Leading from the Front

Business leaders have often drawn wisdom from military leaders when it comes to managing their teams. One concept that stands out from military culture is leading from the front. However, this concept can be misunderstood if leaders try to apply it to business environments without fully understanding what it means.

Leading from the front is not about always being in people’s faces, shouting and screaming commands. It’s about setting the pace with a team, earning team members’ respect, and leading by example. The leader makes quick, decisive moves, knowing that the risk of not making decisions is greater than the risk of making them.

Military leaders who lead their troops to victory are on the front lines of battle. They are in the trenches with their troops, and they lead bravely and fearlessly. Similarly, in the business world, good leaders are in front of customers, addressing their challenges; walking the factory floor to gain an understanding of employees’ needs; and rolling up their sleeves to solve real-life business issues with their teams.

When things go wrong as a result of decisions, leaders take full responsibility, but when they win the war, they give full credit to their troops.

It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership. —Nelson Mandela

As much as we try to make a hero of one person in the business world, typically a team of people slogs day and night to make things happen.

A famous quote from General George S. Patton comes to mind: “An army is a team. It lives, eats, sleeps, fights as a team. This individual hero stuff is a bunch of bullshit.”     

Leaders leading from the front have earned the admiration and loyalty of their troops. Leading from the front means setting the example and, instead of telling the team to do things, doing things with them.

What you do has far greater impact than what you say. —Stephen Covey

To lead from the front, you have to be a follower first. Wisdom, knowledge, and the right to lead do not come because one attended a top-rated school. Great leaders have been in the trenches before, slogged through life’s challenges, failed many times, and followed other great leaders. Only then do they earn the stripes to lead.

Before you start to lead from the front, you have to lead from the side or from behind. You must have the humility to learn, contribute, and then earn the respect of your team.

Leaders who lead from the front are visionaries. They have an uncanny ability to think broadly and deeply about topics ranging from business to the potential effect of their actions on their team, community, and customers.

These leaders have mental maps to project how things may unfold based on the team’s actions. Further, they can communicate with simple bite-size messages to inspire, engage, and energize their teams.

Vision is the main tool leaders use to lead from the front. Effective leaders don’t push or pressure their followers. They don’t boss them around or manipulate them. They are out front showing the way. The vision allows leaders to inspire, attract, align, and energize their followers—to empower them by encouraging them to become part of a common enterprise dedicated to achieving the vision.  

—Burt Nanus

In addition to being visionary, leading from the front requires leaders to be approachable, nonjudgmental, and humble. By nature, leaders are ambitious, assertive, adamant, and sometimes aggressive. These traits, although helpful at different stages of leadership, need to be moderated to connect with the team. As the leader, you need to feel the pulse of the organization, but you can do that only if you are in the trenches with your team members.

A word of caution: Leading from the front requires the traits listed above, but you run the risk of getting too far ahead of your team if you don’t keep it close to its mission. Communication is important, and communicating simple, consistent messages helps keep the troops together.

I am fortunate to have reported to good leaders and some not-so-good leaders, all of whom helped me sharpen my leadership skills. Frankly, I have learned more from the not-so-good leaders, because those lessons get imprinted much more deeply on your brain.

One has to be lucky in life to find good leaders and mentors to follow, because they not only inspire you to achieve your full potential but make a big difference in your personal and professional life.

The Bottom Line

A true leader has the confidence to stand alone, the courage to make tough decisions, and the compassion to listen to the needs of others. He does not set out to be a leader, but becomes one by the equality of his actions and the integrity of his intent. — General Douglas MacArthur

Expat Advise – Moving to Dubai

Expert Advice - Moving to Dubai.

Published in Financial Times.  September 2018.

 https://propertylistings.ft.com/propertynews/United-Arab-Emirates/5486-Expat-advice-moving-to-Dubai.html

Global business executive Ramesh Nuggihalli moved from the US to Dubai in 2011 to work for an engineering company. He lived there for three years before returning to Chester Springs, in the suburbs of Philadelphia, towards the end of 2014.

Dubai is the most fascinating and lively city in which to live and work in the Middle East, and a great place to raise a family. The city has built a brand for having iconic buildings, themed shopping malls, fancy police cars and traditional souks (Arab markets) for spices and gold.

The weather can get extremely hot during the summer, when people stick to indoor activities for most of the day. The winter months are gorgeous and, in the evenings, you sometimes need a light jacket in the desert.

The cost of living in downtown Dubai is comparable to that in Singapore, where I lived between 2015 and 2017, or Hong Kong. Alternatively, you can choose one of the suburbs or neighbouring cities, such as Sharjah or Abu Dhabi, for a lower cost of living.

I lived in the Old Town area of downtown Dubai in a small apartment because it was close to the airport, my two offices and all the shopping malls. I could walk to a souk and the many restaurants surrounding the famous Burj Khalifa skyscraper, and get to a beach within a 15-minute drive. I particularly enjoyed going for a run on the sand at the public Jumeirah Beach.

There is a tendency for expats not to mix with the United Arab Emirates population, but the locals are very friendly and passionate. I made some very good friends and it was easy for me to strike up a conversation and have an engaging discussion.

The food culture in Dubai is unbelievable. You can spend $500 for two at a fancy celebrity chef restaurant such as Nobu, or Armani Hotel Dubai at the Burj Khalifa, or have a simple Arabic or Indian meal for less than $50. I preferred the latter and thoroughly enjoyed the kebabs, shawarmas and tandoori chicken. My favourite place was a south Indian vegetarian restaurant called Saravanaa Bhavan (there are seven branches in Dubai), where you can get a decent meal for less than $7.

Although you are allowed to drink alcohol in Dubai, it is important to understand the local norms on where to purchase and consume it, especially during the month of Ramadan. The culture is amenable to expats, though, and you can always find food, although you are not allowed to eat openly in public places during Ramadan. It is also advisable to be conservative in what you wear when in the malls or on the beach, and to refrain from expressing strong political views.

The city is very safe and has state-of-the-art public transport and taxi services. Prices of cars are reasonable, but you have to be careful driving on the highways — I almost had an accident on my first day on the road when the other cars stopped abruptly because of some commotion. Some even advise sticking to sport utility vehicles to be on the safe side.

The desert has its own charm and many people like to go dune bashing (off-road driving) or camping at the weekend. You can drive to one of the six neighbouring emirates or even to neighbouring countries such as Oman in less than three hours.

In Oman, you can enjoy a day out with a boat ride to the fiords, swimming with dolphins or scuba diving. Many expats like to go for a big buffet lunch on a Saturday (Friday and Saturday are the weekend in Dubai), although I was never a fan.

I am often asked to compare life in Dubai with that in Singapore, but I find it a very difficult question to answer. Dubai is much more glamorous, but Singapore is livelier, with hawker centres (food stalls) all over the town and a diverse religious culture, with Buddhist or Hindu temples, churches and mosques.

When it comes to doing business, both cities allow you to move in quickly and establish yourself. The cost of living, housing and schools are similar, too.

