Category: Ideas

There are many aspects to doing business in a changing world.

One important aspect is to keep ourselves and the people we work with safe.

The internet has brought us many great tools: videoconferencing, email, online video, encyclopaedic knowledge at our fingertips.

We’re more efficient, but sadly enough, so are the criminals and bad actors, and at the moment, criminals are winning.

More than one person within my family and close friends has lost substantial amounts money to a scam. Often these are elderly people that lose their life savings.

Most of us have some awareness of the most obvious scams. We’ve all received emails from a Nigerian prince who would like to enlist us to use our bank account for safekeeping of untold millions, and be promised a few millions for the service.

The basic tenet ‘if it sounds too good to be true, it’s not true’ holds more than ever.

But lately, scams and phishing attacks have become tremendously more sophisticated and it is often hard to discern scams from genuine communications.

The rules of the game has changed, and we all need to become much more careful and distrusting.

Gone are the days of using the same password on more than one internet-based service. Using the same password twice on any two different web sites is now a firm no-no, even if we think there’s no harm.

By now, we all need to know that Microsoft or Spark will not call us to inform us there is ‘increased virus activity on our line’.

In my opinion, the battle against scams will not be won closing our eyes and hoping that everyone using the internet will educate themselves and stay abreast of all the new scams.

The battle needs to be fought on many fronts, and it is important that the institutions, companies, banks, and government departments join the battle and help keep their customers and subjects safe.

A few examples from my own experience, in this case with by bank, which show that all is not well

• My father-in-law recently got a small, suspicious transaction on his credit card statement. The transaction mentioned something ‘this is payment for such-and-such online service. For more information ring +44…’ (listing a number in the UK).
  Luckily we’ve drilled into him to NOT do anything before consulting with me – which he did. He was fully intent on ringing that UK number (and get sucked into what is known as ‘the refund scam’). Instead, I made him ring the number on the back of his credit card, and he managed to get things sorted without financial losses.

• Recently I purchased some hardware in the USA using my credit card. For some reason this was flagged as ‘suspicious’ and my bank rang me to verify this was a genuine transaction.

It is a ‘good thing’ they rang me. But how they went about it is a ‘bad thing’.

I had no way of verifying whether this person on the line was really with the bank. It could very well have been a hacker, impersonating the bank.

What the bank should have done is: ring me, give me a reference number and ask me to ring the bank back on the phone number printed on the back of my credit card. End of conversation.
I’d then ring the number on the back of my card, and that way, I would be reasonably sure I was talking to someone at the bank.

• I recently rang my bank for some information and they tried to enrol me for ‘voice ID’. This was touted as being ‘more secure’ than PIN numbers.
  
  That might have been true a few years ago, but I know that is not true any more. I am studying artificial intelligence, and due to recent advances in AI and falling prices for hardware, it is now possible to take a recording of someone’s voice, have the AI analyse it, and then have the AI speak a random text in the original person’s voice, including accents and speech impediments.
  
  https://www.youtube.com/watch?v=0sR1rU3gLzQ
  
• When I do a transaction, my bank sends me an SMS message as an additional verification. However, it has been shown that this is highly insecure and easily circumvented. Most online services have now switched to specialized apps and abandoned SMS.

Some close elderly friends of mine lost over $200,000 to a scam recently, and it is easy to blame these elderly people for ‘being stupid’.

But having someone to blame does not fix the issue. Our society and institutions need to join the battle to try and keep everyone safe.

One the one hand, we need more general awareness of scams, and in my opinion our institutions need to do much more to help keep everyone safe.

In my opinion, anyone who interacts with people (banks, supermarkets, government…) needs to become part of a joint defence system. We need processes and systems in place to help recognise and stop scams-in-progress.

With Covid-19 we have seen the introduction of more online work; and many organisations have been forced to accept that their managers have been ill-equipped to manage in the new environment. Organisations have found that management methods that ‘sort of worked’ pre Covid-19 didn’t work when people worked online from home.

