Archive for June, 2008

Top tips for surviving a downturn

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Business Link
on 25 June, 2008
in Top Tips
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Surviving a downturn requires many of the same qualities as excelling in a boom time: agility, adaptability, strength, direction, prudence, perseverance, positivity, patience; to name a few. But what practical steps can businesses take to ensure they survive and succeed during a downturn?

1. Review your business plan

Compare your business plan to your business reality. Are you on track or off course? Is your financial performance as strong as your plan says it should be? If it’s not, how might this affect your future plans and operations? To what extent could a downturn in business affect your strategic objectives, targets and financial projections? Your review may give you confidence moving forward, or else you might need to adapt your expectations for the future. Either way, reviewing your business plan puts you firmly in the picture, and thus firmly in control.

2. Budget with caution

Cutting costs may be an inevitability during hard times. But do so with care and precision. Improving financial efficiencies is one thing, cutting budgets to the detriment of business performance is quite another. Cutting costs may result from a panicked perception that your business will not survive without tightening your belt. But this may become a self-fulfilling prophecy, in that your business might decline - not because you didn’t cut costs, but because you did. Reviewing budgets is crucial - just make sure your evaluation weighs up the costs of cost cutting.

3. Sales and marketing

The temptation to cut sales and marketing spend when things get tight could be strong. The great paradox with this approach is that sales might dry up further. A tricky balance. The single most important step to take - over and above cutting spend - is ensuring that spend is achieving results. This means tightening up on performance metrics. Track activity closely and identify which sales and marketing initiatives are performing strongly. This enables you to maintain strong activities, and helps identify areas to cut costs if necessary. Research and development is also important for effectively identifying and fulfilling customer needs, which may change during downturn.

4. Relationships matter

Renew your focus on relationships with customers, employees and suppliers. Loyalty initiatives could help retain key customers; or more generally - take time to understand what issues and challenges customers face during downturn, and be flexible in adjusting to their needs. Employees may also be affected by downturn, so engaging effective and open lines of communication is crucial. If tough times are ahead, employees will be more understanding of change if they are well-informed (as opposed to being kept in the dark). Motivating staff through training or development initiatives (for an example, see ‘innovate and motivate’ below) could also give employees a sense that they are contributing to the fate of your business. Finally, a focus on maintaining strong relationships with suppliers could, for example, help you to negotiate better credit terms should you need to.

5. Innovate and motivate

A recent global survey - based on interviews with 765 business leaders - placed employees as the number one source of innovative ideas (not surprising when you think about it). This offers two opportunities: innovate, and motivate your employees while you’re at it. And remember, innovation doesn’t necessarily mean conjuring up grand inventions or ground-breaking technologies - it could simply mean tackling the small things, such as doing more with less, or finding new ways to satisfy customers. A focus on small, incremental improvements to business performance could make all the difference and give you a competitive edge. It could also engage your employees by empowering them to contribute to your business’s survival and success.

6. Keep both eyes on the ball

Pre-empting problems in advance of their arrival is vital to planning effective solutions. For example, banks are not particularly interested in lending money when things go bad, so spotting financial issues before they arise means you can present lenders with a well-reasoned action plan to get you back to full strength. Identifying sales dips or staffing issues as early as possible also means you can stay one step ahead, avoiding potentially nasty surprises. Open lines of communication with key staff, alongside regular performance and financial monitoring are therefore top priorities. Avoid paranoia, but also avoid burying your head in the sand.

7. Don’t panic

The media spotlight invariably turns onto tales of woe. In light of such negativity, business owners may feel as though their fate is already sealed. Talk of recession is definitely premature; recent figures predict nothing more than a slowdown in growth. There is, then, no reason to panic. It may be wise to prepare for the worst, but there is no good reason not to strive for the best. A positive, realistic and constructive frame of mind is the best way forward. The dictionary defines panic as ‘often causing wildly unthinking behaviour’. Avoid it at all costs.

8. Be agile

Many of the tips discussed in this article demand a single common quality: the need to be agile and adaptable in the face of change. This demands an early awareness of change, a rapid acceptance of it (as opposed to resisting it), and a flexible, motivated workforce capable of responding to change positively. Find out more about business agility in June’s business i.

business i welcomes your views. Comment on this article and share your thoughts with our readers… What is your top tip for surviving a business downturn?

HR focus - measuring employee performance, competency framework, find the right training

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on 25 June, 2008
in HR & People Development
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Measuring employee performance: the competency framework

Four in ten UK employees are considering quitting their jobs in the next year, according to research undertaken by YouGov on behalf of Investors in People.

