The Ongoing Productivity Debate

In my previous blog, I mentioned that productivity in Australia remains sluggish. There are various ideas as to why, and what we could do to improve performance. There are suggestions that traditional productivity analysis may track the wrong thing(s) – for example, output should not simply be measured against input hours, especially in light of technology advances such as cloud computing, AI, machine learning and AR/VR. There are even suggestions that rather than working a 5-day week (or longer), a four-day working week may actually result in better productivity outcomes – a situation we may be forced to embrace with increased automation.

Image Source: Wikimedia Commons

It’s been a number of years since I worked for a large organisation, but I get the sense that employees are still largely monitored by the number of hours they are “present” – i.e., on site, in the office, or logged in to the network. But I think we worked out some time ago that merely “turning up” is not a reliable measure of individual contribution, output or efficiency.

No doubt, the rhythm of the working day has changed – the “clock on/clock off” pattern is not what it was even when I first joined the workforce, where we still had strict core minimum hours (albeit with flexi-time and overtime).  So although many employees may feel like they are working longer hours (especially in the “always on” environment of e-mail, smart phones and remote working), I’m not sure how many of them would say they are working at optimum capacity or maximum efficiency.

For example, the amount of time employees spend on social media (the new smoko?) should not be ignored as a contributory factor in the lack of productivity gains. Yes, I know there are arguments for saying that giving employees access to Facebook et al can be beneficial in terms of research, training and development, networking, connecting with prospective customers and suppliers, and informally advocating for the companies they work for; plus, personal time spent on social media and the internet (e.g., booking a holiday) while at work may mean taking less actual time out of the office.

But let’s try to put this into perspective. With the amount of workplace technology employees have access to (plus the lowering costs of that technology), why are we still not experiencing corresponding productivity gains?

The first problem is poor deployment of that technology. How many times have you spoken to a call centre, only to be told “the system is slow today”, or worse, “the system won’t let me do that”? The second problem is poor training on the technology – if employees don’t have enough of a core understanding of the software and applications they are expected to use (I don’t even mean we all need to be coders or programmers – although they are core skills everyone will need to have in future), how will they be able to make best use of that technology? The third problem is poor alignment of technology – whether caused by legacy systems, so-called tech debt, or simply systems that do not talk to one another. I recently spent over 2 hours at my local bank trying to open a new term deposit – even though I have been a customer of the bank for more than 15 years, and have multiple products and accounts with this bank, I was told this particular product still runs on a standalone DOS platform, and the back-end is not integrated into the other customer information and account management platforms.

Finally, don’t get me started about the NBN, possibly one of the main hurdles to increased productivity for SMEs, freelancers and remote workers. In my inner-city area of Melbourne, I’ve now been told that I won’t be able to access NBN for at least another 15-18 months – much, much, much later than the original announcements. Meanwhile, since NBN launched, my neighbourhood has experienced higher density dwellings, more people working from home, more streaming and on-demand services, and more tech companies moving into the area. So legacy ADSL is being choked, and there is no improvement to existing infrastructure pending the NBN. It feels like I am in a Catch 22, and that the NBN has been over-sold, based on the feedback I read on social media and elsewhere. I’ve just come back from 2 weeks’ holiday in the South Island of New Zealand, and despite staying in some fairly remote areas, I generally enjoyed much faster internet than I get at home in Melbourne.

Next week: Startup Vic’s Impact Pitch Night

 

 

 

 

 

Change Management for Successful Product Development

Recently, there have been a number of commentaries on the current trend/fad for applying Agile and Lean product development methodologies to corporate management. I’ve also noticed an increasing focus on “Product Management” as a formal discipline by training and professional development providers. Consequently, I’ve been revisiting some work I did many years as part of a Change Management Diploma.

Situational Leadership

My thesis is that different Change Theories of Management can be applied to each stage in the Product Development Cycle*, to ensure that the organisation is aligned with the business needs as they relate to strategy, capabilities, capacity and execution. This is also the context in which organisations use Situational Leadership techniques to cope with constant change in technological, social, economic and environmental forces.

