While some companies fail despite all the sophistication of having a strategy, others with no strategy thrive. I have no intention to indicate that corporate strategy does not work or you should not have the right strategy in place. On the contrary, what I am trying to reflect is that having a sound strategy and using what the individual with no strategy achieved, would make profound shifts in performance.

Well, by now you must have figured out that this individual was me and I turned my company into a successful audit and consultancy practice a few years ago. With no advertisement and no internet presence, simple  word of mouth and listening to people’s concerns were key attributes to the growth of my practice.

This is a series of blog posts where I address some of my experiences and what worked for me.

On this post, I list 5 key elements which were my turning points:

1) Giving my time and being fully engaged:

It is obvious but an extremely valuable piece to any business success. The time given to potential clients and customers is crucial. Listening and ascertaining what they want prove to be instrumental to my growth. In fact I used to immerse into discussions at the initiation stages to an extent that I fully grasp what the problems are. I have noticed that many organisations executives ‘attempt’ to listen to their key stakeholders especially customers. But that is not enough. Going an extra mile brings life to your strategy. Being fully engaged takes patience, but the benefits outweigh any time utility. Executives exhibit in reports and voice out that they listen to customers concerns. Some come out and apologise to the public for any misconduct (in programs such as watchdog). I doubt if the root cause is ever discovered or even if it is, it may take a huge load of time and effort trying to fix it. You see many of such executives are simply following a trend without meaning and real substance.

2) Understanding the business core:

When I started offering professional services, I ensured that all relevant procedural steps were identified and formulated . These were not from text book theory, but grasping external and internal process impact points. Every organisation must be clear about what forms the value pipeline and how does this connect to the overall strategy.  Whether you have a multimillion operation or a small operation, you must ensure that all linkages are in place. Sadly, many companies fail to perform to its fullest due to lack of coordinated processes.

3) The right staff:

My first mistake was to hire a staff who gave me a fantastic picture of what he has achieved and how he can add value to the services we offered. A very good communicator who knew how to easily influence an employer. He had qualifications and looked poised and a hard worker. He did well for some time, but errors and differences started creeping in. His interpretation of assurance and mine were different. The result was that I had to get rid of him. From all my staff, I had one staff who was rejected by one of the big four. He proved to be the best asset I ever had and made a profound difference . I deeply appreciate the big four company for not offering him a position with their firm. In fact, he is now running the practice and is doing a fantastic job.

I personally don’t prefer some of the recruiting agents who have a straight approach. They have a set criteria and miss out on seeing the true talent. In order to succeed, you need to find out six key traits (These may vary from company to company): The energy level now and a year ago.. (and I have managed to pick this up from CV’s); the hunger to grow and learn (again checking from background),having confidence, communication and coordination linkage (organised and prioritization), well focused and consistent in progressing, very few job changes and

4) The right focus using discipline.

Sharpening your time and attention on the right and relevant matters will deliver value. It is no longer simply customer satisfaction but fulfilment.  This can only be achieved by being accountable to what is right. Discipline brings a well structured organised system to add value. During my time, my focus was simply to be an expert in what I do and deliver it with quality and efficiency. Commercial gains were secondary as I knew these would fall in place through building a company which offers world class service. Focusing on customer service, focusing on adding value to clients and focusing on building on quality and standards which are the best in the industry is best practice. It starts with all individuals and builds self confidence and momentum to drive a dynamic operation.

5) True purpose and meaning:

If you have a purpose that is good but if you have a passion and a meaningful purpose, that would drive your company to a different level. In fact that is true leadership. Organisations fail because the movement or purpose is not felt strong in many organisations. It has lost its meaning totally in many organisations and focus is on performance rather than following your true purpose.  When I see companies like Olympus in trouble or yahoo going through a difficult phase due to Executive Management changes, I find that the true purpose and meaning is missing from the boards of such companies. In fact Accountability and values are no longer considered foundations and performance pressures and short term thinking has taken precedence. These are companies which will keep eroding their capital in some form or other. Purpose further allows you to build your level of competence through the right training and understanding.

The above are simply some of the issues which can make a positive impact to your organisation. Through a disciplined approach, bring engaged, having a true purpose, understanding your business model completely and having the right empowered staff will have potential benefits to your overall value pipeline.

Vijay Mistri

To add to this, there are regulations, external pressures as well as meeting owners expectations. All these issues result in companies facing difficulties in the long run.

