A riff on Mentoring.

A riff on Mentoring.

Jun 29, 2020 | Collaboration, Governance, Leadership

I was recently asked to turn my mind and experience to the question of mentoring, and to reflect on the benefits and pitfalls that may be present.

Over the years, I have had the benefit of a couple of mentors who profoundly influenced my view of the world, and in turn, have set out to pass on these lessons to others.

At the core of a mentoring relationship is the opportunity to engage in ways not easily replicated in the normal run of activities in an enterprise. Attributed to Benjamin Franklin is the sentence: ‘Tell me and I will forget, show me and I will remember, engage me and I will learn’. Over 45 years of commercial life, this simple observation has proven to be absolutely true.

The means of engagement comes from Greek philosopher Socrates, and as a result is commonly called the ‘Socratic Method’. It relies on leading someone to a conclusion by asking questions. By driving towards a conclusion that the mentee reaches by themselves, being directed by questions, the impact will be greater, as they will be fully engaged.

Objective of a mentor/mentee relationship.

To pass on experience, both professional and life, that enables the mentee to develop their capabilities and skills faster than would otherwise have been possible.

The role of a mentor is:

  • Develop the mentee professionally and personally. To achieve this requires mutual trust and respect, which has to be earned, as it will not be just given, in either direction.
  • A precursor of trust is that there is a clear understanding that mutual confidentiality will be maintained.
  • Listen to the words, and understand the meaning of the words of the mentee, as a means to ensure there is clear understanding of the questions, problems, and personal nuances present.
  • Help the mentee to solve their own problems themselves, do not do it for them, but assist in the process by questioning.
  • Not to expect, or want the mentee to be a clone of yourself. Everyone is different, and those differences of experience and perspective should be encouraged and leveraged.
  • Advocate for the mentee, offering exposure and guidance to others in the enterprise, and to the challenges that emerge in every organisation and personal career.
  • Deliver appropriate resources to the mentee when they will be most useful
  • Act as a role model

The process of mentoring

  • Establish ground rules, goals, and mutual expectations early on.
  • Do a ‘needs’ assessment and gap analysis, that recognises the strengths and weaknesses of the mentee, as well as their opportunities for growth. The gap analysis should be influenced by the next logical step, mentee aspirations, and observed/agreed weaknesses that require being addressed.
  • Agree mutual goals for the process, together. What are the expectations and goals of both parties?
  • Agree a formal contact schedule, supplemented by the ‘rules’ that may apply around informal contact.
  • Listen and question, rather than advising, and only advise after listening. This should be an iterative process, and advice should be the last item, well after questions that are often ‘What if’, ‘Why not’, or ‘How’, have been exhausted
  • Let them make their own decisions and understand the consequences of accountability, and the buzz that comes from it.
  • Be mutually accountable
  • Recognise, address and be transparent about your own biases.
  • Build trust, an authentic connection.
  • Recognise a round peg that may be in a square hole, and provide feedback and assistance to either reshape or move elsewhere, to everyone’s benefit.
  • Finally, and perhaps most importantly. Ensure there is a sense of psychological safety for the mentee, such that they are prepared to open up, knowing that there are no negative repercussions, just advice and acceptance. This will only happen over time, and assumes that the relationship has evolved positively.
  • Not every mentor/mentee relationship will work, and there should be no hesitation for either party to acknowledge that, and move on.

Why invest the time in mentoring

  • Every enterprise needs to build a functional and leadership ‘bench’. People move on, and around. A successful enterprise ensures that there are processes in place to renew management and leadership capability that are robust and continuously improving, so that they can accommodate those movements of individuals.
  • It is a means to identify and develop those skills that will be of benefit to both the enterprise and the individual.
  • Mentoring is a powerful way to build personal and functional networks. This enables problem solving and collaboration on a scale much wider than would happen in the absence of a mentoring process.
  • Teaching, or mentoring, is the process of breaking down and addressing challenges and problems, considering options, and their possible outcomes. Engaging in such a process improves the capability of the mentor, as much as it does that of the mentee.
  • It is simply making a contribution, not only to the mentee, but to the organisation and wider community.

