‘What makes a good leader?’ by Sarah Nicholas, Director, January 2012

I chose this article because it features the recent book - ‘The Language of Leaders’ by Kevin Murray’ - which I reviewed in a recent blog.  I previously had reservations about the book’s messages but have to admit that, in the context of a shorter article, it comes over much more effectively.  The conclusion therefore may be that his research is much more credible in the shorter format.  For instance, the smaller number of leaders featured in the article hides the fact that most of those in the book were not exactly household names.

The article starts by confirming Murray’s overall message, that all round communication skills are vital to the modern business leader and this fact is increasingly being recognised by those at the top.  Leaders are now more visible than in previous times - before technology transformed communication media - and today’s more confident and transferable personnel will only accept leaders who govern by consent rather than by autocratic edict.

Another consequence of the transformation of media is the need for increased speed of decision making and response to events.  This causes tension because it increases the need for decisions to be delegated to others who may not have the same communication and leadership qualities.  The answer, according to Murray and those he interviewed, is to create a common sense of values and purpose among the global leadership team so that there are consistent messages and approaches to communication.

The other key requirement - which resonates with our experience at MTP - is the need for more training in softer skills for those at the top.  In our work with the Finance functions of many top companies, the conclusion is that the higher the level, the more the need for training in behavioural skills; yet this is often low in the development priorities of senior financial people.  It is only in the context of business partnering - the increased need for effective cross-functional communication - that this need has been accepted.

This does of course beg the question of how far the softer skills can be trained, particularly if those involved do not easily accept the need.  It is perhaps easier in the areas that Murray advocates from his perspective as a Public Relations specialist - formal presentations of key messages to staff and on public platforms.  It is less easy to develop the skills in more informal situations. 

But the message of the book is clear and well made - that those who do not have good all round communication skills will not last long at the top.  And no amount of business expertise and strategic skills will change that.

Click below to see the original article;

http://www.director.co.uk/MAGAZINE/2012/01_January/what%20makes%20a%20good_leader_65_05.html

‘Big and Clever’, Schumpeter Column, Economist Magazine, December 2011

I couldn’t find space for this article last time but think it worth carrying forward, because of the issues it raises about the best environment for innovation.  The modern Schumpeter starts by telling us that, many years ago, the original Schumpeter changed his mind about the answer to this fascinating and enduring question - does the best innovation come from small or large firms?

Too often there is the over-simplified assumption that it is small firms who drive innovation because they are entrepreneurial and quick to respond to external trends; the large company by contrast is slow and bureaucratic and dampens the innovative fires of its people.  Hence the attempts by big companies to let their research people recreate the small business atmosphere, memorably described as ‘Skunk Works’  in Peters and Waterman’s book  ‘In Search of Excellence’ thirty years ago.

Schumpeter quotes recent research by Michael Mandel of the Progressive Policy Institute which questions the validity of this assumption and suggests that, with increasing globalisation and big ecosystems, big companies have the scale and skills to innovate more effectively than their smaller competitors.  He also suggests that Western Governments are too obsessed with promoting small businesses and should focus more on a few major players.  Instead they do the opposite, regulating mergers and potential monopolies which would achieve greater scale.

Schumpeter builds on Mandel’s argument by adding the further advantage that the large companies have, the ability to recruit the best innovative talent.  He also argues that big high tech companies who have grown rapidly - Apple, Google, Facebook - have tried hard to retain the innovative culture that started them on the road to growth.  He also points out that big companies like P&G are tapping into the innovative skills of smaller companies via projects and alliances, thus getting the best of both worlds.

But while accepting some of Mandel’s conclusions, Schumpeter rightly challenges its general application. He makes the point which MTP covers in strategy sessions and which was a theme of the excellent book ‘Fast Second’ by Markides and Geroski, - that things are different when ‘disruptive innovation’ is involved.  Disruptive innovation is the sort of breakthrough which changes the rules of the game and this more normally comes from the smaller enterprise.  The big companies may then be the ones who build on that innovation and improve it on an incremental basis, but it is the minnows that start things off.  And of course those minnows may eventually grow to become big companies themselves.