In response to these findings, Simon Jones - chief executive of Investors in People - comments: “Effective feedback on performance is needed… Without it, employees are likely to drift and depart rather than stay engaged with their organisation’s objectives.”

An obvious precursor to providing employee feedback is the effective measurement of performance. In this - the first in a three-part special on performance management - we explore the competency framework; a well-established method which underpins effective performance measurement.

The competency framework

To give context and direction to performance measurement it’s important to link the process to your organisation’s objectives. This involves defining the behaviours that you believe contribute the most value to business performance and long-term strategic objectives.

The competency framework is a logical output of such efforts.

The Chartered Institute of Personal Development (CIPD) defines competencies as “the behaviours that employees must have, or must acquire, to input into a situation in order to achieve high levels of performance”. They describe the typical competency framework as containing no more than 12 core competencies for a particular job role, and suggest arranging competencies into clusters, to make the framework more accessible to users. Each competency should be accompanied with definitions and/or examples for each competency.

A recent learning and development survey from the CIPD (2007) found that the most popular key areas found in competency frameworks are:

• communication skills
• people management
• team skills
• customer service skills
• results-orientation
• problem-solving

Source: CIPD Annual Survey 2007

The survey also found that 56 per cent of 663 respondents use competency frameworks to underpin performance reviews and appraisals, and just under half of respondents use them as tools for greater employee and organisational effectiveness.

A well-designed competency framework delivers consistent measurement of performance over time. Consistency enables reliable comparisons between past and present performance, providing valuable insight into where improvements have been made, and where future improvement is needed.

Find out more about competencies and the competency framework on the CIPD website .

Find the right training

Last month we outlined the benefits of conducting a training needs analysis - a method of identifying gaps between your employees’ skills and the skills your business needs to fulfil its organisational objectives. This month we focus on the challenge of finding the right training.

Any training will educate your staff to some degree. The ‘right’ training imparts the relevant skills in the most effective, efficient and cost-effective way. The right training also serves the learning needs of your people, alongside the practical and strategic needs of your business.

Research by the Chartered Institute of Personal Development makes an interesting observation about post-training evaluation which also provides practical insight for pre-training selection decisions. The research suggests that “very few organisations find return on investment metrics to be appropriate as a strategic measure of the value of learning. Instead, return on expectation measures, which make use of both ‘hard’ numerical and ‘soft’ qualitative information, are more effective.”

So, what relevance does this insight have to pre-training selection decisions? If wisdom has it that effective evaluation of training should incorporate ’soft’ qualitative measures, coined here as ‘return on expectation measures’, it follows that businesses should define such expectations before finding the right training. In other words, businesses should define what amounts to a ‘framework of expectations’ which helps select and subsequently evaluate training.

At this point, reconsider the various different needs for training, as outlined briefly earlier. First there are the personal needs and expectation of the employee. Then there are the practical expectations of stakeholders, such as HR and line managers. Finally, there are the strategic needs of the business itself. Each stakeholder has distinct needs and expectations which need to be considered, co-ordinated and managed.

The process of finding the right training therefore relies on the effective management of these different needs and expectations. Arguably, this is best done through open and constructive dialogue between HR and other relevant stakeholders. In doing so, a comprehensive collection of expectations can be defined which provides the right ‘framework’ for first selecting and subsequently evaluating training.

More info - Training methods to fit your business

More info - Training methods to fit your people

More info - View a list of training methods which may be helpful to your business

business i welcomes your views. Comment on this article and share your thoughts with our readers… How do you find the right training for your business and its people?

Avoid email overload

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Business Link
on 25 June, 2008
in IT & eBusiness
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Email is a fantastic means of communication. It’s universal, quick and easy; which is why it’s become the favoured place for much of life’s incoming and outgoing information. Email is also a victim of its own success. Sending an email is so easy that these days we often feel like we get too many.

So, how can you avoid the feeling of email overload?

Tame the auto-check

Setting your email to check every few minutes means setting yourself up for a hundred distractions a day. If your auto-check is set to check so frequently, why not try resetting it to check every hour or two?

In addition to minimising distractions, less frequent checking is likely to improve your attentiveness when you do come to check your email. If you check your email every few hours, you can reasonably devote a fair chunk of time to the task so that you can properly read, respond and act on emails.

If you’ve ever sent a hot-headed reply after being interrupted by an email, or perhaps forgotten a bright idea because your email ding sounded, you’ll appreciate the concept of setting aside special ‘email time’.

The best part? The few hours in-between email checks equals distraction free “let’s eat some serious work” time!