What makes a good mentor?

  • They need to be keen to do it, and enjoy the process
  • They must engage with the mentee, and show they value learning, and teaching, and learning as they go from the act of teaching.
  • They will encourage mentees to go out of their comfort zone, continually expanding it by way of active listening and Socratic questioning.
  • They provide regular, formal and informal feedback, and articulate the paths to improvement.
  • They are experts, and willing to share that expertise.
  • They show the mentee the value of being mentored, what is in it for them.
  • Leads by example.
  • Recognises that the process is one of education, not training. Educating implies developing an open and critical analysis of situations, and formulation of tactics that reflect that situation. By contrast, training implies the application of a template that tells you what to do, which may not always be the optimum reaction. The ‘Why’ is always more important than the ‘What’ in a conversation.

What makes a good mentee?

  • Watches and learns from the mentor
  • Critically evaluate the lessons taken from the mentor and actively discuss the implications and application of the lessons.
  • Willing and able to engage in the process
  • Puts a high priority on the relationship with the mentor, without becoming dependent
  • Actively engages in mutual critical thinking in the setting of goals, improvement initiatives, and improvement milestones.
  • Is able to accept negative feedback when it comes, by seeing it as an opportunity to improve, rather than an attack on performance.

A final observation. In this day of #metoo and great sensitivity about the relationships of all types between genders in the workplace, we have to be absolutely transparent. The majority of mentoring relationships, at least in the near future, will be between a woman and an older man, someone who has the power by virtue of position and influence that can be leveraged for the benefit of the younger woman. In some instances this may create an obstacle absent in a mono gender relationship.

 

4 critical inputs to a robust forecast

4 critical inputs to a robust forecast

Jun 12, 2020 | Governance, Management

 

Preparing forecasts is an integral part of most jobs these days, even if it is just how much available capacity there might be on the machine tomorrow, and how best to fill it.

Most forecasting I see is based on the financials, and is one of two methods: The ‘spreadsheet method’, where 4.5% is added across the board, and bingo, a forecast. Easy. The second method is driven by numbers of a different sort: the Net Present Value equation, the present discounted value of forecast future cash flow, which is more often than not driven by spreadsheets with hurdles imposed.

Neither is much good by themselves.

More recently, a range of pretty sophisticated modelling tools have become generally and cheaply available, which despite their sophistication, still have to be fed data and assumptions to spit out an answer.

Effective forecasting takes in a range of qualitative factors, some of which can be massaged into the algorithms, with the caveat that they then have some sort of relative weight applied.

  • A realistic assessment of the resources required to reach an objective. Of increasing importance in this calculation are the capabilities of the people required to deliver the outcome.
  • An assessment of the strategic, competitive and regulatory environment in which the forecast lives. Generating forecasts without due consideration of a range of factors external to the business, over which they have little if any control, becomes little more than wishful thinking.
  • An assessment of the impact the successful initiatives will have on the external environment, particularly competitors. I see way too many forecasts that ignore the simple fact that competitors will not sit still while you eat their lunch. Failure to adequately anticipate and accommodate their reactions in the tactics to be deployed, and their forecast outcomes, is just plain dumb.
  • A continuous and rolling After Action Review process. This process ensures the impact of tactical actions can be assessed, and the lessons applied to following forecasts. A forecast should be a ‘living’ document, something that accommodates, adjusts and builds on the facts and changing circumstances as they emerge.

Back in the day when I ran large marketing departments, forecasting was a key part of any project plan. When product managers came to me with their forecasts, I was not so much concerned with the numbers, as I was with the assumptions included and the relative weights of those assumptions. I also insisted that any forecast had three components, a best case, worst case, and forecast case, prepared separately, with different weights allocated to the variables. This gave us a range with which to work, and importantly, ensured some thought had been put into the implications of the ‘pear-shaped’ outcome.