In this post, I list 5 key factors which are considered as failure enablers.

1) Short term Thinking – Probably the most used phrase amongst many executives, yet the least understood . The biggest problem amongst directors and executives is that they are under pressure to keep posting strong results every single year. With a time deadline, they will do whatever it takes to ensure that they make profits. We have witnessed what the financial sector had gone through as regards the sub-prime crisis. The lessons are not yet learnt and companies fail to connect long term to short term. Instead of quick solutions such as innovating a product without considering the long term repercussions, organisations must have research and development  as a fore runner.

2) Growing beyond capacity -  Some organisations are so dynamic that they want to grow beyond what they are capable of. This leads to losing focus and may be detrimental to the core business in the future. Employing more managers and later closing divisions leads to huge financial drains. It is very important to think through properly before planning for any expansions.

3) The Right team – One of the biggest assets an organisation has, is the people they have working for them. If this recipe is not right, your organisation will face difficulties. Sadly, money and remuneration has taken precedence over work competence and skills. Executives are result driven, but only short term in nature. This leads to compromise and building upon fast results in order to please stakeholders. Leadership qualities are somewhat sub standard in nature.

4) Maintaining true focus and priorities – In a world full of complexities, companies tend to get controlled by events rather than control events. Instead of sticking to focus on the true existence and purpose, executives digress into a myriad of issues which contains a lot of fire fighting and micromanaging. The bigger picture is totally misplaced in the entire equation and matters considered urgent are dealt with. This is what they are comfortable with. Sadly complacency kicks and oversight and controls miss out on the true attention they deserve.

5) The core linkage process – One thing I have realised from my experience is to have a strong know how of Strategy, Risk, Finance and Best practice. This applies to all managers and above in an organisational ladder. These areas are crucial. I have heard many complaining that they don’t understand strategy or finance. The problem is, they don’t ask for the right help and don’t take initiatives to learn these important areas which form the core foundation of an organisational structure. A Steel company recently bought one of our finance training programs as well as had a workshop on best practice and saw some quick positive results . Executives must seek some level of relevant training which will help them improve their understanding and decisions they make.

I am sure there are some others which I will cover in the future, but for now, if you act on the above, your chances of having a stronger sustainable organisation are much higher.

The big challenge is, do we have the right people with the right competence? Even if we do, are they placed in the right position at the right time? Sadly, there is a big concern when it comes to choosing the right talents. I believe that organisational failure is further due to lack of financial competence amongst executives.

The new rules is to shift thinking into a more integrated reporting framework. Understanding and linking, strategy, risk and best practice to financials is crucial in order to make the right and relevant choices. Measure of enterprise wide risk need to be linked to the financials with a stronger level of confidence when developing forward plans and business models.

I list 5 financial know how techniques which executives can use:

1) Understand your strategy – financial linkage: You need to know the core of your strategy fully. This is the first place to improve discussions at executive meetings. The richness in discussions is often missed out due to executives lacking strategy and financial understanding. By going through your strategy a few times, you will be able to master and see the financial link and connections more easily.

2) Learn from your financial team: It is important to spend time with your finance staff and learn more. Asking  key questions pertaining to strategy linkage will open up a new dimension of understanding. This gives you the opportunity to have constructive discussions.

3) Read financial related information to your industry. Some time ago, I was a group finance director. One of our unit director had a problem understanding financials. She was sharp and knew her business unit very well but lacked the financial competence which often led to her struggling to present her unit performance and linking this to strategy. Not only did I personally guide her, I also gave her current trends and financial information relating to the industry. In a few weeks, she developed a heightened level of financial knowhow . This resulted in her being more confident and improved her overall presentation.

4) Attend a Financial training program: there are many courses for executives on finance for non finance managers. We at Rentadirector have designed toolkits for directors and executives. Whatever mode you use, the reflections from such training can result in improved corporate performance. Taking home a few points and implementing these in your organisation can add to your competitive edge.

5) Ask incisive questions: The most important aspect of growth and success is to asking the right questions. By asking questions to your finance team, directors as well as executives, you will be sharpening your competence. How is this related to financial competence? Well, think of this.. all decisions have some degree of financial involvement. By asking questions, you are building a stronger financial understanding whether directly or indirectly.

In summary, it is not only diversity or executive pay, but the financial know how which can add value to discussions as well as build heightened levels of awareness of what is going wrong and what needs to be done. Executives must raise their standards and think about long term sustainable measures.

