Reflections on Independence and Leadership

What does independence mean?  Having spent much of yesterday musing on the topic, I have a fresh perspective that I want to share.  Of course, Independence Day (and please, don’t ever just call it the Fourth) celebrates the day the Declaration of Independence was published – but in declaring independence from an oppressive colonial power driven by a whimsical and arrogant monarch, the Founding Fathers turned right around and affirmed their dependence upon God and on one another with these words: “And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.”  Re-reading these closing words, which I believe to have been as important to the ultimate success of the Revolutionary War as the stirring declaration of human rights that opens it, gave me reason to re-examine the notion of independence.

Independence is often painted as the opposite of dependence, but even a casual review of American history provides all the evidence needed to refute such a definition.  Every chapter in our story is replete with examples of people depending upon one another  - whether it be the Revolutionary War, the taming of the West, or the attainment of equality.  Great American heroes – think of George Washington, Davy Crockett, Martin Luther King - no matter how ruggedly individual or incredibly gifted, lent their support to causes that could only succeed if others joined them, and are largely remembered for their achievements in the service of those causes.

The truth is that most meaningful endeavors in our history have required that people join together in common cause, and place their dependence upon one another – this is true whether the endeavor was almost impossible (founding the Nation), simply huge (settling the West), or socially difficult (Civil Rights).  The circumstances of our nation’s founding, and its subsequent rise to preeminence, are often ascribed to a phenomenon labeled American Exceptionalism, but it is important to recognize that American Exceptionalism is built on the foundation of exceptional individuals who found their place as leaders of and/or contributors to exceptional teams, groups or movements.

However, this line of thinking does not lead me to a collectivist, socialist or statist viewpoint, where dependence on a central authority and membership of teams, groups or movements is both mandatory and enforced – far from it.  Going back to the Declaration of Independence again, take a look at perhaps the most famous words from it – the second sentence: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”  This statement of the natural rights of individual humans, which derive not from the generosity of any temporal authority but are explicit in the very fact of their being, is fundamental to the the American national character – and says nothing at all about teams, groups or movements.  

So, then, how to resolve the apparent conflict between individual rights and collective achievements in America as we know it today?  It’s simple, really.  In America, collective achievements arise out of the free choices of individuals to associate for common cause – and, in choosing to participate, individuals do not surrender their individuality.  Instead they are independent contributors, free to dis-associate from the collective enterprise, but choosing to depend on others as others will depend on them in service to their common goal.  It is the voluntary nature of both their association and their individual contributions that gives rise to the exceptional collective achievements of Americans.

Finally, what is the implication of these insights into the meaning of independence for business and political leaders?  Again, it is simple: to lead Americans, you must respect and value them as individuals, because they are free to choose whether to follow you, or not.  Or, as Davy Crockett put it: “I bark at no man’s bid. I will never come and go, and fetch and carry, at the whistle of the great man in the White House no matter who he is.”

2011
07/05
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Thanks, Dad

I learned much from my father, and I also failed to learn much that could have saved me a lot of pain, in life and in business. While he lived, and after I had matured sufficiently to understand both what I had gained and what I could have gained, I was able to share this insight with him, and hear him tell me he had come to the same realization, and had the same conversation, with his father…

My father’s life was not easy, and he struggled to cope with the challenges it threw at him – he was human, after all, and flawed like all of us. Some things I learned by listening to what he said, some by watching what he did, and some as a consequence of failing to watch or listen – he mostly taught by example, and occasionally emphasized a lesson with strong words or a firm hand. At times, as I paid my dues to the rites of passage, we were at odds, sometimes almost estranged – and yet, whenever I was deeply troubled by something in life, whenever I needed someone to listen and understand, his was the company I sought out, his was the ear I bent, his was the advice that I needed.

I came to understand the truth of what he taught me as I stood to give the eulogy at his funeral. I realized that what I had written was not what I wanted to say, because it was not about what mattered most to me, or what would have mattered most to him. The truth was (and is), my father taught me that respect is earned, that work is hard, that burdens must be carried, that truth must be told, that debts must be paid, that promises must be kept, that actions have consequences. He taught me that reputations are made in a lifetime and lost in an instant, that true friends are rare, that a word spoken cannot be unsaid. He taught me to walk tall, be bold, do my duty, love passionately, live with honor, and ask for forgiveness.

Above all else, he taught me how to be a man in a hard world.

Thanks, Dad.

2011
06/19
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Back From The Void

I am mortified to note that it is almost eight months since my last post, during which time the world has continued to spin, matters of note have occurred and been commented upon by others, and my own energies have been necessarily focused elsewhere.  For several months in the fall and winter, I was preoccupied entirely with the sale of EquaTerra to KPMG, a milestone transaction that completed in February – and for the last three months, my entire attention has been focused on getting up to speed in my new role as CEO at Cardon Healthcare, a market leader in healthcare revenue cycle management services.

However, the hiatus is over, the siren song of the keyboard has been heard again, and I am, at last, back from the void!

2011
06/19
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Uncertain Federal Tax Rates Make Business Planning Risky

Third in a series of posts examining the Ten Tyrants of Uncertainty – ten factors causing US business to sit on the economic sidelines and contributing to the extended ‘jobless recovery’.

