Developing Future Leaders

It’s the responsibility of the Human Resources Director to push a CEO into thinking about leadership capability within an organisation. While there may be operational fires to fight and short-term targets to hit, a chief executive must set aside time to reflect on whether the mix of skills in a business is right for the strategy.

Attendees at Criticaleye’s fourth Human Resources Director Retreat, held in association with Legal & General Investment Management (LGIM), agreed that if a CEO is genuine about achieving long-term success, they must identify and develop leaders as a priority.

Andy Clarke, former CEO at Asda, told the audience that when he first stepped into the hot seat he prioritised staff development. “We needed new thinking and diversity, yet still had to develop a strong core of talent from within,” he said.

“I was also extremely mindful of the lack of diversity, so I managed to build a leadership team that was 50 per cent female. The level of debate differed – and I’m not just saying that.”

However, when two of those females were promoted, Andy realised there wasn’t a strong enough pipeline to continue that diversity. As a result, he spent a fifth of his time identifying and developing individuals both internally and externally.

“I did that in conjunction with the HR Director and it was impactful; we were a combined team,” he continued. “At the end of my tenure there was a much greater number of people coming up from within the company.”

Devyani Vaishampayan, Group HR Director at BSI, described how she is concentrating on the talent agenda as the assurance and compliance solutions company looks to double in size over the next two to three years: “The focus of the past was on operational execution – it’s why the leadership team has been successful – but we know we need more strategic skills within the business.”

She then advised: “You need to drive through a message to focus on the gaps that you see in regards to the forward strategy.”

The knock-on effect

As HR Director at Equiniti, Nicky Pattimore is also engaged in developing internal talent within the technology and investment services company. It floated in 2015 and the current leadership team are locked in with equity until October 2018.

“The board are now looking at future succession and we recognise that they can’t all be external appointments,” Nicky explains, noting that several people within the organisation have been identified as possessing senior leadership potential.

This ‘leadership group’ is expected to spend a quarter to a fifth of their time on some of Equiniti’s biggest projects, collaborating with those on the graduate and ‘rising stars’ programmes. “While this group work on these challenges, they must also look at their teams and use them to fill the gaps created when they step out of the day job,” she added.

During the course of the discussions, Charlie Wagstaff, Managing Director at Criticaleye, emphasised the importance of alignment between the CEO and HRD on this issue. “The HR director needs a comprehensive view of the capability within the organisation and how individuals can be upskilled for the future. To think only about the here and now, rather than the next phase of a business, is a mistake,” he said.

CEOs and senior executives have a responsibility to constantly improve their skills and knowledge, while also empowering and developing those around them. Benny Higgins, CEO at Tesco Bank. He noted: “The beating heart of any business is its people; they are the responsibility of everyone, not just the HR director.”

Matthew Dearden, former President for Europe at Clear Channel, built on this point and said: “Unleashing human potential is an inherent leadership responsibility. You can’t delegate or outsource that – although, you should look to the HR director for support.”

Problems occur when executives are overly egotistical, or become complacent because of success. “If you think you’re perfect, you’re done, because you’re doomed to never be better than you are today,” Matthew commented. “You need to embrace being imperfect and be honest with your colleagues, so you can support each other.”

Although it may take time, you should build people up to follow your lead and, eventually, take the baton from you. “You need to cherish, rather than worry about the fact that people are fine without you – that’s a sign that you’re building a good team and organisation,” Matthew concluded.

These views were shared at Criticaleye’s fourth Human Resources Director Retreat, in association with Legal & General Investment Management (LGIM).

By Dawn Murden, Editor, Advisory

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How to Strengthen the Leadership Team

Should the leadership team shift every time an organisation encounters change? It’s a question many CEOs and boards grapple with, because it’s certainly not clear cut. One thing we do know is that every business needs a complementary team of individuals to lead it to success.

Of course, the context will differ for each company and will also constantly evolve. Indeed, over half (53%) of respondents to a Criticaleye survey said that they are either going to replace members of the senior leadership team or overhaul it entirely.

Here, a number of executive and non-executive directors reveal four questions to pose when assessing the leadership team:

1) Do you understand what’s needed?

It would be futile to evaluate the leadership before you know what mix of skills you require to execute the strategy.

Robin Murray Brown, Partner at executive search firm Tyzack Partners, comments: “The most frequent strategic error, in my view, is failing to anticipate future leadership needs. All too often, organisations tend to think about what has worked in the past, or to try to correct current weaknesses rather than working out what leadership qualities are required to deliver their strategy.”

According to Howard Kerr, CEO at UK business standards company BSI, the chief executive and the board must look at strategy, structure and people – in that order – to assess what’s needed.

“If you’re not clear what leadership capability you need to support your strategy, you will fail,” he adds, frankly. “The strategy has to be absolutely pinned down and clear. Not just from a design point of view, but also execution. Who do you need to make it happen?”

2) Is the CEO driving it with the right support?

Effectively assessing the senior executive team calls for a number of constituents. It must be led by the chief executive, while the support of the chairman, board and HR director will be critical.

Anne Stevens, Criticaleye Board Mentor and former Vice President for People & Organisation for Rio Tinto Copper, says the most challenging aspect of strengthening the team can be persuading the CEO of its importance. “You have to coach and support them to take an objective look at their team, their attributes and where to develop them. The HR director has a key role to play in making sure the CEO is comfortable with the approach and prepared to take action where required.”

For David Parry-Jones, Vice President and General Manager for Northern Europe at software company VMware, the HRD and chairman should both act as agitators, pushing the issue to the forefront of the CEO’s mind.

He explains: “CEOs can sometimes get wrapped up in quarterly reporting or annual cycles of the business and lose sight of stuff that may help them in two or three years’ time. The chairman’s role is to look over the horizon to see what’s coming.”

The chairman’s role is also fundamental in assessing the CEO. Alison Carnwath, Chairman at Land Securities, says: “A non-exec chairman of a Plc should require that leadership capability assessment and development be brought to the board regularly for discussion, but only the chair will really assess the CEO.”

3) Can the leadership team be developed?

If the path or direction of the business changes, the leadership team must be reviewed; it may then become apparent that there are gaps. The question is whether you change the team, develop them, or apply a combination of the two.

But ambitious leaders need to feel they can progress. “There needs to be more focus on development,” argues Jamie Wilson, Managing Director at Criticaleye. “Just because someone has reached the higher echelons of their career doesn’t mean they should stop learning.”

On that point Kevin Barrett, Operations Director at Howden Joinery Group, notes: “The CEO should demonstrate their own personal skills and outline what’s missing around the table. They should then ask: Do we buy those skills in, or does someone want to put their hand up and develop them?”

