Are you chasing field mice or antelopes?

Lion anetlope

 

“A lion is fully capable of capturing, killing, and eating a field mouse. But it turns out that the energy required to do so exceeds the caloric content of the mouse itself. So a lion that spent its day hunting and eating field mice would slowly starve to death. A lion can’t live on field mice. A lion needs antelope. Antelope are big animals. They take more speed and strength to capture and kill, and once killed, they provide a feast for the lion and her pride. … So ask yourself at the end of the day, ‘Did I spend today chasing mice or hunting antelope?’”

Newt Gingrich – speaker of US House of Representatives

What is Gingrich’s underlying message?

Certainly, the Pareto Principle or 80/20 rule is implied in this quotation . However, there is another message for managers and business owners here, that is to focus with discipline on the issues that provide the best return for your resources of time, money and expertise. The danger is business failure, as explained by Michael E Gerber in The e-Myth Revisited – Why most small businesses don’t work and what to do about it. This is where a business owner and manager who understands the technical nature of the business but does not understand the business is likely to fail. In summary, they do what they are comfortable in doing and what they know, not what they should be doing.

Jim Collins in his book Good to Great: Why some companies make the leap and others don’t, describes how a ‘culture of discipline’ is evident in successful companies. This begins with disciplined leaders who display empathy, personal humility and intense focus. They do not suffer from ‘I’ strain and rarely appear in the media seeking celebrity. Before purchasing our logistics business, I worked for a privately-owned transport company. In an industry that was known for its larger than life personalities who courted the media, the owner was virtually unknown. He ran a highly successful business which was far more profitable than many of the publicly listed companies in the industry. He was extremely disciplined in strictly adhering to his market niche which enabled higher profits and greater customer service.

In another example of discipline, I managed a large division of a transport business in a large regional centre where the managing director was passionate about truck safety. This involved vehicle journey’s being monitored by on-board computers to prevent speeding, exceeding mandated driving hours and excessive idling as it wastes fuel. If drivers exceeded the speed limit by 5% in a week they were disciplined and if this occurred three times within 12 months the driver was terminated. Like the lion it was targeting the areas that significantly affected the successful operation of the business. Each week the performance of the trucks and drivers was given to me to action. I decided against the advice of my peers to post the results on the drivers‘ notice board.

Did the drivers react negatively to being compared to others as I had been warned would occur?

No.

Instead each week many of the drivers would compare their performance of their vehicles and themselves. Some drivers would personally seek me out to ask if there were problems with their vehicle and why for example their vehicle had appeared to be idling excessively. They became self-disciplined team members who were more accountable and didn’t need to be micro-managed. Fuel economy improved and more importantly our accident record was the best in the business despite having drivers’ company-wide who travelled the most kilometres each week. Within the ‘safety framework’ a culture of freedom and responsibility had developed.

For a business to grow or change in a positive way, the discipline required must be where consistent behaviours align with achieving the organisation’s goals. Note the words – “discipline” and “consistent”. The aim is for consistent productive goal-oriented behaviours to become habits. Habits once formed become entrenched, however they must be right habits and they must align with the organisation’s vision and goals. In the drivers’ example, safety and performance became a habit. With the niche transport company, the discipline was only remaining in its narrow market niche. Both examples required disciplined people acting in a disciplined manner, demonstrating that discipline must start at the top.

Here is another example. I was engaged to undertake a business review by a niche logistics business which had suddenly begun losing money. Determining the prime reason was relatively easy; the business had lost a major customer who had contributed the majority of their previous profits. This was only a symptom of what was wrong. A walk through their numerous warehouses provided some answers. The warehouses were dirty, stock was not in the correct locations and staff were inadequately supervised. Management was focussed on managing day to day crises, were not enforcing operational disciplines, rates had not increased in several years and customer service was inconsistent. Classic chasing field mouse behaviour.

