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Your complete guide to business success 2014







MOVING ON UP Welcome to the third edition of MPA’s Business Strategy special report. Here at MPA we’ve made it our mission to provide you, the mortgage broker, with the essential business strategy insights that you need to progress your business to the next level. It’s in that vein that we’ve compiled this year’s third edition of MPA’s Business Strategy special report. We’ve brought together some of the finest business minds to run you through the theory behind planning, marketing, managing and running a successful business – and backed that theory up with insights from mortgage industry professionals who walk the talk on a daily basis. Contributors have come from renowned business schools, including the University of Melbourne, Macquarie University, Monash University, Swinburne University of Technology, Aston Business School, the SP Jain Centre of Global Management and the Centre for Workplace Leadership. Whether it’s writing your business plan, branding and marketing your brokerage, developing a company vision and managing a winning team or figuring out how to grow your business sustainably, this truly is an essential resource for all mortgage brokers. Robin Christie, managing editor, MPA


EDITOR Robin Christie PRODUCTION EDITOR Moira Daniels






Contact the editor: robin.christie@

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Team building Build a dream team that can smash your goals






Is it right for you?




Why your brand could be your most valuable asset

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4 | Business planning How to get to where you want to be 10 | Diversification Tips for planning a successful diversification strategy 14 | Exit planning Get the best value for your business


36 | Performance management Create a more open, constructive and enjoyable experience 40 | Leadership Shift from a burning platform to burning ambition 46 | Company vision How a new definition of vision can help you to run your business better

CHAPTER 4: SMART BUSINESS 50 | Business opportunities Numerous lessons that brokers can learn from a surprising source

16 | Services marketing The 7 Ps of services marketing explained

54 | Sustainable growth Boost business volumes without sacrificing quality of service

27 | Consumer behaviour How people buy professional services

58 | Personal management Managing the pressures of running a business



Plan to succeed A good business plan can act like a compass, not only helping you stay the course but also getting you to where you want to be

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For mortgage brokers a business plan is an essential tool in helping you realise your goals. “Without a business plan, you have a dream with no stepping stones,” says Michael Griffiths, small business coach and CEO of Michael Griffiths & Associates. “A business plan ensures you know where you’re going, what you want to achieve and the action steps required to get to your goals,” Griffiths says. “Business owners without a business plan usually find themselves not growing or taking the required steps to move the business forwards. Their heads are usually stuck in day-to-day routines rather than business growth strategies.” Even veteran business owners often fail to recognise the importance of creating a business plan, adds Michael Altenburger, Small Fish business coach. “In my experience, only very few SMEs have a formal written-down business plan. Not many know exactly what a business plan is or what purpose it serves. Those who do know often feel overwhelmed by the daunting task of creating one. Lack of experience adds to the problem.” Altenburger adds that having a plan, especially in written form, helps quickly determine that things are heading in the wrong direction (hence ‘not going to plan’) – not when it is already too late.

PUTTING IT TOGETHER Simply put, a business plan is a written description of your business and your business goals. It can be

used to help you describe your business to potential investors, attract employees, or prospect for new business. The structure of your business plan will reflect who is using it. If you’re looking for finance, your business plan might be slightly more detailed than one that will be used internally for staff. So step one in creating a plan is to determine who the plan is for. Deciding whether the plan will be used internally or viewed by third parties will help you target your answers.

“Remember, a goal is no good unless it has action steps to get you there” Michael Griffiths According to Griffiths, it doesn’t need to be pages and pages long. There are many variations of business plans, but a basic business plan typically includes: Description of the business: This is your management plan. It typically covers information regarding the structure and premises, staff, your relevant experience and services. Market analysis and strategy: This section includes an analysis of your industry, your target market, and your competition. It should also outline your key marketing tactics to reach your target audience.


1. Market changes If there has been a significant change in the market, you might want to revisit your plan and figure out how this affects you.

2. Regulatory changes All industries undergo changes due to new regulations. You need to ensure your business plan is in line with the regulatory demands of the current market.

3. Personnel changes Perhaps you are in the process of adding new brokers, or maybe the business has lost a partner – the business plan should be revised and each person should be aware of the management structure.

4. Diversification One way to grow your business revenue is to look at how you can incorporate diversification into your strategy. Your chances of embracing new opportunities will increase if you visualise how it will fit into your business.

5. New financial period There are no hard and fast rules on how often you should update your plan, but a new financial period – annually, quarterly, monthly – can be a good time to update if your goals are being met and your plan is realistic.

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A COMPETITIVE ADVANTAGE: THINKING ABOUT THE FUTURE Conscious Futures principal Simon Dehne explores today’s business strategy considerations Maybe organisations in today’s complex and turbulent world need to rethink what we are trying to achieve when developing strategy. Most organisations have become very good at forecasting and execution, which is about forecasting a future using our head. In contrast, is it possible we might be ignoring possible innovation by ignoring the creative potential from our most important asset, our people? Maybe we are discounting our people and treating them like machines and thus restricting their capacity to help us achieve our higher potential. Despite billions of dollars and countless hours invested in talent development, businesses still struggle with unlocking the creative potential of employees. The result? Innovation has suffered, and worse, employees have disengaged from their work. Frederick Laloux, in his book Reinventing Organisations, suggests, “Leadership that exists in the current paradigm is typically goal-orientated,

Future planning: You might want to include your business’s vision statement, your plans for the future, your business goals (short- and long-term) and how you intend to reach them. Finances: This includes how you’ll finance the business, and outlines the operational costs and earnings, and projections. Executive summary: This can be short and sweet – just a one-page overview of your business. When it comes to outlining your goals, Griffiths suggests: “Start with 12-month goals and ask yourself, what outcome do you want in the next 12 months? Set three to five goals you want to achieve, then break it down to three months, six months and the next 30 days. For example, if you want 100 customers in 12 months, how many do you need in the first 30 days? 6 | JULY 2014

focused on solving tangible problems, putting tasks over relationships. It values dispassionate rationality and is wary of emotions; questions of meaning and purpose feel out of place”. Leaders today design organisations; humans are resources that must be carefully aligned on the chart, rather like cogs in a machine. If some of the machinery functions below the expected rhythm, it’s probably time for a ‘soft’ intervention – the occasional team-building – like injecting oil to grease the wheels. But today’s organisations can be vehicles for self-expression and fulfilment. And when year after year things boil down to targets and numbers, milestones and deadlines, and yet another change program and cross-functional initiative, some people can’t help but wonder about the meaning of it all and yearn for something more. Creativity is the lifeblood of healthy companies and healthy employees. Resuscitating our capacity for creative expression at work requires a conscious shift in how in how we think about what creativity is, where it comes from, who has it and how to evoke it. The good news is that creativity exists in abundance in every individual in your organisation. This leads us back to leadership and strategy. My perspective on the definition of this overly used word ‘strategy’ is that it is about ensuring organisations have a future. But often in the process of developing a strategy we skip one of the most important steps. That is strategic thinking!

What stepping stones or action tasks do you need to be doing to ensure that your goal comes true? Remember, a goal is no good unless it has action steps to get you there.”

AND AGAIN There are no hard and fast rules regarding how often you revisit your plan, although Griffiths suggests business owners check at least on a quarterly basis: “We revisit ours every month to ensure we focus on the next 30 days and what needs to be achieved.” According to Altenburger, a formal review of the plan should be conducted annually. “On these occasions the goals would be re-evaluated based on new information available,” he says.


Strategic thinking happens in three interconnected steps: divergence where you seek out diversity of perspectives on issues and look for the contrary views; emergence, where you let go of deeply held assumptions to see what new ways of seeing what’s possible for your organisation emerge (note: this stage is critical but the most difficult to do well); and convergence, where you connect your thinking to acting today by identifying what responses you will take now. So a key responsibility of leadership is taking the time to systematically explore possible organisational futures to inform decision-making today. It’s allowing your organisation the freedom to operate like it was flying at 30,000 feet. You are flying above the detail to see what’s on the horizon – and what you need to avoid. At some stage, though, you will have to land, and this is where you focus on what you do ‘on the ground’ every day. A way of engaging your people and enhancing creativity is by developing a shared vision. Engaging your staff across all levels increases diversity by expanding the number of perspectives involved in what ‘might happen’ or what ‘could happen’ and allowing time and space to dream and imagine what might be. Today, ‘vision’ is a familiar concept in corporate leadership. But when you look carefully you find that most ‘visions’ are one person’s (or one group’s) vision imposed on an organisation. Such visions, at best, command compliance, not commitment.

A shared vision is a vision that many people are truly committed to, because it reflects their own personal vision. The opportunity for organisations today is to create a vision for all to inspire towards. A note of warning: you may be thinking a vision is a ‘nice to have’, but I would argue that for leaders having a vision that people can connect with and that creates a common purpose is one of the most important responsibilities of leadership and strategic development. The power of a vision impacts on your organsation every day. Why? Because every action that we do involves some view about the future, as we expect it to be, or as we desire it to be, or as we fear it to be. If our vision of the future were different, the decision of today would be different. If our vision is inspiring, it will impel us to action. If our collective vision arouses no enthusiasm, or if there is no commonly held image of what is worth striving for, our organisation will lack both motivation and direction. So, we need to consider not only the current knowledge we have of the past and present but also the images we hold of the future, because all these factors influence on our decision and strategic planning in the present. If a leader and the organisation can develop a shared vision, one that is intrinsic and uplifts people’s aspirations, work becomes part of pursuing a larger purpose embodied in the organisation’s products and services that creates the spark that can accelerate success.

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BUSINESS PLANNING IN FOCUS: BANKWEST Bankwest general manager, strategy and customer analytics, Alex Leyland gives MPA his take on business strategy To put it simply, Leyland explains that strategy is all about understanding where you are today, where you want to get to, and how you are going to get there. “As there are multiple elements of a business strategy, a good place to start is agreeing a list of the key questions that need answering with the recipients, including management, directors, etc.,” he says. “These usually stem from questions or concerns from stakeholders that they want answered; for example: how can we grow faster sustainably? How can we increase profitability? How will regulation impact our business strategy and model?” Leyland explains that a few years ago Bankwest was looking to understand how it could continue to grow. “A lot of research was carried out, covering where the best places were to grow, what Bankwest’s value proposition should be – such as why customers would choose Bankwest over one of its competitors, and the brand and proposition needed to deliver against the ‘whys’,” he says. “All of this culminated in a strategy of expansion onto the East Coast. Bankwest now has just over half of its customer base on the East Coast and continually reassesses these issues as it plans for the future.” He suggests the following are key strategy questions that brokers should ask themselves: what is my vision for my business and where do I want it to be in three or five years’ time? Who are my ‘profitable’ customers and what are they like and why do they select my business as opposed to one of my competitors? What is changing in the external

8 | JULY 2014

environment (are my customers changing, competition, regulation, etc.) and do any of these things mean that I need to operate a bit differently from the way I do today? “Once you have answered these you can address what you need to do differently to deliver that vision of the future, starting with the plan for next year,” Leyland says. “The greatest success is typically shown by those who really understand which customer segments they are targeting, what those customers want, as well as those who design and create offers that meet what those segments want. “By way of example: customer behaviour in terms of how they research and purchase products is rapidly changing for many but not all segments. Those that understand these nuances will save themselves money and time by only delivering those features that really matter to customers.” He adds that there are plenty of strategy pitfalls that should be avoided. The most common mistake, he says, is to base a strategic decision on gut instinct or assumptions that aren’t robust, rather than a fact-supported analysis. “This frequently takes time and money (for example, in research costs) to achieve; however, it is well worth the investment,” he says. In terms of future planning, your strategic planning horizon should ideally tie in with your investment or ownership intentions, Leyland suggests. “For example, when building a mine, the huge upfront capital investment means you have to have a clear view on the returns that you are going to get from that investment, ie over the life of the mine, say 20 years. For most less-capital-intensive businesses it means a shorter horizon is sensible. “Obviously the business, regulatory and consumer environment is relatively certain over the one-year horizon but becomes progressively uncertain as you move further out. A three-year horizon typically provides the optimal balance in financial services.” Bringing the conversation back to brokers, Leyland explains that it’s important to realise the market is changing significantly. “Understanding regulatory, tax and legislative changes as well as customer-purchasing behaviour changes, including the use of digital, and then supplier or competitor changes such as recognising and monitoring new entrants, will be key,” he says.



diversification a winner for

your business How can you go about planning a successful diversification strategy for your brokerage? Graham Kenny reveals the secrets of successfully diversified organisations

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Diversifying a business away from its core has its critics. Some say it’s madness, others say it’s the way to go. I’ve conducted plenty of research on successful diversified firms, which has been published in my book Diversification Blueprint. As a result I’ve reached a number of conclusions on why managers come to negative views on the issue, as well as how successful diversifiers achieve their results. Let me share a few of these with you in the hope that you’ll be able to make diversification a winner for your business.

GET ‘DIVERSIFICATION’ CLEAR There’s a lot of talk about diversification, and not all of it is informed. Here’s my definition of the concept, which should clarify where your company is situated on the issue. Diversification is the variation between businesses within a company. This variation can be by products (or services), eg food versus clothing. It may also be by customer type, eg domestic versus industrial customers.

Far from being the freaks, diversified businesses are the norm The degree of diversification in your company is determined by two factors. The first is the degree of difference in one dimension, such as products produced. The second is the number of dimensions in variation – products produced, customer type, technology employed, delivery mechanism, and so on. To take an extreme example, a company that is in mining iron ore and running a general hospital is highly diverse because of the degree of difference between service type, as well as the differences in other dimensions such as skills, clients, processes, risk to life, etc. Remember this definition when assessing how diverse your business is or how diverse you’d like it to be.

DIVERSIFICATION IS THE NORM The prevailing view in business is that focused firms are the norm. This perspective holds that the world is made up of numerous, very focused, companies – and then there are these oddities called ‘diversified firms’. This simply isn’t the case. Small and large businesses everywhere are diversified. Organisations in the public and not-for-

DIVERSIFICATION IN PRACTICE: FAST FAST CEO Brendan Wright believes that the diversification trend is being driven by consumers and business owners. Wright explains that consumers are looking to find a professional who can provide help, guidance and advice around purchasing property, but adds that more and more business owners are coming to brokers to have their commercial needs met. He explains that, with 2.8 million small businesses in Australia looking for help, guidance and advice from finance professionals, commercial finance is the big growth area for brokers. “And this is not commercial property finance per se, it’s funding businesses – helping businesses grow,” he says. “Business owners live and invest in houses too, so it’s a great opportunity for brokers to meet the needs of not only consumers and investors, but business owners as well.” When it comes to how to facilitate diversification, whether to set up referral relationships or bring in in-house non-mortgage specialists, Wright explains that the route a broker should take depends on their business strategy. “So at FAST we spend the time talking with the broker, understanding their particular strategy and what they’re trying to do to meet the needs of their particular clients,” he explains. Using the asset finance example, he says that FAST is known to be strong in that area, but it doesn’t mean that brokers must get accredited in that area to be able to offer an asset finance solution to their clients. “We also have a quality referral model for those brokers who just want to have a simple way of referring their clients, have their client protected and have that need met without being accredited in asset finance,” he says. “So it’s about taking the time to understand that broker’s particular strategy, and then providing the help, guidance and advice to that broker to pass onto their clients.”

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profit sectors operate across a range of industries as well. Take your local council as an example and think of how many diverse activities it takes on, from road repairs to childcare. Far from being the freaks, diversified businesses are the norm.

