Learning from winners

Malachy Clerkin talks to Billy Linehan and a number of top managers to find out what makes this serial winner so special

 

Excerpt from the Sunday Tribune, 29 August 2010

 

 

 

“Billy Linehan of Celtar business consultants is a board member of the Institute of Management Consultants and Advisers. He compares managing a county team to being in charge of a small or medium-sized business and sees in Cody a natural leader more so than a manager. “A leader challenges the status quo,” he says, quoting another management guru, “a manager accepts it”. I think if you are going to be successful on a continuous basis, you need to be challenging it.

 

“There’s an honesty and a consistency in the way he treats people and that’s the key to keeping people involved and motivated over a long period of time. You rarely hear about tensions between clubs in Kilkenny or hear people complaining that their man didn’t get a fair shot at making the team or even the panel. All you can take from that is that there’s a general acceptance across the board that the man at the top is a man of integrity. That he’s prepared to treat everyone with consistency. I think his personal style is a huge factor. There’s very little mouthing off or bringing attention to himself. You never hear him telling the rest of the world how good he is and all the different ways he’s affected the team.”

 

 

For full article see (excuse mis-spelling Billy Lenihan)

http://www.tribune.ie/sport/hurling/article/2010/aug/29/king-cody/

For more on Celtar business and management consultants see www.Celtar.ie . Celtar provides management advice to leaders of organisations, assisting them to reach their goals.

For more on the Institute of Management Consultants and Advisers see

www.IMCA.ie

 

 How maverick companies have passed up the growth treadmill – and focused on greatness instead, full list below

Small Giants by Bo Burlingham poses big challenges to those who assume that by definition growth is a good thing.

 

Accountants, bankers, commentators and business schools all tell us that thriving companies have to grow their profits and revenues year-on-year.

The only way is up they say.

Burlingham looks at businesses that choose ‘the road less travelled’… they reject the pressures of endless growth and instead they focus on being the best at what they do, creating a great workplace, legendary customer service, and a sense of community (both locally and in the workplace).

 In the book “Small Giants”, journalist Bo Burlingham takes us deep inside fourteen remarkable privately held companies, in widely varying industries across the USA, that have chosen to march to their own drummer. He searches for the magic ingredients that give these companies their unique “mojo” and the lessons we can learn from them.

 Attributes of these ‘businesses with mojo’ are:

 1. The founders/leaders recognised the full range of choices they had about the type of company they could create. They hadn’t accepted the standard menu of options or business model as a given.
 

2. They had allowed themselves to question the usual definitions of success in business, resisted pressures to follow conventional paths and to imagine possibilities other than the ones all of us are familiar with.
 

3. The leaders had overcome the enormous pressures on successful companies to take the paths they had not chosen and did not necessarily want to follow. They remained in control rather than accommodating themselves to a business shaped by outside forces.
 

4. Each company had an extraordinarily intimate relationship with the local city, town, or county in which it did business – a relationship that went well beyond the usual concept of `giving back.’” 
 

5. All companies cultivated exceptionally intimate relationships with customers and suppliers, based on personal contact, one-on-one interaction, and mutual commitment to delivering on promises.”

 6. Because they were privately owned, they had the freedom to develop their own management systems and practices. In fact the companies have developed for themselves a wide variety of corporate structures and modes of governance.

 
7. The companies also had what struck Bo as “unusually intimate workplaces.”

 

8. The leaders had unbridled, limitless passion for their business and about their service or product. Bo comments “I noticed the passion that the leaders brought to what the company did. They loved the subject matter, whether it is music, safety lighting, food, special effects, constant torque hinges, beer, records storage, construction, dining, or fashion.”

 
The 14 companies mentioned in the book Small Giants are

 

Anchor Brewing, in San Francisco: the original American microbrewery, see www.anchorbrewing.com

 

CitiStorage Inc., in Brooklyn: the premier independent records-storage business in the United States, see www.citistorage.com

 

Clif Bar & Co., in Berkeley: a leading maker of natural and organic energy bars and other nutrition foods, see www.clifbar.com

 

ECCO, in Boise: the leading manufacturer of backup alarms and amber warning lights for commercial vehicles see www.eccogroup.com

 

Hammerhead Productions, in Studio City, California: a supplier of computer-generated special effects to the motion picture industry, see www.hammerhead.com

 

Reell Precision Manufacturing designs custom hinges, wrap spring clutches, precision springs and wire forms, see  www.reell.com

 

Righteous Babe Records, in Buffalo: the celebrated record company founded by singer-songwriter Ani DiFranco, see www.righteousbabe.com

 