The disturbing thing was always how inaccurate our forecasts were, no matter how hard we worked.  This does not mean we did not try hard enough, simply that telling the future is a challenging task, not to be undertaken lightly.

Once again, my thanks for the header to Scott Adams and Dilbert.

Where is Batman when you really need him?

Where is Batman when you really need him?

Jun 5, 2020 | Governance, Leadership

 

Observing the virulent spread of ‘The Bug’ and the institutional responses from around the world, there is a disturbing commonality that points at a deficiency in political and ethical leadership, until the  horses are running free, and the stable almost empty.

In this country, at least we have been consistent.

Consistent in denying there was anything to worry about until the crisis is upon us.

Since the 90’s there have been strident calls by scientists that we need to get off our collective arses and address the emerging human causes of climate change.

Ignored, until people die in fires, and then slowly, edged towards the backburner.

Similarly, the clusterf**k that has been the management of the Murray Darling basin, although people may not have died, water has been ‘allocated’ under dubious circumstances, natural flows disrupted, investment distorted, and money made on the ‘QT’.

Now we have the Bug, and people are dying as it spreads, and particularly in the US, the systems are now seen as having been gutted, and are grossly inadequate to manage the crisis. That crisis is now escalating beyond anything foreseen to racial violence, unleashing forces from what now appears to be a cultural pressure cooker with devastating results.

In commercial life, the situation is the same. BP engineers knew that  the Deepwater Horizon rig was a bomb waiting to go off,   Boeing engineers knew there were problems with the 737Max’s software, executives in Australia’s banks and insurance companies were ripping off the estates of dead people, and enabling payments to the makers of child porn, and that ‘oldies’ were dying of neglect in aged care facilities.

There is a pattern to this political and corporate selective blindness that should deeply disturb us all.

The problem is known, when it is called to the attention of senior management it is seen as ‘inconvenient,’ so it is ignored and buried in favour of short term profit. Those doing the questioning are shut down, fired, or intimidated into silence. The problem persists in the dark corners until a crisis occurs, followed by hand wringing, press releases, provision of a sacrificial head for public consumption, and promises to do better.

The only antidote is what Ray Dalio calls radical transparency.

Shine lights in all the dark corners, create a culture where those lights are not selective or optional, but core ingredients of the culture.

 

 

 

Leadership lessons from the greatest marketers in history

May 22, 2020 | Governance, Leadership

Leadership lessons from the greatest marketers in history

I do not go to church, do not believe in the god of the Bible, Koran, or any other narrative that offers a solution to the failures of our humanity.

I have however, been in awe of their collective and individual capacity for marketing.

Let’s just take the three Abrahamic religions, Christianity, Islam, and Jew. They are old, old, have persisted, evolved, and successfully transitioned through the ages to remain a major point of faith for hundreds of millions of loyalists.

Great marketing, tapping into the emotional drivers of our behaviour.

In all three, the 10 commandments are central.

The Islamic form is a little different to the Christian and Jewish, but the sentiments about what constitutes a ‘good’ life line up almost exactly.

If god was all powerful, all consuming, why would he/she (to be politically correct) restrict the delivery of rules to just those 10? Why not go further, and ensure we did not stuff up the environment, or congregate in dirty cities, or give us the rules for building a house, and a million other things?

Instead, we got a framework within which to make our own decisions, a set of guidelines about what constituted acceptable behaviour in a civilised community. Within the boundaries of the guidelines, we could behave as we wished to deliver the outcome of a ‘good life’, one that contributed to those around us, as well as to ourselves.

Sounds a bit like a successful strategic framework, does it not?

Less is more.

Lead.

Are you a day trader or a marketer?

May 18, 2020 | Governance, Leadership, Management

Are you a day trader or a marketer?