It’s down to the CEO to lead by example. “I sit down once a quarter with a coach for half a day and talk about my leadership strengths and weaknesses. I’m very reflective and get a lot of feedback from people,” Howard says. “That makes it harder for people to push back on their own development.”

Unfortunately, some leaders may feel they are beyond that. Anne notes: “I found a clear link to those who were keen to learn about their own strengths and development and strong employee engagement. The more resistant leaders, typically, were the ones who needed the most development.”

Reticence may lead to difficult exit decisions. Chris West, Vice President for Commercial Operations at Asda, comments: “It’s better to address things quickly than hope they will get better over time. Focus on what’s probable versus possible.”

4) Are you over-promising on succession?

Every company should be preparing internal talent for future roles, as well as providing continuous development. However, you should think twice before committing anyone to a specific role too early, such as the CEO role.

“That’s a mistake organisations make, they lock themselves in and feel they can’t go back,” Anne continues. “Inevitably, if the business does take a different direction or adopts a new strategy, you end up having to manage a very difficult conversation and the subsequent fall out.”

According to Kevin, there’s a fine line between leadership development and succession; they need to be in balance. It might be more effective to develop someone, rather than bringing in the next person. “You can get sucked into succession planning, so much so that you do it at the expense of leadership development,” he says.

One suggestion for avoiding this pitfall is to focus on a much broader set of leadership skills, rather than being driven by roles. “If you’re specifically developing someone for an ‘as is’ type of role there is a high chance of failure,” Howard says. “You should be preparing people for the ‘to be’ state.”

That’s why the whole leadership team – plus another 100 employees – at BSI have been through a leadership challenge programme. It’s based on methodology developed by the CEO, HR and an external facilitator. It studies an individual’s strengths and weaknesses related to three elements: strategic thinking, relationship building and operational execution.

“My philosophy for leadership development is to build, rotate and change,” Howard says. “You’ve got an organisation stuffed full of really smart, ambitious people who want to learn and develop, give them opportunities, don’t let them atrophy.”

 

This article was inspired by Criticaleye’s recent Executive Breakfast Briefing: How to Strengthen the Leadership Team

By Dawn Murden, Editor, Advisory

Would you like to share your thoughts on developing leadership teams? If so, please email dawn@criticaleye.com

Don’t miss our Community Update next week on innovation.

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How to Support a First Time CEO

Stepping into the CEO role for the first time is a daunting task. You’ll face immense pressure to tackle widespread responsibility at a relentless pace. No CEO can do it alone and a first-timer in particular will need support in making that transition.

“The top job requires so many skills and leadership capabilities that just acquiring them − let alone using them − can seem overwhelming. Once you’re in the role, don’t expect that you can do everything yourself; a strong leadership team should be there to support you and give you time to reflect and decompress,” says Matthew Blagg, CEO of Criticaleye.

We ask leaders for their experience of being, or supporting, a first time CEO. Here’s what they had to say…

Get the Support of the Board

Ron Marsh, Criticaleye Board Mentor and Chairman at Polypipe

For a first time CEO probably the biggest challenge is having the confidence to drive through change in an organisation that they’re not entirely familiar with.

The chairman is there to support them in that, but also to challenge them and respond to their individual needs. He should be supportive without taking responsibility away from the chief executive. It’s more difficult for a NED to directly support the CEO as they don’t have routine interaction with them, but they should provide the sounding board for the chair and CEO to reach a solid conclusion that they can then back.

One of the things a chairman should look for in a new CEO is whether they are overworked – the hours they put in and the sheer effort needed for the job is immense; it can be too much for some.

The main concern is whether the chief executive is feeling lonely and isolated. That often happens when significant changes occur within the top team and at that point the chair should provide a little more help.

Look for Strategic Insight

Catriona Marshall, CEO at Hobbycraft

I joined Hobbycraft in 2011 as a first time CEO. I was heading into a major change programme in a very competitive market with high expectations from my private equity owners. I knew I would need the support of a good board.

The chairman’s role is very important – they maintain a healthy relationship with investors and the board. They should be supportive but also independent. You want them to point out the pitfalls and give you honest advice but also help you on how to get to where you want to be.

From a functional perspective, the CFO should be able to take on things like IT, the supply chain and property but I love to have a buddy on the strategy; someone who can understand the implications of a strategic question.

Getting a CFO who is technically good and commercially savvy is hard, but getting one who can also build a team is the real trick.

Find a Top CFO 

Ian Harley, Criticaleye Board Mentor and former Finance Director and Group CEO at Abbey National

The relationship between a CEO and CFO is the most important in any corporate entity because of the level of contact between them.

They should be complementary – with different strengths and talents – but it’s also very important that they are in locked step; they must move together on the big issues.

I spent five years as CFO to a very charismatic CEO, an ideas factory who sometimes spoke before he thought. When doing investor roadshows with him I’d need to catch those loose balls. My role was to be pragmatic. I also focused on the numbers because he wasn’t technical in terms of accounting.

When I was promoted to CEO I was lucky to be able to pick my own CFO. It was someone I knew from inside the organisation and had worked with for years. If you inherit an incumbent that’s potentially quite tricky – especially if they were a candidate for the top job, which is almost always the case.

Any CEO will have disagreements with the CFO but you must try to have them in private because stakeholders in the business will see the chinks between you and will worry about it, if not try to exploit it.

Create a Team with Complementary Skills 
Greg Morgan, Director at executive search firm Warren Partners

The energy and dynamism of the first time CEO can be a huge asset to any business, especially when well-supported and given the autonomy they crave.

When preparing for a first time CEO role the candidate should be open and honest about their relative blind spots – everyone has them. These could range from having a limited experience of operations, not having done M&A or being a novice in engaging with shareholders or the City. Individuals should involve themselves in situations that enable them to mitigate some of those blind spots.

Businesses that are committed to developing their people will encourage their ‘brightest and best’ to operate outside of their comfort zones and to seize every opportunity to broaden their skillset.

As a first time CEO, it’s no less important to flag where you’re going to need support – the business will not be expecting you to be the finished article; they will respect your honesty and candour and it will get them thinking about the make-up of the team you will need around you.

Potential implications for the business range from hiring or retaining a ‘heavyweight’ CFO to support the new CEO, or asking the chair to remain in the post a while longer.

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4 Tips on Improving Performance

Improving business performance takes strong leadership and immense effort, but neither will have impact if the company’s customers, staff and other stakeholders don’t believe in its future. A good leader will be able to create buy-in from everyone involved and use it to drive change.

When looking to bolster the performance of a company or division, Matthew Tait, Business Restructuring Partner at BDO, emphasises the value of communicating a clear strategy to all involved.

