March 2007 newsletter

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Pre-Budget snow special.

Forthcoming events

After the excitement of Matt Barker and then Nick Rumney, the Boyscout is struggling for inspiration for the next event. Can I show my climbing slides yet?

The leader from hope

“Hope” is a dirty word in management speak ­ it implies that the game is over and you’re just waiting for Dr Death to arrive. However, thanks to the rise in happiness studies (aka positive psychology movement), hope has been given a second chance.

Research (in the States) has shown that effective executives make people more hopeful. I guess this is just a reworking of the view that if people are compelled to change, they need to see what the benefit will eventually be. Otherwise, there’s no point changing and negativity rules. Apparently, you can get a whole book out of this idea www.puttinghopetowork.com/principles.html

Annual review

Sparkle has produced a list of uninspiring (but nit-picking) changes to the tax rules for you to consider. As always, they are designed to catch you out on the “ignorance is no defence” basis that HMRC is so fond of. Go there.....

I’ve also posted a third party discussion on the possible developments in the small company dividend spat. Must be good ­ it quotes section numbers. Go there.....

Idle gossip/health report

In case I forget to tell anybody/everybody, Kath has now had her baby (Charles William, 7lb+), but declined to come back to work the following day. After a long search, we‘ve found somebody to cover for her: Emma (husky voice; degree in marketing). Don’t all ring at once.

You may also be aware that Sue & Elaine have been under the weather. They are both recovering slowly and are back at work under instruction not to overdo it.

No more bad clients

We’re always telling people that the key to a strong business is having the right customers/clients. The value of a business depends on the quality of its future income streams which, in turn, depends on the quality of its customers. Ghengis Khan School of Business => give your bad clients to your competitors. Simple enough.

The problem, however, is usually that it took such a lot of effort to win a client, that firing them seems a waste. Be strong. Do it. Ghengis would.

This particular thought came (back) to me after skipping through David Maister’s blog site. For anybody involved in selling professional services (all of us?), this is the biz http://davidmaister.com/blog

Turning Chinese

For the brave amongst you who follow web links

www.scottmcleod.org/didyouknow.wmv

Management styles unchanged

The last BD event was given by Nick Rumney talking about the adventures of Shackleton. Whilst Shackleton is now a case study in leadership, the comparison between him and Scott has stuck in my mind:

Scott

• Royal Navy
• Dour, bullying, controlling
• Blamed others
• Rigid and formal
• Military “orders is orders”
• Orchestrated every move
• Risked team to achieve personal goals

Shackleton

• Merchant Navy
• Warm, humorous, egalitarian
• Tease but not humiliate
• Delegated responsibility and gave independence
• Better a “live donkey than dead lion”
• Never felt threatened hiring people who had skills he lacked

Is your boss a Scott or a Shackleton? Remember, Shackleton failed to hit any of his objectives. But, he got everybody back alive.

You could have guessed this

Reports from Whiplash:

1. A recent tax case. Neil Martin v HMRC

A contractor started proceedings against HMRC as they failed to process the transfer of a gross CIS certificate from Sole trader to Ltd Co. As a result he lost business.

He lost. The Judge said that HMRC had no duty of care to process the application expeditiously, despite the fact that HMRC admitted repeated failures.

The effect of the decision is that 'no matter how badly HMRC deal with a taxpayer's affairs, or how disastrous the consequences, an innocent taxpayer who loses anything cannot claim compensation'.

2. HMRC has just lost the M&S case (again) which means that they will have to repay huge wads of UK CT in respect of losses made by foreign subsidiaries.

Very worried about this as a floodgate of claims will open and they could haemorrhage cash. They will somehow change the rules, but that will take time.

First, define success

Vodaphone has a mathematical formula for small business success (when leaving a big Co to form your own). Success is measured with reference to:

• Growth & expansion since starting out
• Personal job satisfaction levels
• More successful than expected
• Better work/life balance than before

Is that it? What about reward for risk? Freedom to make your own mistakes/successes?

Remind me, why would you want to run a small business illusion@chrisduckett.co.uk?

Curved ball strategies

Whilst a sustainable competitive advantage is arguably a contradiction in terms, most of us would settle for short run destruction/humiliation of the competition. One way of doing this is to bluff the competition into doing something stupid; by throwing them a curved ball. So, good example of this in September’s HBR:

Ecolab and Diversey were big time competitors in the cleaning chemicals market. Diversey was profitable in other parts of the world, but struggled against Ecolabs in the US. Diversey was owned by Canadian brewing giant Molson, which appointed a new president (an accountant) with the brief of driving up margins by raising prices.

Unfortunately, this strategy ignored the fact that the cost of servicing a customer (eg filling & installing dispensers) represented half the total cost. Big customers took a lot less servicing than small ones, even though the big customers could negotiate lower prices for the actual product. So Ecolab deliberately adopted a pricing strategy to allow Diversey to win small customers (at apparently high margins over product cost), whilst fighting hard for the big customers. Diversey started to pick up lots of small accounts and management was happy that the strategy was working => gross margin was improving. Encouraged by apparent success, management saw an uncontested market for small customers and really went for it. However, it was actually losing 15% on sales at the bottom line. By the time anybody understood this, the game was over. Diversey was sold off to Unilever which eventually got out of the cleaning chemicals business altogether.

This is probably a case study for Activity Based Costing too.

New Year Resolutions

www.newyearscience.co.uk

By now, most NYRs have well and truly lapsed. In fact, to stick at anything (diets/exercise plans), either the long terms gains must be compelling or the process itself is enjoyable (to paraphrase Matt Barker). The same is true of business. On the presumption that 2007 should be “better” than 2006, then you absolutely have to do something (maybe not much) different, and that means change

7 critical elements of change:

• Compelling case ­ what do we need to change and why?
• Clear strategy ­ what is the goal?
• Defined plan ­ how do we get there?
• Available resources ­ are there enough/how do we fill the gaps?
• Skills & capabilities ­ are there enough/how do we fill the gaps?
• Motivation ­ do enough people get it?
• Communication ­ are we making progress and how do we (all) know?

Arguably, simple stuff, but the businesses that do this well outperform the rest.

A Year of Spamming Dangerously: The Personal Approach to Attacking

http://tinyurl.com/yll8an

With a title like this, who cares what the article says?

It’s about new developments in computer (lack of) security and introduces the concept of “ransomware”. As ever, they are indeed out to get you.

How not to derail as a leader

I’ve been checking Steven Sonsino’s site for new material at regular intervals. He’s nothing if not prolific. There’s an interview with Doug Ready that’s worth a listen, although it makes the Oracle of Delphi sound specific www.leadership.fm/ready.html

Maybe I’m just a sucker for a podcast?

The revolution is here (again?)

Remember the days when there used to be a new book every week proclaiming the end of business as we know it? And the books were so hard to read. Well, one of the authors of the Cluetrain Manifesto (David Weinberger) is at it again.

Try www.smallpieces.com or his blog www.evident.com

Disclaimer

Route to eyeball?

If you don’t want it, say so.

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