduces a complex project into smaller, more achievable steps.

Lying to Cover

Procrastinators are constantly lying to themselves. They lie to justify their failures (“Oh the System was down”). They lie to justify their successes (“Oh Fred did most of the work”). They lie to justify their justifications (“I’m sorry about the inventory debacle; it’s the warehouse, they screwed up again”).

Some procrastinators just don’t know how to not lie. Learning responsibility is the key to beating back the lies and overcoming procrastination. Help them take ownership and live up to their actions.

Lack of Motivation

Goals have to be worthwhile and achievable or managers and staff are probably going to give up on them. If the task isn’t interesting enough, intellectually satisfying enough or it’s simply dull, a procrastinator’s passion for the task is going to evaporate and they’ll find themselves looking for ways to occupy their minds. Suddenly the sun pouring in through the window becomes an irresistible magnet and they find themselves offering to head out and buy coffees for the team.

If you find this happening a lot, restructure the tasks so that they excite or add a personal reward to the end of every project. For example show real appreciation and praise if you get the monthly finance report on your desk by mid-day.

In a properly functioning and caring work environment management and or team members would ideally recognise the indications of procrastination and work together to break the cycle.

If as suggested procrastination is learned, then with help it can be unlearned. By looking out for and identifying procrastination as it’s happening, you can discreetly help by restructuring work habits, adding motivation and removing distractions.

I am convinced that a simple solution lies in planning and time management. Personally I always work from a rolling weekly task list and each day I write down the 5 things that I absolutely must do that day. This keeps me on the straight and narrow when my mind starts to wander.

Procrastination costs business a great deal in lost productivity and we should work to fix it but don’t expect overnight success. Lifelong habits are difficult to overcome and take time but the first step is always a hard yet positive move.

As Dr Ferrari says in his book “Still Procrastinating: The No Regrets Guide to Getting Things Done”:-

“Eliminating procrastination from our lives is like trying to stop a moving train; it’s not easy.”

Now avoid moving trains and….do it quickly, don’t procrastinate!

_____________________________________________________________________________________________________

By, Neil Steggall

 The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-iD

Logo Small wcp 2014

Connect with me on LinkedIn, Twitter or Wardour Capital:

LinkedIn

Twitter     

Wardour Capital

Rotten Apple

Loyalty, respect and support for team members are values instilled in us from childhood and they are certainly amongst the key attributes of successful leaders. A recent review has caused me to recognise that at times we may carry loyalty too far and we risk severe consequences by doing so.

In a recent review of two unrelated corporate failures I realised that each business suffered enormous damage as a direct consequence of disenfranchised and under performing senior managers. With the benefit of hindsight we can see that it is possible that if these managers had been removed 12 months earlier each company may well have survived.

Why are such managers retained? It is likely that their shortcomings have been recognised and discussed with them during performance reviews or following poor management decisions or errors of judgement. When faced with the prospect of dismissing them their line manager has almost certainly taken into account:

  • The monetary cost of replacing them

  • The productivity loss from replacing them and retraining a replacement

  • The disruption within the team or business unit

These are rarely valid arguments a bad manager will cause a disproportionate level of problems which may well lay hidden for months before something finally breaks. Further a bad manager is fracturing the team and negatively influencing others.

What are the solutions?

  1. Only recruit the best: By recruiting the best possible people you are taking primary responsibility for quality – you dramatically reduce the risk of future problems.

  2. Always Reference Check: When recruiting don’t be afraid to ask the tough questions of current or ex employers, yes we need great technical and educational skills but what about their interpersonal skills. Are they team players, do they play favourites or get involved in office politics.

  3. Formal Process: I have a policy that senior people are employed on the understanding that they will face a 180 day performance review – fail that review and its sudden death.

  4. All or nothing: Being mostly a team player is like being “slightly pregnant”; it’s just not on and it’s not going to work.

Now it may sound tough but if one of your apples is looking bad throw it away and do it quickly. Your team will thank you and your bottom line will prosper.

By, Neil Steggall

 The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-ip

Logo Small wcp 2014

Connect with me on LinkedIn, Twitter or Wardour Capital:

LinkedIn

Twitter     

Wardour Capital

Persistence Pays Off - wcp 2014

Remember, Persistence Pays Off.

Stay Motivated With These 7 Tips

Persistence and motivation are in many ways the rocket fuels of success. Certainly if you wish to impress colleagues with your leadership and management you had better hone both of these skills. 

Immediately after waking each day I have started posting a motivational quote to test its effect on me and my friends. A positive start to the day is essential, so often the quote is leadership or persistence based and quite old fashioned by today’s standards.

The leaders quoted include amongst many: Franklin D Roosevelt, Dale Carnegie, Winston Churchill, Napoleon and an old favourite of mine Zig Ziglar.  These men suffered many setbacks in both life and career and yet through sheer guts, determination and persistence they moved forward and succeeded.

The dictionary defines persistence as, “Firm or obstinate continuance in a course of action in spite of difficulty or opposition.”  In other words, don’t expect it to be easy and understand that most will tell you that you are wrong in your chosen pursuit. Until you are successful; at which stage they always knew you were a genius.

For entrepreneurs or management starting life’s climb, an MBA, technical competence, talent, intelligence, and leadership ability – are assumed traits.  However, the key characteristic that is missing for sustained achievement is persistence.

“Nothing in this world can take the place of persistence.  Talent will not; nothing is more common than unsuccessful people with talent.  Genius will not; unrewarded genius is almost a proverb.  Education will not; the world is full of educated derelicts.  Persistence and determination alone are omnipotent.  The slogan “press on” has solved and always will solve the problems of the human race.”  – President Calvin Coolidge

In order to achieve complicated or difficult goals, persistence is the most significant factor.  There are lessons to be learnt from the successful, persistent leaders in all walks of life who have overcome enormous obstacles.

  1. Hold Firm to your vision: Even when others tell you it’s foolish or unachievable.

  2. Train Your Mind to focus on your vision: This doesn’t mean be blind to issues but don’t allow the problems distract you from the objective.

  3. Grow Stronger: Constantly improve your skills and knowledge, constantly question and analyse especially after failure

  4. Change: Be prepared to change 180 degrees if you are wrong, accept your failures

  5. Be Reliable: Be there, be seen trying, be consistent, and demonstrate that even small steps are still results delivered and failures lessons learnt on the journey..

