Sterling Performance

A rising tide floats all boats, but in today’s economy companies face a falling tide and choppier waters.

Last week, for example, Ilva’s UK operation went into administration, continuing the poor performance of furniture retailers (see also SCS and Land of Leather). Few companies are immune — even Nike’s shares fell after it reported flat sales growth in the US.

There are a few ways to succeed in today’s tidal conditions:

• Be the lowest-cost supplier of everyday essentials. Last week, for instance, it was reported that discount food retailers Lidl and Aldi are currently delivering double-digit growth.
• Have a unique, distinctive and valuable customer proposition. Apple continues to deliver growth as a result of its stream of innovative and desirable products which are able to transcend normal economic realities.
• Adapt to the new conditions quickly.

For most of us, the only real option is three — we must find new ways to succeed. As Charles Darwin wrote, “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”

Reducing cost is essential, but is unlikely to be sufficient. SCS, Ilva and Land of Leather all operated lean, low-cost business models, but this has not been enough when they reached the economic low tide.

You must also find new ways to grow. There are three mindsets that are critical to delivering growth in any conditions.

1. Create success for your customers. It is often easier to grow by selling more to your best customers than by seeking out new customers. What new forms of value could you create and deliver that will benefit your best customers and strengthen the relationship between the two of you?
2. Focus on action. Amazon.com has transcended the dotcom boom and bust cycles by continuously developing, testing and delivering new benefits for customers. It’s what CEO Jeff Bezos called “the institutional YES!”
   “People say ‘We’re going to do this. We’re going to figure out a way’,” Bezos told Harvard Business Review.
3. Accept risk. In many ways doing nothing is the highest risk option for many companies. In any case, as management writer Peter Drucker once wrote, “People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”

What other strategies help your organization sail on through today’s tricky tides?

177,000 people, 100,000 acres, 700 acts, 80 stages and 3,000 loos, rain forecast all weekend — it must be Glastonbury.

Now in its 28th year, it’s also the perfect example of a sustainable business and rare proof of good project management in action. An audit last year found that it cost £21.2m to stage, but made £52m in revenue, says Supply Management.

Main costs
The acts: £2.5m
Staffing: £1m
Clean up: £1m
Donations to charity: £1.5m

What it does really well

Buys locally Over half of 2007’s £20.2m spend went to suppliers in the south west and £4.5 specifically to the Mendip region where the festival is held. Local suppliers also keep 800 festival stallholders from running out of stock.

Uses its trusted supplier network It encourages traders to use Glastonbury’s recommended suppliers in a virtuous circle that grows stronger year on year.

Manages waste It composts post-festival waste and shipped the five tonnes of wellies left behind to farmers in Senegal. In partnership with Milletts, it’s giving out £400,000 of biodegradeable tent pegs made of potato starch.

Uses volunteers Music fans will probably be happy to don a green helmet and act as a nuisance monitor if it means access to the festival.

Seeks out low-energy options A wind-powered phone generator offers free, green re-charging for festival goers.

Controls the numbers Gripes aside, the ticket cost (£155 this year) and limits on how many each individual could buy keep it sustainable. (more…)

The Workplace Law Network explains how the draft Equality Bill, ‘Framework for a Fairer Future’, could affect UK employers and their teams.

It aims to “de-clutter” complex discrimination laws and bring them together under the heading of ‘Equality Duty’. It also zeroes in on weak spots in those current rules — ageism, homophobia and disability discrimination are still going unchecked, according to Equality Minister Harriet Harman.

Key proposals

• Employers to report on equality matters such as pay and diversity. (According to Francis Gibb, Harman was pushing for compulsory pay audits.)
• Positive discrimination OK for for women or minority job candidates if it comes down to a ‘tie-breaker’.
• No more ageism in the provision of services.
• Employers cannot outlaw discussion of pay.
• Tribunals can rule for the benefit of not just an individual, but the whole workforce of a discriminating employer.
• The government will investigate how multiple complaints can be brought — say, if someone claims discrimination as a disabled woman.
• Public-sector purchasing will promote the equality agenda through through procurement.

It’s all voluntary — at least for now — so employers’ organisation the CBI is broadly approving.

But all this talk of openness makes me think of Trendwatching’s Transparency Tyranny.

Surely all this disclosure can go too far. Or is it just a case of careful training, so that line managers can handle the tricky conversations that ensue when X finds out that Y is earning more — not because of some unfounded prejudice, but because Y is better at their job.

As entrepreneur John Timpson once said, not everyone is equal. (He even admits to ‘discriminating against drongos’.) But perhaps it’s not the employer’s place to exacerbate those inequalities any more than necessary. As you can tell, I’m on the fence on this one.

But employees up for letting it all hang out can have their say, too, by visiting Glassdoor.com — which reveals what employees think of companies, what they pay and how the CEO is rated.

