Category Archives: Employee Engagement

Are you ready to Dare Greatly?

Daring greatly leadership poster
I’ve been wanting to read this book for ages, ever since I watched Brené’s TED talk (link). I’ve been experimenting with vulnerability, something I have always found difficult, for a couple of years now (Time to get personal – 2016). This book is the gospel on vulnerability, shame and courage. It is really easy to read and is structured with checklists and summaries throughout.
I thought it would be helpful to summarise some of my big takeaways – though I encourage you to read this book and apply its lessons yourself.
Vulnerability is:
  • asking for help
  • saying no
  • starting a business
  • encouraging my kids to try (even if they might fail)
  • calling someone who lost a loved one
  • publishing your work, sending it out, etc
  • falling in love
  • trying something new
  • admitting I don’t know
  • admitting I’m afraid
  • trying again after failing
  • standing up to peer pressure
She has 10 questions she asks to understand the culture of any group or organisation:
  1. What behaviours are rewarded and punished?
  2. Where and how do people spend time, money and attention?
  3. What rules and expectations are followed, enforced and ignored?
  4. Do people feel safe and supported taking about how they feel and asking for what they need?
  5. What are the sacred cows?
  6. What stories are legend and what values do they convey?
  7. What happens when someone fails, disappoints or makes a mistake?
  8. How is vulnerability perceived?
  9. How prevalent are shame and blame and how do they show up?
  10. What’s the collective tolerance for discomfort? Is the discomfort of learning,  trying new things, giving and receiving feedback normalised or is there a premium on comfort?
The space between our practiced values and our aspirational values is the values gap. This is where we can lose people.
In an organisational culture where respect and dignity of individuals are held as the highest values, shame and blame don’t work as management styles. We can’t control the behaviour of individuals, we can only create cultures where certain behaviours are not tolerated and people are held accountable for protecting what matters most – human beings. There is no leading by fear, if we are looking for creativity, innovation and engaged learning.
A daring greatly culture is one of honest, constructive and engaged feedback. However, in most teams and organisations effective feedback is rare. There are two main reasons:
  1. we are not comfortable with hard conversations
  2. we don’t know how to give feedback in a way that moves people forward.
There’s a big difference between mean spirited criticism and constructive feedback: When we stop caring about what people think, we lose our capacity for connection, but when we become defined by what people think, we lose our willingness to be vulnerable. If we dismiss criticism we lose out on important feedback, but if we subject ourselves to hatefulness, our spirits get crushed.
Vulnerability is at the heart of the feedback process. She has a great checklist for preparing to give feedback.
I know I am ready to give feedback when:
  • I’m ready to sit next to you rather than opposite you, and put the problem in front of us rather than between us.
  • I’m ready to listen, ask questions and accept that I may not fully understand the issue.
  • I want to acknowledge what you do well instead of picking apart your mistakes.
  • I recognise your strengths and how you can use them to address your challenges.
  • I can hold you accountable without shaming or blaming you.
  • I’m willing to own my part.
  • I can genuinely thank you for your efforts rather than criticise you for your failings.
  • I can talk about how resolving these challenges will lead to your growth and opportunity.
  • I can model the vulnerability and openness that I expect to see from you.

We can tell a lot about how we are engaging with Vulnerability by observing how often we say:

  • I don’t know
  • I need help
  • I’d like to give it a shot
  • I disagree – can we talk about it
  • I did it
  • Here’s how I feel
  • I’d like some feedback
  • Can I get your take on this?
  • What can I do better next time?
  • Can you teach me how to do this?
  • I take responsibility for that
  • I’m here for you
  • I want to help
  • Let’s move on
  • I’m sorry
  • This means a lot to me
  • Thank you
My commitment as a leader:
  1. I want you to show up, to be yourself, to be open to learning.
  2. I want you to take risks, embrace your vulnerabilities and be courageous.
  3. I commit to engaging with you, standing beside you and learning from you.
  4. I commit to be vulnerable, to be courageous and to dare greatly.
“The key to our transformation as leaders is in realising that getting people to engage or take ownership isn’t about the telling but about letting them come to their own idea in a purpose-led way, and our job is to create the space for others to perform. This is a shift from “having the best idea” or “solving all the problems” to “being the best leader of people”.
This is a shift from controlling to engaging with vulnerability – taking risks and cultivating trust.”
– Christine Day, CEO Lululemon
Vulnerability is the birthplace of creativity, innovation and trust. If you want your employees that take responsibility, take risks and have an entrepreneurial spirit, you have to encourage people to try and to make mistakes (and be willing to stand by them when they do).
Go read it and apply her lessons for yourself!
(Brené has a great chapter on “wholehearted parenting” that is builds on these ideas powerfully.)

8 weeks in: This isn’t the finish line, it’s just the beginning

image

It’s been a busy few weeks. In the spirit of openness, vulnerability and learning, I’d like to share some of my recent mistakes and lessons:

We held a town hall last week to share our 3-5 year strategy with all staff, which overran. I don’t just mean by a few minutes, but by more than 30 minutes. I was grateful for my colleagues’ patience, but I was cross with myself that I allowed it to happen. I and everyone else, spoke for double the time allocated. I was kicking myself for not rehearsing and preparing all the speakers to make sure that we were joined up and on time. From now on, I have to get strict on myself and others – no practice no presentation. At least, we didn’t have it in the kitchen this time, with everyone standing for that long. Also I’m really really glad that we gave everyone a simple and powerful take away in the form of a one page strategy summary. It’s great to be transparent about what I am working on and to be able to ask others to do the same.

Continue reading 8 weeks in: This isn’t the finish line, it’s just the beginning

Reflections on talent, culture, leadership and engagement (Strategic HR Magazine)

At a recent conference, I found myself sitting next to the founder of a rapidly growing media company. She was talking to me about the challenges of hiring and retaining graduates. “What is it with millennials?” She said. “They are so impatient, some haven’t even been working for a year and they want to be promoted. In my day, you just put your head down and did your time.”

Continue reading Reflections on talent, culture, leadership and engagement (Strategic HR Magazine)

We are all in the ‘behaviour change’ business

Mitesh meets Seth Godin

Summary: My Top 10 Takeaways from Seth Godin’s Live Q&A Seminar in London 3rd November 2015:

  1. How to get a billion people saving? Don’t start with a billion people. Focus on the smallest possible number of people you can change…that will allow us to take the next step. We need to change people one by one and then give them the ammunition to become evangelical. We need to figure out the story that our clients will spread.
  1. Behaviour change: We need to accept that – ‘what we do for a living is change people’s behaviour’. So most of the work we do is tell stories, understand behavioural science and engage in a way that changes people. We have to accept that our job is to change people. Now how can we better understand the people we are trying to change?
  1. Trust & attention: Earning people’s trust and attention are going to be the critical success factors for many years to come. We all pay a premium for trust and attention. The person or entity that gets the most trust, will get the most customers. How do we do this better as individuals, as a team, as a firm and industry?
  1. We all tell Stories: People don’t buy what you sell, they buy the story they tell themselves. We need to tell a story that resonates with the person you’re telling it to, and it has to be true. One of the best stories we can tell is that “people like us do things like this”. What will make our clients feel a better sense of belonging with us?
  1. Understand Worldviews: We need to understand the worldview of the people who you are trying to change, or sell to. To find out someone’s worldview – Ignore everything they say, and watch everything they do. People are different and they have different worldviews. Treat different people differently. We need to tell different stories to different people that resonate with them (but they must be true). How can we learn to see better? How can we quickly figure out what people’s worldview is? How do we get masterful at this?
  1. Sell the Benefit: We need to find a way of showing potential clients what is the benefit of using our services before they have to pay? We can’t tell people that I’m not going to tell you my secret until you pay… How do we do this better?
  1. Find your Tribe: As we get bigger we risk getting more mediocre, unless we can say NO. As soon as we can say to a client that you’re not right for me, we start to get the clients you deserve. How can we say no more gracefully?
  1. Client referrals: A lot of us have a loyal audience that never talks about us. The only reason that people will refer you, promote you and talk about you is if it advances their agenda in some way. What would make them want to promote / evangelicalism for you?
  1. Client service: How do you get clients to stay for the long run? They need to feel like they belong. Ask yourself what story do they need to tell themselves to feel like they belong. How will they feel that “People like us, do things like this…”?
  1. Failure is key to good ideas: Human beings are terrible procrastinators. As a result we are less generous, less productive and less happy than we are capable of. We just need to try, it’s an experiment … we’ll only discover afterwards what works and what doesn’t by trying/testing. We have to continuously let our whole organization know what we have tried that doesn’t work, showing that we have failed. That’s how you give people permission to fail, to try and to learn… How can we allow each other to have and express bad ideas, to test, fail and learn?