DIVERSIFICATION GETS WRONGLY ACCUSED When a diversified company goes belly up, managers outside the organisation as well as the press are quick to point out that being ‘too diversified’ was the cause. Note the ‘too’ in this description. Not just ‘diversified’, since managers know, as I’ve already suggested, that most firms are diversified to some extent.

Avoid opinions that are often uninformed by fact but fuelled by prejudice, special interests and rumour In the course of my research I reviewed a case where diversification went horribly wrong. The press screamed ‘too diversified’. The company was Burns Philp, which no longer exists. When I took an in-depth look at the business I found at least eight drivers of Burns Philp’s corporate failure – and not one of these could be labelled ‘too diversified’. I also concluded that each of these factors was powerful enough to cause major problems for the company. From the ultimate result we now know that the combination proved fatal.

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assets, net worth and book value – all highly confusing but they’re the same thing.) ROE has been labelled the single most important ratio in business and is widely recognised as the measure for assessing overall financial performance.

TAKE A FRESH LOOK It’s important to be aware of how you view the issue. If, as academics and many managers do, you take a corporate perspective on diversification and look from on high down to the diverse divisions of a firm, then the immediate issue becomes: How can I (management) manage these different entities? Let’s say that your company runs a chain of hamburger stores and you want to diversify into women’s fashion as well. Your reaction is probably visceral – bordering on panic. The reason: If I know about managing hamburger joints, what do I know about women’s fashion! And so we get concerned about how related the different businesses are – which is the obverse of how diversified the firm is becoming. I invite you to change your perspective. Look at it now from the division point of view. It looks like this: The managers of the two divisions, hamburgers and women’s fashion, might say: “We know how to run our focused businesses, hamburgers and women’s fashion, and we’re quite successful at it. But – and it’s an important ‘but’ – in the case of the hamburger stores, our success in running them has nothing to do with the managers’ success in operating the women’s clothing stores. They’re independent.” So from this point of view, how diversified a firm is has no impact on division performance and hence firm performance. It depends on the skills of the management team heading each division. Changing how you look at diversification has a huge impact on your approach to it as well as how you manage it.



When you’re evaluating whether to be a focused business or a diversified one, don’t get caught up in the prevailing orthodoxy, share market hype or press hysteria. Avoid opinions that are often uninformed by fact but fuelled by prejudice, special interests and rumour. Might I suggest that you cut through all of this by employing a metric that I used to identify the successful diversifiers in my research? It’s return on equity (ROE). (Equity comes with other labels – shareholders’ equity, shareholders’ funds, net

It’s worth remembering that a diversified company is really just a collection of focused firms. As you go on your diversification journey, keep an eye on your focused counterparts. There are lessons there for your diverse divisions and business units. In my research I reviewed focused companies such as McDonald’s, Westfield and David Jones. What I found in them was a focus on stakeholders, especially customers and staff, and a considerable amount of effort expended to obtain a clear understanding of the strategic factors relevant to



each; factors such as customer service and product quality for customers. These companies also built strategies around these factors for stakeholders to produce competitive advantage. The message for diversified firms? Make sure your divisions and business units do likewise.

PULL THE RIGHT LEVERS • My research identified seven characteristics of successful diversifiers, which I suggest you follow in your quest to make diversification a winner:

1 2 3 4

Establish a supportive corporate centre The emphasis here is on ‘supportive’. Avoid a head office that interferes in divisional management trying to run the division itself. Select capable division managers Managers who know the industries of their divisions. Install appropriate performance measures In Wesfarmers, for instance, a central focus of its corporate measurement is return on equity. All division measures are linked to this. Set effective incentives This means motivate your staff through financial or non-financial means. In large companies this might entail some hefty bonuses – but bonuses are not a must.

5 6 7

Align the corporate culture As a CEO of a major diversifier put it to me: getting the culture right is essential, it’s difficult to establish and easy to destroy. Secure competitive advantage By this I mean each division needs to focus on gaining an edge in its territory.

Buy well and integrate This applies if you intend to diversify via acquisition. In short, don’t pay too much and after acquisition work hard on having new staff feel part of the total entity.

Follow these and you’ll be well on your way to diversification success.

Graham Kenny is managing director of the management consultancy, Strategic Factors, which specialises in strategic planning and performance measurement (www. He is the author of Crack Strategy’s Code (President Press, 2013).

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Get the best price for your brokerage When it comes to maximising business value and sale price, size does matter, argues Craig West

For many SMEs, succession and exit is the proverbial elephant in the room. And, irrespective of the countless books, seminars and newspaper columns devoted to the subject, business owners continue to ignore the basic principle that their enterprise needs to be prepared well in advance for sale in order to maximise value, price and successful exodus of the principals. Like all things in life, there are a series or sequence of steps that must be adhered to in order to ensure a business is valuable, attractive and saleable. The following factors have a heavy influence on the value of a business for sale and owners need to ask themselves these key questions to determine the sale readiness of their businesses:

BUSINESS SIZE Is the size of my business ‘right’ for my industry or market in order to maximise sale value? Simply put, ‘size does matter’! There is plenty of research that supports the fact that businesses with a turnover of $5m or more nearly always sell at higher multiples than their smaller counterparts. 14 | JULY 2014

Whilst I am not in favour of growth for growth’s sake, designing your business to grow to at least this level of turnover will maximise value. Achieving the scale required might include making acquisitions of complementary businesses/ opportunities, opening in other states or looking for baby boomer business owners ‘desperate’ to exit and retire. Interestingly, the research clearly shows the top two outcomes baby boomers look for in a successful exit are not about the dollars; rather, they want assurance the business will continue after the exit (legacy) and that the new owner will look after the staff.

BUSINESS MODEL Clarity and sense of purpose and belonging are the next important factors. Are the business owner and all the members of the team on the same page with their understanding of the business model? Does every aspect of the business actually match the business model? Is it a boutique or scale business and, even more importantly, is every aspect of the operation – customer service, online presence, the people employed, the pricing strategy, office location (even its layout and fittings) and marketing materials – all aligned to ensure they reflect the business model? This is further supported by a key finding in a Pitcher Partners 2013 survey that the overall price was rated less important than continuity of the business and ongoing jobs for employees, with 69% of respondents believing continuity of the business was important before they engaged in succession planning, and 89% afterwards. I met a financial adviser recently who told me he looked after high net wealth individual clients, was extremely good at what he did and as a result charged a premium. When he gave me a business card on very flimsy paper that looked like it had been printed as cheaply as possible it clearly highlighted a misalignment within his business model.

REVENUE The ease of reading and understanding the business revenue is the next factor that has a significant bearing on the sale price. Is it an annuity-style income based on long-term contract, or does it depend on continually deriving new sales?


Put simply, recurring revenue is worth more. Businesses with clients on long-term retainers, extended contracts, or some type of residual income trail are far more attractive and valuable than those that need to make sales continually, every day, week and month. Astute buyers will carefully examine the sales system/process (especially to identify if it is based on a key salesperson’s skill and networks) and the supporting marketing strategy and infrastructure.

SALES AND MARKETING Sales and marketing that run independently is vital for a business and needs to be able to generate new business, leads, enquiries and ultimately sales without relying on either the owner or a key person’s skill and sales ability.

SYSTEMS Businesses that are systemised and have a documented operational process will have a distinct advantage over similar operations that are on the market. Systems save time, effort and money because they are far simpler to run, less stressful and generally far less risky and as a consequence, are also more valuable. The potential that they are performing well is greater and the level of specialised skill to run them is reduced and the lower risk is always more valuable.

EMPLOYEES Positively engaged, motivated and incentivised employees to perform and work are also an immense asset for any business. Incentive plans that reward based on performance can easily be adapted in an employee share ownership plan (ESOP). This simple strategy substantially reduces one of the key risks for buyers – employees exiting the business after the owner has left. It also provides a strong incentive for performance and their financial wellbeing (at least a part of it) is closely matched to those of the owner. Employees with the same mindset as the business owner result in better performing, more profitable businesses with everyone sharing in the benefits.

RISK MANAGEMENT Far too many SMEs unwisely regard risk

management and compliance as something only large businesses need to worry about. Corporate governance and compliance is often ignored by business owners, they fail to see that it adds considerable value as reduced risk can provide a source of the right type of buyers for the business. In our experience we often see deals fall over at due diligence stage when the buyer really investigates the substance behind the business. Those with poorly prepared accounts, badly documented processes and little or no governance structures often fail to meet this hurdle.

OWNER DEPENDENCE It is the reliance of the business on the owner that can often be the deal breaker. Can the principal take time away from the business for a holiday? A potential buyer needs to see that the business is able to operate efficiently and effectively without the owner’s involvement. It reaffirms to a prospective buyer that many of the above operational attributes are in place and functioning properly.

START EARLY Ideally business succession should start the first day a business opens its doors and then evolve continuously until it is time for the owner to leave. However, in the real world business owners get caught up in the day to day demands of running a business and pay little attention to succession and exit until they are on the eve of retirement. Others postpone exit planning because the task seems too difficult or it is avoided because of the emotional issues involved. For many owners, it can be quite stressful to relinquish control of what has been one of their greatest achievements in life. Family owned businesses have special needs, some of which can impact on family harmony and relationships. However, irrespective of the barrier or emotional roadblock, business succession is important to all businesses irrespective of size, market share or ownership and is not a process that can wait to the last minute to be implemented. The sooner owners acknowledge the need to implement an exit and succession strategy, the better their prospects are to maximise value, sale price and comfortable exit following a lifetime of work and endeavour.

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. He has written four books on employee incentives, succession planning, asset protection and exit strategies. Craig is the president of the Australian Chapter of The Exit Planning Institute and in March 2014 was appointed executive chairman of the SME Association of Australia. Visit www.successionplus.

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Ps of services marketing explained

As a broker you’re selling yourself and the services you provide, but how do you market this to your prospective clients? Jo Macdermott explains

It’s an unbreakable rule of business that if you want to get customers, you have to market yourself. Marketing can seem like a chore when you have many other things to do but it’s important that you do it, and you do it well. Understanding the best way to market your business can save you time and money in wasted effort and ensure that you have the best chance of success. Unfortunately, much of the information that is available to help businesses trying to market themselves is aimed at product-based businesses, so what should you do if you are marketing something more elusive and hard to define? 16 | JULY 2014

As a mortgage broker you aren’t selling a tangible product. The customer isn’t going to walk away with something they can hold in their hand and show off to their friends. What you are selling is your own knowledge and expertise, along with the experience of dealing with you or your business. Product marketing strategy often centres on four main factors known as the four Ps. When it comes to marketing a service-based business, things get a bit more complex and instead of four, there are a total of seven main factors you will need to think about if you want to have a complete, effective marketing strategy.


Here is a quick guide to the seven Ps of service marketing along with a few ideas that might help you apply them to your own marketing strategy.

SERVICE MARKETING PRACTICE: BANKWEST Bankwest general manager, customer communications & brand, Paul Vivian, explains how brokers can market their services effectively

1. PRODUCT Even though you don’t have a tangible product, that doesn’t mean that you don’t have something to sell! When you are selling a service, what you have to offer is usually more fluid than a solid, physical item. It can be adjusted and tailored to each purchaser. Unlike products, you don’t produce what you are selling until the client is ready to consume it.

As a mortgage broker you aren’t selling a tangible product. The customer isn’t going to walk away with something they can hold in their hand and show off to their friends If you want to market your service successfully the first step is to define what it is you’re actually selling. How much is it customisable for different customers and how much of what you offer needs to be the same for the sake of consistency? Although you have flexibility around what you are offering, you need to differentiate yourself from the rest of the market. How will you stand out and make sure that your main selling points remain the same even as you adapt your services to the needs of each individual client?

2. PRICING Pricing is an important element of successful marketing. Charge too much and you are likely to struggle to find customers, price yourself too low and you may end up selling yourself short as well as earn a reputation for being cheap. Getting the balance right can be tricky.

The key to service marketing for brokers is putting themselves in the shoes of their prospective customers, believes Vivian. “It’s important to think about what makes you unique in the broker market, and why prospective customers should use you as a broker,” he says “Is it convenience, value, location and/or accessibility?” Once you have the answers to these questions, he says, you can begin to develop a proposition. If you can’t think of one, he adds, “then that may be a reason as to why you’re struggling!” “Successful brokers know what their customers want and are able to communicate this to them. Importantly, their customers often act as their advocates, passing on referrals and recommendations simply because they’ve had a positive experience with the broker,” he says. What this type of relationship marketing helps to build, he explains, is a brand and a reputation that you can sell. “Getting noticed can be challenging but if you’re invisible then no-one knows you’re out there,” he says. “You can build a brand relatively cheaply but you have to work at it. For example, you could build a social media presence and actively produce useful and interesting content, or consider adding livery to your car.” But you have to be willing to be active, says Vivian: “If you don’t sell yourself, no-one is going to do it for you”. He adds that the specific channel of choice to reach customers depends on your target customer. “You need to be in places where your customer is, so if they’re reading newspapers then advertise in the paper. If they’re looking at websites, be on those websites,” he says. “Understand where your customers have come from and analyse this, as this will help you to build a marketing plan.”

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SERVICE MARKETING PRACTICE: CONNECTIVE For Connective director Glenn Lees, marketing your services as a broker has to align with your core business purpose Lees explains that when consumers have a number of brokers to choose from, you need to sell your passion for what you do. “You need to have skill, you need to have product and you need to have expertise,” he says. “But those things are all taken as read. The differentiator is the attitude with which you deliver them.” Stick to what you believe and what your purpose is, he suggests, and use your brand both persistently and consistently. When it comes to the marketing strategies that mark out the best in the business, he says that consistency of service is crucial. This means keeping regular contact with customers, asking for referrals and setting time aside to take a less transactional approach and take marketing seriously. “It’s the brokers who invest the time in that speculative marketing component that do best,” he

There are a number of factors you need to think about when pricing your services. When you are pricing products you can calculate a charge from the cost of the raw materials, production and distribution, but pricing your services is a more complex process. When considering how much to charge you will need to think about the market rates, your level of expertise and the benefit to the client as well as your overheads, paying employees and any other expenses. Don’t forget to include a reasonable mark-up so you get a profit. 18 | JULY 2014

says. “And it’s the ones who’ve made that part of their normal process who do especially well.” He points out that servicing a customer represents a big investment, so staying in touch with them to drum up referrals and repeat business is making that investment work for you. “You spend most of your money in business just opening the front door and turning the lights on. What happens after that is discretionary, and so you’ve got to maximise that return,” he says. It’s essential, too, that all marketing activities are integrated, says Lees. And that starts with having a credible website and a credible social media presence. “And not saying what you had for breakfast yesterday, but information that sets you apart from the rest in being a subject matter expert who is active in the field,” he says. “You can form a view, at least, of that person’s engagement in the market that they’re advertising their services in. And I think for brokers especially that’s critical.” He notes that dealing with a mortgage broker is personal, with borrowers telling their broker things that they wouldn’t tell their doctor, so it’s essential to earn their trust and explain through your online marketing material that you are an active and experienced participant in your field. “Many people go social now, or they go to the web, just to validate the bona fides of the people they’re proposing to deal with,” he says. “And if you have a website that’s old, and one post on Twitter from nine months ago that says ‘test’ you’re not going to have that credibility.”

3. PLACE Where you offer a service is important. Regardless of what you do, your location or office premises will form part of your overall image. Will you work from an office or meet clients at their home? If you are considering your options for a physical premises, think about where is it located. Is there adequate parking, is it appealing to look at and will it create the right professional image? Your office or business premises is like the packaging on your product. Clients will form an instant impression of you and your abilities based


on what they see. Make sure their impression is a good one! As well as a physical location it’s important to think about your online location. In most cases your website will be the first contact that your potential clients have with your business, so think of it as your virtual shopfront. With so many people turning to online facilities to find services, it’s even possible that your clients may never actually visit your physical premises. Your website should create a positive, memorable impression and be easy to use.

