Monthly Archives: April 2011

Spend it, Spend it – just a little bit

It is interesting that sometimes several seemingly unconnected bits of information provoke a new line of thought [or reopen an old one].

Last week, Management Today reported on-line that UK corporates were sitting on over £70 billion of cash reserves and quoted an influential forecaster as saying they needed to start investing.

This week we got the GDP figures for the first quarter and they’ve generally been welcomed as they suggest we’ve avoided a double dip recession [so far]. However, it was noticeable that the figures for the Construction Sector fell by 4.7% in the last quarter.

We also had an announcement that a severe shortage of component manufacturers was threatening the future of car production in UK. This suggests a need for developing some high quality modern manufacturing capability.

As long ago as February 2001, I together with my colleague Keith Plumb commented [in a paper presented to the Institution of Chemical Engineers] on the advantages of investing in capital projects during downturns. The key element of our argument was that you get better value for money and get your new capacity earning profits while your competition is still thinking about it.

Empire State Building 2007

(c) J A Yates 2007

We illustrated this point by reference to the best known structure of the Great Depression – The Empire State Building. The drawings for this were produced in 2 weeks [OK they were what I call “Blue Peter Engineering” – modified from “Here’s one I prepared earlier”. Hopefully, you get the point: people were keen to deliver] The building [all 105 floors of it] was built in just 410 days [it can take longer than that to get planning permission these days!] and the building cost came in at just under 50% of budget! Wouldn’t you love to get that?

Our estimates at the time was that those spending in the least busy parts of the cycle could expect average tender costs to be about 21% lower than those at the peak. Given the low interest rates and higher inflation rates, the cash in the bank is gradually becoming worth less, so surely it makes sense to invest in capital projects!

A future post will discuss the results of a survey I’ve done on LinkedIn which questioned the main reasons that good ideas don’t get implemented and it was notable that funding came well behind Organisational Culture, Business Systems, Policies and Processes and Risk Aversion / Self Confidence. This suggests that the barriers to investment are predominantly internal.

Now would also be a good time to invest in training and developing staff so that they have the skills needed for up turn when it comes.

So what’s the point of sitting on the cash – it won’t hatch!

Don’t call us …

Customer care is something I have a real bee in my bonnet about and I really enjoy helping clients improve their performance. I’m always on the lookout for stories of good [and not so good] customer care. Some of them are so good / bad that I’d willingly pay for them but some businesses are just so good at shooting themselves in the foot I don’t have to.

My current bête noir is British Gas whose every contact throws up a learning point – take this recent episode as an example.

I was working in my home office last week when the house phone rang. Making my way to the kitchen, I answered to be confronted with an apologetic voice on the other end of the line; “I’m not sure why we’ve phoned you – I only answered to save you getting a silent call! Let me have a look at your file. Oh, it looks as though they want to arrange the service visit for your boiler maintenance contract – do you mind waiting whilst I connect you”. Reluctantly I agreed but after three minutes of “music”, I hung up and went back to work.

So they interrupted my work and then got me to wait! Great! This must be the greatest customer care faux pas.

Presumably, this is because their systems are set up to make it easy for their staff to get through as many calls and tasks as possible. You might ask where the customer fits into this. Surely, the systems should be set up to make life as easy as possible for the customer!

Do you think this enhanced the customer relationship?

Do you ever do anything like this to your customers?

Are your systems set up with the customer in mind or are they aimed at making your life easier?

What are you going to do about it?

You could take the first step by looking at “Give your customers a good listening to!” and the associated white paper on “The Voice of the Customer”

Don’t just sit there!

In the Open University Business School MBA module I tutor [“Making a difference”], the students are expected to undertake an evidence based initiative in their own organisation. As they move through the process, we suggest that they use a mnemonic “CATUR” to assess the:

  • Complexities
  • Ambiguities
  • Tensions
  • Uncertainties and
  • Risks

associated with their proposals. As you might expect, there is quite a range in the skill with which these elements are applied.

There does however seem to be one reasonably consistent theme, which also echoes my experience with consultancy customers. Most students and businesses are very good at identifying the risks associated with the actions they are proposing. Sometimes, they even do some formal quantified risk assessments taking account of the probability and potential impact of a wide range of events.

Most, however, fail to consider the risks of not taking action and rarely weigh them against the possible benefits of doing something.

In the current uncertain times, it can seem appealing to take the low profile option and keep ones head down. This might seem the safest way to protect your job but it will hardly get you noticed either. There is always the danger that the company’s position will get worse without an intervention. The best policy may be to try something adventurous, be seen to be doing ones best and perhaps coming out with an enhanced profile in the business and beyond.

As Franklin D. Roosevelt said:

One thing is sure. We have to do something. We have to do the best we know how at the moment… If it doesn’t turn out right, we can modify it as we go along.

Doing nothing might seem to be the easy option but it may not be the safest.

Don’t forget that it is often easier to ask for forgiveness than permission [Grace Hopper], particularly if it is demonstrably in the business’s best interests.

What can you do to make a difference in your business?

What is stopping you from making a start?