Our industry be disrupted the way so many others have before. The only question is – When and who can do it?

Our job is to see what others do not see, to imagine what may be. The firms who succeed will be the ones who care more, who gain more trust and pay more attention. We need to get masterful at this!

 

Main points covered by Seth:

I have tried to organise my notes from yesterday Q&A into topics to make it easier for you to scan and pick out what is most useful and relevant to you.

Seth Godin in London 1

The next big thing

The search for the next big thing fuels a lot of people’s work. Well this is the next big thing. Stop looking for the next thing and focus on what’s changing all around you today.

 Change

We are in the midst of a new revolution (that’s even bigger than the industrial revolution). We are 10 years in and it might be another 10 years before others realize it. Revolutions destroy what is perfect and make the impossible a reality.

Anything that you do where there’s a manual, We will be able to hire someone cheaper or automate in the future to get better results than you to do.

The Internet is a platform that gives each of us tremendous leverage. It is not for watching cat videos, it permits each of us to make a meaningful change in the entire known universe.

Disruption

Innovators Dilemma – Clayton Christensen. It’s almost always an outsider that disrupts a system.  Will your industry be disrupted the way so many others have before. Yes it will. The only question is – When and who can do it.

The first person who really observes the industry and really sees what stories people tell themselves and what it will take to change them will succeed.

Trust & Attention

Earning people’s trust and attention are going to be the critical success factors for many years to come. We all pay a premium for trust and attention.

The person or entity that get the most trust, will get the most customers, and the most money. A man came to fix his boiler and covered up his shoes (showed respect). Then gave a list of all his neighbours that have used his services, “you can call any of them”. He built trust quickly, he got business

Failure

Many organizations think their work is so important that they have to get everything perfect. They are not willing to make mistakes and experiment.  It is far more natural to hide, to pretend you don’t make mistakes and to never innovate.

If you’re going to change that, you have to let the whole organization know something you tried that didn’t work, showing that you failed. That’s how you give people permission to fail, to try and to learn… If you made a mistake in previous age it was game-over for you. Today the cost of being wrong is much lower than it has ever been, but we are still acting as if we have a factory.

As a breadwinner how do I make space to fail? Go speak to someone, a new prospect, a lead, a potential customer, user, courageously and generously, set yourself up for interactions that aren’t fatal, but help you see and learn something new. Learning to fail is key.

Ideas

Professional brainstormers allow more stupid ideas than anyone else.  Seth writes his own blogs every day. He writes down up to 10 ideas every day, then types up 3-4, then edits/curates till only one ends up going out on his blog. He says he comes up will a lot of bad ideas, and every once in a while there is a really good one amongst them.

Story is key

All of us buy the story we tell ourselves about the thing we purchase. You get the item for free when you buy the story.

Thousands of people have a Harley Davidson Tatoo but no one has a Suzuki Tatoo. Why do they do it? Is it about the speed or the horsepower? If you ask they will say “this is who I am?” – it says something about them.

In marketing your brand, you should know what it is your customers will say about your product. Great organizations make a change happen.

Harley Davidson turn you from an outsider to an insider, when you buy their stuff, you become one of them, you’re part of a club. Apple doesn’t just produce cool gadgets, hey set out to teach us to have better taste in digital goods, SJ said – “the problem with Microsoft is they have bad taste”. Once you’re hooked on the taste wagon you buy anything that looks better.

Sales

The reason selling B2B is hard is because you are dealing with people who don’t care. The thing someone who doesn’t own the company / doesn’t care is thinking when buying something is “what will I tell my boss?”.

So they buy what has always been bought before, how has it always been done, no one wants to be noticed, take the risk of doing things differently. The only thing we are willing to tell/explain to the boss is “It is cheaper.” “Look how much money I saved?”, “Everybody uses them.” That’s the only story business tell themselves, if you don’t have a story.

It is the purchasing department’s job to say no; to say I want cheaper. You need to believe is that your prices are not high. You will be tempted to lower your price, this is the refuge of the marketer who doesn’t know what to do, it is a last resort.

Tell a story that resonates with the person you’re telling it to, and it has to be true. One of the best story we can tell is that “people like us do things like this. What you want to tell the purchasing department, that “these are 4 of your biggest competitors, they all use me/this… Do you want to tell your boss you missed this opportunity to save a few bucks?”

Worldviews

You need to understand the worldview of the people who you are trying to change, or sell to.

Which kind of person works for the government, or works in a school or in the procurement department. What’s their worldview? A Defensive Buyers worldview: “I don’t want to get into trouble, I won’t get in trouble by rejecting you. So we need to tell them “Do you want to be the last person to sign up, then that’s ok.”

No one goes to work, wanting to be shown they are wrong. Only once you have someone’s attention can you educate them based on what they already believe. We can’t try and change people’s beliefs.

To find out someone’s worldview – Ignore everything they say, and watch everything they do. That’s why focus groups are toxic. Your job is not to make something in a factory, but your job is to see. In a very short time, you need to judge others and figure out what their worldview is.

Where to start?

We hold back, we fit in, we don’t share our dreams. We don’t want to be exposed. We procrastinate. Human beings are terrible procrastinators. As a result we are less generous, less productive and less content than we are capable of.

You just need to start, it’s an experiment, we won’t know till afterwards… we discover what works and what doesn’t by trying/testing.

One of the things hard wired in our culture is the fear of being told “you’re not as good as you think you are”. We have to confront this fear, change the story we tell ourselves in our heads and just put ourselves out there again and again.

Embrace Tension

Change has an ugly twin brother, and he’s called tension. You have to accept tension if you want to change someone or something.

 Are you brave enough?

When people ask “I need to know if it will work before I will try it.” Are asking the wrong question. Once someone else has done it before, if I still ask will it work what people really mean is “I’m afraid.”

It doesn’t matter if it works, what matters is “Are you brave enough to do it?” So you can find out if it does and how you can make it work.

Starting a new business (line)

Anything that is easy to set up or do is harder to market, because it’s harder to stand out. You have to create a community and the need. Almost nobody wakes up and says I have a marketing problem and I can solve it by joining a community.

We need to find a way of showing potential customers what is the benefit of using your service before they have to pay? You can’t tell people that I’m not going to tell you my secret until you pay… Radio gave music producers a free sample… before you buy.

