Archive for June, 2014

Ready, Set, Grow! This Week: Combine Activities

Monday, June 30th, 2014

Ready Set Grow
I don’t know about you, but I can’t stand waiting. To me, for example, waiting in line means time wasted. An acquaintance of mine, a manager at IKEA, Germany, once said to me while in line for the cashier of an understaffed and utterly overflowing furniture store, and I brought up the subject. “Herr Quelle, you see what’s going on here. Lines are for crap.” He used even stronger language, but he’s right.

How do you make your unproductive time more productive? Here are a few tips:

  • While you are waiting in line, answer emails that are easy to respond to. That works whether you’re at the airport or the supermarket.
  • Make a plan to accomplish something while on a train trip. It should be about things that you don’t need a computer for. That way, no one can see what you’re doing. Don’t make telephone calls while on the train. Too loud. Too many interruptions. Too public.
  • Listen to audio books in the car.
  • In the car, make phone calls planned in advance not to require you to be at your desk—ideally with the hands-free setup built into the car and not with some low-cost device.
  • Even better: Get yourself a chauffeur. If you don’t have your own driver, but you know a discreet, self-employed taxi driver whom you can trust, ask him whether he can occasionally drive you in your car and bill you for it. Or use “uber.com” or “Mydriver.” Then work in the car (or sleep, if you have a sleep deficit . . .).
  • Have you tried taking a night train? Travel, eat, drive, sleep, sometimes even with your car “on your back.” Shower in your room. A rolling hotel. Not bad.
  • Make sure that you have access to a lounge, for trains and planes. If you don’t as a rule fly business- or first-class or are not a member of a frequent-flier program, become a member of Priority Pass® or other lounge network. American Express® offers free Priority Pass® with a Platinum-Card® or higher. You get worldwide access to hundreds of lounges. Work in the lounge. Eat there, too.
  • Get in the habit of having lunch with people you would like to meet. Why shouldn’t all of us mix lunch with conversation. By the way, this is significantly easier to do than to arrange dinner. It doesn’t take as long, is a small break, and doesn’t keep you away from your family.

We can extend the list as you wish. What are your top tips for combining activities?

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved. © Sprinter: mezzotint_fotolia – Fotolia.com

Car-Purchasing Experience, the Sequel—This Time: Jeep

Friday, June 27th, 2014

In my search for a new car, a Jeep Grand Cherokee SRT is also on the agenda. OK, so I contact the dealer.
A friendly lady at the switchboard: “Autohaus . . . good afternoon.”

  • Me: “Good afternoon. Who should I talk to for a quote on a Grand Cherokee SRT?
  • She: “You want to buy a car?”
  • Me: “Perhaps. I’d like a quote.”
  • She: “The salesman is busy right now. Please call back a little later.”
  • Me: “No, I’m not going to do that. Please give me the email address, so I can send a configuration and then wait for a quote.”
  • She: “I’m not allowed to share the email address.”
  • Me: “Say again?”
  • She: “I’m not allowed to share the email address.”
  • Me: “Then give me the dealership email address.”
  • She: “But you could just as well call back.”
  • Me: “No, I’m not going to do that.”
  • She: “Or go to our website.”
  • Me: “No, I’m not going to do that, either. What would I do there? You want to sell cars, right?”
  • She: “I’m sorry.”

I ended the conversation.

This was either a misunderstanding, or the store is abysmally managed. And by the way, I doubt that this is an isolated incident. The management will never learn that their dealership just now lost the opportunity for a lucrative deal. I’m not going to tell them about it; to do so would be of no value to me. And the switchboard lady will certainly not have understood. She didn’t even take my name—that’s a dead end.

How many deals slip past you because your team doesn’t deal appropriately with customers.

 
© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

What Stands Between Private-Equity Firms and Their Companies, Part 2: Proliferating Control Systems

Wednesday, June 25th, 2014

Here is the next part of my short series about obstacles to growth between private-equity firms and their companies. They come from my presentation “Who Pays the Piper Calls the Tune—What Private-Equity Firms are Regularly Missing” as part of the German Private-Equity Conference 2014 in Frankfurt am Main.

So what does often stand in the way of the relationship between private-equity firms and “their” companies?

Part 2: Proliferating Control Systems

One of the fundamental competencies of private-equity firms is their virtuosity with numbers. It is not rare for a company that has been taken to benefit from this skill quite quickly. Indeed, a high degree of professionalization is often reached. Typical control systems established by private-equity firms—systems that we see in our consulting projects—make possible every kind of analysis imaginable, right up to simulation. No wonder! In the end, you want to report to investors and banks regularly and accurately.

Yet in this context, sledgehammers are often used to swat flies. Some control systems are simply so bulky that they discourage management from doing what they’re paid for: to steer the company toward growth. A great many meetings only about control poses the risk of forcing the topic of material progress into the background.

