Harvard Business Review Blog

Sorry to have been conspicuous by my absence recently. I have been writing, just not here...but here:

http://blogs.hbr.org/cs/2011/01/why_superstition_is_good_for_y.html

Facebook, Blackberry and Social Media - At Play and Work!

Last week I was Moderator of an Insights session for the European Sponsorship Association entitled, 'The New Era of Sponsorship'. We were fortunate to be joined by Vijay Solanki from Blackberry, Trevor Johnson from facebook, Thomas Godfrey from Sport England and Kieron Kilbride from Football League Interactive. It was a fascinating session which focused on the growing adoption of social and new media in sposnorship. What was clear throughout was, in the Vijay’s words,

‘social media is word of mouth on steroids’

It is also the future of marketing and sponsorship as we know it.
It has been relatively easy this far for those of us who are slightly long in the tooth in our roles to ignore the phenomenons of facebook, myspace, bebo and the like in our lives and our business. But did you know Starbucks now has 6.2m facebook fans in the world, and that it can effectively now engage with them on a personal level for free? Could you imagine how frustrating it might be for the Football Association that there are now more football clubs set up on facebook than there are registered with the Association itself? Can any of us really understand how powerful it is that British Gas can market their British Swimming Championships in Manchester to 98,000 fans of swimming in the local area at the touch of a button?

As Thomas Godfrey from Sport England shared, the majority of sport in this country is now played outside of traditional clubs. Just like the majority of music is bought outside record shops, the majority of voting decisions made without watching an official Party Political Broadcast and the majority of our news consumed outside of the 10pm broadcast and the morning paper. We no longer live a boxed-in existence.

The great irony, of course, is that for some reason in a corporate setting we somehow forget all of this. We tend to assume that mass communication without two way dialogue is appropriate, and even effective. We grumble when we see an employee on facebook at work, ignoring the fact they will likely be on e-mail in the evening. We tut when we see our employees with their ipods on while they work – ignoring the fact classical music helps them focus. We consider it a hindrance not a help.

Social media helps create tailored communication with individual audiences. It supports dialogue and debate rather than formal dictat. We could all use a little bit in our lives – at work and play.

Sponsorship, Employees and London 2012

This week Lane4 hosted an informal event for those clients of ours who are focused on employee engagement through sponsorship. Our session took a specific focus on the forthcoming London 2012 Olympic and Paralympic Games. It felt like a very meaningful step not only in Lane4’s journey in this space, but also the awareness of the sponsorship industry as a whole.

Three years ago 'employee engagement through sponsorship' meant, to put it simply, ‘free hats for every employee, offering tickets for the sales teams to win through incentive programmes and hospitality for key clients’. There is nothing particularly wrong with those areas of an internal activation programme, but they are scratching the surface of what is possible. The danger if this is all tha you do is that they risk disenfranchising all but the lucky few. How on earth can you hope to rationalise an £80m spend with an intelligent employee by giving them a free hat? What else might you be doing to help your employee base understand how the Games is relevant to their own daily working lives? How can the Olympics help them understand what their own organisations are all about?

Our conversation this week was focused on that final question. Very tellingly, thirty people from more than ten organisations were working it through together. Richard Lloyd – Head of Brand, People and Culture at BT talked compellingly about BT’s work in the area of cultural and behavioural change. The Games offers a metaphor for the journey BT and many other partners are on.

If this is an area you’re interested in, you might like to pop along to Sadlers Wells Theatre in London on 15th April at the Think Sponsorship event where we’ll be sharing more of the BT journey so far.

http://www.thinksponsorship.com/pages/content/index.asp?PageID=131

Different Types of Conversations

Two months into the year, and our economy continues to be in a very interesting yet slightly perplexing place. Traditional indicators of the health of our market-place do not provide a consistent picture.

Of course prospects for the public sector and the overall size of the national debt cast an ongoing shadow over the UK market at the beginning of the year. We all recognise that something needs to be done, and yet we have a curious interlude until the General Election until anything major actually happens. Britain’s biggest businesses claim that 56.6% of gross profits went back to the Government in the form of different types of taxation last year. That is an extraordinarily high figure. We tend to think of the government as having an equity stake in our banking sector alone, but the practical reality is that their ‘dividend’ flow comes from each part of the 'private' sector.

The challenge of public debt aside, there is a brighter news. Recruitment in the UK is on the rise. I met a provider of assessment software the other day who described a very promising uptake in demand from January. The prevailing mood at the Best Companies Awards Ceremony (where we were delighted to come 5th) was one of cautious optimism. This definitely stronger than last year, although less because of any broader confidence in the economy than a feeling that we are collectively wiser about how to tackle this uncertainty than eighteen months ago.