Now imagine you want to create a community that is only open to the top 500 CMOs, but no one has heard of you. Start by getting just 10 CMOs to join. Now the 490 CMOs that are not on it have a problem, because they are worried about what they’re missing out on.

Scaling your business

You scale should be as small as you can possibly live with, then demand will grow and you can grow bigger. If you can start by changing 10 lives, you can get 50, and then you can go online and go to a million … billion.

Figure out what the smallest possible subset for the community is. AirBnB did not start to be the biggest accommodation company in the world, they started small.

The best way to grow (if growth is your goal), is to start with your minimum viable business. You have to keep working till you figure about how to flip one village / one customer / one segment of the market, then you go to the next village and tell them and talk to village 1 / customer 1.

 All things to all people

As you get bigger you get more mediocre, unless you can say: We have a lot of people who want to be new clients, but we’re not going to just take everyone on. As soon as you can say to a client that you’re not right for me, you get the clients you deserve.

“It’s not for you”, is one of the most powerful things we can say when you are making your art. You can be happier and more profitable if you are doing work that people will miss when you are gone. Most people do work that someone else can do. If you could, spend your whole day doing work that only you can do.

Find your tribe

Seth has tried to talk to many different types of people over his career, but all were not right. So many times, the people in the audience were telling themselves a story that didn’t match the change he was trying to make in the world. So he kept trying new groups until he found his tribe – people who were trying to make change – “people like him”.

Product adoption

The product adoption lifecycle is important to know. Everyone has a worldview about where they are on that spectrum, for shoes, for technology, etc. The middle of the curve is most of us.

Early adopters are the geeks and the nerds. The middle/majority waits till the technology is cheaper. The laggards have still not given up their VCR. Something new gives some people stress (majority) vs something new gives others pleasure (early adopter).

In between the early adopters and the masses is a big chasm. The gap between “what’s new” and “what works”. Lots of industries have trained us to try and be early adopters. Movies have created a feeling to make us watch the new film in the first week (otherwise they’re off the screens). That’s why they do the mystery and the trailers, etc.

To achieve scale you have to work your way through the curve. You have to decide which curve you’re going to work through.  Alternatively you don’t go for scale, just keep focusing on the “new”. Seth didn’t follow the permission marketing adoption curve (after the book, he didn’t do the handbook, course, series, the talk, etc). The audience he wanted to have always wanted “what’s new”, so he focused on that.

Getting people to listen

If you are find your words are landing on deaf ears, with no one listening, you need to ask yourself what it will be like when it has changed; when it has reached its tipping point. You start with the early adopters. When people like us are doing things like this, everyone will do it.

What is the story the person is telling himself. He doesn’t want to look stupid. You are an agent of change. Create an environment that makes them look less stupid by choosing you.

Beaurocrats often feel left out and isolated. How do you get better at addressing their narrative; helping them tell a story?

 Marketing is about changing people

When we do our best work, we are not a machine, our best work is changing people that is hugely valuable. We need to own that. “I am going to this meeting to change people”.

If you want to market the importance of customer service to your board, what if you go and interview 10 angry customers on your iPhone, just show that video, and you have now sold the need for customer service. That’s what marketers do. We have to care, we have to own it.

We need to accept that – What we do for a living is change people’s behaviour? So most of the work we do is tell stories, understand behavioural science and engage in a way that changes people. You have to accept that your job is to change people. Now how well do you understand the people you are trying to change?

Referrals

A lot of us have a loyal audience that never talks about it. What is their worldview? What would make them want to promote / evangelicalism for you?

The only reason that people will refer you, promote you and talk about you is if it advances their agenda in some way.

I recommend someone to you that because it will make me look smarter.  “One reason Seth’s blog/books succeed is that he consciously says what people want to tell someone else, so they will forward it to them.”

Client service

How do you let clients to stay for the long run? They need to feel like they belong. Ask yourself what story they need to tell themselves to feel like they belong. How will they feel that “People like us, do things like this…”

Complaints

When you get something wrong, when you have an angry/upset customer if you just sent a robotic professional generic message you will achieve nothing. Instead if a human shows up and makes it personal and apologizes sincerely, you might be surprised.

“I see you” – that simple sentence is at he heart of what we want as humans. Dignity is different than transparency. People don’t want to know everything about you. They want to know that you will treat them with dignity.

Entrepreneur vs Freelancer

As an entrepreneur your only job is to hire someone (better than you) to do what you think your job is, again and again, until you’re only job is to disrupt what you already built.

Freelancers get paid when they work themselves. Seth said that as an entrepreneur he kept wanting to hire myself which left him frazzled. He couldn’t hire others to do his job, he wanted to write his own blogs, run his own classes, etc. Seth is a freelancer.

As an entrepreneur you cannot be the best technical person yourself. You have to be able to leave the building, start a new business line and it should continue to run without you.

Making art

You can do art regardless of what you do. Art is not just painting. We all have a fundamental need to make art. Art is anything we do where we don’t hold back, where we immerse ourselves, do it for the sake of doing it. With art you’re ok to fail, because it’s worth doing regardless of success or failure.

Arthur Miller doesn’t hold anything back. People who make art are all in and don’t hold anything back. We need to do art so we can feel alive. But we may need work for work’s sake to be able to pursue art in an unconstrained way.

Is it possible to make a living making art? Sometimes… But if you have to compromise what your art to get enough money, it’s not worth it. Seth advises people that are starting out – Get a job (any job) to make enough money. That allows you to be able to make your art without compromise. But it can’t be art if it doesn’t resonate with anyone. We need to make something people want, who are “People like us?”.

Be specific

There is a company in NY Mismatched that decided to make socks. It’s cheap to get made. Race to the bottom. ‘Mismatched’ did 40 million dollars in revenue. This company said, our socks are not for everyone, they are for 12 year olds girls who have a fashion problem.

They sell 133 styles of socks that don’t match. It allows people to be noticed, to be able to go and have a conversation. They are targeting a very specific worldview – people who wanted to be noticed, have something to talk about. They gave 12 he old girls something to talk about, gave them meaning, every industry can do this.

People are different and they have different worldviews. Treat different people differently. You need to tell different stories to different people but they must be true.

What is the change you’re trying to make and who are you trying to change? If you can focus on just one group do that. But if you have to market to multiple world views, know that and invest in it.

Building teams

There are 2 ways to build a team – you either look for misfits (they are really difficult to find) or you look for cogs who’ll do as they’re told.

At Apple now you go to the Genius Bar and get someone working from a manual.  That’s the only way they could scale. They don’t care anymore.

 Direct marketing

Direct marketing is about building a connection directly with the person is paying you. The Internet is the biggest direct marketing medium of all time.

A great business, should aim to acquire a customer for less than they are worth. Amazon believes that the average lifetime customer value is $33, so they will spend anything up to that amount to acquire them.

If you’re not going to be doing direct marketing the only other option is to follow the route of Religious institutions/Alcoholics Anonymous, and be the thing people talk about before the went to sleep. There is no other option. Move so far to the edge that people can’t help but talk about it.

Seth has never done a day of SEO, but his blog has been at the top. His blog got big because the first 100 people he started with got a benefit from sharing it. They needed to share it to use the terms he had invented, that they wanted to use. You have to give people a story, a reason that they would want to share with others, design it that way.

(Now Seth’s blog is at a size where He doesn’t want to do what he would have to do to make the number of subscribers go up.)

