In the fall of 2012, I made a presentation at a seminar focused on high growth strategies and I was intrigued that most questions and comments were directed at the pitfalls encountered, or to be avoided, while implementing such strategies. In this context, I define high growth strategies as major new product or service introductions or moving into new business sectors or geographies.
This is the second article in the series and it follows “High Growth Strategy Pitfall #1 – Turning Your Back on Your Base Business”.
There is an often used analogy “You can’t build a house on a cracked foundation” and this applies very well to expanding into new fields of business when there are flaws in the existing operations. Bringing new clients and related volume into an operation that is ill prepared for it is likely to result in inefficiencies and errors that will frustrate both the new clients and employees at the same time resulting in unpleasant consequences.
A friend of mine had accepted a position as CEO of a professional services business and after a few months had elapsed he engaged me to facilitate the annual senior management offsite meetings where the focus would be on the vision for the future and related new business streams.
I have found that engaging meeting attendees in confidential one-on-one consultations prior to the offsite session is a great way to develop an understanding of both the business and the views and opinions of these key individuals. Gathering perspectives from non-attendees is also valuable; and in this situation I held some employee group sessions. This process is invaluable in creating the agenda for the upcoming sessions.
Following the consultations, I will always remember walking into the CEO’s office and calling a “Time-Out”. I said that we should not be talking new growth strategy but rather working on business fundamentals. Unbeknownst to me prior to conducting the interviews was that the company was losing clients and employees and morale was low. People were spending time putting out fires as client delivery dates were missed on a regular basis. Employees stated that they hoped no additional volume would be coming in because they could not cope with what they had.
As a result the offsite and resultant action plans were focused on meeting client needs and expectations, employee satisfaction and on fixing business processes. We then held monthly follow-up sessions on the action plan and within a few months all action plan items had been implemented.
Over the following year, I conducted confidential interviews with a selection of key clients and these have been repeated on a regular basis and satisfaction levels have risen sharply. Likewise we conducted employee satisfaction surveys with similar results.
The offsite session the following year was focused on vision and high growth strategies, held with the comfort that the foundation was solid and employees were once again excited about facing the challenges that new clients and business would bring.
High growth strategies include acquisitions and the same foundational problems may be present in addition to the expected issues based upon different processes and different cultures. In the case of strategic purchases there is most often an expectation for savings associated with business synergies.
Prior to the creation of Halifax Global, I had been working with a large corporation that had recently purchased a value added reseller that had revenues of over $200 million from operations throughout North America and Europe. I was asked to join the newly acquired subsidiary as the Senior Vice-President Finance and one of the tasks was to help deliver on the operational synergies that had been identified during the acquisition process.
What I found was that there was a myriad of operational problems that had to be addressed before we could implement synergistic measures. The process was one of problem and solution identification with a well-communicated and distributed action plan.
An absolute key to success was to solicit and receive the proactive involvement of the acquired company’s employees and the elimination of the “We/They” syndrome.
Accordingly, the timeframe for implementation was extended from one to two years which provided time to solve the foundational issues from which we were then able to deliver the promised savings.
An important, but often unrecognized, element of the foundation is having a culture that will support aggressive revenue growth.
I was working on an initial assignment with a client that was going through transformational change with aggressive growth plans. Through my consultations with senior management and selected staff members, it became obvious that the existing culture in the organization was not conducive to bringing on new business in an effective manner. The decision-making process was too centralized at a very senior level and employee involvement with the planning processes, including budgets, was minimal.
Working with the leadership team, an action plan was created that included employee training that would enable enhanced employee empowerment. The planning processes were revamped with greater employee involvement in setting plans and objectives which generated heightened commitment, buy-in and accountability to the plans.
The engagement of and input from all employees in the planning process helped to identify the skill gaps that existed in the company that would curtail expansive growth. Filling those identified critical positions in various departments throughout the company not only provided the skill sets required but also demonstrated to all employees that their voices were being heard.
The overall outcome was that a culture shift occurred that strengthened the foundation of the company.
Two critical elements of an organization’s foundation are its people and processes. There must be the good people in the right positions with both an appropriate culture and with positive morale all supported by strong business processes. The stories are examples of pitfalls and shortcomings that have existed and been eliminated thus providing for the ability to enjoy new business growth.