To imbibe the culture, you need to stay for at least three years. Don’t underestimate the little things you might miss from your home country. Every time I visited the US, I would bring back my favourite Kashi cereal and Amy’s soup. Unless you and your spouse want an adventurous life, don’t take a foreign job because it will be difficult for both of you.

Until I moved to Dubai, I didn’t realise how expensive and difficult it can be to find an apartment that you like and that is conveniently situated. It was also hard to secure places for our children at the American School of Dubai. Some companies buy slots at international schools for their employees, but if you don’t work for such a company, finding school places might be difficult.

The Prospects and Perils of Project Pursuit

Project Pursuit

It is every manager’s dream to start a new fiscal year with a strong backlog of orders that generates enough sales for the year and beyond. If you are one of the lucky few sitting on a big backlog because of project business, you might consider planning a vacation at the beginning of the year or dropping by Starbucks and enjoying a nice latte before heading to work.

Project pursuit is the process of planning, organizing, coordinating, and controlling the resources to accomplish specific goals of bidding on and winning new projects. This article relates to industrial projects, such as building a power plant or supplying the critical balance of plant equipment to a major oil refinery project.

In the project business, the hunt for the next new project never ends. As the company depletes its backlog, it is critical to replenish it, which is done by being persistent and focused in the approach to seeking new projects. Keeping the book-to-bill ratio greater than 1 is a healthy target to strive for. It takes a different mind-set, business model, and risk appetite to be in the project business.

The definition of project changes from company to company, but in general, it relates to a scope of work that is complex and large in size, requires sourcing material from third parties, manufactures in multiple places, and has a delivery cycle that can go beyond 6 to 12 months. It may or may not involve on-site construction but may include long-term service agreements or field support while products are being installed. The contractual terms, revenue recognition, and resource allocation can be tricky compared with a short-cycle business or direct product sale.

My experience in developing EPC (engineer, procure, and construct) projects in the international markets started more than two decades ago when emerging countries were building power plants to drive their fast-growing economies. Those were the heady days when Western firms would bid on, win, and execute complex infrastructure projects in developing countries. The experience led me to be smart about the project business, and during that time, I learned a couple of tricks of the trade when it came to winning and executing large, complex infrastructure projects.

One cannot underestimate the risks involved in the project business. If the risks, both the known and the unknown, are not managed properly, they can wipe out a company’s balance sheet. A good example of this is the recent spate of nuclear power plants being built in the United States and the United Kingdom where project delays have doubled or tripled the cost of construction and bankrupted a large player in the industry.

If you are not lucky enough to have a customer relationship management (CRM) application to manage new project sales, don’t worry: God created Excel for that. In the absence of a CRM application, one can still manage project sales using a simple MS-Excel worksheet (see template below), although it is not the answer if you want to build a robust project business.

To successfully bid on, win, and execute projects, you have to consider many factors. Here are three important considerations to keep in mind while you are actively chasing projects to bid on and win.

  1. Pick the right project.

No matter where you work, company resources are always constrained. Allocating the best and the brightest members of a team to chase the right opportunities is a critical part of the leader’s job. The decision to invest in bidding on a new project should be made scientifically. It should not be based on emotion or the fact that someone in the organization fell in love with a particular project or customer. The opportunity cost of not working on other profitable projects, which you might have better chances of winning, should be considered in the decision-making process.

One can create a simple point system along five to eight criteria to help decide which projects to pursue. For example, when I was serving the Oil & Gas (O&G) industry, we set up a simple set of five criteria to consider: Lead Time, Compliance with Specifications, Price, Service and Application Support, and Competition. Before we started the bidding process, the sales, marketing, and operations teams together assigned points along those five. If a project’s final score was not above 75 percent—an internal cutoff point to approve new project bidding—we would not invest valuable resources in it.

It is important to think about the strategy to win before investing time and resources in a project. A few years back, a young engineer walked into my office and made a passionate argument in favor of bidding on a project. “Ramesh,” he said, “we are the only company in the world who could make super duplex material [a strong material used in harsh applications], and manufacture and deliver products to the site, in batches, to meet the short lead time the customer is demanding.” This led to several internal strategy sessions. We made a quick decision to bid, and we won the project. That one project alone constituted approximately 30 percent of the annual revenue for that business unit. As leaders, we have to be open minded and opportunistic when there are compelling reasons to chase a strategic project.

  1. Start the missionary work early.

Smart companies start pursuing a project before the specification hits the street, and in many cases, they are involved in the project well before the start of the front-end engineering and design (FEED) process. Major infrastructure projects need project funding, and using this information as a guide, you can start working with various stakeholders to highlight how your products and services differentiate your company from the competition.

More importantly, work with the influencers to support their efforts to reduce project cost, improve efficiency and reliability, and reduce project time with innovative ideas. Writing white papers in industry journals and publishing them in industry conferences to set industry standards on performance levels helps differentiate your offering. Proposing alternative solutions to address various plant performance requirements, while remaining cost competitive, helps differentiate your offering.

Put yourself in the customer’s shoes and think about what a successful project execution looks like for them. Although price and performance are key to customers, having deeper discussions with them may reveal that they need after-sale services, readily available spares, or even project financing.

Nowadays, the specification for a complex project is developed in one country, designed in a second country, and procured in a third country, and the project execution team is based close to the project site. Having the ability to interact and coordinate activities with all these customer touch points is important to the overall success of the project—at both the bidding and the execution stage.

For international projects, work with your country’s consulates abroad, be part of trade missions, and establish relationships with governmental entities that support exporting products—all the steps that improve your probability of winning projects.

When I was involved in developing EPC power projects in Asia Pacific, our company targeted Australia, which had plans to build several power plants. We knew competition from Asian players was going to be intense. As an American company, we started the missionary work in the country with various stakeholders and targeted two projects we had the best chances of winning.

On my first trip to Australia, we spent more than a month meeting all the stakeholders and building brand around our company’s offering. We demonstrated how our technology could help the local EPCs build an optimal plant at the lowest possible cost. We established a small local project office and actively started bidding on those two large EPC power projects. Although we lost the first project, we won the next one, which was worth approximately $110 M for the company.

  1. Manage risks.

By nature, the project business is a risky one, and there are few risk-free projects out there. An unforeseen risk can not only wipe out the profits from the project but also bring the entire enterprise down.

For that reason, many companies avoid the project business and stick to a simple product sales model. And sometimes, it is wise not to bid on a project with significant risks. That being said, companies can become well prepared by being smart about the scope of supply, having the capabilities to assess and manage risks, and building a solid project management team.

Companies that are predominantly in the project business establish a risk management team whose job is to assess potential risks and make recommendations to mitigate them. Project risks can vary from financial (such as the cost of goods or labor going up rapidly during execution) to execution (such as design changes). Developing a good project execution plan, before inking the project, helps address the potential known and unknown risks.

Companies that have developed a well-defined delegation of authority to assign project responsibilities to the right individuals within the company help mitigate potential risks.

