STEERING THE WAY CLEAR

According to Ram Charan, coach to some of the world’s top CEOs and author of The New Rules for Getting the Right Things Done in Difficult Times, as a business leader today, you face an unprecedented challenge: cash and credit are dwindling, sales forecasts are dismal, and morale is sinking. This is not a time to reflect. It is a time to act, decide, and energise your people – and with urgency. This is your moment. Are you up to the task?

Charan’s solution to ensuring your business emerges leaner, stronger, and well ahead of the competition is to protect cash flow vigilantly, even daily, and use cash more efficiently; evaluate your pricing strategy and capital expenditures; develop a better understanding of your customers and cost-cut strategically.

And this is where the leaders (owners/managers) in each and every business – not simply those newly-crowned political leaders – need to show their mettle, to ensure as many as possible of our Kiwi SMEs truly take stock of each unique situation affecting individual business. Then it’s a question of trimming the sails and being ready to sail when the tide turns – whenever that is.

If you are looking for proof that nothing will ever be the same, look no further than Tom Peters, management guru of the monster corporate world. He’s just discovered an interest in SMEs on his recent visit to these shores. In fact, he’s convinced SMEs will be New Zealand’s saviours. That’s if they are “agile” and adept at being “quicker than the rest”, and, of course, there are the usual attributes of “adding value”, “knowing customers needs”, “sticking to the knitting” and having an “action orientation”.

NZBusiness decided to gain insight from local experts on leadership (and training for leaders) like Kaizen (‘continuous improvement’) College’s Danie Vermeulen; The University of Auckland Business School’s director of short courses, Darren Levy; Richard Gill, a successful serial-entrepreneur in the US and in New Zealand; as well as, for an alternate view, Trevor Taylor and Steve Hall, CEO and director respectively for Outward Bound School, along with  Jenna Shaw of Hamilton’s The Effect Limited – who subscribe to the philosophy that the recessionary regime requires people to bring their ‘whole selves’ to work, rather than just their muscles and/or brains.

Authenticity and trust

“At Outward Bound we talk a lot about leaders needing to be authentic. There are many reasons for people to become cynical and mistrustful of business leaders in recent times, and people need leaders who are motivated by more than next quarter’s shareholder return,” says Steve Hall, a winner of the Sir Peter Blake Emerging Leader Award.

“Leaders need to have set standards concerning people; integrity; a focus on the long term; and a desire to serve. Integral to this is the ability of true leaders to be credible and be able to build trust,” he says.

“People need to trust you, therefore you need to be trustworthy, through your actions; being credible; your character; fairness; compassion; and how you are around people. People who trust their leader are so much more likely to give their best – no matter what the circumstances. This is particularly applicable in the tough times we now face; rather than do the minimum, go slow or even sabotage.”

Trust has surely been the greatest inanimate victim of the giant financial scandal currently gripping the world.

According to The Effect’s Jenna Shaw: “Emotional Intelligence (EI), which is at the core of our leadership training, is the habitual practice of thinking about feeling – and feeling about thinking – when choosing what to do.

“EI, which unlike IQ can be learnt, is about managing our personality and behaviour to be personally and interpersonally effective,” she says.

The Kaizen formula

In 1985 Masaaki Imai founded the Kaizen Institute in Japan, which lives by its philosophy of “Kaizen”: developing and refining all areas of a business, from the CEO’s office down to the factory floor. Three years ago, this globally proven formula was brought to New Zealand (now one of 23 countries) by its current directors Danie Vermeulen and Richard Steel – both fully accredited in the practice, which is at the heart of Toyota’s global success (see sidebox: Kaizen’s “Sins of Waste”).
In a time of threatened job losses and manufacturing closures, the Kaizen approach, which encourages the use of nearby suppliers, is likely to have a most receptive hearing.

 “It is based on a team approach, with each member challenged daily to find a better way of doing things. Nothing is fixed in stone. Things can always be improved,” says Danie Vermeulen.

“Your SME owners/managers say they employ people for their time; if you get their creativity, that’s a bonus. Kaizen is about accessing that talent to the benefit of all. This is ongoing, ingrained, not something you take in for a few days at an exotic spot out of town and quickly forget. This is for life and especially appropriate to the tough times ahead.

“We tell people who opt into the ‘lean way’, espoused by Kaizen, that there is good and bad news: the good is that you can learn to do it yourself and stay self-sufficient – the bad is that you will end up doing it for life.

“Too many people are over-reacting and destroying their own businesses in doing so. The very worst thing you can do right now is get rid of proven and loyal people. You have to find a way not to do that ‘obvious’ and wholly-destructive thing,” says Vermeulen.

But isn’t even Toyota taking tremendous strain right now?

“Sure, even a lean company like theirs is suffering now. But you have to know that when the tide turns they will be well-prepared to race ahead again.”

Clearly, there is no shortage of help available to business owners who want to learn more leadership skills and philosophy. Another example of what’s available out there is Wellington-based Catapult Leadership, founded by former business journalist and ad man Nick Sceats and international corporate executive Andrea Thompson. It runs three-day residential courses across the spectrum of leadership.

The Catapult promise is to “to unleash leadership potential and to provide participants with a world-class leadership tool box”.

Somewhat refreshingly, they believe: “The leadership that keeps the world and business moving is carried out by ordinary people removed from the public spotlight. These people have no special leadership chromosome. Leadership skills can be learnt.”

Train to retain

‘Train to Retain’ is the not totally objective advice of The University of Auckland Business School’s Darren Levy. But he makes the case that sending people away on short courses demonstrates confidence in the business to other employees, and customers will appreciate that while hunkered down for the tough times, your business is ensuring its best and brightest not only remain with your company, but are also up-skilling for the turn-around.

Levy guarantees it won’t be a talk-fest, given the world class visiting facilitators (“no, they aren’t old-style lecturers”) his organization brings in each year. As for value for money, he referred us to Richard Gill.

Gill, now running a strategy consultancy, Richard Gill and Associates, knows what it is like to start a business in a recession. A “serial-entrepreneur”, with particular skills and experience in the software industry and taking companies to the highly competitive US market (“my head is in those spaces”), he is now both sharing leadership skills through training and partnering in ventures.

He is adamant that SME owners and CEOs need to “get outside themselves, get external references, ideas and validation, through off-site programmes, before returning energized to the business and actioning them”.

Gill himself is a poster boy for the Auckland University Business School having had a ‘Damascene’ experience on a leadership course led by Venezuelan-born Tony Seba (a frequent guest on their courses, where he delivers the same material he presents at his Ivy League, Stanford University in California).

Gill’s ‘Cyberglue’ software start-up seemingly “had it all”, at the time, but just couldn’t gain sufficient traction to “jump the chasm” – a problem familiar to many SME owners/managers.

“What Tony did for us, by opening our eyes, had great impact, moving us through the theory and also assisting us in coming up with a practical set of processes and tools to apply it.”

He still applies a good deal of Seba’s approach, which focuses primarily on the customer, “finding the pain in the marketplace” and developing a product to address that pain.

Describing the current economic tsunami as “brutal”, he believes SME leaders need to use strategy and structure to refine down the business’ focus to ensure it survives the initial hits, stabilises and is ready to move forward at the appropriate time.

Good leaders never panic.

Kevin Kevany is an Auckland-based freelance writer. Email [email protected]