In the new environment, managers who saw themselves on top of a group of people, no longer had a role. It was no longer possible to look ‘over-their-shoulder’ and closely supervise what would be done or how it would be done. It was no longer possible for them to be top-down, controlling and limiting. It just didn’t work in the new environment.

In my experience top-down was always a poor way to manage. It’s largely why, in 1992, we set up Virtual Group Business Consultants. We launched it in a pinstriped tent as a symbol that intangible assets are more important than tangible assets (see the high-rise buildings of our competitors behind the tent). By intangibles we mean relationships, knowledge, experience, culture, brand, and service delivery. The tent also symbolises our flexibility, pin-stripped quality, canvas-thin overheads and virtual structure).  

Interestingly, the tent has become far more than a symbol; it has changed the reality of how we work. When my colleague John Pettigrew suggested our marketing slogan, “Wisdom Without Walls” it immediately appealed to me as the essence of what we were trying to achieve.

Wisdom comes from people and treating people as whole: Body (physical), Head (intellectual), Heart (emotional) and Soul (spiritual). Mostly wisdom comes from the Soul. Wisdom comes from becoming deeply connected in three ways: more connected to the Self, to other people and to the environment. These are connections we have always worked to achieve even when most people worked within the organisation. For us working without the walls meant without separations, silos, barriers and controls that normally go with organising people. We have found that people work with unbounded energy in an open system with all unnecessary rules and structures removed, if they are supported by a new type of leadership, technology and culture. 

For nearly 30 years we have helped organisations achieve wisdom without walls and they have found it to be the difference between success and failure. Post-Covid-19 ‘without walls’ has taken on a more literal meaning as Covid-19 has exposed weaknesses in managing people online.

Today we have specialists working with Boards, senior managers and front-line people. We are experts in achieving wisdom without walls, liberating human energy, breaking down silos, building connections and trust, opening communications and reducing complexity by removing unnecessary boundaries, barriers, rules, processes and top-down management. We are also experts in the technological support and decisions required to work remotely.

If your managers have been ill equipped to manage remote online workers please give us a call. We’d love to chat with you about achieving wisdom without walls in your organisation.

Bruce Holland

Strategic Managers know that 76% of strategies fail to produce the benefits promised and most fail during the implementation phase. This is extremely costly both in terms of time and money wasted on the current strategy but also costly because failure this time makes it harder to achieve success next time.

You see Strategy is usually an intellectual exercise that’s done by only the top people in the organisation. Both of these practices are a problem.

An intellectual exercise?

Many managers see strategy as an intellectual exercise. They put 80% of their effort in to logic and costs and features. They should put 80% of their effort into emotions, feelings, trust and security. The 18 Inches from the head to the heart is a long journey. Until this unconscious level is addressed nothing will change.  It’s like an iceberg; we tend to address the bit that is most visible forgetting that so much lies unseen below the waterline.

Only the top people?

Even the best managers have problems going from planning to doing. Recently, different CEOs, all of whom I would rate as some of the best, have made the following statements to me. Do any of these statements ring true to you?

• ‘We know what we need to do, but we don’t seem to be able to make it happen.’

• ‘We need to put some rubber on the road.’

• ‘It is not that people don’t want to do it, they just don’t know how.’

Part of the reason these problems exist is because strategy processes are restricted to the most senior people in the organisation, whereas it’s the frontline who have to implement the strategies; and they don’t understand them let alone care about them. Implementation is the result of thousands of decisions made every day by employees who want to do their best but often don’t know what the strategy really means.

Of course the Tops understand and care; they have spend days thinking and arguing about the strategies; but the frontline haven’t and so they don’t care. 

It’s a process

Some managers think they can get around this by doing a one-hit “roadshow”. They proudly tell me: “I’ve been to every branch in the country and presented the strategy. Everyone knows about it!” This is a nonsense, there’s no way you can tell someone about a strategy; it takes a process which has as much to do with building trust and confidence as agreeing strategies.