This sense of 'confidence from experience' we felt in the SME market last week is also mirrored in our corporate clients. They are increasingly leaning to practical action not just despite, but also because of economic circumstance. Certainly the strategy houses are very busy indeed with a blend of growth strategy and due diligence work. The strongest businesses are plotting for significant market share growth in the next eighteen months. We notice them being far clearer around their strategy whether we experience double dip or slow growth scenario. They have built plans which will operable under either set of economic conditions.

This environment creates a really interesting shift in our client conversations. Three years ago we might have been asked about (for example) a pre-diagnosed leadership development programme for a 150-strong Directorate. Often it needed a lot of probing to identify how this related to the future strategic intent for the business. Today our conversations start earlier and far broader in scope. Questions like ‘’if this is our strategic straw man for the next 5 years, how will this impact our people strategy? How do we cascade the imperative for change and the behaviours we require? How will that impact on our employees, our customer service levels and the way our customers talk about us? How will we know if it is working?’ This is where we love to start a conversation.

Economic uncertainty remains in the UK, but it seems to be driving far less strategic uncertainty than twelve months ago. Our clients are clearer about a future vision and purpose. Or challenge is to respond to that.

Regulation versus Common Sense!

I read with interest journalist and author Philip Whiteley's last post on regulation in British business at http://felipewh.wordpress.com/.

''The arguments over more-versus-less regulation are often not the most important ones to have, because the things that really matter are to do with leadership, workplace competence, engagement and trust''

I found myself nodding along as I read. Regulation is not the sexiest of subjects, but like it or not it increasngly effects my role every day at work. We recently moved around the structure of our office and some of us were in at the weekend moving desks around. Theoretical Health and Safety risk. We have some fabulous working Mums (and some soon to be Mums) in our office. Maternity leave requires a PhD to understand. Let alone the procurement systems that some FTSE businesses would judge a suitable first interface to put together a partnership-orientated approach to scale change!

It is not just my core Lane4 role that I feel this pressure. Wearing my European Sponsorship Association hat, European regulation of alcohol, betting and tobacco sponsorship among other areas is also a hot topic. On one level this is understandable, and yet on another my frustration is that the lobbying becomes an industry in its own right. Six years ago I spoke at a European Union conference on the subject in Brussels. It was run by a private company in a swanky hotel with chiefly European Union Member speakers and evening ''lobbying'' aplenty. There was a distinct sense that nothing at all of any importance would be discussed or debated (let alone decided), apart from which champagne was the best on the menu. 

Despite all of this I support sensible regulation in business leadership. I support it in the world of sponsorship. I particularly support it in an industry such as learning and development where no qualifications are required to call oneself a coach. However I also support common sense. Any business leader who needs to get out the small print to wrangle through a conversation about accrued holiday with a a new Mum returning to work has more fundamental issues in their organisation than the odd day of holiday. Any sporting organisation who genuinely wishes to accept a sponsorship which is ethically dubious will only erode their value in the long term. Equally any HR Director who is prepared to bring in unproven and unsupervised coaches will soon realise that the risks outweigh any potential benefits.  

I believe in regulation to help us look after the vulnerable in society and business, but I also believe that ultimately the ethical, sensible and emotionally intelligent prevail way before it is needed. Regulation in business is similar in many ways to the best negotiated commercial contracts between two organisations. It is important to have in the desk drawer as a guide, but if it ever leaves the desk drawer, it is probably too late!

It's a Dodgy Old Game: Debt versus Equity

I enjoyed the Sunday Times article yesterday on the parlous state of the finances of Premier League football clubs. While the Sunday Times business section can regularly veer into sensationalism, the Premier League continues to reflect a truth that is stranger than any fiction.

http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article6991053.ece

The article, subtitled ‘How Manchester United became a piggy bank for its American owners’, confronted head on United’s attempts to restructure its financing (total debt of £700m). United are not alone. Liverpool are in a similar boat (net debt of £300m), with Chelsea and Manchester City’s owners having recently swapped their loans for equity stakes to stay on the right side of football’s traditionally impotent rule makers.

There is a certain irony of course that the Sunday Times is a Murdoch business – the same parent company that has funded the Premier League gravy train via Sky and some core international TV rights deals. I recall leading part of a due diligence process for Newcastle United some 12 years ago now. Even then, player salary levels were a significant, limiting concern for future value of cash flows. Now this has become a concern for current profitability.

It is widely expected that one Premier League club will default on its financials obligations this season. Hot favourite is Portsmouth. It is extraordinary to think that the England goalkeeper cannot get any games for his club in a World Cup year because that club is scared of triggering a clause in his contract which will commit them to paying another year of his salary. In particular when you think they are bottom of the Premier League and leaking goals.