2011 is set to see the largest across-the-board tax hikes in US history, when the so-called ‘Bush tax cuts’ expire and rates return to their previous levels. Personal and corporate income tax, capital gains tax, dividend tax and estate tax are all set for substantial hikes.  Maybe.  Or maybe, after the mid-term elections next week with a different political climate  and a new Republican House majority in Washington, D.C., the Bush tax cuts will be continued for another 12 or 24 months, either selectively or in aggregate.  We will not know until late November or early December, when we find out how much backbone the newly elected ‘fiscally conservative’ Republicans actually have, whether any kind of bipartisan spirit emerges, and what the Lame Duck Democratic House majority decides to do with its expired mandate (see my earlier post “Business Worries about the ‘Lame Duck’ Session“).

There are two separate problems with the uncertainty regarding Federal tax rates for 2011 and beyond: one is that uncertainty, specially when the divergence between the two scenarios is as drastic as it is in the current situation, makes it very hard to plan – and when it is hard to plan, business and investors usually become hyper-cautious and consumers defer spending and save rather than borrow; and the second is that, if the Bush tax cuts are reversed or, even worse, additional increases are layered on top of a return to pre-Bush tax rates, consumer demand (which is already on life support) will collapse and any meaningful recovery in the US will be further delayed, with dire consequences for many businesses.  The reality, though, is that uncertainty has the same short term impact as an actual tax rate hike.  Consumers are not spending, business is not investing, and jobs are not being created at anything like the rate needed to pull the economy out of the ditch and get it nose-up again. If this behavior continues long enough, it will become institutionalized – savings will replace credit and cost management will replace growth capital as the new consumer and corporate norms – and we will be set for an extended recession with the risk of it deepening into a true depression.

Another consequence of the current, uncertainty-reduceded level of economic activity is that the gross tax take at every level in government will continue at its current reduced levels, or potentially decline even further, driving demand for additional borrowings to sustain spending commitments and making it harder to service (let alone reduce) our national debt…  Of course, as a fiscal conservative it is my own view that, if the uncertainty is resolved in favor of higher tax rates the net effect will be to reduce the gross tax take anyway, as economic out-performers respond to the perverse incentive by emulating John Galt.

The Bottom Line: Until the uncertainty surrounding the future Federal tax rates is resolved, it will remain yet another factor conspiring to keep businesses sitting in the economic sidelines, waiting for clear signals before committing capital to growth – and, the uncertainty had better be resolved in favor of sustaining the current rates rather than increasing them, if we hope to see an end to the ‘jobless recovery’ and any kind of broad-based improvement in consumer economic circumstances any time soon.

2010
10/26
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Business Worries about the ‘Lame Duck’ Session

Second in a series of posts examining the Ten Tyrants of Uncertainty – ten factors causing US business to sit on the economic sidelines and contributing to the extended ‘jobless recovery’.

Previously, we identified concerns about the US mid-term elections as one key factor driving the ‘decision paralysis’ that is prevalent in the US business community – with the result that businesses are not investing in growth, and not creating the jobs needed to accelerate consumer confidence and consumer spending, create a definitive end to the recession and turn the corner on unemployment.  Another political factor reinforcing the decision by businesses to sit on the sidelines of the economy, which is particularly relevant when you consider that a GOP victory that will hand control of at least the House of Representatives and possibly the Senate to the Republicans, is a growing concern that the Administration will try to use the ‘Lame Duck’ session to force through unpopular and economically damaging policies that will further undermine the outlook for recovery.

For those who may not be familiar with the way the US legislative system works, a Lame Duck session occurs when control of either House or Senate switches hands to the period between the day the election results become known – mostly the day of and the day after the election, which takes place in November – and the day that the newly elected representatives are seated, which occurs on January 3. During this period, incumbents who lost their seats in the election remain in office until the balance of their term runs out, and continue to form a majority.

The political calculus here is that, as these individuals have already lost, they may no longer feel constrained (to the extent that they ever did) by the wishes or best interests of their constituents, and may be prepared to vote in support of measures that they would have rejected when they still needed electoral support to retain their seats.  In recent history, Lame Duck sessions have been largely uncontroversial, but there have been disastrous examples in the past – most notably, the 1860-1861 session that at least contributed to if not directly caused the Civil War, and the 1932-1933 session that massively amplified the effects of the recession, caused thousands of bank failures and was one of the root causes of the Great Depression.  However, based on the disregard displayed by the administration during the last two years for majority opinion, despite the recent history of respecting the verdict of the electorate during the Lame Duck session, this time might be different.

Business is particularly concerned about the vast and complex proposed legislation focused on energy policy – often referred to as ‘Cap & Trade’ (by proponents) or ‘Cap & Tax’ (by opponents).  While a small number of business that have carefully positioned themselves to profit from it would cheer loud and long if such legislation were rammed, many (possibly most) business decision makers are very concerned that the impact on their businesses (and therefore on our economy) would range from crippling to devastating.  The cost of all manufacturing activities, all production activities, all distribution activities, all business travel would escalate substantially – and this cost would inevitably have to be passed on to their customers.  Demand would be reduced by the escalated prices, and business revenues and profitability would likely be reduced.  The economic impact would be far reaching; consumers having to pay more for food (because the fertilizers, pesticides, feed and distribution costs that that drive price all went up) will have less to spend on discretionary items; businesses trying to reduce cost in order to remain price competitive with foreign goods while struggling with reduced demand from consumers will lay off workers and move more work offshore; the total tax take will go down because corporate profits will be reduced, unemployment will rise even further, and individual earnings will be reduced – while the welfare costs will raise as even more people are driven below the poverty line (because the poor will bear a disproportionate share of the burden as a much higher percentage of their total net income is dedicated to food and energy costs).

