Sterling Performance

The launch of Windows 7 promises to put IT decision-making back on the agenda for many businesses. Companies that have delayed IT purchases in a bid to restrain capital spending can only wait so long. There comes a point when out-of-date hardware and software will not only leave you at a competitive disadvantage — slow machines can also cost you money.

A new OS from the dominant player in business computing seems like a good time to put IT back on the agenda.

But while a new version of Windows is big news — especially to businesses who find Microsoft’s current mass-market operating system Vista to be “problematic” — there are now far more choices in play if you’re looking to revitalise your systems. Let’s take a brief look.

1. Apple Mac. With the emergence of the hugely stable, highly usable, very attractive and widely supported OSX operating system, the company is moving out of its enclaves in the creative industries. And using emulators such as Parallels, Wine or VMWare Fusion, all of those business-critical and legacy Windows applications can run on swanky Apple hardware. It might cost a bit more but users will thank you for greater stability and better ease-of-use. Even accountants are starting to consider Macs.
2. Desktop Linux. Open source Linux emerged as a brand in the late 1990s. But although it promised to revolutionise the operating systems market, it failed to gain traction at the desktop level. The explosion of the market for netbooks — small wireless laptops — has proved a boon to Linux. Because these devices compete heavily on price, using a free operating system is immensely attractive to vendors. That’s exposed many more end-users to a world without Windows.
3. Cloud computing. The netbook model works (whether it’s Linux, Windows or something else) partly because so much data and so many applications now reside across distributed networks of servers. Cloud computing allows businesses to use application service providers (ASPs) to run their applications for them. “We’re delivering a traditional outsourced IT service but we do it remotely,” says Nigel Redwood, MD of e-know.net. “Our customers have no need for IT staff on-site to manage their hardware or applications. Their technology people can focus on value-adding activities and supporting users at the desk.”

You’ve probably come across the term “software as a service” (SaaS), too. Again, the idea is that rather than have your own servers and applications, you simply log on to the internet and do all your business remotely.

All operating systems have web browers. Moving your business into the cloud makes the decision about exactly which hardware and operating system you use almost meaningless. Windows 7, judging by early feedback, looks to be a better bet than Vista. But Microsoft no longer has the lock on business computing that it once did.

(Pic: treehouse1977 cc2.0)

It’s interesting to see how one retailers are adapting its offer to the changes in consumer demands. Last night I saw a new advert from PC World and it struck me how the computer products retailer is re-inventing itself.

The advert is about a man who loves to watch films and the message is that PC World can help him design a home entertainment centre with his PC.

The difference here is that PC World has switched from selling computer equipment to selling dreams. Gone are the shots of people walking down aisles to be received by smart, friendly shop staff. Instead is a talking head embellished with special-effects. Hollywood star Christian Slater even makes an appearance, so it’s obvious PC World has spent a lot of money on this campaign and it’s a sign that it is committed to changing the way shoppers see it.

It has responded to the changing relationship consumers have with computer equipment. PC World stores have up to now been associated with geeks, who want to improve or customise their computers. (more…)

Karl Marx would be spinning in his grave. The media are reporting excitedly about shareholder revolts against the executives.

That means capitalists are revolting against the workers. That is the world turned upside down. Marx’s idea was that the workers would revolt against exploitation by the evil capitalists, not the other way around.

In the bad old days, workers put in all the effort and the capitalists took all the reward. Now shareholders are left with all the risk and the workers take all the rewards: ask any bank shareholder how they feel about such a risk return ratio.

As ever, Marx got it wrong and Adam Smith got it right. (more…)

Of all the British banks for which a name change would hide their shame, Abbey is not one. Northern Rock, Royal Bank of Scotland, Halifax, Bank of Scotland and even Lloyds are tarnished brands since the state rescued them. Yet it is Abbey, the former UK building society with a relatively unimpaired balance sheet, that will disappear, replaced by the name of its Spanish parent, Santander.

This is a self-inflicted destruction of a brand, like Norwich Union’s transformation into Aviva or HSBC stripping Midland Bank of its well-established identity. Other names, like Safeway or Forte, disappeared in takeovers, or crumbled into insolvency like Woolworth or Rover, but Santander has chosen to replace a well-known and trusted intellectual property with one the UK public will have to be educated to accept.