In Conclusion

Project business is attractive to some companies because it brings big dollars to the top line, but if not managed properly, it can wipe out all the profits and bankrupt the company. Even a simple project needs to have a good execution plan and a dedicated project management team. Building a professional project management team in-house with professional Project Management Institute certification (PMI) will help you build a solid execution plan.

As industrial companies merge, creating a larger basket of offerings to their customers, getting into the project business is inevitable. Being prepared both at the leadership level and mid-management level to manage these complex sales and their execution is important to the overall success of the company. The Asian EPC houses (Korean, Japanese, Chinese, and Indian) have taken a predominant role in the world’s infrastructure projects, and through learning from their mistakes, they have built competencies to successfully manage complex project business.

The Bottom Line

Let our advance worrying become advance thinking and planning.     —Winston Churchill

The Not-So-Good Leadership Traits to Avoid

The Not-So-Good Leadership Traits to Avoid

In an age where everything is stored digitally, I have this habit of saving good articles by cutting and pasting them into a paper notebook.

While flipping through the pages, I recently came across one of those cut-out articles - The Worst Leaders, published by Harvard Business Review (HBR) in 2009. There are thousands of articles and books on good leadership, but few talk about the characteristics of worst leadership.

At some point in our lives, we have worked for great leaders and have had the opportunity to experience the respected qualities that come with strong leadership. Other times, we face the misfortune of having to work for not-so-good leaders, yet there is ample room to learn from those experiences as well. 

Here are the top 10 traits of worst leaders according to HBR and keeping an eye on these blind spots helps to improve one’s leadership:

  1. Lack of Energy and Enthusiasm – these are the leaders who avoid new initiatives and they can suck all the energy out of any room
  2. Accept their own mediocre performance – these are the leaders who seem to be ok with average level of performance
  3. Lack clear vision and direction – they believe their only job is to execute
  4. Have poor judgment – they make decisions that colleagues and subordinates consider to be not in the organizations best interests
  5. Don’t collaborate – they view other leaders as competitors and they are set adrift by the very people whose insights and support they need
  6. Don’t walk the talk – they set standards of behavior or expectation of performance and then they violate them
  7. Resist new ideas – they reject suggestion from subordinates and peers. Good ideas are not implemented
  8. Don’t learn from mistakes – they fail to use setbacks as opportunities for improvement, hiding their errors
  9. Lack of interpersonal skills – they are either too abrasive or aloof and unavailable
  10. Fail to develop others – they do not develop new leaders causing individuals and teams to disengage

Realistically, one can’t expect to excel in all aspects of good leadership in its entirety. Keeping an eye on a handful of leadership traits, which are part of your core leadership style, and improving on others is a good balance to have.

Bottom Line

You can’t create greater followers under poor leadership.

The ABCD of Channel Management

The ABCD of Channel Management

Multinational companies are expanding their product portfolios, getting into new regions, and serving multiple end markets to continue their growth aspirations. This complex environment challenges a company’s CEO, CMO, sales leaders, and business unit presidents to effectively plan the sales process to serve their large, diversified customer base. A good salesperson is worth her weight in gold, but adding salespeople without a planned approach to channel management becomes an expensive proposition.

Building, training, and deploying a direct sales force is quite expensive, and companies with products and systems containing high-technology content typically lean toward this direct model. However, a majority of companies have a combination of both direct and indirect sales channels, where representatives outside the company help the original equipment manufacturer (OEM) sell their products. Indirect sales channels can range from resellers and independent sales representatives to value-added distributors and system integrators.

I have managed businesses with a mix of both direct and indirect sales channels, but I’ve been surprised by how some companies place little to no importance on actively building and managing indirect sales channels.

In this article, I explore the Always Be Closing Deals (ABCD) mentality of channel management and give pointers based on my personal experiences with building channel management processes and expertise. As much as it is tempting for large firms in the B2B world to disintermediate the channels, one has to thoroughly weigh the pros and cons of doing so. Indirect sales channels pull the demand from the front-line customers to the factory floors, and when done well, it gives you the lowest cost-of-sale-per-dollar of revenue.

Certainly, the positive effect of having indirect sales channels is the ability to scale quickly and get broader market penetration at the lowest possible cost. This allows companies to put more feet-on-the-street in multiple markets and multiple regions quickly. This model works well for midsized companies that are resource constrained and selling products that are not complex engineered systems.

Companies do face some challenges with channel partners when it comes to their ability to influence the product brand image, get direct customer feedback, and obtain market intelligence. Further, without direct customer contact, it becomes challenging to get a bigger share of the end customers’ wallet.

Don’t forget, your channel partners may be multiproduct line partners who sell not only your products but also your competitors’ products. In a recent example, one of our channel partners was competing with our company on services and rental offerings without our knowledge, which led us to open our own service and rental business in the region. These conflicts in scope should be addressed during partnership structuring.

For a partnership to work, a few things need to happen between the partners. An OEM will be very interested in getting customer feedback on product performance and data on installed base to later serve customers with services and replacements. Further, the OEM will be interested in gathering data about industry trends and competitive knowledge of the end markets. Finally, the OEM will expect to meet or exceed the sales target assigned to the channel partner.

Similarly, the channel partner looks for sales training, marketing collaterals, product training, engineering support, and, of course, increased sales. As you can imagine, the common goal for the partnership is to achieve top-line growth for both the parties.

Based on my experience in building channels in high-growth markets serving multiple end markets, I have listed three critical considerations for a typical industrial OEM:

  1. Channel Mapping, Structuring, and Due Diligence

Thorough mapping of the channels to various end markets, key accounts, different product lines, and different regions of the world helps you think through the efficiency and cost of building indirect sales channels. Pay close attention to any exclusivity demands of the partners and the overlapping of products and regions. Structuring agreements for 12 to 24 months provides an optimum time frame in which to test out the partnership.

Conduct the right amount of due diligence before bringing a channel partner on board. Understanding the partner’s company structure, financials, historical track record, product and market fit, and SWOT analysis is critical. Finally, for any partnership to be successful, it is important to make sure the chemistry works, the values are aligned, and the ethical standards of the partner match those of the OEM. In some emerging markets, I have sought the help of American or Canadian consulates’ business attachés to help identify reputable and ethical partners.

Channel partners are independent businesses who look after their own goals. OEMs should make sure they are getting the right amount of attention and resources they need from their partners to grow in selected markets. Doing a Pareto analysis of your partners’ performance and culling the bottom performers helps keep the channels robust and productive.

Having more channel partners is not always better, something I learned the hard way. Channel partners need marketing support, application engineering support, and technical training. If one does not have the staff to meet those requirements, the channel performance goes down over time, and no amount of blaming is going to help rebuild the trust in the relationship.

  1. True Partnership

Key to building any successful partnership is establishing clear guidelines and rules around the engagement. There needs to be open and transparent communication about sales pipelines, lead generation, and lead management. Aligning and setting annual and quarterly performance goals and having timely discussions around performance are important to keeping the partnership true to form.

OEMs sharing tools and templates on best practices with the channel partners and creating a community where partners learn from each other helps increase the level of engagement. Going on joint sales calls and capturing market intelligence and customer feedback is invaluable to any OEM aiming to further optimize the channels.