Of course, the Administration’s green energy policy is not the only big or controversial piece of legislation that may result from the Lamer Duck session, but it serves as a great exemplar for why the business community is worried about could happen, and why they are reluctant to commit to significant investment strategies that could be completely derailed if such sweeping legislation were to pass.

The Bottom Line: Even though they may be reassured about the mid-term future if (as most expect) the mid-terms break strongly in favor of the Republican party, many US businesses will continue to sit on the sidelines, deferring the investment programs that would create the jobs that would start to drive unemployment back down, until they have a clearer line of sight into how the anticipated Lame Duck session will play out – and as a consequence the ‘jobless’ recovery will likely continue through the year end.

2010
10/21
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economic crisis
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Jobless Recovery
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New Life for Shared Services?

A Personal (And Sometimes Provocative) Perspective on Issues and Events in the World of Transforming Business Performance

While the impact of the economic crisis and the results of the US election on the outsourcing industry have attracted much attention (including some from me), there has been little consideration of the consequences for the shared services movement – which is somewhat remiss of us all.  I will try to make amends for that neglect in this post – and incidentally, for those not sure what shared services means, or not sure what this writer intends when referring to shared services, please refer to my Defined Words and Terms page.

To set the scene, my thoughts on shared services arise out of the following set of general assumptions regarding key economic and socio-political trends:

The Economic Context

The economic crisis will impact every enterprise, whether public or private, by constraining revenue and restricting the availability of capital.  Constrained revenue (whether from lower sales volumes at lower prices or from reductions in federal, state, local and charitable funding) means that support services must be cut back and/or performed at lower cost.  Restricted access to capital means that project activities must compete harder for funding, will be required to meet a higher business case threshold for approval, and will in many instances be deferred.  Many private sector enterprises will experience large scale forced restructuring through bankruptcy (or in an attempt to stave off bankruptcy), with plant closures, layoffs, divestitures.  Others will be acquired (or will be making acquisitions) as consolidation accelerates in many sectors in pursuit of sufficient scale to ensure survival.

The Socio-political Context

The probable impact of the US elections is harder to assess, but based on campaign promises and subsequent events, several consequences seem likely:

1.  The public sector, and private enterprises heavily dependent on the public sector, will find that outsourcing generally (and outsourcing to offshore destinations specifically) is discouraged, if not outright prohibited.

2.  More stringent oversight and more binding regulation will be imposed upon the banking and financial services industry that will both increase the cost of being in those industries, and make it harder to outsource the effort required to assure compliance (by extension of principle, other currently regulated sectors, such as health care, life sciences, energy, transportation, broadcast media and telecommunications, may also see tighter regulation).

3.  The federal government’s rescue packages will come with strings attached that will both apply restrictions to the use of the funds and at the same time seek performance improvements from the enterprises accepting the funding.

4.  The US tax climate is likely to become less favorable for business over time, making it harder yet to deliver acceptable returns for investors and applying additional pressure on back office costs.

5.  US consumer spending is unlikely to recover quickly while the affluent consumers that account for a disproportionate share of consumer activity remain unsure of the scale and timing of promised tax hikes

Implications for the Shared Services Movement

So now we have a contextual framework, what does it all mean for the shared services movement?  Both public and private sector enterprises will continue to feel a squeeze that requires them to improve the efficiency of their back office business process – in the case of the public sector, to release funds to support programs that would otherwise have to be cut, and in the case of the private sector, to remain profitable or minimize losses in order to survive until better times return.  The use of outsourcing generally will be limited in the public sector, and offshoring specifically will all but disappear.  In some areas of the private sector, outsourcing generally, and offshoring specifically, will be subject to some new controls.  

This will result in increasing acceptance of shared services solutions in the public sector, and a new lease of life for shared services solutions in the private sector, as impacted enterprises seek to drive out the necessary efficiencies without resorting to outsourcing.  However, to some extent the shape of shared services initiatives may change.  One tool that has been readily available, the creation of new offshore captives, may be harder to execute because it looks so much like offshoring.  In some cases, that will result in entities retaining their existing offshore captives when they had previously been contemplating selling them off.  In many cases, it will result in the transfer of significant additional volumes of work to the offshore captives, because it is a low visibility way to gain the advantages of lower labor costs. Finally, there will be some cases where because of regulatory pressures, enterprises are pressured to dispose of their offshore captives and bring their work back to the US.

Another implication for shared services initiatives (new and existing) is that they will be placed under much more pressure to accelerate the delivery of planned improvements in efficiency and effectiveness, and in many cases accept even more demanding targets, while at the same time the availability of capital to fund transformational programs is constrained.  This may result in an increase in the consumption of advisory services, as in-house teams may not have the skills and experience necessary to achieve this acceleration.