So wise managers find ways to involve the frontline right through the process including, the decision about what to do and why we’re doing it. As a minimum managers need to find ways to involve these people in thinking deeply about how they will make the strategy work. 

There are real benefits in involving frontline right through the process. It often adds to the quality of the strategy because in my experience the ability to think strategically is widely spread throughout the organisation and has little to do with where people sit on the organisation chart. Also, the strategies end up being grounded in the real world and more highly practical than otherwise. And most importantly, it adds meaning to the work and increases levels of energy at the frontline. 

You want me to involve everyone?

Yes!

I first trialed the 100% solution when I was Group Strategy Manager at the Bank of New Zealand. It was 1989, just after the recession, and the Bank was in a bad way. Everyone said the recovery would take 10 years; however, by involving all 6,500 people over 350 branches the recovery was achieved in just over two years.

Since then we have run dozens of processes that involve everyone. Depending on the levels of trust and communication they usually involve several half-day workshops of up to 100 people at each workshop. This approach may take a little longer in the short-term, but in the long-term the time is significantly shorter.

Want more information?

This video will give you far more detail.

Bruce Holland was the Group Strategic Manager at the Bank of New Zealand before becoming a consultant. In 1992 he formed Virtual Group and works with many organisations helping their strategic processes.

Many managers think their power comes from the conscious mind, so they put lots of effort into building their thinking skills, especially analysis.

Most of their power comes from their subconscious mind and this can be a powerful friend or a powerful enemy. Without realising it many managers sabotage themselves.

About 90% of what managers do is done at the subconscious level. It’s all about the pictures they hold about themselves, the words they use, and the habits they adopt. It’s about trusting their gut feelings, intuitions and listening to their bodies.

Here is what the best managers do:

1.They deliberately develop positive rituals because they know about 90% of what they do is done at a subconscious level based on habits; therefore 90% of their success depends on having positive habits.

2. They take control of their subconscious mind. They know they will be as big as their self-image, or as small.

3. They know they are creatures of habit and work to establish highly specific, positive behaviours that become automatic rituals in their subconscious minds.

4. They understand and trust their subconscious mind, in the knowledge that it is the source of much of their success.

5.They understand the power of words. They actively feed their minds with powerful words and thoughts. They deliberately reject words and thoughts that make them weak.

6.They know that the people they lead will be as powerful as the thoughts they hold about themselves. They deliberately help people overcome their doubts and find their core of greatness.

7. They understand that the seven points listed above also apply at the organisational level. They are happy to talk about the health of the organisation’s subconscious. They work to build it.

Bruce Holland

Mergers are inherently risky. A KPMG study carried out in the UK in 2002 found that “half of the (merger and acquisition) deals analysed either failed to deliver or actively destroyed shareholder value”. Beating the Bears, KPMG, 2002

One of the big risks to any business in contemplating a merger is the human factor yet it often receives little consideration. The commitment of the management team and employees is a key to any merger.

Differences in the culture of the organisations can be a make or break issue.  The CoLab Process™ is a tool to help evaluate the key element of risk in exploring a merger and to assist in mitigating risk where the decision is to proceed.

The CoLab Process™ focuses on understanding the differing cultures between organisations and using that knowledge to assist in making go/no go decisions and in adopting good management approaches where the decision is made to proceed with a merger.

It can take some of the “ego factor” out of merger decision making.

Using the CoLab Process™ can provide:

• a means of balancing the people risks along with other risks in evaluating a merger
• for retaining what is special about each party to a merger as well as better consolidating forecast gains from the other synergies expected from the merger
  
• a route for bringing about culture change in a consenting manner
  

The CoLab Process™ is an approach developed by the Virtual Group in consultation with businesses involved in mergers.

For more information contact: Bruce Holland or Allan Frazer.