In one of my previous companies, we invited channel partners from multiple countries to witness the pre-launch of a new product line. We got tremendous feedback from our partners on our product configuration, marketing plan, and launch price; as a result, our engineers and supply chain leaders had to go back to the drawing boards and alter our launch program significantly. When OEMs include the partners in their multigenerational product planning process, it’s a win-win for all.

  1. Investment

Compared with direct sales channels, creating channel partnerships is much more cost-effective, but to make it work and deliver value, one has to continue investing in the channels. Co-investing with channel partners to incrementally add salespeople will incentivize them to deliver incremental growth. Other investment ideas include providing regular sales and technical training, sharing marketing and advertising costs, and helping to build social media platforms for your channel partners. Giving price discounts helps meet short-term volume needs but is not considered an investment for long-term growth.

Proactively connect the channel partners to your company’s engineering, manufacturing, and product teams. Encourage your engineering team and product managers to visit the partners and make joint sales calls. There is immense value to tightly integrating the channels with the technology and manufacturing teams. Support the channel partners with business systems like CRMs or LEAN so that the partnership is mutually beneficial.

In Conclusion

In a resource-constrained environment, it is important for leaders to allocate sales costs appropriately to get maximum benefit on top-line growth. The normal metrics of bookings, backlog, sales, and book/bill ratio are good to measure, but leaders should go one level below and look at other factors, such as where sales are not coming and whether there is any merit in allocating resources to a slow-growth segment or product line.

Doing a deep review on channel performance once or twice a year at the senior leadership level helps keep the channel strategy robust and current. Some channel partners are not only your partners but also your customers, and companies should treat them accordingly. Reaching beyond traditional advertising and trade shows to allocate part of your marketing budget to working with channel partners on joint investments will be much more powerful and yield tangible results.

Finally, channel partners are an extension of your company brand, and therefore it is important to make sure the partners are in line with your company’s values.

The Bottom Line

In a complex global business environment, your strategy and approach to channel management makes a big difference in achieving strong, profitable growth.

The Art (and Science) of Acquisition Integration

The Art (and Science) of Acquisition Integration

Ramesh Nuggihalli. (rameshnuggihalli@yahoo.com). January 30, 2018. Published on LinkedIn.

Companies worldwide closed or announced $3 trillion worth of acquisitions in 2017, with North America leading the transaction value by more than 50 percent, followed by Europe and China. It was a bumper year for mergers and acquisitions (M&A), and the new tax laws passed in the United States are encouraging companies to repatriate more than $1.5 trillion in stranded cash from overseas accounts, which is further expected to increase the M&A trend in 2018 and beyond.

Experts are attributing the increasing trend toward M&A to technology and business model disruptions that are taking place, from the retail industry to industrial sectors. The same experts also predict that approximately 50–70 percent of these transactions will fail to add shareholder value. Beyond the strategic intent of doing a transaction, acquisition integration (AI) plays a big part in the success of a deal.

In the recent past, many deals have failed, rather spectacularly[1], to achieve value committed during the transaction phase. Value creation work and integration planning does not start when the deal is announced. In fact, it starts when a company’s CEO and board members first start discussing a potential transaction.

A strong board will ask all the tough questions starting with the big “why.” Why are we considering this transaction? How is this going to add value to our current portfolio and customers? How does this transaction fit into the overall strategy and vision of the company? Finally, how are we going to integrate this new company, and who will manage the integration process?

The AI process consists of two parts: One is the tactical element of integration (science), such as making sure employees get paid the first month after the deal closes. The second element of the AI process is the strategic element (art) of achieving the intended purpose of the transaction and adding shareholder value. This article deals with that second element.

Leaders and organizations that are adept at change management thrive in the M&A world. In the past, the realm of M&A used to be the big blue-chip companies, but today, the M&A process is ubiquitous and senior leaders are expected to know the tricks of the trade. What used to be the big corporate M&A team consisting of dozens of professionals who help the business unit presidents acquire and integrate, has typically whittled down to a very small team. The presidents and general managers are now expected to pick up both the front-end deal negotiations and the back-end integration process, with limited help from corporate.

After spending a decade in corporate development roles in large industrial companies integrating and managing cross-border deals, I have come to appreciate what it takes to integrate a company. Further, I have been on both sides: acquiring and acquired. I have experienced mergers, divestments, de-mergers, reengineering, restructuring, reorganization, and the creation of tax-efficient models. Throughout all these corporate ventures and adventures, one thing has been constant: change.

There are a million things to consider during the integration process, but if you are the CEO or a board member of the acquiring company, I recommend that you first concentrate on a few critical factors that will have a disproportionate effect on value — both positive and negative. Let me highlight below the top three considerations in the art of AI where you manage the strategic elements of the AI process.

  1. Managing Value Creators and Value Destroyers

When a deal is presented to the board for approval, the presenter articulates the strategic value of the transaction. In all cases, a dollar amount is attributed to these value creation ideas. In M&A lingo, these value creation ideas are called synergies. Typically, these synergies are sales synergies (top-line growth), cost synergies (profitability growth), and sometimes, negative synergies, where you might lose sales synergies because of certain market conditions.

Instead of allowing attention to get misdirected and bogged down by a dozen synergy ideas, I recommend that the integration leader list the top five value creators with tangible values and assign it to specific individuals to plan and deliver. One example of this could be the two merged companies jointly bidding on active large projects by pulling in each other’s products and services to increase the probability of winning a project.

Every transaction is accompanied by a host of risks, and if the risks are not managed properly, they start to erode the value. Again, the CEO and board should request a list of the top three value destroyers and manage it effectively to avoid or mitigate unforeseen risks. An example of this could be loss of sales because of a potential new customer who also happens to be a potential competitor of the acquiring company.

In an example of a similar situation, the CEO of a large industrial company personally visited its impacted customers within the first 30 days of announcing the deal, to assure them that they would be served with the highest level of integrity and that any information provided to them would not be used for any competitive reason other than serving them. The CEO was able to retain at least 80 percent of the business, although the company still lost some because few customers wanted to diversify the supply base.

  1. Integrating Culture and People

Once you get past the equipment, intellectual property, and various other line items on the acquired balance sheet, the most important asset that comes with an acquisition is people. Understanding the culture of the acquired company during the entire deal process and getting to know the senior leadership of the acquired company is an important task - not simply for the human resources department, but also the entire senior management.

What do I mean by culture? By its simplest definition, culture is how a company operates and does things on a daily basis. It can be as mundane as putting up (or not putting up) Christmas decorations in the lobby. One has to study the cultural dissimilarities between the two companies and prepare the combined team to deal with potential issues, both big and small. These factors need to be addressed early in the integration process to avoid any long-term damage to the combined culture.

As an example, in one of my previous companies, we had zero tolerance when it came to legal compliance. Through a series of events, we discovered and terminated the head of sales on Day 1 because of compliance reasons. Despite the impact we knew it would have on first-year sales, we were sending a powerful message to the entire organization about our values and beliefs and how we wanted to manage the combined company going forward.