What you are selling is your own knowledge and expertise, along with the experience of dealing with you or your business 4. PROMOTION Promotion is essential when you are marketing a service-based business. Services, unlike products, aren’t unique. Chances are you are not the only person in your area to offer the same service. Why are people going to choose you and how are they going to find you? Even with the best skills, the most up to date software and a plush office or website, if you don’t take a proactive approach to promoting yourself, nobody will know you’re there. If you are going to be successful you will need to think about how and where to advertise your services, plan a promotional strategy and regularly analyse the results.


Jo Macdermott is the founder and senior marketing consultant at Next Marketing, a marketing agency that specialises in outsourced marketing for small and medium businesses that don’t have an internal marketing manager. Visit nextmarketing.

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Unlike a product, which exists independently of the person selling it, a service is indistinct from its provider. This means that people become a crucial factor in the marketing of any service. In fact, the quality of customer experience is likely to be a determining factor in whether or not your clients refer you to their friends and/or use your services again in the future. Whether you are a one-person operation or you have a team of employees, it’s important that customer service is the priority and a high standard of professionalism is maintained at all times. Contact employees should be given specific customer service training and the way they deal


with the public should be aligned with your brand values.

6. PROCESS To present a consistent image and brand you will need to make sure your level of service is consistent, reliable and your clients know what to expect from you every time they use your services. This usually requires some level of process implementation, especially if you have a large team of brokers and support staff. Even if you are a small business or a one-person operation, you can probably benefit by creating a few basic processes to allow you to keep on top of everything. By creating systems and processes you can ensure that your clients receive a consistent experience every time they deal with you, and that you continue to live up to their expectations. Showing that you are efficient and reliable can build customer confidence and make it more likely that your clients will refer you to others. If you have multiple staff members, good systems equate to more consistent service delivery and happy clients.

7. PHYSICAL EVIDENCE Physical evidence is still important when you are selling something intangible like a service. Although there may be no physical product to associate with your business, think about the physical experience your clients have when they visit you. Is your office set up to be client friendly? Do they have comfortable chairs and magazines to read while they wait and does the décor and general setting match the image you are trying to present? As well as the environment your clients will spend time in, think about the way you present your services. Your advice and expertise may not have a physical manifestation, but you can create physical evidence in the form of reports, case studies and fact sheets. Physical brochures and marketing materials can be reassuring to clients as they give them something tangible to see and hold on to. When you think about marketing your service there is a lot to take into consideration, from defining what it is you provide, where you provide it and what systems are involved in the delivery to promotion, customer service and pricing. Services marketing does require a different approach to marketing a product but with a bit of thought you can successfully market yourself to clients, increase your leads and sales and watch your business go from strength to strength.


Branding and your Brokerage Your brand could be your most valuable asset, argues Julian Vieceli. Here’s how to make it count

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Arguably, the most important asset for any company is its brand. Sustainable, powerful and successful brands can take years, even decades to build. They can be damaged very quickly and are often the soft target for new senior managers looking to make their mark on the company. This article highlights the importance of the brand to an organisation, its management, marketing and long-term strategic thinking – and finishes with some branding dos and don’ts. Building and understanding a brand or a group of brands is a complex process and requires care and attention. Such care can result in a powerful asset that can have a range of benefits, imbuing your service with higher levels of recognition and awareness, allowing the ability to charge a price premium, promoting quality, and even protecting you from price competition. Interbrand, a US-based brand valuation company, releases an annual report into the value (brand equity) of the top 100 global brand names. In 2013, the five most valuable brands in order were as follows:





Coca Cola



Microsoft (US$60bn)


This value represents the amount of money it would take to buy the brand names from the organisation, but not the physical assets. This illustrates the power of a brand name and the importance of a consistent, strong brand name over time.

The design of a brand is much more than just a name, symbol or typeface BRAND MANAGEMENT The first stage of developing a brand is under­ standing what drives the organisation, and what customer needs are going to be satisfied by the products on offer. The design of a brand is much more than just a name, symbol or typeface; it is a marriage of tangible and intangible elements. These individual elements themselves are very important, but are part of a much larger entity – the brand. Additionally, an organisation must consider that every interaction or touchpoint with a customer is a potential opportunity to build or damage the brand, which means every employee of the organisation is a brand ambassador. This is particularly so in the service industries, where the interaction with a company and its staff is vital to consumer satisfaction. For many consumers, the brand is the point of reference and offers a shortcut to many other aspects of the organisation. The brand name for consumers is a mnemonic, where the mention of the brand, the logo, or in some instances the colour, can bring forth a rush of emotions, associations, memories and meanings that can assist the brand to enter the small group of brands that consumers consider for purchase. Additionally, the colour (eg Cadbury’s purple), smell (eg Acqua di Gio by Giorgio Armani) or sound (eg Intel) of the brand can evoke images or feelings of joy, summer or quality.

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The Holy Grail for brands is to be one that consumers consider for purchase (part of their consideration set), but more importantly, even for high-involvement products such as mortgages, to be the salient brand or the first brand that is recalled under a variety of conditions. If you can get your brand to be the first recalled, then you have the beginnings of a competitive advantage over the other players in the market.

BRANDING RULES The brand needs to be something that is: • unique • memorable • easy to pronounce • relates to the product at hand • makes sense to the consumer • is not too long • can be recalled easily These are some of the golden rules when developing a brand name. There are notable exceptions to every rule, but these are generally held up to be the standards.


Julian Vieceli is a senior lecturer in marketing, the director of postgraduate education and program director MBA at Swinburne University of Technology (SUT). SUT’s Faculty of Business and Enterprise offers a range of masters level programs to give you the edge in management. SUT programs embed innovation, entrepreneurship and leadership in the learning experience, and the MBA has a five star rating from the Good Universities Guide

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If your organisation is working with an existing brand name, then the most important thing is managing its position in the mind of the consumer. A brand’s position is that space that it occupies in any consumer’s mind. It is an important piece of real estate, and it can change at the whim of the consumers. It has been said that organisations manage the brand, but consumers own the brand. Consumers are the people whose understanding and perception of the brand and brand image can change rapidly, which influences the outcome and how people treat the brand. A second point to consider is that brands are not only owned by the consumer, but that perception can be just as important as reality. How a consumer or the market perceives your brand is crucial, and can determine the fate of your brand, just as much as the reality of what your brand does. You may be the number one lender in Australia, but if someone else owns the brand position, it is hard to budge that brand. Again, you may have repositioned to be the best customer service brand in the market, but unless consumers perceive this, and unless they agree with the new position, this may be meaningless.

Many organisations have found this out to the detriment of their brands. McDonald’s is currently undergoing a positioning exercise with their campaign of answering honestly any question consumers put to them. It is an interesting exercise in response to some poor publicity about the slogan ‘100 per cent pure Aussie beef’, which was a brand and not necessarily a fact. Additionally, McDonald’s is trying to overcome the resistance to fast food. As another example, the perception of used car salespeople and politicians remains poor, even when they may actually be good citizens. The perception is always more important than the reality.

UNDERSTANDING YOUR BRAND When an organisation is managing its brand it is important to understand what the brand means internally, and externally. Important questions you may wish to pose include: What is my brand? What does it mean? What are the associations with my brand? Asking consumers what words come to mind when they think of or hear your brand name is also a great strategy. Brand associations are those words or images that come to mind upon hearing a brand name. It is important to get an instant reaction so that consumers are not filtering the responses. Importantly, it does not matter whether the brand is real or has been concocted – brand names evoke associations and images. Additionally, these associations will be either positive or negative, and unique or common.

Every interaction or touch point with a customer is a potential opportunity to build or damage the brand Firstly, a brand needs to have more positive than negative associations. If a brand has many negative associations, then consumers will recall it to a rejected set, and this means that they will not consider buying it. If the associations are more positive, this helps to locate the brand against


BRANDING IN PRACTICE: BANKWEST There are some simple measures brokers can take to define their brand, explains Bankwest general manager, customer communications & brand, Paul Vivian What’s important when it comes to building a brand, says Vivian, is creating a perception that your customer identifies with. This process should start with thinking about what the name of your business communicates to clients. “It’s no surprise that ‘mortgage’ appears in many broker brands; it tells the customer what you do,” he says. The next step, he explains, is to think about creating something that makes you unique and memorable so that when you do connect with your customer, they can recall your brand and make contact with you. “We have spent years talking about Bankwest as a ‘happy’ brand – one that wants to make your banking experience a happy one,” he says. “It takes a great deal of consistent repetition to embed a brand promise and to help customers understand why they should talk to you. We back this up with the colour orange and characters that support the ‘happy’ positioning and reinforce our sunny disposition.” In short, Vivian believes that it’s important for branding efforts to be simple, clear, relevant and – if possible – unique and memorable.

competitors, and in the industry. It is important to have positive associations to your brand despite the fact that consumers may be forgiving. This happens particularly with brands such as certain banks and mortgage brokers, where consumers may have more positive than negative brand associations recalled even though they are not positively predisposed to the particular institution. Then we look at unique associations, which can be measured as the associations that reside with one brand and not the others. These unique associations are what help to differentiate your brand in the consumers’ minds, and they also provide a great point of difference for the organisation. Even if the perception is different to reality, it can work to the advantage of the organisation. When you have information about brand associations it can be good to develop these

“What you create should mean something to your target customers,” he says. He warns brokers, however, that branding requires care and attention, as it’s easy to disenfranchise

customers. “Simple mistakes like poor quality imagery can put people off your brand and make them feel that if you don’t care about your business then why should they use you,” he says. “Similarly, things too ‘radical’ probably wouldn’t work too well in the finance field. People want to trust you and you need to be professional – your brand should reflect this.”

associations into meaning for an organisation. This will allow you to develop a short statement or a brand mantra that may be used to guide branding decisions. This is a short, three- to 10-word statement or series of words that sum up your brand and determine which components fit within your brand architecture. For example, Nike is authentic athletic performance and all of Nike’s branding fits this mantra. Disney is fun, family entertainment, and again, Disney makes decisions to maintain and protect this. It is a very useful exercise to undertake to develop a brand mantra or something that can be used very quickly to guide your branding decisions, and to guide your marketing decisions and even your purchases. Organisations must continually ask if the decision fits the brand mantra and that should determine the behaviour of the organisation with regard to branding decisions.

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BRANDING IN PRACTICE: CONNECTIVE For Connective director Glenn Lees, it’s your behaviour that defines your brand, and that behaviour should be driven by your core company values Lees explains that, for him, a brand isn’t just a logo or a tagline. It’s how the market perceives your business – and whether you live up to that promise. He believes that the key issue is to understand what your values are, and live them every day. The brand, therefore, becomes the rallying point that clients can turn to and know instantly what the company stands for. “We’ve always wanted to be open, transparent, responsive, respectful and innovative. So everything

BRAND DNA An organisation can also analyse its distinctiveness, novelty and associations to position itself in the market for the long term. Brand managers must analyse what makes the brand unique and different in the market. The brand must have something that is novel and makes it unique and interesting in the minds of the consumer. Additionally, it gives points of parity (what you need to compete in the space) and points of difference. The word with regard to brands is to treat them with respect, nurture them, and help them to grow. A good brand is generally a consistent brand. Making changes is fine as brands must evolve, but make changes to the brand with care and with research. Understand what the brand, design, logo and typeface mean to the customers, and then make considered changes. Brands can be updated slowly over time ( just noticeable difference) or quickly (butterfly effect) but if they are updated then these decisions should be made with the consumers in mind, and the position and perception of the brands must be considered and managed. 26 | JULY 2014

that we do has to be tied back to those things, and the brand has to stand for that,” he says. “You can’t have something that looks atrocious if you’re talking about the physical brand, but it’s the values that are most important.” He suggests that brokers ask themselves a few questions when defining their brand: Why are you broking? What’s the purpose? How do you want and need to achieve that purpose? “There needs to be passion for the brand. Just having a logo because you think you need one – that’s not branding,” he says. “It’s about having something that you believe in, that you’re passionate about, which brings purpose and brings joy to the exercise as well.” The main branding pitfall to avoid, he says, is inconsistency. In other words, pick the values you want to represent and doggedly aim for them. “Be prepared to get onto the gruelling treadmill at times, and just pick your brand,” he says. “Use it all the time and make sure that it’s always used in a way that reinforces those values and that message that you want to send out.”

Consistency is the key for brands, although Google may be an exception to the rule. Google has the confidence, as a clear market leader, to change its logo daily to reflect important world events or historical figures. Generally, it is best to offer consumers what is known – consumers like to buy from organisations that are familiar and who they trust, and the brand is one way of communicating familiarity and trust. There has even been a move to brand love, where consumers develop feelings of love toward a brand (e.g. Apple). Pay attention to how your brand is perceived in the market, how it is viewed both internally and externally, and be consistent with what you do with it. Don’t change the brand without reason or make rash decisions and make sure that the brand matches the products, and the organisation. It is important to invest in marketing support to assist your brand management. Marketing should be seen as an investment and not an expense, and gaining further knowledge in the area of marketing and branding can be one way to invest in your brand and your business.



Why trust sells: The winning way to market your professional service

Casey Lightbody examines how people buy professional services, and reveals how to synchronise your marketing with their buying cycle to reach more clients and close more sales Your marketing spend is a major investment. Naturally you want those dollars to convert into higher profits and sustainable growth. But unless you understand how people decide on a service provider, how can you give prospects the right incentive, at the right time, to make sure they choose you?

WHAT DO BUYERS REALLY WANT? When buying products people predominantly use rational criteria to make their choices. It’s different for professional services, because your services are intangible and the outcomes can be hard to predict. Typically your technical capability is greater than that of the buyer, which makes it difficult for them to assess. So buyers rely on other criteria to make their decisions, including their personal ‘gut feeling’ about you. People generally turn to professional service providers because they need help handling a perceived risk, or to achieve something important to them. They have a unique set of needs and they’ll have to trust you with sensitive information about themselves or their business. They could be risking their wealth, home, career or reputation by following your advice. If you fail to deliver, they will personally suffer the consequences. So what professional service buyers most want is an adviser they can trust.

AUTHORITY: GETTING ON THE SHORTLIST For product purchases people tend to rely on impartial reviews to judge the quality of an item. When it comes to professional services, buyers prefer personal recommendations from someone

they know. Research by the Hinge Research Institute shows that 87% of people buying accounting and financial services turn first to friends or colleagues for a referral, with a further 11% searching online or asking via social media. At this stage the primary question buyers have is ‘who is most able to do this for me?’. They’ll base their answer on the information they get through referrals (i.e. your reputation) first and then on their research into your qualifications, capabilities and expertise, predominantly online via your website, a web search or your social media channels. Buyers are looking for evidence of your authority and experience – unless they’re convinced you have the skills they need, you simply won’t make the shortlist.

GETTING PERSONAL: CLINCHING THE DEAL To choose between providers on the shortlist, buyers ask three questions: 1. Can you really fix my problem? They want evidence that you can resolve their individual, specific issues. Other considerations only become important once they’re convinced of this. 2. How will you make my life easier? This will be based on costs, flexibility, service standards and the picture you paint for them of future outcomes. 3. Will I enjoy working with you? Clients want advisors they feel comfortable with. They need to have total confidence that the specific person or team who’ll be handling their project has their best interests at heart.

