Tuesday 17 July 2012

Sounds a no-brainer to invest during troughs and reap dividends during peaks?

There is enough historical and mathematical evidence to prove that return on investment is maximized when the investment is made at the troughs of the business cycles instead of at the peaks. Mathematically, this must sound fairly obvious considering that returns come from business benefits that are directly or indirectly a function of the business volume.
Why then, do some parts of the investor and business leadership community get overly obsessed with bottom-line improvement in a downturn? When there is a dire need to generate cash on a day-to-day (ok, that was an overkill, read short-term) basis because of an intent to cash-out at the earliest or you’ve already made the mistake of investing at a peak, you are likely to have no choice but to focus on the bottom-line. The latter is reality that you can live with if you have a long-term vision and a sound strategy for volume uptake beyond the market on a revival but the former could be a real danger if the underlying reason is that you have run out of ideas to improve volumes beyond the market even on revival.
You would be surprised just how many people and organizations demonstrate this behavior and what their underlying reasons are. I recommend trying this hypothesis out in your own ecosystem or with businesses you watch closely and see the results for yourself.

Friday 13 July 2012

Am extracting some stuff from my blog http://saysmuraliaboutlife.blogspot.in/ that are more relevant in a business scenario than otherwise. Here's one...

THE IMPORTANCE OF GREY
The first and most important step towards building consensus in a multi-party scenario is to establish the presence of grey. If the view remains binary till a decision is to be made, the only way to decide would be to have the majority prevail if the process is to be kept democratic. That is, often, the worst outcome in a multi-party discussion or negotiation since all parties in the minority have been provided infinitely more time to prove the decision wrong, and that too at the time of carrying out the action following the decision!

Wednesday 11 July 2012

Leadership lingo and mindset – the most common faux-pas

A job well begun is half the job done. If the leadership mindset is incorrect or its messaging is unclear, it puts at risk the entire task at hand. Right posturing and positioning, they say, is the all-important first step to a product’s success. Putting together a winning team to work towards organizational success is no different.
I am attempting to call out some of the most obvious leadership mindset and messaging faux-pas that one comes across in routine day-to-day corporate lives. I know there would be countless others, more commonly used and starker in their incorrectness. I am just attempting to kick-off the topic with a small list of five – would really appreciate if readers could contribute their own observations and stuff they have experienced or come across, that are along similar lines.
So here goes…

Employee engagement – I am sure the original semantics of the phrase was centered on the concept of making the entire process of running a business, participative, by involving more and more people that make up the organization from ideation to implementation. However, the latest interpretation of this phrase is akin to co-curricular activities in academics. Employee engagement in most organizations has become the generic buzzword for cultural, social, sporting and similar activities involving a cross-section of employees.
Inclusive growth – This is another classic case of trying to convey the participative culture and that the employee is a key stakeholder in the business and its growth. It is all very well till you start contemplating the corollary - what would non-inclusive growth mean? That your contribution is not seen as worthwhile or that you contribute and I grow!
The 30-60-90 day plan – There are some who would have us believe that if there is no 30-60-90 day plan attached to a piece of work, independent of it being creative or demure and routine, it cannot be meaningful and relevant to the organization. More often than not, if you can put something into such a plan, it is likely to be something that ought to have been done anyway, plan or no plan, because you could think through every bit of what needs to be done!
Empowerment – Another term used in leadership messaging which means everything and nothing all at once! You constantly hear that you must feel empowered to make decisions and conduct your business in your own way. Well the only catch is, you have to keep the leadership ‘informed’, you should ‘operate within the set boundaries’, you should seek ‘approvals for exceptions’, et al. The operating word in actual empowerment is ‘trust’. If trust is at a premium and found lacking, there is no real empowerment. It is like ‘you can decide alright, but you can act only after I have approved’!! Empowerment, in such a scenario, would be the delegation of decision-making and not the delegation of work. Real empowerment would be to provide the flexibility to influence process changes, at times even work around them on ‘exception’ basis without compromising the goals, values and the fabric of the organization.
The Comfort zone – You would often find leaders propagate the mindset and message that when folks get into a comfort zone, their productivity and creativity would suffer. Hence the mantra for organizational efficiency and effectiveness is to prevent anyone getting into a comfort zone – the corollary being everyone should operate in a zone of discomfort. This is the biggest faux pas you would come across. It is a simple law of nature that resonance is constructive and has the characteristic of enhancing the combined output beyond the sum of individual outputs. This is true with humans and teams in resonance as well. Put folks in a comfort zone and you are likely to find greater productivity and enhanced outcomes.

