Save your energy for the “right” battles!

I have seen too many people fighting battles, wasting resources and impoverishing the end results, just for the pleasure of winning. In other words, engaging in “lost” battles. And what are “lost” battles? You are asking. Well, lost battles are all of those situations that one cannot change and that are not critical to achieve the end goal. Imagine the following situation, you are implementing a project and suddenly something that puts the project at risk happens. How do you react? Would you prefer to fight to revert the situation although you have to spend more resources; or would you prefer to “lose” that battle by not engaging in reverse it but instead use your time and resources to find an alternative way so that you can be able to deliver alike results with no additional “pain” (higher costs, miss deadlines, etc) ? As a manager, I have seen too many situations where people fought just for the sake of winning, ending up with a missed Goal and higher costs. I also know that not engaging in a battle it is not as straightforward as we would like it to be. Securing the “war” it is much more important than winning a battle, unless that battle is critical to winning the “war”. Thinking in the long-term and focusing on the big pictur are, at least for me, “right” moves if you want to achieve goals, otherwise you may be wasting resources and increasing the likelihood of missing the goal.

Attention: doing business domestically is not the same as going abroad!

ImageDoing business domestically is not the same as going abroad, new challenges and issues will arise and they can easily break your business if not controlled. Thus, it is of the utmost importance that you fully understand what is at stake and which aspects will differ from your domestic business. By listing and analysing this new challenges and differences you will be protecting yourself from unexpected costs and risks that may lead you to losses rather than profits. Sorry for me being blunt, but along the times I have seen too many amazing products and businesses failing to succeed due to this kind of mistakes – bad forecast of costs and revenues; fail to master the documents and licenses needed, payment methods, and sales conditions used in international trade.Therefore, I am here today to introduce you a checklist of domains you should cover while doing your business case for your export operation.

In order to do it in a systematized way and saving time, I like to divide the checklist into four main areas and although there is no special order or preference, I prefer to start with the Management  and HR, followed by Marketing, Operations, and end with Finance – as you can see in the figure.

Management and HR you should assess everything impacting the way you manage and organise your business domestically: extra time to start-up the export operation, new organizational needs, new decision-making processes, and new activities that you will need to implement. IP rights along with special licenses are aspects underestimated that can easily put your business in a tough position. Human Resources are also critical, assessing the key personnel and special training needs for this new venture is therefore crucial. You should start asking if the actual team is enough in quantity, skills and competences, and what kind of training they, and you, will need.

Marketing, in this area you should assess everything related to the market and the differences of going to an international market. Exporting is highly challenging because you need to find new markets and customers, and therefore it is critical to have information and data. Assessing the kind of Market Intelligence you will need, in oder to comprehend how the market operates, the customers’ needs and habits, and the local way of doing business is critical. Along with that you will also need to understand if your Product needs to be changed in order to penetrate the market. The Trade Marketing – sales materials, promotion campaigns, point-of-sale merchandising, and other materials and strategies – will probably need to be customised for the market. Along with this it is also important to understand that the trade marketing strategies and tactics will also need to be tailor-made for the market and region, and that may bring new needs. Cultural distance is a highly critical variable for any export business, understanding the market you are exporting its cultural differences it is crucial. I can tell you that this is one of the most underestimated aspects by the companies that can easily spoil the whole operation.

The third block of your export challenges checklist is the Operations side, in here I put everything related to executing on the field the business plan. Meaning, managing your production capacity and other special product customizations in time and linking it to an international supply chain that efficiently delivers your goods to the market, designing a distribution plan (distributors, reps, agents,etc) that meets your demands, preparing and handling special documentation and other needed certifications and licenses in order to be able to export and sometimes import your products into the new markets (depending on your distribution choice), and the needs for a tight project management and control of all the different variables involved when exporting. By project management I mean everything going from the moment you sell to the moment you deliver and collect the payment. A lot of small firms underestimate the importance of handling the part of collecting and sometimes delivering correctly what means not get paid in time or at all. As you know with the Incoterms is easier to be on the same page with your buyer concerning sales and payment conditions, and therefore is important to choose the correct Incoterm to use in the contract along with the correct execution otherwise it does not work.

The Financial aspects are the last but not the least export challenges in your checklist. Exporting means extra costs (trade marketing new needs, credit costs, transport costs, etc) different credit and payment methods, and extra risks (exchange rate, payment methods, default of payment, scams, etc). Thus, It is important that you understand all the changes so that you can have a competitive and profitable operation.