Casey Lightbody is the principal consultant at Cloud Marketing Services. She is a global marketing specialist with 15 years’ industry experience and deep insight into consumer behaviour. Visit www. digitaltools to download our free report on the most effective digital marketing tools to help grow your business

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Trust is critical to the professional services buying process, which is why a marketing strategy based on establishing and nurturing trust is the absolute key to successful sales.

THE WINNING STRATEGY: MATCHING YOUR MARKETING TO THE BUYING CYCLE Stage 1: Establish your authority Outcome: Generate leads This stage involves creating a distinctive brand, supported by high-impact marketing collateral and an unforgettable online presence, to raise your profile with your target audience. Referrals are a vital source of business for professional service firms so you should do all you can to encourage them. The most cost and timeeffective way to build and leverage referral relationships and collect client endorsements is through LinkedIn. It’s the social media platform of choice for professional services, with 12.4% of all users being in the finance industry. LinkedIn is a powerful platform for any business, from single operators to large corporates, to grow a professional network of prospects, strategic alliances and centres of influence.

Of course, once you’re on their radar, potential buyers will investigate you further. This means you’ll also need a high-converting online platform (usually a website) to capture and nurture the valuable leads you generate through referrals and other marketing activities. It should be filled with great content that educates, empowers or entertains your specific audience and demonstrates your expertise. To do this effectively you really need to know your audience, so regular market research is a valuable investment. Your email database and social media platforms are essential tools in your arsenal to conduct this research. Stage 2: Prove your value Outcome: Close sales In the lead nurturing phase your marketing needs to get personal. Buyers believe in your broad capabilities and now they need to know how you can help them. They want you to show that you understand their concerns and can deliver a solution. Your priority is to talk to them, through email, on social media or in person. Engage authentically with your audience. Answer questions. Participate

THE CYCLE: HOW PEOPLE BUY PROFESSIONAL SERVICES . Goal: Find a capable provider Needs: Evidence of your expertise; positive feedback from people they trust Activities: Ask for referrals; perform background research; read and evaluate your content; make initial enquiries

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Goal: Ongoing needs met

Goal: Choose the best provider

Needs: Job completed well; awareness of what else you can do for them; evidence that you understand and care about their issues

Needs: Proof that you can meet their specific needs; trust that you will get the job done and make their job easier

Activities: Seek provider to solve their next issue; discuss their experience of your brand

Activities: Meet/discuss issues with shortlist; test drive or trial run, rapport


CONSUMER BEHAVIOUR IN PRACTICE: BANKWEST Bankwest general manager, strategy & customer analytics Alex Leyland offers his insights into the investor mindset

Leyland and his team at Bankwest have invested heavily into finding insights into the investor market and, from his research, notes that the majority of investors are mums and dads rather than sophisticated investors. “They often invest due to external, life-stage pressures such as divorce, inheritance, redundancy or retirement rather than a proactive desire to become an investor,” he says. “Importantly, they account for 75% of the property investment home lending balances – the majority of the property investor market.” He notes that there are several key motivators that drive investors. They include needing to get ahead in life and/or keep up with others; fear of missing out; needing to grow a nest egg; making the most of home equity and tax reduction through property investment. “For brokers, it’s important to acknowledge that the majority are not seasoned property investors so they can have a lot of questions,” he says, adding that brokers can differentiate themselves from the rest of the pack and add value to the customer by being knowledgeable on the topics that matter to investors. “Key topics or queries could include addressing how they can get into property investment, if they think it is out of their league and what are the costs after rent and after tax,” he says. “The tax basics like depreciation, negative gearing, offset accounts versus redraw are valuable, while for couples it could be which partner’s name should it go in as well as confirming how to structure lending to make the most of their equity.” Bankwest’s research, says Leyland, indicates people primarily use a broker rather than go direct to a bank because they expect a better service, independent advice, a single point of contact and someone to handle everything. “Therefore brokers should be focussing on the service that they offer and reassuring customers that they will handle everything, making the process and the customer’s life easier,” he says.

in conversations that are important to them. Find out exactly what they need (they may not even know themselves) and start solving their issues. Share specific, relevant information or ideas that will genuinely help and offer case studies to prove that your strategies work. Show them how their goals will be achieved and their lives will be easier once they hire you. Stage 3: Develop the relationship Outcome: Increase loyalty Marketing during the relationship stage is about finding new ways you can help your clients. It’s likely that they won’t know what else you can do for them, so keeping up a dialogue, focused on their issues, is central to cross-selling and increasing loyalty. That doesn’t mean bombarding them with sales material – again, it’s all about providing them with targeted information that’s relevant to their specific needs. The more you do to help them, the more satisfied and loyal they’ll become. At this point you’ve come full circle. Delighted clients become your most powerful advocates and can be very proactive about making referrals. Since your reputation is so critical to lead generation it’s important to encourage this behaviour with thanks and acknowledgement (or a formal referral program) and to leverage recommendations by sharing them, especially on your website and social media platforms.

NURTURING TRUST: GETTING LONG-TERM RESULTS The trust that forms the basis of any professional services relationship must be nurtured over time. It’s experiential, growing or fading based on your behaviour and the extent to which you deliver on your promises and live by your values. From the first moment they hear about you, clients begin to judge whether they’ll be able to rely on you. How much they trust you will dictate whether or not they choose you over a competitor, stick with you once the contract ends, come back for more services and refer you to others. That’s why a trust-based strategy, attuned to the needs of each customer’s position within the buying cycle, is the best way to get great results from your marketing spend.

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Great teamwork makes anything possible How can you build a dream team within your brokerage that can smash your goals? Former three-time chief psychologist for the Australian Olympic Team Graham Winter offers his advice History tells us that great teams achieve the near impossible. We see it in Olympic sport, in medical research, the arts and military, and particularly in business when great teamwork turns a mediocre plan into an outstanding result. However, we live in a nation where every enterprise calls a group of more than two people a team. Even in small businesses there are leadership teams, sales teams, business unit teams and project teams. Do you find it strange that organisations say they have teams, then complain about disunity amongst leaders and silo behaviour slowing the business and disrupting service and the bottom line? The harsh reality is that these businesses regularly use the word ‘team’ to describe business groups or functions and yet fail to develop the single greatest capability to succeed in the complex and ever-changing world: having the whole business work together as one team. It is a recipe for mediocrity and it causes untold damage to businesses in every sector.

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IS MEDIOCRE TEAMWORK DAMAGING YOUR BUSINESS? 1. Delays Are you frustrated at the speed with which you can implement new initiatives? 2. Cost overruns Do projects creep over budget despite every possible attempt to manage efficiently? 3. Missed opportunities Have you regretted missed chances because two or more parts of the business couldn’t get their act together to make it happen? 4. Relationship breakdown Is there friction (or stand-offs) between people that affect responsiveness?


TEAM BUILDING IN PRACTICE: AMP BANK AMP Bank head of sales and marketing Glenn Gibson offers his thoughts on how to build a winning team

WHAT DOES ‘WORK TOGETHER’ MEAN FOR THE BUSINESS? Four characteristics will tell you immediately if you have people working together in a one-team culture: • Your leadership team is united and they collaborate outside of formal meetings • Functional experts and teams openly work with others to tackle the business challenges • Managers and employees work like partners to help each other to perform • The business is nimble and adapts quickly to opportunities and threats

These four areas can be summarised as leadership, teamwork, performance and change. They are the pillars on which you can build a strong business culture.

USE FIVE CRUCIAL PRACTICES TO BUILD YOUR TEAM CULTURE While there is much written about team building and bonding, the reality is that these are short-term fixes at best. From business leaders to sports coaches, successful leaders are deliberate about building a one-team ethos into day-to-day behaviour because without this, the spectre of disunity and silo behaviour soon emerges under pressure. On the positive side, by developing a one-team culture you can respond quickly to opportunities, better servicing key clients and capitalising on marketing and sales initiatives. The Think One Team model has identified five crucial practices that characterise the behaviours and culture of organisations that have great teamwork within and between teams. You can use these to strengthen your business culture and performance.

Gibson advises brokers that a good starting point is to think about their own strengths, and then recruit staff whose own abilities complement them. He adds that brokers can sometimes fall into the trap of thinking that growing their business is all about sales – and therefore making another salesperson their first new hire. However, if you’re already selling well by yourself, he suggests that an administrator might be a better addition to your team. “If you’re fantastic at sales, if you’re fantastic at relationships, you should hire an operations admin person that, in essence, runs your operations backend. So that gives you the opportunity to bring more business in yourself.” He suggests that brokers work towards building a team around them that are similar in attitude, but different in skillset. On the attitude front, he believes that it’s vital to bring people in who fit in to the company culture. For him, making that call often comes down to the “gut feeling” he gets when interviewing a candidate. “I do a lot of my recruitment two ways: I will do phone interviews as well as face-to-face interviews. Because, especially in the broker world, a lot of the times that you’re talking to a customer are actually over the phone.” What this two-step process allows you to do, he explains, is get a feel for how the candidate presents themselves both in person and on the phone – and whether that gels with your company ideals and culture. “Sometimes face-to-face you can be swayed by somebody’s body language, and over the phone it’s just raw personality that you’re getting. So I think a combination of that kind of technique is very useful,” he says. On the subject of experience versus personality, Gibson explains that one of his favourite sayings is that “you can’t train personality but you can train experience”. He adds that sometimes you simply need someone with the right experience to slot into a role but, on the whole, he’s an advocate of looking for skills and enthusiasm before experience. “One of my best staff members in the mortgage business actually came from fishing trawlers, but just had that spark and just had the hunger to want to learn and to grow. So I will always go with the spark before experience if I can afford to do that,” he explains.

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TEAM BUILDING IN PRACTICE: ING DIRECT ING DIRECT head of broker distribution Mark Woolnough explains how he goes about team building, and offers his advice to brokers For Woolnough, finding team members who are energetic and passionate is vital. “Their infectious personalities or their engagement will drive certain outcomes,” he says. “But I also make sure that during the recruitment I look for where there could be a gap”. He also believes in making sure that new team members will complement the existing team from the perspective of company culture and values. “There are a lot of incredibly talented, educated, intelligent people that have made approaches and have applied to work at ING DIRECT, yet we’ve made the decision to move with someone that has greater cultural ability to fit in with the organisation and align to the way we do things – rather than just go for outcomes,” he explains. Having the team work with the company’s key values in mind (‘simple and straightforward’, ‘delivering together’, ‘passionate and energetic’, and ‘bold and different’) is vital, he says. But clear values statements aren’t just for large organisations, he explains. Brokers would be well advised to formulate their own values to set the tone within their business. These value statements should mean something to you, your business, your team and your customers, he explains. “They’re essentially drivers, so they’re headlines or they’re words, or whatever you want to call them, that should mean something to them and to their business and – more importantly – to their customers. “Whether you’re a one-man band as a broker or you have 10 staff, you should always have values or principles that you want to run your business to,” he says. “All decisions that you make, and any initiative that you wish to introduce or people that you want to bring into your business – or even when you’re out there seeking referral partners – you should be able to tick every one of those boxes.” He adds that it’s important to celebrate successes with your team to recognise the essential role they play in that success. This could be team outings to industry events or in-house initiatives to bring the team together and reinforce that they’re all working with one another towards the same outcome. “I think the thing that brokers do really well – and it’s because the virtue of the business model around making sure that they’re providing a service to the customer – everyone knows what their role is. And everyone’s working towards making sure that their customer has the best experience that they can,” he says.

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1. SHARE THE BIG PICTURE To establish and build a team that performs under pressure you must ensure that everyone and every team knows and shares their part in the bigger picture. That picture might be of the business vision and values, or simply just understanding workload and priorities in the next few weeks. Without it, your employees’ likely response to pressure will be to get busy and blinkered which means gaps, duplication and inefficiencies.

SELF REFLECTION • If your team members were asked separately to write on a post-it note what they understand to be the big picture for your business, what would they write? • Would they share the big picture or are they pursuing conflicting agendas?

Sharing the big picture starts with you and the way you interact with other leaders in the business. There are many clever ways that effective leaders share the big picture: • Define a small set of ‘trademark’ values and behaviours that you want to characterise the business. If possible, get the whole team involved in formulating this because it will generate energy and commitment. • Get into the habit of engaging people early in any new initiative. Keep them informed, explain the ‘why’ behind decisions and consider the impact change has on people. • Use 3-monthly updates to share the big picture of the business plan and goals.

In a busy world, in even the smallest of businesses, people lose motivation and direction if they don’t understand the bigger picture.

2. SHARE THE REALITY If there is one characteristic of high performing teams that sets them apart it is open and honest conversations. They don’t sugar coat their stories, they seek, offer and receive feedback and they respectfully challenge each other. When the opposite prevails, people avoid and deny reality – which puts your business at risk because people won’t raise concerns. One of our clients has embedded the Think One Team method into his small business using the


following three guidelines to which all managers are committed: 1. Put values first in recruitment decisions A recruitment choice puts the business at risk. Be fully accountable to get the right values fit for your business. Never recruit a technical expert no matter how good they are if their values don’t fit. If in doubt, use psychological profiling to support your decision. 2. Do not compromise on behaviours Immediately call behaviours that don’t fit the culture. Be accountable as a leader because what you accept, you approve and that will become your culture. 3. Ask for and gracefully accept feedback Regularly seek feedback from your team and colleagues. Receive graciously, reflect slowly and then act on what needs to change.

3. SHARE THE AIR Do your people share the air? Do they listen to each other and respect the diversity of views? Do they collaborate on the most pressing business problems? If so, then you are building a nimble and adaptive business. The alternative is stifled communication that slows down the business and often leads to finger pointing and blame when things go wrong. There are simple yet powerful actions to take to strengthen this practice. • Instead of meetings where people just present information, set them up to brainstorm and share ideas. Pose questions such as ‘What’s the single most important thing for us to improve in the next month?’ • Bring together people with different skills and backgrounds to work on key problems and initiatives. • Hold ‘whole-of-business’ get togethers regularly so that people get to know each other as people, not just in their business roles.

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When your team culture really starts to ‘tick’, the fourth practice happens spontaneously as people understand what the load really is, and they collaborate to get the job done while playing their own part. The alternative is what people call ‘look after your own turf’ and you will see it as in-business competition, and narrow self-interest. Here are five ideas to create a ‘share the load’ culture:

From small businesses to large corporations the team culture is always a reflection of the unity and day-to-day behaviours of the leaders. Investing in developing a united leadership team is as vital as having effective financial systems and controls.

• Bring people together to jointly plan and prioritise • Ask for help and seek help • Get the right people in the right jobs • Roll up your sleeves and help out • Encourage people to find ways to simplify the business processes

Of all the possible actions, the biggest single contributor to sharing the load is planning and prioritising together. Have a ‘top 10 priorities’ list for the business and make sure that everyone can see their contribution to those items.


Graham Winter is an executive director of Think One Team International and the best-selling author of Think One Team. He is a former three-time chief psychologist for the Australian Olympic Team (including Sydney 2000). Visit www.

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In strong teams everyone wins and loses together, whereas in the alternative play ‘I win, you lose’, people take credit for wins, while blaming losses on others. You have a vital role to play here in instilling frequent good-quality debriefing because this creates the expectation and the opportunity to celebrate successes, learn from these and from the setbacks, and turn lessons learned into lessons applied. Here are four questions to ask your team to prompt some ‘share the wins and losses’ behaviour: • • • •

Are we winning? Have you recognised someone’s effort today? What wins can we celebrate? What have we learned in the past month?