When the first rumors of a merger-in-the-making come out, they send shock waves through the organization. The first question that comes to employees’ minds is whether they will have a job after the deal is closed. The level of uncertainty and ambiguity that surrounds the deal process will have huge psychological effects, and those can and do affect people’s performance. It is vitally important to have a formal communication plan that keeps the teams updated on the deal progress and to be intentional about killing any rumors that are affecting the company negatively. The one piece of advice I have often given to my team to alleviate their fear and ambiguity during a deal process is “Keep doing your job and use the merger to create personal growth.”

The senior leaders of the acquiring company should spend a disproportionate amount of energy addressing the people issues; that critical task should not all be left to the HR department. Having open and transparent communication, building trust during interactions, managing power struggles, avoiding leadership ego trips, and preventing the loss of key employees becomes one of the most important leadership accountabilities during the early stages of integration.

  1. Addressing Change Management

A big part of AI planning and execution is about the change management process. In my observation, many senior leaders are ill-prepared and trained to effectively execute a change management strategy.

There are various change management models, but I have successfully used this self-developed simplified three-step process—what I call the three Ds—:

  1. Discovery Stage: Understand the need to change and build a baseline on what to change and how fast to change.
  2. Developmental Stage: Build a business case for change by including the stakeholders. The plan needs to have a starting point and an ending point with measurable metrics.
  3. Deployment Stage: Launch the plan with open and transparent communication, seek buy-in, and manage resistance at all levels. Finally, measure the progress, and continue to revise the plan and re-deploy it where necessary.

I was involved in a change management process where the company wanted to reorganize the business from a regional structure to an end-market-structure. The CEO invited 90+ senior leaders from all over the world for an intensive, hands-on workshop where we launched the three-stage change management process described above. It was highly effective as we were able to manage resistance in the breakout sessions, come to agreements on change priorities and timelines. By the time, 10 days later, the leaders went back to their regions, they were able to effectively and consistently communicate and cascade the plan to the next level. This was a costly and time-consuming exercise, but as we demonstrated, when done properly, it delivers solid results.

How Do You Know It When You See It?

In terms of the Acquisition Integration process, the senior leader(s) who sponsor the transaction manage the critical steps and they are actively involved through out the deal process. Success demands that the leadership clearly understands the value drivers and value destroyers and prepares the team to address them in the early stages of integration. The CEO or Deal Sponsor can articulate the acquisition rationale in simple terms, and the leadership team knows where and how the business will be integrated well before the transaction closes.

It is my observation that High-performing companies and serial M&A dealmakers hire general managers who have not only executed transactions but have successfully integrated them. They don’t use a generic integration playbook for all the deals; each plan is carefully customized to each transaction, with the value drivers clearly identified.

Between the steering committee, deal sponsors, external advisers, subject matter experts, functional leaders, regional leaders, and the teams -- from both the acquiring and acquired company - the size of the integration team can, at times, be unwieldy. Smart companies keep the team size to a manageable few who are directly involved in delivering results. Further, they seldom use outside consultants to come up with synergy estimates, and it is all done internally with the help of the chief commercial officer (CCO). Off late, many companies are hiring CCO who manage all aspects of growth from strategy, marketing, e-commerce to M&A/Integration.

When, at the CEO and board level, leadership is focused on strategic aspects of the integration and regular reviews are held to make crucial decisions, you start to see value creation at work. Synergy assumptions are tested and retested during the entire deal process, and when the assumptions are wrong, the leadership is bold enough to drop a synergy and pick another synergy to replace it. The leadership team keeps a close eye on cost synergy, which is the controllable piece of the synergy book, which is executed flawlessly according to the plan.

Synergy goals are well articulated and driven to different business units and regions with clear execution plans and defined milestones on the way to achieving the results. Activities are prioritized, such as finance closing the books, so that the resources are effectively deployed to deliver value. Leaders keep a hawk eye on the value creators and destroyers, and they come up with contingency plans quickly if something is not working.

A good acquisition integration plan is simple, measurable, and executable, and delivers the intended value. In the art of AI, the senior leaders concentrate on the value drivers and destroyers, culture, and people, and build capabilities around a change management process to create value for the business.

The Bottom Line

Simplicity is the soul of eff

[1] A few examples are Daimler–Chrysler, AOL–Time Warner, and HP–Compaq.

You are who you are, so be who you are.

Look famous. Be legendary. Appear complex. Act easy. Radiate presence. Travel light. Seem a dream. Prove real.

—Anonymous

The New Year is right around the corner, and some of you must have started thinking of New Year’s resolutions, from losing weight to making more money to being happy.

The pursuit of happiness is the greatest goal one can strive for, but it is an elusive state of mind that keeps changing with time, place, and circumstance. Trying to achieve happiness by being someone other than your authentic self is not only short-lived but also painful. Perhaps, one of your goals for the coming year ought to be your true self.

Bill Bryson in his famous book A Short History of Nearly Everything articulates how trillions of drifting atoms had to come together in an intricate and intriguing manner to create a human being. The combination is so specialized and particular that it will happen only once.

This process was billions of years in the making, and all elements of the cosmos—pressure, temperature, chemical composition, and time—have to be in perfect sync to create a human. In this sense, every person is unique and distinct in many ways. Despite this uniqueness, some people try to hide their true self and go about life being someone else, thus missing out on the magic of creation and creativity.

When I was growing up, the monks in my school drilled into us that each soul is potentially divine. Without getting into philosophy, I’ll just say that we learned that every human is uniquely gifted and we have infinite energy to accomplish anything we want in life.

We spend more than a third of our life working in different organizations, with different people, with different values and cultures. Being authentic and injecting your true self into your leadership style will help you gain a bigger following—and I bet you will be happier by being yourself.

Leading companies are going to great lengths to make diversity and inclusion (D&I) a key part of their culture, but inclusion is the secret sauce that binds D&I together. Creating an inclusive culture that makes room for and engages people with different leadership styles is key to creating an innovative company.

A recent study shows that approximately 30 percent of ethnic millennials consider changing their ethnic names to something Western sounding to blend in with their colleagues. Changing your name does not change your true self, and I encourage you to maintain your personal touch and a level of authenticity that makes you, you.

Certain behaviors, attitudes, and actions are not acceptable in a working environment. For example, openly and vigorously expressing views on sensitive subjects such as politics or religion at work is not acceptable.

There are at least three ways to express your uniqueness. While working in organizations, you are always on stage, and people are observing, drawing conclusions and building an image of you. The question becomes how you will manage to be your true self and remain authentic while balancing all the other nuances.

Physical Image

This is the visible part of you, and how you show up to work or a meeting says a lot about your unique tastes and self-expression. Looks can be deceptive and people should not judge a book by its cover, but they still do.

If your work environment requires a formal dress code and your preference is to be informal, then wear funny socks with your suit to show a bit of your true self. If, like me, you like wearing Buddhist beads on your wrist on Fridays, go ahead and do it—it is not a deal breaker.