(*This work was based on a reading of Theories of Organisational Change as Models for Intervention by Dunphy & Griffiths (published by Australian Graduate School of Management – Centre for Corporate Change, University of New South Wales, 1994). For a copy of my model, please contact me: rory_manchee@yahoo.com.au)

1. Fit for Purpose

Various skill sets are needed along the journey from ideation to production, and management has to harness appropriate resources to increase the potential for success. Organisations may need to consider restructuring to maximise their ability to develop sustainable product development systems that incorporate continuous improvement, feedback loops and market responsiveness.

For example, moving from annual software updates to quarterly releases might simply suggest some production rescheduling, but it may also mean changes to documenting user requirements, customer billing systems and client support tools.

2. Playing to Our Strengths

The person who is great at capturing the design specs may not be the best person to undertake market testing with beta users. And it’s generally accepted that someone who is adept at working in a production or QA role on an established product may need some re-training before they get to work on building a prototype.

3. The Model Approach

In conclusion, my analysis reveals that at each stage in the Product Development Cycle, there is a need to review the relevant Business Challenges, address the corresponding Change Issues, and apply appropriate Change Management models or techniques.

 

Update on Perspective – Introducing the “We R One World  Game”

In a recent post on “Perspective”, I commented on the value of stepping back and taking a different look at current ways of doing things. For an immersive, interactive and experiential learning opportunity on how to gain a new perspective on problem solving and how we might address global challenges, the Slow School of Business is running the “We R One World Game” on Saturday, July 25 in Melbourne

Dymaxion_map_ocean2

The Dymaxion or Fuller projection is a world map, which can be rendered in 2-D.

Facilitated by Ron Laurie, and based on the pioneering work of Buckminster Fuller, this event promises to combine a hackathon, a meetup and an unconference all in one! Tickets available here.

Next week: Who needs banks?

Getting Stuck – and how to deal with it

We’ve all witnessed (or even experienced) those moments when a speaker or presenter gets stuck. They stumble over their material, they offer an inappropriate response to a tricky question, or they simply go off topic and stray into verbal quicksand. And although they realise they are in difficulty, they carry on regardless, only to wade deeper and deeper into the mire. Some of our current political leaders know exactly how that feels…

Photo by Mark Roy - Licensed under Creative Commons

Photo by Mark Roy – Licensed under Creative Commons

In my experience, many small business owners do the same thing when they get stuck. They carry on doing the same as they’ve always done, even though they know they need to change course, take another approach, or try a different tactic. Which is where someone like me comes to the rescue. As a consultant, I can bring an objective, external and independent perspective that can help clients navigate away from the problem, and steer them back onto the right track.

The Inflexion Point

The typical scenario is that the business is faltering. Most often it’s about sales and business development – either not enough new customers, or too few of the “right” customers (and too many of the “wrong” ones). Sometimes it’s about an aspect of their strategy that isn’t working. It could be a problem with their operations, such as workflow, resourcing or IT systems. Or it might be that they have lost their way and are facing some sort of external challenge. Or maybe there is a disconnect between the products and services that they offer, and what their customers actually need. Or it could be a need to recast their financial information to get a better idea of how the business is really tracking.

Whatever the issue, the common feature is a point of inflexion – the business is either stuck, has hit a plateau, or come to a fork in the road.

So, how do they get help?

The 3-Step Recovery Program

First, the client has to realise that doing the same thing won’t work, doing nothing is not an option, and they have to be open to the idea of change. They recognise that bringing in some external help will relieve the log jam (even though at this stage, they don’t know what form that help will take, or where it will come from).