Later in January, I will be writing about Pitfall #3 – Faltering Commitment to support High Growth Strategies!
In the meantime, additional insights related to growth pitfalls can be found in the first article in this series plus a previous blog article that I wrote called “The Ten Keys to Customer Satisfaction for Services Businesses” that you may find of interest.
In the spirit of the holiday season and as 2012 draws to a close, I began to reflect on some of the things for which I am thankful, particularly in light of so much sadness and violence around the world.
I am thankful for living in a stable democratic country.
I am thankful for being engaged in interesting and meaningful work.
I am thankful for the love and support of my family and friends.
I am thankful for the loyalty of my clients and the confidence they continually show me.
I am thankful for living in a community where I feel a sense of belonging.
I am thankful for the camaraderie and strong relationships with my work colleagues.
I am thankful for the love, understanding, and support from my life and business partner.
I am thankful for being me. I am a very lucky and fortunate person.
This reflection has led me to think about some of the things that I am less thankful for, such as living in a world where violence has become the evening news; where children are killed en masse by a crazed murderer; where the environment is taken for granted and we continue to dump toxins and garbage into our oceans, our air and our ground; where abuse of women and children continues seemingly unabated; where education and equality for girls and women is still an enormous challenge in many countries; where people who are ‘different’ in our country are bullied and marginalized; where animals are considered disposable; and where people are hungry and starving in our city, one of the most prosperous cities in the world.
There is so much to be thankful for and yet, at the same time, so much that is unacceptable and simply outrageous in the 21st century. This Christmas, we should all be thinking about how we can each make a difference, even in a small way to change the world. Margaret Mead, the great American anthropologist of the 20th century said “Never doubt that a small group of thoughtful, committed citizens can change the world”.
Witness Jenny Benson from Halifax, who is changing the world of one Ugandan girl at a time through her Aninga Project, an educational initiative that pays school fees for girls who would otherwise never receive an education (www.aningaproject.org). Or Riet Koetsier, who passed away just last month; she was the longest living volunteer at the Bide Awhile Animal Shelter, started by a small group of dedicated people in 1969, who couldn’t stand to see strayed and homeless cats starving to death on the streets (www.bideawhile.org). Or, Norman Greenberg who in the early 1990’s started Affirmative Ventures to help people with mental health and other disabilities gain economic independence www.affirmativeindustries.com), and now is leading the charge to bring a full-service grocery store back to the North End of Halifax (www.communitycarrot.coop).
There is much that needs changing and if you consider yourself as fortunate as I consider myself, then there should be nothing that stops any of us from grabbing hold of one thing that has the potential to change the world for even one person. How will you change the world in 2013?
Earlier this fall, I made a presentation at a seminar focused on high growth strategies and I was intrigued by the fact that most questions and interest were directed at the pitfalls encountered, or to be avoided, while implementing high growth strategies. In this context I define high growth strategies as major new product or service introduction or moving into new business sectors or geographies.
Over the next couple of months I will be writing a series of blog articles on the pitfalls starting with what I consider to be the most prevalent– turning your back on your base business.
The “New Business Development” component of an organization’s business strategy is often the most exciting element of the plan but often gets more attention than is desirous.
We were doing an offsite strategy session with the executive team of a manufacturing company and the discussion was around the recent move into the American marketplace. We brought up the danger of neglecting the base business and the CEO turned to the VP of Sales and asked when was the last time he had visited with the top clients in the home region. The extended pause before the answer was the answer.
Proactive communication with employees, clients and other critical stakeholders is a great thing but you must make sure that your messages are comprehensive and inspiring for everyone. Every employee should be able to link their role and activities to the overall strategy and goals of the organization. There is a natural tendency to talk about the exciting new future with a focus on the new initiatives but this can create the “chopped liver syndrome” for the more mature elements of the business! If you are an employee and your job is firmly tied to the base business and all the excitement is elsewhere you can start to feel left behind. This is dangerous territory. A firm must protect and nurture its base business as it is often the cash cow that provides the funds for new business development. Not only can this loss of importance be felt by employees but also by clients and suppliers.