The hard reality is the business model for professional football – where salary levels are typically 65% plus of total revenue and net profitability is marginal or non existent – simply cannot sustain that level of debt. It might survive it in the short term, but it cannot sustain it or thrive on it.

This brings an interesting reflection for those of us who work in professional services businesses. There are not many businesses in our sector where costs of our ‘talent’ are less than 65% of our total revenues. It is impossible for the average professional services business to make a debt versus equity swap on a week’s notice should things get a bit sticky. I know many who would envy Chelsea’s agility!

Many in our market continue to struggle. This will continue to be the case as demand remains flat, in particular if interest rates rise. It has been interesting to see the increasing number of clients who request our full company accounts when we are pitching for work – and rightly so. Several suppliers in our market have run the debt gauntlet to capitalise on early to mid noughties growth – developing their own software, buying competitors and so on. Any client would want to be sure their 2010 suppliers can continue to fulfil their obligations without needing to do the equivalent of dropping their England regulars.

Neither HR Director, nor Marketing Director, But Disciplined Business Leader!

Last night I attended a HR Magazine Leaders Club event somewhat provocatively titled ‘Is the Marketing Director the new HR Director?’. It was an excellent event.

Those who have visited this blog before will know this is a subject close to my heart. It is also bubbling up as a hot topic. Ironically I was facilitating a session not more than two months ago for the European Sponsorship Association where the discussion turned to whether the ‘HR Director is the new Marketing Director’. There’s clearly a little insecurity both sides of the fence!

Navjot Singh, Global Marketing Manager, Recruitment and Global Communications Manager at Shell talked compellingly about how marketing know-how had been integrated into Shell’s recruitment strategy to take them from also-ran to leader in high potential recruitment among their competitors. He shared how the use of behaviour models (as marketers would use every day to model customer activity) were used at Shell to predict the behaviour of job applicants through the process. Shell can not only predict the potential revenue that any new recruit would bring into the organisation, but also predict each individual’s performance once in the organisation.

On one level, yes, these are tools which are now beloved of the bigger marketing departments. For ‘job applicants’ in HR’s world, read ‘potential customers’ in marketing’s. For ‘performance once in the organisation’ in HR speak, read ‘lifetime customer value’ in marketing. However, on another level none of these skills are purely the preserve of HR, or marketing, or both. They are exactly the same techniques one might use valuing a business for acquisition, or deciding whether to spend money on a new factory or product launch. They are simply good business practice in a lean, less indulgent business environment.

For those of you who were good enough to read my last post, you may feel there is an inherent contradiction in this view given my criticism of the ‘commodity trading’ I witnessed at the CIPD Fair. I do not mean to criticise the process of using data to make decisions (quite the opposite in fact). I mean to criticise the laziness of organisations who use the data as not just as the rationale, but also the principle means of communication. To cite an example given last night, the organisation that recruits online, but never sends a tailored, thought-through rejection letter to the unsuccessful candidate with some insightful feedback. I was party to another conversation last week with a friend, where restructuring decisions had been communicated only within the context of total headcount reduction figures. No rationale for the change, or compelling thoughts about what the future might hold.

In my view, good business management practice is the insightful use of data to reach a conclusion. Good business leadership equates to be able to share the story behind those conclusions in a credible and authentic way with each and every stakeholder group - whether the leadership comes from HR or marketing. 

Navjot painted a picture of a world in the future where companies are applying to prospective high potential employees for their service, rather than the other way around. We are definitely seeing that the HR and Marketing communities need each other like never before. The biggest challenge, however, is that both these groups need access to a third set of skills – that of world class 21st century business management. Neither HR nor marketing will lead until they can manage – otherwise each simply offers a world of empty promises.

HR, CIPD 2009 and the Nonsense of the Employer Brand

After the Lane4 Conference on 11th, last week I was at the CIPD Annual Conference in Manchester. I have been to the conference most years since joining Lane4 just over 5 years ago. On one level it was a little sad to see the accompanying Exhibition this year – probably around 50% of the size of the event at its height. We are definitely seeing a market-place in transition. Jim Collins was discussing ‘How the Mighty Fall’ in the plenary session. Quite.
On one level I could take consolation from the fact that there were far fewer outplacement providers than recruitment providers unlike the HR Director Event in January. However, this time recruitment solutions were mostly delivering the search process online. James Caan was sharing ideas around how to maximise your online recruitment search. Ironically for an HR exhibition, it did a good job of communicating a feeling of ‘commodity trading’ people.
Against this fairly depressing backdrop, Wil James from Lane4 did a cracking job talking through the TUI Travel (Thomson and First Choice) merger integration process with Jacky Simmonds, TUI Travel’s Group HR Director. This was anything but a transactional piece of change management, as I will come back to.
Beyond the Lane4 session, the highlight for me was probably seeing an introduction of the CIPD’s ‘Next Generation HR’ work shared by the likes of BT and Nationwide. This picks up among other things on an emerging trend towards the blending of HR and marketing functions. To quote Andrea Cartright from Nationwide

“Over the past six months you might as well have called me a marketer. I have been wholly immersed in the marketing team redeveloping what the Nationwide brand is going to look like.”

