Category Archives: Leadership

Bring Your Own Device (BYOD) – Productivity Gain or Problem in the Making?

English: A woman cuddling a pile of digital de...

Which Devices To Take To Work? (Photo credit: Wikipedia)

The incredible growth in sales of tablets and smartphones during the past few years is changing the landscape for business, leading to increased demands for knowledgeable business consultants that understand the dynamics of this rapid change and the opportunities and risks it presents. The Bring Your Own Device (BYOD) concept has also become popular over the past few years.

The latest statistics really emphasise the speed of this change:

  • Nearly 1 Billion smartphones will be shipped this year, overtaking basic mobile phones for the first time, according to IDC.
  • Tablets, such as the iPad, have already overtaken laptops – just 3 years after being introduced – with shipments of around 230 Million expected this year, pushing them 20% ahead of laptops. In fact, tablets are expected to pass sales of all PC form factors in 2015, reaching sales of around 330 Million.

Recognising the desire of employees to take advantage of the latest technology to make them more productive, companies are embracing the Bring Your Own Device (BYOD) concept , with an iPass survey carried out in December & January showing that 81% of companies accommodate personal devices in the office, and 54% of them having formalised policies for this.

This is where the need for consultants becomes apparent – nearly half of the world’s companies don’t have formal policies that address this urgent issue, and the problem becomes more apparent when we realise that the top 2 sources of frustration in IT departments relate to onboarding and supporting personal devices (thus approving the BYOD practise) in the office. This even eclipses security concerns, although these, of course, become even more of an issue with such devices.

In fact, over half (55%) of companies surveyed reported some form of security issue in the past year, mainly in connection with lost or stolen phones. When you consider that in 2011, over 70 million smartphones were stolen (we don’t yet have the data for 2012), and only 7% of these were recovered, the size of the problem really becomes apparent. Even with laptops, companies can expect to lose one in ten during their lifetime (3-4 years).

When we then consider that, according to IDC, 70% of enterprise data now resides on mobile devices and yet three out of four companies lack comprehensive policies for managing and securing their mobile devices, while nearly 60% of lost smartphones were unprotected, the enormous scale of the costs to business become clear.

So, given this, why are companies embracing the Bring Your Own Device (BYOD) concept?

Simply put, because allowing staff to choose and use their own devices increases employee satisfaction, improves productivity and reduces cost to the company. Over half of mobile workers report working more than 50 hours per week, and nearly one in five reports putting in over 60 hours each week.  The gains here are tangible, as are the cost reductions through companies not needing to invest so heavily in such devices themselves.

Companies need to take full advantage of the benefits of Bring Your Own Device (BYOD), while minimising the risks through putting comprehensive policies, systems and procedures in place that will minimise the risks and costs inherent in the loss of such mobile devices. Doing so will improve their performance, competitiveness and bottom line. Failure to do so risks them being left behind.

Note: I first posted this on the Business Connexion blog on 12 Jun.

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The Morality of Tax Avoidance

Tax

There’s an interesting scuffle about tax going on in the British media at the moment – and it seems that the Government is in danger of being responsible for companies contravening the Companies Act which was rewritten in 2006.

This scuffle started a few months ago with the ‘outing’ of various individuals who were apparently using legal tax avoidance schemes to reduce their tax burden. The newspapers – always looking for some dirt to dig up – leapt on this with joy and the resulting public furore caused a number of wealthy people to apologise publicly for avoiding tax, even though the schemes were legal, and in many cases volunteer to pay more tax.

Secure in the knowledge that a significant part of the British public supported this crackdown on the dastardly villains that were exercising their rights to legally reduce their tax bill, the next step was to take on corporations – and the multinationals were an obvious target: nasty foreign companies taking advantage of making huge profits through the sweat of the (implied: underpaid) British worker, but not paying tax on the proceeds. It’s easy for the press to whip up public support for calls that they pay more tax and for the politicians, ever ready to back a cause that would seem to be a vote-catcher, joined in. In essence, these multinationals were being blamed for cuts in welfare and other government services, completely ignoring the fact of profligate government over-spending for years, if not decades.