Elevator pitches

Replace Elevator pitches with elevator questions… No one will buy from you in an elevator.  The key to a great elevator question is “Are you the kind of person that benefits from the kind of thing that I do?” Once you figure this out, need to practice a thousand times, once you get it you’ll have a line outside the door.

What is your purpose/why?

Seth doesn’t agree completely with Simon Sinek on finding the “why” first?  What is the why for a shoe shiner? The why generally has to follow, we need to focus first on how you want to change people / how you want to make people feel. If the shoes shiner figures out that he has 2 jobs/outputs – The shine he puts on the shoe, and how he makes people feel while he is polishing the shoe… Now if he’s going to make people smile, he has a why.

How do you fire a client?

We need to generously tell people they should go somewhere else. Worldview: if someone is going to feel dis-empowered by what you do, that’s not good. Spend the effort in finding alternatives for them.

How about this – “We can’t serve you as well as you need us to. Here are three people that we have looked into on your behalf who can do what you want better and cheaper”.  Now not only have you shown them you care, you’ve given them a good story to tell when they go back to the office.

Dealing with criticism?

Life is not a focus group. You don’t have to listen to everyone. Not everyone is going to get you, but if you spend too much time with them you will lose your footing. The trolls and non-believers need us because they like telling us were not good enough.

Seth has not read an Amazon review of any of my books. “No one becomes a better writer by reading all their 1 star reviews”. Just accept that your books / products / services are not for them. If you are trying to take any tribe from here to there, some people will drop out because they are afraid of change.

This doesn’t mean you should ignore everyone. You need to listen to those people who feel the need for change as much as you do, even if they disagree on how to achieve it.

Work/life balance

By calling it a work/life balance we are creating a problem. Work is personal and work/life overlap. If you let people bring their personality and humanity to work… You may be surprised.

Workaholic – is someone who needs to control the outcome because they are afraid, they need to be online all they time because it may go wrong … that wrecks your life.

To do work that matters – you care enough to try to make things better, and if you fail you learn from it and don’t beat yourself for it. The people in our life are the main reason we are here; so let’s not miss that.

Education

Education was designed to create compliant factory workers. It’s not just the schools fault. It’s too easy to blame the school. We need to blame the parents because they are not speaking up enough. We need to ask “what is school for?” If it is to develop people who can create, take risks, build connections and solve problems then let’s not make them robots.

We cannot take our kids out of school… We can home school our kids from the moment they get home till they sleep. We can get them on Wikipedia, writing blogs, starting their own non-profits, speaking up, volunteering, letting them out failing/testing/learning from the time they are 12 years old.

Tell your kids that an A means nothing if you didn’t learn anything, if you want kids that institutions will fall all over to hire.

You can’t blame schools for wanting to avoid parental involvement, because they don’t get the point and are not consistent.  Mostly annoying. The alternative is for parents to figure out how to earn their voice. I ran nature tours for the school 6 students at a time. Don’t offer revolution, scale, just start small and work your way up. Can we contribute one thing?

Teachers and administrators have a worldview, how do we give them the dignity they are looking for. If you want to make change, understand that you are changing real people, they have real world views and if you want to change them you have to tell them a story that resonates with their worldview.

Emotional labour

Emotional labour is exhausting, but it’s as essential as physical labour. To be a professional means we bring ourselves to the table, even when we don’t feel like it.

We have to be able to say “Follow me, trust me, I have confidence….even when we don’t.” If you don’t feel emotional labour you’re not working hard enough.

Seth’s Closing messages

  •  There is no doubt you have succeeded already, but when you leave today you need to decide what you will do next? Will you choose to matter?
  • Most people do work that someone else can do. You can choose to do work that people will miss if you are gone.
  • We have more leverage to reach more people than ever before on earth.
  • We don’t need someone to pick us, we don’t need a license, we don’t need permission.
  • If you want leverage, if you want to amplify your message, learn to take responsibility and give away credit.
  • Learn to postpone the moment you cash in, as you build trust and attention… That’s the new currency.
  • We may not be able to change the whole world, but what about our corner of the world.

Seth Godin takeaway gift

 

15 top tips for a successful 2015

IMG_0899

I have jotted down my top tips for 2015 to help me remember the most important lessons from last year. If you are running a project, managing a team, leading a business unit, company or charity you might also find some of these tips useful.

1. Focus
2. Address conflicts
3. Consult widely
4. Be decisive
5. Don’t wait for perfect
6. Find brightspots
7. Challenge convention
8. Create new routines
9. Be prepared
10. Don’t underestimate people
11. Live by your strategy
12. Periodically step away
13. Zoom in / zoom out
14. Be flexible
15. Create assets

1. Focus: Don’t diffuse your attention over a dozen things.

As I have grown in age, roles and responsibilities I have had to take on an increasing number of goals, roles and jobs. In 2014, I found the power of focus. I decided not to diffuse my attention over a dozen things but pick one thing at a time to put all my energy into. When you apply all your energy, passion and intellect to solving one problem at a time, to delivering one outcome or achieving one goal, the results are incredible. There’s another benefit too that, with clear focus, others know what you’re working on, they can get involved, support and help you; they can also see when not to distract you; and it’s much easier to say ‘no’.

2. Address conflicts: to avoid confusion, loss of credibility and wider organisational disfunction.

Too often we are left to resolve issues that really should have been addressed at the top. So many things are left unsaid, unresolved and unaddressed despite people spending more and more time in internal meetings. Most of us would rather have polite meetings than have to face the discomfort of conflict. It feels difficult, destructive and disruptive to address the elephant in the room, even when everyone is aware of it. As Patrick Lencioni explains in The Advantage – What we often don’t realise though is that when leaders avoid conflict amongst themselves, they transfer it in far greater quantities onto the people they are supposed to be serving. We need to get better at addressing difficult issues, having difficult conversations and addressing conflicts to create momentum, clarity and loyalty.

3. Consult widely: but don’t wait for consensus.

It’s quite natural to wait for consensus before taking any action, in order to get proper support and buy-in. All too often though we end up with decisions that are too late and too mediocre. I have found that waiting for confirmation that a decision is right before making it is a recipe for disaster.
In 2014 I learnt that consulting widely and socializing an idea broadly is even more impactful than trying to get consensus. Most people will not actively commit to a decision that they haven’t had the chance to provide input to. However, they can rally around an idea that wasn’t their own as long as they’ve had a chance to debate and understand it.

4. Be decisive: overcome inertia and boldly deal with the consequences.

In the absence of clear decision making; confusion reigns, credibility is lost and the organisation suffers. It’s so easy to wait for others to make decisions or to avoid difficult decisions. We all hear people complaining about a lack of clear decision making. What I find incredible is how long people will continue to work in the absence of any clear guidance or direction, with little faith that the important decisions will ever be made. Often in these situations more than getting the right answer, it’s important to simply have an answer – one that is broadly correct and around which everyone can commit. In 2014 I learnt the value of being decisive – I still consult, test and socialise my thoughts – but I’m not afraid of making decisions and am happy to deal with the consequences.

5. Don’t wait for perfect: The pursuit of perfection is the real enemy of progress.

Whenever we are designing, writing, developing or changing something it is natural to seek perfection. We want to do the best. We want to hold on sending the document till it is perfect; we review and re-review our presentation and publications; we don’t communicate the strategy because it still has holes in it; we don’t share our values because it is always work-in-progress. I have found that striving for perfection causes huge inertia and ultimately frustrates everybody. We all know that we learn by making mistakes, even bad ones. By making decisions we allow ourselves to get clear, immediate and frequent data from our actions. We need to lead by example and foster a culture that encourages this.