A company brought in a new CEO whose mandate included expanding the service offering away from a paper based solution to a digital one in order to meet marketplace demands. Several new hires were made giving the company the capability to move in the new direction but still the bulk of client work was based on the existing technology. However, many of the existing employees started to feel like second class citizens since they were stuck with the old non-glamorous product while the future was digital. Soon this malaise started to be felt by their clients and key suppliers as confirmed in confidential interviews that I had with these stakeholders. Working closely with the CEO, we identified the communication shortcomings and the appropriate fixes.
The company addressed the morale problem with a well communicated strategy focused on the need for maintaining the paper based-product line as long as possible and that there would still be an enormous reliance on the employees in this base business. In addition, there would be an ability to provide an integrated solution set to their clients which also meant involvement in the digital business for all employees.
All employees stepped up to the challenge and five years later the paper-based product volume has increased and this coupled with new sales in the digital business has resulted in vigorous overall revenue growth and an even more impressive increase in profits.
Unless you are starting a completely new business, it is critical that an organization adopt a plan that provides for a strategy focused on the protection and nurturing of the base business that has gotten the organization to where it is today, while working on the high growth strategy with a distinct set of action items. The new business development focus must not be allowed to become a distraction that prematurely erodes the value of the base business.
In two weeks’ time I will be writing about Pitfall #2 – Expecting growth to fix problems with your foundation!
In the meantime I welcome you to visit our website for additional insights and stories including a previous blog article that I wrote called “The Ten Keys to Customer Satisfaction for Services Businesses”
Our management consulting practice includes a significant number of not-for-profit and charitable organizations that vary in size, mandate, composition, and geography; and that have a range of funding sources including government, membership fees, foundations, fee for service offerings and donors. What they all have in common is that they are governed by a voluntary board of directors.
The CEOs / Executive Directors who are successful leaders have a vision for and a passion about their organizations, and they know how to recruit, inspire and engage their volunteer board members.
We have one client who is the CEO of a national organization that when she took over 10 years ago, it was a demoralized organisation in a deficit position with 6 employees. She now leads a 100 person organization with nine offices across the country; she has built up a significant reserve fund and is the leader in that sector. The composition of this board is diverse in terms of geography; they come from across the country but they are all interested in the cause and affiliated with it in some way in their professional lives. They are all busy professionals with important positions in their ‘day jobs’. Yet she is able to consistently attract high-calibre and committed board members to her organization and prevails upon them for their insights and their knowledge.
We have another client who started up a not-for profit in NS with a commitment to wean the organization off government funding over a four-year period. Not only has she been successful in doing so, she too has a reserve fund and has opened a second office internationally. Her board comes from a very specific and defined group of members and her challenge is that these board members are not the heads of their organizations. Therefore, she needs to ensure that she knows not just how to motivate the board members but also knows the priorities of their organizations and their leaders. Her’s is in many ways a more complex challenge in that she needs to maintain two sets of relationships. Without the decision-makers sitting at her board table, she must ensure the board members, who are in fact the influencers, are communicating a persuasive and supportive message to their organizational heads.
Both of these leaders have had very different struggles, but what has sustained them both, is that they have had a very clear and compelling vision of where they want to take their organization, a strategic plan to guide them and the wisdom to manage and lead their boards in a manner that supports their organization and ensures board members feel their contribution is making a difference.
Strong, visionary CEOs know how to bond with their volunteer board members. Board engagement is hard work and takes a certain amount of charm combined with hard-nosed business sense. It is one of the critical attributes of the successful not-for-profit CEO. An effective board with existing high-calibre members attracts new high-calibre board members and also attracts funders, clients, employees and sometimes, the public and media.
One of the most successful charitable organizations we have seen is a small community-based organization whose Executive Director has a fervour for his job and his casue that is truly contagious. Over the 20 years he has served in his role, he has led from behind. But make no mistake; he is the leader of his organization. He works closely with his board chair, keeps his board informed and excited about the work of the organization, and paints a clear picture of where the organization is headed. He has more than one year operating expenses in his reserve fund, a new building fully paid for through a successful capital campaign, and a new venture in the planning stages. His board comes from the community and the public-at-large which presents a whole other set of challenges. But their motivation is uniform and consistent. These board members are driven by the cause so his success is dependent on tapping into the passion of his board members.