The business review formed the basis of a new business plan. New benchmarks for performance were established and a renewed commitment to improving customer service was implemented. This was underpinned by imposing operational disciplines in the warehouse following consultative meetings with staff. Several managers and supervisors exited the business and a new general manager and senior management team were appointed. In the first year the company made a modest profit. In the second year, profits exceeded expectations, revenue grew through targeted strategic sales in the business’ market niche, prices increased, unprofitable customers were forced from the businesses, a warehouse was closed and new leases with more favourable terms were negotiated. This was a good practical example of what Jim Collins describes in his book, Good to Great: Why some companies make the leap and others don’t; disciplined people – first who; then what, disciplined thought; confronting the brutal facts, and disciplined action; a culture of discipline.

Being a successful business owner, leader and manager requires discipline. Lack of discipline manifests itself physically in examples such as untidy and dirty warehouses, poor telephone manners and uninspiring first impressions.

What are the antelopes you should be hunting in your organisation?

Have you identified the field mice?

Is it clear to others in the business?

Do the antelopes align to your vision, values and goals?

Discipline in the areas of accountability, teamwork, and attention to detail are required. Disciplined leadership is defined by is defined by sound habits, rigour, consistency and routines. A disciplined environment assists in putting both management and employees on their best behaviour leading to improving productivity and profits.

Retaining long term good customers…

‘Customer satisfaction is worthless. Customer loyalty is priceless.’

Jeffrey Gitomer – internationally renowned expert on sales and customer loyalty

How many sales executives are given sales targets for new customers rather than nurturing and maintaining current long term customers?

Too often in business today, the focus is on finding new clients – often at the expense of existing clients. Generally, there are two types of salespeople with different personalities. They can be best described as either hunters or farmers. In the business sales process, they have different roles. A hunter’s role is a sales role – find new clients. A farmer’s focus is maintaining accounts and developing long-term relationships with existing customers – an account management role.

Attracting new customers is a challenge and, although it can be rewarding, it involves planning and hard work – and it costs money. International consultants Bain & Company found that the cost of attracting new customers was seven to eight times more expensive than retaining existing customers. They also found that an increase of 5% in retaining current customers could increase profits from 20% to 80%.

While acquiring new customers is important, retaining current profitable customers is a far more cost-effective strategy. Listening to current customers and actively seeking their feedback provides an opportunity to improve service, develop new services and provide a new source of referrals.

Remember: over 65% of customers leave due to indifference.

Do you have a system in place to nurture and manage current profitable customers?

I was providing advisory services to a business who were faced with two of their largest customers threatening to leave. There had been a history of poor service and strained relationships. Both client businesses were headed by difficult and often unreasonable personalities. Careful analysis of each business showed that one was not growing and was unprofitable to service, whereas the other was growing and profitable. To the credit of the business’ general manager, and despite pressure from the owner, he took action. While it forced the unprofitable customer to leave, at the same time he developed a strong working relationship with the other customer – which resulted in the signing of a new contract with increased rates. The customer also recommended the business’s services to another company. This is a good example of successfully managing an existing profitable customer.

Are farmers more important than hunters as salespeople?

No.

It depends on the business’s objectives. Both are needed for a business to grow. It is very important to maintain the current profitable customers, as it is cheaper for the business and offers other opportunities to improve and expand both services and products. The emphasis is on ‘profitable’ customers as, according to the Pareto Principle, not all customers are profitable. Making and maintaining sales need not be a difficult task. It requires an understanding of the business and must be aligned with the business’s plan and goals.

Do you know who are your most profitable customers?

Why are they the most profitable?

Which customers are you not making money from?

The Charge……the lessons

“ With bayonets drawn, they charged the town, they were a fearsome sight

But they had fulfilled their orders, they took the town by night”

From the poem “The Wells of Beersheba” by Warren Eggleton

105 years ago during World War I, British, Australian, New Zealand, French and Empire troops stormed ashore at Gallipoli in western Turkey on 25th April. The plan was to seize control of the strategic Dardanelles Strait and open the way for their naval forces to attack Constantinople, the capital of Turkey and the Ottoman Empire. The campaign failed. The Turks never succeeded in driving the Allied troops back into the sea, and the Allies never broke out of their beachhead. After eight months of bitter fighting the peninsula was evacuated in December 1915.