There are many reasons to change brand names, some of them good. There can be synergy in consolidating branding, as when Nestle bought Rowntree. Or a corporate name can confuse: B&Q invented the Kingfisher name to point out it was not only a DIY chain, for instance. And sometimes the old name is so badly regarded that anything else is better; Slater Walker survived the 1970s secondary banking crisis but started afresh as Britannia Arrow.

Yet it can be better to repair a damaged name than scrap it. (more…)

What would make a 29-year veteran of a business up sticks and leave? At oil giant Royal Dutch Shell, Linda Cook, formerly head of gas and power, was passed over for the top job and is doing what one blogger calls the decent thing and leaving.

Speculation is that incoming CEO Peter Voser could be merging her division with production and exploration and cutting 30 per cent of senior management.

So staying on might not have been an option — although you can’t help thinking Voser could’ve done well to to keep such a safe pair of hands on the board, particularly in light of the roasting the business is currently taking.

Why was she passed over? Evidently, Voser was more known among the investment community and had gained valuable outside experience as a turnaround expert at Swedish engineering group ABB. Some didn’t even see Cook as a contender, according to Womenomics.

All of which bears out research published by talent strategy specialists DDI. While doing some global research, DDI stumbled across a corporate Bermuda Triangle into which talented working women seem to disappear.

But unlike Cook, most women don’t step off but fall off the career ladder long before they reach the top, says DDI’s  “Holding Women Back”.

The problem’s that women are being excluded from fast-track talent development programme and are missing out on learning opportunities that they need to get to senior executive level.

So why aren’t they doing anything about it? According to DDI’s research, they don’t actually find out until it’s too late. Women “are not only less represented at the highest levels of an organisation, but processes are in place to ensure the situation doesn’t change”.

They aren’t being granted the same access to high-potential talent development opportunities, and although it’s not a case of deliberate exclusion, it shows the difficulty companies have in making board-level diversity a reality.

“There’s an expectation that women hit a glass ceiling, but it happens much earlier than that,” says DDI senior consultant Mary-Rose Lines.

The situation’s been allowed to continue because most high-potential programmes are “conducted in secrecy” — neither men nor women know they’re being groomed for stardom and so they don’t know what goals they are hitting or missing along the way.

The idea that women lack vision and this stymies their progress has already been quashed by BNET’s readers. But men in business schools may still believe it, says DDI’s report.

Then there’s women being their own worst enemies by losing heart  and dropping out of the race. Lines’s advice: “Become more tuned in to how decisions are made and do not assume good work speaks for itself.”

From the corporate viewpoint, what’s needed is a dose of objectivity and more formal succession programme. Shell’s already better than many — although by July it’ll have just one woman on the board. But until most companies see the benefit of diversity, things aren’t likely to change.

But even if women were granted equal access to the ’star’ programmes tomorrow, there’d still be a problem that affects both sexes: if you’re the one who’s passed over, (which is bound to happen to a majority), is it really essential that you leave?

In a world of supposedly flattened organisational structures, why do sideways moves still look like a demotion?

Think about people who have inspired you at work. I bet the one thing they had in common is that you knew what it was that they were telling you.

As John D Rockefeller observed: “The ability to deal with people is as purchasable a commodity as sugar or coffee and I will pay more for that ability than for any other under the sun.”
 
At the heart of this ability is being able to communicate effectively – getting people on-side and, as managers, getting both buy-in and a motivated team.
 
For this to work, clarity of content that is critical.  Think of those inspiring people again — they were probably clear, concise, to the point and, most important, they were honest. You knew where you stood with them.

Now think of the wafflers in your life, those vague people who didn’t know what they really wanted from you. And even the ones that had to deliver bad news but sweetened the pill so much that you didn’t have a clue what they were on about. I’ll bet they aren’t on your Bosses Who Inspired Me list.
 
I remember talking to a colleague about great bosses. She mentioned someone I vaguely knew but who I’d always thought of as being a bit of a dragon. Her explanation? “I may not have always enjoyed the journey, but boy did I learn a lot.”
 
Similarly, I remember taking someone to task by explaining that I’d been “disappointed”. She told me off for choosing ‘disappointed’ — I was fluffing it. It was clear that I was mightily pissed off and should tell her that. Then she’d know where she stood and could respond accordingly.
 
Part of the challenge we have is that we all want to be good with people – we all want to have that asset that Rockefeller described as the greatest ability of all. But with that comes responsibility.

