Archive for February 2010

Can CEOs tackle the simple questions?

February 26, 2010

Would you like your child to work for your company?

Thus asked Stefan Stern this week. If the answer is yes, great. If not, why not? Ouch – too obvious and far too close to the bone for many.

Portsmouth Football Club is struggling top tier team in England. Nice players and a colourful manager have not prevented them ending up rock bottom of the Premier League and bankrupt. Accountant Nick O’Reilly of Vantis, who recently examined the club’s books, declared in a BBC interview:

I came away not knowing who controlled what. …(Their business methods had gone) against all good governance.

So how can the owners of Portsmouth FC – and any other struggling enterprise – get ahead of the ball game? Is there a “secret formula”?

A new article in the Harvard Business Review fittingly asks “how can managers assess whether their organizations are fit enough for the new business environment? How can they identify the obstacles preventing their organizations from executing effectively, and how can they overcome those barriers?”

The article cites 7 factors, centred on the theme of agility – is an enterprise vital enough to spot its own mistakes or see the gaps left by others, and then respond quickly?

In the case of Portsmouth, which has seen 4 owners and 2 professional managers within a few months, too much talk has centred on gossip rather than strategy. Many of us can name companies where the effort to create buzzwords has been more intense than the implementation of actual policies.

And you have to ask – be it Portsmouth or elsewhere: Would these top teams encourage their offspring to come to work with them?

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Palestinian economy – new perspectives

February 24, 2010

Go to Gaza. Visit a village in the West Bank. You will find people living in poverty, especially compared to most OECD population centres.

Then ask yourself where the money has gone and you will start to find some unusual answers.

Let’s start with Israel and Egypt’s blockade of Gaza. Whatever the sense of this policy, the fact is that Gaza is not short of food or commodities. First, most commentators accept that there over 500 smuggling tunnels available, of which around 100 are in operation at any one time.

To illustrate the effect of these supply routes, according to an article in Hebrew by Gideon Eshet in Yediot Ahronot, the price of cement is lower now than before the blockade. A liter of petrol costs approx 2nis (6.4nis or US$1.70 in Israel), with one shekel going to Hamas “admin costs”.

That the Palestinian Authority (PA) and Hamas leadership are awash with cash is not in doubt. This blog has reported on occasions of the corruption endemic amongst much of the respective leaderships. In a legal settlement last year in America, the PA agreed to pay up to US$200 million in damages. Where did the money come from?

In Gaza, Hamas resorts to cash smuggling as opposed to the printing of money. On the West Bank, controlled by the PA, the World Bank (through Western taxpayers) has been paying for water and electricity bills.

And what about the lack of electricity in Gaza? It seems that the power was paid for by the EU, which was supposed to pay the money to Hamas. In addition, Gaza residents are paying to Hamas. But Hamas does not always pay the supplier (which is mainly….Israel). Thus, every so often Israel reduces the supply. And now even the EU is demanding greater accountability from Hamas, which in turn shouts “oi gevalt” insults against European and Israeli hate crimes. Sic!

All this goes to explain the economic contradiction that Palestinians have relatively high expenditure levels but low GDP.

It is time to move past politically correst slogans. Time for greater transparency. Time for Palestinian leaders to start looking after the financial pockets of their own people.

Motivation – 3 observations

February 23, 2010

Two case scenarios. Yesterday, I heard that a close friend was about to hand in his notice after over 10 years in a lab of a biotech company. Along with 2 colleagues, they had met all their targets and sacrificed to help the Israeli company through the recession. They were left to doubt is they were worthy members of staff, and were encouraged to go home every day …late. In the space of 8 weeks, the firm was losing 20 years of experience in a core department.

With some irony not far from there, a daughter company of a multinational is plodding along. In the words of one senior manager, they were about to spend the next set of salary negotiations beaming at their staff, thanking them for their continuing achievements and giving them a pay rise that barely matched inflation. Bonuses along with initiative are governed by an anonymous head office overseas .

The local board cares, but guess what the staff is thinking? There comes a time, when all the smiles and camaraderie in the world just does not do it.