To summarize, there will be increasing momentum for the shared services movement, resulting in the launch of many new initiatives and giving a fresh lease of life for existing initiatives.  Enterprise expectations for the performance of shared services will be increased, and timeframes for the delivery of planned benefits will be reduced.  New offshore captives may be harder to establish, and existing offshore captives may need to grow to accommodate expanded volumes, while some may have to be disposed of. The use of advisory services will grow, as enterprises seek to source the premium skills necessary to go faster and get more benefits while working with less capital for transformation.

The Bottom Line:  The Shared Services Movement will prosper and grow over the next several years, but will need to deliver performance closer to that of world class outsourcing to do so.  Consulting firms should beef up their shared services advisory capacity accordingly.

Copyright ©2008 Mark H. Robinson All Rights Reserved

2008
11/25
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Business Process Improvement
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Outsourcing Alert: Risks of Automaker & Banking Sector Financial Problems

A Personal (And Sometimes Provocative) Perspective on Issues and Events in the World of Transforming Business Performance

The continued problems of the American financial services and automobile industries have potentially serious consequences for the prosperity of some outsourcing service providers.  Between them, the big three auto makers, their top ten supply chain partners and the top ten banks and insurance companies account for billions of dollars a year in ITO and BPO contracts, which constitute an appreciable fraction of the total revenues of many outsourcing companies.  Increasingly, much of that revenue must be considered at risk, as the auto and financial services industries flirt with bankruptcy on the one hand or nationalization on the other.  At a minimum, the volumes of work within many of the outsourcing contracts in these industries has declined precipitously, and will likely continue to decline, reducing their value to the service providers.

Existing Outsourcing Customers

As an existing customer for outsourced services, this means that you must pay closer attention to the financial health of your service provider(s) if they have any exposure to the auto or financial services sectors (and most do).  Put them on credit watch, check on the provisions in your contracts regarding credit ratings and insolvency, and develop contingency plans in the event that they should become unable to perform the services.  Evaluate whether your interests would be best served by renegotiating your contract – if you are solvent, and have solid demand, your business is worth more to your service provider than it was, and you may be able to gain more advantageous terms or pricing.

Prospective Outsourcing Customers

As a potential new customer, ensure that part of your selection process includes a deep analysis of the current financial health of your prospective service providers, and considers the scale and potential impact of their aggregate exposure to automotive or financial services clients.  Give extra weight to terms that provide you with step-in or termination options in the event that your service provider’s credit ratings decline below a threshold value.  Consider mitigating risk by contracting with a portfolio of service providers rather than entering into a single monolithic contract, even if this does not result in the lowest cost solution.

The Bottom Line: Outsourcing is a critical survival tool in the depression economy – but it will cut both ways if your service provider fails, so be smart, protect yourself, and consider the financial health of your service provider to be as important as your own.

Copyright © 2009 Mark H. Robinson All Rights Reserved

2009
02/28
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economic crisis
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Recommended Reading

Two outstanding books have contributed significantly to my continuing professional education this last week, to the extent that I want to share them with you, and suggest that you too may benefit from reading them.

The first is titled The Services Shift: Seizing the Ultimate Offshore Opportunity, by Robert E. Kennedy with Ajay Sharma. This book could be retitled ‘Everything you always wanted to know about offshoring but didn’t know who to ask’ because, once you read it, you will have a pretty good understanding of both what is already happening, and perhaps more importantly, what will likely happen next.  If you are a corporate decision maker considering an offshore service solution, or a public policy maker struggling with the issue of balancing the demands for better cost efficiency in government with a public distaste for shipping American jobs offshore, you will gain a great deal of very useful insight from The Services Shift.  If you are involved in the outsourcing industry, whether your employer is based in the US or in an offshore ‘destination’ you can’t afford not to read it. To help you find and buy it, I have put a link to the website for the book in my Blogroll section.

I had the pleasure of being a panelist with Bob Kennedy recently, on an EquaTerra webcast on the subject of Managing Risk in Offshore Services, and this provides a nice link to my second recommendation – The Fat Tail: The Power of Political Knowledge for Strategic Investing, by Ian Bremmer and Preston Keat.  The connection is this – that political risk is a critical dimenison in any consideration of offshoring services, but is perhaps the most difficult aspect of risk to qualify and quantify.  The Fat Tail looks at the wide variety of political risks that impact global businesses, and offers insights for investors in how to manage them (the name comes from a characteristic of a frequency/impact curve that implies that political impacts are both more common than we might intuitively think and have much more sever conequences).  As I read the book, it became obvious to me that any organization making a decision about offshoring services is in fact an ‘investor’ in global business, and the analysis and advice contained in this book is directly applicable to making offshoring decisions and mitigating the risk inherent in offshore solutions. While I have not (yet) had the pleasure of meeting Mr. Bremmer or Mr. Keat, I have also provided a link to their book and think that buying (and reading) it would be a strategic investment for anyone in the global Business Process Transformation industry.

The Bottom Line: These two books will significantly increase your knowledge and understanding of offshore services, and will help you make good decsions whether you be a legislator, a policy maker, a strategist, or a business leader.