I recently had a meeting with a senior HR leader from a large industrial company. She was dressed informally and sported a tattoo on her wrist, but that did not make her any less professional. In fact, I enjoyed talking to her and she came across as authentic. It also reflected the inclusive culture of the company.

Irrespective of your desire to be your true self, being smart about the situation is important. Don’t show up to work in a brand new sports car if you plan to announce cost-cutting initiatives or disrespect your customers by not being professionally dressed for the occasion.

Mental Image

You project your unique thoughts by how you speak and how you verbally articulate your ideas in the workplace. If your talking style is direct and straightforward, you can expect different expressions and perceptions from your audience compared with someone who speaks soft and slowly.

During a leadership program, I made a couple of strong statements in the team discussion to kick-start the conversation. The feedback after the session was that I had been both provocative and unifying. Words when spoken (or not spoken) have a powerful way of projecting your self-image. Strong leaders who exhibit executive maturity know how to modulate their tones and words to get the desired effect.

If you are the kind of person who likes to cut jokes all the time, don’t stop—but do it in moderation.

There is always pressure to conform to certain norms, but in today’s world, there is more flexibility in the workplace to express your views professionally.

Action Image

Actions speak louder than words. You have almost certainly heard the adage that only 7 percent of face-to-face communication is attributed to the words spoken; the rest is about body language and how you say those words.

Further, some people lead from the front and some from the top, but others stand on the sidelines until they are called. Depending on your actions, you can be perceived as a go-getter, power player, team player, or bystander.

If you are the kind of person who likes to take the lead, be proactive and make your intentions known to others. Being consistent in your actions is as important as the action itself. As the saying goes, “Always be yourself, unless you can be Batman. Then always be Batman.”

People higher up in an organization have earned the power to be truer to their true selves. They also have earned the right to exhibit their idiosyncrasies. However, there are professional boundaries one has to manage. Being too open, transparent, or informal in a workplace setting is not helpful for your personal growth or for your career progression.

Bringing it all Together

Building an inclusive culture where different kinds of leadership styles are encouraged helps an organization build an innovative and thriving enterprise. When an individual becomes part of an organization or team where the personal and organization values and culture are aligned, it will be a win-win combination for both. Becoming a strong leader is also about being authentic and being true to one’s true self.

The Bottom Line

To be yourself in a world that is constantly trying to make you something else is the greatest accomplishment.

—Ralph Waldo Emerson

The Pillars of Building a High-Performance Team. Part 2

High Performance Team

In my last article on building a high-performance team (HPT)[1], published on LinkedIn on October 23, 2017, I explored the subject from the foundational elements of respect, trust, and loyalty. In this article, I continue to explore other elements of building an HPT and, more importantly, nurturing it on a sustainable level.

The classic definition of a high-performance team is an organization or a team that is highly focused on its goals and achieves superior results - against all odds.

Most leaders would agree that it is easy to motivate, engage, and drive a team to spectacular performance for a short period. The real challenge is to do it day-in and day-out while maintaining high energy levels and focus.

In a quick online review of the subject, it appears that the concept of an HPT has become such a cliché that sometimes people take it for granted and don’t fully appreciate all the basic elements needed to build and sustain a performance culture. To achieve superior results, the accountability rests with the team leader who needs to have energy, passion, and drive.

Developing one’s own leadership qualities is a journey. Personally, I continue to explore and experiment with leadership concepts that build strong team spirit and deliver superior performance.

The four pillars of an HPT that I describe below are concepts that I have implemented in the past with great success. Although they might look very basic on the surface, the key to success is to implement them on a consistent basis for a long period. The question becomes whether you have the energy and passion to build and sustain them.

Here are my 4 pillars of building a high-performance team:

  1. Alignment on Goals, Objectives, and Roles

Whether you are leading a complex business or a functional team, as a leader, it is crucial that you put some thought into your team’s vision, strategy, and operating rhythm. One can’t expect different results by doing things the same way.

What makes great leaders is their uncanny ability to convert vision and strategy into tangible goals and objectives and communicate them to their teams in a meaningful and measurable way. Put differently, even the best strategy will not jump out of the PowerPoint slides and implement itself. By articulating goals at the beginning of the fiscal year, when they align with the budgeting process, it is easier to match the initiatives against both short and long-term goals.

Be mindful of the number of goals you pick and how you allocate capital, both human and financial, as it will determine the team’s overall success. One thing I have found particularly helpful is maintaining a transparent operating rhythm and holding the entire team responsible for delivering the results.

Finally, the leader has to clearly define and agree on the team purpose and the role of each individual on the team. That may sound simple, but often people look at each other when discussion of an action comes up in a meeting, unsure who is responsible for implementing next steps. Clearly defined roles and a decision-making matrix are paramount to building an HPT. When conflicts arise, which they invariably do, it is the job of the leader to take a proactive role in resolving them.

  1. Communication and Engagement

When it comes to building a cohesive team, the advice I have is to communicate more than you think you need to, and use modern technology to your advantage. More importantly, the content, frequency, transparency, and media with which you deliver helps bridge communication links between senior leadership and the working team.

In one of my previous role, I had the opportunity to spend several hours with just six employees in one of the world’s fastest-growing countries. In this meeting, I presented and discussed the corporate and regional strategy and how the team could make a difference. This one session energized the team so much that we started seeing new growth ideas that had not been captured before.

Mathew Syed, in his book Black Box Thinking, says openness is not an optional extra but a useful cultural add-on to create an environment of learning from mistakes – including your own. Be open and talk about issues, challenges, and values that matter to you as a leader. And because an engaged and informed team is a productive team, remember to reiterate your strategy and the progress the team is making on key initiatives.

Employee engagement is a broad topic and I have had great success hosting activities ranging from holding a company picnics to doing a community-based activities. These events were planned around company values and done purposefully, which helped build a solid and cohesive team. The events created an opportunity for me and other leaders to interact informally with the employees and feel the pulse of the organization.

Finally, consider conducting skip-level meetings with key individuals two or three levels below you to seek feedback on how they are being supported in achieving both personal and company goals. As a leader, your goal should be to continue to influence and build new leaders at both the top and working levels.

  1. Performance Discussions and Feedback Loops

If you have more than six people reporting to you and some of them are matrixed into other functions, doing a formal performance review becomes a mini-project in itself. But that is not an excuse for not doing it.

Some progressive companies are moving toward dialogue-based performance reviews and away from the forced ranking system. I’m a strong advocate of this practice. In fact, one that comes to my mind happened in an airport lounge where my supervisor gave me feedback and openly discussed successes and failures with an eye toward making me a better leader. It takes maturity and the foundational elements I discussed before to have such a crucial conversations.

Finally, during these sessions, I have asked my team members how I can be a better leader. Speaking from experience, you’ll be surprised at how much valuable feedback you can gather from your team.

  1. Celebrating Success

This one may seem less relevant, but remember all work and no play also makes a dull team. Great leaders celebrate small wins that culminate in a big win. Irrespective of an employee’s level within the organization, a well-deserved thank-you note from the team leader goes a long way.