Therefore the conclusion has to be that the big versus small argument is based on a false dichotomy and that there should be a place for innovation from both types of business in a healthy economy.  Governments should continue to encourage small businesses but also - and here is a lesson for the UK government - stop demonising and restricting those large companies who provide growth and employment.

Click below to see the original article;

http://www.economist.com/node/21541826

‘Can UK Sport do the Business?’ by Jim White, Management Today, January 2012

Sports teams - with football as the highest profile example - are a fascinating topic for those interested in business and financial management.  Why is it that some teams seem to survive against all the odds yet others go belly up?  Why do business people - including many dodgy characters from overseas - want to put money into such a high risk business?  And is it so much different from running any other business?

This article starts slowly and spends far too much time telling us what we already knew - that English football teams are famous in the far reaches of the world - but it then moves on to ask a fundamental question.  How can the English Premier League, with such global recognition, make so little profit and be such a business basket case?  It is not just individual clubs that are badly run, it is the whole sport. For brands with such recognition, the revenue is pitiful - equivalent to a few megastores - and there is no profit; football clubs have not discovered how to convert their global reach into money.  Instead they allow global brands like Nike to exploit their popularity with low cost sponsorship.

However, the status of basket case is not restricted to football.  Even sports that may seem well run - cycling, rowing - are dependent on government subsidy and those that make a small profit - like Rugby Union - are bedevilled by serial incompetence. So it’s hard to find a sport that could be described as a well-run business.

The article does however come up with two exceptions; one from a different country, one from another sport with global appeal.  The exception from another country is the American National Football League which turns over $8 billion a year and makes double figure profit margins.  And the reason is clear; it is run as a league rather than as individual clubs and they work hard to share resources and ensure equal competition, the exact opposite to what happens in the UK where dog eats dog.  And Americans who have bought into Premier League clubs, hoping for the same level of success, have received a rude awakening.

The unique example of global sporting success is Formula One motor racing which continues to make enormous sums of money and contributes large sums to the British economy where much of the development activity takes place.  This is partly due to the fact that it is supported by the motor industry but the other key factor is that it is run by shrewd business people who know how to monetise their assets, even if the race tracks seem like ‘a parade of advertising logos’.

Having made lots of interesting points, the article tends to fade out without a firm conclusion, but it does leave readers with an interesting question.  Should success in sport be measured in financial or cultural terms? It closes by relating that question to this year’s Olympics but leaving the question hanging in the air.  This is an interesting issue that, in my view, should have a wider airing, particularly during times of austerity.  It would be good to see a follow up article developing this point.

Click below to see the original article;

http://www.managementtoday.co.uk/features/1109847/UK-sport-business/

‘Developing Training with Impact’ by Hilary Briggs and Jean Gamester, Training Journal, March 2012

I always look for articles on the basics of training delivery because, though it is so important, there is normally little written coverage of the fundamental success criteria.  And it is vital to remember the basics and get back to first principles from time to time.  This is particularly so for a an organisation like MTP where we  recruit mature tutors who have been self-taught and have never received formal training in training techniques.  Of course we are all brilliant (!!) but we can also benefit from confirmation of basic principles.

I was however rather disappointed with the article’s content.  I accept that a lot of such guidance is no more than common sense so I was not expecting too much but this is pretty obvious stuff, even for the most inexperienced trainer.  This may have something to do with the authors’ association with ‘Toastmasters International’ which is likely to cater for the more formal approaches to delivery.

There were however some interesting insights at the beginning of the article, comparing training in the UK with other countries.  Apparently we spend more per capita on training than comparable western countries like USA and Sweden, yet we deliver less training hours per employee.  It would have been interesting to have explored this difference further; it would have been more enlightening than the content that followed.  

There is lots of advice on how to gain rapport and achieve interaction but the only message that was in any way interesting was the recommendation to engage before the session.  We all know the perils of pre-course work and at MTP we usually use it to equalise prior knowledge; however the valid point made here is that the use of questionnaires - or similar instruments - before a session can engage the audience early on and avoid initial passivity.  It does however beg the question of how many will deliver what is requested beforehand, a regular challenge when running programmes for busy and independent managers.