“One risk to recognise about businesses in distress is management’s tendency to lock the doors to the bunker. Despite the evidence, they can believe that no one sees what’s going wrong. Nothing could be further from the truth. Staff, customers, competitors, will know what is happening,” he says.

“A good turnaround plan needs to be agreed by the stakeholders as opposed to being imposed on them. You must understand what you need from each stakeholder – it could be time, funding, or a change in work practices. You also need to understand what the turnaround offers them; if it doesn’t give anything to key stakeholders then the turnaround won’t work.”

Change can be worrying for anyone, but the greatest fear comes from not being informed about where it will lead. As Joe Berwick, Business Development Manager at Criticaleye, highlights: “A clearly communicated strategy is the cornerstone of any successful change programme, and it is the leader’s responsibility to ensure it’s well-received by all stakeholders.”

We spoke to a range of business leaders, each of which have been through a restructuring, to find out how they managed their stakeholders. Here’s what they had to say:

  1. Reassure Your Customers 

When Vanda Murray, Criticaleye Board Mentor and Non-executive Director at Bunzl, led the turnaround of conservatory provider, Ultraframe, where she was UK MD and Group Marketing Director, she knew all key stakeholders had to be involved. “You must engage with them on a meaningful level about what they need, what their issues are and how you will work together,” she says. “The core of the turnaround story should always be the same and it should be based on reality, but you will clearly want different messages for different stakeholder groups.”

One move Vanda made early on in Ultraframe’s turnaround was to reassure customers that the company was reacting positively to market changes.

“The competitor had copied the product and halved the price, the product wasn’t quite as good but it was good enough. Our customers were leaving us in droves; it was a critical situation and action needed to be taken very quickly,”Vanda explains.

“I spent a week on the road speaking with all of the top customers to really understand what was happening. I spoke to most of the senior people in the company and then modelled how it could survive. We made it very clear what we hoped the timeline would be and we told them about our milestones to show we were on track. That was really important for them.”

  1. Build the Right Executive Team

When Andrew Richards took over as Managing Director of Britvic’s newly acquired Irish operations, recession had just hit the country. “We saw a procession of poor numbers, poor productivity and a poor marketplace performance across almost the entire spectrum. The business was failing,” he explains.

Andrew realised that he needed a team fit to take the business through Ireland’s recession; that meant very honest conversations with his executives, culminating in five of the seven leaving the business.

“In my first 90 days, one of my goals was to assess the nature of the loadbearing team,” says Andrew. “When I arrived, the Britvic Group Chief Executive had confidence in the Britvic Ireland executive team we’d inherited, but as we spent time pressure-testing the plan it became apparent that a lot of people weren’t capable of making the journey.

“The first person to exit the executive team, which was within three or four months, was the HRD. He was very well intending but not capable of managing a progressive HR agenda, and he recognised that.”

This process needs to be maintained throughout the change programme – while it’s common to make initial changes to the executive team, continued assessment will ensure the team still carries the skills it needs as the business evolves. “Those who initially feel they’re engaged and involved can begin to lose the energy to continue,” Andrew explains.

  1. Restore Staff Morale 

Low morale will take its toll on any business in decline; it can blight productivity, stain your company culture and lead your best staff towards the door. While emotions are bound to run high, there are ways to improve things – the most important of which are openness and clarity.

“People know when you are being straightforward with them. I talked to the staff in small groups of their own teams, so they felt comfortable enough to ask questions. I was as honest as I could be with them about the changes that would happen,” explains Vanda.

The greatest fear for many employees will be redundancy, so it is important to ensure it is handled properly. “We allowed people to leave with dignity and their heads held high, as much for them as the people left behind,” says Vanda.

It’s also important to understand how cultures vary across regional and international operations. Bryan Marcus, now Chairman of JBR Capital, recalled his experiences while being CEO of Volkswagen’s Latin American financial services division, VWFS.

Tasked with the turnaround of loss-making businesses, Bryan says: “I was a Brit leading a turnaround of German-owned banks in Brazil and Mexico, so the cultural, regulatory and operational challenges were numerous. From my experience, the critical success factors were openness with shareholders, consistency with local stakeholders and to ‘walk the talk’ with the local management teams.

  1. Communicate With the Board

Having led the turnaround of an international division, Bryan is familiar with the complexities of dealing with a distant board, as he explains: “Having worked in a local corporate, one of the challenges I faced was being part of a global corporation with global standards. You need to manage the pressure from headquarters and meet shareholder expectations while creating the time and space for the transformation to take root locally,” he explained.

Andrew faced similar issues at Britvic Ireland and found face-to-face communication was the remedy. “Some of my group executives and board colleagues had less sympathy or understanding of the situation I was in,” he explained.

“One of the ways I tried to work through that was to get the Chairman and a couple of non-execs over to explain what we were grappling with, that’s how I tried to manage my stakeholders back at the group level. Once I’d got them on the ground to see the situation first hand, they started to understand the challenges better.”

Whether you meet your stakeholders in person or build a rapport from afar, it’s imperative that you earn their confidence. As Matthew explains: “You need to have a trusted starting point otherwise people will hear the same messages reiterated but never believe it.”

And as much as you may want it, widespread improvements won’t happen without the belief of others.

Read more on managing your staff through a turnaround and rebuilding a business.

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Connecting with China’s Consumers

Western businesses won’t break the Chinese market with ambition alone. It takes patience, research and knowledge of the market’s consumers. Understand the customer and you will know how to position, alter and grow your offering.

To think that China is a homogenous or static market would be a huge mistake. Criticaleye’s Global Conference Call, Understanding China’s Consumer Landscape aimed to drill down into the complexities of consumer behaviour.

Michael Crompton, General Manager for Asia at Criticaleye, said: “Understanding the consumer is so important. The company − its brand, its product or service and everything it stands for − has to match the desires in the marketplace. Work out what people are passionate about and appeal to that. Also consider product differentiation depending on whether you enter a basic, mid-range or premium market.”

Here are some of the key points to emerge from the call:

Foreign vs Home-Grown 

David Comeau, former President for Asia Pacific at Mondelez International, which owns brands, including Oreo, Chips Ahoy! and Belvita, explained that you can’t just export a Western idea and hope that it’ll stick.

“It’s not simply about bringing a product or idea to China, it’s about how we understand what the Chinese want and do it in a way that feels home-grown,” he said.

To tackle this, David gave his Chinese team the freedom to tailor the brand communication and new product pipeline to suit the market. “We gave them ownership, we set them creating messaging around the brand that made sense to the Chinese consumer so it felt home-grown,” he said.