These CEOs are successful because they are not only passionate about their organization’s mission and tireless about pursuing their vision but they also know how to connect, engage and collaborate with their volunteer board members to keep them excited. These are also the CEOs who work with their boards to renew their vision, develop a strategic plan every three to five years, and hold themselves and their boards accountable for delivery of the plan. The value for the organization is that these CEOs usually attract creative, enthusiastic and committed board members who often go beyond the call of duty to support them in running highly successful organizations.
Volunteer board members are motivated by their desire to give back and / or make a difference and CEOs of NFP organizations need to tap into those philanthropic, big-hearted genes. They need to know why their board members are there and what they require in return to ensure their ongoing contribution of time and talent. That special insight combined with some good old-fashioned TLC makes all the difference and keeps volunteer board members engaged, involved and enthusiastic about the organization.
In summary, successful engagement of volunteer board members in not-for-profit organizations is an essential part of the CEO’s job. It involves:
- Strategic recruitment to ensure the board has the right combination of skills, talent and commitment of time;
- Generating passion and enthusiasm for the vision and the mission of the organization;
- Holding the board and the organization accountable for organizational performance and delivery of the strategic plan; and
- Understanding what motivates each board member and tapping into their good-will and altruistic disposition.
Many companies state that they want to “delight their customers”. This article looks at this lofty goal from the customers’ perspective and the ten attributes listed below are what they say is truly important to them.
Our business services clients recognize the value of obtaining their customers’ perspectives as they undertake strategic and business planning initiatives. To solicit customer input, Halifax Global typically undertakes a number of one-on-one interviews with a representative sample, including, of course, the largest customers. We start off each consultation advising our client’s customer that the conversation will be kept confidential and that only a summary of all consultations will be presented to our client as “What We Heard”.
We typically ask about the length and depth of the relationship, a rating of the overall services provided, and the competition and marketplace. The key questions are focused on the value customers seek and are receiving from their supplier – our client.
We have identified the following attributes that customers value from their suppliers primarily in the business-to-business services sector but many of the attributes would also pertain to manufacturers and retail organizations.
Number 1 – Meeting Commitments
Customers want their suppliers to meet their commitments – to do what they said they would do by when they said they would do it. Physical product must meet the quality specifications. Attention to detail is critically important. Any faltering on timeliness or quality is very visible and certainly opens the door to competitors.
Mistakes do happen and often there is more tolerance for a single large mistake that is properly addressed in a timely fashion than a series of small errors that creates frustration in the relationship.
Number 2 – The Team and Relationships
The connection between the two organizations is only as strong as the relationships among the people involved and a set of strong, positive relationships is a powerful attribute. There is a strong linkage between high employee satisfaction and client satisfaction levels.
Transition of team members is disruptive and the ability to handle it correctly and professionally is of critical importance. If done in an orderly fashion within reasonable timeframes this is considered acceptable. High turnover of people in either organization is fraught with risk, particularly if the customer deals solely with one person
Number 3 – Knowledge
Customers value the knowledge that is represented by their suppliers. Customers can readily tell if supplier representatives truly know their subject matter and this expertise certainly represents a value that customers are willing to pay for.
Knowledge typically transcends the individuals involved and there is a collective knowledge within a supplier that creates both a critical asset in an existing relationship as well as a reputation in the marketplace.
Number 4 – Trust and Integrity
Customers will talk about individuals at suppliers firms but also talk about the integrity of the organization as a whole. “We trust them” is an attribute associated with the supplier in its entirety and not typically tagged to individuals. Trust is earned over time. Customers welcome the opportunity to collaborate and to discuss strategic and operational matters in confidence.
Administratively, it is important that all documentation (quotes, purchase orders, contracts, etc.) are kept current and customers expect to receive accurate invoices on a timely basis.
Number 5 – Responsiveness
Being easy to do business with ensures that the supplier is in tune with how the customer wants to engage in business activities. It may be through direct face-to-face contact, the use of inside customer service reps, web-enabled commerce, or some combination thereof. Clear communications are very important especially where services involve multiple iterations and/or steps in the process. Role definition is essential where multiple staff members from both parties are involved.
Responding to customer requests left by voice mail and e-mail in a timely manner is fundamental. Voids in communication create uncertainty.