“Stay the Course”, “Never Give Up”, “Winners never Quit”; these are good adages for sports, life, and sometimes for businesses.  However, the purpose of this article is to provide some guidance as to when these adages do much more harm for an organization than they do good.

An extremely important part of managing a company is the ability to make pragmatic, logical, and thoughtful decisions; and a major part of the decision making process for managers and executives is to determine when the course of action that is being taken isn’t the course of action that should be continued.  From a management standpoint this part of the decision making process is every bit as important as that which includes taking advantage of opportunities, analyzing successes, and determining the initial course of action for a company.  For this reason management must put itself in a position where it continuously reflects on its strategies and actions in an attempt to garner a realistic understanding of whether those strategies and actions are benefiting or hindering the organization.

A major issue with this type of overt reflection is that it requires individuals who are, in many instances, extremely stubborn to take a look at not only their ideologies but themselves as managers and determine whether or not they must admit that they have been wrong in their previous decisions.  This should only be an issue if the manager believes that they are infallible, and since that doesn’t exist, it shouldn’t be an issue; but in fact….it is.  What managers must be willing to do is place the company’s interest above all else and make sure that when they are analyzing these strategies they are open-minded and willing to do what is necessary to protect the company’s interests.

As stated, the main purpose of this article is to provide a systematic method of determining when a strategic course must be reviewed, and a system of basic protocols to utilize if it is determined that that course should be reversed.  While there are a multitude of ways to determine when a particular strategy has gone awry, the following examples of extremely noticeable ways to make this determination:

1. Projections/Benchmarks have been missed – This is probably the easiest way to determine if something is working or not; as companies generally create benchmarks and projections to lay out the goals of a particular action or major strategy (OR AT LEAST THEY SHOULD), this is one of the simplest ways to determine if a change in course is necessary.  This is not meant to advocate a cut and run strategy at the first sign of discourse but to insinuate that if a company is not meeting its projections then it is time to analyze your strategies to determine the underlying cause of the missed benchmarks.  As stated, a major part of corporate decision-making is making INFORMED decisions; changing course on a whim is not informed, it is reckless, so whether a manager determines to stay the course or reverse the course it should be done by analyzing the data that is present and then making a decision based on a structured analysis of that data.

2. More resources are being utilized than originally assumed – Another easy marker that shows that there may be a problem; if you are using more capital, more staff, or more production resources than what was originally projected then it may be time to review whether or not the current strategy is working.  Resources are generally the lifeblood of any company, and when too many of those resources are committed to a particular project/action then it becomes the responsibility of management to determine if there is a problem with the current strategy and what the continued ramifications on the company’s resources will be if the course of action is continued.

3. Sustainability Issues are presented – Even when things are going well there may be signs that a change will be eventually needed.  Sustainability from a strategic position is a major issue in determining the long-term prospects of a company, and management should always make sure that sustainability is always a part of their corporate strategy (whether that strategy is long-term or short-term).  Negative sustainability issues can present themselves in a number of ways; the most common are likely to be:

1. Capacity Issues are being presented – The ultimate catch 22 in business; demand is up and our customers are purchasing our products/services; but we are running low on capacity which could eventually cause us to begin creating inferior products, or could mean we are required to turn away business.  Both of these could have long-lasting effects which could damage our reputation and our ability to compete in the market.

2. There is a finite time-frame relating to the current strategy – Sometimes, as a manager, you can see the end of the road; maybe new technology will eventually replace your products or services; maybe your customer base is being rendered obsolete, or maybe your once unique product is seeing a major flood of competitors.  In either circumstance you are now tasked with determining how to change your strategy to account for the future; this may mean subtle changes or this may mean major changes; either way you must act fast to determine how your company should progress.

3. Unsustainable Growth – Sometimes, it is simply a point of understanding that the “Good Times” won’t last forever.  In many instances the most notable sustainability issue is that demand for a given product or service will eventually drop, and its management’s job to determine the course of action that must be taken to make sure that when demand does drop that the company is in position to replace the lost revenues with new and innovative strategies.

4. There are major market shifts – One of the most egregious issues that arose during the beginning of the current global recession was the inability of managers in industries ranging from technology to manufacturing to financial services to notice the indicators that were being presented in the market.  Specifically; they didn’t open their eyes to the fact that a major market shift was taking place and because of that ambivalence many companies were destroyed.  A major part of planning at the strategic level is being able to recognize the signs that are present in the market and then making decisions based on the key indicators that are derived from those signs.