Note: If you can’t or don’t want to change your auto-check habits, why not consider turning your email software off every now and again. You might find this approach useful at times when you really need to avoid distractions.

Get yourself a system

A simple system for processing incoming emails will do more to manage your inbox and reduce clutter than anything else. The crucial point: it needs to work for you. That means devising it yourself.

Some swear by the ‘inbox-zero’ approach of acting on, filing or deleting every incoming email until there are none left. That may work for you, but be careful it doesn’t become an obsession.

Others use their inbox as, well, an inbox. The inbox is essentially a to do list - everything that stays in the inbox requires an action, everything else should be deleted or filed away.

Merlin Mann - a popular business writer and speaker - claims it’s all in the verbs. He uses a system for processing incoming emails that’s based on five key verbs: delete, delegate, respond, defer, do. According to Mann, every singe email - without exception - should be vigourously processed using one of the aforementioned actions.

Mann’s verbs work for him, but what’s your system? They crucial point is to define a process, and a set of actions for processing all incoming emails. No stone should be left unturned.

Two become one

An action-based system such as the one described above really does work wonders. The most important thing is to find an approach that works for you. With that said, it’s important not to get too bogged down by the system. That’s why you should take the two tips above and use them together.

Using an action-based processing system in conjunction with fixed-interval email checking means you can periodically stop what you’re doing (the real work bits), get your email sorted efficiently and effectively, and then get back to work.

It’s quick and easy… just like email should be.
business i welcomes your views. Comment on this article and share your thoughts with our readers… What is your top tip for avoiding email overload?

A world of opportunity

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Business Link
on 25 June, 2008
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It’s no secret that the UK is entering a period of economic uncertainty. Figures from the International Monetary Fund do not predict a recession, but its UK economic growth forecast of 1.9 per cent for 2008 and 2009 is the lowest since the early ‘90s.

Such a dismal outlook presents an uneasy choice for business owners: Should they batten down the hatches, keep a close eye on the finances and focus on survival? Or should they take a bullish approach and try out new opportunities for business growth? The latter question, of course, depends on the potential value of those new opportunities.

International trade is not for everyone. And admittedly, it’s not the quickest or easiest route to business growth. Nevertheless, the world’s global marketplace offers a world of opportunity for some businesses. It offers the potential for increased sales and profits which could ultimately eclipse potential downturns in domestic trade.

Talking at the Confederation of British Industry Annual Dinner last month, Martin Broughton, CBI President and Chairman of British Airways, had this to say:

“These are times of grievous uncertainty… But these are times also of stupendous opportunity in the international markets for goods and services. Today, even the humble Granny Smith can make a journey of 11,000 miles, and still turn a profit. Such are the daily miracles of international trade.”

Miracles aside, the benefits of international trade are very real. According to UK Trade and Investment, “recent research shows that new exporters boost their business productivity by up to a third in their first year of exporting and confirms that, in general, exporting companies are more productive than non-exporters and significantly more likely to stay in business.”

The challenge may be greater than it was before. But does that mean business owners should stop seeking out new opportunities? Despite economic downturn, the world keeps on turning - and the global marketplace keeps on ticking.

The question is, are you ready to export? Click here to find out

More info - Exporting - an overview

Interactive tool - Getting ready to export to individual countries

Innovation is…

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on 25 June, 2008
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Innovation is the process of successfully introducing new ideas, methods, or things. Creativity and invention may drive innovation, but they are just its beginnings; the transition from concept to successful execution is what innovation’s really about.

The inventor Thomas Edison is often credited as inventor of the light bulb, but historians have since cited handfuls of inventors who perhaps should have taken that accolade. What is certain is that Edison was the best innovator. He took the idea, he made it work the best, and he built an ‘entire, integrated system of lighting’ which provides widespread, practical application. As Edison himself said: ‘genius is 1% inspiration and 99% perspiration’. Creativity is important - but it’s just one part of the innovation process.

Skip forward 130 years, and innovation experts are using phrases like ‘operational excellence’ and ‘practical science’ when talking about innovation. The Economist argues that “the innovation process is steadily becoming a practical science to be measured, taught and managed.” For the lone individual like Edison, or the innovative global firms of today, attention has turned to mastering the ‘process’ of innovation. Firms are trying all sorts to innovate at innovation, from attracting inspirational leaders and creating innovation-friendly company cultures, to opening up to ideas from outside. And of course, there’s big bucks being thrown around.

Apple co-founder Steve Jobs once said: “Innovation has nothing to do with how many R&D [research and development] dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.” A sentiment echoed by media mogul Rupert Murdoch, who mused: “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.”