Mediocrity and dysfunction

Share the big picture

Pursue your own agenda

Share the reality

Avoid and deny

Share the air

Stifle communication

Share the load

Protect your own turf

Share the wins and losses

Play ‘I win you lose’

You can set up your team for success (and take the load off yourself ) by developing a leadership team that brings the five crucial practices to life in your business: • Instil vision, values and purpose (share the big picture) • Foster openness to have the robust conversation (share the reality) • Engage everyone’s ideas and energy (share the air) • Be accountable for your job and for collaborating (share the load) • Debrief, learn and adapt together (share the wins and losses)

The time invested, particularly if guided by a skilled facilitator or coach, will set up your business for success and that arguably is your most important role as the business leader.


The end

of the performance review In this book extract, Dr Tim Baker argues that the traditional performance review is an outmoded artefact of the 20th century. He advocates a ‘5 conversations’ approach which dispenses with bureaucracy, leading to a more open, constructive and enjoyable experience

Most managers are locked into the belief that they need to conduct annual or bi-annual performance appraisals with their staff. Yet they acknowledge, on the other hand, that the system is not working. There is currently a plethora of comments on the value of the performance review. Performance management is increasingly being spoken of in articles, blogs and management books and is the topic of conversation at management conferences all over the world. Not all this commentary is positive; many people are seeking answers to the perennial challenges of getting the best from people in their role at work. The ‘5 Conversations’ Framework answers some of these questions, particularly in relation to offering an original and comprehensible alternative to the old performance appraisal system. As we increasingly recognise the value of human capital in the modern workplace, fresh insights and new 36 | JULY 2014


PERFORMANCE MANAGEMENT IN PRACTICE: AMP BANK AMP Bank head of sales and marketing Glenn Gibson offers his advice on how brokers can manage their teams When it comes to setting targets, Gibson suggests that brokers take a step back and look at their own goals before those of their team. It’s vital, he says, to know exactly what you want to achieve, and in what timeframe. If your business goal is to amass a $100m loan book for example, and you really had a two-year target in the back of your head, then it’s no good giving yourself a pat on the back when you hit the $100m mark in five years. “You need to understand what you want to achieve before you can set targets and KPIs for your own staff,” he explains. “If you’ve got an idea of what each individual staff member needs to contribute to your own end goal, then it’s very easy to set those targets and KPIs.” He adds that it’s essential for staff engagement that each team member knows not only what the goal is, but how it’s going to happen. “If you can clearly articulate how we’re going to get there, they’ll own it and they’ll help you get there.” And when it comes to the hugely important issue of monitoring team performance, Gibson offers up a simple truism: “You can’t manage what you can’t measure”. He explains that you may have clearly stated your

approaches to manage people’s performance are undoubtedly needed. When it comes to performance reviews, my involvement with organisations, big and small, indicates it’s generally not a positive experience. In fact I regularly hear the following complaints about performance reviews or appraisals: • They are a costly exercise • Performance reviews can be destructive • They are often a monologue rather than a dialogue • The formality of the appraisal stifles discussion • The infrequency of reviews • Appraisals are an exercise in form filling • Performance review are rarely followed up • Most people find the appraisal stressful

goal and timeframe but, to use cricket terminology, you need to know what your run rate needs to be to get there. “Unless you know what you’re currently running at and what you’re projecting to be, you’re doing a hindsight review. And the problem with doing a hindsight review is that things happen in the market and it moves before you get a chance to do something about it,” he says. He suggests that brokers use their aggregator’s software to keep track of exactly how many applications have been lodged, how many have conditional approval, how many have formal approval, how many are due to settle and how many are in the pipeline. “If you know that – not only for yourself but for your individuals and your staff – that’s key to the whole thing. So that comes down to having the systems in place and being able to measure them,” he says.

Please don’t get me wrong – I am not against performance feedback. In fact I believe it is one of the most important things a manager should be doing. Organisational psychologists tell us time and time again about the importance of feedback and its link to performance improvement and motivation. You would be hard pressed to find a book on management and leadership that doesn’t extol the virtues of timely, tactful and specific feedback on performance. Performance management is central to the role of manager. Here is an approach called The ‘5 Conversations’ Framework that I think you will find very helpful. It is easy to implement, constructive and not bureaucratic. Essentially, it is based on five conversations each lasting about 15 minutes between the manager and his or her employees.

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Key questions

Job satisfaction, morale & communication

How would you rate your current job satisfaction?

More effectively deploying strengths & interests

What are your strengths & talents?

Strengths & talents

Opportunities for growth

Improving performance & standards

What are some opportunities for improved performance?

Climate review

How would you rate morale? How would you rate communication? How can these strengths & talents be used in your current & future roles in the organisation?

How can I assist you to do this? What are some skills you would like to learn?


Learning & development

Support & growth

What learning opportunities would you like to undertake?


Innovation & continuous improvement

Ways & means to improve the efficiencies & effectiveness of the business

What’s one way that you could improve your own working efficiencies?

Let’s look at each conversation briefly.

CLIMATE REVIEW CONVERSATION A climate review is about determining the current atmosphere in a particular workplace. It is mainly concerned with employees’ job satisfaction, morale and communication. Although people’s opinion about these matters can fluctuate over the course of a year, it is important to take a snapshot of the business occasionally. This assists managers to get a handle on the current state of the business. Information from these conversations can be a rich source of information for planning purposes in the business.

STRENGTHS AND TALENTS CONVERSATION Most performance appraisals are fixated with what is going wrong; in other words, it focuses on the weaknesses and sometimes neglects to discuss particular strengths and talents. Tom Rath in the # 1 Wall Street Journal bestseller Strengths Finder 2.0 states: “Society’s relentless focus on people’s shortcomings has turned into a global obsession. What’s more, we have discovered that people have several times more potential for growth when they invest energy in developing their strengths instead of correcting their deficiencies”. 38 | JULY 2014

What’s one way we can improve our team’s operations?

Apart from being a far more positive place to start discussing performance, as Roth points out in the above quote from his book, building upon strengths has a higher payoff than working on overcoming weaknesses. This does not mean that we shouldn’t discuss deficiencies.

OPPORTUNITIES FOR GROWTH CONVERSATION This conversation focuses on strategies for improved performance from the employee’s individual perspective. It provides the team member with an opportunity to consider how they may improve their own work performance. The manager is able to use this conversation to gain a common perspective on areas for improved performance. From here, the pair can discuss some tangible ways and means of improving individual productivity. This conversation is important to reflect on the individual’s role in the business and how to improve their contribution. Many of the strategies can be implemented on the spot with the assistance of the manager. Other ideas can be discussed and put in practice later.

LEARNING AND DEVELOPMENT CONVERSATION The learning and development conversation is designed to discuss the learning needs of the


PERFORMANCE MANAGEMENT IN PRACTICE: ING DIRECT For ING DIRECT head of broker distribution Mark Woolnough, performance management is closely linked with having a company vision A good leader will always have a vision, a view on where they want to drive the business and what the outcome is that they’re looking for. This is one of the core foundations that’s needed before getting into performance management issues, suggests Woolnough. The vision should always be articulated in strategic documents, but it must also flow down into personal objectives, he explains. “Everyone must have objectives that align to what the organisation is driving towards.” He believes that it’s essential to engage with team members to hear them explain what the company vision means to them, and where they see themselves fitting in. If staff outline their own objectives then they’ll know exactly what they need to do to contribute to the brokerage’s success. “Everyone’s motivated in a different way,” he says. “So you need to actually sit down with the individual, identify what motivates them, and then deliver it in buckets.” He adds that this tailored approach to each team member’s management must include regular conversations to update them on how they’re going and harness the power of two-way feedback. This will allow you to not only keep your team on track, but also track their motivation and engagement levels – and recalibrate your approach if necessary.

employee now and in the future. It may include formal opportunities such as attendance at courses, programs and seminars. Informal opportunities may include skill development within the business, or further coaching and mentoring. These discussions are important to establish some short-term goals for personal and technical growth and career development.

INNOVATION AND CONTINUOUS IMPROVEMENT CONVERSATION Conversations around innovation and continuous improvement are about practical ways and means of improving both the

Having regular conversations also helps when it comes to dealing with those team members that simply aren’t performing, he explains, as it will prevent the performance conversation from coming as a shock. “The worst thing you can do is to put off conversations but then one day sit down with them and let them know where you believe they’re not performing,” he says. He adds that it can be tempting to put off these difficult conversations, but that it’s better to address the issue when it becomes evident and have a private conversation with the team member in question away from prying eyes and ears. “Address it, but always make sure you give the other person the opportunity to explain the situation as they see it, and make sure you keep asking questions,” he says. “Get them to talk more, and to really articulate or outline where the issue is, or why they see an issue, and what they will go about doing to improve it.”

employee’s own efficiency and effectiveness and the business in general. It focuses on ideas for developing new and improved working arrangements for the individual and organisation. It is likely that a conversation with all staff during a particular month about this topic will lead to the immediate generation of some practical and cost-effective ideas that can be used to enhance systems and process improvements in the business. I’d recommend you try this approach if you either have no performance management system in place or the current system you have is not working.

Dr Tim Baker helps managers develop productive workplace cultures. He is author of several books including The End of the Performance Review. Contact him via

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Leadership Turning fear into focus

To create success, leaders must shift from burning platform to burning ambition, argues Dr Peter Fuda “I have learned that we are standing on a burning platform. And we have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.” – Stephen Elop In February 2011, the incoming CEO of Nokia – Stephen Elop – issued his now famous ‘burning platform’ memo to staff, including the sentence above, which was quickly leaked to the press. And just in case staff still didn’t get the message, he goes on to say that “we poured gasoline on our own burning platform… Nokia our platform is burning.” Of course, Elop probably felt very justified using this kind of metaphor and language given Nokia’s poor performance over the past few years. Perhaps not surprisingly, however, Nokia continues to struggle, and Elop is not the most popular CEO in town. In my experience, Elop is not alone; the burning platform metaphor is perhaps the most pervasive in the world of business. It was coined by consultant Daryl Conner more than 20 years ago, and popularised by Professor John Kotter of Harvard. It comes from the true story of Andy Mochan, a worker on the Piper Alpha oil rig when it exploded in July 1988, killing 167 of his colleagues. 40 | JULY 2014


In the story, Mochan is awoken by the explosion. He runs up on deck to see that the platform is on fire. He is now faced with a choice; does he stay on the platform and burn alive, or does he jump more than 150 feet into freezing water? As the flames engulf the platform, he makes the split-second decision to jump. Somehow, he survives the impact and is rescued by a boat before freezing to death. When asked why he jumped he replies “better probable death than certain death”. This is an amazing story of survival amid tragedy, but I have several practical issues with the burning platform metaphor as it applies to business change and transformation. The first issue is that it implies fear and extreme urgency are not only necessary, but somehow desirable motivators for change; the implication being that in order to change, we all need to have our backsides on fire.

COMMITMENT NOT URGENCY From interviews I have seen recently, Conner intended the burning platform to be interpreted as a metaphor for commitment not urgency. Unfortunately, the power and danger of metaphors is that they are autonomous and uncontrollable.

The mental picture most people create when they hear this metaphor involves fear and anxiety – not commitment, and anxiety is the single most contagious human emotion. It encourages many physical and psychological consequences, none of which I have found particularly conducive to change – either personally or in my work. In our research and practice over the past 12 years, while we have found that some urgency helps motivate leaders to commence a journey of transformation, it is not what enables them to sustain their journeys over time. What we have found is that aspiration is a far more important motivator; sustainable change requires the fire of a ‘burning ambition’. Beyond the burning platform/burning ambition dichotomy, there is an additional nuance to the fire metaphor that became starkly evident in our research: a leader’s motivation is most powerful when it encompasses both organisational and individual reasons for change. The Fire Matrix, outlined below, enables us to explore the effects of these motivational forces on a leader’s ability to transform. Let’s take a quick look at the four quadrants.

Sustainable change requires the fire of a burning ambition


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LEADERSHIP IN PRACTICE: BANKWEST Bankwest head of broker sales Ian Rakhit talks to MPA about effective leadership styles In Rakhit’s eyes, the best leaders adapt their style to suit the audience and the opportunity, and this is no different in his business to anyone else’s. “Broadly, I employ a more authoritative style when setting ‘what’ we want to achieve but I will change to a more consultative style when considering ‘how’ we will achieve the goal,” he explains. It’s vital, he says, to understand the motivation of each individual and use your leadership to bring out the best in each of them. “I’ve always believed you must surround yourself with winners. If a member of the team doesn’t want to be there or cannot deliver what’s required, you should let them go, for their sake as well as for the good of the team,” he says, adding that taking the time to know the team on a personal level can be the difference between being an inspirational leader and a manager. It’s also important, says Rakhit, so take time to celebrate achievements, but don’t linger too long on a job well done – or missed goals, mistakes or errors. Also central to successful leadership are resilience and drive, he explains, noting that becoming a true leader means being ready to make the tough decisions. “It’s not a popularity contest but you still need to spend time with each person and understand them as an individual,” he says. In terms of leadership mistakes, Rakhit suggests the most common ones are a lack of follow up, setting goals that aren’t measurable, having an insufficient understanding of the task and the associated activities. “Leaders need to be clear with goal setting and take time to clearly explain the ‘why’ or the ‘how to’ of the goal,” he says. “Basic principles and tasks such as reviewing progress frequently and following up agreed actions are mandatory.”

QUADRANT 1: ORGANISATIONAL BURNING PLATFORM Consistent with Kotter, we found that leaders are readily able to list the problems and issues that have motivated them to undertake a transformation effort. Time after time, we would hear statements like ‘our financial trajectory is poor’, ‘our competitors are more aggressive’, ‘our customers are squeezing us’, or ‘our staff engagement is at an all-time low’. Over the last couple of years, I have discussed this quadrant with large numbers of executives all around the world. As a result of these discussions, I 42 | JULY 2014

have come to understand the pervasiveness of the burning platform: leaders often operate from the belief that nothing significant happens without a crisis. Leaders also need to justify large investments of time, money and resources to their stakeholders when undertaking a transformation effort, and an organisational burning platform seems to provide a compelling way to do just that. But my most important observation is that the use of the burning platform is more often a sign of limited leadership capability, than it is a sign of a genuine and urgent crisis. It is much easier to scare the life out of people, than it is to inspire them with a compelling vision of the future.

QUADRANT 2: PERSONAL BURNING PLATFORM When I partner with leaders on their quest for more effective leadership, they gradually begin to open up about their personal fears, challenges and insecurities, represented by the second quadrant of the matrix. For example, they say things such as, ‘my reputation is on the line – I’ll look really stupid if I can’t build a company of substance’, or ‘every day I try out a different approach, but nothing seems to work’, or ‘I’m physically exhausted; I can’t keep going like this’. I have learned that the personal motivation for change is often concealed beneath more obvious organisational forces. In an attempt to live up to pervasive notions of the ‘heroic leader’ and avoid looking weak, senior executives will bury or otherwise disguise their personal motivations for engaging in a transformation effort. In the earlier stages of my consulting career, I didn’t probe deeply into a leader’s personal fears and concerns, partly because they didn’t offer them up easily, partly because I didn’t want to risk losing the consulting engagement, and partly because I suspected they would emerge over time as we built trust in the relationship – which is what usually did happen. What I now understand is that respectfully probing into a leader’s personal fears from the very first interaction is actually one of the fastest ways to build trust in the relationship. Perhaps more important, it allows leaders to quickly shift away from hiding what they fear most and toward realising their deepest personal ambitions.