Number 6 – Innovation and Leadership
Customers often choose suppliers that are acknowledged or seen to be leaders in their industry and are a continuing source of innovative products and services. The supplier must be proactive in providing customers with access to the leadership of their organization on a regular basis. This can be done through one-on-one meetings, account team sessions or supplier sponsored events. The supplier could be an important conduit of industry product innovation so part of the value of the relationship is that the customer is regularly made aware of industry and marketplace trends and development.
Number 7 – “They Get Us”
The respective parties develop deeper, collective knowledge over time as the supplier learns more and more about the customer and vice versa. This includes a greater knowledge and appreciation of the values and culture of each organization and the supplier builds an understanding of what the customer’s goals and ambitions are all about. When customers tell us that our client really understands what we are all about or that “They get us” it is clear that a strong relationship has been built between the two organizations.
Number 8 – Passion and Energy
Customers love working with people who enjoy what they are doing and are passionate about it and this energy elevates the relationship. People who enjoy working with each other are likely to sustain their commercial relationship over the long term.
Number 9 – Supplier Longevity
There is a sense of stability in working with a supplier that has been in business for a period of time. It creates a feeling of comfort in taking the time to build a relationship with this firm because they have a history that suggests they will be here for the long run.
Number 10 – Living up to Expectations
This is a critical element in a new relationship. Customers come with a set of expectations and if they are met or better yet, exceeded, then the likelihood of repeat business is high. However, if the supplier falters and does not live up to expectations then the customer will revert to previous suppliers or continue the search for a new one.
The key for future success and growth for most businesses is to maintain and nurture their existing client base. I have never heard one of my clients’ customers say the they “Want to be delighted” but if a supplier rates highly on the above noted attributes they are sure to have very satisfied and repeat customers in the future.
Preserving Options and Opportunities – Avoiding Unintended Consequences
As two Nova Scotia communities face major job losses with the potential permanent closure of pulp and paper mills, there are lessons to be learned from the experiences of others who have faced this situation previously.
Over the past several years, Halifax Global has worked directly with three communities in Eastern and Northern Ontario, as well as with a provincial government, to help them define pathways to a sustainable future forest industry in the wake of a major pulp – paper mill closure. We have learned much from each situation about enhancing opportunities, options and potential for success, as well as about unintended consequences that result from statutes, policies and regulations developed in a different era for different sets of circumstances.
Three particular lessons are important for Port Hawkesbury and Liverpool, and for the Province.
Retain and Preserve Infrastructure and Equipment
When a mill or a paper machine is shut down permanently, it is reasonable to expect the owner wants to ensure that production capacity is permanently removed from the marketplace. This is especially the situation in the newsprint industry, where the overriding, fundamental challenge is declining demand and excess production capacity.
In a shutdown, the paper machine is likely to be scrapped or have major components removed to ensure no future paper production. However, mill infrastructure such as pulp lines, electrical and control systems, waste treatment, shipping and warehousing, and office facilities all have potential for future use by new ventures that will not be competitive with the prior owner’s business. Such infrastructure can be leveraged by economic development agencies to support establishment of new ventures.
Ensuring that availability, however, requires collaboration among all stakeholders, including the community, the Province and the mill owner to ensure that assets are preserved, kept heated where essential and maintained at basic levels to ensure future usability.
Look to the Future – Try New Things
As a communications medium, newsprint is not quite a ‘buggy whip’ industry, but it’s getting closer. However, as I have noted previously, new industries need to be considered as part of Nova Scotia’s future forest sector. Examples can include biochemical extraction and processing of hemicelluloses (sugars) in woody biomass to facilitate production of five and six carbon sugars which can be processed into advanced biofuels, biopolymers and other products. The cellulose fibre and lignin can also be processed into advanced composites; and residual materials can be cost effective feedstock for bioenergy generation.
Interesting new research being undertaken in Canada shows promising potential for conversion of thermo-mechanical pulp (TMP) lines to bio-refining applications. TMP is the pulping technology used at both Port Hawkesbury and Liverpool and idled TMP capacity at either or both facilities may be suitable for pilot or early stage commercial scale demonstrations to prove technology viability.
Such ventures will not instantaneously replace the employment lost through mill closures. But, they can lead to development of locally-based, knowledge and technology intensive industries that can sustainably process our forest resources over the longer term.