Copyright © 2009 Mark H. Robinson All Rights Reserved

2009
03/27
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Another recommended read


This book is packed with valuable advice derived from the hands-on experience of two very successful practitioners of the arcane art of pursuing and winning high-value IT engagements. As COO of one of the TPA’s (Third Party Advisors) referred to in the text, I can tell you that it is essential reading for both newcomers to the field and experienced pursuit team members. Reading, absorbing and integrating the insights offered here should pay dividends in the form of improved sales performance. My congratulations to Anirban and Hetzel on a well structured, readable and immediately useful addition to the literature.

The Bottom Line: Winning Strategies is a worthwhile addition to any IT services sales professional’s library.

Copyright © 2010 Mark H. Robinson All Rights Reserved

2010
02/19
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recommended reading
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Healthcare and Outsourcing – First Thoughts

In light of the health care legislation just passed by the current US administration,  I have been turning my thoughts to how this will likely impact outsourcing in the health care sector.  I expect to return to this topic many times over the next few weeks and months, as we begin to see the impact of the administrative steamroller  set loose upon the industry by this bill.  Just for now, though, here are my first thoughts…

The more the government controls healthcare, the higher the proportion of total healthcare expenditure that will be claimed by workers employed by the government, at the expense of other participants in the healthcare economy – and at the expense of the total volume of treatments actually provided to patients by the healthcare sector. Outsourcing would reduce the labor burden and increase the portion of the cost of healthcare spend directed towards patients, but our current administration is inimical towards outsourcing generically (and specifically towards off-shoring), and with its allies in big labor will indubitably resist new outsourcing initiatives and seek to roll back existing outsourcing arrangements.

The Bottom Line: There will be more patients, served by fewer medical practitioners (Doctors, PAs, Nurses), meaning that each patient will wait longer, receive less attention, and experience lower quality service, while a higher proportion of the total dollars spent in the US in the health care sector will go to non-medical, unionized, government-employed labor.

Copyright © 2010 Mark H. Robinson. All Rights Reserved.


2010
04/01
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Horses for Sources – Giddy Up!

Horses for Sources has recently delivered a provocative and engaging discussion on innovation in outsourcing – I have contributed to the discussion in a small way, and thank Phil Fersht (the brain behind the blog) for accommodating my views.

However, this post is not focussed on that discussion, but rather on Horses for Sources and Phil Fersht.  In the most difficult economy in decades, and in the face of ever-increasing consolidation in the research industry, Phil has decided to take his blog from spare-time to full-time, and has re-launched Horses for Sources as a research firm focused on the sourcing world.  He has assembled a stellar cast of contributors, and is already demonstrating that there is room in the sector for the services and the perspective he and his new colleagues offer.  I am confident that we will see true innovation in the way analysts examine, report on and engage with the sourcing industry emerge from this new venture.

The Bottom Line: I commend Phil for having the courage of his convictions, welcome his firm to our industry, and look forward to the next few laps around the track.  Phil Fersht IS an innovator in the outsourcing sector.

Copyright © 2010 Mark H. Robinson All Rights Reserved

2010
04/01
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Industry Showcase
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The Age of Uncertainty

We in the Western world are living in an age of uncertainty, a contrarian age where as soon as it seems a new orthodoxy has arisen in any area of our experience it is overturned by events.   As a perfect example, the ‘Global Warming Consensus’ has broken down in the aftermath of the ‘Climategate’ scandal, and meanwhile the US (and much of Europe) has had one of the coldest winters since records began, with millions of worker-days lost to snow disruption.   Inflation is once again the ghost at the feast, currency risk is back with a bang, the national debt of many nations is a multiple of their GDP, and the tentative economic recovery is described in the US as ‘jobless’ (which means that consumers are not experiencing any ‘recovery’ and consumer spending remains depressed). After almost a century of increasingly routine air transportation, a volcano on a remote, frozen island disrupts European and trans-Atlantic flights on a scale not seen since 9-11, causing massive losses to the travel and leisure sector

The list could go on and on – the spread of terrorism, a nuclear-capable Iran, the stumbling economy in China – but the point is made, and is enough to make anyone who grew up in the sixties and seventies nostalgic for the relative certainty (or at least the reliable structure) of the bipolar world of the cold war era.

The point, though, is not to mourn the loss of the old order, but to motivate business leaders to deal with the lack of order in the new age more effectively.  In my daily conversations with executives, all too often the focus is on ‘the end of the recession’ or ‘when the recovery comes’ – and to think this way is to risk too much.   Recession may be the new normal, consumer spending patterns may have permanently changed, structural unemployment at the 10%+ level may persist for a decade – no one can predict the future when the recent past and current context are effectively unprecedented.   To act as though we are simply in the waiting room of a reliable recovery is to be the lobster, sitting quietly in the pot without noticing that the temperature of the water is rising.

The Bottom Line: We all need to act as though the chaos of the recent past is the new order, and adapt our organizations and business practices to survive and even thrive without the predictability we have historically depended upon.   This requires more emphasis on flexibility and responsiveness, a shorter time to market on new offerings, a faster return on investments, and a much stronger focus on continuously predicting the short term future well enough to profit from it without being too concerned about the long term.

