Blog

How Well Do You Know Your Business Model

Many business owners and senior managers, if asked, admit to having a great understanding of their business model and the market in which it operates. In reality, most have a startlingly shallow understanding, failing to take into account many facets of the model.

One of the difficulties in defining or describing a business model is the complexity involved. Verbal descriptions are often long winded and ineffective to describe the components of the business that exist, and how they all integrate with one another. As an excellent example, consider the owner of a small business I spoke to the other day. I asked him about his business, and the model he had chosen. To most, his answer was acceptable – his business manufactures clothing items out of his small office in Australia. When prompted for more information, he didn’t have much to tell. Why is that a problem? Simple. Knowing only what your business does means you are failing to comprehend large portions of your business model. This owner could not tell me which customer segments his business targeted, what the channel to market was, or even what the specific revenue and cost components of his business model were. That’s a problem.

This may seem pedantic, but this is critical for anybody managing a business. Knowing the business you are in is not an option, but a strict requirement. If you’re starting a business, figure out a solid business model before you ever put pen to paper on your business plan. If you’re already in business, dedicate some serious time to understanding your business model. If you can’t make the business model work, change it. Don’t fall into the trap of many small business owners, writing a […]

Customer Service and Profit are Complimentary

Customer Service and Profit go hand in hand. Many people think that to do well at one means reducing the other. They could not be more wrong. To see why, look no further than restaurants in your own town.

The other night I was at a local restaurant with my wife and some friends. We arrived on time, having made reservations earlier and also confirmed earlier in the day. Upon arrival the friendly wait staff informed us that our table was not yet ready, and we should wait at the bar. Well, he wasn’t wrong. We stood in the bar for at least five minutes before being served. After much fuss, we were eventually seated and the night continued.

What’s this got to do with customer service or profit? Everything. If the wait staff had of immediately taken our orders, they would have provided exceptional customer service, and also maximised the profit per customer. Have you ever gone to a restaurant and waited, searching out wait staff to order drinks? Alcoholic beverages are one of the most profitable areas for restaurants, and a lack of customer service in the area is bordering on negligent.

Don’t go thinking that this only applies to restaurants or alcohol, because it applies to you too. If you have staff who provide customer service you can maximise profit by increasing your customer service. If staff take orders over the phone, they can ensure the customer has accessories or related products they may require. Too often, the customer can get half a solution simply because the phone operator “took the order” and nothing beyond.

If you believe you’re trying to make money by forcing unwanted products onto the customer, you are. On the other […]

Honesty Is the Best Policy and the Only Option

In all parts of all organizations, honesty is the best and only option. Whether you’re dealing with a customer, colleague or a supplier, you should never, ever, do anything dishonest.

Seems like simple advice, right? Exactly, but many people struggle with it. Sometimes it’s difficult to be honest. It’s not easy to tell clients you can’t deliver. It’s not easy to tell somebody you’re letting them go. It’s not easy telling a supplier you’re switching. Certainly there are many, many cases where it’s much simpler, and more comfortable, to be dishonest or mislead.

However, in almost all of those circumstances, it’s counter-intuitive. First of all, look at the outcome in each of the above examples. In any of them, honesty gets you the end result. It’s like ripping off a band-aid, it hurts. Get it done quickly and correctly, and it’s out of the way. Contrast that with dishonest behaviour. In most of the examples, you’re delaying the inevitable.

Dishonesty also doesn’t win friends. You’ll alienate your employees, superiors, customers and suppliers with your conduct, which is also ethically questionable. Best case scenario, you’ll make an enemy where you could have a fan. Worst case scenario, you’re in all kinds of ethical and legal hot water.

Stick to honest behaviour. Don’t fall into the trap of deceiving others just to save yourself a difficult conversation. Be frank, open and transparent and the market, and people in general, will reward you for it.

How to Deal with Poor Employee Performance

Employee performance is an area that a large number of managers fall down. They struggle with the whole box and dice from understanding why performance fails to meet expectations, to not knowing what performance actually is. Sound familiar? If it does, listen up, because these tips will help you to better manage your staff and get the excellent performance outcomes your organization is after.
1. Know What Performance Looks Like
It sounds simple, but this is where the majority of managers fall down. You need to know what performance looks like in your organization, and for each individual position. Without that, you’re flying blind. Worse, so are your staff! You most certainly can’t expect them to know where and how to direct their efforts without some accurate guidance as to what performance actually looks like.

