Monthly Archives: June 2015

Assumptions are dangerous

 

I am helping a client deal with an approach from a prospective buyer, and  I’ve been reminded just how dangerous assumptions can be.

My client doesn’t have a background or training in finance, so I’m acting as the translator, explaining language used by the buyers’ advisors in plain English.

In this case the shareholders are a management team of 5 and after the deal is done only three will stay. There’s an earn-out involved, and to my client it was obvious that only those members of the team who are staying would participate in the earn out.

All the shareholders have the same type of shares with the same rights.

The buyers’ expectation is to treat them all the same way – including the earn-out, even for those no longer part of the team once the deal is done.

My client assumed one thing – you could say it was common sense – but the buyer’s advisors assumed something completely different – and again for valid reasons.

The problem with assumptions is that they are sometimes so obvious to person making the assumption that they don’t even know they have made the assumption and are not aware of an alternative.

This can be damaging!

To avoid assumptions is largely a matter of communication. If you explain, in great detail, what it is that you expect or want to happen, and then listen carefully to the reply, you will stand a chance of minimising or avoiding assumptions.

I was arranging for some subscriptions to be paid by standing order, and I set out the standing order form with instructions on how to complete it. To me it was obvious that the person sending the money has to send it to their bank – but then I have done this before!

If I don’t include that step in my instructions, we will get many of these completed forms in the post.

That’s no good to us – the bank cannot follow instructions it does not have!

If there’s not enough detail, assumptions creep in. Make sure you are all on the same page with detailed instructions – especially for something new – and then listen well, looking out for assumptions!

 

Are you listening?

 

A colleague told me a story about an engineering business having trouble with the reliability and frequent failure of its products.

A fellow speaker described what they do as helping people to listen.

A different colleague told us how he had created a multi-million dollar business using a simple sales technique.

The engineering business resolved the quality issues when they started listening to the mechanics using the equipment, and took note of the modifications these enthusiasts were making to their own machines.

My speaker colleague is a specialist in mediation and problem resolution. Most problems occur because people are not really listening to each other, or even worse just sending emails.

The sales technique is to (at its simplest) listen to what your potential customers want, and then provide a solution.

“We have two ears and one mouth so that we can listen twice as much as we speak” is a quote attributed to Epictetus the Greek philosopher.

If you are listening to the people on the front line – those who have to deal with the customer, or fix the problems – you can see patterns and take steps to minimize those problems before they occur.

If you are listening to your team, you can recognise when morale is not what you would like it to be. Poor morale in your team will lead to poorer customer service and to poorer business performance.

In negotiation, if you are really listening to the other parties you will be much more successful.

In sales, if you drown out the customer by telling them what you can do, you may miss the opportunity where they tell you what they really need. Supply what your customer really needs and you will keep a customer forever.

Try listening more – you don’t know what you might hear!

You can eat that elephant quickly!

It is great to have ambitious targets and a dramatic vision for the future, considering what the business might become. It’s even better if you share that vision with your team but the step that all too many miss is to break down the overall target into achievable steps.

It is great to inspire and enthuse the team by sharing that target, but you need to make use of that enthusiasm and enable them to help you achieve those goals.

Think of your plan as if it were an assault on a mountain. You and your team would have to plan where you were going to rest each night, where you were going to eat, who was carrying which bit of equipment and so on into great detail. Every member of the team would have their assigned tasks to complete, and would fully understand and buy into those tasks knowing how they contributed to the overall plan.

I would argue that business is both more complex and simpler than climbing a mountain!

It is much more likely that in your business not everyone is as motivated and driven as you, the business leader. You have to spend more time explaining persuading and cajoling team members! On the other hand, you are probably not risking life and limb leading a business – it just feels like it sometimes.

So break down your plan into little pieces, departmental targets and objectives, into smaller timeframes (a year is way too long) and get your team to recognise and see how they can contribute to overall steps.

Remember the old saw about how to eat an Elephant – one mouthful at a time. In business, get your team to help and just the bones will be left in no time!

 

Striking the right balance

How do you make decisions?

You start by gathering data (usually it is data, rather than information) and you analyse what you’ve learnt. From the analysis you can make your judgement and usually your decision.

Sometimes though the data you have is insufficient. You can’t decide, you are not sure.