QUADRANT 3: PERSONAL BURNING AMBITION It is in the third quadrant of the Fire Matrix, the personal burning ambition, that I have found a leader’s commitment and personal accountability for change really begin to accelerate. Quadrants 1 and 2 are about running from a fire; quadrant 3 describes a fire that burns inside. As Stephen R. Covey once said, “Motivation is a fire from within. If someone else tries to light that fire under you, chances are it will burn very briefly.”

While fear may provide the initial spark for action, aspiration is a far more important motivator The motivation behind a personal burning ambition is evident in statements like ‘I want to live a big and authentic life’, ‘I want to increase my health and happiness’, ‘I want to align my work with a strong sense of purpose and meaning’, or ‘I want to fulfil my leadership potential’. When leaders shift their focus away from what they want to avoid toward what they want to achieve, they experience a dramatic shift in energy – away from insecurity and perennial urgency and toward a calmer and more purposeful disposition. This in turn makes it possible to apply a more deliberate and disciplined effort toward realising those ambitions. I have found that burning ambitions provide far greater leverage than burning platforms to keep leaders on track. All of the ‘transformed’ leaders I have worked with faced days when it just felt too hard, where they encountered opposition, or where they were consumed by short-term pressures that demanded immediate attention. Clarity of personal ambition allows leaders to reorient their focus in spite of these competing pressures, and allows them to accept short-term pain in the pursuit of longer-term gain.

LEADERSHIP IN PRACTICE: AMP BANK AMP Bank head of sales and marketing Glenn Gibson explains that there are a range of leadership styles that you can employ

When asked which leadership style brings the best out of people, Gibson explains that there simply isn’t an answer to that question. This is because the leadership style you employ will need to be tailored to the experience and personality of each of your team members. “Sometimes staff just need direction, so you just tell them what to do,” he says. “Sometimes you need staff that are collaborative, that actually want to have their input and need to feel like they’re contributing – then you work to that as well.” He explains that there’s quite a change in mindset that brokers, or anyone who steps up to management level, need to adopt when they take on staff. “The hardest thing in regard to that mindset is letting go. I’ve spoken to a number of brokers about this in particular in depth,” he says. One of the issues to confront, says Gibson, is that your staff are going to make mistakes. But allowing them to learn from their mistakes is a natural part of the growth process. In terms of dealing with this big change in mindset, Gibson says that he’s a big proponent of speaking to business coaches, mentors or even just trusted friends who work outside of the mortgage industry and can offer a fresh perspective. “When you’re talking to someone and saying you’re really busy, doing this and that, and then somebody says to you ‘why do you do all that?’ and you can’t answer them, it’s just another reminder that you’ve got to let go,” he says. “And I think there is really no other way of getting around that mindset unless you actually do it.”

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LEADERSHIP IN PRACTICE: ING DIRECT When it comes to leadership, you can’t take a one size fits all approach, explains ING DIRECT head of broker distribution Mark Woolnough Woolnough believes that leaders can let themselves down by not adapting their style to each individual in their team. “Make sure you can relate to all of your people and understand how they think and what they’re looking for in terms of success at work,” he says. Importantly, he adds that another key part of leadership is understanding that it’s not all about you. “A leader is the person at the front, but I always say to my team ‘I am accountable to you rather than you need to be accountable to me’,” he says. “Because I’m the one that is responsible for ensuring that you’re resourced to be successful, that you have the tools, that you have the opportunities, that you’re being developed and that you know that there’s a supporting culture and a learning environment.” It’s important, therefore, to be open to asking your team for feedback on your own performance, and how you can represent the needs of your team. And it’s important, he adds, to remain authentic and humble when you make the transition to a leadership position. “Someone once told me a very simple phrase that I’ve never forgotten, that when you step into these roles always begin with the end in mind,” he says. “So always know what it is you’re driving towards, and set your objectives and then begin from there.”

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QUADRANT 4: ORGANISATIONAL BURNING AMBITION Leaders’ personal ambitions are transcended by the lasting impact they wish to have on their organisations, their customers, their industries, and their communities. Leaders saying things like, ‘I want to leave a legacy of a growing organisation’, ‘I want my successor to be set up for even greater success’, ‘I want to transform our industry’, ‘I want to revolutionise the customer experience’, or ‘I want our organisation to go beyond financial performance to societal contribution’ are all expressions of the motivational forces at play in this quadrant. Daniel H. Pink, author of Drive: The Surprising Truth About What Motivates Us, speaks about the power of purpose when it transcends the individual: “Autonomous people working toward mastery perform at very high levels. But those who do so in the service of some greater objective can achieve even more. The most deeply motivated people – not to mention the most productive and satisfied – hitch their desires to a cause larger than themselves.” My core insights from the Fire metaphor are threefold. • First, shifting from a burning platform to a burning ambition is critical. While fear may provide the initial spark for action, aspiration is a far more important motivator. Sustainable change requires the fire of a burning ambition. • Second, it is vital for a leader to articulate not only the organisational reasons for change, but to delve deeper and establish very compelling personal motivations for change. • Finally, the Fire, or the why, is an integral part of how leaders transform. As Friedrich Nietzsche famously said, “He who has a why to live can bear almost any how.” In other words, if the flame goes out, all other factors become redundant.

So, how do you tap into your burning ambition? Asking yourself these questions is a great start: • What does success look like for me? • What gets me out of bed in the morning? • What do I want to be remembered for?

If you find yourself in a Nokia-like situation, and these questions seem too ambitious, you can always turn fear into focus by asking this simple but powerful question: what is the best outcome from here?


How to be a



Do leaders like Steve Jobs prove that the ‘vision’ model of leading a successful organisation is a myth? Chris Golis explores the need for a different definition of vision and how it can help you to run your business better

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A sine qua non (an indispensable element) of nearly every talk or blog on leadership is the importance of vision. Typically, the author says that unless the leader has visualised and articulated a dream that they can then successfully communicate to the team, they will fail as a leader. This is a popular thesis. For example, one article I picked out of the 222 million hits when I Googled ‘Vision Leadership’ provided the following quote: ‘Leadership success always starts with vision. Henry Ford dreamed of a car families could afford. Steve Jobs dreamed of an easy-to-use computer that would unleash creativity. Nelson Mandela dreamed of an integrated, prosperous South Africa.’ – Forbes 2/4/2009


However, when you read the above you do wonder if it is hindsight talking. Is this really how successful leaders start? I don’t know about Ford or Mandela but I have read Walter Isaacson’s wonderful authorised biography of Steve Jobs, who relates how Apple started. In 1973, Jobs was working for arcade game company Atari, Inc. He was assigned to create a circuit board for the video game Breakout. According to Atari co-founder Nolan Bushnell, Atari offered $100 for each chip that could be eliminated in the new machine. Jobs had little specialised knowledge of circuit board design and made a deal with Steve Wozniak to split the fee evenly between them if Wozniak could minimise the number of chips. Apple was eventually started in 1976 and the Apple I was similar to the Altair 8800, the first commercially available microcomputer. Do successful leaders develop a vision and align their organisation/motivate their people to achieve that? There is a counter view that was perhaps best stated in 1993, when IBM was in trouble and Lou Gerstner stepped in to steer the company. He famously said, ‘The last thing IBM needs right now is a vision’. My own experience says the ‘vision’ model is a myth. As a venture capitalist, I was involved for 25 years with start-up and growing companies, and far more important than vision for success was flexibility. Success came not from developing a vision and following it through, but more due to a combination of being flexible, chasing the right opportunities and keeping a very tight control on costs and cash.

To me a leader is a person who sets attractive goals and has the ability to attract followers who share those goals Consequently, whenever I heard someone talking about the importance of vision, I would usually shut my eyes and go to sleep (metaphorically, if not literally). To me a leader is a person who sets attractive goals and has the ability to attract followers who share those goals. Goals are tangible

COMPANY VISION IN PRACTICE: ING DIRECT Can you articulate your company vision and strategy in a one-page document? ING DIRECT head of broker distribution Mark Woolnough, suggests that the answer to this question should be ‘yes’ In Woolnough’s world, the company vision is underpinned by values that every staff member can not only relate to, but can also explain in terms of how those values align with their role and how they go about performing it. “The other aspect of culture which is very important, regardless of size, is that you have very clear parameters; ground rules,” he adds. “Yet within those you give people the opportunity to take ownership. You find tasks where, directly and indirectly, they’re empowered to make decisions and shape outcomes. And you check in along the way.” Setting the values, culture and ground rules, however, is just the start. Woolnough explains that it’s up to you as the leader to manage to that culture and make sure that it’s infectious. The company vision and purpose need to be aligned, but also resonate with each and every team member. “It’s really important that you can support your staff but, more importantly, that they can articulate where they believe what they do and how they go about doing things – the ‘what’ and the ‘how’ – actually relate to the success of the organisation,” he says. In other words, everyone should know how and why their job contributes to the company. To that end, Woolnough explains that, at ING DIRECT, every business unit, and therefore every management team and individual, has a ‘plan on a page’. And he believes that this is a strategy brokers can adopt successfully. It’s no use, for example, spending ages working on an enormous strategy document for your brokerage if it just gets filed away never to be seen again. Woolnough suggests distilling your vision into a plan on a page, that’s underpinned by your own company values. “It’s there, it’s a visual, it’s in front of people, it’s a daily reminder that motivates and drives performance and direction,” he says. “If you’re a one-man broker or if you’re a broker with 50 people in your office, I absolutely encourage you to have a plan, but absolutely insist that that plan be simple and straightforward and easy to articulate to a customer, a business partner or a staff member.”

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COMPANY VISION IN PRACTICE: AMP BANK Getting your staff to care about your company vision is all about creating an ‘us’ culture, believes AMP Bank head of sales and marketing Glenn Gibson

Getting your staff to engage with your vision is closely related to how you go about performance management, says Gibson. He explains that, for him, translating company vision down to an individual level is a case of making sure that everybody in the team understands the ‘wheres’, ‘hows’,‘whats’, and ‘whys’. “If everybody knows where they’re heading, how they’re going to get there and their part of it, it then just enhances the vision,” he says. “It’s not just the admin person owning the admin section or the sales person owning the sales section. It is everybody realising that ‘I’m an important contributor to the vision, because I’m doing this part which enables me to deliver on the whole thing’.” He explains that creating a collaborative ‘us’ mentality is vital – especially when it comes to operations that are the size of a regular mortgage broking business. “In the corporate world, ‘us’ is very important. In a broker environment, it is even more important,” he says. “Because when you’re talking to most broker entities that are about three people – maybe two loan writers and an admin staff – it has to be ‘us’.”

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targets that can be reset if the environment changes or the market is rejecting your product or service. The process is more one of ‘ready, fire, aim’ rather than ‘ready, aim, fire’.

A DIFFERENT DEFINITION So, is there no need for vision by the leader? The answer is no but it requires a different definition of vision. I first heard it in a talk given last year by the professor of organisation behaviour at London Business School, Nigel Nicholson who defined vision as the leader seeing things the rest of the team do not see. Successful leaders use their ability to see what others do not see to frame their actions and build a successful business.

Successful leaders use their ability to see what others do not see to frame their actions and build a successful business Perhaps the best modern example has been Steve Jobs. He did not just transform one industry. Through his ability to see what others could not see he transformed four: personal computing with the Mac/iPad; music with iTunes/iPod; communications with the iPhone; and the movie industry with Pixar. Leaders fail when they lack insight – into themselves and the worlds they inhabit. Again, Apple provides a wonderful example in the form of John Scully, who is immortalised by this famous quote while he was CEO of Apple: ‘Apple was supposed to become a wonderful consumer products company. This was a lunatic plan. Hightech could not be designed and sold as a consumer product.’ He could not have been more wrong. Scully is also famous for another quote: ‘The future belongs to those who see possibilities before they become obvious.’


Sometimes, the irony of life is truly delicious. So, vision is important provided he or she is looking at the right things. Again I refer to Nigel Nicholson, and in particular his latest book, The ‘I’ of Leadership. The insight that really resonated with me was critical leader relationships (CLRs). Nicholson argues that these are the people who help leaders with their most difficult decisions. In organisations they can be upward, downward and lateral, but Nicholson argues that perhaps the most useful are external, be it a spouse, personal coach or adviser. According to Nicholson most leaders take CLRs for granted, but successful leaders typically have CLRs that provide the following: • Help: e.g. Bill Gates and Steve Ballmer in the early years of Microsoft • Insight: e.g. Warren Buffett and Berkshire Hathaway vice chairman Charlie Munger • Challenge: e.g. Walt Disney Company’s Michael Eisner and Frank Wells • Feedback: e.g. Leighton Holding’s Wal King and Dieter Adamsas were a formidable pairing • Ideas: e.g. Steve Jobs was always on the hunt for creative intellects • Support: e.g. Margaret and Dennis Thatcher

SELF-MANAGEMENT Nicholson suggests that one task leaders should undertake at least annually is an analysis of their CLRs, and makes reference to one of Australia’s more successful CEOs, Flight Centre founder Graham ‘Skroo’ Turner. Turner apparently read a paper by Nicholson on evolutionary psychology and business published in the Harvard Business Review, which led him to reorganise Flight Centre into units of families (stores), villages (clusters of stores) and tribes (aggregates of villages totalling no more than 150 people). This is known as Dunbar’s number and is the size below which self-management can be maintained. There are two key messages we can take from Nicholson’s book and its title. The first is the pun on ‘I’. Leaders should use their inner eye to become self-aware and be able to answer authentically the question: ‘Who am I and why am I here?’ Good leaders are self-aware. The second key message focuses on a new word, ‘decentre’. Many leaders suffer from ‘I-strain’, an overuse of the word ‘I’: ‘I did this’, ‘I do that’, ‘I make the decisions’. The first-person pronoun is

interspersed widely in their conversation. Good leaders get inside the heads of other people rather than focusing on themselves, and use that knowledge to build successful relationships, particularly CLRs. Of course these are the first principles of emotional intelligence and while the exhortations to be self-aware and empathetic are all well and good, my belief is that unless you have a theory of temperament such as the Humm-Wadsworth, the exhortations will soon be forgotten. I call it putting on the ‘Humm’ glasses, and once you have put them on you never look at yourself or other people the same way again.

THE HUMM-WADSWORTH MODEL The Humm-Wadsworth model consists of seven components:

Normal N Hustler H Mover M Double Checker DC Artist A Politician P Engineer E Each of us have all seven in our personality – typically two to four of them will be strong in each of us, while others will be average or weak. This combination of components is one of the major factors in determining our temperament – our emotional predisposition. Psychologists tell us that these components or drives are responsible for about 90% of our non-rational behaviour.

Chris Golis is an adjunct lecturer at the SP Jain Centre of Global Management and an author and lead presenter of emotional intelligence courses. He is now in his third career teaching practical emotional intelligence to managers and salespeople. Previously he had successful careers in IT and venture capital. Visit www.

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Improve your process

and find new opportunities There are numerous lessons that brokers can learn from a surprising source, says Steve Bryant, who explains how the manufacturing industry can influence the way you expand your business

At the core of business improvement is how you can do more with, and get the most from, existing resources. Manufacturers do this well because their approach focuses on maximising output in the most efficient way possible. Here are some common sense concepts, transferable to any company, used by manufacturers to improve their business.