Copyright © 2010 Mark H. Robinson All Rights Reserved

2010
05/05
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A Paradigm Shift in Research

I don’t usually write about EquaTerra (the great advisory firm that tolerates my eccentricities and provides me with an incredible job), but I feel compelled to comment on a big announcement that hit the newswires yesterday.  I am sure many of you already know Phil Fersht either directly or through his must-read blog turned upstart analyst firm, Horses for Sources – and if you don’t, you soon will, because effective immediately EquaTerra has entered into an alliance with Phil and his team to create some ground-breaking and exciting new products.

I firmly believe that the backward-looking volumetric research so common in the IT and BPO Services sector is irredeemably bland, and has limited utility and an even shorter shelf life.  EquaTerra and Horses for Sources have defined a new research category called Actionable Intelligence, that is succinct, focused, current, timely, and provides a basis for clients on both sides of the industry to make immediate decisions that will quickly generate financial and/or operational benefits.  You can find the press release describing this exciting alliance here, and Phil’s Horses for Sources blog post here.  I am proud to have played some small part in making this happen, alongside two real luminaries in the research business, Stan Lepeak (EquaTerra Managing Director of Global Research) and Phil Fersht (Founder and CEO of Horses for Sources).

The Bottom Line: The EquaTerra Research alliance with Horses for Sources is a paradigm shift in that segment of the research industry focused on IT and BPO services – if you’re in that industry (and if you’re reading this, chances are good that you are), you will definitely want to stay on top of the stream of new product offerings that will be launched over the coming weeks.

Copyright © 2010 Mark H. Robinson All Rights Reserved

2010
05/07
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Horses for Sources
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It’s Time to Make Lemonade!

For the last two and a half years, we in the business community have been operating under conditions of extreme uncertainty in highly volatile markets, and there is no credible sign of a return to our previous, altogether more comfortable circumstances.  We have watched customers, competitors and suppliers go out of business in unprecedented numbers, seen massive transfers of control from the private to the public sector, and noted with some alarm the ever-darker predictions of many economists and observers that we are at sustained risk of widespread economic disaster…

All this, though, is now old news. There have been so many economic, political and social train-wrecks in the last 30 months that they no longer have the power to move us, except when they are truly outlandish. What remains are two key questions: What have we learned, and how will it help us succeed?

What have we learned?

In my day job, I have the unique opportunity to evaluate the lessons our own business hands us, and those we are called upon to help our clients learn.  There are, of course, dozens of potential themes – but here are the three that I find most significant:

(i)    Only People Will Get You Through

If there is a secret sauce to success in the current climate, it can be found in your people.  These difficult times place exceptional demands upon them in both their professional and their personal lives, and there is nothing like knowing, and having your customers know, that your people will go the extra mile to ensure successful outcomes.  Whether in the front line of delivery or in the back office keeping the wheels on, great people and the high impact teams they form are critically important to survival and prosperity.

(ii)     Marketing Really Matters

Yes, at the end of the day, marketing REALLY matters! In a time when your customers are struggling to find a dime for a phone call, getting them to focus on your message long enough to make a buying decision is incredibly difficult, even if your message is that you can help them find that dime! It takes smart marketing to get the initial attention that puts prospects in the pipeline when times are tough.

(iii)   Frozen Processes Will Ice Your Business

Waiting out rather than reacting to the recession has killed thousands of businesses that looked like sure winners up through mid-2008 – so the third key to making difficult times work for you is adaptability and agility.  Keeping on doing business in the same old ways only guarantees that you will lose business to competitors who are reinventing their approaches in recognition that frequent high-impact change is the new norm for trading conditions.

How will it help us?

These lessons will only help us if we can overcome the decision paralysis that is affecting so many of us right now, and actually make and follow through on impactful, strategic decisions.  There is always some horizonal event, usually set one to two quarters in the future, that looks like it will signal a turning point after which there will be more certainty and a new consensus on direction – right now, the US mid-term elections are the excuse I’m hearing most often for doing nothing.  Get over it!  Your market isn’t going to ‘improve’ any time soon – so you need to improve your ability to compete in the market you’ve got!

First, People: The worst thing you can do right now is to start thinking of your people in abstract terms (like, for example, headcount), regarding them as a commodity because high unemployment leads you to believe that they are readily replaceable.  This is the road to ruin, because intangible institutional knowledge, cultural affinity and integration within a team are not commodity attributes, and you need them now more than ever. Additionally, high turnover will result in increased recruitment and HR costs, and will erode loyalty across the board.  This can become a death spiral quicker than you would believe!  Instead, look to invest in people, focus on creating high performance teams, consider sharing a higher fraction of your total margin with team members through performance-linked incentive schemes, and if you find you do have to let people go, do so with sensitivity and dignity. Consider building strength by selective recruitment of high-value contributors whose presence will help motivate the whole team.  Above all, trust your team, share as much information as you can with them, and actively solicit their input on any specific challenges facing your organization.

Next, Marketing: The second worst thing you will ever do is to reflexively slash your marketing budget in a misguided attempt to reduce ‘overhead’ costs. In difficult times, you need to be spending every cent you can afford on marketing – and the trick here is to figure out how many cents you can afford.  The right mindset with regard to marketing spend is to optimize it in support of specific business objectives – and you may be surprised to find that this actually results in increasing your marketing spend! The key is to connect marketing activities (and dollars) directly to measurable objectives – customer retention, new customer acquisition, account value expansion, market share improvement – that are meaningful to your business.