Two questions link the stories:

  1. Is anybody with true authority prepared to take responsibility for the HR consequences of their actions?
  2. If not, they must realise that the remaining employees will be less than inspired, which will have a knock on effect in performance. Is there a back up plan to motivate them?

I recently read 3 articles on this very theme.

“Motivation is now a big issue to ensure that the staff capitalise on opportunities as the economy limps out of recession,” writes Jonatan Moules in the Financial Times. He recognises that the pay issues can be overcome, when the right internal company environment is created.

The Mercer Engagement Scale, which measures what motivates employees across a range of companies, ranks bonuses and pay rises in eighth and ninth places, a long way behind having an interesting job, being recognised for contributions made, and having good relationships with colleagues.

“A surprising thing about what motivates us” is a new book by Daniel Pink. Using examples from Google and other successful enterprises, the author goes for the jugular.

The dominant view is that “in the end, human beings aren’t much different from horses: the way to get us moving in the right direction is by dangling a crunchier carrot or wielding a sharper stick”. Pink draws attention to the wealth of research that suggests that, as far as human motivation is concerned, something far more interesting and potentially more powerful takes place

So again, no overt need for financial reward. Just let the worker get on with a purposeful task in their own way.

Dr Robert Brooks has been quoted before on this blog. His latest writing on motivation happens to quote Daniel Pink. Brooks cites the work of Deci and Ryan.

This is a really big thing in management. When people aren’t producing, companies typically resort to rewards or punishment. What they haven’t done is the hard work of diagnosing what the problem is. You’re trying to run over the problem with a carrot or a stick.

As Brooks notes, the question remains what are the conditions or techniques to create a motivational environment. I suggest that he sends he thoughts directly to a large number of CEOs around the world.

Israel’s r&d

February 21, 2010

Very early on in economics 101, you are taught that pumping money into investment projects usually leads to a growth economy. Simple enough.

New stats from the OECD revea how Israel spends nearly 5% of its GDP on r&d. To put that in perspective. If you compare that level to the rest of the OECD group, which Israel is about to join, then Israel is leader of the pack with nearly twice the OECD average. 

It is not just this money create jobs etc. Down stream, wealth is generated through higher export sales or improved efficiency levels in the local economy.

No surprise then that Israel is one of the countries emerging strongly from the global recession of the past year. In fact, economic indicators for November and December 2009 have just been revised upwards.

As a word of caution, first investments in Israeli companies dropped around 50% in 2009. One reason for this was clearly a knock-on effect from the recession. A second factor is a suspected shift towards revenue generating companies.

There’s more to Israel than meets Dubai

February 19, 2010

Did Israel bump off a Hamas arms runner, whose purchases were destined for the population centres of Tel Aviv and Jerusalem? When you cut away all the spin, there ain’t much real proof.

And meanwhile, back in the Holy Land, there is so much positive economic and commercial news that the world’s media seemingly goes to great length to report….in silence.

Did you hear that Israel and Egypt are seriously mulling over a joint venture to produce solar energy? How about Mumbai’s drive to form a free-trade agreement with Jerusalem? With Israel’s growth indicators continuing to move in the right direction, the governor of the Bank of Israel has been exuding cautious optimism.

On a micro level, there are multiple signs that Israel’s innovation revolution is has not stopped because of the recession. I have scheduled a visit to Israel for a UK firm in 2 weeks time; a joint venture based on a hardware-software application. I have spoken to participants from the 2nd Eilot conference on Cleantech, who related that every table seemed to be occupied with partners signing LOIs.

Move over to Barcelona, where 70+ Israeli companies are creating a very audible presence amongst the giants of Nokia et al.

Buongiorno (Italy, MTA STAR:BNG), the world’s leader in mobile entertainment, has signed a cooperation agreement with the IMA – Israel’s Mobile & Communications Association; a non-profit organization representing over 100 Israeli member companies, …. in which the IMA will give Buongiorno fast access to Israeli technological innovation in the mobile sphere, while Buongiorno will introduce IMA’s portfolio companies to a potential +130 telecom operators it currently serves…

And it’s not just high tech that is doing Israel proud. Even Israel’s chocolate industry, once known as the epitome of poor and cheap ingredients, is finding its way to the heart of exclusive global population groups.