Remember you will be competing against a rising number of domestic brands, many of which are enjoying growing customer loyalty.

Anne Stevens, Criticaleye Board Mentor and Board Trustee for charity Over The Wall, reflected on the market changes that have occurred since she was Vice President for People & Organisation at Rio Tinto Copper, where she led the people strategy and practices across the Americas and Asia Pacific.

“There has been a rapid amount of change in a relatively short space of time; businesses and products are now viewed differently. In particular by millennials and younger Chinese consumers,” she noted.

“Previously, we saw a lean towards Western products, for example Prada and Burberry in luxury fashion, but now there’s a move towards local brands. Leaders need to stay on top of these changes and tune into what the market is telling them.”

Take Advantage of Trends 

A taste for domestic brands is not the only consumer trend in China and understanding more of them helps you position your product or service.

Chris Riquier is Board Director at Foxley, a platform for website design and online marketing; prior to that was CEO for the market research and market information group, TNS Asia Pacific, where he gained insight into the Chinese market.

On the Conference Call Chris noted some trends that Western companies have done well to adapt to; one of which is the growth of domestic tourism, which outdoor clothing company The North Face has taken advantage of. “Previously, their advertising in China was very much directed at Western experiences such as trekking in The Alps, now it’s directed at urban Chinese who want to experience rural China.”

He also explained that uniqueness and self-expression are of growing importance among Chinese consumers. “Individuality is an intoxicating taboo that is growing within the marketplace and according to research, 64 per cent of consumers within Beijing and Shanghai agreed with the statement: ‘I don’t like it when I see others wearing the same clothes as me,” he shared.

Understand the Channels 

According to Iñaki Amate, Group Director for Greater China at Fjord, Western companies often underestimate the power of digital platforms in China, especially those on mobile.

“It’s important to understand why people behave as they do and why people in China consume media in a different way compared to other markets,” he said. “Always test before you enter, and not just segments; create the persona of the different users before you create the products and services. In a market like China, which is so broad, it may sound challenging but you need to go one level deeper.”

Take the pervasive WeChat, for example. While it is similar to an instant messaging platform like WhatsApp, it also has a payments platform, meaning consumers can order food, taxis, manage their money, sort utility payments, pay traffic parking tickets, check the weather – it has a long list of uses and owner Tencent is constantly developing it.

Chris said: “I come back to a Western market and see the messaging apps we have; they seem positively archaic compared to China. Brands have to be aware of this if they are going to connect with consumers.”

When David was at Mondelez he realised the company had to adapt to the rise of ecommerce in China. “We saw other companies [start] on [nothing] and grow unbelievably quickly – for example, we saw a Chinese nut company called Three Squirrels go from zero to more than 200 million sales online. We weren’t growing like that,” he explained.

That’s when Mondelez started partnership discussions with companies, including internet service portal Tencent and the ecommerce company Alibaba, to develop the business’ online mindset.

“That was a huge win for the organisation in terms of incremental growth. A lot of growth will come from those channels as consumers develop stronger online habits; this is happening elsewhere but China’s leading the way,” said David.

Partnering isn’t a Necessary Evil 

There’s often a presumption that China plays by different rules. One of these is that you must join forces with a Chinese entity to get your business off the ground, but this is not always the case.

Chris at Foxley noted that it’s difficult to make a generic statement about partnering and the best course of action, be it a joint venture, M&A, investment or going in alone. “It’s contingent on what market you are going into, your company and products or services,” he said.

“Apple is an example. Where it has strong products it’s going in alone; where it feels less able to compete it’s going down the partnering or investment route – for example, it has invested $1 billion in the app-based taxi company, Didi Chuxing, which is Uber’s main rival.”

If you’re going to form a partnership, be it via a joint venture with a commercial partner or another type, it must deliver discernible value and include clear roles for those involved. “Partnerships in China need to be seen as a good thing. It’s a real chance to create a ‘one plus one equals three’ scenario,” David adds.

Read more from Chris Riquier, or find out how to organise your leadership team in Asia 

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A Board’s Eye View on Brexit

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Last week, the UK’s referendum delivered a historic vote to leave the European Union. Since then, political uncertainty and market fluctuations have ensued. As the dust began to settle, Criticaleye spoke to a number of executive and non-executive directors to get their views on the recent turn of events.

“Many business leaders were surprised by the decision 51.9 per cent of the UK population took to leave the European Union. Even those that penned intricate contingency plans will now be in a period of uncertainty. What’s needed now is strong leadership and a calm, considered, long-term approach,” says Charlie Wagstaff, Managing Director at Criticaleye.

While predictions are difficult to make, it’s important to assess the situation. As such, we spoke to a number of executives, non-executive directors and advisors to get their thoughts on the forthcoming Brexit.

Steven Cooper, CEO for Personal Banking at Barclays

There is a lot of speculation about the impact of the vote on our industry. Our job is to be there for our customers and ensure our colleagues feel calmly supported – that’s exactly what we’re doing.

The business did contingency planning for either outcome and thank goodness we did because I don’t think many imagined it would come out the way it did. That planning has enabled us to respond without panic and provide reassurance to customers and colleagues.

This is a time for rational decision-making, calmness and focusing on the fundamentals of your business, not getting distracted by short-term volatility. We don’t yet know what leaving Europe actually means and it could be quite a long process.

We’re tracking things like call volumes on the hour. We’ve seen record levels of stock trading but there’s been no additional activity in branches or call centres – people aren’t calling up more or asking for more cash. We were prepared for that but it hasn’t happened.

It’s likely that the UK will go into a modest economic downturn for a reasonably short period of time. Have one eye on it but don’t be distracted from the day-to-day running of the business.

I think there will be some opportunities from this; for example some people are taking the current market positon as a buying opportunity.

Jane Furniss, Criticaleye Board Mentor, Senior Independent Director at the Solicitors Regulation Authority and Non-executive Director at the National Crime Agency

I’m not surprised at the decision, I think the Remain campaign lacked conviction and inspiration, UK governments have been constantly critical of the EU so naturally citizens have grown to believe it’s not a club we should stay in. I’m very sad about the vote as I think the ‘EU project’ has broadly been a force for good.

In terms of the organisations I am involved in, leaving the EU could have a dramatic impact on the freedom of lawyers and law firms to operate across Europe. It could also make cross-Europe co-operation between law enforcement organisations harder.

On the other hand, if we come out of the single market it might be easier to control the movement of criminals into the UK, and reduce the numbers of homeless or jobless people who come from poorer EU countries.

Whatever happens next will take time and the period of uncertainty in the short term could damage public confidence. No one actually knows from experience how to exit the EU, or even what it means.