6. Find brightspots: don’t just look at what’s going wrong.

In our day to day business of finding incremental improvements it is really easy to only look at problems, or what is wrong. Good teams try to analyse their mistakes so that they can learn from them. This is true and important. In 2014 I learnt that it just as important, if not more important, to also look for brightspots, to identify what going well, really well, and study the secret of those successes, in order to share them and replicate those successes again and again.

7. Challenge convention: just because we’ve always done it that way doesn’t mean we always should.

A culture is a way of working together that has been followed so frequently that people don’t even think about trying to do things another way. There is real power, speed and scale in having tried and tested habits. A culture is set through hundreds of everyday interactions. Once it is set it’s almost impossible to change. That’s no surprise given we all like the comfort of what we know and what we have always done. It only really becomes a problem when these old habits become outdated. We need a mechanism for periodically asking ourselves and each other whether our culture is fit-for-purpose, facilitating natural opportunities for challenge and creating mechanisms for change. Great teams and companies often disrupt themselves before others can come along and disrupt them.

8. Create new routines: it’s the most direct route to changing a culture.

In my experience if you have identified a problem, consulted widely, provided an opportunity to debate and found brightspots, then all that is left is to create new routines or rituals. These new routines, however small, can appear insignificant but can play a huge role in facilitating broader changes. There is no getting round the fact that change is hard and to succeed you have to persist. Our daily decisions about where we invest our time and how we respond to issues will reinforce this. Small and well thought out changes in routine are the first steps to facilitating bigger shifts.

9. Be prepared: failure to prepare is to prepare to fail.

We all know that with pitches and presentations just taking the time to prepare, to script, to rehearse and seek feedback can lead to a tremendous improvement in success rates. Great speakers and presenters don’t just ‘wing it’, they prepare till its spot on. This year I have learnt to take the importance of preparation in all aspects of my professional, charitable and personal life. My boss (Robert Gardner) comes prepared to every meeting; he has a mind map ahead of every conversation we have. Working with him has taught me to prepare for every meeting I have with him. It’s not long before you see the benefit of thinking ahead and I have started to apply it to every meeting and every conversation I have.

10. Don’t underestimate people: take time to understand them and to develop them.

The ‘right stuff’ that most companies look for is not a superior set of skills that someone is born with but skills people have honed through life’s experiences. Companies focus too much on the grades, trophies and accolades someone has. Over the years I have found that lots of people that have become ineffective or perform poorly are in the wrong role, are not understood, or not well managed. I truly believe that everyone needs to be given a chance to shine in their area of mastery, skill or expertise. In recent years I have learnt not to accept other people’s perceptions and judgements; but to understand people better myself, to look carefully for whether a person has wrestled with the problems you need them to tackle and to create these learning opportunities. As Clayton Christensen says “management is amongst the most noble professions as it offers more ways to help others learn and grow”.

11. Live by your strategy: Carefully choose how you will spend your valuable time, effort and money.

A strategy is not just a one-off, high level plan, created in board rooms and then forgotten till the next year. A good strategy is created through dozens of everyday decisions about how you spend your time, energy and money (how you allocate your limited resources). With each of these decisions we make a statement about what really matters to us. We need to avoid giving our limited resources to whoever shouts the loudest for our attention or wherever the need is most urgent. If your team are important to you then invest in their development; if learning is important then make time to learn; If your family are important to you, ask yourself how often family comes out top in all the choices you have made in the past week. As Aristotle famously said “We are what we repeatedly do, excellence then is not an act but a habit.”

12. Periodically step away: don’t overestimate your impact, allow others lead the way.

Over the past 12 months I have tried to be home for most of the school holidays. Initially I worried that this would make it hard to manage my workload, team, clients and deliverables. It’s actually turned out to be a blessing. Having to be away for a longer period of time forces you to train and coach others. It also gives others the space to fill your shoes and to step-up. I have found that getting some space, stepping away periodically critical to developing a team of leaders.

13. Zoom in & zoom out: we need to check we’re going in the right direction

Our first accomplishments as professionals are usually rooted in our skill in getting things done. We’re fast, we’re efficient, and we do high-quality work. However, to lead effectively often we need to do less. We need to go from being firefighters to being fire marshals, taking a more strategic approach to the business, and solving problems before they become crises. Whilst we all need to be able to get our head down to make sure we get stuff done, we equally need to periodically lift our head up to keep checking were going in the right direction. We need to learn how to both zoom in and zoom out regularly.

14. Be flexible: Work does not need to happen between 9-5pm at the desk.

There are times you need to be in the office from 7am – 9pm and there are times you are better off at home. In the concept/strategic phases of any project I find it’s better to not be in the office. In the socialization/implementation you absolutely have to be in the office. In the insights/feedback phase you need to get out of the office and speak to clients/stakeholders. I think the idea of working 9-5pm in the office everyday is out-of-date. We need to have shared goals and work towards them sincerely and above all flexibly to get things done best in the most sustainable way.

15. Create assets: Don’t just do a job, build process and turn them into assets.

Our teams need our time and attention but above all they need processes. All businesses and teams need ‘processes’, habits and routines to convert scarce resources into something useful. They need to learn routines for how to solve problems themselves, how to deal with mistakes, how to build client relationships, etc. They also need values and ‘priorities’. This defines how they will make decisions, what they will invest their time and resources in and what not. The best way of developing processes and priorities is by helping them solve hard problems for themselves. When we do this systematically we create assets, that are not dependent on us, that make the company or team more productive and more valuable.

2013 was a year of ‘discovery’ for me – listening to my calling, having faith, being bold. 2014 was the year of ‘devotion’ – I made a conscious choice about where, when and how I was going to devote myself, my time and my energy.

As I look forward to 2015 I don’t yet know what it holds for me. It has started as a year of sacrifice and giving. I feel excited by the possibilities as I am a whole year older and wiser. The best part of starting a New Year is that it is still unwritten and it is full of potential waiting to be released. I wish you all the best in maintaining focus to stick to your goals and resolutions, in learning from previous mistakes, in building upon previous successes, to create new routines, build new processes and to make 2015 a fantastic year.

Best wishes for the New Year.

P.S.

Now that the year is over I wanted to look back, review and reflect on my top 15 from 2015:

1. Focus — We all know that if you spread yourself too thinly you don’t progress anything properly. This year I learnt that though you may focus on one major thing at work (you can juggle various smaller things too). Also you still have capacity to focus on one major thing at home, one in your leisure time, etc.

2. Address conflicts head on — I tend to deal with the most difficult problem first and this year was no exception. What I learnt this year though was that most of our brains’ natural tendency is to put off or avoid difficult situations. Acknowledging this is a powerful first step.

3. Consult widely — I knew people want to have an input, contribute and be consulted, even if you don’t end up taking their suggestions on board. What I’ve realised this year is that actually many brains are better than one, and people will highlight things you would never have considered.

4. Be decisive — It’s so easy to procrastinate over a difficult decision. I’ve really learnt the value this year of “shipping”.

5. Don’t wait for perfect — I am not a perfectionist, but I definitely spend too long thinking about and working on presentations and reports. I’ve learnt it’s better to just get out a version 1, so you can get feedback and iterate on versions 2, 3, 4…

6. Find brightspots — I still need to work on this. I find it much easier to identify problems, point out shortcomings and criticise. I need to make it a habit to praise and acknowledge successes and brightspots daily.

7. Challenge convention — there’s a balance to challenging the norm. At one extreme you become a troublemaker, at the other end you’re too compliant. Like everything I’ve realised this is a matter of picking your battles.

