Where have all the leaders gone?

I had promised to discuss the New Venture BC seminar series I attended earlier this year in my last post. I decided to write about a very interesting conversation I had this week with a colleague instead. This person used to be passionate about the company we work for. Sadly frustration has made way to apathy now. I can assure readers this problem is not limited to where I work. Employee engagement remains a huge problem for most companies. A recent article in BusinessWeek suggests that employee engagement is at all time low in the US. Most employees no longer fear losing their jobs. The emotional attachment and loyalty many employees used to have for their employers and leaders is gone.

The HR leadership council has published excellent reports this year supported by qualitative data to highlight the problem. For a less robust analysis of the problem but a far more interesting read you can check out an online site called glassdoor.com. The site invites employees to rate their company and share salary information. For potential candidates you can check out previous candidates comments on interviews and how some employees really feel about their company. There is a lot of angry people venting about the perceived failures of their employers. Take  the time to read more and you will find a lot of very insightful and more balanced comments as well. As an MBA student it is very interesting to compare what we read in textbooks with feedback on the site. For example, I frequently read about the fantastic work culture at SouthWest airlines. This was reflected in the feedback on the site even in challenging times.  Other companies, fare less well…..

A couple of interesting trends are evident when I compared large competitors to the company I work for.

  1. Many employees have had their cheese moved. A lot don’t like it!
  2. Companies trying to reinvent themselves to survive have struggled to communicate their strategy in a way that resonates with their employees.
  3. Many outsiders brought in to implement the new visions are clearly resented at these organizations.
  4. Due to downsizing, there are fewer leaders accessible to employees to discuss challenges candidly in a personal way.

There was more interesting feedback of course. I’ll focus on the points above for now. These trends are indicative of a pretty treacherous operating environment for leaders. How can they reconnect with their disillusioned workforces? The colleague I mentioned earlier has little faith in leaders any more. I understand the frustration. I see things differently though. Put yourself in an executive’s shoes for a moment. Presumably many know they are not trusted. Most executives probably have more responsibility after the layoffs of the past few years.  They are under huge pressure to deliver or face the chop themselves.  Many are leading business transformation initiatives. This means they have many urgent, complex and strategic problems to solve.  As a result they have less time to deal with employee morale and engagement which is silently killing productivity. To make matters worse companies operate in a tough economy which severely restricts their ability to reward high performance. That is a “sticky wicket” as the English would say.

My colleague had several good points though. It seems to me many leaders needlessly lose credibility when their actions don’t align with their words. For example, it is fine to talk about “walking the halls” and more personal contact. Is this really possible any longer for more some senior executives who are constantly on the road? New expectations could be set and communicated to reflect the new reality. Even more importantly, replacement local leaders must be identified and available to hear employees concerns and perspectives. A local leadership team prepared to speak to the company strategy on a regular basis could be an excellent start to rebuild a local employee culture. Social media has shown a pull communication strategy is likely a more successful approach to build a community. Make attendance optional. Employees interested will go. They will share their perspective with colleagues not inclined to attend but curious to know what is going on in the company.  A small group genuinely interested in the topics at hand offers a far enjoyable and productive meeting for all concerned. These small groups are the linchpins company’s need to re-energize the base.

I have also seen leaders implement successful tactics where I work that could be of interest to readers. The corporate intranet is much more relevant than before. An “Ask the Executive” feature was added which has been a great way to foster open communication. For now it is limited to a Q&A format with no comments possible. Apparently this feature will roll out shortly which will raise communication to a new level.  There is no easy answer to the leadership problems executives face at the moment. Executives are  not the enemy. They are chronically overloaded. Most are doing their best and willing to do the right thing. It’s tough at the top!

On a side note, it is important to know I have not followed this advice many times over the years. Hopefully, I am wiser as I get older. :)

Is there a market in the gap?

I was flattered to be asked to review a business plan for a potential online venture back in Ireland recently. It’s rewarding to know that some people are interested in what I write. Without going into details the guys core idea is to leverage crowd sourcing much like Innocentive in the US. Their mission is to connect bright people with businesses that need creative solutions to their problems. They identified a niche in the Irish market and created a business plan. Now it’s time to execute. Good for them! I wish I was that smart and ambitious when I was in my twenties.

I suggested they consider the following points as they move their venture forward. The text in italics is my direct response to them. The comments later are some general thoughts and personal experience on the topic.

1.       It sounds like your biggest “threat” is non-consumption. How is your target market surviving so far without your product? The QuakeAware team is taking a well deserved break to avoid burnout. We are faced with a similar challenge. Most agree our smart phone app is a cool idea. The fact is everyone has survived so far without it though. What is the “hook” you have to really capture the attention and imagination of non-consumers?

2.       It’s not clear to me how you plan to monetize your product (Online advertising, subscription etc ) Similar to point 1 it’s one thing to have a good idea. It’s quite another to persuade others to pay for it. Music is a great example. While many people are willing to pay for great music online through iTunes I believe far more people will download music illegally for free. Many of us love good music.  Why pay for something you don’t have to though? (I am not making a moral judgment. My intent is to highlight a business reality that is severely impacting profits in the music industry)

3.       How do you protect yourself against imitation? Branding is one way of course but new entrants typically lack the money or time to build a brand quickly. If your product is  manufactured your costs will need to be negligible to compete effectively with the Chinese. If your product or service is in software and you are successful it won’t be long before many “me too” products are competing against you. If you were your competitor trying to steal market share, what strategies would you consider?

4.       If you prove the market and gain a sizeable user base how will you compete when a larger competitor enters? They will have deeper pockets, more resources and a better brand. Many larger firms will let newer entrants prove a market before deciding to enter. Some will try to acquire their competitors. Others will simply engage in nasty price wars to drive out the small competition. It will be even worse if they don’t come. That means there really is no market in the gap after all.

5.      What barriers to entry are there? If none, how long can you generate a decent profit? In short, no barriers to entry means the chance to make high margins is not very long.

6.       Do you have a target niche you plan to go after first? Govt, industry and research is quite broad. What does your perfect customer look like? I read a fantastic book called “Crossing the chasm” by Geoffrey Moore. A key point in his research is that entrepreneurs need to be very selective and pick a niche they can dominate before attempting to compete in other markets. Attempting to please everybody may bring in more revenue in the short run but really hurts your ability to develop a sustainable competitive advantage over time. It takes a lot of discipline to research and then limit your enterprise to a narrow niche in the short run. 

In my next post I’ll share some key learning’s from New Venture’s BC seminar series I attended earlier this year. The series was dedicated to start-ups from the investor perspective.

Dining with the CTO

The Accpac R&D management team was invited out to dinner with the new Chief Technology Officer of Sage North America, Motasim Najib earlier this week. It was a very interesting and enjoyable evening. We had no idea we were going to be invited to dinner which was good and bad. Good, because dinner was  informal, unfortunate because perhaps I could have prepared a little better had I known. Anyway on to the highlights and some observations from the evening. Continue reading

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