This is a much needed development which our thinking and work in the sponsorship space plays directly into.
It was ironic given this to see that the latest CIPD report published is ‘The impact of Mergers and Acquisitions on the Employer Brand’.

http://www.cipd.co.uk/subjects/corpstrtgy/empbrand/_impact_employer_brand_summary.htm
While I think CIPD’s approach in the Next Generation piece is laudable, personally I think the notion of creating an approach for an employer brand is complete nonsense. Your company’s brand is simply the way people (employee or customer) talk about your organisation. If the HR and Marketing Directors are doing their job well, employees and customers are able to engage in a personal dialogue with your brand. If they are doing their job excellently, this results in positive word of mouth and referral. It is simply impossible to paint a different picture for employees than customers.

To this point, in the Lane4 / TUI session Jacky talked compellingly with strong supporting data about the pride with which TUI employees (whether they originated with TUI or First Choice) now talk about their organisation to friends and family. A caring and empathetically managed change process created more external ambassadors than a thousand pieces of stilted internal communications or 30 second television ads would have done. Each business has just one brand. HR and Marketing and both its custodians. Perhaps in five years time the empty stands at the CIPD Event will be filled by Martin Sorrell from WPP and his swathe of marketing agencies.

Our Lane4 Brand

It’s been a few days now since our Client Conference, ‘From Fragile to Agile’ on Armistice Day, 11th November. It was our fifth year, and our client feedback is suggesting it was our best yet.
We try to schedule the day in such a way as to offer our clients the chance to design their own day. What continues to amaze me year-after-year is the sheer variety in the individual schedules which people select. Even clients who I think know personally very well!
For example, I was part of a session on the subject of the parallels between the London 1948 and 2012 Games with Rob Clarke, the Head of HR Operations from London Organising Committee for Olympic and Paralympic Games. Rob and I spoke at the same time as our clients from CRH shared their approach to investing in leadership development in a building products sector in the eye of the economic storm, and Mark Richardson with Greg Searle (both from Lane4) talking from personal experience about maintaining self belief under times of intense personal pressure and media scrutiny. It would be hard to find a more varied set of subjects, even for Lane4!
This blend also relates to how we position Lane4’s offer in the market-place. We aim to offer a hybrid of a world class leadership development consultancy (CRH). Our approach is driven from personal insight and experience (Mark and Greg) coupled with cutting edge research which marries both our understanding of elite performance in sport and business (Rob and I).
Interestingly when choosing their day, our clients spread themselves almost exactly evenly between the three sessions. No one area of our positioning or approach is more important than the other. We have the priviledge of working with a brand which sits at the intersection of these areas. It’s really gratifying to know our clients really valued the day. Roll on 2010!

Market Trends and the Future - Retail versus Learning and Development!

Useful insight in the papers over the last few days of current performance and prospects for the retail industry in the UK. It was interesting to read about Westfield – the new high end shopping complex built in Shepherds Bush. Westfield’s UK Managing Director suggests the first three months of their year had been ‘very scary’….but cites some impressive evidence that performance has stabilised. The SVP of Louis Vuitton says their performance has ‘surpassed all expectations’.
Elsewhere, PwC’s retail director is quoted as suggesting that the middle ground of retail is becoming increasingly tough. A good example would seem to be the off licence trade – First Quench having gone into administration just last week. At the premium end, the wine clubs and consultancy-based propositions of Majestic reign supreme, and at the volume end of the market the economies of scale which Sainsbury’s, Tesco et all can achieve simply cannot be matched. Hence very tough trading conditions for those caught in the middle.

I believe we are seeing exactly the same thing in the learning and development market. In our experience the requirement for senior executive alignment and development is as high as we have ever known. Just like alcoholic retailers, quality, breadth of offer and credible experience are no longer a competitive advantage at this level – they are a given.

There is also a significant shake-out happening in the development market at middle and junior management (which I would very loosely describe as beyond the top 500 in a FTSE business). We are hearing words like ‘flight to demonstrable quality’ and ‘evidence-based value for money’ from our clients – and rightly so. For too long our industry has been oversupplied and, to be frank, a little lazy. Which feels a good description of the shelves on my last trip to Oddbins.

It is not easy of course, but this recession will be the best thing that has happened to our industry when we emerge at the other side of our V (or W!) shape.