In today’s motivational culture we just have to make sure that, as communicators, we are clear about what is good and what is bad.
 
That doesn’t mean to say that we have to rubbish people’s efforts and there’s no sense in deliberately going out of the way to be hurtful. We just have to be honest communicators.

(Pic: earthworm cc2.0)

Shell shock: CEO Jeroen van der Veer's bonus is a blight on Royal Dutch Shell's image

Does it pay to be ethical in your business? We’ll come to a definition in a minute, but a couple things suggest the question’s becoming more important.

First, this article on Ethical Corporation, arguing that even the seemingly rapacious and cold-blooded private equity (PE) industry is getting interested in all things cuddly. PE firm Doughty Hanson has now endorsed the Principles for Responsible Investment.

“We’re not doing it to earn brownie points,” the firm’s Guy Paisner told EC. “We are doing it for cold, commercial, opportunistic reasons. Firms that operate in a sustainable way significantly de-risk their business model and ultimately attract higher valuations in the capital markets.”

That justification holds true for many investors and businesses. If the latest boom and bust has taught us anything, it’s that we all need to play a reasonably long game.

PE firms were flipping investments within months in the middle of the decade — a decidedly unsustainable model.

It might be uncharitable to suggest their love of sustainability has been caused by their need to hold onto their own investments for longer as M&A markets languish.

But it’s fair to say firms that are serious about the business of investment banking can see the benefits of long-term risk management.

The other data point is the rejection by shareholders of Shell’s remuneration report. Shell has some other ethical worries, but the exec pay issue strikes to the heart of the public mood.

Can it be ethical for these people to earn so much money? The avowedly upright Co-operative Asset Management obviously thought not.

Which brings us to a definition of “ethical”. For some people it’s just a case of not breaking laws. Whether it’s on the environment, exec pay, working conditions or quality of products and services — so long as it’s legal, it’s ethical.

The problem here is that the last few years have shown us that the rules aren’t actually terribly good at securing good long-term outcomes; and the people who make the regulations aren’t very ethical and tend to be out of touch with business themselves.

So companies that offer excessive rewards for execs shouldn’t be surprised that they now have a problem on their hands despite being perfectly legal.

For many of you, ethical business is a moral imperative. That’s not just working within the law, it’s taking a paternal (yet not patronising) approach to employees, causing no long-term damage to your environment, supporting your community.

These ethical approaches are bedfellows to the more obvious value creators — like going the extra mile for customers and supporting innovation.

In value terms, the longer you can sustain earnings, the more your company should be worth on a net present value calculation (just ask those private equity guys).

But sometimes good ethical considerations yield immediate benefits, too. Just ask John Lewis Partnership. Most retailers (especially the most rapacious ones) would kill for their performance in the midst of a recession. Whichever way you cut it, then, ethics is now seriously good business.

(Photo: WEF, CC2.0)

Any manager needs to be concerned with getting the best from people. But how do you tell if you are actually doing that?

A favourite way is to conduct a staff survey for deciding the extent to which people feel fully engaged with their work.

The trouble is, while staff surveys are popular amongs talent managers, their validity is questionable.

The much respected Gallup organisation regularly polls staff in numerous organisations about their levels of engagement. Best Companies also conducts engagement surveys across business.

But Peter Hutton, who has spent more than 30 years in research and was at one time deputy managing director of pollster MORI, argues they are too ambiguous to truly measure engagement. “They offer the wrong questions in the wrong way”.

So how do you measure whether your team is engaged and enjoying their work? The answer is to avoid “off the shelf” solutions and get close to the “customer” — in this case the people doing the work. If you truly listen, they will soon tell you whether they are finding the work fulfilling and if not why not.

But what manager has time to do this — many find themselves too busy answering emails (up to half their day, according to some studies) and attending meetings.

Spending time with the people you manage, looking and listening and seeking feedback, is too often a minority managerial activity. But there is no substitute for this kind of interchange. Quite simply, nothing beats being around and being available.

Being available sounds obvious yet even top managers can forget this important lesson.

In one company we worked for some years back the MD and majority owner, complained that he did not really know whether his people were being fully productive or not.

We steered him away from an expensive and highly dubious staff survey. Instead we asked him to come in each morning and on his way to the office, stop by people’s desks and say “good morning!”