  6. Complete the Task:  Finishing the job requires the courage to hold your vision, an ability to think through and overcome obstacles and to persist when others would walk

  7. Never Ever, Ever, Give Up: Keep at it despite the obstacles, despite negative comment, despite the odds

In principle these points are so easy to state and yet it takes enormous reserves of mental strength, courage and character to swim against the tide and achieve great things.  

Lets consider how persistence and motivation changed history……

 The Little Spider That Changed History……..

“A Spider that changed history?” I hear you ask; well as a small child I heard a great story demonstrating the value of persistence involving The Scottish King Robert the Bruce and a humble but determined Spider.

Robert the Bruce was defending his country from invasion by the English and their armies. Battle after battle he had fought with England. Six times Robert the Bruce had led his men into battle. Six times his men were beaten, and finally driven into flight. The army of Scotland was entirely scattered, and the King was forced to hide in a cave.

As he lay recovering, he noticed a spider over his head, getting ready to weave its web. He watched as it worked slowly and with great care. Six times it tried to throw its thread from one edge of the cave wall to another. Six times its thread fell short.

The spider persisted and on its seventh attempt was successful. Legend has it that Robert the Bruce gathered his remaining troops and told the story of the spider’s persistence. Using this story he reinvigorated and motivated his bedraggled army  into one last battle and one in which they won such a famous victory.

This childhood legend has had a very significant impact on my life during times of difficulty and failure.

Neil Steggall

 

Barking Mad with Neil Steggall

 

http://wp.me/s401Wv-532

The Barking Mad Blog

Business Advice with bite!

www.wardourcapital.com

Logo Small wcp 2014

 

New Ideas - wcp 2014

Leader or Manager? – Vive la Différence!

The terms leadership and management are often used to describe the same person or even used as though the words are interchangeable. They are not. The differences between leadership and management are vast and varied and placing the wrong person in the wrong position could have dire consequences for your business.

Leaders are rarely great managers and vice versa. Both are much needed and both have very different skill sets needed to build and sustain a successful modern business.

In his book: Management, the Individual and Society, Peter Drucker stated that “Management is doing things right; leadership is doing the right things.” Whilst the phrasing of this is a little “clunky” I have thought about the quote over many years and I cannot really improve upon it.

There is no hierarchy between the two but it is important to recognise which is which as early as possible both to ensure each individual receives the best training and support and to plan where in your organisational structure these Leaders and Managers are going to fit. Understanding who your leaders and managers are will assist in strengthening your organisation and its corporate culture and morale.

Good leaders have a unique ability to rally team members around a vision. Their belief in the vision is so strong, and they are so passionate about achieving it that team members will naturally want to follow them. Leaders also tend to be willing to take risks in pursuit of the vision.

Managers, however, are far more adept at executing the vision in a very precise and systematic way, taking responsibility for the infrastructure and detail of the vision and working with the team to see the job done. Managers are usually very risk-adverse.

It is the combination of these two skill sets working in harmony which often differentiates two seemingly similar organisations.

I have often likened leaders & managers to composers and conductors. The composer creates the dream or vision and the conductor delivers it.

By, Neil Steggall

 

The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-gZ

 www.wardourcapital.com

Logo Small wcp 2014

A Paradox - WCP 2014

The Business Planning Paradox 

Some years ago I sat on the Australian board of a major US consumer goods company when the news came through that our regional boss in the US had retired and was been replaced by a newly retired US Army General with no business experience – imagine our misgivings!

Our new boss, let’s call him “Bud” arrived in Australia three weeks later to sit in on the presentation of our revised and much changed 5 Year Strategic Plan. He sat patiently through two days of presentations, projections, detail and the final summary asking pertinent questions and seemingly agreeing with our logic and direction.

On the third day, in our windowless board room, he kicked off the questioning by asking me “Son, how much faith do you personally have in this plan, would you bet your career on it?” I was confident in our team’s research, logic and the plan presented so I answered in the affirmative with: I am confident Bud and yes I would bet my career!

“Son I am saddened because you must be a lot dumber than I was thinking” was Bud’s response!

This was a bit of a downer to say the least. Bud continued:-

“Son I served in supply in Vietnam can you imagine starting your day at 5.00am not knowing where your troops were going that day, or how many would be alive or wounded that night, but knowing that wherever they were they needed mess tents and hot food, field hospitals, beds, fuel, ammunition, and vehicles to replace the damaged ones and if I let them down I let America down”

“Now Son my enemy was a lot harder to handle than your “competitors” so how helpful would a 5 day plan never mind 5 years have been to me?”

I assumed this was a rhetorical question and asked Bud just how he did plan his supply chain – I was incidentally impressed by the complexity of his logistics.

Bud’s response was to answer “Son I’m asking the questions today so let me ask you this; how far can you turn your head to each side?” around 90° each way, I answered, about 180° in total. “And how far can you lift and lower your head?” mmm, around 90° degrees each way “BULLSHIT!” he roared “you are very lucky if you can get a true 170° and let me tell you problems  will come at you from 360° and spherically so better be prepared!”

I may have made Bud sound like a difficult character, he wasn’t, he was different and we became friends and remained so for many years.

He had developed his famous 4 point plan to “Succeed in Everything” and here is the paradox: it was potentially an 8 Point plan! Let me explain:-

“The 4 point Plan to Succeed in everything”

RULE 1:

a)      Develop  a detailed written plan

b)      Don’t be too “stuck” to your plan

RULE 2:

a)      Calculate, Calibrate & Measure everything

b)      Don’t be bound by numbers, always look beyond

RULE 3:

a)      Constantly seek information, input and advice from others

b)      Follow your own heart & instincts

RULE: 4

a)      Delegate wherever possible

b)      Always retain control

Developing a detailed plan of where you want to be and how you plan to get there is to me absolutely essential to good management. Done well it involves bringing the whole team together to focus on the challenges and opportunities facing the organisation and the plans progressive development forces you and your team to think through each point, to question, determine and build a strong team vision.

 Don’t be too “sticky”! I like to think of a plan as a road map to guide us from point A to point Z, a very useful document without which many long journeys would fail. However if along the journey a bridge has collapsed or the mountain pass is blocked by a slide we have to put the map to one side and handle the blockage. So it is with business plans!