Second, they do some basic research, or get a referral from their networks, on where they can get help. Much of my work comes via word-of-mouth and personal contacts, and in large part this is due to the need for trust in any consulting relationship. Sometimes, a prospective client has liked something they read in my blog, or heard something in our conversation that has clicked with their own needs. There has to be a connection or match with what the business needs, and what someone like me can offer. It’s a bit like finding a GP, financial planner or personal trainer – there has to be a fit.

Third, they are able to define a specific problem that needs addressing, or at least prioritize the issues. This requires some reflection, self-awareness, and willingness to have their assumptions challenged. There is a need for honesty, and even vulnerability, if the intervention is going to succeed.

Helping clients get back on track

I will say upfront that my services are not suited to everyone. If your business is running like a well-oiled machine, I probably can’t add much value, unless you are looking to improve an area of your operations, or embark on a new initiative where you need help in getting it off the ground. Alternatively, I may be able to help if you simply want to tap into some external perspectives to challenge your current thinking, or if you require some specific expertise that draws on my knowledge and experience. Otherwise, my role is to help clients get free of what is bogging them down.

One of my clients recently said that working with me felt like “keyhole” surgery, rather than undergoing open heart surgery. I think I know what he means, and that he meant it as a compliment….. In my experience tackling “the whole” is not always practical. Rather, zooming in on a particular aspect of the business allows for incremental change, that if applied appropriately, can have a multiplier effect. Such an approach is hopefully less disruptive, and therefore less threatening, to the existing business.

As part of my consulting work, I tend to break the business down into its component parts, look at the business model, review the revenue streams, and analyse the workflow, both internal operations and customer-facing services. For example, clients often have a slightly misplaced perception of where/how they add customer value – so, if they spend a lot of time on a particular task or activity, they naturally assume that this should form the greater part of what their customers pay for. Whereas in reality, the customers may value something else the business does, but the business has not realised that value.

It’s always important to encourage clients to develop an action plan, with specific goals, responsibilities and timelines. I’m not talking about a 50-page business plan, but a more manageable working document for the next 6, 12 or 18 months (depending on their circumstances). A key outcome of this is a list of priorities, plus agreement on which activities to wind-down or discontinue. Despite limited resources, businesses often make the mistake of trying to continue doing everything they’ve always done, plus all the new stuff – the law of physics suggests that something has to give, so they need to stop doing things that are no longer relevant, or are no longer working.

Making a Difference

When it comes to more direct business coaching, I know from the client feedback I receive that the insights I offer and the way I reframe their situation are as valuable as a re-engineered business plan. By analysing the problem, taking it apart and putting it back together again, it allows me to share my observations and offer fresh thinking – which is sometimes all the client may need to get back on track.

If you feel your own business could use some external assistance in getting back on track, or if you think you may be stuck as to what to do next, please get in touch via this blog.

Next week: The David and Goliath of #Startup #Pitching

Connecting Investors and Founders

In recent weeks I have been listening to business founders and investors talk about what each party is looking for in the other when it comes to striking a potential deal. We know that due diligence, planning and preparation as well as financial analysis are all critical to success – but investors are essentially buyers, and as with any product or service, people buy from people. More often than not, relationships based on a common connection, mutual respect, purposeful rapport and personal interaction will form the basis of most investment decisions.

Here are some examples of what you might expect to encounter when thinking about selling your own business, or bringing in external investors.

handshake-220233_1280

What are investors looking for?

At a networking event hosted by Startup Victoria, established investors talked about their criteria for investment.

First and foremost, investors need to know the business you are in (the basic principle being “if you don’t understand it, don’t invest in it”). In the case of an early-stage business, investors also need to know how/where they can add value, since they expect to be more involved with the strategy and execution.

Second, as explained at a workshop hosted by AICD/KPMG, there are only a few types of transactions:

  • Strategic – such as a trade buyer or targeted M&A transaction
  • Financial – such as a Private Equity fund or Family Office
  • Succession – a management buy-out or generational transfer
  • Public – an Initial Public Offer, such as an ASX listing

Each will have their preferences and processes, and as a business owner or founder, you need to understand what each option means for you. Your interests need to be fully aligned, otherwise all the planning and due diligence in the world won’t prepare you for potential disappointment, unmet expectations or even a failed transaction. For example, as a founder wishing to sell your business, are you prepared to see the new buyer shut down one of your cherished products?