I liked the emphasis on telling stories and the way in which these allow you to go into the how and the why, much more so than with straightforward factual delivery.  I was less sure about the suggestion that budding trainers should try stand-up comedy as a way of developing their story telling abilities; but the message about seeking improvement through putting oneself in different, challenging situations, is a valid one.

The other valid message is that the trainer - and indeed anyone in any walk of life - should not be afraid of silence; in fact the planned pause can and should one way of keeping an attention, particularly when linked to changes in pace and volume.  When you listen closely to Barack Obama speaking, you realise that his impact has a lot to do with short pauses, followed by increased volume and emphasis.  And the authors make the valid point that silence is infinitely preferable to um, er, or - worst of all - ‘y’know’.

I also agreed with the point at the end which suggested that sending experienced trainers on courses in training techniques is unlikely to improve performance.  The authors make the analogy with physical fitness; it is much better to be always looking for improvement, to keep practicing and learning on an on-going basis, supported by those whose opinions you value.

Click below to see the original article;

http://www.trainingjournal.com/feature/2012-03-01-delivering-training-with-impact/

‘The future of the Balanced Scorecard’ by Robert S Kaplan and David P Norton, CGMA Magazine, Inaugural Issue

This magazine is produced by the new association between the American CPA institute and our own CIMA body, following their recent joint venture agreement.  And it is quite a coup to get the two founders of the concept of the Balanced Scorecard (BS) to contribute on the 20^th anniversary of their launch of the framework in their initial Harvard Business Review article.  As an admirer of the original concept - and of much of Kaplan’s work - I was looking forward to hearing about their latest thinking.

I was therefore a little disappointed at the article’s brevity and its lack of new thinking.  The main extra ingredient was its link to their ‘strategy map’, suggesting that the Balanced Scorecard is central to the strategic planning of any right thinking organisation.  I found this hard to accept because, though I have long been an advocate of their main message that performance should be measured along a number of dimensions, I have never seen it as central to the whole strategy process.

If that had been the only point made, I would have been disappointed but in fact there were some more valuable points in the rest of the article.  To me the most interesting area of future potential is their suggestion that the framework of the scorecard can be used in an external context as well as to monitor internal performance.  I felt rather smug reading this as MTP has already used the BS framework as a checklist for competitive benchmarking, to ensure that the analysis is not confined to financial information; in addition we look at customers, culture, people and innovation.

Kaplan and Norton go even further by suggesting that companies should be working with suppliers and customers to have an integrated supply chain strategy, using the scorecard as a framework to agree joint objectives and monitor performance.  This is perhaps a rather idealistic view and would not be easy to implement but it could work if the will was there on both sides.

I was also surprised to hear that BS has been used quite extensively in the public sector, with a number of major cities developing their strategies and monitoring performance on this basis.  The authors also suggest that the other area of recent development and future expansion is risk evaluation and management, as a checklist to ensure that all risks have been taken into account.

As I read the article and tried to follow the six stages of the strategy map, with its complex network of arrows and boxes, I had the feeling that this was a great idea but maybe now its creators are trying too hard to drag out every last drop of value from it.  BS has been and still is a brilliant checklist that encourages management discipline and avoids financial measures becoming too dominant.  But that’s all it is; it is not a replacement for strategy and it has been taken as far as it can go.  Kaplan and Norton should be looking for their next big thing.

Click below to see the original article;

http://www.cgma.org/magazine/features/pages/the-future-of-the-balanced-scorecard.aspx

‘Moneyball’ by Michael Lewis, published by W.W Norton

This book, first published in 2003, has been re-released after the recent film which starred Brad Pitt and earned him an Oscar nomination.  I decided to review it because, as I read the book and watched the film, I found myself thinking about the broader implications for business; are the lessons only applicable to baseball or to sport, or are their wider applications?