On 25th April, each year ANZAC Day (the acronym ANZAC stands for Australian and New Zealand Army Corps) is commemorated in Australia and New Zealand with marches and ceremonies, even though the Allies were defeated. This year due to the COVID-19 pandemic, ANZAC Day will not be publicly celebrated, for the first time since 1916.

Ironically Australia’s first great World War I victory, the Charge of Beersheba that ended the Battle of Beersheba is barely remembered or celebrated. It is considered history’s last great cavalry charge and provides some great lessons for managers.

Beersheba (now Be’er Sheva, in modern-day Israel) is situated in desert terrain and was a strategically important town. Here the Allied advance into Palestine was blocked as it was protected by over 4,000 well-armed Ottoman Empire troops in trenches. Beersheba an important transport hub had water wells that were vital in the desert for both men and horses.

The battle for Beersheba began at dawn on 31st October 1917 when the British infantry began attacking with artillery and air support combined with infantry attacks. By mid-afternoon the British had failed to capture the town. The situation had become serious – horses and men needed water. In the late afternoon, looking at a potential defeat the order was given to the Australian Light Horse to charge the Turkish trenches protecting the town.  800 mounted Light Horsemen, armed with bayonets not cavalry sabres, charged over 6 kilometres of open ground towards Beersheba. Initially the Turks opened fire with shrapnel. This was ineffective against the widely spaced horsemen. They then used machine guns. which were quickly silenced by British artillery. The charge caught the Turkish defenders off guard. They failed to allow for the speed of the charge and had little time to recalibrate their weapons for close range fighting.  The Light Horsemen, whose horses could apparently smell the water, jumped over the trenches. Some men dismounted and attacked the enemy with rifle and bayonet from the rear. Others galloped ahead and captured the town and its vital water wells.

If the Allies had failed, over 60,000 troops would have been stranded in the desert without water. If they didn’t prevail, men and their horses who had already been without water for two days faced dying of thirst. It was also the first major victory for the British army over the Turks in World War I. More importantly, the Battle of Beersheba was a precursor to capturing the city of Gaza. The city barred the way north to the important cities of Jerusalem and Damascus. Within a week Gaza fell, and the Allies marched north routing the Turkish troops. The campaign to secure the Sinai Peninsula ensured the Suez Canal remained open to Britain and its allies and led to the collapse of the 400 year old Otterman Empire.

So, what are the lessons for managers from the Charge of Beersheba?

Here are three lessons, that as managers we can learn from the Charge of Beersheba.

  1. 1. A leader needs to be flexible. The Australian commander, General Chauvel had planned to make a dismounted attack on Beersheba but as evening approached, ran out of time. The alternative was to make a cavalry charge. The traditional strategy was to dismount and attack with rifles from a distance. In the open desert this would have made the Light Horsemen vulnerable to shrapnel and machinegun fire. Clearly a different approach was required so a new strategy was devised. The Light Horse attacked like a cavalry unit, with bayonets in their hands like sabres, thereby catching the Turks by surprise. Their speed and determination outweighed their limitations of protection and weapons.
  2. Planning. There is no substitute for sound planning. Fighting a war in a desert required careful planning as Beersheba was surrounded by desert. This posed obvious logistics challenges for moving troops and equipment, particularly mounted troops. British army engineers established forward supply dumps of water and reopened wells that had been blocked by the Turks. This secured sufficient water for the troops and horses as they moved across the desert. Although the town was protected by a system of trenches, there was no barbed wire on one side because the Turks believed they would not be attacked through the desert from the southeast. The British-led forces, by careful planning and doing their homework  proved this to be a false assumption. Logistics planning and doing your homework is critical whether in warfare or in business
  3. People. Success in any organisation depends hugely on the quality of the people. The importance of experience and training is critical. Many of the Light Horse men involved in the Charge of Beersheba were battle hardened from fighting on the beaches at Gallipoli, and most were tough Australian bushman who were experienced horsemen and used to tough living conditions having also trained extensively in Egypt for desert fighting before the Palestine campaign. The Turks led by German officers, were poorly trained as evidenced by them failing to set their rifle sights correctly and not being able to adjust to the changing circumstances.

What do you think the management lessons from the Charge of Beersheba are?