“Strategic planners pride themselves on their rigor. Strategies are supposed to be driven by numbers and extensive analysis and uncontaminated by bias, judgment, or opinion. The larger the spreadsheets, the more confident an organization is in its process. All those numbers, all those analyses, feel scientific, and in the modern world, “scientific” equals “good.”

“Yet if that’s the case, why do the operations managers in most large and midsize firms dread the annual strategic planning ritual? Why does it consume so much time and have so little impact on company actions? Talk to those managers, and you will most likely uncover a deeper frustration: the sense that strategic planning does not produce novel strategies. Instead, it perpetuates the status quo.”

So starts the Harvard Review article (Sept. 2012), “Bring Science to the Art of Strategy.”

I agree entirely with their analysis of the problem; however, I agree less with their solution to the problem. In my view strategy needs logic and magic; the weighting of which depends mostly on the level of change the strategy will require in technology and changes it will require in people.

Logic and magic

In a more predictable market where there are few changes required in either technology or people, a weighting towards logic may be appropriate; however, in a less predictable market (and today most are) more magic is required.

What sort of strategy required?

Today the environment for most strategy processes is requiring a more
“Magic” (sometimes called Wicked) approach; despite this, most strategist rely on the “Classic/Management” approach described above.

There are two schools of thought about the Strategic Process

1. Logic School – A linear or left brain school
2. Magic School – A nonlinear or right brain school.

The Logic school is by far the most common, however, on its own it is seriously lacking. It is based on several unspoken assumptions that are highly questionable:

1. That you can create a powerful vision of the future after thinking extensively about the present. In my experience, thinking too deeply about the present tends to limit the possibilities considered for the vision.
2. That analysts are the best people to drive the Strategic Process. In my experience Line Managers are far better drivers of strategy because they understand the issues and reality in the market place. They are also the people who must execute the strategies and therefore their ownership is vital. Managers do not have sufficient ownership or understanding when strategies are presented to them by analysts.
3. That the ideas needed to create a winning strategy do not exist within the organisation and need to be imported from outside. In my experience this is simply untrue. I think it’s vital to have an outsider to lead the Process so they can challenge thinking that is not strategic or innovative enough; but I’ve found the content is always available from within.

TWO SCHOOLS OF STRATEGY

1. LOGIC

Linear
Left Brain Thinking Starts With the Present

Sequence =
• where are we?
• where do we want to go?
• how are we going to get there?

Driven by Analysts Ideas must be imported

Extensive analysis determines strategies

2. MAGIC
Non-linear
Right Brain Thinking Starts With the Vision

Sequence =
• where do we want to go?
• where are we?
• how are we going to get there?

Driven by Line Managers Ideas exist within firm

Extensive analysis to test strategies

Conclusion

Both schools have their strengths and weaknesses. It would be wrong to disregard either; however, in my experience most New Zealand organisations rely far too much on the linear approach. As a result, many strategic workshops are boring, and not nearly as successful as they could be.

Bruce Holland

1.    A ‘Rodent’ Economy?

Squirrels and mice are quick, intelligent and gregarious; and as species, adaptable, collaborative and virtually indestructible. 

They favour large families over individual size. 

They generally sustain themselves on the surpluses and inefficiencies of mankind. 

Is this a useful analogy for a versatile business economy?

A ‘rodent’ business might acknowledge limits to growth and use its energies to succeed within them.  It might be more agile than its larger competitors, employ few people and little capital, but have a profitable niche and a satisfactory return on investment. 

Rodent businesses might be successful in exporting (like the smaller dairy companies), importing (like used Japanese cars) or local services (like regional law firms).  A country with an economy that largely consisted of rodent businesses might find that per capita, it had generally a high level of business ownership, high levels of employment, a culture of innovation and strong regional activity.  

The limits to growth of a business are both internal and external, determined by its owners and its trading environment.