Calculating & Calibrating:  Peter Drucker said “What’s measured improves” and I am a huge Drucker fan. I am a bit of a numbers nut, I find spreadsheets akin to soothing pictures; when I sit down to review a business I enjoy dissecting the market, the innovation, the competition, the costs, expenses, cash flows and projections…….they can all be reduced to numbers and measured.

There is also a common corporate condition known as “Analysis Paralysis” this is the stage at which you can no longer see the wood for the trees. KPI’s are great but they can hide the bigger picture, so step back occasionally and look beyond the numbers – you may be surprised by what you see.

Seeking information, input and advice from others has long been a hallmark of good leadership and a strong indicator of an organisations culture and attitude. Until we strive fully understand every aspect of the market in which we operate, our relative position within it, our products relative positions within it, our financial position within it and the markets overall direction, wants and needs we are operating an incomplete structure, perhaps one lacking a vital component.

 A strong CEO or leader asks many questions in meetings or planning sessions but is careful in placing forward their views; they listen to, consider and weigh the advice, they read through the detail of market and financial analysis and then make an effective decision based upon their experience and their heart or gut instinct. This is what makes them leaders.

Delegation is another common denominator of strong leaders. Delegation not only provides leaders with more time to lead but it empowers subordinates whilst building their leadership and the organisations culture. It’s a wonderful, internal win-win!

A really good leader delegates on an 80/20 principle which I call “Loose, Tight, Management”. In effect 80% of decisions are safe, that is if the wrong decision is made it’s not life threatening to the Corporation but 20% of decisions are crucial and by keeping control over this 20% you always retain control of the whole.

A strong leader never criticises a poor decision or a failure arising out of delegation, these are valuable lessons for subordinates and each lesson well-handled builds the person and enhances the corporate culture.

The lesson I took from Bud was that there are few if any absolutes in an ever changing world and that the key to good planning is to understand exactly where you want to be whilst retaining the flexibility and the ability to change to adapt to changed needs and conditions.

The lesson was well taught and conveyed and as a consequence planning improved, I improved and the corporation improved and that is what “A Plan to Succeed in Everything” should deliver.

By, Neil Steggall

The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-gz

 www.wardourcapital.com

Logo Small wcp 2014

Business Writing - WCP 2014

The Essence of Business Writing

“The Essence of Business Writing” is number two in a series of ten “Essence of Management Articles”

You may have rattled off brilliant essays throughout school or university; however, business writing is tough. It’s full of subtleties and more dangerous than a minefield. It is a make or break it skill which everyone in business really needs to be on top of.

If you cannot clearly and simply convey your ideas into business writing for others to follow; or write a concise, accurate and compelling business plan  you are going to struggle to communicate with and develop the teams and structures you need to succeed in business.

Even in today’s seemingly casual environment business writing skills are vital. A well written email will deliver you a far better result than a weak one and a well written business plan, loan application or equity document can make your future just as surely as the reverse is true.

As a new graduate I was allocated to the office of the Finance Director a man of terrifying intellect and a reputation for the fiercest temper on earth. I recall in my early days that sitting in his large and plush office, which was always filled with clouds of cigarette smoke, scared me to the point that my mouth was too dry to use for speech and my bladder always appeared to be filled to maximum discomfort.

After a few weeks I was called into his office and he handed me a large clamp file of photocopied ledgers, notes, calculations, drawings and photographs and said “Can you turn this into a report on the cost savings to be made at the Victorian pipe plant? Nothing too detailed, say about ten pages; need it for next week’s board meeting” I nodded speechless and backed out of his office.

I froze, at last I understood “analysis paralysis”, I spent the rest of that day shuffling the papers and a large part of the next day doing the same. I could see and understand the data but I had no idea as to how I could even start to translate the complex data into a concise, meaningful and interesting report.

This was a test and I knew the cost of failure.

After hours of terrifying inactivity I thought back to my school days and how I used to piece together essays and I came up with the following written list of questions to myself.

  1. What is the purpose of the document

  2. What am I trying to say

  3. Who am I saying it to

  4. How do I present the information

  5. Have I quantified/qualified  my facts

  6. What is my conclusion

  7. Does it make sense

  8. Have I proof read it

My eight point format worked, the report was well received and importantly I still use this list today!

I think on that day I reached “The Essence of Business Writing” and it lives on. Let’s see how the 8 point essence can help you.

  • What is the purpose of the document: If you cannot answer this question clearly in three lines don’t write it because no one needs to hear it.

  • What am I trying to say: I literally write or type this question and its answer at the top of my first draft page of any complex document as I start to write.  I limit both question and answer to four lines each and if I have difficulty with space I rethink the documents whole premise. This question and answer should be at the core of every single communication even a simple email – though I usually allow a mental Q&A for emails.

  • Who am I saying it to:  Each audience has differing needs and expectations. Think this through; ask what will make a difference to your target audience. You are best to use a “different voice” depending on your intended audience. Therefore your writing style, words and authority should change accordingly. The facts are the facts but the audience changes.

  • How do I present the information: Remember when you start to write your report you know the subject backwards. Your reader is in your hands, take then on a sensible, fact backed and sequential journey finishing with a tight summary and sensible conclusion.

  • Have I quantified/qualified my facts: Your discovery that blue widgets outsell red widgets 10 to 1 is astonishing but when supported by respected research your discovery is in lights and your career is taking off. It’s all about cred! Yes research credibility brings respect.

  • What is my conclusion: In a well-researched, balanced and carefully thought through piece of business writing the conclusions will slowly emerge. Sometimes not the ones you or your audience wanted. Facts are facts and conclusions are drawn from those facts. Always call it as it is, don’t dress it up, a “bad” answer is much better than the wrong answer.

  • Does it make sense: In today’s world email a draft to a friend or mentor, their subject knowledge will usually be less than yours so see if it makes sense to them. Listen to input, take it on board but ultimately it’s your report and your decision.

  • Have I proof read it: The more important the document the more important the proof read and I don’t mean a computerised spell checker. Don’t tell anyone but I still have issues here. I check, I double check, my dog checks and yet every time I press “Publish” half a dozen errors flash in front of my eyes!