If you are in Australia or New Zealand on ANZAC Day please don’t forget to remember the sacrifices made by service men and women in your country’s defence.

Note: if you are interested in reading about this event in more detail, I would recommend reading the following books:

Paul Daley, Beersheba, Melbourne University Press, 2009

Roland Perry, The Australian Light Horse, Hachette Australia, 2009

If it’s not written down, it didn’t happen!

“If it is not written down, it does not exist.”

Philippe Kruchten –  Academic and software engineer

If it is not written down it didn’t happen. Now that’s a big statement.

Does this sound absurd?

Is it the truth?

Many years ago, I was listening to a recording of oral family history. It was claimed by a distant cousin that her father (my great grandfather) met the bushranger Thunderbolt (bushrangers were outlaws and highwaymen) as a young boy. Thunderbolt arrived unexpectedly early one morning on his father’s small land holding in the New England district of NSW. The story goes that Thunderbolt joined them for breakfast and while having breakfast he kept looking nervously out the window. Thanking them for their hospitality he gave them a gold sovereign, mounted his horse and rode off. Not long afterwards some mounted police arrived.  Apparently, this occurred in 1864. When I checked the dates, I found that my great grandfather was not born until 1866 and Thunderbolt was in jail in 1864. Although the event probably happened, it did not happen in 1864.

There is business lesson here that should not be under estimated.

My advice is to write down and record the most important things.

If a legal issue arises, the written word is far more reliable than someone’s recollection. It is important particularly with issues of people management and workplace health and safety.

Let me give you an example.

As a young manager in my mid 20s, I was managing a concrete plant in Canberra. The fleet of owner drivers continuously threatened and intimidated me. It was an unusual situation when looked at through today’s eyes. The drivers were independent businessmen, who owned a concrete truck. This was the same for four other ready-mix concrete companies also operating in Canberra. Despite being businessmen, the owner drivers were all members of a trade union. With the union’s assistance they restricted the number of trucks operating, thereby restricting competition and increasing the rates they could charge.

It was a business cartel restricting competition.  It was not a legally or government sanctioned cartel such as taxi plate licences. The construction industry was booming and the capacity to deliver concrete was restricted, adversely affecting the construction industry. The situation deteriorated to a point where driver’s representative in our business tried to tell us when and to who we could deliver concrete.

This was clearly illegal under the Trade Practices Act. Businesses were not allowed to collude and restrict competition and increase prices. This “arrangement” was adversely affecting our customers. On several occasions I was confronted and threatened. Having some knowledge of the law and knowing that this ‘arrangement’ was probably illegal, when threatened I quoted back that what they were doing was illegal. I then noted it in my work diary.

More than three years after I had left the business, I received a call from the company’s lawyer. The new CEO had decided to use Canberra as a test case to initially overturn the “arrangements” and then use it as a precedent in the state of NSW, to break up the arrangements there. Luckily, I had kept my work diaries and when called as a court witness, was able to quote the times, dates and conversations. The company won the court case and the cartel arrangement that had been supported by the union was quashed.

This outcome demonstrates the importance of recording events, as the diary entries were one of main reasons the court case was won. Too often in business, we are busy and fail to record important events only to find out later, that they should have been. The ready-mix drivers’ case was an important learning experience for me.

Employee issues such as performance management and safety requirements are areas which are important, and discussions and events must be recorded. Our memories cannot be relied upon as we cannot remember dates, times and actual conversations.

The Thunderbolt story illustrates the unreliability of oral history and memory. As managers, writing down important things is not optional. Many of us hate paperwork, however it is an essential part of our job.

What should you as a manager be recording?

Where should you file these records?

 

The power of a vision

“I believe that this Nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth”

John F Kennedy – USA President

This quote delivered in 1961 by President Kennedy is one of the best examples of a vision statement as within the decade, man had landed on the moon and returned safely. On 20th July 1969, astronauts Armstrong and Aldrin landed on the moon and returned safely to earth fulfilling Kennedy’s vision.  However, it is important to remember that the moon landing was the result of decades of work by hundreds of thousands of people working across the disciplines of science, technology, and engineering, peaking at a cost of 4.41% of the Federal US budget in 1966.