LESSONS FROM MANUFACTURING • Look at your business as a series of processes • Identify constraints and ‘waste’ in your business • Apply skills, system and/or technology solutions to improve your processes • Have a timeline for these improvements • Grow the business through collaboration and opportunities

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The manufacturing industry is responsible for most of the consumables we use in everyday life. These consumables undergo a manufacturing process that is aimed at ultimate efficiency – specifically geared towards delivering cost, flexibility, quality and/or time benefits to the customer. It has only been recently that nonmanufacturing businesses have caught on to the way manufacturers approach their businesses, realising the valuable lessons that can be learned from this logical, but relatively easy approach. Manufacturers look at their businesses as a series of processes, which is not only exclusive to the assembly line, but to other processes such as finance, marketing and HR. Manufacturers are very good at examining these processes and identifying areas for improvement, usually through skills, systems or technology solutions: • Skills: This is not only about the qualifications required to do a job, but the skills that are required to deliver value to the customer. Problem solving, staff management and leadership are skills that are critical to ensuring efficiency in a manufacturing setting • Systems: Systems are the convergence of skills and technology to ensure a process is repeatable and geared towards high productivity • Technology: How a company sources and uses technology can contribute greatly to a competitive advantage, reducing labour costs, increasing output and improving high-end skills development


BUSINESS OPPORTUNITIES IN PRACTICE: BLUESTONE Manufacturers typically use two proven approaches for process improvement. These are a constraints-based analysis and a waste reduction approach. Manufacturers use a constraints-based analysis to search for the main constraints hindering process efficiency within the business. It is based on the notion that a process can only move as fast as its slowest constraint. This approach sometimes requires a shift in thinking because the initial instinct is often to ‘break’ the constraint by adding resources, when the issue may be that the constraint is not actually operating at optimum efficiency because of the activities before or after the constraint. This approach is good for teamwork as it encourages teams to work together to identify how a process can be improved and empowers those involved to continue to improve the process. Another way a manufacturer looks at their business is in terms of waste. Many nonmanufacturers would only look at waste in the context of what gets thrown away, but manufacturers also consider waste in terms of lost time, effort, cash flow and opportunity. You can minimise or eliminate waste by educating employees about what to look for – do a relatively simple Waste Hunt – and potentially use technology to put a lean system solution in place. Once again – a combination of skills, systems and technology solutions are the core elements to achieving a solution. Any company that implements such improvements successfully will soon start to see a competitive advantage emerge because the internal machinery within the business is running more smoothly. While these three elements are important, there are two additional elements that will grow the business – networking and opportunities – and are activities external to the organisation.

OPPORTUNITY KNOCKS By our definition, networking is more than attending business events. Networking is the broadening of relationships and collaboration activities to look at ways in which you can offer more value to customers. In terms of what a

Bluestone chief operating officer, Asia-Pacific, Peter Wood offers his thoughts on how brokers can reshape their business plans to accommodate new opportunities

In Woods’ eyes, it’s important, not only to be dynamic, but also to keep an eye on long-term sustainability. “Business owners and brokers should continuously review and update their business model to ensure that they can accommodate new market opportunities whilst creating a sustainable business longer term,” he says, offering up these readily identifiable means of doing this: • Keep up to date with market trends including what your immediate competitors and suppliers/lenders are doing • Spread the risk across your business – include niche segments as part of your offering including specialist lending and insurance products • Embrace technology as part of your day to day business to improve efficiencies • Invest back in your business and employees • Don’t be afraid to seek advice from professional advisers • Be prepared to change direction quickly in time with the market

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LOOK FOR ‘WASTE’ IN YOUR BUSINESS • Over production Producing goods over and above the amount required by the market at a given time • Waiting Periods of inactivity for people and product


Steve Bryant is the manager – industry leadership at QMI Solutions and a board member at Marsden Education Association Inc. Visit www.

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manufacturer would regard as networking, this may be through partnering with researchers, better supply chain relationships, or working with others to identify niche product offerings. Remember, the ultimate goal is to offer something that your customer values. Opportunities and networking leverage each other. Opportunities are usually generated through the act of networking which then generates further networking and collaborative relationships. Additionally, the opportunity and networking process is vital in checking the pulse for where your industry is headed in the future. If you have not done so already, create a profile on Linkedin and start interacting with others through groups or sharing information. It is the best starting point for anyone wanting to connect with others professionally. Successful manufacturers are very open to collaborating with other companies on opportunities that complement their capabilities. We see this when manufacturers team up to bid on specific projects. Project owners look at this favourably too because it demonstrates that the

• Transportation Rather than improve the method of transportation look at minimising or eliminating it from the process • Inventory Direct costs of raw materials, work in progress (WIP) and finished goods stores, as well as extra handling costs, increased space requirements, more paperwork etc • Motion Refers to any excessive movement by people or machines • Over processing Many organisations fail to ask what the customer actually values. As a result they perform work deemed unnecessary or even detrimental • Defective units Prevent the occurrence of defects instead of finding and repairing them

participants can, and are, willing to work with others. Another successful example is when groups of companies come together to solve a particular problem that affects all within the industry. The ‘cluster’ approach has the benefits of driving innovation, encouraging new business opportunities and increasing productivity of those participating in the cluster. Above all, the networking and opportunity elements should be introducing the company to new relationships and new possibilities for growing the business. By adopting a manufacturing approach and implementing these five elements, businesses are able to gear themselves better for growth and in doing so, are less affected by forces out of their control. For example, many struggling businesses often look to government support or hope for an upswing in the economy as the stimulus to improving their business and it is these businesses that will continue to struggle. Those that spend time working on the five core elements are ones that will develop a viable business in the long term.



storms How to grow your

business sustainably

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How do you boost the volume of business that you can handle without the wheels coming off and sacrificing quality of service? Dr Greg Chapman explores the issue Business owners often find that following a period of early rapid growth, things start to tail off because they simply can’t handle more business without sacrificing the quality of their service. If this sounds like you, it’s likely your business is experiencing growing pains and its sustainability may be at risk. Like a shallow rooted tree, your business is susceptible to the next big storm, which might be hard to predict but is certain to come. Chances are you are also working longer hours than any of your staff, and are the last to get paid. Your business is a victim of its own success.

To get out of the firefighting business, owners need to look for opportunities to outsource, delegate and re-organise If you do ever get a chance to take time off, when you return you wish you had never left. It’s as if nothing happened at all when you were absent. Sure, work was done, but nothing progressed, and your inbox is full of unanswered enquiries. Your business has become its own version of Groundhog Day. While it feels like a trap and seems unsustainable, this is also an opportunity. A sustainable business needs to be like the oak tree that establishes deep roots preventing it from being blown over before it grows to its mature height and is able to withstand decades of severe storms.

SUSTAINABILITY IN PRACTICE: BLUESTONE Bluestone chief operating officer, Asia-Pacific, Peter Wood explains how his organisation grew sustainably through the GFC by taking a look at the bigger picture Like many other financial institutions, Bluestone made a conscious decision to stop issuing new loans during the GFC. But Wood explains that this decision allowed the company to grow in other areas. “This presented an opportunity to focus on asset acquirement/ diversification, primarily in Europe, which enabled the business as a whole to diversify and develop exponentially,” he explains. “Having said that, Bluestone has always been committed to the lending market and has always had firm intentions to re-enter this market once conditions permitted. We continued to manage our relationships, service our portfolio and pay broker trail commission throughout this period.” So how did he decide that the latter part of 2013 was the right time to re-enter into the mortgage origination market? Wood explains that the decision wasn’t made without extensive due diligence and discussion with a number of broker groups. These discussions enabled the Bluestone team to decide both that the timing was right and that the market would benefit from Bluestone’s offering. He adds that they’ve also got an eye on growing sustainably within the broker market in the future. “Bluestone’s commitment to the third-party channel will be sustained in the short and longterm by proactively evolving our product offering, identifying and developing niche markets, continuously offering a high level of service and providing quality technology solutions,” he says. “This will be done in collaboration with our network relationships to broaden the customer base and drive revenue growth.”

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SUSTAINABILITY IN PRACTICE: CONNECTIVE Connective director Glenn Lees explains that sustainable growth is all about constantly reviewing your plans – and being willing to accept advice According to Lees, the GFC turned out to be a fantastic opportunity for Connective, as many brokers looked at their business expenses during the GFC and decided to make the switch to his operation. However, the company wouldn’t have been able to sustain its growth through this period if it hadn’t invested in running a “lean, efficient, systemised organisation”. “Investing in those processes and procedures and technology systems to allow us to deliver the service at that price also gave us scalability,” he says. “So when the GFC came along we could just keep piling brokers on to our system without too much stress”. And he believes that brokers, too, can employ a lean, efficient, systemised approach to ensure their business can grow sustainably. Question your actions and processes, he suggests, because “there are many things you can do in business, but only a few things you should do”. “It’s understanding what they are, understanding your return on investment from what you’re proposing to do, and having the discipline to stick to it,” he adds, noting that Connective operates under the mantra of ‘plan, act, review, repeat’ to make sure their business strategy is constantly under review. When it comes to setting sustainable goals, he suggests asking some tough questions: Are you being realistic? Have you got the resources? Have we you the expertise? What are the opportunities in front of you? Which ones should you follow and, importantly, which ones shouldn’t you follow? Accepting advice, too, is crucial. “You have to be careful to be not too fond of your own ideas. Many mistakes are made by people who think they’ve got a great idea, so we always do and always have sought feedback from others who know more than we do,” he says. Your advice network could include solicitors, accountants or experienced colleagues who can help you to review your plans, check your progress and constantly check your assumptions. Brokers also have access to vital data through their aggregator software that can inform their business plans, he adds, suggesting that monthly reviews can keep your eyes open to the risks ahead. “How did we go last month? How many new customers did we see? How many applications did we submit? How many did we settle?” he says. “I saw a great quote from Donald Trump once, where one of the questions he always asks is ‘what am I pretending not to see here?’. I think that’s a great illustration of the risk you take where you just pretend not to see something, because it’s going to make you uncomfortable. You’ve just got to be harsh with yourself.”

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But before checking the roots of your business, you also need to check its direction. Like a teenage boy growing out of his clothes ever half year, your business may have outgrown its strategy. What worked in the past no longer fits, and you need a whole new wardrobe. The opportunity arises when you diagnose this situation, and recognise that it’s unsustainable, and have no choice but to take action. Here are the five Rs that will allow your business to overcome the growing pains and put it on the path to sustainability.

1. REDUCE DEPENDENCY ON YOU While your business depends so much on you, there is no time to step back and review it, let alone to take action to change it. So creating time is the first priority. Often owners spend significant amounts of their time fighting fires. To get out of the firefighting business, owners need to look for opportunities to outsource, delegate and re-organise. This will require putting in place simple systems that will allow you to pass work onto others to create the space you need. While there is a temptation to hang onto this work yourself because owners don’t believe that others can perform this work as well as themselves and because they think they are saving money, this is an opportunity cost to your business. Owners become micromanagers, which stunts their growth and is unsustainable. They need to learn what brain surgeons do. The brain surgeon doesn’t run the operating theatre. The theatre nurse does. The brain surgeon doesn’t open up and close. They have junior surgeons to do that for them, and they certainly don’t mop up the blood from the floor. All the brain surgeon does is brain surgery, plus a little bit of marketing beforehand – client needs, and a little bit of marketing afterwards – client satisfaction. Owners need to discover where the brain surgery is in their business. When you stop spending dollar time on penny jobs, you will have the time to take the next steps.

2. REVIEW YOUR STRATEGY Investigate where your business really makes its money. There are often pockets of gold hidden amongst cross subsidies to other parts of your business. Which products and services and which customers make the biggest contribution to your


bottom line? Where are you and your staff spending most of your time? Is it in your gold mine? Analysing the financial structure will let you know where you need to start. If instead you are having difficulty managing all your customers, perhaps it’s time to dampen growth to give you time to work on your business. Rather than continually struggling to finance expansion and grappling with the gap between paying your bills and getting paid while trying to increase capacity, consider increasing your prices on your in-demand services to moderate growth to a sustainable level. If this doesn’t work, increase them again!

Like a teenage boy growing out of his clothes ever half year, your business may have outgrown its strategy Look at your customers. Who are your best buyers? Airlines understand who their best buyers are. They get the free upgrades, and get served French champagne in First. Are you giving out too much champagne to your noisy economy customers and ignoring the ones in First?

3. RE-ENGINEER YOUR BUSINESS In light of your review, which products, services and customers will you be focusing on? How will this affect the way you promote your business? Will you change the way you deliver your products and services? This enables you to get the biggest bang for your buck, which is essential in small business where the bucks are fairly limited. Have you analysed your cost structure, not just on service delivery, but also on your cost per lead, and cost per sale? This should not only be done by customer type, but also service type. What looks like a profitable service based on delivery costs may actually have a proportionately high cost per sale. It’s quite common in many businesses for the cost per sale to be similar for low and high-value services. Changing the way you sell low-price

services may be needed to prevent your attention being diverted from converting high-value sales.

4. RECONSTRUCT YOUR BUSINESS MANAGEMENT SYSTEM Once you have re-engineered your business, you will need to redefine roles in your organisation, complete with business systems, job descriptions and performance standards. Your business management system should be built around your workflow process which documents all your activities from the time you get the phone call to the time you bank the cheque. There should be systems such as procedures, templates, checklists and even scripts for each part of the workflow process. Each should be assigned to roles as well as a description of what a good job looks like. This enables you to measure the performance of your staff, rewarding those that exceed expectation and supporting those that have not yet attained it. Your staff will now be in a position to manage more of your business so you can focus on your brain surgery.

5. REPORT YOUR BUSINESS While a well-constructed business management system is an essential prerequisite for a sustainable business that runs without you, it’s not sufficient on its own. Without a driver for your systems, they can become dusty manuals on a shelf that no-one follows, a waste of your time and money. To ensure that your business is run the way it is meant to, that mistakes are avoided, that the customer experience is consistent, that the business management system is followed, there needs to be one final system to drive all the other systems in your business – a reporting system. This ensures that staff are following your business management system, and gives you the confidence to delegate. Ultimately, this gives you a business that will run without you and turns it into a saleable asset.

MOVING ON Once these five steps have been taken, you will be confident that your staff can manage the business for you so you will delegate, giving you more time to plan the future. Your business will be able to weather the storms because of its deeper roots and will become sustainable, enabling it to continue to prosper and grow to its full potential height.

Dr Greg Chapman is author of the award-winning small business bestseller ‘The Five Pillars of Guaranteed Business Success’. Download a free copy of his Mission Statements Made Easy Tool from

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Managing the pressures

of running a business Running your own business can be highly rewarding, but it can also put you under tremendous pressure. Stefan Kazakis explains how to keep things running smoothly

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Running a small business isn’t easy, but then if it were, everyone would be doing it, wouldn’t they? But it can be fun, as long as you learn a few fundamentals around mindset, critical thinking and planning.

ARE YOU GROWING OR DYING? One question I always ask business owners who I meet is, “Are you in maintenance mode or growth mode?” Which of these two do you connect with? You must look in the mirror and make a conscious choice about this because they are two different mindsets and whichever approach you take will affect each and every decision you make in your business. If you’re not clear about which mode you are in you could be heading for trouble.