By, Neil Steggall

The Barking Mad Blog

SMS Advice with Bite

http://wp.me/p401Wv-eH

 

www.wardourcapital.com

Logo Small wcp 2014

Positive Pricing WCP 2014

The Power of Positive Pricing!

And how to use positive pricing to double your profits $$$

 

When discussing management theory some subjects are greeted with much more enthusiasm than others and recently I addressed a group of SME owners on “Improving Profits” a subject dear to all and a topic pretty well guaranteed to ensure rapt audience attention irrespective of the speakers skill.

Yes profit was in everyone’s mind and the subject was greeted with enthusiasm, yet as I probed, few participants really understood what profit is, how it is calculated and what profit really means.

After some general discussion I threw open three questions:-

  1. Do you know what your profit was last year?

  2. Do you know how to define or calculate your profit?

  3. Do you want to double your profit next year?

Let’s leave question 3 aside for now as I reckon you can guess the answer. Disappointingly however, few participants could provide a clear and accurate answer to questions 1 & 2, so we spent some time discussing the calculation and meaning of Gross Profit, Operating Profit, EBIT and finally Net Profit.

We covered off a little basic accounting and financial theory before agreeing that for everyday use EBIT (earnings before interest and tax) was perhaps the most relevant and practical “measure of profit” and that most companies operate within a rough ratio of EBIT of to revenue of between 5% and 20%. SME’s tend to perform a little better (in my experience) at between 10% and 20% and so we chose 15% as our optimum target.

Obviously question 3 brought about an enthusiastic if predictable response…….everyone wanted to double their profit! The reasons for wanting to increase profit were many and varied spanning those who were currently unprofitable and struggling to those who saw profit as the ultimate measure of success – more on that later!

So given the enthusiasm for the subject the doubling of profit was discussed as a group and the group ideas noted. Those ideas or suggestions for improving profits emerged in roughly the following order of importance:-

a)      Reduce costs

b)      Lift sales

c)       Spend more on marketing

d)      Use social media to drive sales

e)      Improve/increase product range/service

f)       Buy better/lower costs (stock, raw materials, etc)

g)      Improve efficiencies/productivity

h)      Expand/take on more staff

We work-shopped these 8 ideas until we collectively agreed that lifting profits this way wasn’t as easy as it looked and so I asked a very simple question.

“What would happen if you increased your selling prices by 15%”?

The consensus was nothing much. It may lose some customers but by focusing on service standards and a strong customer contact and communication program customer loss could be minimised if not overcome altogether.

Let’s return to our earlier accounting theory and take the example of an SME with revenues (sales) of $500,000 pa.

After wages, costs and overheads, that hypothetical business will generate an EBIT, as discussed, of approximately 15% of revenues –so let’s say $75,000 per annum.

If we applied an across the board price increase of 15% the hypothetical business would generate additional revenues of $75,000 which if costs are stable (as they should be) w ould flow directly to EBIT thus doubling your profit.

If your selling price was lifted by only 5% then your revenues would be $525,000 and EBIT $100,000 giving you an increased profit of 33.33% and so on.

Surveys demonstrate three consistent failings in SME profits:_

         i.            A reluctance to charge what the job or service is really worth – remember your EBIT or PROFIT is only 15% of revenues the rest goes to cover wages and costs

       ii.            A willingness to discount by 10% or 15% when asked. This “wipes out” your profit – why give it?

      iii.            A failure to pass on cost increases as they occur. This means your profit is slowly eroding by at least CPI and possibly more.

The money you retain or take out of your business each week to feed your family and pay the household bills with isn’t profit. That is your wage.

Given the risk, stress, long hours and commitment you dedicate to building your SME you need to see a profit over and above your wages!

Your profit can be fine-tuned by attending to some of the points raised in a) to h) above but addressing your price points will give you the fastest and most efficient profit improvement.

Earlier I mentioned that some SME owners see profit as the ultimate measure of success. Profit is perhaps better seen as the fuel that can be used to build your business through:-

  • Improved conditions and training for employees

  • Providing the highest possible and most up to date services to your customers.

  • Allowing access to quality advisor’s and advice

  • Employing and retaining the best people

These four points will lead to the achievement of sustainable profits and when you come to sell your business sustainable profits are very valuable indeed!

Neil Steggall

The Barking Mad Blog

SMS Advice with Bite

http://wp.me/p401Wv-dA

www.wardourcapital.com

Logo Small wcp 2014

Winning WCP 2013

The Power of Marginal Gains

I first heard of the power of marginal gains as a student. Back then “the power” of ideas such as marginal gains, marginal pricing,  marginal costing, marginal probability and compound interest were all being used in business studies to show how something didn’t have to be “wiz, bang, new, fast and you beaut” to make a difference. It was power man!

Compounding interest has continued to fascinate me and occasionally I while away the odd hour on Excel running compounding options. Truly fascinating…..really! The largest deal I ever closed was when as a young executive I convinced the board of a major American company to supply us on the basis of marginal costing.

Recently on a quiet Saturday (I know it’s sad) I googled “The Power of Marginal Gains” expecting to find a plethora of MBA theses on the subject but instead I found page after page of British cycling triumphs and a guy called Dave Brailsford – Now Sir Dave all thanks to his marginal gains!

British Cycling…….Why?

No British cyclist had ever won the Tour de France, but as the new General Manager and Performance Director for Team Sky (Great Britain’s professional cycling team), that’s what Brailsford was asked to do.

His approach was simple.

Brailsford believed in a concept that he referred to as the “aggregation of marginal gains.” He explained it as the “1 percent margin for improvement in everything you do.” His belief was that if you improved every area related to cycling by just 1 percent, then those small gains would add up to remarkable improvement.

They started by optimizing the things you might expect: the nutrition of riders, their weekly training program, the ergonomics of the bike seat, and the weight of the tires.

But Brailsford and his team didn’t stop there. They searched for 1 percent improvements in tiny areas that were overlooked by almost everyone else: discovering the pillow that offered the best sleep and taking it with them to hotels, testing for the most effective type of massage gel, and teaching riders the best way to wash their hands to avoid infection. They searched for 1 percent improvements everywhere.

Brailsford believed that if they could successfully execute this strategy, then Team Sky would be in a position to win the Tour de France in five years’ time.

He was wrong. They won it in three years.