How important is it for an organisation to have a vision?

A vision is a picture or an idea. It helps focus us on the future, provides inspiration and assists in overcoming the obstacles that inevitably appear along the way. A vision is a target. It should be  aspirational, perhaps like the concept of a BHAG (Big Hairy Audacious Goal) as descibed in Jim Collins’ book; Built to Last: Successful Habits of Visionary Companies and be successfully communicated throughout the organisation.

An example of the power of an aspirational vision is Rotary International’s PolioPlus program. In 1979 Clem Renouf, the Australian President of Rotary International read in the Readers Digest how small pox had been eradicated. After discussing this with a medical expert, he had a vision that the world could be polio free. At the time, more than 350,000 people were infected by polio in 125 countries each year. Later that year Rotary’s Board of Directors passed a resolution for a program for “the eradication of poliomyelitis and the alleviation of its consequences” throughout the world. Subsequently, in 1985 the PolioPlus program was adopted with the aim of eradicating polio worldwide. With so many countries where polio was still endemic this was a challenging vision.

Rotary initiated the program and together with the support of UNICEF, WHO and other organisations such as the Bill and Melinda Gates Foundation have almost achieved Clem Renouf’s original vision. By 2017 only 22 cases of polio were reported in just three countries, Afghanistan, Nigeria and Pakistan. At times there were difficulties in overcoming cultural suspicion, low levels of education, training staff to manage and administer the program, political insurgencies and geographical remoteness. However, despite these obstacles, the original vision ensured the program continued. It is now almost complete.

There are many websites and other sources who provide a methodology on how to create a vision statement for your organisation. As can be demonstrated from the above two examples, strong and clear visions are powerful tools and have the ability to provide a framework for the future. Visions should be compiled into a vision statement in a suitable form to communicate to staff, customers, suppliers and other stakeholders. Vision statements define goals and assist in creating a path for the future.

Does your organisation have a vision statement?

If not, do you think that the organisation would benefit from having a vision statement?

President Kennedy and Rotary’s Clem Renouf’s vision are great examples of the impact of having a vision statement.

Management lessons – why the Schlieffen Plan failed: the What vs the How

“In western Europe the military machine, with its thousands of wheels, costing millions to maintain, cannot stand still for long. One cannot fight a war for one or two years, from position to position, in 12 day long battles until both combatants are completely exhausted and weakened and forced to sue for peace. We must attempt to defeat our enemies quickly and decisively.”

Count von Schlieffen, German strategist, 1905

What was the Schlieffen Plan?

Long before 1914, Germany was preparing for war. In 1905, Count von Schlieffen, the German Chief of Staff completed what became known as the Schlieffen Plan in which planning commenced in 1897, based on the theory that Germany would be at war with France and Russia at the same time.

The aim was not to fight the war on two fronts at the same time, in the West against France and in the East against Russia. The plan was to first defeat France within 6 weeks by invading through neutral Belgium and capturing Paris before Russia could mobilise its army. After the fall of France, German troops could then be diverted to the East and attack Russia.

The Schlieffen Plan failed spectacularly as World War I became a war of attrition, bogged down in trench warfare in eastern France and Belgium, well short of Paris. The Germans believed that neutral Belgium would not resist and that the British through their 1839 treaty with Belgium, allegedly described as a ‘scrap of paper’ by the German High Command would not come to the support of Belgium. Furthermore, the Germans believed that there was no need to fear the British Expeditionary Force (BEF) which the Kaiser called a ‘contemptible little army’.

What are three management lessons from the failure of the Schlieffen Plan?

Lesson 1: inflexible and arrogant leadership leads to failure

Apparently over 80% of the German soldiers were not professional soldiers. The schedules were prepared by a military hierarchy for fit regular soldiers under ideal conditions, not for non-regular soldiers who were not for physically or emotionally fit to march 30 km per day with heavy packs. The German High Command refused to modify the plan when the advance faltered. There was no Plan B

Lesson 2: under estimating and not understanding your opponents and their tactics

The BEF was not expected to support Belgium but they helped delay the plan. This led to atrocities being committed often by the inexperienced and untrained German troops. The bureaucratic minds of the German planners justified these actions as nothing should stop the plan’s operation. These atrocities in turn assisted in portraying the image of the ‘evil Hun’, which mobilised public and political opinion, first in Britain and later in America, indirectly allowing America into the war several years later.