Avoiding Unintended Consequences
Rightly so, shut down of a heavy industrial facility such as a paper mill can trigger regulatory requirements for mitigation and remediation of environmental impacts. However, these statutes and regulations were developed in an era when mill closures resulting from major decline of an entire industrial sector were not anticipated. Hence, efforts to develop new ventures on such a site can be seriously constrained if there is insufficient flexibility permitting alternative uses incorporated into environmental policies and regulations. The result can be a mill site rendered unavailable for potential new ventures for such a period that infrastructure deteriorates beyond any useful level. The outcome – definitely unintended – can be a community facing a potentially even larger remediation challenge at a site which by then will have limited or no economic development potential.
Application of these lessons to the benefit of Nova Scotia communities will be challenging, especially in the context of bankruptcy-related processes underway in connection with the Port Hawkesbury mill. However, with creativity and willingness to pursue new directions by all stakeholders, a sustainable forest sector of the future can be found in approaches and product streams that capture value from the widest possible range of properties of our resources.
The Halifax Global team has had a very busy summer talking with our clients’ customers, suppliers, funders and other key stakeholders.
It has been a summer of global and regional uncertainty, an environment where there is a tendency to agonize over exchange and future interest rates, the price of energy, the reliability of sales forecasts and so on. It has been and is a season of second guessing and often hunkering down staying the course, regardless.
But, it is the ideal time to assess the validity of strategic and operational plans to ensure that they reflect the realities of the current and future marketplace and most importantly to determine if your organization is meeting the needs and expectations of your customers and other critical stakeholders. You can benefit from their insights into future marketplace trends and what will be important for them and for you in the foreseeable future.
You can learn about and understand if your organization is meeting your major customers’ and other stakeholders’ expectations – your areas of strength as well as your gaps and weaknesses. This information can be obtained by having a third party undertake confidential consultations following an introduction from you, the client. When we undertake such assignments, we advise the interviewee at the outset that our conversation is kept confidential and what we share with the client is an aggregated summary of “What we Heard” from all stakeholders. Following this introduction, we then ask for them to be completely candid – and they typically are. The questions asked are predetermined and developed with the client and tailored to the specifics of the situation. There are often two categories of questions with the first set being performance and relationship specific and the second set more geared to the marketplace in general.
We have found this approach to be very effective with the following groups:
- Significant customers of private sector companies;
- Key suppliers to companies, particularly if the company is a value added reseller of suppliers’ products where the relationship is similar to a client relationship;
- Funders and donors of not-for-profit organizations;
- Fee-paying members of trade associations and similar organizations;
- Partners and collaborators of research and other academic institutions / organizations; and
- Board members of any organization or company.
Based on our experiences, the third party consultation process provides unbiased intelligence and valuable knowledge about the perceptions others have of your company or organization, including:
- Insight into how you are meeting or not meeting client expectations that then allows you to tailor initiatives and strategies focused on improving customer service and identified gaps and weaknesses.
- The ability to measure client satisfaction over time. We typically ask customers to rate the services provided by our clients on a scale of 1 to 5. We then provide rating details and averages to our client as part of “What we Heard”. We are currently undertaking the third bi-annual consultations for one client, a process started in 2007.
- Input into future marketplace trends that allow you to link to the needs of your customers, vendors, suppliers and other key stakeholders.
- The ability to ensure your programs and areas of focus are aligned with the expectations of your funders, fee paying members, and clients.
- The insight necessary to create valid economic models for not-for-profit organizations to create a bridge from start up funding model to one of independent sustainability based on unbiased stakeholder input.
- An understanding of key partners’ and collaborators’ perceptions of who you are and what you do.
We have been engaged to carry out stakeholder consultations in conjunction with employee surveys that then allow our clients to determine linkages and create client-focused action plans.
We have found that an ancillary benefit of this independent consultative process is a heightened sense of engagement between our client and the stakeholders interviewed. Customers and stakeholders truly appreciate the ability to provide input that will make a difference in the future relationship with valued suppliers, service providers, funders, partners and donors. We often receive comments at the conclusion of the interviews such as:
- “This process is great”
- “Appreciated the opportunity”
- “Great that ‘client’ is doing this. Their competitors are not.”
While you cannot plan with certainty what will happen in the future, you can plan with the certainty of knowing what your customers and other key stakeholders truly value from their relationship with you.