In 2012, Team Sky rider Sir Bradley Wiggins became the first British cyclist to win the Tour de France. That same year, Brailsford coached the British cycling team at the 2012 Olympic Games and dominated the competition by winning 70 percent of the gold medals available.

In 2013, Team Sky repeated their feat by winning the Tour de France again, this time with rider Chris Froome. Many have referred to the British cycling feats in the Olympics and the Tour de France over the past 10 years as the most successful run in modern cycling history.

And now for the important question: what can we learn from Brailsford’s approach?

The Aggregation of Marginal Gains

It’s so easy to overestimate the importance of one defining moment and underestimate the value of making better decisions on a daily basis.

Almost every habit that you have — good or bad — is the result of many small decisions over time.

And yet, how easily we forget this when we want to make a change.

So often we convince ourselves that change is only meaningful if there is some large, visible outcome associated with it. Whether it is losing weight, building a business, travelling the world or any other goal, we often put pressure on ourselves to make some earth-shattering improvement that everyone will talk about.

Meanwhile, improving by just 1 percent isn’t notable (and sometimes it isn’t even noticeable). But it can be just as meaningful, especially over time.

And from what I can tell, this pattern works the same way in reverse (in other words an aggregation of marginal losses) a 1 percent decline here and there — that eventually leads to a problem.

In the beginning, there is basically no difference between making a choice that is 1% better or 1% worse. (In other words, it won’t impact you very much today.) But as time goes on, these small improvements or declines compound and you suddenly find a very big gap between people who make slightly better decisions on a daily basis and those who don’t. This is why small choices (“I’ll take fries with that”) don’t make much of a difference at the time, but add up over a period.

The Bottom Line

Success is a few simple disciplines, practised every day; while failure is simply a few errors in judgement, repeated every day.

Most people love to talk about success (and life in general) as an event. We talk about losing 50 pounds or building a successful business as if they are events. But the truth is that most of the significant things in life aren’t stand-alone events, but rather the sum of all the moments when we chose to do things 1 percent better or 1 percent worse. Aggregating these marginal gains makes a difference.

There is enormous power in small steady wins. This is why the tortoise usually beats the rabbit, the system is greater than the goal.

Where are the 1 percent improvements in your life?

Neil Steggall

The Barking Mad Blog

SME Advice with Bite

http://wp.me/p401Wv-di

www.wardourcapital.com

   Logo Small wcp 2014

A woman Knows - WCP 2014

What Do Women Know About Business……?

Quite a lot actually!

My offensively sexist headline was used as a “hook” to encourage you to think about gender equality in business.

Gender Equality WCP 2014

In my years in business very little management discussion has focused on the simple fact that our population is more or less and equal split between males and females. When gender is discussed it is usually in terms of targeting a product at either men or women – as an example I am told that in my son’s local supermarket in up-state New York they now sell pink rifles for the “girls”!

Where is he going with this? I hear you ask; well stay with me.

Each week I set aside two days, usually Tuesday and Thursday to meet with clients, prospective clients and the affiliate businesses we maintain relationships with. This week was different.

All but one of my meetings was with a female CEO or Manager; it wasn’t planned it just happened that way.

Interestingly SME’s lead the way in gender balance as over 32% of SME CEO’s are female compared to only 8% in the corporate world.

Now back to my week. It turned out to be both challenging and exciting as I quickly recognised that the “pattern” of the meetings was subtly different, the questions put to me were far more direct and probing and some of the feedback regarding our corporate direction and product offerings was more frank than usual. This was consistent across my two days of meetings and the only difference was the gender mix of the meetings.

I didn’t initially think anything of the changed “pattern” I merely enjoyed the buzz and excitement that flows from strong and intelligent discussion and was pleased with progress made. Towards the end of my string of meetings I realised this “pattern” had to be more that a coincidental meeting of minds with a series of very challenging intellects.

These very smart CEO’s were different. They were WOMEN!

Research from Dr Patrice Zsabo of The University of Manchester published in 2012 states that males and females do think and act differently in both social and professional settings.

The research suggested females demonstrated higher levels of both Social IQ and social empathy than men, they are conciliators by nature, good team members and more detailed, honest and open in their discussion with colleagues.

I recognised that I was benefiting from the subtly different ideas and views which flowed back and forth during the discussions with these very smart, savvy and professional women and I believe they felt the same. I quickly realised that collectively we were stronger, a more complete team.

 I didn’t agree with all that was put forward but I had cause to stop, think and question my positions and ideas and that very questioning provided me with a wider understanding of the issues.

Logically if 50 percent of the population is female and 50 percent male I am at a loss to understand why current management doesn’t reflect this.

Why as managers do we not venture out to seek the views of the opposite sex? Surely for optimum balance and a better understanding both sexes should be involved in discussing and determining the corporate direction.

I just don’t buy the “if we are professionals our sex doesn’t matter” It does. Management should reflect the society we live in, the clients and customers we do business with indeed it should reflect humanity.

It’s up to us male and female to make this happen and it’s easier as an SME to lead the change than it is for a corporation.

So let’s make a difference and take the SME balance to 50/50 we are already closer than our corporate counterparts.

Neil Steggall

The Barking Mad Blog

SME Advice with Bite!

http://wp.me/p401Wv-cM

www.wardourcapital.com

Logo Small wcp 2014

 

A Great Mind Map - WCP 2014

 

Mind Mapping: let it work for you.

MIND MAPPING

Some of us think better in pictures etc. Before thinking through a big idea, I usually visualise it as a diagram. I have always “solved problems” graphically. Sometimes entirely within my mind and then A1 sheets of paper, followed by whiteboards, and eventually computers. Now I use a combination of all three. I called it mind mapping long before the phrase became popular – it just seemed to fit..

Basically mind mapping is the task of transferring thought and ideas, group or individual into a written form. I find brainstorming sessions are so much more powerful if there is a mind mapper in the group and especially so if that person is good with pen, paper or the whiteboard.

Are you a mind mapper? Are you able to get those amazing business ideas you toy with when driving or in bed down onto paper? It’s a skill but not a hard one to acquire, it can be fun and importantly the results can really change your business.

WHAT IS MIND MAPPING?

A mind map is a powerful way to generate and visualise new ideas, analyse problems, brainstorm, plan, show or research, complex ideas. Isn’t this just good old fashioned “brainstorming” under a new name? I hear you ask. No, mind mapping is a more structured approach to analysing and solving problems.