If it is determined that a change in course is necessary based on these or any other indication mechanism that is utilized by management, then management should be cautious.  As stated; hasty decision making will eventually lead to poor decisions, so when an analytical platform suggests that a change in course is necessary, management should re-assess their results.  If after this reassessment it is still determined that change is the best course of action then the decision makers must have the ability to make these changes in an expeditious manner; not being diligent can be very problematic in these instances so management must be direct in its changes and have a workable plan for implementing these changes.

The goal of this article was simply to reiterate the point that sometimes a change in strategy is necessary and being too stubborn to make that change may have dire consequences; furthermore there are ways to determine if a change in course is necessary, and by using them the company is in a much better position to make diligent and correct decisions.

Vijay Mistri

CEO & Founder

vijay@rentadirector.com

Rentadirector.com

Well, it may sound simple, but it is true. Visions may be inspirational but they don’t hold the passion, drive, energy and consistent enthusiasm one needs.

In the business world, practices are many times ineffective and the reason is not holding the vision as a core embedded lively force of energy. To make matters worse, a small or medium sized company may have a few directors, who don’t have the same level of energy and passion to make it a collective force to maximise value throughout the organisation.

Here are 7 tips to make your vision, effective, lively and full of passion:

1) Have a clear and specific vision: It baffles me to see vision statements not clear and too generic. If you are an individual or an executive, your vision statement must be clear and succinct with precise core values defined. Check your vision and recheck it again with some associates and colleagues.

2) Believe in your vision: to begin with, you must take a lead role and believe in the vision you have. Whether you are a business person or individual, the strength lies in how much you believe in it!! Immerse yourself fully and believe in your vision fully.

3) Show off your passion: It does not matter if someone else thinks of you as someone who has lost it!! so long as you walk the talk and show it in your physical appearance, you are making it happen..Someone once told me that a mantra is something that you repeat 10,000 times in order for it to be powerful.

4) Visualise your vision: Sounds silly but if you can form an image of your vision, you will be closer to making it a reality. A decade ago, I wanted to talk to a big group which I had never done before. Two weeks later, I was attending a professional function and was called on the stage (and this happened without any preparation) to speak on the stage.

5)Share your vision: You need to share your vision with your friends and family or your staff. By repeating and relaying the right message, you will be increasing the overall energy level. This is powerful as you will have more people believing in your vision. In companies, collective conducive force works when there is alignment in their long term goals and objectives. This is normally lost at times. A quick exercise: ask each and every director  (and executives) what the company vision is.. (As a professional management coach, I was surprised with a company, whose unit directors did not know or forgot their vision statement).

6) Decisions: if you have your vision embedded and instilled in your DNA, you will be able to make decisions which will connect to the long term with ease. This is an art which has been forgotten as many end up fighting fires. Remind yourself of your vision before making any decision.

7) Celebrate at certain stages: progression leads you closer to your vision despite challenges. This progression must be recognised and appreciated. Take some time and enjoy your progression. It does not matter if you have had a few failures so long as you have learnt and are on the right track.

If you can work on the above with discipline, you will start seeing results which will amaze your ability. It takes hard work and dedication in achieving your vision but it all starts from the mind!!!

©Vijay Mistri Founder and CEO of rentadirector.com

email: vijay@rentadirector.com

While all the above (and others) may prove useful, the idea is not to micromanage and get bogged in deep financials. Keeping it simple is the message. I believe if boards can set criteria through Executive Policy Development from the onset, keeping it simple yet covering all financials of your organization is the way forward. Subsequent monitoring of the financial health at appropriate intervals will help you shape your organisation’s financial strength further. After all, it is all about accountability at board level.

The following are some of the steps that key decision-makers need to take in order to assist the company in building a more competent and more effective financial management infrastructure.

1)      Your executive Finance team: To have a financially competent executive team; YOU NEED A TEAM; there is ALWAYS an inherent danger in leaving major financial decisions to a few individuals.  The fact is that we are talking about money; and when that is the subject then many times self interest replaces corporate interest in the decision making hierarchy.  Furthermore a company that has a properly chosen team of individuals to make decisions provides a system of checks and balances which mitigate the risks associated with these decisions.