2.    Owner (internal) Constraints on Business Size

·         Intellectual property – allows product differentiation;
·         Skills –to successfully recognise, take and build on growth opportunities; 
·         Ambition to grow – which may be large or small, inwards (about the person in control) or outwards (about staff, suppliers, customers and the wider public).

3.    Trading Environment (External) Constraints on Business Size

External factors may over-ride ambition, skills and IP.  Businesses may be small when there is one or more of 

·         Low barriers to entry – allowing many competitors (corner dairies);
·         Low storage capability – perishable items (fish, flowers, vegetables);
·         Low demand – limited earnings (performing arts); 
·         High demand but strong competition – encouraging boutique suppliers (food, clothing, recreation, art, housing etc); 
·         A rapidly changing situation demanding constant innovation (computer maintenance, mobile phone applications).

Businesses may be large when there is one or more of

·         Readily available capital – from historic earnings or confident shareholders;
·         Capital intensive products or services (refineries, airlines, insurance); 
·         Market stability – discouraging innovation (food processing);
·         High competition –encouraging economies of scale (consumer electronics); 
·         High demand – makes growth easier (Trade Me); 
·         High reliance – clients demanding high standards of compliance (legal, accounting, aerospace, military contractors).

4.    How Common is ‘Small’?

‘Small’ businesses, in broad terms, make up more than 99% of all companies in NZ.  The Companies’ Office registers around 45,000 new companies each year of which around 450 (1%) issue a prospectus, suggesting they plan to be large. 

The other 99% are either constrained to, or choose to, start small.  There were 592,350 companies in NZ at 30 June 2013. 

From the 2011 census, Statistics NZ confirms that the top 1,000 companies contributed 94% by value of the country’s exports and 80% of its imports. 

The other 591,000 companies in New Zealand (99.8%) contributed only 6% of exports in total.

5.    How ‘desirable’ is large?

Large businesses tend to have high ratios of employees to ‘controllers’ (Boeing for example has 10 corporate executives and 169,000 employees). 

The higher the ratio, the more isolated the ‘controllers’ are from the workforce.  

The ratios of top pay to lowest pay of businesses also correlate broadly with company size.  There is growing resentment about the extremes of pay ‘inequality’ now being discovered. 

Big businesses may also be vulnerable to changing conditions. 

For example the recorded music industry has suffered big declines in revenues and large scale lay-offs since the introduction of electronic file sharing. 

On the other hand, big businesses are more successful at exporting than small businesses, and NZ needs to generate a positive balance of payments.  Hence government support for big businesses (e.g. the Bluff aluminium smelter).

6.    Combining small and large

Small businesses with a common interest may assemble into large businesses to gain some of the advantages of size while working within the owners’ constraints. 

These may take the form of cooperatives such as Fonterra, Foodstuffs and Mitre 10; franchises such as Versatile Homes and Buildings and Postshop-Kiwibank; or “coopetition” where businesses in the same market work together in research while competing for market-share.

7.    Do we have a ‘rodent’ economy?

Given that we have over half a million companies in New Zealand and that we enjoy a relatively open market, we might assume that our national economy has evolved into both ‘large’ and ‘small’ businesses in statistically valid ways. 

That is, because our businesses are free to identify and service markets anywhere, and to form, grow, decline and dissolve without interference from Government, our overall mix of business sizes fairly reflects our culture and trading environment. 

This is not quite true of course as the Government influences the economy in many ways, through controls on investment, taxation, education, health, employment and (in some cases) resources; but perhaps in broad terms we generally have a ‘rodent economy.’  Is that good?

Well, yes.  Rodents are survivors. 

They are smart and fast and don’t feel guilty or inadequate about their size.  Our ‘rodent’ businesses meet customers’ needs, create dispersed employment, enjoy high levels of ownership, help income equality and contribute to a resilient and durable national economy.  I think we should celebrate that. 

Howard Moore, August 2014