Lesson 3: not understanding and taking into account logistics in your plan

The Schlieffen Plan was partially successful in the first month of the war, as it resulted rapid penetration into France. However, the speed of the initial advance created its own problems, placing a strain on the supply lines as well as placing great strain on the German troops, where the majority were travelling on foot and also having to fight on the way. They became fatigued, sunburnt and developed blisters reducing their fighting capacity. The daily needs of feeding the hundreds of thousands of horses and men, and providing ammunition was a logistical nightmare (logistics in your business). The army moved away from the railheads at 30 kms per day resulting in the supplies being brought to the front by horses. It is estimated that the German army needed 3,900 tonnes of food and fodder each day, clearly a difficult task when overwhelmingly horses were used for transport. Clearly logistics limited the operational success of the plan.

There were other reasons for the failure of the Schlieffen. However, as managers that we can learn from the three management lessons from the failure of the Schlieffen Plan.

In conclusion, the questions you need to ask yourself are:

Post note: The Russian Army mobilised quicker than the Germans had predicted which meant a war on two fronts.

How NOT to celebrate Christmas…

“Every Who down in Whoville liked Christmas a lot

But the Grinch who lived just North of Whoville did not!

The Grinch hated Christmas! The whole Christmas season!

Now, please don’t ask why. No one quite knows the reason.

It could be, perhaps, that his shoes were too tight.

It could be his head wasn’t screwed on just right”

From the book “How the Grinch Stole Christmas!” by Dr Suess (Theodor Geisel)

So, what relevance does a children’s book of rhyme about a grumpy, solitary creature who tries to end Christmas by stealing Christmas-themed items from the homes of a nearby town Whoville have for managers?

In previous Christmas blogs, topics covered  included the need to have rules on behaviour, the importance of taking the opportunity to celebrate, thank staff and display leadership as well as a time for renewal and evaluation and setting the tone for the next year

John Cleese the famous comedian and Antony Jay one of the authors of TV show “Yes Minister” made a fortune from training videos that emphasised what not to do. With the large number of articles on management and leadership easily available today, I find it inconceivable that managers still display appalling examples of how not to do things. In these times where communication is spread quickly through social media it is even more important to ensure communication to staff in particular, is considered and done carefully.

This year I was sent a copy of the following Christmas notice posted on a company notice board.

From the text it would appear there have been problems of behaviour at the company’s Christmas parties in the past. As a manager, what do you think of this Christmas message to staff?

Here are some questions to ponder…

What is the underlying message in this Christmas notice?

Is it positive?

Would this communication help lift employees’ morale and get them working to improve performance?

What tone is set for the future?

What do you think of this company’s culture?

Do you think that culture effects profitability?

Between January 2016 and late 2019, the price of the commodity this business mines rose 40%, however in two of these years this company made losses and did not pay a dividend. Anecdotally it would appear that culture could be a contributing factor to less than satisfactory financial performance.

My advice to managers and business owners is “don’t be a Grinch-like at Christmas”. It is traditionally period of goodwill. Celebrate the occasion display graciousness, thank your staff and their families…

Take advantage of the opportunity, provide hope for the future and display leadership.

And to all the readers of this blog, thank you for subscribing and I wish you and your families the compliments of the Season and best wishes for the New Year.

What is Koala Bear Syndrome?

Flea-ridden, piddling, stinking, scratching, rotten little things”

John Brown – Australian Minister for Tourism

In the 1980s, the Tourism Minister sparked a national outcry when he described the koala bear in a such disparaging way. Koalas are considered a national animal icon in Australia with overseas tourist seeking to view and be photographed holding them. Koalas are not actually bears, but are mammal marsupials (have pouches) and are protected by law.