The referendum is a democratic imperative, not a legal one. In theory the Government could ignore it. If I were still a civil servant, I would advise the Prime Minister to take their time negotiating positive arrangements for our withdrawal, and then get Parliament’s and the country’s agreement before triggering Article 50 of the Lisbon Treaty.

Bill Payne, Criticaleye Board Mentor, Chairman of Primedoc and Non-executive Director at Tekcapital 

I feel some shock [at the referendum outcome] but nobody really knows where this will go.

There are many questions. Will the UK remain in the single market? Will Scotland want independence from the UK and to remain in the EU? Or will the exit negotiations be so horrible that the UK Parliament votes to reject them, triggering a General Election and perhaps a new referendum? Anyone got a crystal ball?

My fear is that investment from Asia will significantly reduce. Asian companies have always seen the UK as a good place to do business, in particular as it gave full access to Europe.

The organisations I’m involved with haven’t made extensive plans. There are no real guidelines or ideas of what the future will look like. So, all you can really do is hunker down and be cautious while carrying on.

In terms of advice to others, I would say prepare scenarios for a number of business cases… full access to EU market, significant trade tariffs, or look to alternative markets. Finally, it is what it is and life goes on.

Simon Warr, Communications Director at National Air Traffic Services (NATS)

Personally, [I feel] disappointed and worried about what Brexit will mean for the country in the years ahead.

The relevant teams [at NATs] examined the voting scenarios and ramifications as far as they could. This was discussed at both executive and board level and where appropriate, contingency plans were put in place.

There will be little immediate effect on the business, apart from any potential impact the economic shock waves will have on air traffic volumes, although these are largely covered through risk sharing mechanisms in our licence.

The longer term will depend entirely on the future relationship the UK forms with the EU and, in particular, whether the UK continues to adhere to the requirements of the EU’s Single European Sky legislation [EU legislation to improve air traffic] as this determines much of what we do.

It will be some time before we can complete a proper assessment. In the meantime, we will maintain dialogue with our customers, regulator and the Government on the options for the future of air traffic control outside the EU.

Leslie Van de Walle, Criticaleye Board Mentor, and Chairman of SIG and Robert Walters

In the short term the impact is uncertainty; people will stop investing and growth will slow down, especially in the UK but also in Europe.

I think the next Q4 and next year’s Q1 will be difficult for UK companies. For international businesses, I think those that have used the UK as their European headquarters will rethink whether or not they want to stay in the UK. For example, Chinese organisations saw London as one of the best places to invest because they wanted to be within the EU. Now they will decide between France, Germany and other places.

Businesses looked at the impact of leaving the EU and had contingency plans, but they were for an orderly world. People are now realising that Brexit has created a political and an economic crisis. Nobody expected David Cameron to step down so quickly; there are lots of decisions that will be postponed until there is a new Prime Minister in place.

At SIG we signed a refinancing contract that was cleared just before the referendum results. [I suspect in future] there will be a problem of liquidity, which at some point might impact on borrowing and the ability to refinance.

There is a lot of noise but people should just continue to run their business and focus on what they can control.

Sally Shorthose, Partner at international law firm Bird & Bird

I don’t think businesses are completely prepared for this eventuality. Even for the leaders of the Remain and Leave campaigns, it was not the result they expected. Of course, the implications could be very far-reaching.

Clients have been asking if they should make allowances and changes to prepare for Brexit. Actually, we’re having to think quite carefully when drafting agreements about a number of things – for example, references to directives and regulations [as] they are likely to fall away in the next few years. Care will also need to be taken in defining the ‘territory’ and with choice of law and dispute resolution clauses to ensure that these survive Brexit, and are even flexible enough to include a broken up UK.

In due course, I would suggest a review of IP portfolios to see if any action needs to be taken – but we need to see what is proposed regarding European Union Trademarks (EUTMs), Community Registered Designs and of course the future of the Unified Patent Court (UPC).

We’ve had a dedicated Brexit [team internally] here at Bird & Bird for about six months; I think it’s very useful [for businesses to] have key people who keep abreast of what’s happening. It’s likely things will change quickly and decisions need to be made. Those people could have a job for much longer than first anticipated.

 

Do you have a view on Brexit that you would like to share? If so, please email dawn@criticaleye.com

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Unlocking the Value of Data

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Mastering data analytics can reveal a multitude of business learnings and the means to improve your products and services, yet the sheer volume of data available often leaves companies immobilised. Here, we detail five simple steps to unlock the value in your data.

1) Be Clear on What You Want to Achieve 

The difference between sitting on a gold mine of information or drowning in it depends on how you approach big data analysis.

Criticaleye’s Managing Director, Charlie Wagstaff, explains: “As is the case in so many aspects of business, it pays to have a clear strategy; it’s no different with data analytics. By knowing what you want to achieve you can hone in on the data you need to accomplish it. Go in as though it’s a treasure hunt and you’ll soon find yourself lost in a sea of information.”

Catriona Marshall, CEO of Hobbycraft, has learned that the best way to benefit from data analytics is to set clear objectives: “We cottoned on to having a customer club a couple of years ago and through it we rapidly built a database of over two million people − and we use really smart analytics with that.

“We haven’t gone for big data and got swamped with finding our way through, or had to put a lot of resources into understanding it, we’ve been really clear on what we were looking to deliver. While we have a mass of data that we can drill into to answer numerous questions, we tend to focus just on what we really need to know to drive specific behaviour.”

2) Present the Information in a Meaningful Way 

The second trick to analytics is to present the information in a meaningful way, explains Peter Lumley, Head of Business Intelligence & Analytics at PA Consulting Group.

“People want something visually rich. They don’t want a flat table of numbers but something they can interact with,” he says.

“You need to pick the right tools for the job. With products like Qlik, Microsoft, Tableau and Niagara Files, there are a whole set of offerings that give you opportunities to do new things.”

As an example, Peter describes how his team at PA Consulting Group worked with the UK’s local Government: “In under an hour we were able to extract their public data, put it into a dashboard and start to build insights. The intriguing part is that if you really understand how a local government works you can bring that data to life. There’s a theme developing on the use of analytics alongside business understanding.”

3) Understand the Etiquette of Big Data 

“Access to swathes of online information has raised public questions about the big brother nature of data analytics and whether it will be used it to ‘spy’ on people,” says Criticaleye’s Charlie. Be aware that you will have to find a balance between interaction and intrusion.

This is something Ruchir Rodrigues, Managing Director of Digital Banking at Barclays, knows first-hand having had to reassure the public of its intentions following the recent release of its data analytics tool, SmartBusiness.

Using transaction information, SmartBusiness allows UK SMEs to track their financial performance, compare themselves with other local businesses and then use Barclay’s online tools to reduce costs and grow the business.