British consumers are fed up with the high cost of living, according to McCann Erickson’s annual ‘Mood of Britain’ survey, written up in Marketing. And brand managers, marketers and advertisers may need to re-think campaigns to match the shift in sentiment.
The economic situation is now the biggest influence on UK consumers, with the high cost of living as the UK’s biggest gripe — consumers are increasingly concerned as they see it outpacing salary rises.

It’s not yet directly affecting the UK’s love of shopping, but the research into what makes consumers angry indicates that it soon will — and then they will want something different from their favourite brands.

“Attitudes toward debt are changing. The excesses of the ‘living on credit’ lifestyle are becoming more frowned upon and could… soon become as unacceptable as smoking,” says the article.

Other targets for British ire include

• Gordon Brown
• Banks
• The environment
• Crime
• Immigration

How brands should respond

• Add value Brands that offer more value for consumers will earn favour — Sainsbury’s ‘Feed a family for a fiver’ or Lloyds TSB’s AirMiles mortgage. Environmental campaigns should help consumers save money while saving the planet.
• Be sincere Messages need to convey the appropriate level of gravitas, with financial services firms and banks such as Barclays already opting for more earnest campaigns.
• Tout your history Brands with heritage offer the comfort of solidity to consumers. (more…)

Apparently, something called ‘achievement amnesia’ is blighting jobseekers’ chances of getting an interview.

Research by iProfile has found a mis-match between what employers look for on a CV and what job applicants deliver.

Employers consider work-based achievements essential to a good CV. But job applicants spend more time tinkering with the design than working on the content.

They often dash off their CVs in less than two hours and, in their haste, struggle to recollect significant achievements or learning experiences over six months’ old.

iProfile interviewed 200 employers, of whom 73 per cent claimed they’d rejected job applicants because they’d failed to highlight workplace achievements.

They also claimed that applicants who sell themselves convincingly are in a position to ask for higher starting salaries — 51 per cent of employers said a strong seller could ask for five per cent more.

Start keeping a record of career milestones, suggests iProfile (not surprisingly), using new online sites that allow you to update information continuously.

iProfile has a vested interest in changing the way we compile CVs, but it asks a valid question — is the old-fashioned job resume dead?

Is there a better alternative?

UK managers underestimate the skills of their Chinese counterparts, says Management Issues, reporting on the Institute of Leadership and Management’s report, ‘Global Management Challenge: China vs the World’.

The western perception of Chinese management is outdated, says the ILM — we see China’s as a place where long hours and low costs prevail and management is authoritarian. But Chinese managers are highly principled and consider themselves good motivators who are outcome-focused team players.

What’s more, China is starting to develop a “distinctive and highly effective management culture” that could result in businesses that leave the west in their wake, doing for China what techniques such as ‘kaizen’ did for Japan.

“The similarities with post-war Japan are uncanny,” says David Pardey, the ILM’s senior manager, research and policy. If so, western businesses need to up their game or find themselves outstripped in the longer term.

Chinese managers are generally far more educated and ambitious than those in the west, and in-house training is taken seriously — telecoms giant Huawei has its own university.

The ‘Chinese way’ of management draws on western management models but is binding them with its own culture to create a new practice.

The traits most valued by Chinese managers reflect this:

• Knowledge, wisdom and the ability to learn.
• Taking responsibility.
• Teamworking skills.

“The emphasis is on ‘communitarian’ values, discussion and consensus,” says Pardey. “Decisions emerge, rather than being made.”

What appears to western eyes as a reluctance to make decisions is simply a result of this consensual approach. What’s more, because everyone’s been consulted on a decision, they are more likely to buy into it.

The management model also focuses on long-term results. “There’s a strong emphasis on relationships and not allowing short-term setbacks to deter a business from its end goals, whereas the Anglo Saxon model is much more short-termist,” says Pardey.

He cites China’s barter-style investment in Nigerian oil as an example — it’s willing to shoulder an initial loss for a bigger gain in the long term.

This is where western complacency is dangerous. Chinese businesses may not be immediate threats to their western rivals, but in 10 years, they will have deep foundations that guarantee success.

The ILM research also claims western managers tend to be slower to identify areas for improvement than the Chinese, a trait that must change.

Says Pardey: “We have got to learn and we’ve got to innovate. The UK’s strength is in risk-taking — culturally, it is more prepared for innovation. But not enough UK organisations are at the leading edge.”

Having trouble persuading your boss that you need a pay rise? The FT’s Adam Jones offers a compelling argument, courtesy of legendary music producer Quincy Jones.

Managers’ work, if done well, is likely to be invisible, argues Jones (Adam). What you do all day is smooth the path for others to deliver results. Your ability is in the orchestration — like QJ’s.

It’s also about bringing together the right contacts from your network, which, in Quincy J’s case have included Ella Fitzgerald, Miles Davis, Diana Ross, Lionel Ritchie and Michael Jackson.

A manager’s value is bound up in his or her star contacts, plus their ability to get others to produce. It’s also, presumably, about creating in-house stars — who might go on to eclipse their manager.