These quotes are interesting because they offer mixed messages. On one hand they highlight tangible features like leadership and people as important to innovation (things that businesses can really focus on getting good at). Then they allude to less measurable influences such as business agility, and the art of ‘getting it’. They suggest that - increasingly - innovation does not rely on size, power and money. And they support the notion that innovation is a process that can be measured and improved. But they also imply that part of innovation is more intangible. Innovation seems to sit somewhere between science and art: something that constantly frustrates those who can’t, and puts a smile on the face of those who can.

The daunting thing about innovation is that it’s the revolutionary, world-changing creations like the light-bulb and the Mac that fall under the spotlight. This type of innovation is inspirational, but the disruptive and grandiose nature of such change makes you wonder - as a creative individual or business - whether you can ever emulate such feats. The constant quest for the next big thing is part of what drives innovation, but this glosses over the equal importance of evolutionary, incremental innovation; the type that people and businesses do every day.

Because innovation is a process, it can be applied to constantly improve everyday lives and everyday businesses. Through day-to-day, on-the-job modifications of practice, products and services, incremental change offers a layman’s alternative to million-pound research and development projects and high-profile innovations. Often, it’s the small incremental improvements which contribute to increased profit margins, add up to competitive advantage, or simply make our lives easier.

Innovation is… the process of successfully introducing new ideas, methods, or things. It is difficult. It is there for the taking; by anyone from individuals with little money to global businesses with billions. It is small, incremental, evolutionary change and it is revolutionary, world-changing change. It is a process that goes beyond creativity and invention, and it is a process which is increasingly being measured, taught, managed, and mastered. It is part science, part art - because even the experts would agree there is an undeniable magic left in innovation.

Read - The business case for innovation

business i welcomes your views. Comment on this article and share your thoughts with our readers… What is innovation?

Failure - three ways to make failure a friend of innovation

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on 25 June, 2008
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As Woody Allen once said: “if you’re not failing every now and again, it’s a sign you’re not doing anything very innovative”. Woody is as creative as they come. But it wasn’t creativity alone that made him a film director, writer, actor, jazz musician, comedian and playwright. It was innovation; the process of turning creative new ideas into successful realities.

Innovation is oft described as a loser’s game, because new initiatives often fail. The trick, they say, is accepting and managing failure as a part of the innovation process. And when you fail, fail quickly.

Accept it

Failure is not good, but there is good in failure. Learning from failure can help make future innovations stronger. And for innovation’s sake, trying and failing is sometimes better than not trying at all.

Failure can be managed and thus minimised, but success is never guaranteed. Failure is therefore an intrinsic feature of innovation. Innovators should accept failure, and take value from it.

Manage it

Acceptance of failure does not mean failure should be welcomed. Big business may swallow the cost of failure, but the rest of us need to keep mistakes to a minimum - if only to survive. One of the biggest challenges for creative individuals and businesses is deciding which new ideas are most likely to succeed, and thus which ideas should be devoted time and resources.

Harold Sirkin, co-author of ‘Payback’, a book on innovation strategy, argues that “firms have too many ideas and too much emphasis on creativity - more ideas merely choke the funnel even more”.

Having too many ideas is not necessarily a problem, unless their development leads to too much failure. It’s therefore crucial to manage failure like any other risk. The transition from creativity to innovation (idea generation to implementation) is something to be closely managed.

For businesses, effective communication, leadership and decision-making help control and filter new ideas. For the lone individual, the filtering process may simply mean being pragmatic about how much time can be spent ‘chocking the funnel’ with new ideas. Either way, managing the move from conception of creative idea to innovative implementation helps avoid countless and costly dead ends.

Do it quickly

If you accept failure but manage it to the point that it never happens, you are either incredibly successful, or you are pursuing fewer new ideas. That could ultimately stifle innovation. A happy middle ground: fail, but fail quickly. This approach lets individuals and businesses try new things, without losing too much time or money if things go wrong.

The problem: an innovator with a new idea can be like a dog with a bone. It’s sometimes difficult to let go. Niklas Savander, an executive vice president at Nokia, argues that innovators “need really harsh discipline to weed out ideas quite quickly”, and explains that Nokia “are working at fast failing, but are not there yet”. Failing fast is a challenge for even the biggest firms (and arguably, it’s easier for smaller, more agile entities).

Interestingly, the need to fail quickly brings us back to the need to accept failure in the first place. If failure is a dirty word, it’s going to be less easy to do quickly and comfortably. If it’s accepted as part of the innovation process, the act of giving up, learning from one’s mistakes and moving on becomes a less bitter pill to swallow.