“We’ve got permission from the customer so we’re legally compliant but that is not enough. You have to be very cautious that everyone understands that it’s anonymised information and the customer’s privacy is secure. You have to spend time and energy reassuring the customer, even if you have permission,” says Ruchir.

4) Partner for Quick Progress

Norman Bell, Group strategy and IT Director at Travis Perkins, highlights the widespread challenge of finding the talent needed to support the data function. “Not having enough of that technical capability is a major limitation. There just aren’t enough data analysts coming out of university to meet the growth in demand – which is almost as big as the growth in data.”

At Hobbycraft, Catriona has tackled staffing constraints by partnering with external companies. She explains: “One of the ways that we’ve overcome resource is to contract out to really good partners – these being younger, smaller, really hungry partners who would give us a good deal financially but were really keen to prove themselves.”

Harnessing innovation through partners is at the heart of Barclays’ strategy. Ruchir explains: “We let partners develop on an open platform, which makes it easier for them to show the relevance of their intellectual property and also makes it a more efficient model.”

Through its programme, Accelerator, Barclays supports fintech companies by offering investment, mentoring and business connections and in return gains the latest insights into machine learning, digital banking solutions, cyber security, payments, cryptocurrency, and wealth management.

5) Build an Army of Analysts

Partnering with external companies can build momentum and create a drive for further change internally, yet it’s not enough to support long-term growth and innovation. “As businesses become more inherently digital, so too must their workforce and that means building up the talent from within,” says Charlie.

Peter at PA Consulting Group advocates that talent be built internally. “In our business recruitment is challenging, the people who have the right skills are in high demand, which also affects the market,” he says.

“I think companies are missing a trick in not building the resource internally. Reskill the people you have by building communities around a few very skilled people, it could make a big difference in the long run.”

Ruchir – who sees data and digital as becoming integral to every aspect of business at Barclays − stresses the same point. He says: “It’s difficult to find people who really understand data sciences so we’re encouraging everyone in the business to be analysts. We need to change the culture from going to ask the nerdy people in the corner what the data means, to everyone in the business becoming a data expert.

“If we can change the organisation’s mind set and culture to become more data led then we can get scale behind using information.”

Do you have an interesting story to tell about data analytics? Share your experiences and opinions with maryanne@criticaleye.com

Read more about fintech partnerships and dial into our upcoming Global Conference Call to hear Catriona Marshall discuss the challenges of being a first-time CEO.

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Creating a Mindset for Fast Growth

The challenge for the leaders of fast-growth companies is to master the art of reinvention. It’s a matter of creating teams that possess both the capability and desire to keep rebuilding and improving the business model in order to gain competitive advantage.

Not every company will make the journey. Criticaleye looks at some of the common barriers that need to be overcome when scaling-up a business at pace:

Attitude is everything

The priority for any leader of a fast-growth business is to bring in people who can cope with the demands of ongoing change. Jim Macdonald, CEO at Calvin Capital, says: “We altered our recruitment policy. We had always recruited on a skills and capability basis but changed our first priority to recruiting on the character of the individual and whether we believed they could lead us to growth.”

For Joanne Thompson, CEO of Penrillian, a shift in mindset has been crucial as the software company moves from providing clients with one-off technology solutions, to rolling out its own white-label products.

“The most critical barriers for us to overcome are the ones we set for ourselves through our own lack of imagination, or by too readily accepting the constraints imposed by our current environment,” she says. “By accepting a limit on what’s possible, you make it more difficult to innovate and impossible to completely re-envision an environment in which you’re able to grow rapidly.”

Matthew Blagg, CEO of Criticaleye, agrees that leaders must promote a shift towards a forward-thinking approach. “A business going into growth needs to unlock inhibitors and ensure it is not wedded to the things of the past. It must create an adaptive culture, recognise the potential it has and speed up all elements of the business,” he says.

Stay on top of the numbers 

Many promising businesses have strayed off course due to poor financial management. As Jim notes: “One of the common barriers is not having the funds; there’s no point having a strategy for growth if you don’t have the finance behind it.”

This is something Jay Patel, whose experience covers numerous rapid-growth businesses from publishing to online retail, has learnt first-hand.

Jay, who is now CEO of IMImobile Europe, a software and solutions provider for mobile communications, explains: “A lot of entrepreneurial companies misunderstand revenue growth for success. They typically over service clients and don’t make any money. They then tend to struggle when it comes to funding future growth.

“Anyone looking at growth initiatives should make sure they measure it properly − revenue can be a crude measure.”

Walking the M&A tightrope

An acquisition can rapidly change the fortunes of a business, for better or worse. This is why plenty of thought and planning must go into deciding whether the target company is the right fit.

It’s something that Steve Richards, CEO of Casual Dining Group, knows all about. The multi-branded restaurant company, with subsidiaries including Café Rouge and Bella Italia, acquired the chains La Tasca and Las Iguanas last year.

In the case of Las Iguanas, Casual Dining Group set up a devolved structure. Steve explains: “Anything to do with the consumer, people or brand, we left within the business. The Managing Director of Las Iguanas is continuing to run it with his team. We’ve integrated his IT and finance but haven’t gotten in the way of his business. Getting that balance right is at the heart of the matter.

“Whenever you buy a business you have to remember that you’re doing so because you admire it. We loved lots about Las Iguanas and the fact it’s so scalable. The worst thing you can do when you buy a business is to homogenise it and turn it into your own. So many companies do that through M&A, but that certainly doesn’t work for a consumer-facing business.”

The tactics for combining two businesses will vary by sector, but in no case should the newly acquired entity become a distraction. Stuart Lisle, Tax Partner at professional services firm BDO, comments: “One of the big problems is not planning for integration ahead of doing the deal – a lot of companies focus on the deal first and then think about integration. Issues can build quickly when the two businesses are working on different systems or have different cultures.”

Build capability in your team

Questions on talent, capability and resources will dominate the thoughts of a CEO leading a business through rapid growth. Among the many questions, they will want to think about how much to spend on training and development, how you raise professional standards and improve processes, and whether the senior leadership team is capable of stepping up to the next level.

Joanne explains that she will need to build the company’s workforce in order to match its growth trajectory: “What I am doing at Penrillian, as well as ramping up our permanent resources quickly, is looking to work with partners and contractors while in the process of achieving critical scale. That enables you to recruit in slower time the right people who are able to stay with you on your journey.”

For Jay of IMImobile, an individual and collective sense of responsibility is important. “The one thing I always ask when a business is entering a period of growth is which one of my team is going to handle it? If you don’t have that individual who has put their hand up it’s very difficult to sustain growth, or even believe that you’ll succeed,” he says.