We now operate in a world where graphic representations are used more frequently and our brains are responding well to graphic analysis. Here are a few handy tools you can use to incorporate mind mapping into your business process.

WHITEBOARDS

The most basic tool you can use for mind mapping is a whiteboard. If you have a whiteboard you can start mind mapping individually or as a team to solve problems or to formulate new ideas. Today life is so easy, when you have the whiteboard full of ideas, take a picture of the whiteboard with your phone and upload it to your computer and share it with the team. Sometimes I get the original whiteboard data on the 60 inch screen in the meeting room so the whole team can see it and we start again on the whiteboard testing out our earlier ideas. This is a great way to mind map as a team.

THE BIGGERPLATE MIND MAP

If you want to up the ante and introduce a little more structure and sophistication into your sessions there are now several free or inexpensive mind mapping programs available.

Biggerplate’s mind map should meet most of your needs. In this extensive mind map collection, you’ll find templates for almost every task and challenge, including business mind maps, training mind maps, and general mind maps which you can use in your everyday life. The Biggerplate templates include everything you need from SWOT analysis (strength, weaknesses, opportunities, and threats), time management matrix, project management, task management and even tracking objectives.

If you and your team are struggling to get the mind mapping started, the Biggerplate templates can lead you into and through the process. I enjoy looking through Biggerplate’s top 10 mind maps just to see which templates other professionals are finding useful.

MINDJET

Very easy to use and inexpensive to buy Mindjet is an easy to use program designed for a variety of tasks, including mind mapping and brainstorming, Mindjet has flexible features which can be used in a variety of tasks including mind mapping, strategy development, marketing, sales and information technology.

MAPS FOR THAT!

The title just about says it all. Maps for That is great if you’re looking to share the mind maps you have just created or if you want to browse mind maps submitted by other teams or team members. It comes with amazing features and includes user-submitted mind maps in a variety of categories; including business, analysis, management, education, entertainment, events, and productivity, just to name a few.

If you’ve created a mind map you think others may find useful, upload it to the Maps For That site so that other users of the service can share. Initially just sign up for a free account, you can download and upload mind maps, comment on other users’ mind maps, and rate the mind maps you find the most useful.

MOBILE APPS

If your business uses smartphones or tablets as a way to communicate or work on projects, check out the mobile apps available from Mindjet. These apps allow you to create, edit, and view mind maps while you’re on the go or away from your computer. Available for the iPhone, iPad, and Android devices, these mobile apps can be downloaded free of charge directly to your smartphone or tablet.

If you haven’t started using mind mapping in your business, you may be missing out. Mind mapping can be used to create new business ideas, solve complex problems, and brainstorm with other team members — whether you’re in the office or on the go.

As I said at the start we all think and work differently, I enjoy mind mapping, let me know what you think.

Neil Steggall

http://wp.me/p401Wv-b8

The Barking Mad Blog

Business Advice with Bite!

www.wardourcapital.com

Logo Small wcp 2014

Business-development

5 Tips for Business SUCCESS!

 

1.       Business Development Is Not Increasing Sales

Managing the development of your business has a lot in common with conducting an orchestra. It’s a case of encouraging and leading the various differing components of your business forward, in harmony, to the same point at the same time to produce an extraordinary effect. You need to develop your unique product or service to meet the highest level of customer expectations and you must do so at a price representing fair value and at a cost which generates a fair profit.

2.       Understanding profit does not equal cash

Profitable businesses fail every day. Many small business owners chase growth and revenues forgetting the basic facts of cash management. Profit equals Revenue – Costs but until you have received payment you are in a cash negative position. Ideally you would ensure that you have sufficient cash reserves to meet three to six months of costs. In the early days of a business keep fixed expenses as low as possible, use a virtual office and work from home if possible, keep full time staff to a minimum, pay cash or do without non-essential plant and equipment. This helps if you have a quiet month or even two.

3.       Intuition Versus Fact

Don’t build a business around a product or service you like or you would buy. Undertake sound quantitative research to determine what your prospective customers want and buy then see if you can develop an even better product or service at a price they are prepared to pay. Don’t be tempted to compete on price alone. If company A has been making its product for many years and you realise you could source and sell that product at a good profit for less that’s a good value proposition to you not your customer. The market is less willing to change supply on price alone but if you can offer a better value/service proposition where they get a better product and improved customer service you will have a much greater chance of success.

4.       Business & Financial Planning

There is an old saying “if you don’t know what you want you will probably never get it” and that’s certainly the case in business. A well thought through and documented business plan outlining your core objectives, market analysis, product development, marketing strategies and detailed financial budgets is essential. This is an area where you should consider the use of a mentor or an external consultant to help you get it right. Your financial plan should include linked budgets for P&L, Cash Flow and Balance Sheets. A beautifully bound business plan kept on a shelf is a waste of space it has to be a living breathing document understood and read regularly, reported against monthly and the strategies varied as needed to meet your actual versus budgeted position.

5.       Respect all Stakeholders

 A successful entrepreneur understands that the stakeholders in a business are not just the shareholders. The stakeholders include employees, suppliers, customers, shareholders and advisors and they are vital to the success of failure of your business. Spend time with each stakeholder, respect them, listen to their ideas, take their ideas, discuss your plans and your position with them. Take them on your journey as partners. Keep them honestly and openly informed and they will join your team and give you their full support. Again many businesses fail because they don’t earn the respect and support of their stakeholders. Building a successful company is hardit requires a lot of commitment and courage as well as a little luck and of course having a great product and team. Watching your idea become a product and a product generate revenue that becomes a successful company makes it all worthwhile. Working with your stakeholders and mentors, following and constantly updating your plans and finances will go a long way to ensuring success.

Neil Steggall

The Barking Mad Blog

SME Advice with Bite!

http://wp.me/p401Wv-ao

imagesCAP6MTH4

High Profits & About to Crash?

A relevant question for SME Management.

“How important is profit?” this question in one form or another is one of the most common questions we receive from new SME owners or potential start-ups and surprisingly it’s not a simple one to answer.

Some time ago I sat down for a chat with a highly intelligent friend who had recently joined the board of a mid-sized family SME. “I just don’t get it” she said “everyone tells me the business is booming, sales are up, profits are up yet from what I read the company is broke”.