8. Create new routines — I’ve struggled. I’ve allowed old routines that I really value to fall away. I haven’t been able to make new routines stick. This will need overhauling in the New Year.

9. Be prepared — I have been preparing a lot more for presentations, meetings and even conversations rather than just ‘winging it’ this year. It’s a really valuable habit.

10. Don’t underestimate people — the most unlikely people have surprised me when given the opportunity. What I’ve realised though is that they may need some support and coaching to really succeed.

11. Live by your word — it’s no good saying something is important to you if your actions don’t demonstrate it. I’m very conscious of this.

12. Periodically step away — the value of this has been really clear this year. Every time I stepped away, or went on holiday, my team really stepped up and shone. We need to do this systematically. It’s is the key to delegation.

13. Zoom in / zoom out — when faced with a problem it’s easy to dive further into the details but it’s a combination of stepping back to get perspective, alongside diving in that creates new solutions.

14. Create Assets — I have caught myself every time I get too consumed in delivery. I have consciously stepped back and tried to create processes, routines and assets for my team. We could all be even better at this, even at home with our children.

15. Work flexibly — I’ve been awful at this in the past 6 months working every hour I can. I want to plan my time better and work more flexibly next year. Moreover, I want to leave at 5pm at least 3 times a week so I can have dinner and do bedtime with my family.

I look forward to starting fresh in the New Year, with new lessons learnt, with new resolutions and new habits to create. Change is the only constant.

“If you do what you’ve always done, you’ll get what you’ve always got.”

The essential C-word in Investment Management

Over the past few years, a number of previously successful asset management firms have blown up spectacularly, unexpectedly tripped up, or surprised us all with how fast they have unravelled. Over the same period, however, relatively unknown players have risen to prominence, and some managers have continued to succeed despite serious knocks. What’s the difference between them?

Extract reproduced from June 2014 edition of IPE: http://www.ipe.com/reports/top-400-asset-managers/top-400-the-essential-c-word-in-investment-management/10002043.article

Busy office culture

For years, I have been trying to answer this question: how to identify those investment managers most likely to fail in advance of their demise?

At Redington, we speak to fund managers, CIOs, CEOs, academics, researchers, clients and colleagues continuously in an effort to determine the key drivers of asset management success and failure.

The most oft-mentioned success factor is culture, although people rarely use that word. Indeed, culture is something of a dirty word in asset management; it is not one that asset management teams talk about, and it is used less by clients and advisers. However, its impact is underestimated until too late. Executive committees at investment management companies spend hours and days discussing incentive schemes, team structures, titles, reporting lines, risk management and regulation. However, if someone mentions culture, a deafening silence ensues.

It is understandable that this factor is ignored and sidelined, given the analytical and inherently cynical nature of most fund managers. Frankly, there is little consensus on what (corporate) culture is, let alone how to influence it and how it affects behaviour. Having said that, culture is not as intangible as many people believe. In my experience, there are plenty of clear, measurable and critical elements of culture that are quite tangible indeed.

Culture is embedded in the unwritten rules colleagues tell new joiners – ‘this is how things are done around here’ or ‘we have always done it this way’. Culture is a set of repeated habits, rituals, narratives and expectations that govern how people do things in organisations, and are based around the inherent values of decision-makers. Culture is a control system that carries the behavioural norms that must be upheld, and determines the social consequences for those that do not stay within the boundaries.

It is not surprising that the UK’s new regulator, the Financial Conduct Authority (FCA), has shown a keen interest in the culture of financial services firms. “Culture is the DNA of the firm,” Clive Adamson of the FCA has said, noting that it shapes “how decisions are made at all levels of the organisation”. He is of the view that “in many cases where things have gone wrong, a cultural issue has been at the heart of the problem”.

Cultures can evolve naturally, be driven by role models or by a management team. Culture is usually carried by leaders, long-serving employees, historical narratives, habits and routines. It is influenced by incentives and sustained through recruitment and management of staff, the induction of new people, and through appraisals and discretionary rewards. Large organisations can have multiple sub-cultures that should not be ignored – the legacy of cultures within acquired units can persist for a surprisingly long period of time.

In my experience, there are 10 dimensions of culture that are critical to determining success, or failure in fund management. These are listed below, each expressed as a spectrum:

  • People focus: Is the business long-term people oriented or short-term results oriented?
  • Star culture: How are successful managers treated? How are support people treated?
  • Self-orientation: Are portfolio managers loyal to themselves, their teams or the company?
  • Conflict tolerance: Are people expected to agree or is conflict and challenge encouraged?
  • Risk culture: Do employees tend to ask permission for everything or do they feel empowered to take risks? Are people trusted or is someone always watching?
  • Approach to failure: How does the company deal with errors, mistakes and failure?
  • Job security: Do people feel secure in their jobs, are they motivated to excel or avoid attention and ‘stay out of trouble’ motivated by career risk?
  • Success definition: Is investment performance, client retention, net sales or share price appreciation the ultimate measure of success?
  • Competition: Are individuals/teams incentivised to collaborate or allowed to compete?
  • Abdication risk: To what extent are problems and issues escalated upwards, or do employees feel responsibility for dealing with issues?

This list is not a ‘yes’ or ‘no’ checklist. The key question is not absolute value or exact position of the firm on any of these cultural questions, but how aware and in control of the culture a management team is. What is particularly interesting when assessing asset manager riskiness is how their position on each of these issues fits together, how the culture has changed or is changing, what new employees are sold, what clients expect and whether there is a disconnect between the leadership and the people on the ground.

A year ago, my new client (now employer) Robert Gardner, founder and co-CEO of Redington, asked me to help develop a system to identify and communicate early warning signals that should be monitored by clients, in order to assist decision making around the engagement with, and timely removal of, managers.

After research and deliberation, 10 early warning signals presented themselves. These have now been developed into a system through which we aim to understand what might go wrong with a manager before any assets have even been allocated to them. We monitor and report on these critical issues on an on-going basis to help clients avoid being caught by surprise.

These 10 key risk factors are:

  1. Business focus on asset gathering and short-term priorities
  2. Increased dependence on a single client or channel (asset persistence)
  3. Weak leadership
  4. Misaligned incentive structures (prioritising asset growth over investment performance)
  5. Increasing key person dependence
  6. Product proliferation and business complexity
  7. Process drift or moving away from core skills
  8. Poor capacity management
  9. Undisciplined growth implications for operational infrastructure
  10. Lack of challenge and accountability.

These are not a series of boxes that need to be ticked or crossed. Instead, they are considerations that help us to understand how a fund management company measures and rewards success, whether a portfolio manager’s interests are aligned with the clients.

It’s early days, but the FCA seems to understand that organisational culture is hard to change and it takes persistence. The responsibility lies with every employee, led by the senior management, and cannot just be delegated to the compliance, or HR department. To change deeply embedded behaviours, senior management have to support the right behaviour through rewards, performance evaluation, employee development and their own actions.

Investment management is a complex business, and it is vital that consultants help clients to understand the various moving parts and key drivers of success or failure. The truth is that every institution, no matter how large, is vulnerable to failure; fund management companies can look strong on the outside despite being sick within.

While it may not be not possible to determine the fate of every firm, we assert that early symptoms, and even underlying causes, can be detected and can be avoided. The challenge is to talk more openly about the C-word, understand corporate culture better and embed on-going assessments of whether an investment manager’s culture is aligned with its clients, and whether it risks creating a negative loop that could drag it downwards.