“We have people in 15 territories and operations in about 70, and the one characteristic in people across all those areas is that they are entrepreneurial self-starters that we’ve built trust in.”

Matthew notes that the qualities and skills of the team you require are likely to change over time. “Rapid growth doesn’t go on forever. You can have a team in which the executives are great for growth but not consolidation and the converse is true. A team can evolve if the appetite is there but you’ve got to invest in them as you’re going along,” he concludes.

By Mary-Anne Baldwin, Editor, Corporate

Do you have a view on this subject? If you have an opinion that you’d like to share, please email Mary-Anne at: maryanne@criticaleye.com

Interested in reading more? Find out how to stay calm in an overheated M&A market,
Or, discover the six steps to unlocking performance.

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Give Something Back

While charitable donations are helpful, there’s much more businesses and leaders can do to make a difference to society. Often, an approach beyond financial giving is more effective and, when it’s well-considered, it can unite colleagues and enforce a company’s brand values.

Corporates regularly face pressure to be socially responsible yet can also be criticised when trying to do the right thing; even charitable donations shouldn’t be given without thinking it through.

Facebook boss Mark Zuckerberg and his wife Priscilla Chan announced last year that they would donate 99 per cent of their shares – valued at approximately $45 billion (£30 billion) – to “make the world better.” Yet, because they are looking to establish the philanthropic project as a limited liability company rather than a charitable foundation, many have suggested the initiative is a tax avoidance scheme.

The social network founder is not alone. In September 2014, the leaders of US rifle manufacturer Henry Repeating Arms were criticised for donating proceeds from the sale of custom rifles to a four-year-old battling primary pulmonary hypertension.

Criticaleye finds out how leaders can ensure they get it right when it comes to giving something back:

Align it With Your Strategy 

Don’t just give for the sake of giving – determine your objective and why it fits with your business.

In 2011 Rob Woodward, CEO at Scottish media company STV, set up the STV Children’s Appeal in conjunction with Sir Tom Hunter and The Hunter Foundation. It raises funds for Scotland’s poverty-stricken children.

“There is a horrendous child poverty issue in Scotland that wasn’t particularly publicised. We wanted to tell stories about it, raise awareness and money,” Rob says.

“As Scotland’s largest commercial media company, part of our strategy is to keep close to communities; be local and accessible. So the work that we’re doing through the STV Appeal sits very comfortably in the minds of our consumers.”

The appeal raises money for existing charities or action groups that are shown to make a difference to child poverty; funding is largely used to grow services or duplicate them. So far it has raised £11.1 million, helping just under 60,000 children.

“Our key priority is to demonstrate hope through the success of the projects that we fund,” says Rob.

This year, Criticaleye begun working with The Girls’ Network, a charity that matches girls from low socio-economic backgrounds with inspirational female mentors. Jamie Wilson, Managing Director at Criticaleye, says: “The idea was put forward by one of our younger members of staff, who is now leading the initiative, which in itself has fostered a powerful buy-in across the team.

“Through working with an organisation like The Girls’ Network, we are able to positively impact the future of business by empowering young people to confidently shape their futures. At the same time, it connects our team with the value of mentoring, which is such an important component of our service offering.”

Leaders, Set an Example 

Each year since the STV appeal was launched, Rob has embarked on a personal challenge. In 2015, he did an abseil, kayak and 50-mile cycle in three consecutive days.

“The only way I know to spread the word to all our staff is by doing it myself. I want to do it and set a particular tone – I think this is why we’ve had such overwhelming support from all our staff.”

Martin Hess, Vice President of Enterprise Services Sales for the UK & Ireland at Hewlett-Packard, takes the same hands-on approach. Last year, he and 15 other HP employees travelled to a poverty-stricken township in Cape Town, South Africa, to help build 12 classrooms, two toilet blocks and two playgrounds with the charity Mellon Educate.

“It started as a discussion in the canteen one day between a couple of us,” Martin says. “HP gave us the time off work and supported it by sponsoring us £150 each. We also ran a number of fundraising events throughout the year. It reflected well on HP but we were there as individuals.”

Cisco Systems has been involved with Comic Relief for over 15 years, and around seven years ago Phil Smith, CEO for the UK and Ireland, signed up for a triathlon to raise money. It was then he recognised that his personal involvement was spurring others to set their own challenges. “People were starting to use me as a reason, saying: ‘If the boss can do it, I can.’

So in 2012, Phil founded LeaderBoard, a cross-industry team of over 30 UK CEOs who have since raised thousands of pounds for Comic Relief by competing in triathlons, with another coming up this year.

Get Your Staff on Board 

Charitable work can bring colleagues together, improve relationships and enable staff to feel proud of their achievements.

Martin says that hierarchies went out the window during their South Africa trip: “There were all different levels of people; there were account managers, vice presidents, technical people… when you’re laying breeze blocks or mixing cement, hierarchy is ignored, everybody mucks in together.”

Coming together in this way can really improve staff pride and enjoyment. In Cisco’s last employee engagement survey, 100 per cent of staff said they felt proud to work there, says Phil. “Charity is all part of that. If you just do the day job it’s hard to get that kind of engagement,” he explains.

“When you ask people what they’ve enjoyed the most over the last few years they tend to refer to the things we’ve done on Red Nose Day and for Sports Relief.”

Rob agrees, noting that the STV Appeal has built staff moral and teamwork. “Virtually every member of staff has backed the appeal, whether it’s organising cake bakes, running marathons or climbing mountains. It’s acted as a fantastic catalyst to bring our teams together.”

At Warren Partners, leaders and staff are encouraged to take part in a number of activities, including helping local and national causes through the UK Community Foundations, volunteering days and pro-bono trustee recruitment for charities. Also, since 2008, leaders, staff and friends of the executive search firm have undertaken a biennial sponsored charity bike ride abroad.

“As individuals we learn lots and it fits with our company values,” says Executive Chairman Joëlle Warren. “In helping others, we often benefit the most. It’s hugely meaningful to the team, it really brings you together.”

Make a Real Difference  

While charities find money incredibly useful, longer-lasting initiatives and partnerships can be priceless.

Jane Furniss, Criticaleye Board Mentor and Deputy Chair at homelessness charity Crisis, says: “One off donations are great for specific projects but most charities need a reliable income to meet regular outgoings. Corporate charity of the year events are important and I wouldn’t diminish the value, it’s nice whether you’re getting £5,000 or £500 and there is a strong feeling that the organisation has chosen you, yet a more sustained relationship is of much greater value.”