Finally – Processes: Now is definitely the time to review every aspect of the way you do business, because it is certain that wasteful, inefficient or ineffective processes have become institutionalized and are costing you revenue, profit and customers.  Whether it is petty bureaucracy in the back office or a compulsive aversion to risk in the front office, the value leakage you will find will more than pay for any changes you need to make.  Three key concepts will help you focus on improving your processes: (i) Do I need to do this at all? (ii) If I must do it, how can I do it faster, better or cheaper? (iii) Could it be done using technology instead of people? (and no, this last question doesn’t contradict the ‘people’ focus above – if it can be done by technology, it should be done by technology.  People should only be asked to do things that only people can do!)

The Bottom Line: Unless you make a solid commitment to continuous, agile adaptation, you may not make it through the next 30 months. Recruit, invest in, retrain and retain the best people you can find; spend smart money on marketing; and, take a hard look at every aspect of your business through the lens of faster adaptability,  improved cost and revenue cycles, and tighter engagement with your customers. Or, as many grandfathers (including mine) have told many grandchildren – when life hands you a basket of lemons, it’s time to make lemonade!

Copyright © 2010 Mark H. Robinson All Rights Reserved

2010
08/23
POSTED BY
CATEGORY
Adaptation
Agility
Business Process Improvement
economic crisis
financial crisis
Strategy
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A Good Read: Winners Never Cheat

Jon Huntsman is his own role model in this inspiring book, based on the simple concept that you don’t leave your moral compass at the office door. As a self made billionaire and a dedicated philanthropist, Mr. Huntsman has at least earned the right to be heard – and in this easy read he delivers a very solid message that is more relevant than ever in these trying times: essentially, your word is your bond, so keep it, even when it puts you on the losing side of a situation, because (i) it’s the right thing to do; (i) a great reputation is the most valuable asset you can have; and (iii) you will sleep easier at night if you do!
I found it refreshing to read a book about business that focuses on individual morality rather than on competitive success – but at the same time demonstrates conclusively that you can be extremely successful without compromising on basic values.  Over the last 30 months, since the recession began to bite in earnest, there have been way too many highly visible examples of corruptions and sharp practice even at the most senior levels in the business community.  We all need to realize that, ultimately, society at large shapes its attitudes to business based upon what kind of news business is making – and we cannot afford the bad press we have been getting.

You can buy “Winners Never Cheat – Even in Difficult Times” from  Amazon by clicking here (I don’t make any money if you buy it)

Copyright © Mark H Robinson 2010. All rights reserved.

2010
08/30
POSTED BY
CATEGORY
cheating
recommended reading
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Insurgent Strategy: The Secret to Adaptive Success

The Financial Crisis became the Economic Crisis became the Recession became the Summer of (Non-)Recovery. One metaphor after another wore out its welcome as the press attempted to label the new age of uncertainty with a tag-line that would stick, yet here we are on the verge of the Fall and still in search of a narrative we can all agree on…

As I have written previously, business leaders who are waiting for it all to be over and hoping for a return to the good old days are playing a fool’s game that will at best barely delay disastrous failure, and at worst bring it on. I believe that this truly is the Age of Uncertainty, and that most attempts to organize and operate based upon a set of long-term assumptions about a stable future (traditional ‘Strategic Planning’) are inherently more likely to limit and potentially destroy your business than to enable and empower it to succeed. Doubtless some such strategies, in the short run, will appear successful – but the bigger the bet placed on a specific set of economic, political, technological, ecological or cultural trajectories, the harder the fall will be when (not if) several critical assumptions are confounded by a seismic shift in the underlying trend lines.

Instead, sustained success will go to those who adopt organizational and operational models designed to take advantage of volatility and uncertainty, who make a cultural virtue of adaptability and agility, and who internalize the new truth that there is no inherent predictability in today’s markets beyond the near-term horizon. I call this kind of thinking Insurgent Strategy,  a grass-roots, crowd-sourced, semi-instinctual mindset that amplifies responsiveness to leading indicators and enables the early identification of transient micro-markets, the rapid adaptation of products or services to meet new demand, and the ready abandonment of those same markets long before the demand curve reaches its tail, so that resources can be repurposed to the next opportunity.

Businesses that successfully adopt Insurgent Strategy will make many small bets on short-term futures, will become adept at short-cycle product or service development, will be comfortable with a portfolio approach and accept that there will be a standard distribution curve with respect to the performance of individual micro-markets. They will be culturally distinct from traditionally structured enterprises, and will exemplify a different set of core skills, use different tools and organizational models, and require different modes of analysis to assess their value as investment opportunities.

Stay tuned for future posts, which will further develop the Insurgent Strategy theme, identifying the characteristics of the Insurgents, discussing the specific tools they will need, and addressing how their practices will differ from those of the tradiional Strategic Planners.

Teaser: Insurgent Strategy can be used to exploit the “Long Tail“, so well described in Chris Anderson’s great book, where businesses can do very well from feeding micro-market demands abandoned by the Insurgents.  For such enterprises, which I call Scavengers, the bubbling opportunity is in fact the top of the demand curve for a transient micro-market, signaling that the Insurgents will begin moving on and leaving established but underserved demand behind.