Click here to read the full article in the June 2014 edition of IPE: http://www.ipe.com/reports/top-400-asset-managers/top-400-the-essential-c-word-in-investment-management/10002043.article

When to fire your fund manager

I spoke about “Knowing when to fire (& when to retain) your fund manager” at Fund Manager Selection 2014 this week.

Here’s a link to the Prezi.

I’d love to hear your thoughts on this.

What are the most important red flags for you? Are there other early warning signals you look for?

Is your team a ‘Superteam’? Book review

SuperteamsSuperteams by Khoi Tu

My rating: 5 of 5 stars

Super stories, super insights and super learnings from Khoi Tu. An easy read though quite thought provoking for anyone in a team, building a team, running a team or trying to fix a team. Find out why the SAS, the British Red Cross, team Ferrari F1, the Rolling Stones and Pixar are ‘superteams’.

My 7 top takeaways for building superteams:

  1. You need a set of shared objectives (clear common purpose); this is the most potent force in attracting the right talent and in getting them to want to do great work, together.
  2. Great teams are led by great adaptive leaders (there is no single style preference here) but  you have to lead by example and ultimately foster a team of leaders
  3. The best teams start by bringing in the best individuals for every role; however, choose people that know they aren’t perfect, but pursue excellence always and want to get better by surrounding themselves with excellence
  4. You have to get the small things/routines right to create the best environment for success (agendas, team size, engagement rules, clear roles, etc)
  5. Individuals have to respect each others’ skills and contributions and have to build trust in each other in order to thrive under pressure
  6. Avoid comfortable harmony and ‘groupthink’; foster and harness conflict and abrasion to ensure sparks of creativity thrive
  7. You have to continuously improve; reflect, review, feedback and change (“this is how we do things here” – is a killer); always seek ideas for improvement from your team using both success and failure as lessons for learning.

I highly recommend this book.

Here’s a link to Khoi Tu’s TED Talk – http://www.youtube.com/watch?v=wLw4vDveH-s

View all my reviews on Goodreads.

http://www.miteshsheth.com/recommended-books/

Outcomes revolution in investment management & pharmaceuticals

IMG_0744In this month’s issue of IPE Mitesh Sheth outlines what investment managers can learn from the transformation taking place in the pharmaceutical industry.

03 June 2013

I was recently invited by Sanofi, the fourth largest healthcare company in the world by prescription sales, to talk to 500 of their UK and Irish employees about my experiences with innovation in the investment management industry. As I prepared for the presentation, talked to Sanofi’s leadership team and participated in their workshops, I came to realise the massive parallels between the pharmaceutical and fund management industries. Both industries are in the middle of an outcomes revolution.

Investment outcomes in investment management

I was first drawn to investment management, having been a pension fund consultant and manager researcher at Towers Watson in 2005. I joined David Jacob, head of fixed income at Henderson, determined to design better investment products and solutions for institutional clients. I felt strongly that clients shouldn’t care about index benchmarks, narrow asset class definitions, regional boundaries and deceptive strategy labels (like hedge funds) in achieving their overall investment outcomes – be that income, capital preservation, beating inflation, long-term growth, and so on.

We built a risk budgeting and capital-allocating ‘investment strategy group’ at the centre of the investment process. This allowed us to engage with our clients (and their ultimate clients) around their goals, risk appetite and time horizon in designing and delivering investment outcomes. With a focus on outcomes, we brought together high yield and investment grade analysis, developed market and emerging market analysis, as well as cash bonds and derivatives expertise to give clients access to the fixed income universe against their choice of benchmarks and targets.

I still believe clients should begin with the end in mind. Our starting point should be: where am I today; where do I want to get to and by when; how much risk am I willing to take (what return volatility would be uncomfortable and what’s my maximum drawdown); and what cash flow (or liquidity) do I need along the way. This is true for a pension fund, an individual investor, a family office, a sovereign wealth fund – in short, anyone.

Background to the pharmaceutical industry

The pharmaceutical industry has changed a lot over the past few decades but at its core it still develops, produces, markets and distributes drugs licensed as medicines. Drug discovery and development is very expensive as only a fraction of all compounds investigated are ever approved for human use. To cover these costs a company needs to discover a new blockbuster drug (one which generates revenues in the billions) every few years.

The industry has been growing at a rapid rate since the 1970s, as legislation allowing for stronger patents has come into force in most countries, helping pharmaceutical companies to generate significant profits from their patented products. In recent decades, a handful of large companies have dominated manufacturing of medicine around the world, supported by numerous mergers and acquisitions.

Pharmaceutical companies have been great cash generators for shareholders over the past 20 years, and IMS Health values the global pharmaceutical industry at over $800bn (€620bn). But while healthcare ought to be simple at its core, layers of management regulation, processes, policies, business models and acquisitions have complicated pharmaceutical organisations and the healthcare industry over the years – creating a global problem today that itself appears to defy definition.

Drivers of change

The market capitalisation of the largest pharma companies is expected to come under significant pressure in the coming decade. Over the next few years patent protection on historical blockbuster drugs will continue to run off. Regulators are demanding more affordable and cost-effective therapies. In addition, there is an industry-wide research-and-development pipeline gap meaning there are no big blockbusters on the horizon.

Furthermore, there is a growing demand for personalised healthcare challenging the current business model, with new competitors with new business models emerging and gaining in strength.

To add to its woes, the industry’s image has been damaged by accusations of disease mongering, bribing doctors, false claims and illegal marketing, not to mention the high profile court cases. Bestselling books such as Bad Pharma (2012), Side Effects (2008) and Big Pharma (2006) have built on the public’s impression of big businesses putting profits over patient welfare. Even Hollywood portrays pharma as a global, shadowy force (not unlike the way in which the investment industry is portrayed).

The industry has survived a continuous series of regulatory, scientific, social and political challenges in the past. However, the changes it faces today from regulation, competition, commoditisation, technological advances, austerity and public perception are significant on their own and even more disruptive when considered together, demanding a more radical response.

Parallels with fund management

These forces of change are very similar to those facing the fund management industry (global assets under management are estimated by IPE to be around €39.2trn):

• Historical blockbuster products are being commoditised;

• Intense competition is putting pressure on margins;

• Disillusioned clients and customers are frustrated with fund manager self-interest;

• Regulators are ever more intrusive, demanding more transparent charging, better management of conflicts and clearer marketing;

• Technological development is spawning new products, new business models and new avenues for client communication;

• Economic austerity, low growth and on-going cost cutting mean clients and end-customers want more for less.

Pharmaceuticals, like fund management, are B2B businesses in that the customers are essentially not the end-patients but the intermediaries – the healthcare professionals, doctors, consultants and pharmacists. These intermediaries are facing change and disruption of their own with intense regulation, flat budgets, pressure to cut costs and growing patient demands, much like the pressures on IFAs, platforms, banks, insurance companies, pensions consultants and funds.

With this roller coaster of changes and resultant uncertainty about the future, the only constant that pharmaceutical and fund management companies can hold onto is putting the end-customer (patient) at the centre. Both industries need to transform from being product centric to customer (service) centric; from pushing drugs and funds to helping customers improve their health and wealth.

Pharmaceuticals and fund management are in the midst of an ‘outcomes’ revolution. This is a huge undertaking and it cannot be achieved through a series of incremental steps or a long list of initiatives. Such fundamental changes call for a focused and radical response, leveraging one’s strengths.