Be aware and prepared, and you will be fine. Good Luck!

Do you need to forget your ethics when going internationally?

No, you do not need to forget your ethics to enter a new market. However, you do need to understand the cultural background of the country you are entering so that you can avoid problems and awkward situations. And do not forget that, if you want to go internationally, being a “cultural illiterate” can jeopardise your business. Though, if you are still asking “why do I need to learn about other cultures if I have a top notch product to offer ?” you are being silly and naive.

Before you enter a new market (country) you need to do a strong cultural analysis including how to do business locally. You should also understand that skipping it it is the same as investing in a new project without a cash flow analysis or a Net Present Value calculation. It is a huge mistake that will cost you lots of money.

I would like to highlight, though, that cultural diversity is highly underestimated when preparing a business plan to go internationally. Companies spend great amounts of money and resources on financial viability studies and exhaustive marketing studies but they normally fail to include a cultural study into the business plan. Therefore, the sooner you acknowledge the cultural and ethic differences the better. Defining an ethical code to operate internationally is rather important while expanding. The code should remain faithful to the company’s vision, believes and social responsibilities, and should include a list of guidelines to help your teams behaving in the field. Ethics is too important not to consider it while operating internationally. Do yourself a favour and include a cultural study and your ethical guidelines in the business plan before deploying your resources on the field. Good luck!

Objectives, motivation killers or strong boosters?

Along the years to many were the occasions where I knew beforehand that no matter what the conditions were – team readiness and competences, or corporate culture and organization -, my objectives were impossible to achieve. Why? Because they had been set in such incomprehensible and unrealistic terms that they were completely impossible to achieve. Therefore, I keep wondering, how can unreachable objectives help companies being competitive? Well, I strongly believe that they CANNOT!

Why setting objectives? Answering to this question must be the very first thing to do, immediately followed by answering, “Why these (objectives) and not any other?”.

Objectives must be aligned with the business strategy, execution plan, available resources, and time span. If companies do not take any of this into account, how can they set objectives that make sense? The more randomly objectives are set the more impossible are to achieve them.

So what do you need to know, or have, in order to be able to set relevant and coherent objectives? Objectives must bring value into the company not only in the short but also in the medium and long run. Objectives must be always aligned with business strategy, major goals, and an execution plan. Objectives should not be limited to financial, profit or cash related indicators, they must translate also the company’s “health” in other areas such as operations, sales profitability, innovation, competitiveness, readiness and flexibility toward future challenges, people development and talent management, suppliers quality and capabilities, or customers satisfaction and loyalty. In order to have a strong, complete and cross-section set of objectives and KPIs (key performance indicators) several methodologies can  be used and built. I am particularly fond of the balanced scorecard approach along with a strong mapping of the strategic areas that should be impacting or being impacted by the business strategy. This strategic mapping help defining the strategic objectives that must be monitoring, after that is key to define the way of measuring them and set a target/deadline to be achieved. The important aspect to highlight here is that what ever approach one takes, it must take into account the following aspects: business strategy; strategy execution; top/bottom and bottom/up analysis; cross-section KPIs (include more than just financial, profit and cash related KPIs); KPIs must be set by area only after the integrated analysis (strategic mapping, top/bottom, and bottom/up analysis); resources available and needed; talent and human resources needed; reporting and control system (that helps mitigating risks, taking decisions, and learning).

I see objectives as key to competitiveness! If one does not have a set of KPIs and targets to be achieved, how can this person know if it is working well, evolving, and adding value? In my perspective, well defined objectives are a strong motivational tool. How can companies stay in the market and be competitive if they do not measure their achievements and set targets to be achieved? However, objectives should not be the end goal of a company, but rather a way of knowing if the company is in the right path toward its business strategy and vision. Obviously, business strategy or vision are changeable, though they should be set for a horizon of 4 to 5 years, and not yearly, and be more than just a profit statement. A multi-annual execution plan accommodating objectives for the period must be designed before going setting objectives. Objectives are a too important tool to be misused! Objectives must be a strong motivation booster rather than a motivation killer!

How about having fun while working?