My friend had sat down with the half year results and looked at the first two quarters performance against budget. Revenues were up by around 35%, Gross Margin was tracking, as a percentage, around 5% better than budget and operating expenses were around 11% lower than budget leaving a very healthy EBIT compared to budget and management applauding themselves all round.

Where is the problem? I hear you ask.

Cash or rather the lack of it was the problem. As revenues and revenue projections grew the funds allocated to the raw materials and finished goods needed to service such growth had increased exponentially as had the debtor’s ledger.

Yes the SME was producing more at lower cost and selling every item produced at a profit but amongst the excitement no one had calculated the impact on future cash flows.

If you achieve an EBIT of 20% (which is on the generous side) it means you have to outlay costs, in advance, of at least $0.80c in every dollar of anticipated revenue. You may offset this to some extent by negotiating an extension to trading terms with your creditors but that is a very slippery slope and best avoided.

If you sell your product to a major retail chain, they will look to pay you in 60 days from the end of the month in which you invoice them. So you could easily wait 60 to 90 days for payment. For every $10 of widgets you sell them each month your cost is $8 and if you carry that and the subsequent monthly sales until you are paid, you are out of pocket by $24 before you receive a cent. On top of which you have had to lift your finished goods to 60 days stock to meet varying demand and raw materials by 45 days so you are roughly $50 out of pocket as you wait for the $10 to be paid of which you retain $2 profit or EBIT.

Yes you are still profitable but your short term cash burn is exceeding income and without a rethink your fast growing, profitable enterprise is going to crash.

My friend could see where the company was heading whilst the sales manager was elated by high revenues, the production manager proud of the COGS and the operations manager satisfied by the low level of OPEX.  In all business management not just SME’s good cash flow management and budgeting is essential.

There were several funding options available to secure this company’s future once the threat was identified. But within 60 days the company may have been in turmoil and no funder wants to lend into a panic.

So in answer to the question; profit is very important but it is just one of what I call “The Four Pillars of Business”: Revenue, Cost, Profit and Cash; and always remember that whilst the first three are very important CASH IS KING. 

Neil Steggall

The Barking Mad Blog

SME Advice with bite!

http://wp.me/p401Wv-9D

Power Press IronyOne for me and one for you.

Why do the Rich and Powerful think rules are for

someone else?

The airwaves and social media are throbbing with outrage about politicians claiming allowances for private trips and businesses using bribes to win valuable work.

This is the kind of behaviour that most people know they would never get away with – even if they wanted to.

What makes it worse, in the mind of the average person, is that the people being exposed are already so privileged and powerful. Tony Abbott can easily afford to fly to Wangaratta for the wedding of a colleague, why would he charge the taxpayer $1094.64 for the trip?

Sydney Morning Herald columnist Peter Fitzsimons made a good point over the weekend, when writing about Attorney-General George Brandis charging the taxpayers for the cost of a trip to a radio host’s wedding.

Brandis had justified his actions with the comment that, with the wedding guest list dominated by media people, most of the time was spent “talking about politics”.

Retorts Fitzsimons: “Exactly. And surely the guiding light on such matters is whether or not you’re talking policy, not merely politics. Politicians pay for the politics, and we pay for the policy development, would [that] seem to be fair?”

It is notable that the Labour opposition has not exactly been shouting from the rooftops about these “wedding cashers”, leading to the suspicion that this sort of practice has probably been commonplace in Canberra.

But all this is small change compared to the allegations that Leighton Holdings had paid multi-million dollar kickbacks to win work – and claims that the then CEO, Wal King, had approved it.

And then there are the ongoing investigations into the business activities of the former NSW Labour ministers Eddie Obeid and Ian Macdonald, as well as questions about why the new NSW Opposition Leader, John Robertson, did not report the offer of a $3 million bribe by businessman Michael McGurk, who was murdered in 2009.

Of course, these are just the cases that are in the media today and many of them may not account to actual illegality or corruption – no such findings have been made in the travel claims allegations or against Leighton Holdings, Wal King or John Robertson.

But the frequency with which such allegations are made about our leaders makes you wonder about what goes on that we never find out about.

The big question is: why do they do it? What makes successful people more likely to bend, break and flout the rules? It is not like they don’t know what the rules are – they generally make them.

Hypocritical tendency

To investigate whether power corrupts, or if power merely attracts the corruptible, Joris Lammers at Tilburg University, in the Netherlands, and Adam Galinsky at Northwestern University, in Illinois devised an experiment that suggests that power promotes a hypocritical tendency to hold other people to a higher standard than oneself.

According to a report in The Economist: “These results, then, suggest that the powerful do indeed behave hypocritically, condemning the transgressions of others more than they condemn their own.

“But another everyday observation is that powerful people who have been caught out often show little sign of contrition. It is not just that they abuse the system; they also seem to feel entitled to abuse it.”

“People with power that they think is justified break rules not only because they can get away with it, but also because they feel at some intuitive level that they are entitled to take what they want. This sense of entitlement is crucial to understanding why people misbehave in high office.”

Another interesting finding from another study is that people tend to think that rule-breakers are powerful.

A study in the Social Psychological and Personality Science journal says when people have power, they act the part.

“Powerful people smile less, interrupt others, and speak in a louder voice. When people do not respect the basic rules of social behaviour, they lead others to believe that they have power . . . ”

“Norm violators are perceived as having the capacity to act as they please”.

In this way, we law-abiding people play our part by unconsciously colluding with the rule-breakers, admiring them for their chutzpah and not taking them to task when we should.

If you have already read my previous rant on those wonderfully powerful people at the Reserve Bank of Australia and their minor and quite understandable transgressions I apologise but……………..

The Barking Mad Blog

SME Advice with bite!

9 October 2013

http://wp.me/p401Wv-5k

If you enjoyed this article please sign up and follow our blog.

The Perfect Storm

(A Modern Horror Story)

Because it Rains in Paradise

Why be so negative?……. well let’s use  Paradise as a metaphor.

Because It Rains in Paradise…….!!!!!! 

Come along take a short ride on this little thought wave, let’s see Paradise as a metaphor for a well-run business, a prosperous and growing concern and let’s see the rain as a metaphor for an approaching economic storm.