Joëlle takes pride in the longevity of the relationships they have built with various not-for-profit organisations. “We’ve always believed that the business exists in a system and that we are part of a broader community. I think doing these things helps us to appreciate that in a new way,” she says.

For Martin, it’s all about individuals getting involved: “It’s great when big companies really help charities, but there’s a difference between donating and individuals going right to the coalface in a really poor, destitute environment like we did.”

On a personal level Martin says the experience left him feeling enriched, adding that “most of us spend our lives in a bubble where the only thing that matters is the company and how it’s doing”.

In light of this, Martin is trying to get HP staff more involved in The Prince’s Trust. “HP is a big contributor and I’m the HP representative of the technology leadership group. I’m trying to get more of us to act as direct coaches and mentors to the children that the organisation helps.”

Active involvement is often more powerful than just giving cash. At STV there is an open invitation for staff to visit one of the many projects funded through the appeal. Rob comments: “It’s very humbling when you go to look at some of the projects we have funded; then you realise the enormity of the problem that we are trying to tackle. It brings home the impact we are having.”

By Dawn Murden, Editor, Advisory

Do you have a view on this subject? If you have an opinion that you’d like to share, please email Dawn at: dawn@criticaleye.com
Find out more about the featured charities here:

STV Appeal

The Girls’ Network

UK Community Foundations

Mellon Educate / Martin’s JustGiving Page

LeaderBoard / Comic Relief

Crisis

You can also contact each of the contributors through Criticaleye. 

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Rethinking Your Business Strategy

Companies that have enjoyed success over a sustained period invariably have leadership teams that aren’t afraid to go into uncharted territory. Whether it’s the likes of Apple, Samsung or Virgin, there’s an appetite from the top team to recalibrate strategy so that they can take advantage of new market conditions.

High-quality leaders are defined by their ability to step back and understand why changes have to be made and how they can be executed. Vanda Murray, Criticaleye Board Mentor and Non-executive Director at distribution and outsourcing group Bunzl, says: “A strategy should be dynamic and constantly monitored to see what parts need to be adjusted to fit the marketplace, your customers’ needs and your competitors’ actions. It’s easy to say but quite hard to do in real time.”

Matthew Blagg, CEO of Criticalaye, comments: “From a leadership perspective, when seeking to improve performance it’s essential for CEOs to have the strategic ability to judge an organisation’s capacity for change. They should also be able to create a sense of trust and shared purpose among the senior executive team that enables them to outperform.

“By contrast, mistakes are made when change is pushed through too quickly. All too often, executives are traded in rather than supported, largely because tactical decisions are mistaken for strategic ones. Nearly all great companies take a longer-term view so that they invest and develop top talent throughout the organisation.”

Criticaleye spoke to a range of business leaders to look at how, in very different circumstances, they’ve set about making decisions that have led to an uplift in performance.

Paul McNamara
Group CEO
IFG Group
Until recently, IFG was quite a diverse company but it decided to refocus about 18 months ago. We changed the emphasis from international expansion to being really clear about our target market. By playing to our strengths and capabilities we’re growing profitably.

We had eight businesses where now we have two. We sold subsidiaries including an advisory arm in France, an employee benefits business in Ireland and a small insurance brokerage.

IFG is now very focused on UK high net-worth individuals. We give financial planning advice through our subsidiary, Saunderson House, and also wealth platforms through James Hay. We were able to demonstrate returns from our new strategic focus and in the six months ending June 2015, revenue from James Hay and Saunderson House were up 10 per cent to £34.5 million.

The important part was figuring out how to accelerate the plans and proposition for the two core businesses and understand what was critical to their success. For example, we needed to get James Hay’s infrastructure, IT and processes really fit for purpose and future-proofed. We also upgraded the whole leadership team other than the managing director.

While executives sometimes fear that shrinking business scope could lead to lower profits, we have shown that narrowing our focus has allowed us to increase our return to shareholders.

Howard Kerr
CEO
BSI Group
During my first 60 days as CEO of BSI Group, I realised that the company needed to change and that meant changing the leadership team.

The organisation was successful despite itself, rather than because of itself. It had a great legacy and customer loyalty but it was full of managers, not leaders, and offered jobs but not careers.

While everyone was very happy to take orders, when I looked around for people who could make a difference, I didn’t see them. I wanted to build a more collaborative, market-based organisation, which needed to be more open to taking business risks.
Over a period of 18 months, I changed almost all of my senior management team and they then changed a lot of their people.

A large part of my effort, and that of the HR Director I brought in, was leadership development. We set programmes to help people on their journey.
After three years of change and three more years of consolidation, we’re in good shape. We’ve invested heavily, made acquisitions and expanded geographically. We’ve had six years of continuous revenue growth and are heading towards another record profit this year.

But it took a lot longer than we expected. It takes time for people to warm up to the idea. Don’t assume that everybody is thinking the same and running at the same speed as you.

David Wingfield
Partner
Rutland Partners
One of our successful investments was CeDo, which sells household disposable products such as bin bags and tin foil. When we acquired the company in September 2009, it had a dysfunctional management team and no clear strategy. It was a market leading business, but there was significant scope for it to improve. We sold it last year and made 2.8x our original investment.

We worked closely with the UK MD, who was promoted to CEO, to develop the strategy. The main tenets were factory and operational improvements, the reduction of overhead costs and efficiency gains.

The lesson was to have clear alignment of the strategy and the right team to execute the plan. In this instance we made wholesale changes to the executive team. Getting the right people in place is critical, because that can cost you a lot of time otherwise.

We also had to be reactive. For example, we had a Chinese factory that was making some of the more labour intensive products, Chinese wage inflation went up considerably so we set up a new factory in Vietnam from scratch. That wasn’t in the original plan.

Vanda Murray
Criticaleye Board Mentor 
Portfolio NED 
I worked at a company that produced high-end security systems which it sold through distributors. We were getting stuck and couldn’t grow, so we decided to change the way we sold.

We moved away from trading exclusively through distributors to selling to the installers of our equipment as well. We had to put a lot of support in place to enable us to do that; much bigger and better customer services and technical support. It required total commitment from the whole team and everyone had to upskill.

We had a good strategic plan in place and that gave us the confidence to begin, but you also need the right people and an understanding of the business, its market and customers.

We tested our strategy with customers and knowledgeable people in our industry. We had a hit list of 100 installers that we wanted to work with. We talked generally with a few of them and had a day when we met them all, which changed the dynamic of the business completely.

We immediately improved the profitability and quadrupled it in three years. I started out as marketing director, led this change and then became managing director.

By Mary-Anne Baldwin, Editor, Corporate

Do you have a view on this subject? If you have an opinion that you’d like to share, please email Mary-Anne at: maryanneb@criticaleye.net

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