It is a paradox to me that we treat investments in capital equipment for our businesses and various financial instruments for our own wealth generation, as items on a balance sheet. By contrast, we treat marketing investments, and particularly those made in various forms of communication, as discretionary items recorded in the profit and loss account as an expense.

Nothing is more critical to the long term commercial health of an enterprise than the investment in marketing. Identifying, communicating, creating transactions and building relationships with customers.

There are 3 basic strategies considered by financial investors

  1. Index investment. This is a low risk strategy, sticking to stocks that reflect the particular index against the performance measures that will be applied. The most usual are the reserve bank interest rates, and the top 200 stocks.
  2. Arbitrage investment. Essentially this is a short term strategy that assumes the investor is smarter than the market. It involves a lot of buying and selling of stocks, essentially bets that the short term is higher or lower than the current. Over the long term, there is plenty of research around that indicates that the performance is around the major stock indices. This is also a high cost strategy, in that the constant trading incurs transaction fees, usually not included in the published performance metrics.
  3. Value investment. Investing for value is a strategy that involves taking a long term view of the businesses in which you invest. This means you engage deeply, not just with the numbers, but with the management and culture, as well as taking a view of the marketplace in which they compete. It is a ‘filtering’ strategy, one where a lot of research boils down the potential targets to a very few, in which you take a significant position. It is a focussing of resources at the specific points where you see there is long term returns available, and are prepared to accept the vagaries of the short term focussed market gyrations.

If you apply a similar frame to the manner in which businesses make investments in marketing, there is a remarkable similarity.

  1. Index marketing. Doing what everyone else is doing, being average, a follower, and risk minimiser. It also ensures you do not stand out from the crowd, which in a cut-throat marketing world means nobody notices or cares about you, so perhaps you should save your money.
  2. Arbitrage marketing.  Those following this strategy are just applying tactical actions to situations they see, there is no underpinning strategy, just advertising and promotion, usually driven by a budget that has to be spent, and KPI’s that measure the activity, not the harder to measure  outcomes of that activity. The driving word is ‘campaign’. A string of tactical activities will be seen as a campaign, and usually there is little flow from one campaign to another. This tendency has been accelerated to stupid proportions by digital, where the cycle time of a campaign, limited as they are, has reduced from months to days. No longer are we looking for the ‘big idea’ that will engage and motivate customers over a long period, we are looking for 10 ideas for the Facebook and Instagram posts in the next 24 hours.
  3. Value marketing. Successful marketing requires a solid strategy, well executed with a long term perspective. Over time, you will fiddle with the details as you become more familiar with the minutiae involved, and you fine tune the application of funds as you learn, but it is a multi-year commitment, not a short campaign, and certainly  not a few ‘cat photos’ on Instagram. Such ‘cat photos’ may be a tiny part of the tactical execution, but are never a component of the strategy. This takes time, resources, and most importantly, a laser focus on what is important to the selected group of primary customers. Over time, you communicate your value proposition that defines why they should do business with you rather than someone else, and do so at a price that delivers you a premium return, while delivering them premium value.  Then you retain their business, increasing your share of wallet, innovating, reducing customer churn, all of which delivers sustainable returns. 

 

If any of the above arguments hold true, then it must be that the measures we use to make decisions about our financial selves should be able to be adapted to the investments we make in marketing.

Step one is to see it as a long term investment in prosperity, and not a short term expense to be reported and forgotten, hidden in a monthly P&L.  

Step two is to have a robust, well thought out, and agile strategy.

Step three is to implement relentlessly.

None of this is easy, there are no templates of any value around that you can just download and apply. The requirement for success is the wisdom that comes with long and deep experience, not some superficial knowledge of the advertising algorithms in Facebook.

 

Header cartoon credit xkcd.com

 

 

directors; do you understand your rights and obligations?

May 8, 2020 | Governance, Management

directors; do you understand your rights and obligations?