How well protected are we in terms of our ability to weather the storm? We have our business plans to hand but they make no mention of a storm. Have you been through a storm before? What changes? How do we survive? How bad will be storm be? Can we rebuild post storm?

So many questions and yet so far so few real life answers.

Breath deeply, let us relax together and read a little story……….

At times business can appear a lot like paradise, it’s a great place to be, and everyone wants to be there to enjoy life with you, to know you and to bask in your reflected success. You are the visionary, the hard working, creative, entrepreneurial brain who made this all possible, your adrenaline flows, your energy and ideas come together, your staff are happy, motivated and successful, they respect you, the cash flows in, you drive a nice car, dress well, you eat at the best restaurants, you fly at the front of the plane, you speak at conferences, and…….ahhhh you sit back, relax and you reflect on just how good your life is.

One day, a small cloud passes between you and the sun, sending a slight shiver through you, but it quickly passes. Utilizing your latest smart devices you send a few more ideas, instructions, queries, emails and more pictures of Paradise to your office, you check your bank balances, transfer a few funds here and there and it’s not yet lunch time.

The sun still shines but the palm leaves rustle again this time with an unsettling sound and in the distance the ocean appears darker, are those clouds, building in the far distance or a trick of light on the horizon?

Far, far away from Paradise and way over the horizon is The Land of Plunder (LOP). A terrible, bleak, dark miserable environment that draws the humanity, skill, resourcefulness and entrepreneurial spirit out of you like a black hole draws energy from its surrounding universe…..no profit, not even a scrap, ever escapes its clutches.

Populated almost entirely by wise and educated sages such as investment bankers, credit providers, speculators, derivative traders, stock brokers, securitization specialists, short sellers, long sellers, fund managers, promoters, actuaries, lenders, accountants, auditors, receivers, managers, liquidators, lawyers, barristers, regulators, and their shiny suited minions oh it’s a soulless place to exist yet alone to live.

The problem is that in the Land of Plunder no one actually makes, grows, manufactures, produces or sells anything. Nothing. Not a single thingamajig or even a widget. Not a single truly commercial activity in the whole land. Yet its population consumes the funds made in Paradise, it lives to play games with those funds converting them into concepts and instruments called spreads, market sectors, cash, gold, minerals, fuel, pork bellies, red bean futures, long and short positions, options, shares, derivatives, differentials, margins, rates of interest, rates of exchange, incremental ROI, leveraged positions, contingent assets and equally contingent liabilities. Perhaps the favourite game of all, played only by the most knowledgeable of sages, is the interpretation and discussion of meanings…..net, gross, before, after, on or off the balance sheet, earnings brought forward, deferred debt, provision for, contingent, or not and most importantly the holy grail itself………THE BONUS.

That night as you lay back in your king size bed, sipping a final glass of Comte de Taittinger, the wind rises and the palm leaves rustle, indeed as the tree trunks bend under the increasing force of the wind you get to thinking about The Land of Plunder. Who actually pays them and what for? What happens historically? Doesn’t the LOP like totally fuck up at least once every generation? And what happens when they do? Could it damage your business? What could you do to protect your business and the thousands like yours?

Another perfect day in Paradise dawns and already your CFO has confirmed that your cash registers are still singing caa-ching, your revenues are up, your staff are motivated, your customers are happy, your suppliers are on time and on budget and your R&D team is about to make yet another technological breakthrough and yet that lingering fear niggles away at you. How would I get by if the LOP was to get it all wrong?

Much of your new day is given over to this dreadful thought, and with the help of your laptop you reflect on history’s greatest LOP fuck ups. Dating from the Roman Emperor Diocletian’s disaster in the fourth century to those wicked Medici’s and their Pazzi Conspiracy and the subsequent Banking collapse of the fifteenth century, to the collapse of the Spanish economy in the mid sixteenth century….oh how could the wise sages have got the gold price so wrong? Of course no one within the LOP’s Dutch branch could have imagined that one day a Tulip Bulb would be worth less than its weight in gold but alas it came about. All of this further distresses you.

You of course realise that in the eighteenth century the sages came up with a brilliant plan, they sold the South Seas Company the exclusive rights to trade with and to import gold and other untold riches from South America. Sadly the sages didn’t actually clear this with the owners of South America, (Spain) or even mention it in the prospectus, small oversights they later realised and thus came about the South Sea Bubble. To date this is still history’s largest corporate collapse. Those damned Spaniards just didn’t play Cricket, did they, the sages were heard to mumble.

Racing forward, you find we have the sages of the LOP, engineering a convenient double act, in the Railroad and Silver collapse in nineteenth century America. Again the sages were ever so slightly wrong. More rail road carriages and rail roads were built than there were people and stock to travel on them. Some railroads went to towns and cities yet to be built. Proving that a double act was possible, the sages funded one or two, or was it ten or twenty, US silver mines to be opened on virtually the same day and surprise, surprise, the silver price fell through the floor. The US economy plunged into recession, jobs lost, families homeless, Railroad stocks crashed and companies failed but God Bless the sages……they still had their fees.

Still good hardworking entrepreneurs just like you were soon back at work in Paradise building their businesses, making and selling thingummy bits, widgets and the many whatnots needed by the people of Paradise. The sages were so impressed they decided to buy shares in these solid enterprises and trade them at a profit in LOP, whilst of course charging fees and profitably clipping tickets along the way.

Alas the shares were oversold and overpriced and in 1929 the entire global monetary system collapsed causing the worst depression, loss of jobs, homelessness, self-respect and starvation the world has ever known. In fairness some of the sages did feel quite bad about this and threw themselves out of their Towers of Babel to the pavement below. Though not many; and for the few that fell it was often as close to reality and real people as they ever came. One could go on and on mentioning the sages doing so well out of the provision of two glorious sessions of twentieth century global war debt, the Credit Squeeze of the early ’70s, the stock market collapse of 1987, the Banking Crisis of the early 1990’s and that monumental fuck up of 2008, but by now you really need a drink;

More importantly you need to recognise a the pattern, call in some real people and plan!

Please lets us know your thoughts, ideas and feedback. Contribute to this debate is both free and important to do so!

Post your thoughts below and………………….give some bark to your thinking!!!

October 2013

Neil Steggall

http://wp.me/p401Wv-aS

The Barking Mad Blog

SME Advice with Bite!