Pharma’s response

Historically, large pharmaceutical companies have reacted to market pressures by cutting costs, and on the face of it this time is no different. If you look deeper though, there is a realisation among senior leaders that cost cutting is short term and incremental, and it will not address the fundamental shift they are experiencing in the competitive landscape.

They know that their entire business model needs to be looked at differently.

Sanofi (and the other major pharmaceutical companies) have recognised the need to shift from being a product marketing company to becoming a customer relationship business.

They believe that while having great products was enough to drive success in the past, this nowadays creates diminishing returns. They know that their future success will be determined not just by how many drugs are sold, but how well their products, services, tools and education have helped to improve or maintain a patients’ health and wellbeing.

Their revenues will still come from product sales, but the reason why customers will want to buy from pharmaceutical companies is changing. They need to offer their customers more for less and create an ecosystem of products and services around the end-patients’ health outcomes.

For example, in 2012 Sanofi and Agamatrix launched a new type of blood glucose monitor, which also connects to a smart phone. This allows patients to track glucose levels continuously and give them access to a telephone hotline and other support services, which earns Sanofi considerable customer loyalty. This shift to integrate products with innovative monitoring technology and personalised support services was possible because Sanofi listened to the needs of patients with diabetes.

With any change in strategy it is critical to diagnose your problems honestly and to leverage your strengths to differentiate your business. Pharma companies continue to build a stronger product portfolio through deals, partnerships, alliances and virtual R&D to access a broader universe of research companies.

However, they know not to stop here. Their sales people know their customer and they have unparalleled access and information. The best pharma companies are determined to build on this to be the partner of choice for their customers and to go beyond that in building a relationship with the end-patient too.

Pharma companies are breaking down silos (diabetes, oncology, generics, and so on) to use key account management techniques to ensure their customers do not get lots of different sales reps trying to get a share of their limited time. Instead, they are working on a single point of contact which understands the customer’s needs and offers support, education, services and products to help meet patient health outcomes. They are learning to think and care more about the customer and the patient (their needs, their experience and their long-term relationship) rather than just focusing on the disease, the drugs and their profits.

There is a significant effort being made to transform how medicines are presented, marketed and sold with a better understanding of stakeholder needs, demonstrating clear value for healthcare professionals and end patients. Sales reps are increasingly becoming a conduit of best practice among healthcare professionals, making links and introductions between stakeholders. The best are helping their customers – the intermediaries – deal with their challenges, as well as the steps, processes and tools to get to where they need to.

I am most impressed with the acknowledgement that this requires a major shift in attitude, behaviour, people and culture. Significant training of senior leaders, middle managers and other employees is underway. Employee-led customer-centric innovation is a powerful way of achieving this kind of culture change. In the past pharmaceutical innovation was limited to product development much like in fund management. Pharmaceutical companies are starting to use innovation more broadly across their employee base to improve business efficiency and customer service too. This requires giving employees permission to take risks and experiment with new ways of working without the fear of failure.

Taking a blank sheet of paper to fund management

The vast majority of investment management companies are not structured around their clients’ needs and outcomes. They are built around fund, asset class and regional silos that operate independently with limited dialogue, interaction and collaboration. A handful of houses have created successful outcome teams or divisions – with LDI or multi-asset specialists – though even there the challenge remains to apply this way of thinking to the rest of the business.

Senior leadership in investment management houses does not yet accept that the investment management business model needs to be overhauled. There is no overall drive to move the business from being product marketing to client relationship centric, and no corresponding plan to shift attitude, behaviour, people and cultures. Innovation remains a product manufacturing activity.

As an industry we need to look at the end investors and clients, rather than just being focused on the intermediaries and consultants, and start to ask ourselves how we can work together do a better job for them.

Some of the more dynamic, agile and client-centric investment managers are starting to realise this and are taking it seriously. Here are some lessons we can all learn from the disruption facing the pharmaceutical industry and their response:

  1. Our clients’ focus on outcomes will affect our whole business model not just a single multi-asset product area;
  2. A central risk-management, risk-budgeting and allocation team is essential in responding to clients’ needs and designing/delivering investment outcomes;
  3. Break down silos between funds, between equities and fixed income, between manufacturing and distribution, between back/middle office and the front office and between the corporate/board and the business to work together to deliver better outcomes for the end client;
  4. Focus on our strengths, rather than being all things to all people. Build alliances and partnerships with specialist investment boutiques and complementary players;
  5. Rebuild trust by putting the end-customer at the centre of our business. Help the clients and intermediaries deal with change and work together to deliver better solutions for the end customer;
  6. Train sales people to behave more like well-informed, trusted advisers. They must be able to listen and draw out client’s unarticulated needs. They must be able to offer advice and assistance to help our clients reach their overall strategic goals;
  7. Foster a client-centric, employee-led innovation culture beyond product manufacturing;
  8. Give our employees permission to take risk and experiment with new ways of working, without the fear of failure.

Finally, it is all too easy to stick to what we know and who we know. If the investment management industry wants to adapt, innovate, transform and engage, we need to include people with different perspectives, with different experiences and expertise; intentionally draw on customer insights, employee ideas and other industry perspectives.

I think if senior leaders in investment management commit to becoming fit for the future they will be blown away by how many middle managers, employees and clients volunteer their time, ideas and enthusiasm to solve these complex industry challenges.

If we get it right, our clients will be more successful in meeting their investment outcomes and our employees will thank us for investing in them and for helping them to do the best work of their lives.

Here’s a link to the full article here. 

Management needs reinventing

In this excellent video (click here) Gary Hamel, founder of Management Innovation Exchange (MIX) and one of the world’s most influential business thinkers, explains why management is out of date and needs reinventing to make it fit for the future and fit for human beings.

Many of management tools we use today were invented before 1920, as we entered the industrial revolution. The problem that management was invented to solve was – how do you organise human beings into semi-programmable robots that deliver consistently, efficiently and on time? How do we get farm hands to turn up on time, to do the same thing every day, over and over again? Our management structures were built to solve this problem and we were successful, but that is not our challenge today!

We face unprecedented challenges today: exponential change; hyper competition and creative destruction. Knowledge itself is becoming a commodity. Our challenges today are: how to create organisations that can change as fast as change itself; where innovation is the work of everybody, all of the time, everyday; where people are willing to bring to work the gifts of their creativity and passion. We are struggling to create organisations that are adaptable, innovative and engaging.

To deal with this Vineet Nayar, CEO of HCL Technologies (India) created ‘reverse accountability’ where all his employees rate their boss rather than the other way around. This is a culture where people hold their management accountable. It may not be for everyone but Vineet firmly believes that all value is created in the interface between the employee and the customer and so a manager’s job is to encourage the innovation there.

“My employees are more important than their managers; in fact they are more important than our customers. Unless I take care of my employees they are not going to work hard for my customers” – Vineet Nayar, HCL Technologies

In this video Gary Hamel says promotes aspiration, being a contrarian and learning from the fringe:

  1. Aspiration – Innovation starts with aiming high
  2. Be a Contrarian – Next you have to be willing challenge dogma, confront embedded and unexamined beliefs that limit us and our organisations
  3. Learn from the fringe – innovation happens at the edges.
To make our organisations future-proof we need to instil some of the values that underlie the success of the the Internet which is inherently adaptable, innovative and engaging.
We have an amazing opportunity to create organisations that are fit for human beings, because as humans we are already adaptable, innovative and engaging. We already have many of the qualities our organisations don’t, because they were built to serve another purpose.
I want to be a champion for the future and help build more human organisations that fully utilize and honour the gifts of every single person who comes there every day.
What about you?