Look beyond the duplicitous claims emerging  from the Dubai story, and you find a friendly and healthy economy, looking to share its goodies with the rest of the world.

Why great leadership is not enough for a start up

February 18, 2010

Conventional leadership is grounded in the notion that true leadership is felt when we exert our personal will to reach a clear vision and inspire others to follow us.  Examples of this style include command and control and directive action.

Thus writes the executive coaching team, Jennifer Joyce and Patty Beach, the co-founders of LeadershipSmarts. And they continue:

However, there is a shadow side to conventional leadership. That approach is at the heart of the Emperor With No Clothes myth. When conventional leaders go too far, they can be too autocratic, egotistical in the extreme, insular in their decision-making, and blind to their faults and mistakes. Their staffs are told to shut up and row – and they do, to a certain extent.  Unfortunately, the conventional approach leaves one person struggling to know and control everything in the organization and the rest of the staff resentful that they have no real influence.

This week, I met a very capable entrepreneur. Let’s call him David. Now David has invented a product, and with standards that engineers had told him were impossible to achieve. A typical Israeli, he took that comment as an incentive, not a put down.

2 years later and US$150,000 lighter, David has presold his first trial order. And it’s a good looking item with unique selling points. It was at this stage that I was called in for a chat on business dev.

The first 40 minutes were spent discussing how to find specific retail outlets in Europe. Could I help? Surely, I reply. And then the contradictions set in.

First, when I suggested what practical, hands-on assistance I could offer, David told me that he did not want a consultant. And that attitude did not alter, when I explained how I, personally and thorugh my efforts, would put him in touch with retail decision makers.

Anyway, and point number 2, for him the immediate issue was an investment partner and not sales. (He had not mentioned this subject previously, but it was not surprise.)

And why was it not a surprise? Because David had informed me that he could not finance a significant order for his product. But he wanted the cash injection to fund the development of the next model. And he only wanted a set sum. He did not appear willing to consider other possibiliites

Finally, I asked him why he did not look for an investor himself. Guess what? David is too busy, as he himself develops, sells, deals with patents, handles the accounts and loads more. And remember he had turned down my offer of another pair of hands, because he saw this as consultancy work.

Clearly the conversation was going nowhere. In parting, David asked me if I knew of investors and the answer was yes. He does not have a business plan in English, although he is committed to writing one. He suggested that I ask my contacts if they will be interested in his project.

I asked him what would happen if I brought him an affirmative response. David sounded eager and told me he would rush to check them out. But he had already forgotten that he owed them a business plan before I would put them in touch with each other.

I do not know if David will succeed. How he intends to collaborate with sales channels is a mystery to me, when he cannot trust others around him. How he intends to move from thinker to business man is uncertain, as he has shown that he does not accept advice readily.

David’s brand of determined leadership successfully took him to where he is today. It is those same characteristics that are likely to hold up the next stage of his company’s development. 

Good leadership requires an ability to listen to those around you and to internalise those comments. That is often a direct challenge for good entrepreneurs, whose very nature is often compried of stubborness and individuality.

Rockin’ all over the (holy) world

February 15, 2010

Madonna made it kosher. Paul M has also done it. They have proved that you can have a great rock show in Israel, and not make it a political event.

The year 2010 is set to put Israel on the world “rock and pop” music map. Final arrangements for Beyonce, U2 and Coldplay are in the making. However, the list below is a stunning selection of entertainers, who will be gracing the holy land with their talents over the next few months. With most of the concerts in the Tel Aviv area, consider the following attractions: –

  • 5 March – Alison Moyet
  • 7-8 March – Alan Parsons
  • 30 May – Rihanna
  • 4-5 June – Joan Armatrading
  • 9 June – Pixies
  • 17 June – Elton John, my wife’s hero
  • 30 June – Elvis Costello
  • 1 July – Rod Stewart
  • 7 August – Jethro Tull

My friends are used to organising trips to London or New York, which includes a package to various theatres. Israel is beginning to offer some serious tourist competition to those destinations, with a few incomparable biblical and natural beauty sites thrown in for good measure.