Koalas are found in the eucalyptus forests of eastern Australia and feast exclusively on eucalyptus leaves, which are tough and not very nutritious. They are covered in grey fur, weigh up to 14 kilograms, have strong clawed feet suitable for climbing and living in trees and are universally considered ‘cute’. Their poor diet means that they get little energy, needing to eat up to one kilogram of leaves per day. They are very docile and sleep up to 18 hours per day. The koala’s brain is very small, and they are considered the least intelligent mammal in the world. In summary the koala is protected, considered ‘cute’, not very intelligent, docile and not very productive.

The concept of the Koala Bear Syndrome© (KBS©) has been developed from a lifetime of work experiences in a range of businesses. Fellow workers often referred to some of their peers, colleagues and bosses as “marsupials”.

They didn’t have pouches, so why call them marsupials?

Because like most marsupials in Australia they appeared to be a “protected species’ and displayed such characteristics as being chronic under performers who could say and do anything without bearing the consequences or being held accountable. However, I consider the characteristics of the koala a better description of such people, particularly those who produce little, under perform, lack energy, are lazy, continually made the same mistakes, are incompetent and more importantly appear to be protected by their managers. They are rarely held to account. Koala bears are another form of disruptive employee, although they are more likely to be less obvious.

Sadly, few organisations are completely free from KBS©. We all have our blind spots and the challenge is to be self-aware enough to recognise them. Looking back, there are times when I have allowed KBS© to exist by failing to recognise it. KBS© tends to manifest itself more in private family companies, where business owners are more emotionally involved and where family members are not held to the same standards as other employees. Employing relatives and friends is also another area where KBS© is more likely exit.

Are there koala bears in your organisation?

How do you recognise them and what are you going to about it?

Value statements, structured performance appraisals, codes of conduct and clear and strong leadership can assist in managing KBS©.

Management lessons from the fall of the Berlin Wall…

“The Wall will be standing in 50 and even in 100 years”

Erich Honecker – East German head of state, January 19th 1989

Almost thirty years ago, the Berlin Wall came down. The Berlin Wall was a guarded concrete barrier that cut off West Berlin from the surrounding Communist State of East Germany. Over 140 kilometres long, it was built in 1961 to prevent East Germans from escaping to West Berlin. From the early 1950s to 1961, nearly 20% of the East German population left the country for West Germany.

On 9th November 1989, with crowds mounting in East Berlin the East German authorities announced the end of travel restrictions and opened up several checkpoints for visits to West Berlin.  Thousands swept through the checkpoints. Soon Berliners from the East and West began dancing on top of the wall and breaking off pieces of the wall. The fall of the Berlin Wall triggered a revolutionary wave that ultimately redrew the map of Europe, bringing down the Iron Curtain and setting millions of people free. Within two years, the Soviet Union and its empire also fell.

For 28 years the wall kept people in, and kept people out, separating and dividing families and friends, dividing Germany and the European continent. Over 5,000 people had escaped over this time and sadly an estimated 200 plus people died trying to escape from East Berlin to West Berlin. No one tried to escape from the West to the East.

My father believed that he would never see the dismantling of the Berlin Wall in his lifetime. I can clearly remember him saying this to us at the family Christmas in 1989. The current thinking at the time was that Communism’s rise was inevitable. Very few ‘experts’ predicted or expected that eventually Communism would collapse, let alone so quickly, and that Russia would lose its status as a world super-power.

What are the three management lessons from the fall of the Berlin Wall?

  1. The power of a vision. On 12th June 1987 US President Ronald Reagan stood at the Brandenburg Gate and demanded “Mr. Gorbachev, tear down this wall.” His words were largely ignored by the international media. Many so-called foreign policy experts dismissed Reagan’s demand as naïve and sensationalist.

There are few things more powerful for a business than having a clear and concise vision. Amazon’s vision is “To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavours to offer its customers the lowest possible prices”. Amazon’s current market penetration and size is testament to their vision.

  1. Things can get better rather than worse. The worst-case scenario may not happen, particularly when people put their minds to achieving positive change. Very often we are subjected to negative media stories. We regularly hear people spreading such sentiments inside organisations.