The pinnacle is reached when entire systems are changed—as we have seen, for example, in the context of “secondaries,” where one private-equity firm takes over a company from another private-equity firm. In this situation, a first-class, oversize control system is changed over to another first-class, oversize control system. More precisely: A project comes to life because in reality, there can be no talk of “changeover.” These systems, which are then called the “control tower” or the like, can hold back a company significantly.

Overcome the hurdles. Less is more. The control system must fit the company. And, if you set aside your ego slightly, a private-equity firm that takes over a company can also simply take over the world-class system of another private-equity firm. That also saves time.

 
© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Ready, Set, Grow! This Week: Time is More Important than Money

Monday, June 23rd, 2014

Ready Set Grow

When I used to lecture on self-management, sooner or later we came to the point where I told my students that time is more important than money. You can imagine what the usual reaction was. Correct. “That’s all well and good for you to say!” Especially students financing their own studies—which is definitely a challenge at the private college where I teach—couldn’t imagine such a thing. Time is more important than money? Impossible.

But it’s true. If we lose 50 bucks, we can earn it back. If we don’t get an order, we’ll get another one. But if we lose an hour, it’s gone forever. Among other things, this also means that poorly-paid deals are bad deals indeed. I find it preferable to lie in a hammock than to accept a crummy order.

So let’s make the best use of each hour of every day, and not wait around for some better time to come along. We are the ones who decide whether an hour will be well spent, or not.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved. © Sprinter: mezzotint_fotolia – Fotolia.com

Don’t Take On Every Customer—and Also Not Every Project

Wednesday, June 18th, 2014

Dear sales professionals: There are bad customers, too. You know that. Customers who pay late or not at all. Customers who squeeze you to the bitter end over the last penny, but who aren’t prepared to acknowledge performance. Customers who, after a first-rate performance or delivery of a topnotch product, nevertheless try to find something to grouse about so they won’t have to cough up part of the final payment. Customers who believe that you are dependent upon them—and then play from this position. Dear sales professionals: You know this perfectly well.

Then why are such customers taken on? Why do you permit your company to develop business relationships with such undesirable customers? But, you protest, I can’t tell that right away. Although I am of the theory that there are already many signs at the beginning of a so-called partnership that signal a bad customer, you will concede that the following question arises: When you at last realize that you have a bad customer, why don’t you fire him? In my experience, that rarely happens, if ever.

In my experience, bad deals are too often made knowing that they will indeed be bad deals, and that too often, bad customer-relationships are continued in full knowledge that the relationship will not improve. But a sales department that is strong on growth—and that begins with the sales-department leadership, with the head of sales—finds ways to recognize bad customers and not take them on in the first place. If this mistake is made again, a sales department strong on growth finds the ways and means to quickly free itself from such toxic relationships.

What are your criteria for taking on a customer? How do you make sure that these criteria will also serve you well in bad times?

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Ready, Set, Grow! Do You Know Why You Do What You Do?

Monday, June 16th, 2014

Ready Set Grow
At one of our annual Mandat strategy sessions, we addressed our personal motives for our actions. The question was: “What are your three primary motivations? What drives you forward?” Each of us has found motives he (or she) could use to explain most of their actions—or lack thereof.

Do you know the motivations for your actions? What are they? Now, the question arises of whether the things you do dovetail with the motives that stir you to action. When this is not the case, the result will be inefficiency or reluctance at the very least, and possibly even frustration. All demand a change. At the same time, it’s not all that helpful to change your motives without also changing the underlying circumstances.

Or do you not yet know why you do what you do? Then this week would be a good opportunity to address the situation. Don’t make a scientific inquiry out of this; you can have something on paper in 30 minutes. Examples? Gladly: Is it the pursuit of relevance? Wanting to accomplish something in concert with others? To take on responsibility? To create a legacy? Is it freedom? Recognition? The feeling of being needed? Or is it something else?

When you take yourself to this plane, you will understand why you do some things and not others, and you will understand why some of your projects make better progress than others. All essential aspects of growth. Have fun.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.
© Sprinter: mezzotint_fotolia – Fotolia.com

What if . . . You’ve Missed the Fact that Your Customers See You as Dispensable?

Sunday, June 15th, 2014

Some of our clients notice too late that, instead of having made themselves indispensable to their customers over the years, they have done just the opposite. This very often happens in the supply business. Under the assumption that you have developed a relationship of mutual trust with your customer’s decision-maker over the years, and that fas far as you are aware, the amount, quality, and price have been satisfactory for all concerned, you go into autopilot mode. An order comes in, you make an offer, you get the contract, and you deliver the goods.

But what happens if new competitors appear on the scene? What if your customer, through the convenience of globalization, gains access to markets that a few years ago seemed impossible to enter profitably. What if the decision-makers, with whom you had such a good relationship, are replaced by others? What if a committee—such as a product-line committee or a purchasing department, for example—becomes part of the process because of compliance or for some other reason?