What has been completely overlooked in all of this self-righteous posturing (and let’s ignore the ongoing issues with MPs and their expenses) are a few important points:

  • First and foremost, every company’s directors have a fiduciary duty – as laid down in the Companies Act – to “promote the success of the company.” By volunteering to pay more tax than is legally required these boards would act in contravention of the Companies Act and, in fact, directors could therefore be disbarred from serving on boards. Even by the admission of the government, these companies are not engaged in tax evasion (that’s illegal) but are structuring their affairs to minimise tax paid, an activity that is not only legal but necessary in terms of the Companies Act. So the government is encouraging directors to act in contravention of its own laws.
  • E.U. legislation requires there be a single legal head-office for companies operating throughout the region, and companies will obviously look to put this in the country/city that makes the most financial sense overall – tax, employment, etc. So, countries that are competitive in these areas will derive most benefit, while those with higher operating/tax costs will not. That’s called free-market enterprise.
  • The UK tax system is now arguably the most complex of any, having more than doubled in size under Labour from under 5000 pages in 1997, to over 11500 pages in 2009. Such complexity will always result in loopholes being found – a simpler code means more tax, more fairly applied. What about simply imposing a flat tax system – this generally means more tax collected at a fraction of the cost?
  • Figures published early this year showed that some 52% of the working populace in the UK are employed by the State. This means that less than half the workforce is not only supporting those not working, but this massive and grossly inefficient (it must be at this ratio!) government machine, too. The issue, therefore, should not be more tax income, but less expenditure.

But, of course, common sense flies out of the window when it comes to politics.

Our revered “public servants” in the current government recognise that the wealthy, and the captains of industry are unlikely to switch their vote to Labour and by appealing to an increasingly vociferous “mob” they might garner enough votes to remain in power after the 2015 elections. Even if this means abandoning previously-held principles and, in fact, common sense, as by taking this tack they risk chasing even more companies and wealthy individuals to more favourable business climes.

Bear in mind that the top 1% of British earners pay almost 30% of all income tax (more than twice their proportion of earnings), and the top 10% pay almost 60% of all income tax. As these are typically the business owners / leaders – and therefore the employers – encouraging them to move will not only reduce the tax receipts from these critical contributors, but put overall employment at risk, too, threatening the health of the country as a whole.

It’s time for that most uncommon of things – common sense – to start playing a part in the UK; for people to realise that the government doesn’t have money and everyone needs to play their part in the economy and life of the country; for politicians to  stop trying to buy votes with short-term moves that will cost the country dearly in the longer term; and for the media to present a more balanced approach to matters and to actively seek to lift the country out of its current mess by encouraging everyone to work together for the good of all.

Early Birds Make the Best Decisions

Board Meeting.

Image via Wikipedia

A fascinating piece by John Tierney in the NY Times explored the concept of “Decision Fatigue,” concluding that people faced with making a number of decisions do so less well as the day wears on.

In studies with Roy Baumeister, a clear correlation was shown between the quality of decisions made at a point in time and the number/difficulty of decisions subjects had been required to make beforehand.

These studies explain the anomalies in, for example, parole being granted to prisoners by a parole board – those whose applications were heard at the start of the day, or immediately following a break for nourishment, were considerably more likely to succeed that those whose applications were heard at the end of a session, or just before a break.

Car salesmen were able to increase the value of the options taken with vehicles simply by altering the order in which the options were presented: once decision fatigue started to come into play, the buyers were more inclined to simply go with the recommended/default choice, even when it was more expensive and, potentially, less suitable for their needs.

Supermarkets have long had their ‘impulse racks’ at the checkout counters, but the real reasons these work has only recently been understood – shoppers are fatigued from all the decision-making during the shopping process and so are less able to rationally decide against a tempting treat when this is put in front of them.

What transpires from the studies is that the process of decision making depletes glucose levels in the brain and that this affects the way the brain works. In essence, some areas of the brain will work better for longer: the reward centre area continues to function well, while that controlling impulses weakens. So, our buyer who has been through a number of decisions in deciding on options for the new car will look at fewer and fewer factors in coming to a decision and be more prone to impulse – for example, “those leather seats look great.”

Interestingly, it was shown that replenishment of the glucose levels quickly restored decision-making ability, so if our buyer chewed on some sweets during the process he/she might well save some money. Of course, using sweet substances for instant glucose replenishment is just a temporary solution as the glucose derived from sugar is quickly used up – that from complex carbohydrates and proteins providing a steadier supply over time – but it certainly can help in tough situations.

If you need a decision from your boss, choose your time carefully, and maybe soften him/her up with a piece of chocolate at the start of the meeting so the glucose can be absorbed before asking for a decision, unless of course the decision you want is one that does not require change to an existing situation – in which case low glucose levels will favour the status quo.

The bottom line seems to be that you should make your biggest decisions at the start of the day (assuming you have breakfast, of course!) or after a healthy meal. In board and management meetings where there are many decisions to be taken, ensure the participants are suitably nourished and their glucose levels are maintained. As the article recommended – don’t make decisions on restructuring the business at 4pm…

 

Capitalism – What the Future Holds

Wall Street

Image by Mirka23 via Flickr

The world is in a state of flux.