Too many business owners allow themselves to be victims of the environment around them You may think you should be in maintenance mode, treading carefully and being conservative until you can get back on your feet, and then you can worry about growth. But let me tell you something right now: you should always be in growth mode. That’s right, always. To be in growth mode means you are focused on the future. You should have three five-year goals and shorter-term targets to ensure you’re on track to the greater destination. Being in growth mode means having a strategic plan that is the basis for all the decisions you make. It means having the right team who will grow with you, and the right physical environment that takes into account your future needs so you won’t have to scramble together unsatisfactory solutions at the last minute. Always remember that the short term is just a step on the journey to long term, so you must always be clear on your destination. Sometimes you must go two steps backwards to go four steps forward, but you must see the opportunities before you and not just the costs. Focus on the cost of opportunity, not the cost of

BUSINESS MANAGEMENT IN PRACTICE: PLAN Having been the CEO of PLAN Australia for a year, Phil Quin-Conroy is busy running a growing business One thing that makes Quin-Conroy’s job easier is what he describes as the fantastic culture of camaraderie that exists in the PLAN business. And this is something that he’s harnessing to keep the company’s plans on track. And playing to the company’s strengths is clearly a priority. “In looking to take the business forward, I’ve absolutely had a focus on also having one eye on the past; very much respecting the past, looking to nurture the culture of the business – this really entrepreneurial mindset that exists within the PLAN Australia business,” he explains. He adds that, rather than come up with a new strategy for PLAN Australia, it’s been a process of updating and evolving from a solid base. “We’ve got a real belief that good quality businesses evolve and innovate to stay relevant, to stay competitive and to grow,” he explains. “So, rather than come up with a new strategy, we’ve evolved our strategy to look to better support our members to help them grow their businesses.” Looking forward, his key mandates are to deliver services to assist brokers as business owners to run a great business, and services to assist brokers as credit advisers to deliver a great customer experience. To this end, tracking progress is vital. “We measure the satisfaction that our brokers have with the services we deliver to make sure we’re constantly challenging ourselves to evolve to deliver the best to our members,” he says.

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growth, and be prepared and strategic to take a short-term hit for long-term gain.

You should have three five-year goals and shorterterm targets to ensure you’re on track to the greater destination

Stefan Kazakis is a business strategist, presenter and speaker, and author of the new book ‘From Deadwood to Diamonds’ (Major Street Publishing, $29.95). He is a futurist and communicator with the voice of experience. Visit www.

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EVERY PLAN A SHOULD HAVE A PLAN B So, having decided that you are in growth mode you must always ensure that every plan A has a plan B. I always say, “every problem I am experiencing today, started out as a great idea!” When things start to go pear-shaped do you start making decisions in a blind panic just to get out of the current mess? Just as important as using your plan to guide your decisions and growth is having a plan B for everything you do. We all know that despite best efforts and careful planning things still go wrong from time to time. All businesses hit speed bumps; it’s inevitable. So whenever you make an important decision in your business, make sure you have a backup plan as well.

FOCUS ON THE BASICS Keep things simple and focus on executing well. Make sure your team has this attitude too, both your internal team and any support you outsource. • Have effective communications systems: You need to have effective systems in place that allow you to communicate quickly and easily with your current and future clients. Make all communication relevant and frequent. • Have effective operating cashflow management: This is vital. It doesn’t matter how many clients you have or how great your products are, if you can’t pay your bills or re-invest in your business you are going out of business. • Manage the hard decisions: When it’s time, you need to wield the axe. You are the leader in your business and that comes with the responsibility to make tough decisions. You need to embrace this mindset. It’s part of your responsibility as leader of the business. If you don’t accept this role, your hesitation and inconsistency when making decisions will cause confusion and this will cause you to fail. • Create a positive environment: If you operate in fear of losing clients, if you don’t do the things that separate you from the competition, if you don’t push yourself and your business to be the best you can be, you will die. If you operate with a positive outlook and an attitude of abundance you can thrive and grow.


WHAT ABOUT WHEN TIMES GET TOUGH? When I tell business owners that they always need to be in growth mode, they often ask me, “but what about when times are tough?” My response is: “which part of always did you not understand?” Too many business owners allow themselves to be victims of the environment around them. If you have built a robust business, you know your market intimately and what clients want from you, and you know how to deliver it, tough times will bring you no fear. Sometimes when things get tough people automatically turn to survival tactics, without a strategy or belief that they are better than this. Yes, we need to get through tough times, but we don’t need to throw out all our hard work and forget who we are and what we do. When you’ve found the right target market and know your numbers, tough times won’t worry you.

GROWTH MODE IS ABOUT PLANNING, MAINTENANCE IS ABOUT FEAR Are you at your full potential? It’s not about who is the smartest, it’s about recognising the void and filling it. When the opportunity moves from the head to the heart you will move forward. When you fully own and take responsibility for what you are doing, and when you are totally committed, good things will start to happen. Business is demanding. It always has been and it always will be. If you’re feeling a little overwhelmed, here’s a great exercise that can help you clear the decks a little bit. It’s called the Traffic Light Exercise. For many clients I find that this is a moment of truth and a moment of clarity. It’s actually very simple, but also very powerful. Simply answer the following questions: • What 3 things do you need to stop doing? • What 3 things do you need to continue doing? • What 3 things do you need to start doing?

You can begin this activity by looking at yourself. Everything you do in your business must be led by you. What do you need to stop, start and continue? Look at your default diary. What are the three key things to achieve today rather than the 50 trivial things to do? Ask these three questions of your team too – the answers can be both surprising and liberating and result in massive steps forward for everyone.



Outsourcing A new era?

Outsourcing is a growing trend that can reduce costs and drive efficiency. Is it right for you? Erik Mooi, Ananya Bhattacharya and Peter Gahan explore the issue Outsourcing has for some time been a common business practice. By drawing on the expertise or the economies of scale provided by external providers, outsourcing may help reduce costs and ensure a business remains focused on its core activities. Few firms would, for example, question the wisdom of outsourcing catering or routine desktop PC maintenance. While outsourcing of non-critical tasks has become common practice, experts and industry providers, like Infosys, believe that the global market for outsourcing is now set for a sustained period of growth. This new growth phase is taking outsourcing beyond non-core routine tasks to encompass many business processes that were previously considered too complex or for strategic reasons were best maintained in-house. For some businesses, whole production processes or complex service provision have been outsourced. This approach has, for example, been critical to Apple’s global growth strategy. Moving on from outsourcing relatively simple and straightforward tasks, Apple has outsourced the manufacturing of most of its product range, as well as the design of critical components such as screens, and much of the marketing is sourced from third parties. The same is happening in the financial industries where key tasks, such as credit scoring, are performed by third parties such as Experian, and more recently in legal operations (for example, document search) and the provision of a range of legal services.

At the heart of this new era of outsourcing have been new technologies that enable the routinisation of complex business processes and establish productive outsourcing relationships in a rapidly globalised outsourcing sector. However, this new market for outsourcing raises as many challenges as it does opportunities. To begin with, the economics of outsourcing deals are increasingly questioned. A recent study undertaken by The Economist revealed substantial price rises to deal in countries that until recently were considered low cost. This, and the need to be close to where the

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OUTSOURCING IN FOCUS: LOANWORKS Loanworks Technologies general manager, sales, Wayne Macartney, poses the key question that you need to ask yourself before establishing a new tech project: Do you have the headspace? Studies have shown that many companies attempt to tackle too many projects at the same time, and that this is a significant factor in project failure. As organisations get leaner, spinning off staff from ‘business as usual’ activities to implement something new can be a challenge. In the helter-skelter of daily activities, it’s often the project that suffers. Bringing in outside expertise or assigning the project to a dedicated team are alternative approaches, however the trade-off here is that the lack of real-world buy-in from operational teams may result in a well-executed project that does not deliver benefits, or a project that is perceived as a nuisance by the rest of the organisation. Getting results from IT projects requires organisational discipline.

CHOOSE WISELY So how do you choose the right projects? Given finite resources, opportunity cost can be a killer. Ideally, a project selection process should reach broadly across the organisation and have some (or all) of the following features:

Peter Gahan is director of the Centre for Workplace Leadership and professor of management in the Department of Management and Marketing at the University of Melbourne. He has held academic positions at Monash University, Deakin University, University of New South Wales, University of Southern California, Los Angeles, and The European University Institute.

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• Executive sponsorship • Project outcomes tied to strategic objectives • Rigorous selection criteria across strategic, financial and other organisational criteria, including degree of ‘fit’ to current organisational capabilities • A firm gating process, potentially at various stages in the selection process. Outcomes might be ‘yes’, ‘no’, ‘more information required’, and ‘not right now’

One of the advantages of some kind of formal project selection process is that it means that the expected benefits are more likely to be linked to organisational problems or opportunities. It’s very easy to say ‘we need a CRM’ or ‘we need to move to cloud’ or ‘we need to be on social media’. Why? What does this achieve? What’s the problem you’re trying to solve (or opportunity you’re trying to exploit)? Will the proposed solution actually solve the problem?

TECHNOLOGY IS NOT A MAGIC BULLET It’s highly likely that deploying more technology may simply add complexity rather than solve the original problem. This is especially true if the problem is organisational; be wary of simply dragging your existing problem into a new solution. As an example, technology will not solve a workflow problem if the organisation can’t agree on what the current workflow is, or what the desired solution should look like. In other words, technology is not a solution. It’s an enablement mechanism. Often the emphasis on technology can obscure the fact that the solution may be multi-faceted, requiring changes to organisational culture and/or structure, rigorous scrutiny of process around value-adding activities, and an assessment of the impact on the organisation’s broader information architecture.

BE CAREFUL WHAT YOU WISH FOR Increasingly, organisations are looking to IT providers to bring their expertise to bear to deliver value. IT vendors can provide a ‘turnkey’ approach, assisting with project management, solution definition, configuration, handover and training. In this way, organisations can benefit from the breadth and depth of the vendor’s experience across previous projects delivering similar solutions, offering new insights to old problems. Selecting the right implementation partner is therefore crucial. Asking the right questions through the selection process is vital, but be careful that your selection criteria are not arbitrarily rigid or prescriptive, or you may inadvertently exclude potential suppliers. It’s also important to look beyond the IT to the vendor’s organisational capability – are they agile; are they collaborative; do they partner well? Remember, it’s also in the vendor’s best interests to achieve a meaningful outcome; don’t be afraid to ask them how they can help.

WHAT HAPPENS NEXT? Project planning often stops with the delivery date. The reality is that the challenges of change management are often acknowledged, but are not always addressed. How do you achieve buy-in, how do you weather the learning curve and get past the shock of a new process? The best companies foster organisational agility, pace change to avoid ‘change fatigue’ and adopt approaches that deliver a stream of incremental benefits rather than a deferred ‘big bang’ solution.


customer is, has even led companies such as Lenovo of China, to outsource manufacturing to the United States.


how it is implemented needs to be carefully managed. Here we discuss three critical steps that can help successfully set up deals.


Firms typically compare a quote from an outsourcing partner against their internal costs when deciding on outsourcing. Typically the outsourcing partner can get their price below the internal costs. What is not factored in these decisions are the transaction costs – the costs of dealing with an outside party. One of the first large outsourcing deals – the 1994 deal between Xerox and EDS – fell apart because the outsourcing party was unwilling to make changes and difficulties in re-negotiating arose. Many deals still fall apart for the same reasons – transaction costs are typically ignored in decision-making. Such transaction costs consist of negotiating the deal, managing the external party, and monitoring their activities.

Costs are not the only issue at stake. Indeed, where business focus is solely on short-term cost savings as the key driver in outsourcing decisions, it may also lead to a loss of critical capabilities. The lessons to be learned from these and other experiences is that the decision to outsource and

Selecting the right partners is critical. Activities can be outsourced to a sole partner or to multiple partners, sometimes guided by a prime contractor. Kraljic’s matrix can provide a useful model to determine how best to approach a partner. Consider the importance of the activity to be outsourced and the complexity of the vendor market first. If there are many vendors, and the activity outsourced is simple, aim for a low cost/price and outsourcing decisions can be decentralised, often with local vendors. If on the other hand the activity is of critical importance and the vendor market is highly complex – aim to assure reliability and availability and centrally decide on long-term contracts. For complex outsourcing arrangements, most clients spend around six to 12 months on the selection process – typically involving people from different levels of the organisations. The desired outcome is to select a partner you have confidence in.

2. NEGOTIATING Negotiating with potential outsourcing partners can be difficult and costly.


Contract duration

Number of vendors

Vendor selection criteria


Vendor switching/ contract termination



Focus on rules and regulations

Dislike terms and conditions that could become counterproductive

Like contracts between 4 to 7 years

Like stable and long-term contracts that support partnership

Pursue mostly a single vendor strategy with a few multi-vendor exceptions

Prefer a single vendor strategy

Select on cost and put some attention to references

Focus on soft factors such as past experiences, recommendations by other clients and vendors, and achievement of service level agreements

Do not believe that vendors are deliberately misleading, but know they are not telling the truth on some commercial issues - including price

Do not always trust the client

Consider switching or termination often prohibitive – they need to have very significant reasons to switch or terminate

Consider termination expensive but usually less so than the client

Erik Mooi is a senior lecturer at the University of Melbourne, and Aston Business School in the UK. His research interests focus on business marketing including topics such as inter-firm contracting, technology licensing and franchising. He has published his research in the Journal of Marketing, the International Journal of Research in marketing, The Journal of Business Research and others. He is also the author of A Concise Guide to Market Research, published by Springer.

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The ‘Typical client-vendor differences’ box on the previous page summarises key findings of University of Melbourne research on outsourcing and shows the different perspectives of clients and vendors to such deals. Evidence from IT procurement shows parties often spend weeks or months drafting deals for complex purchases. Some partners aim not to agree to everything in writing but instead aim to create ‘partnerships’ and shared ‘long-term interests’. While this sounds good, the reality is that are agreements often break down. Research suggests that such contracts are well placed to safeguard investments but have to be chosen carefully. If you choose an outsourcing partner with the aim to keep costs down, try to fix contractual terms. If the outsourcing partner is strategic and critically impacts the customer experience or aims to create synergies, agree in general but keep specifics open. Make sure you reach understanding on what the vendor will provide.


Ananya Bhattacharya is a lecturer at Monash University. She has conducted extensive research into outsourcing, recently exploring outsourcing experiences among clients and vendors in Australia. She specialises in outsourcing, offshoring, international business and international management.

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Many outsourcing providers subcontract their work to other parties. For example, market research companies often outsource fieldwork to third parties. This does not need to be problematic but try to reach an understanding with your outsourcing partner on what activities they carry out in-house and what they outsource.

3. ONGOING MONITORING AND CONTRACT MANAGEMENT Ongoing monitoring and contract management requires communicating with the outsourcing partner to make sure they put in the required effort and reach the goals set. Monitoring is therefore often aimed at the task executed or the results achieved. Evidence suggests that monitoring tasks is obtrusive and creates opportunistic behaviour. However, where it is complemented by a good understanding between parties, task monitoring


can help. Output monitoring is suggested to work well in general. Task and output monitoring require processes that enable ‘relational coordination’ between employees directly involved in managing processes across firm boundaries. Effective relational coordination is founded on frequent and timely information sharing, effective communication between employees involved in coordinating outsourced service provision, and a shared understanding of the value creation chain. Also, the use of placing own personnel at the vendor, information sharing systems and formalised communication structures can reduce opportunistic behaviour.

The decision to outsource and how it is implemented needs to be carefully managed As a quote from research by the University of Melbourne revealed, “if we do not manage them [the client] quite closely, they will not perform as per the agreement and could try to averse some of their obligations in the agreements” (a global resources company). As this example shows, conflicts might arise. During conflict, it is best to keep negotiations open to resolve issues. As another interview revealed, “if you’re getting to a point where you’re engaging in legal action, then no one is going to win; better to sort them out through relationship, or leave things”. Outsourcing has always come with problems – getting another party to perform (critical) tasks can be difficult and challenging to maintain. However, where it is well planned and managed, it can be highly successful. Selecting the right partners, agreeing upfront on what to expect, and liaising and monitoring can reduce, but not entirely avoid, some of the pitfalls in outsourcing.

2014 Business Strategy  

Special Report - Business Strategy

2014 Business Strategy  

Special Report - Business Strategy