Easier said than done, right? How do you actually put that into practice? Unfortunately there is no one right answer, however it does all start with knowing your organization. You need to understand what the overall strategic objectives are, how they fit in with your local operations, and who does what. Start there, and the rest will slowly become clear.
 2. Identify Performance Gaps
Once you have a handle on what performance looks like in your organization, you’re equipped to identify any gaps where performance doesn’t meet expectations. But, and I’ll put this in bold because it’s important, you cannot identify performance gaps before you know what performance looks like. It’s like complaining that Google maps incorrectly plots the course for your next vacation, before you even know where you intend to go.

Another tip for the identification of gaps in performance, and thus under-performing employees, is that gaps should be identified based on actual data only. This […]

Learn From Mistakes, If You Can Acknowledge Them

Mistakes are absolutely wonderful things. They are the method by which people learn and improve, and without them we’d be stuck doing the same things every day like the old Bill Murray movie, Groundhog Day.
The key to harnessing the full power behind the mistakes you make is acknowledgement. It ties back to the locus of control. In simple terms if a person predominately views themselves as being responsible for outcomes and results, they are said to have an internal locus of control. Conversely, those who mainly feel that others are responsible for the outcomes or results have an external locus of control.

Those with an internal locus of control are much more likely to learn from their mistakes. They acknowledge responsibility which allows them to identify better ways to avoid the problem in the future. Those who view everybody else as responsible are unlikely to learn the same way, as they can’t admit their actions were the cause. If they did nothing wrong, there’s nothing to learn.

To tell you the truth, that’s on of the things I dislike the most in people – the inability to admit their shortcomings, especially when they proceed to blame anybody and everybody else. You probably know the type. Typically, the same mistakes occur again and again, but it’s never their fault. It’s always the vendor, their staff, the customer, or some other external force. I find the stubbornness really makes me think twice about the prospects and usefulness of those staff.

What’s the take away from this? Acknowledge your mistakes openly and honestly. Learn from them, and strive for better outcomes in the future. For those who manage staff, encourage your staff to acknowledge mistakes in the same way.

Managerial Power – Why Coercive Power is Overrated

Most people have heard about the various types of managerial power within organizations. Yet, it still terrifies me when managers default to, and delight in, the use of coercive power. It’s equally as pointless as it is ridiculous.

For those who haven’t heard of coercive power, and as a reminder for those who have, I’ll give you a quick overview. Coercive power stems from the ability to administer both rewards and punishments. In an organizational sense, it typically refers to the power for a manager to threaten to, or actually deliver either discipline or allocate undesirable work tasks.

“Authentic leaders rarely, if ever, rely on coercive power to accomplish objectives.”

What’s unfortunate is that many new managers, and indeed some more experienced managers, think that coercive power is the only tool available. They jump at the opportunity to show off their power to discipline subordinates as if it’s some kind of trophy. And of course, employees respond absolutely negatively. In fact, there is practically no place for coercive power inside a healthy organization.

Authentic leaders rarely, if ever, rely on coercive power to accomplish objectives. Instead true leaders utilize referent power, or charisma, in combination with expert power. But it’s not that simple. You see, legitimate leaders understand power, but do not use it consciously. Legitimate managerial power is less like a tool kept in your toolbox, and more like a wonderful cologne. You don’t pull it out and use it at specific times, it follows you around and lends you some real value without you even thinking about it.

 

 

Management Development – Trends in 2012

We’re a little way into 2012, and what better time than now to touch on some of the emerging trends in management development this year. While a large amount hasn’t changed from last year, it’s worthwhile covering the big picture items, as the vast majority of organizations are stuck in their old management development systems.
From Individual to Organizational Focus
For effective organizations, the focus for 2012 is moving away from individual key members of staff toward the overall organizational capability and capacity. That means exceptional businesses are looking at the bigger picture, deciding who really needs management development.

It’s really the only intelligent way to decide where to spend scarce training budgets. To really do this effectively, it’s absolutely vital that you know the maturity of your management staff across the organization. From there you can develop an organizational management capacity inventory, allowing you to know where the organization is, and in which areas and people you need to focus. Be careful, though, you don’t want to single out poor performers as a method of punishment. In fact you’ll see the best returns by focusing your development on the 50% of staff that make up the middle of the range.
Management Development as a Pipeline
Some companies are starting to realise that management development isn’t just training. It really is a great pipeline for future talent requirements across your organization. If you’ve developed an understanding of your current management capacity, you can make some assumptions about the future, and use them to develop staff competencies for the long-term objectives.