We have often come across existing business relationships that have been destabilized by such circumstances and for other reasons. Often, the causes are right before your eyes: You stopped cultivating customer relations, or you would have anticipated these eventualities with your customers. You stopped innovating and did only what was required. You didn’t build an international network that would have allowed you to offer high quality—which is still in demand—under more advantageous conditions.

The bad news: Many lucrative customer relationships have been lost over the years. The good news: Recognized (just) in time, some of them can be salvaged. Or you can forge new, lucrative relationships. The key to all of this is a structured growth-initiative in sales. The more so, when sales isn’t exactly enamored of the idea.

 

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

What Stands Between Private-Equity Firms and Their Companies, Part 1: Toward a Sharper Focus on Financial Aspects

Saturday, June 14th, 2014

Herewith, as promised, is a short series about obstacles to growth between private-equity firms and their companies. They come from my presentation “Who Pays the Piper Calls the Tune—What Private-Equity Firms are Regularly Missing” as part of the German Private-Equity Conference 2014 in Frankfurt am Main.

So what does often stand in the way of the relationship between private-equity firms and “their” companies?

Part 1: Toward a Sharper Focus on Financial Aspects

Absolutely. Private-equity investments are all about money. Often about a great deal of money. The investors want to earn just as much from the deal as management, which not uncommonly also become investors. That is fine, too, as long as it doesn’t affect the substance of the company.

But: It is easy to forget that company employees do not necessarily “perform” for money. Of course, there are employees who run faster when there is more money to be had, but most employees are won over by substance, by collective achievement, by goals, completed sections of a path agreed to in advance—not by operating numbers, salary, profits, EBITDA—and the number of employees will increase before it will decrease.

The junior designer would like to design cool products. The head of marketing would like to develop the brand. The young engineer would like to improve procedures. Money is a so-called “hygiene factor,” not a tool for motivation.

Overcome the obstacles. Private-equity firms are well advised to grapple with the the substance of a business and engage employees in a conversation about that. Discussions of financial aspects ought to be reserved for boards that assume control of financial management and communications.

 

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Clean or Replace the Pipe, not Enlarge It

Friday, June 13th, 2014

When a water line or a drain line is plugged, there are two possibilities: Either the line is cleaned, decalcified or unjammed, or it is replaced. No one would think of encasing the existing pipe in a new one, with the expectation that flow in either direction would be improved.

But all too often, I see exactly that in business. Processes don’t run as they should. So instead of purging them, instead of defining new processes because the old “pipelines” are calcified, instead of reducing the number of procedures, additional loops are introduced, staff assigned, quality-control programs established—all of which are intended to assure that performance will improve. Instead of changing something structurally, “more of the same” is brought to bear. The result: The “pipes” become superficially wider, but at the same time, the internal diameter remains inadequate. It takes more effort to achieve the same performance. But even worse, the increased effort cannot prevent further clogging of the “pipes” (or processes, in other words), and performance actually declines. Sometimes, when accompanied by increasing pressure from the top, the whole thing becomes an explosive situation.

“But we’ve really done everything we can to increase performance!” I hear that all the time. No, you haven’t. You’ve only added to the problem. Intelligence about growth means intelligence about giving things up, not “more of the same.” Clean your “pipes,” replace them, build a new structure. But don’t expect to be able to generate better performance by simply adding things to the old one. As a rule, that doesn’t work.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.

Growth Leverage for Private-Equity Firms and the Companies in Their Portfolios

Wednesday, June 11th, 2014

“Who Pays the Piper Calls the Tune – What Private Equity Firms are Regularly Missing”—this was the title of my VIP-dinner speech on the evening preceding the German Private Equity Conference 2014, in Frankfurt. Before an audience of decision-makers and CEOs of private-equity firms, I addressed five factors that, from our consulting experience, often stand in the way of even more effective cooperation between private-equity firms and their portfolio companies:

  1. Too much focus on money
  2. Oversize controlling systems
  3. Poorly defined roles, competences, and responsibilities
  4. Lack of interest in people and processes
  5. PI: “Project Inflation”

The intentionally provocative presentation (“Too much focus on money?? In the private-equity sphere??”) produced an animated response and offered additional topics for discussion during the subsequent VIP dinner. The general tenor: A good relationship between company management and its private-equity shareholders rests on mutual understanding and trust, which in turn forms the indispensable basis for profitable growth.

If you would like to watch the speech, you can download a video of “Who Pays the Piper Calls the Tune” (ca 800 MB) here.

Over the next few weeks in this column, I’ll address each of the five points.

© 2014, Prof. Dr. Guido Quelle, Mandat Consulting Group, Dortmund, London, New York. All rights reserved.