This is the hard part. Adam Jones doesn’t mention it, but the famously perfectionist QJ could also teach managers a lot about how to forego the limelight while retaining recognition.

Mind you, any boss who’s experienced the ‘negative equity’ resulting from poor management — or no management at all — will recognise these ‘invisible’ skills in a trice. Won’t they?

Contrary to conventional wisdom, conflict is an essential characteristic of any high-performing team.

Weak teams and committees are full of people who keep their opinions to themselves when together, only to whine when outside the group.

Effective teams get the issues on the table immediately, confident in the knowledge that they are working toward the same goals.

Take Manchester United. From Schmeichel to Keane to Rooney, and not forgetting the manager, Sir Alex Ferguson, the team has always had individuals ready to challenge others — often very directly — to raise their game.

The key to success is to ensure that the conflict is positive, not destructive. In business, there are two major advantages to allowing conflict and differences of opinion to influence big issues and decisions:

• Clarity of solution. Sculptors often remark that as they work on the stone, the final piece reveals itself. Solutions to major decisions are the same. They are crafted and shaped by the arguments and counter-arguments that positive conflict encourages. As weak arguments and ideas are chiselled away the best solution becomes clear.
• Commitment to action. Allowing and encouraging positive conflict builds rather than destroys commitment. Everyone can be involved in developing the solution, giving your team greater ownership of the solution. As the quality of the final solution is likely to be higher, your people will have greater confidence that it will work in practice.

So how can you promote and develop positive conflict with your team? Here are three steps you can take:

1. Develop genuine alternatives. There is more than one way to grow sales profitably. A good alternative should
   • Address the issue or opportunity head-on.
   • Enable you to create real performance improvement.
   • Improve your competitive position.
   • Be feasible for your organisation to deliver.
2. Encourage an ‘inquiry mindset’. Harvard Business School’s David Garvin argues that business leaders should create an ‘inquiry mindset’ across their teams, promoting collaborative problem-solving where team members remain open to alternatives and accept constructive criticism. They should avoid an ‘advocacy mindset’, where decision-making is a win-lose contest involving persuasion, lobbying and the dismissal of others’ views.
3. Recognise the risks. All alternatives have risks and, even with your final solution, these should not be played down. Recognising the risks allows you to plan preventative and contingent actions, giving you and your team even more confidence in the final solution.

Is there sufficient positive conflict in your team? If not, is it time to encourage your people to challenge others’ ideas and assumptions and put forward genuinely new alternatives?

Another note on Generation X, this time more positive. They may be the bashful ‘dark-horse’ generation between the limelight-hogging Boomers and Millenials, but X-ers are behind some of the most radical social media businesses in the world.

This is the upshot of the fantastically named book, ‘X Saves the World’, by Jeff Gordinier, reviewed on Wikinomics by Naumi Haque.

Gordinier on YouTube gives a flavour of the book. In brief:

In their quiet, questioning way, Gen X-ers are changing the way the world does business, especially online through Google, Wikipedia, Craigslist — “those companies have altered the face of global media,” says Gordinier, not without justification.

Gen X-ers, rebelling against the ‘macro’ approach of the Boomer, create businesses with a “niche quality, in-betweener, middle-child sensibility”, says Gordinier, contrasting Google’s low-key founders with Apple’s mythologised Boomer boss.

They like to influence their immediate sphere, radiating out from there: Architects for Humanity is a perfect example of the X-er’s “indie philanthropy”.

Gordinier deems the X-er “anti-collective” and not especially motivated by money. Yet the business examples he cites are often both extremely rich (Brin and Page of Google, for example) and creators of sprawling online collectives.

Whether X-ers meant to become captains of industry or not, many have. Now in charge of some of the world’s biggest businesses, they’ll have to tap into Millenials’ sensibilities as employees and customers.

That’s going to be tough if all X-ers share Gordinier’s view of the next generation — “in it for the money” and “completely greedy”. Not a great start to a fruitful working relationship.

Personnel Today reports back from a CIPD conference where Fionna White, Nestle’s head of recruitment, talked about ‘candidate relationship management’, which brought cost-per-hire down to £700 a person.

How she did it: She took £5,000 she’d been allocated for one hire and spent it on developing a Web presence. Called the Talent Pool, the site posts specific jobs, but also allows candidates to submit their CVs, even if there isn’t an appropriate vacancy for them at the time.

HR can then assess submissions as they come in, rather than being inundated with CVs over a month or so. At launch, 300 people registered, 25 were rated excellent and seven appointments were made.

As a concept, the top benefit must be that anyone who registers with this type of site is demonstrating a real interest in the business — so you’ve got an early indication of loyalty. On the minus side, it’s an ongoing cost and without promotion, a fairly passive hiring vehicle. But clearly, the advantages outweigh the disadvantages for Nestle.

“We had a case of a candidate being kept warm for a year, and when a job was finally available, we rang them up and they accepted — in effect, a 24-hour turnaround from offer to acceptance. You can’t ask for more than that,” said White.