With the economic downturn lingering far longer than most people expected, governments are under growing pressure to kick-start economies. However, a growing number of countries with looming debt crises and a consequent unwillingness or inability of governments to spend more money hampers this.  And, as the northern hemisphere weather warms up, we can expect to see growing numbers of demonstrations by people wanting jobs or, at least, a reduction in job cuts.

All of which leads to the question – is the capitalist system doomed?

I don’t believe for a moment that this is the case – history shows that capitalism is the most effective way for countries and people to grow their wealth – but I do think we’re going to see some far-reaching changes.

Back in September 2009, I suggested in my post, “The Perils of Quarteritis” that the short-term thinking so prevalent in recent years had contributed significantly to the crash, and that businesses would move to a longer-term, more strategic model.

The March 2011 edition of Harvard Business Review has a wonderful paper, “Capitalism for the Long Term,” by Dominic Barton, Global Managing Director of McKinsey & Company where documents his findings from 18 months of research and hundreds of meetings with business and government leaders. In this paper, Barton makes 3 points to support his conclusion that capitalism must survive, but that it needs to change, too:

  1. A return to longer-term thinking by companies, investors and politicians alike – he refers to this as “The Tyranny of Short-Termism” (my version was Quarteritis).
  2. That there is no difference between serving the interests of shareholders and of stakeholders – in spite of a more recent belief that serving stakeholders made shareholders poorer, managing for long-term value growth benefits not only stakeholders and society but shareholders, too.
  3. Company executives and boards need to act more like owners, not temporary care-takers – as by doing so they will naturally look to the long-term and so benefit the company, its shareholders, its stakeholders and society as a whole.

Basically, it all comes down to taking a longer-term view of business (as well as the economy, in the case of government) and a consequent change in leadership style, too – see my post of November 2009, “Leadership for the New Business World.”

This longer-term thinking and more inclusive leadership approach will ultimately be to the benefit of all – investors, executives, employees and society as a whole.

What do you think?

Update (31Mar11): Read the Leadership Interview with James Quigley of Deloittes, just out at N2growth.com – leadership is about trust and looking to long-term sustainability.

Can Mergers & Acquisitions be More Successful?

Board meeting room

Image via Wikipedia

Why is it that although many companies, and almost all large ones, grow through mergers and acquisitions, most of these result in a decline in overall value, rather than the envisaged increase?

In the lead-up to such activity – the “engagement period” if you like – shareholders are shown clearly the benefits that the merger or acquisition will bring: lower overall costs, great (combined) market share, stronger sales teams, more experienced management in the combined entity, and so on. All of which is supposed to lead to greater overall value for the shareholders – a case of the proverbial 1+1 resulting in a good deal more than 2.

The reality is, far too often, startlingly different with 1+1 adding up to a good deal less than 2. In other words, significant shareholder value is lost in the process.

Naturally, there are many reasons for this decline in value – most commonly those resulting from a attempt to merge two very different corporate cultures and the consequent fall-out. And much of this happens in the board room.

I’ve seen many cases of incompatible cultures clashing in boardrooms, although I’m fortunate to have avoided this first-hand. Too often, the newly constituted board in an M&A situation will have directors drawn from the two companies proportionate to the value of each part in the transaction and so the acquirer will seek to dominate the acquiree, even when the reason for the acquisition (as is often the case) is that the latter has qualities the former believes is missing from its own company. The result is the departure of the very expertise being acquired and the consequent drop in overall value.

It seems to me that there is one reasonably simple way to increase the likelihood of success – and that is to increase the size of the overall board with the appointment of further Independent Non-Executive Directors (NEDs) when companies are undertaking mergers and acquisitions.

The Corporate Governance Code states “Except for smaller companies, at least half the Board, excluding the Chairman, should comprise Non-Executive Directors determined by the Board to be independent. A smaller company should have at least two independent Non-Executive Directors.”  But how many companies actually carry this through?

Should this strong recommendation not be even more strictly adhered to during the M&A process? Bringing a substantial body of independent, experienced NEDs to a board can reduce the level of infighting and help to ensure that the talent/expertise being acquired stays in the transaction.

As we see the global economy slowly recovering, we can expect to see a strong increase in M&A activity as companies seek to assure their future positions while values are still relatively low. This is the time for boards of companies – large and small alike – to become more independent.

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BAA Humbug – The short- and long-term effects of greed and ineptitude

BAA staff work feverishly to clear the snow at Heathrow

Image via yfrog: BAA staff work feverishly to clear the snow at Heathrow

I’m going to try not to make this too much of a rant, but I’m both extremely disappointed and annoyed – not for me personally (thankfully I wasn’t directly affected), but for the thousands of people who’ve had their holiday plans, reunions and Christmas spoilt through a combination of woeful ineptitude and greed.