He was amazed at the response. Not only did people smile at him, which seldom happened before, but they happily explained what they were doing and some of their current frustrations.

From then on the boss’s daily walk to his office became a continuous and increasingly reliable check on people’s level of engagement.

(Photo: oskay, CC2.0)

How’s your cashflow? It’s a vital question right now.

Ask your finance director what their three main priorities are and you’ll get the answer “cash, cash and cash”.

In a downturn, cash means you can pay your bills and stay in business. Or, as one FD puts it, “You can make losses for years, but you only run out of cash once.”

There’s a good chance it’s going to get even more important quite soon. So it’s probably time for a refresher course.

A few things cashflow is not
(If these seem obvious, consider how many companies have got them wrong since the financial crisis

Cashflow is different from profit and loss. Whether an activity is profitable is important, of course. But the time when you actually see the cash come in from customers determines whether you can use it to pay bills (particularly the important ones, like wages, rent and taxes).

Nor is it working capital. Money that’s unavailable — invoices customers have yet to settle and stock you haven’t sold — is working capital. You enhance your cash position by minimising working capital and extending the time you take to pay your own suppliers, the tax man, your landlord and so on.

The reason cashflow could become a problem now:
At the start of recession, most businesses get caught out. They’re still ordering stock as if sales are buoyant, and then orders drop off a cliff.

That means they have lots of cash tied up in inventory. They stop ordering goods to stem cash outflow and start to run down their investory levels to meet (a lower level of) orders, converting that working capital to cash again.

When the inventories start to run low — as is the case now — companies can start to order again.

That’s good news for their suppliers. But instead of converting stock to cash, they have to start paying for goods again.

Customers paying on credit mean cash inflows can lag outflows unless you’re careful. Worse, when the recovery does kick in (we live in hope rather than expectation) growing order sizes further stretch working capital. Overtrading is a nice problem to have, but it’s still a problem.

The solution?
Well, the 13-week cashflow forecast is perhaps the most important tool in the FD’s armoury. It picks up potential problems and ensures you can manage working capital proactively.

Better yet, be a supermarket. The main reason Tesco has been such a blistering success is that it had negative working capital.

People pay at the tills in real time, while the supermarkets don’t pay suppliers for 30, 60 or even 90 days. All that cash, then, sits merrily on their balance sheet or can be used to expand their business.

It seems such a simple thing, but being able to stand up and state your point of view clearly and warmly is still one of the greatest challenges executives face.

But it can also be invaluable for your business. I was listening to financial guru Gerald Ashley’s SIMA talk, “Could it be true that psychopaths make the best traders and entrepreneurs?”

He’s a brilliant speaker and it occurred to me that his ability to be funny, relaxed and informed in front of a large (and probably demanding) audience speaks volumes for his reputation and brand.

Here are some pointers for those who’d like to follow Ashley’s lead:

1. Put some thought into what you wear so that you feel good, then when you step up to the stage you will know that whatever happens you look great. And pay attention to your shoes — on a stage they may be right in front of the audience’s eyes.
2. Tell your story in three slices — the beginning, (tell them what you’re going to tell them), the middle, (tell them), and the end, (tell them what you told them). People won’t retain much of what you say, so you need to reinforce your story.
3. Know your topic inside out. It’s a bad idea to learn your speech off by heart. If you dry up or stumble, you’ll just stop dead and look foolish. Instead, think in bullet points to make a speech flow.
4. Slow down. Breathe and use pauses (great orators speak at 120 words a minute — newsreaders at 200). If you speak too quickly the audience retention will be next to nothing anyway. Take your time and pause to verbally underline important points.
5. Imagine the audience is full of five-year-olds. That should help calm your nerves and remind you tell them stories. People love to picture things in their minds and will remember more of what you’ve got to say as a result.
6. Join a speaker’s club such as Toastmasters International — it’s encouraging, not intimidating. Toastmasters is a worldwide organisation that’s easily accessible and will teach you how to use your voice to good effect and build your confidence. I know it helped me.
7. Move around the stage — don’t be tied to the spot by fright, and use gestures and pauses to emphasise sentences.
8. If you’re prone to sweat when you’re nervous, don’t wear a mid-coloured shirt or blouse that may expose tell-tale dark patches — wear white.

What do you think — do you have other tips to help nervous speakers make the most of their moment in the limelight?

(Photo: MSDPE, CC2.0)