2) Training Courses in Finance: Another conduit would be to get a day or two day workshop in financial training where current decision makers receive tutelage in financial decision making from an application standpoint instead of an academic or theoretical standpoint.  Bringing in people that have a history of being competent financial managers will be helpful.  But also teaching examples of how poor decisions have destroyed companies would be helpful as well.  Many course offer sound coverage of financial topics of importance. However, it is important to check background, experience and credentials of the trainer before embarking on a course.

3) Get a Coach or Corporate Consultant: Coaching at executive level has proven to be popular in many parts of the world. Experts believe that the value an executive coach (whether it is a successful consultant, former executive, or entrepreneur) adds, significantly impacts progression and drives performance to a higher level. There are many coaches available but you need to ensure you get a coach who will listen to your concerns at the same time offer the right and relevant professional advice. With the advent of the internet, organizations also offer virtual coaching support.

4) Have self-analysis meetings: At least once a year all organizations should seek to have a meeting with all people involved in the financial decision making process (executives, senior financial/accounting personnel, board members, etc.) and simply have a brain-storming session that focuses on the direction of the organization; future financial needs, current financial position, etc.  These meetings have a way of bringing issues to light that otherwise would stay in the dark; and furthermore you want all of these people to work well with each other, and this is a good platform to start from.

While most organizations believe that the decision making aspect of their financial infrastructure is at least competent; the fact is that many organizations aren’t aware of what constitutes competence as it relates to financial decision making.  The fact is that, no matter where your organization is located, the WORLD HAS CHANGED for companies; to stay prosperous companies must focus on sustainability and not luck; they must focus on consistency and not major peaks.  Financial competence has little to do with an education in finance, it has everything to do with how your executives can use that information and analyze the health and the future of the organization.  Those that understand this are in an advantageous position; those that don’t are playing with fire.

It is also important to realize that the outcome of certain situations has no bearing on the competence of the decisions that have been made.  The fact is that poor financial leadership can still yield success from a periodic standpoint.  In the same manner that an unskilled Poker player can have a run of “good luck” and win big in a night of gambling, so to can incompetent financial managers “GET LUCKY”.  The problem with depending on luck to manage the financial infrastructure of an organization is two-fold:

1. Luck does; and will always run out at some point in time
2. Financial management isn’t gambling; especially when considering what’s at stake whether it is the shareholders, the market, the employees, or the customers; there is simply too much at stake to make financial management a “Coin Flip”

To ensure that the key decision-makers are financially competent it is incumbent upon management to analyze the knowledge of these individuals and provide opportunities for them to update and hone their skills as it relates to financial management.  The good news is that most organizations generally select the financial decision-makers within their organization by doing a thorough search; this generally allows them the opportunity to select the person that they feel best can handle the position.  Furthermore, most organizations that utilize committees to help manage operations have a financial management committee (as it is considered to be the most common among companies with three or more committees).[2] The problem is that many companies don’t understand the position enough to fully handle this search, so they end up hiring people that have had past success without determining whether the source of that success was luck or skill.

If the current global economic calamity has taught us anything; it has taught us this: When the economic climate is advantageous to organizations it is much easier to seem competent than when things go bad.  In a good economic climate decision-makers can take huge risks and if they win they are superstars; if they lose there are generally opportunities to mitigate that loss (either by acquiring debt capital; increasing sales, or raising equity funds just to name a few).  In a bad market we have discovered that THE SAFETY NETS ARE GONE; and risky decisions have real consequences.  In this market we are finally paying the price to learn that there is a real difference between corporate sponsored gambling and effective financial management.  What we need to do now is train current and future financial decision-makers about what makes an executive financially competent, and what does not.  This will produce more effective financial decision-makers and more importantly it will provide a future asset for companies that will assist them in diverse market situations; NOT JUST WHEN TIMES ARE GOOD.

In conclusion, boards must be fully engaged in linking long term strategies to what is happening currently. This can be achieved if all board members have conducive ground which is aligned in such a manner, that any knowledge gaps are fully covered through synergy.  Risk management and corporate financial health have proven to be central in majority of board meetings. If Board behaviour, values and culture matters are built on the true purpose of your organisation, many irrelevant time taking tasks will be eliminated bringing out best practice amongst board members. This can be done by crafting the right policies using the right words which are rich in meaning yet simple to understand. Having monitoring reports which comply within workable parameters as reflected on executive policies, is basically the construct of a much needed framework for boards globally. The sequence of lights, cameras and action as far as boards are concerned is, craft executive policies ahead of time allowing and empowering management to function as effectively as possible and finally monitoring what has been executed.