And, I think, there’s a real danger of this ineptitude and greed having long-term effects that are several orders of magnitude more serious for the country as a whole.

I’m talking here, for those of you who’ve not yet guessed, about BAA and Heathrow.

How can a company entrusted with managing the world’s busiest international airport be so unprepared for winter? It’s certainly not through lack of money – BAA is on track for an operating income of nearly £1 billion this year, and yet their total expenditure on preparing for snow and winter conditions this year was just £500 000…  (an amount the board has just allowed to be increased to £10 million – still only 1% of their operating profit!). In my view this is a typical case of short-term profit focus, at the expense of long-term sustainability (see my post: The Perils of Quarteritis).

It’s not as if they didn’t have warning. The first cold snap hit at the end of November and there were already warnings that heavy snow and icy conditions could be expected for the rest of the year. Granted, by then it was probably too late to have been able to source much new equipment in time (although they should have learned a lesson from January & February), but they put no contingency plans in place at all.

What about a deal with farmers nearby to use their tractors and grading equipment in an emergency? What about stockpiling grit, salt, glycol, etc.? Then they compounded things by turning down offers of help to clear the runways and taxiways from the military.

And, on top of this, they apparently gave out poor information to airlines such as BA which could have operated more flights than they did, and so reduce the backlog somewhat.

So, this corporate greed and ineptitude directly ruined the holidays for thousands of people, apart from costing hard-pressed airlines a good deal of money (can they sue BAA?)…

But the long-term effects could be even more serious. With some 30 million people a year visiting Britain, annual tourism expenditure of some £90 billion and almost 8% of jobs supported by tourism, this is a vital sector of the economy. However, the unreliability of British airports – especially one as important as Heathrow – is bound to make travellers think twice about using Britain as a stopover point, or even as a destination.

And airports in the Middle East such as Dubai and Qatar are eager to take these passengers. For example, Dubai is already the 4th busiest international airport in the world, with huge expansion already underway, and one of the youngest fleets in the world (and a flexible one, as Emirates was apparently able to put on 3 extra flights a day to clear their backlog once Heathrow reopened).

The impact of a diversion of disgruntled passengers from Heathrow to Dubai, for example, would have an enormous impact on Britain and on the struggling BA.

BAA needs to wake up, stop being so greedy and to accept proper responsibility for its role in running strategically important airports – or it needs to be replaced by a company that will do so, and quickly.

What do you think – should the company, its leadership, or both be replaced?

“The Lifetime Value of Customer” Concept

AA vintage sidecar (date unknown) at the Great...
Is the AA’s approach to customers old-fashioned?
Image via Wikipedia

Well, we survived October unscathed (although it remains to be seen if Ireland will drag the whole of Europe down) and am now pretty well settled in England so will be able to write more frequently again.

An issue that has really been highlighted during my move is that so many companies here seem to have little or no understanding of “The Lifetime Value of Customer” concept. And I’m not just talking about SMEs here – in fact, many of them understand it far better than the big ones.

Let me illustrate this – apart from Newsweek, that troubled publication that continues to make it far more attractive to take out a new subscription each year than renew (see “Is There Value in a Repeat Customer”), an excellent example of this is the AA (Automobile Association) here – an organisation that is clearly confused by policies and customers.

Having been a member of its sister organisation in South Africa for some 20 years I joined the AA in England as soon as I was no longer using hire cars, and had bought my own. It’s just a piece of mind thing for me as I’ve only had a very few occasions to need their help in all the years. Well, as luck would have it, a few weeks after joining I did need them, so put in a call.

I won’t go into the details here – suffice it to say that I needed to upgrade my membership for the call to be answered (hadn’t read the small print carefully enough) so did so. Imagine my shock to find that I was not only charged for a new, higher-level membership plus a penalty for not having had the right level when making the call, but was given no credit for my previous membership fees. In other words, I was considerably worse off than somebody who was not a member at all when calling.

Assuming that somebody had pushed the wrong button, I wrote to the AA and – after having to request a response for a second time – got a rather offhand letter referring to “company policy”: that wonderful phrase used by so many people to hide behind. The fact that the policy is stupid seems to have escaped them.

The fact is that the AA, for the sake of around £40 will lose my future membership fees of probably some £3000: an extremely poor decision. They just do not understand the concept of “Lifetime Value.”

Mind you, they’re not alone – I’ve seen numerous examples of some of the world’s biggest companies throwing away, potentially, millions of dollars/pounds in future sales through mistreating their customers in the technology channel.

And yet the concept is so simple: attend to your customers, have sensible policies, take the opportunity of turning an unhappy customer into an advocate for your business and you will thrive. Take a short-sighted view at single transaction level and risk all those future earnings you might otherwise have had – not exactly a guarantee of long-term success, is it?

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