This will happen where it is a new situation – one you have not had to deal with before – and you don’t have past experience to guide you.

The first thing to do is to try to improve the data that you have. Often, a second round of data gathering will reveal the crucial facts that were missed out the first time around, and the decision becomes easy.

There will still be occasions where you just don’t know enough, and that’s when you can fall into the trap of Analysis Paralysis.

When that happens, you don’t make a decision and the opportunity passes you by. Maybe it was that big contract but you didn’t feel you had enough information to bid, or perhaps it was a potential recruit – you didn’t make an offer in time, so they took another job.

With every decision you make, there is a balance to be struck between gathering perfect information and making a timely decision, but the more important balance is that of risk and reward.

Some businesses leaders espouse the JFDI methodology (Just F*****g Do It) which works brilliantly for the little decisions, with low reward and low risk profile.

I doubt that many of them would espouse the same methodology when the risk is big enough.

That’s the point at which you should ask for help. What is difficult for you, and something you haven’t experienced before, might be something that one of your friends or advisors has seen before. Perhaps just a second pair of eyes looking through the data will see something that you have not.

The chances are you will never have perfect information. You still have to make a decision, and the risk is still high, so all you can do is gather as much data as possible in a reasonable time, but then.

Get someone else to take a look – two heads are better than one.

 

Leading in the right direction

 

I don’t know about you but I was always told to “work hard and success will come” and that’s true, to a point. Put it the other way around – success won’t come without hard work – and it is much truer.

It is really important to work smarter, not harder.

There’s an old saying “Insanity is doing the same thing over and over again but expecting different results” which has been attributed to many authors. If working harder was going to make the difference you want to make, then you are just too lazy!

So take a step back and build into your schedule some time to think. Even the Prime Minister takes a few minutes each day – and I am sure his diary is busier than most – to stop and reflect.

Perhaps take time to go for a walk – the physical exercise is good for you as well, and if you have a dog (as I do) they will appreciate it!

A further opportunity to make sure you are working smart is to join a Mastermind Group. That’s a group, usually of your peers, where you can share your thoughts and problem. You can get and give feedback and sometimes just explaining things to your peers helps you see the solution to your problem.

If a mastermind group is not for you, consider engaging with a coach or a mentor. There are hundreds available, so be careful who you choose, but they can be a fantastic way of getting clarity and becoming re-energised.

On a less personal, more business level you might consider engaging a Non-Executive Director.

The Institute of Directors says “Essentially the non-executive director’s role is to provide a creative contribution to the board by providing objective criticism…should bring an independent judgement to bear on issues of strategy, performance and resources including key appointments and standards of conduct.”

Whichever route you choose, make time to ensure your efforts are focused in the right direction. If you aren’t focused on the right things, your team won’t be – you are the leader and leading in the wrong direction won’t get you to your destination.

 

Lessons from the top 100 companies to work for

 

I’ve been reading Fortune magazine’s article on the top 100 best companies to work for.

In the article the authors point out that the perks provided by the top employers have an indirect purpose; Google (as many of us will already know) provide many employee perks including free food; what I had not known is that they manage the serving time so that employees have to wait for a few minutes – so that conversations may be struck up whilst waiting to be served.

The eating arrangements are long tables, placed a little too close together. There’s a good chance that you will sit opposite someone you don’t know, and when you push your chair back to get up you’ll likely bump into the person behind you – they call that the “Google Bump”

The thinking behind all of this is to create relationships across the company – and it is a common factor in the top 100 – that encourage the employees to feel part of a team.

A study quoted in the article through a little graph (http://www.oceantomo.com/blog/2015/03-05-ocean-tomo-2015-intangible-asset-market-value/) shows that intangible assets as a percentage of market value have risen from 17% in 1975 to 84% in 2015.

The article continues

“the most effective teams are not those whose members boast the highest IQs, but rather those whose members are most sensitive to the thoughts and feelings of others”

How can you apply this learning to your business?

It starts with your personal approach and attitudes.

Gandhi said:

“Your beliefs become your thoughts,
Your thoughts become your words,
Your words become your actions,
Your actions become your habits”

In simple terms if you start to believe that this matters – in a business context, not just in your personal life and with your family & friends – and you act in accordance with those beliefs, you will be observed and imitated.

What can you do today to make someone else’s day a little better…the foundations for a more productive workplace?