   
Note: The views expressed here and in any of my posts are my personal views and not to be construed as being shared by any organization or group that I am or have been associated with presently or in the past.

Tuesday 3 July 2012

Business reviews – how much is not too much?

This is a question that all leaders must have asked themselves at some point in time in the process of conducting business. The entire business cycle - ideation, simulation, conception, planning, execution, delivery, feedback and back to ideation – must be reviewed periodically along multiple themes and viewpoints and across multiple levels of detail – strategic and tactical down to transactional. Reviews could be for financial performance, customer satisfaction, employee productivity, sales forecasts and fulfillment planning, name the thing.
It is important to take a step back and understand the fundamental need for business reviews.
It could be to –
·         track and monitor progress and status against a plan (review of performance), for e.g.
o   business plan for the organization, a function, a process, a charter, a project
o   employee performance
o   customer experience / satisfaction
·         review the output of a business process (review of a deliverable), for e.g.
o   proposal, quotation, contract review
o   design review
·         ensure compliance to procedures, statutes, rules, policies et al, for e.g.
o   process quality reviews
o   legal/statutory audits
Well, the intent was not to put together an exhaustive list but to give insights into what kind of reviews are typically done in any organization and to zero-in on the particular category that we are trying to address here. For the purpose of this discussion, we will confine ourselves to the first sub-bullet of the first category and just call it, business reviews.
At one end of the spectrum, there are people and businesses that just believe in and focus on doing things. They do not have formal review mechanisms and are fairly ad-hoc in their method and periodicity of reviews. Not all of them summarily fail in their businesses but the element of predictability, sustenance and people-independence of such a business’ outcome and results is suspect. At the other end of the spectrum are people and organizations that are, simply put, either ‘control freaks’ or ‘consensus committees’. There is, in such cases, an elaborate process to review with set periodicity, not only the business and its performance, but the review process themselves, the policies, procedures, people, everything! There are preventive reviews and when they fail, corrective ones; proactive and reactive reviews, reviews of the review process where its effectiveness and efficiency is reported, consolidated and reviewed!!

There are many organizations where business metrics like revenue forecasts, sales and opportunity pipeline, hiring performance etc are measured, reported and reviewed on a weekly basis. There are systems being built to have a general ledger view across businesses and geographies on a daily basis. There are monthly account reviews and quarterly business performance reviews with 30-60-90 day action plans which are reviewed, you guessed it right, every 30 days. There are week-long annual business strategy and planning meets, a month of preparation before and another month of communication after, quarterly employee performance feedback, annual performance and compensation reviews. The entire business reporting cycle is on a weekly basis with the preparation, review and action plan spanning a day. Such organizations spend more management time reviewing what was done and the plans of what is to be done, often more than 50% of their time! And they would report their low productivity numbers periodically, review them, have an action plan to improve it and review that diligently all over again!!
So, jokes apart, what is the ideal periodicity of a business review? Is there an absolute answer across businesses, organizations, cultures, and the product-process-people ecosystem? How do you determine what to review, when to review and how to review?
There are no absolute answers but here are some pointers to what may or may not work for you…
1.       Try to find a correlation between action items that emerge from your reviews and their significance to the business. If there is a positive correlation, the review is a value-add.
2.       Recap what was reported in the previous review – if the numbers, issues, line-items, trends haven’t changed much, you should revisit the periodicity of your reviews – it is, perhaps, too often?
3.       Drop into the reviews conducted by your direct reports – if the content (and indeed, the template) of the report is similar to your reviews, ask yourself if there is any value in the same facts being reviewed twice and at what level in your organization are the action items owned. One of the reviews is, obviously, redundant!
4.       Revisit the objectives and process of your reviews – are you using these as mechanisms for you to understand what’s happening in your business? Does everyone just run through the data in standard reports that are brought into the meeting or is there an opinion, perception, value beyond the data? Could you be gathering this information offline? Do you really need a meeting to comprehend data?
5.       In the worst case, if you are unable to figure out if there is a value-add or otherwise, cancel a review but still call for and track the data. This will be most revealing!
6.       The 10-20-30 rule. And finally, as a golden rule – if you are spending more than 10% of effort at any level of the organization in reviews (of any kind), you’ve tipped over. If you are spending more than 20% of that review effort in tracking and monitoring business that has already been conducted (as a corollary, at least 80% of your reviews have to focus on business that is likely to come in the future), you’ve tipped over.  If you are spending more than 30% of that effort in audit-mode or finding-holes-mode of reviews, you’ve tipped over.


Note: The views expressed here and in any of my posts are my personal views and not to be construed as being shared by any organization or group that I am or have been associated with presently or in the past.