When chatting with friends and business partners, I keep listening the same complain – “Well, I like my job, though it’s not funny anymore”! When asking, why is it? I receive almost always same answer, “to be taken seriously, in my job I need to be focused, and serious all the time!”. And that answer confuses me a lot, because I strongly believe that having fun while working has nothing to do with being focused, or be taken seriously by others. Having fun is one of the reasons why people stay motivated and wanting to excel. Why then corporations and managers try to inhibit employees of having fun while working? I believe that the reason is connected to the idea that it is impossible to have fun and do hard work at same time. What is in my opinion wrong, and a preconception instead! A preconception that it is costing millions to companies in retaining and motivating talent. In a time where uniqueness, innovation are as key as talent management to thrive in the business world, I believe that the ‘how one should work and play her role within a company’ should be rethought in order to better aim 21st century ‘s reality and challenges ahead.

Having fun while working does not imply being less focused or the lack of professionalism. In an environment that privileges ‘milking the cow as soon as possible, and with the higher profits possible’, it is complicated to have companies built to attract and keep talent for more than a couple of years. In my perspective, running a business with a ‘squeeze oranges’ mentality leads only to immediateness, forgetting the medium and long term. Attracting talented people is a key aspect when starting a company, though keeping it in-house, motivated, and willing to excel it is the toughest part of the challenge of starting or managing a company in the 21st century. In order to build a strong company, one needs to a build it as a real challenge, and find the unique ingredients that lead to success. However, to build a strong team for that company, one needs a corporate cultural that stimulates and allows people to do different, creative, and meaningful stuff. And having fun is an ingredient that should be present, and stimulated.

Companies should nurture a culture of meritocracy, where having fun can be positive and bring competitiveness. How? Well, if you are having fun you are probably happier, and therefore you have a higher predisposition to be creativity, inventive, and more productive. The trick part is to build up a corporate culture that allows and stimulates the ‘right’ (right is highly subjective, and depends on the social and cultural aspects of the environment where the company works) positive behaviors that lead to better results.

Being irresponsible, not focused, not productive, or acting as a free-rider are behaviors one can find regardless the corporate culture and that should be condemned but also understood in order to avoid and prevent them! It also happens that sometimes these same condemnable behaviors arise due to a inappropriate corporate culture or unfit leadership.

The ability of having fun while working can definitely be considered as a important factor when analyzing a company for its competitiveness! It is something that some companies can stimulate and other cannot! What kind of company do you want to work for, or start up?

How Can A Corporate Culture Based on Frugality Save Your Brand?

I strongly believe that a company does not need to spoil resources to have a strong brand or be competitive Yet, we keep seeing companies spending and spoiling more than they can afford. Working for cost sensible companies gave me an insightful position on this matter, but never inhibited me of focusing on quality or brand image. Therefore, I still believe that if a company wants to face successfully the challenges ahead, it needs Leadership not vanity, and a culture of cost sensibility and frugality, instead of one based on waste .

Cost sensible does not mean less quality or weak brands, it means instead a sensible management of expenses. A company does not need to have expensive offices, latest state of the art fleet, or exquisite furniture to run a business successfully! It needs instead an informed and well trained team willing to be creative and innovative without a millionaire budget, and always committed to be lean and customer-oriented. More important, it needs a leader who uses the companies assets wisely and productively.

cost-sensible and frugal culture can work as a way of freeing up resources to invest in new capabilities and gain stronger competitive advantages. Obviously, for this to happen the company must re-invest the freed-up resources in crucial areas such as innovation, creativity, uniqueness, talent management, R&D or other that can add uniqueness and factors of differentiation.

I strongly advocate that a cost-sensible and frugal culture as a competitive advantage factor and a brand saviour. 

What Complexity Has To Do With Being Competitive? Nothing, I Must Confess!

Complexity is everywhere, I know! However, I sometimes feel that some companies want a piece of this complexity to feel like God, omnipresent and omniscient. This companies believe that by making use of a puzzled language and complex processes they are differentiating themselves from their competition and being unique. Not True!

We, human beings, have a problem with simple things, we believe that to be good and better than others one needs to be complicated and complex. I advocate that complexity leads only to a false sense of superiority, and creates a feeling of suspiciousness in consumers. Consumers do not like to be tricked or fooled by incomprehensible language and processes, though. Complexity does not lead to any competitive advantage, but it can cause damages! It generates difficulties in handling and optimizing processes, and in designing business strategies.

Being simple does not mean simplistic, like complexity does not mean competitiveness! Please avoid shortcuts and keep it simple, invest in uniqueness, creativity and innovation instead!