 

There are a lot of SME’s around that are now in unexpected and unplanned financial trouble. For some it will be terminal with a potentially huge impact on personal assets, as well as those of the businesses they run.

 

Many owners of SME’s do  not fully understand their rights and obligations, often despite having an accountant that does their compliance and advises on financial structuring.

 

In particular, many owners of SME’s do  not understand the obligations they have under the Corporations Act as directors of their company.

 

This was brought home to me in a conversation yesterday with a casual acquaintance who I thought would be pretty well informed.

 

Following is a simple checklist, if in any doubt, ask your accountant the question. now is not the time to be dodging asking those questions because of the cost.

 

Insolvent trading.

 

It is illegal to trade while insolvent, and doing so risks personal and criminal liability. It is a black and white test: ‘Are you able to pay debts as and when they become due’?  For manufacturing businesses the answer is often tangled up in the valuation of inventory, and the state of your debtors ledger and revenue forecasts.

 

Can you collect what is owed to you, what can you reasonablly expect to sell, and how much cash do you have on hand.

 

Solvency is based on the expected cash flow, the result of these calculations. If you are not solvent, you are, by definition insolvent.

 

Directors duties.

 

As a director, which most will be, there are duties imposed by the Corporations act, and ignorance is not a defence.

 

You are required to act in good faith, with due diligence, and not improperly use information gained as a result of your privileged position. When solvency is in question, you are further required to look after the best interests of creditors.

 

In order to carry out these duties, you need to be fully aware if the financial position of the business, and have a management plan that addresses the problems. If in any doubt at all, ensure your accountant is completely informed and able to offer their expert advice.

 

What to do?

 

If your conclusion is that you are, or may be insolvent, a voluntary administrator can be appointed. The effect of this is to voluntarily relinquish control of the financial management of the business to an outsider, whose responsibility is to ensure creditors, in a defined order are paid. It does however, limit the liability of  the director after the day of the appointment. This option leaves you with more options than a wind up order instigated by a creditor, or group of creditors.

 

Premature appointment of a voluntary administrator is sometimes a temptation, so there has been recent changes to the Corporations act to allow a ‘Safe harbour’ which offers directors protection against personal liability of an insolvent trading claim. There are conditions attached to such protection:

 

  • Tax records are up to date.
  • All employee entitlements are up to date.
  • There is a concrete, stress tested plan to trade out of the difficulties, that does not include optimistic forecasts and hopes that ‘something’ will turn up.

From March 25th as part of the governments response to the Corona induced problems, the ‘Safe harbour’ provision have been extended. You are now allowed to incur debts in the course of ordinary trading for the next 6 months, and the thresholds for issuing statutory demands have been increased. This is  not a ‘get out of gaol’ card, simply a recognition of the reality of the current situation, and other director duties are not impacted. For details talk to your accountant.

 

The plan.

 

As noted, hope and rosy projections do not constitute a plan. There has to be specific actions taken to stabilise the financial situation, that will necessitate some challenging decisions about asset disposal, restructuring of operations and perhaps personnel, and managing the manner in which further costs are incurred. Together these should offer a concrete pathway to rebuilding the financial capacity of the business to trade its way out of insolvency.

 

The obvious elements of the plan will be:

 

  • Assessment and reordering of the cost base. Removing, reducing and deferring as much cost as possible, both fixed costs like rent, and discretionary costs like planned capital investments, and revenue generation activities that do not have a short term payoff.
  • Ensuring you have accessed government and provider assistance
  • Communication with all stakeholders. Employees, funders, suppliers, regulators, landlords and key customers.
  • Aggressively managing your cash conversion time by extending by agreement, payment terms to creditors and chasing debtors, early, politely, and often. This is just managing your working capital. The cash flow forecast is the essential tool for doing this. every change you make should be reflected in the cash flow forecasts.

 

The key ‘takeaway’ is to manage your cash.