The text of this blogpost generally, and the term Insurgent Strategy specifically, are copyright © 2010 Mark H Robinson. All rights are reserved.

2010
08/31
POSTED BY
CATEGORY
Crowd Sourcing
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The Ten Tyrants of Uncertainty

Ten Tyrants of Uncertainty hold US businesses (from corner store to corporate behemoth) firmly by the throat, and until their paralyzing grip can be shaken off, the ‘technical’ (jobless) recovery will likely remain just that…  The following issues (in no particular order) are those raised most often in my conversations with business leaders over the last two weeks (there were dozens of others, but many were specific to a market, an industry or an individual):

  • The outcome of the mid-term elections
  • The actions of the anticipated lame-duck House session
  • The Federal tax rates for 2011 and beyond (income, capital gains, dividends)
  • The Federal budget for 2011 and beyond (deficit spending, the national debt)
  • The impact of the Healthcare Reform Act on employment costs
  • The specter of runaway inflation
  • The risk of sovereign debt default
  • The rise of a nuclear Iran
  • The regulatory actions of the ‘Czars’
  • The ‘next’ crisis – Fannie/Freddie, commercial real estate, union pensions…

These seem like pretty reasonable things to be worrying about to me – I’ve lost some sleep on all of them myself – but the reality is that many of these issues are likely with us for the long term, more attributes of the age in which we live rather than transient symptoms of a passing malaise.  It is therefore incumbent on those of us who spend our lives working with, advising and supporting businesses in their efforts to improve performance to help them adapt their thinking and their operations to the environment.  However, many in our industry are also struggling to adapt their own business models to new patterns of demand and radically altered economics.

The Bottom Line: The only way to lead, is to lead… but to do so, many in the advisory industry who are also held captive by the ten tyrants of uncertainty must find their own way to break free.

2010
10/18
POSTED BY
CATEGORY
Adaptation
Agility
economic crisis
election
financial crisis
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Business Waits on the US Mid-term Elections

On November 2, the US electorate goes to the polls as a nation for the first time since Barack Obama and his 2008 Democrats surfed a wave comprising in equal parts anti-Bush sentiments and financial crisis hysteria, right into the Oval Office.  The ultimate protest vote handed the Democrats the Presidency to add to the House and Senate majorities they acquired in the 2006 mid-terms, and gave them almost free reign to implement the agenda that Nancy Pelosi and Harry Reid had been signaling for the previous two years – an agenda that called for extensive Federal government intervention into every sector of the economy through new legislation, Executive action and the massive exercise of the regulatory authority that had been accumulating in many Federal Agencies for years.  The so-called ‘financial crisis’ provided them with the excuse and the opportunity to use their total control of the Federal government to drive that agenda further and faster than they had previously dreamed, and they put the pedal to the metal with both feet.

While they managed the  political process effectively and succeeded in implementing much of that agenda, Obama and his Democrats have failed in the most fundamental and important ways: they have failed to manage the economy in such a way that it delivers meaningful, private sector jobs; they have massively expanded the already huge budget deficit; and they have committed to spending programs that will drive the national debt to unsustainable levels and burden generations to come.  These failures have created an adverse economic climate for business, where high unemployment rates, high mortgage foreclosure rates and high personal bankruptcy rates are all serving to keep Americans out of the mall, and forestalling the consumer-led recovery that has traditionally marked the end of  recession in the United States.

Obama’s Democrats have also presided over what is widely seen as the most anti-business administration in living memory, imposing the massive burden of skyrocketing healthcare costs, creating a complex, confused and ever-expanding regulatory climate, threatening an energy policy that will drive transportation costs off the charts, pushing for legislation to ease the path of big labor back into the private sector, and using Congressional and Senate committee hearings to generally humiliate and degrade executives summoned before them.  Being cast in the role of demons came as a huge shock to the business community, many of whom had been swept up by the wave and contributed heavily to Democratic election campaigns around the nation.

As a direct consequence of the disastrous economy and the administration’s hostility towards business, just as in the general populace, businesses have hunkered down and are conserving cash, deferring investments and de-risking operations, waiting for a change to the prevailing political climate; and, just as it has in the general population, sentiment in the business world has swung sharply to the right.  Many corporate donors have switched from funding Democrats to funding Republicans – and many of their employees who last election cycle supported and worked for the election of Democrats have followed suit.  Working Americans know that it is business, not government, that creates sustainable jobs – and they don’t blame businesses for waiting to create those jobs until the political and economic climate is more favorable, they blame government for mismanaging the economy and discouraging investment.

The Bottom Line: The mid-term elections are clearly set for a significant victory for Republicans – and, equally importantly, a switch in the balance of power within the GOP and its elected representatives from the ‘compassionate’ (read ‘big government) conservatism of the Bush era to the ‘fiscal’ (less government, lower taxes, lighter regulation) conservatism of the populist conservative movement.  Business is waiting for, and counting on, that victory – and the greater the scale of the victory, the faster businesses will get off the sidelines and back into the economy, creating jobs and spreading wealth as it has throughout the history of America.

2010
10/19
POSTED BY
CATEGORY
election
mid-term elections
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