This is an opportunity which is almost always missed. Organizations often develop managers with vague plans of what stereotypical managers do. While that no doubt has some benefit in developing […]

Young Managers and Management Development

One topic I find very interesting is management development, particularly the development of young managers. By starting to develop people into managers early, they become much more effective over the course of their career.

What got me thinking about this recently was a visit to the local Navy Cadet unit. One of the older more experienced cadets showed an exceptional ability to manage the others, to the extent that I wanted to congratulate her! It really made me wish that the type of managerial experience she had gained over her time there was mandatory for all new managers.

The point of this post isn’t to suggest all managers should take on a five-year course to develop their skills. The point is to draw attention to management development for young managers.

Far too often young managers are placed into their first management position without any advice, training or development. With such a poor level of preparation by middle and senior managers, what can we expect? Several years of below average performance, as the new manager learns “on the job”.

We can, however, shortcut this learning curve. There are a plethora of ways to develop your young managers faster. For example, some of the services that Daniel Rose & Company deliver for clients include coaching for new line managers, the establishment of mentor programs, and of course traditional management development workshops or training courses. Which is the best option? All three. They each serve a different purpose, and help your new managers to develop the skills they’ll need to become effective within your organization.

When it comes to your best bright young managers, do not under invest. They provide perhaps one of the best return on investments in the management development […]

Why Qantas Missed Out with the Air Australia Collapse

Anybody in Australia has probably heard all about the “Air Australia” carrier’s voluntary liquidation. If you haven’t, you can find out all about the Air Australia collapse here. The really shocking bit was the opportunity this present for Qantas, and how they missed it almost completely.

For those of you reading from areas other than Australia, Qantas is the quintessential Australian national airline. It’s not government-owned, but it has a rich history and historically has been the golden child of the Australian airways. In recent times, Qantas has been marred by union shutouts, threatened strike action, leaving more than a few customers stranded and less than impressed. Days ago it was announced that 500 jobs were being cut, because of a huge drop in profitability.

What’s this got to do with Air Australia? Opportunity. For Qantas, the Air Australia collapse was an opportunity to become the knight in shining armour. With around 4000 Australians stranded overseas, Qantas could have stepped in, saving the day. The cost to provide additional services, bringing stranded passengers home, pales in comparison to the goodwill generated. The “Flying Kangaroo”, looking after Australians when they need it most.

Granted, Qantas are providing some extra services. But there are stories of stranded passengers being required to pay. The Qantas CEO, Alan Joyce, was interviewed on morning television show Sunrise, and asked about how Qantas could help. Rather than a direct, “All Air Australia customers will be flown on Qantas, with no extra charges.”, his answer swerved around as though he was giving somebody directions to the transfer desk.

The point of this isn’t to bag Qantas. They’re my favourite airline. The point is to demonstrate the beautiful opportunity they had to cement their position as Australia’s national […]

Culture Change In Organizations: The Forgotten Step of Unfreezing

Managers at all levels try to focus on culture change to work around a myriad of organizational troubles. My message to most of them? You’re doing it wrong.

Almost all managers trying to influence culture change focus their efforts on practical changes. People interacting differently, doing tasks differently, or seeking organizational approvals differently. That’s fine, but it’s important not to get ahead of yourself.

The critical step, almost always missed, is that of unfreezing. Unfreezing is the stage which makes people receptive to change. It loosens the existing culture, which makes it easier to change the elements as desired. When managers skip the step of unfreezing, and move straight to other parts of culture change, it causes several problems.

Firstly, with an ingrained culture and without receptive staff, any kind of culture change will be difficult to drive. Staff will resist, directly or indirectly, and make the changes a terribly difficult experience. Secondly, any change that is successfully driven without unfreezing is very unlikely to stick. Those same unreceptive staff are likely to pay lip service to change, and quickly slip back to old ways making your expensive culture change program practically useless.

How does unfreezing happen, and what does it all mean? There are several different methods, each suited to particular circumstances and existing cultures. Usually, unfreezing involves experiences which take staff out of their comfort zones, and expose them to uncomfortable interactions. It’s a little bit like Scrooge McDuck in “A Christmas Carol”, coming to understand the real truth. Next month I’ll post my top tips for unfreezing organizational culture. Keep an eye out, it will help you become an effective manager of change within your organization.