Third, financial and strategic investors will have very specific objectives and timelines. As one early-stage investor said: “I’m not a lifestyle investor”, meaning, “I don’t invest in a business to fund your lifestyle” (I invest to fund my own lifestyle…). So, the goal is to invest, drive growth and exit within 3-5 years having generated a target multiple of return on investment. Another investor took a contrarian view, commenting that he had never yet sold out of any business he had invested in – because he takes a longer perspective, and he likes the people he invests in.

Finally, and following on from the last point, investors (especially in start-ups and founder-operated businesses) are often buying the people and the team, not just the business. This prompted the comment about “can you have a beer” with the business owners or founders? The “getting to know you” process is very important for establishing the relationship, exploring what each party is looking for, and framing the nature and terms of the transaction.

What are founders and owners looking for?

Apart from money, what else might you be looking for when contemplating a business sale or bringing in external investors?

Depending on what stage your business is, you will likely need capital for specific purposes, or you may be looking for a particular type of investor. So, know what type of funding you require, and what you might be expecting from the investor.

If it’s contacts and introductions you want, then as shows like Dragons’ Den and Shark Tank demonstrate, investors will extract a high price in return for opening up their precious address books.

Just as investors check out the people as well as the business, owners who are seeking external funding should really do their homework on prospective investors – especially when it comes to unsolicited or unexpected offers to buy your business.

One speaker (who has been on both sides of the transaction) noted that he was wary of a particular investor, because he knew that the relationship would be difficult – a feeling that was borne out by problems at board meetings, and challenges getting shareholder alignment and agreement on critical strategic decisions.

Even if as a founder you are seeking to exit your business via a trade sale or equity transaction, in many cases the new owners or investors will expect you to stay on in the business, to maintain continuity. As is frequently the case, the owner’s sale proceeds will be subject to an earn out to ensure the business meets its projected forecasts.

I have known some entrepreneurs who have left a corporate role to start a new business, with the specific aim of being acquired by their former employer – and I know of at least one such founder who has managed to do this more than once, but a condition of purchase is usually golden handcuffs linked to a performance target.

Other Considerations

There is a commonly held view that if you don’t need to bring in external investors, then you should hold out as long as possible. It’s also said that debt is cheaper than equity, and with current interest rates at a record low, borrowing from a bank or other lender is quite possibly a better option.

However, as I have written previously, there are several obstacles to getting startup funding, especially from banks. In particular, banks prefer secured lending, so if you don’t have sufficient assets (or if you are reluctant to put the family home at risk), and if you don’t have consistent cashflow (for factoring or invoice discounting purposes), your borrowing options will be limited.

An alternative to either bringing in external investors or taking out a loan might be to enter into a joint venture or similar partnership that gives you access to cash and other facilities, while retaining control of your business. For example, a JV to develop a new product or enter a new market can de-risk the opportunity, while enabling you to leverage skills or other expertise that you may not have.

If you are intending to sell your business, even one that is a mature and going concern, most advisers will tell you that the planning and preparation will take 2-3 years, especially as buyers will likely want to see a minimum of 3 years’ trading information and financial records. Don’t underestimate the time it will take to pull together the accounts, document key aspects of the business such as IT systems and processes, catalogue the IP, consolidate CRM and client account information, get a valuation and ensure key personnel are in place as part of the transition team.

Finally, don’t forget to obtain professional tax and accounting advice – I’ve heard business advisers lament the fact that many retiring business owners just about realise enough money to pay off their mortgage, once the sale transaction costs, business debts and tax bills have been settled.

Next week: The changing economic relationship of “work”