Never under estimate what positive outcomes can be achieved with great leadership and teamwork. Everyday we are subjected to non-positive messages that make us believe our future is not in our hands. Like the East Berliners in 1989, by believing that we can escape from a prison-like environment, whether physical or mental, we can set ourselves free and make positive change.  The dismantling of the Berlin Wall is a reminder of how the seemingly impossible can became the inevitable and if there is the will to make it happen.

  1. Predicting the future is dangerous. Sadly, we tend to lean on so-called ‘experts’ who advise us and write books predicting the future. However, the fall of the Berlin Wall and the associated collapse of Communism caught almost everyone by surprise. We should be sceptical of people who claim they can predict the future.

In the late 1800s The Times predicted that “In 50 years, every street in London will be buried under nine feet of manure”. This became known as the “Great Horse Manure Crisis of 1894”.  The invention of the motor transport and Henry Ford’s assembly line production of motorcars at affordable prices changed this ‘expert’ prediction. By 1912, less than 20 years after this prediction there were more cars than horses in London. Furthermore, they were cheaper to own and use than a horse.

What are the 3 concluding messages from the fall of the Berlin Wall?

  • Change is evitable.
  • Things do not remain the same.
  • Whatever you are doing today will not be good enough for the future.

Certainly, the failure of Communism to adapt and change assisted in its downfall. This is the same for organisations. Many of the great corporations of times past no longer exist.

So, what is your business doing to recognise the evitability of change?

What should you be changing so your business not only survives but thrives?

Is an annual budget really all that important?

“The budget is not just a collection of numbers, but an expression of our values and aspirations”

Jack Lew – US Secretary of the Treasury

Many small businesses (SMEs) do not have annual budgets. In fact, I have come across some multi-million dollar businesses that do not have budgets, including several of my past clients.

What is a business budget?

A business budget is ‘a financial plan and prediction of future revenue and expenditure’. A budget is a goal for the business over the next 12 months.

Why are budgets important?

They serve a goal, or a plan…with 3 main purposes:

  • To forecast income and expenditure, and by extension profitability; (i.e. where are the costs incurred and where does the revenue come from to make a profit)
  • A tool for decision making that establishes a financial framework for the decision-making process, and assists in determining courses of action that can be either planned or unplanned over the year.
  • To monitor and measure business performance, where the actual business performance is measured against the forecast business performance.

In simple terms, all good businesses MUST have an annual budget, otherwise management and staff will not know what is expected of them, or the business.

How should budgets be compiled?

There are two main ways of compiling a budget; top down or bottom up:

  1. Top down is the less rigorous way of setting budgets and is more suitable for very small businesses. Often last years’ results are reviewed, and a percentage is added to revenue and costs for the following year.
  2. Bottom up entails reviewing costs, customers, revenue, sales and other Profit and Loss (P&L) items at a micro-level and determining what can be and what is likely to be achieved next year.

In my experience based on having my own business and on feedback from my clients, bottom up budgeting is the best method. It is important to invest the time in creating a comprehensive and realistic budget as it will be easier to manage and ultimately more effective than top down budgeting.

What are the suggested steps?

  1. Involve the right people, including financial, sales and operational staff. Their involvement will help gain their commitment to meeting the budget.
  2. Ask them for their estimates on sales, production costs or specific projects based on first principles by referring to each line item and customer in the P&L.
  3. Rigorously question each assumption, get agreement and then a commitment from those team members who are responsible for each part of the business. Ask questions such as:
    • Which customers will increase their purchases next year?
    • Where and how can we increase sales?
    • Will we be able to increase prices?
    • How can we reduce our fixed costs?
    • What staff will get pay increases next year?
  4. Use last year’s figures as a guide only, and do not simply make broad estimates from these figures.
  5. Complete the budget and share it with key staff.

In conclusion, the compiling of the annual budget is an opportunity to review and understand the business more thoroughly. A budget provides structure for the next 12 months, imposes discipline and holds people accountable for the business’ performance. What resources are required? How many staff are required? What customers are the most profitable? Where can we reduce overheads and still increase sales?

Overall budgets must be realistic and achievable and should also be aspirational and not too easy to achieve. A budget should have ‘stretch targets’, to ensure the business grows. In all my years in business, I have never set a budget where revenue or sales were less than the previous year.