The story is of how the manager of a mid-level baseball team - Billy Beane of Oakland Athletics - achieved great success in the mid-1990s, despite having limited financial resources.  His team consistently out-performed teams like the New York Yankees, even though they had about a quarter of the wage budget.  He achieved this by a recruitment policy that challenged all the traditional views about success.  Using statistical analysis and backed up by a computer whizz kid, he found out that the ability to hit the ball and get to first base was the main factor that determined success, even if other aspects of performance - like catching or running - were below par.  Therefore he brought in a group of low cost hitters who could not do much else.

This shocked the baseball community - particularly the veterans who scouted for talent - because their traditional ideas were being challenged.  However it impressed those who owned the clubs and Beane was soon besieged with offers to leave Oakland and join the top clubs; he received and turned down a $12 million salary offer from the owner of Boston Red Sox.  The owners also realised that the approach could be copied and, over the next decade, most of them introduced similar systems of analysis.

This is a fascinating story and I can strongly recommend the book and the film, but do the lessons apply to business more widely?  It may be stretching things a bit but I think they do, for instance?

- How many businesses focus on the wrong KPIs, because that’s the way it has always been done?

-  How many businesses recruit people on subjective criteria - like personal appearance - rather than ability to get the job done?

- How many businesses fail to take advantage of the quantitative data that is available and instead make ‘gut feel’ decisions?

The other lesson for business came afterwards in the story.  Competitive advantage is rarely sustainable over the long term and Billy Beane’s team is now back among the also-rans as other teams have caught up and applied similar methods of analysis.

There is one other interesting postscript.  Other sports have copied the analytical methods that are now used throughout baseball, notably cricket, where the opposite conclusion was reached, that fielding was much more important than was once thought.  But with football the success has been more mixed.  Ironically the owner of Boston Red Sox, John Henry, bought control of Liverpool FC and brought in a new ‘Director of Football’, believing that the same methods could bring success.  It is early days but the signs are not good!

Buy the book;

http://www.amazon.co.uk/Moneyball-Winning-Unfair-Tie-In-Editions/dp/0393338398/ref=sr_1_2?ie=UTF8&qid=1333445364&sr=8-2

‘The Daily Drucker’ edited by Joseph A Maciarello, published by Collins

This 2004 book has been re-released after the death of the great man and, because of my soft spot for his work, I decided to review its relevance to today’s challenges.  The rather gimmicky format provides readers with a one page gem from Drucker’s work for every day of the year.  I am not sure how you are supposed to read it but I dipped in over a period of two weeks while on holiday and found that Drucker usually provides something to make you think and question what you do.

You can’t fail to be impressed by the sheer scale of what he has written; every page quotes the source of his wisdom and you realise just how amazing his output was.  The other noticeable feature is how often he was ahead of his time, forecasting trends that are now part of our business culture.  It is true that some of his writings are statements of the blindingly obvious but that may be because it was him, and the other early management gurus, that made them obvious.

It is difficult to sum up 366 (one for leap year) pages of wisdom so instead I quote some of my favourites - quite a few directed towards management learning - which should give you an idea of the style and scope coverage:
• Profit is the only source of future jobs
• Businesses fail when they don’t realise what represents value to the customer
• Training via the Internet requires a complete redesign of the learning process (glad MTP got that one right!)
• The first sign of business decline is when you cannot retain high calibre people
• Knowledge workers will fail unless continuous learning is brought into their work
• Management courses for inexperienced people are a waste of time
• Cost never drift down so cost prevention is a never ending task
• Beware diversification; the less complex a business, the fewer things can go wrong
• Move executives over 60 years old away from executive decisions, into advisory and development roles (glad MTP got that one right too!!)
• Be careful not to make decisions until you have to
• For acquisitions to succeed, the two companies must share a common core of unity

This book is well worth having in your office and on your coffee table, to keep you thinking about the issues that determine success  or failure in your business.  My only criticism is the decision to put an ‘action point’ at the end of each page; this comes across as contrived and unnecessary.  From Drucker’s words of wisdom, we should all be capable of deciding what action to take.

Buy the book;
http://www.amazon.co.uk/The-Daily-Drucker-Insight-Motivation/dp/0062089242/ref=sr_1_1?s=books&ie=UTF8&qid=1333445605&sr=1-1