Related resources - The business case for innovation

Collaborative innovation

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on 25 June, 2008
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On the 17th of June Mozilla launched Firefox 3, the latest iteration of their cross-platform internet browser. It’s the culmination of 10 years work by “a global community of people who believe that openness, innovation, and opportunity are key to the continued health of the Internet”. The company lauds the fact that thousands of individuals from around the globe contributed to the innovations contained within Firefox.

On that day alone the new Firefox was downloaded over 8 million times. Even before launch the browser had an estimated 15-18 per cent of the web browser market. Internet Explorer remains a dominant leader, but Firefox is a respectable second, beating Apple’s Safari browser which holds just a few per cent. Even if Safari catches Firefox, many of the innovations contained within Apple’s browser come from collaborative, open source software. And open source software is not just in web browsers - it’s a part of major operating systems, professional and consumer software applications, and website technologies. The collaborative approach to creating innovative software is no fad - it’s challenging and changing the computer software industry.

In many ways open source software is a showcase example of collaborative innovation. An open approach to the development of new ideas provides a diverse knowledge pool, which when organised effectively and underpinned with strong communication, has the potential to make disruptive, creative and innovate products and services.

That is the opportunity. And it’s becoming so compelling that the business world is beginning to ‘swarm’ around the concept of collaborative innovation.

Swarming - an increasingly used model of ‘collaboration beyond the organisation’ - injects mass participation into businesses. MIT Sloan Management Review defines the three principles that should govern a swarm business: it must ‘gain power by giving it away’, ’share with the swarm’, and ‘concentrate on the swarm, not on making money’. A focus on sharing, integrity and community offers the potential to generate new ideas and innovations, and create successful businesses along the way. “Now collaborative innovation is being extended from the realm of idea generation and product development to the very essence of doing business”, say the authors from MIT Sloan.

The importance of this model is the recognition that collaborative innovation demands a certain level of responsibility and integrity from stakeholders. If collaborative innovation evolves upon open principles akin to those of swarming, there should be universal opportunity. The creative individual could obtain invaluable resources usually reserved for much bigger fish, or showcase their talents with a view to developing employment or new business opportunities. And businesses large or small could take value from a wider and more diverse pool of knowledge, talent and ideas - in order to improve their innovation process.

With open innovation as the primary goal, and self-interest a close second, creative individuals and businesses can collectively benefit from the collaborative approach. Should the balance swing too far from give to take, the spirit of collaborative innovation may quickly fade away. That makes collaborative innovation something to be used, but also respected.

Read - The business case for innovation

Discussion: What makes a business agile?

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Business Link
on 6 June, 2008
in Management & Leadership and Strategy & Operations
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Uncertain times tend to get business owners thinking; arguably the one constructive outcome of economic downturn. But beyond the usual musings over cash-flow and profit forecasts, what steps can business owners take to guard against uncertainty? What makes a business adaptable and ever-ready to face change? The answer: businesses must become more agile.

The word ‘agile’ is easy to define: adjective; 1. able to move quickly and easily. 2. quick-witted or shrewd. In contrast, ‘business agility’ is a frustrating fuzzy notion. We know that an agile business has quick and sharp powers of judgement. We know that an agile business is able to respond quickly and effectively to change. But what factors contribute to such an adaptable nature?

Arguably, being small is one way of being agile. Small businesses are often much closer to their marketplace and customers, which means they can identify changes, threats and opportunities more rapidly. Reaction times are also quicker, with fewer obstacles hindering quick adaptation. Business agility is a product of closeness and intimacy - both with the outside world, and within its four walls.

Business agility may also be determined by an organisation’s management. Leaders direct a business’s fate, so decision makers who are firmly ‘on the pulse’ are more likely to identify change and adapt quickly. Again, a closeness to markets and customers, sound judgement and decisive action are key characteristics contributing to business agility. A bottom-up consciousness - where workers have influence over the strategic direction of a business - is also likely to facilitate a more adaptable and flexible business.

In these uncertain times, you may be forgiven for thinking that business agility is about responding to threats. But remember: it’s about seizing on opportunities too. Reacting quickly and easily to both threats and opportunities - with equal precision and confidence - is really what it’s all about.

Join the discussion

There is no easily definable recipe for business agility (the thoughts above are just a few ideas to get the conversation started). The best way to understand what makes businesses agile is to learn from agile businesses. Which is why we are asking for your opinions. Comment on this article and let us know your thoughts on:

  • what makes a business agile?
  • how a business can become more agile?
  • how your business has quickly and effectively responded to threats and opportunities?
  • Or more generally - share your experiences of how your business has adapted quickly and easily to change.

Thank you. We appreciate your views.