Consider if it is possible to include your customers in your success story, as it is even more powerful. Last year my team hosted a customer celebration day as part of a trade show. We thanked our customers for the trust they placed in us, acknowledged their accomplishments, and built strong relationships in the process.

Goodness of Leadership

What brings this all together is the goodness of leadership. My definition of the goodness of leadership is being authentic, inspiring, empathetic, and having the courage to take personal responsibility. Finally, the leader acts and manages the team with integrity. Great leaders bring out the best in their team while acknowledging and supporting the personal and professional aspirations of their team members.

What I’m suggesting is akin to combining the leadership qualities of Mahatma Gandhi, Steve Jobs (throw in Bezos and/or Musk, if you like), and Mother Teresa - all in one individual. That may sound daunting, but who said leadership is easy? If you can take one or two good leadership qualities and internalize them, it will have a positive effect on your team.

How Do You Know It When You See It?

Building an HPT starts with the leader. A good leader comes with a plan, converts the plan into effective, tangible, and measurable projects, and communicates the plan to the entire team.

The leader has mental maps of the various steps required to implement the strategy and holds the entire team accountable for delivering the results, including him or herself. The leader is not afraid of reallocating resources in the middle of a project or even admitting mistakes and completely shutting down a nonperforming initiative.

These leaders don’t shy away from team conflicts, and they go above and beyond to make sure the team is fully aligned and engaged with the plan.

The team is aligned on the goals and aware of the role each member plays within the team. Team members have developed and agreed to a mechanism to sort out issues with a clear decision matrix. The team functions as a single fighting unit and is aligned to such a great degree that it doesn’t need much of the leader’s attention on a day-to-day basis.

The Bottom Line

Coming together is a beginning. Keeping together is progress. Working together is success. —Henry Ford

[1] https://www.linkedin.com/pulse/foundation-building-high-performance-team-respect-trust-nuggihalli/

Home of High Performance Team

Foundation for Building a High-Performance Team: Respect, Trust, and Loyalty (Part 1)

Respect, trust, and loyalty are some of the most powerful words in the lexicon of leadership and team management. Quite often, these words are thrown around loosely without context or thoughtful consideration for the people involved. As I’ve experienced and will explain, the meanings and implications of these words tend to change with the people, the situation, and the culture in which we operate. As a way to strengthening your leadership skills, being aware of the norms around these words can allow you to build stronger teams.

Donald Rumsfeld once said, “You go to war with the army you have, not the army you might want or wish to have at a later time.” Very often, when a leader takes a new role, the team comes built-in with the job and the leader starts the journey of bringing the team along with a new mission and vision. It would be wonderful if all the team members were loyal to the leader on day one and, of course, were trustworthy and respectful to each other at the same time. Unfortunately, it seldom works that way. The leader needs to start building trust through respect, which ultimately creates loyalty.

In my most recent leadership roles, I was thrust into a situation where I had to lead a highly diverse team spread across many countries – each with unique cultures. It felt challenging in that I started the job without an onboarding process, leading a team that had previously being led by several leaders in a short time frame. With advice from my mentors, I started the journey of building a high-performance team by creating a culture of respect, gaining members’ trust by working along with them, and finally, building followership (loyalty) toward a shared purpose. The result was spectacular as the team achieved and exceeded the commitments made to the business and the local community.

Earning Respect

Although respect looks and feels different for different people, in general, it is about admiring or giving special attention to a person or something. For instance, a person in power may feel disrespected if someone questions his or her ideas, yet, if considering generational differences, a Millennial leader[1] may want that person to challenge her so that she feels engaged and heard. In certain cultures, following orders from a supervisor without pushing back is a form of respect, and anything short of it is considered treason. Being aware of the norm for the organization and its culture becomes an important first step for a new team leader.

The basics always matter and active listening is one basic. Respect people when they speak by allowing them to complete what they are saying, and give weight to their ideas. Acknowledge any differences respectfully but be transparent about where you are coming from. Appreciate the local culture and norms, including that of your organization, because that is important to building a mutually respectful team.

In a blog post in the Wall Street Journal, Jennifer Deal[2] makes the point that when it comes to respect—or disrespect — “what you tolerate, you promote.” As leaders, you set the trend and the boundaries of a respectful culture.

To make that more personal, in meetings with my leadership teams, I would set boundaries by saying, “Within the family, it is okay to throw food at each other occasionally, but you are not allowed to throw knives and forks.” It set expectations and the tone lightened the mood creating a healthy and productive culture that encouraged open debate and welcomed diversity of thoughts whilst still maintaining a professional environment.

Gaining Trust

Trust is an unwavering bond between individuals where one believes in the other without any prejudgment. As Jon Mertz says in one of his articles, “To gain trust, we must be believable so that others will have confidence in our ability to keep our word, do our part, and follow through on expectations set.”

Gaining trust starts with small steps and it is cumulative: the more you do it, the more you make deposits into the trust account. Trust is built on a foundation of honesty and transparent communication. If you lack either one of those, it will start eroding the trust factor in your relationship with others. Finally, trust is about consistently delivering what you say you are going to deliver.

John Blakey (http://johnblakey.co.uk/), founder of the Trusted Executive Foundation, is a prolific author and thought leader on this subject. He talks about trustworthiness having three components: ability (coach, deliver, be consistent); integrity (be honest, be open, be humble); and benevolence (be kind, be brave, evangelize). He further makes the point that although people can deliver on promises day in and day out, if they are dishonest or cruel, others are unlikely to trust them.

The fastest way for leaders to build trust within their team is to roll up their sleeves, get into the trenches with their team members, and help them accomplish their goals. Leaders’ actions then get amplified; making promises and acting on them helps significantly improve the trust quotient. However, failing to do so bankrupts their trust account.

Returning Loyalty

Loyalty is a strong feeling of support or allegiance to an individual or an organization. Loyalty is the result of a respectful relationship built on trust over a period of time. As a team leader, avoid encouraging blind loyalty from individuals because it may lead to mediocracy trap, which would be hard to unwind later. It further leads to a bad working environment and does not motivate other team members to give their best.

One cannot buy loyalty, but one can buy a dog that will be loyal. In the political world, loyalty is considered an entry ticket to a job; in the business world, loyalty is earned over time.

Don’t be in haste and question someone’s loyalty without clearly understanding the context of his or her words or actions, because it will take twice as much effort to rebuild the level of trust that was established. Finally, don’t expect true loyalty to occur in the early stages of a relationship; it takes time to build respect and establish trust before seeking loyalty.

How Do You Know It When You See It?

How often do you attend meetings where one person speaks the majority of the time and other people just take notes, make some cursory comments, and leave the meeting without any actions or follow-up? This shows a broken system where respect, trust, and loyalty exist on a superficial plane.

When leaders create an environment where issues are vigorously debated and diverse views are respectfully heard, you see a team atmosphere of mutual respect. When people are not branded for their views or politically castrated for pointing out obvious things, their leaders are building a trusting team. When people complete the process of grinding through the issues in a setting where their views have been given a hearing, the leader makes the final decision and the team follows through on the actions because that leader has earned the loyalty of the team. It is the leader who sets the trend in earning respect and gaining trust, and if it’s done thoughtfully, honestly, and consistently, that person will earn a loyal followership and team members will go to any length to achieve the vision.

The Bottom Line

Respect is earned. Honesty is appreciated. Trust is gained. Loyalty is returned. —Anonymous

[1] http://next.bncollege.com/wp-content/uploads/2016/03/Millennial-Infographic-Ideal-Boss-Oct-2015.pdf

[2] https://blogs.wsj.com/experts/2017/02/24/what-does-respect-mean-at-work-it-depends-who-you-ask/

The Road to Building Commercial Excellence

The road to building commercial excellence (ComEx) to achieve high levels of growth is long, but not necessarily straight. Commercial excellence, like operational excellence (OpEx), combines processes, programs, culture, and leadership to profitably grow the top line. ComEx is not just one thing, and like many enterprise-level initiatives, it takes a significant amount of effort, time, and committed leadership to build and operationalize it.

As industrial companies struggle to achieve growth rates much above GDP levels and address the pressure from the investment community to deliver value, CEOs and board members have started to think about the process of growth.

There is a link between OpEx and ComEx: companies with good operational rigor have put similar processes in place to address growth. In one case, the CEO of an industrial company measured each commercial transaction on a weekly tollgate review process with the intent of achieving an 80+ percent probability-of-win rate. With this process, the company increased top line by approximately 25% over a three-year period.

The formula for growth is both organic (investing in the current business) and inorganic (typically achieved through mergers and acquisitions, or M&A). Developing organic growth is the essence of ComEx, but it is also the most challenging and creative of the two. A recent study by McKinsey & Company of 550 companies over a fifteen-year period revealed two things: (1) companies with more organic growth generated higher shareholder value than those dependent on M&A, and (2) companies achieving above-market growth pursued a diversified approach to growth.

Traditionally, ComEx sits in the realm of strategy, marketing, business development, and sales departments. To build a robust ComEx program, it is necessary to connect the commercial teams to product development, R&D, manufacturing, human resources, and finance. Some companies have built a proprietary business system (such as the Danaher Business System), which integrates all these concepts into a cohesive commercial and operational model that achieves shareholder value. These companies have painstakingly built their proprietary model over the years, and it has become part of both their culture and their winning formula. As Peter Drucker said, “Don’t confuse motion with progress.” Investing in a few meaningful programs is better than chasing many wasteful ones.

In a crowded marketplace, the key to success lies in differentiating your products and services from those of your competition. As Warren Buffett famously said in 2007, “I don’t want a business that’s easy for competitors. I want a business with a moat around it with a very valuable castle in the middle.” Part of developing a solid ComEx program means building this moat around organization’s valuable assets. It means constantly positioning and repositioning your business by understanding the external dynamics and by connecting the dots in the marketplace.

I have developed a simple model (Exhibit 1) that serves as a framework for assembling the building blocks of ComEx along customer-, market-, and business-focused programs. Within each of these areas, one can build multitudes of competencies, capabilities, tools, templates, and processes, but I have listed the critical programs that can have a significant effect on the overall growth. To start the journey, conduct a current capability study across all these programs and then pick one or two each year to implement ComEx.

 

 

Customer-Focused Programs

Irrespective of the size of the company, resources are always limited. Doing a thorough analysis on the customer segments, picking the right segments to play (and not play), and preparing a unique value proposition for the targeted segment is key to success.

To optimize selling cost effectively, it is important to allocate resources along the chosen customer segments. An active and robust channel management process, whether working with direct or indirect channels, helps build closer customer intimacy for increased sales.

Consider doing a Pareto analysis of your customer segment and in some cases, few customers contribute to a bigger share of your revenues. How the company serves these big customers, as part of your key account management process becomes important to maintaining the lead. Similarly, large projects that contribute to a bigger share of the revenues and risks need a special process (project pursuit) throughout the life cycle of each project.

Market-Focused Programs

Similar to customer programs, this is externally focused, and companies get better at making critical decisions by having a deep knowledge of the external environment. The customer and market programs combined with product planning help build a solid go-to-market strategy.

If playing in a regulatory-based environment or a business with long project cycles, it is critical to implement upstream marketing (missionary work) to influence the decision makers with the company’s unique value proposition.

Finally, in this modern digital economy, how the company conveys the value proposition to a diverse global customer base through marketing collaterals is key to long-term success.

Business-Focused Programs

As one might imagine, the real battleground is typically inside the company. The secret sauces for growth are the internal processes, programs, initiatives and talented leaders that help build the moat we talked about above.

Good data drives good decisions, and implementing a good customer relationship management (CRM) tool is the basis for driving a good sales process. In the absence of a formal CRM tool, using a glorified Excel spreadsheet to manage the sales process works, and yes, it can be done.

Building pricing models based on market and competitive assessment, combined with a clear value proposition, positions your organization’s offering attractively in the marketplace.

Having a solid sales and operating plan (S&OP) tying the sales plan to the factory floor helps deal with the volume and mix issues while contributing to improved working capital.

Driving innovation and R&D investments based on a thorough understanding of the market and customer needs yields a higher return on investment. There are limits to growth and innovation in certain sectors of the industrial markets. Following the principles of “fail fast, fail cheap” allows companies to test out many growth ideas until they hit the jackpot. Fast product customization, similar to fast fashion in the retail industry; help generate incremental sales to selected customer segment.

Finally, the people who make growth happen need to be trained, rewarded, and motivated. As the markets grow increasingly diverse and global, introducing a sales leadership program that facilitates the recruitment of new talent and putting them through various markets and businesses helps build the superior sales team of tomorrow.

Bringing It All Together

The programs mentioned here are tactical in nature, but on top of it sits your company’s growth strategy. A simple model for organic growth comes from the work done by Chris Zook, who has written several books on growth. If thinking about organic growth in terms of the six angles of product, geographic, channel, customer, supply chain, and new business development expansions, one can generate a rich list of growth ideas. I have used this model to host growth workshops in which participants successfully create adjacency growth maps for each of the business units.

How Do You Know It When You See It?

Companies that are operationally focused also tend to have a good commercial growth program. They manage growth the same way they manage the factory floor, with clear performance metrics and rigor when it comes to delivering results. There is tight coordination between the customers, commercial teams, and factory floor. Senior leaders spend more time in front of the customers doing enterprise selling and defining the value proposition to their customers. These leaders work with the customers to jointly shape the future of the industry, and share the success and rewards with their customers. They do not let market conditions impede growth, because they have already studied the market dynamics and are prepared for all eventualities. Finally, instead of holding their people’s feet to the fire to squeeze out every ounce of growth, the leaders partner with the commercial teams by asking, “How can I help you grow or close the deal?”

The Bottom Line

Commercial Excellence and Operational Excellence are two sides of the same coin. Operationalizing the growth process and connecting the two helps the business achieve significant growth and value.