Union Square Hospitality Group, in New York City: the company of restaurateur Danny Meyer, see www.unionsquarehospitalitygroup.com

 

Zingerman’s Community of Businesses, in Ann Arbor: including the famous Zingerman’s Deli, see www.zingermanscommunity.com

 

OC Tanner Co. company with 1,600 hundred employees and annual sales of $300 million, see www.octanner.com

 
Rhythm & Hues Studios character animation and visual effects studio, see www.rhythm.com

 
Selima Inc a two-person fashion design and dressmaking firm

 
The Goltz Group parent company of celebrated Chicago retail stores Jayson Home & Garden, Chicago Art Source Gallery and Artists Frame Service, see  www.goltzgroup.com

 
WL Butler Construction Inc full-service general building contractor, see  www.wlbutler.com

 

Size and growth rates aside, these small giants share some very interesting characteristics. They are all utterly determined to be the best at what they do.

Closer to home in Ireland there are examples of small giants, many Celtar clients aspire to becoming “small giants”, and several are well on the path.

 

For more on the author and book see www.smallgiantsbook.com , Bo Burlingham is an editor at www.Inc.com

For more on us see  www.Celtar.ie

Tories following Brian Lenihan’s example?

Today we are bringing you a summary of the relevant economic and business information that was announced yesterday in Chancellor George Osborne’s first Budget.

This will be of interest for those already trading in the UK, or planning to do so.

_________________________________________________________________________

Chancellor George Osborne delivered his first Budget yesterday, which he said was “tough but also fair”. He also called it “unavoidable”.

Mr Osborne said the UK government’s target was to reduce the structural deficit so that it is balanced by 2015. He announced that economic growth for 2010 had been revised down from 1.3% to 1.2%, and growth in 2011 was predicted to be 2.3%, down from the 2.6% that was forecast by the newly established Office for Budget Responsibility. He concluded that the Budget was a “progressive” one, had “paid the debts of a failed past” and was one that meant “prosperity for all”.

Responding to the Budget, acting leader for Labour, Harriet Harman, said the UK government had “revised the growth for next year down because of the harm that [George Osborne's] Budget does”. She said the Chancellor had not been honest on the issue of jobs, and said that tens of thousands of people would be out of work as a result.

Some of the key points affecting business and enterprise from the UK Emergency Budget 2010 include:

Help for business

• An increase of £200 million to the Enterprise Finance Guarantee (EFG) scheme, which will support small business lending of up to £700 million to 31 March 2011. Additionally, lenders participating in the EFG will have a target of 20 working days in which to process loans.
• The creation of a £37.5 million Enterprise Capital Fund, which will provide equity finance for small businesses. The UK government will provide £25 million and private investors will provide the rest. The Fund will form part of a programme of Enterprise Capital Funds.
• The abolition of Regional Development Agencies (RDAs), which will be replaced by local enterprise partnerships. These will lead local economic and business development.
• A Green Paper on business finance, which will look at the finance options available to all businesses and how to improve access to finance for credit-worthy businesses. This will be published before Parliament’s summer recess.
• A scheme to help support employment and growth for new businesses. New businesses that start up in specific areas of the UK (not including London, the East of England and the South East) will be exempt from paying the first £5,000 of Class 1 employer National Insurance Contributions due in the first 12 months of employment. This applies to the first ten employees taken on in the business’ first year. The scheme is expected to start no later than September 2010 and new businesses that start up now and meet specific criteria should be eligible for the scheme.
• The creation of a Regional Growth Fund in 2011 that will provide support to English regions that rely heavily on public sector employment and encourage support and growth in the private sector. UK governments in Scotland, Northern Ireland and Wales are expected to provide similar schemes.
• The publishing of central UK government tenders online and free of charge from the end of 2010.

Banks

• A levy on banks will be introduced from January 2011, affecting UK-based banks, building societies and UK operations of foreign banks. The levy will be based on banks’ balance sheets and is expected to raise £2 billion a year.

Tax and VAT

• Mr Osborne announced that next year the corporation tax rate will be cut by 1% to 27%, then by 1% each year for the following three years, to a record low of 24%. The rate for small companies will reduce from 21% to 20% next year.
• The standard rate of VAT will increase by 2.5% from 17.5% to 20% from 4 January 2011. The zero rate for food and books remains in place while the lower rate for other items, such as fuel and power, remains at 5%. In line with the VAT increase, the higher rate of insurance premium tax will increase from 17.5% to 20% while the standard rate will increase to 6% from 5%.
• The Chancellor confirmed the UK government’s commitment to increasing personal income tax allowance, which will be raised by £1,000 (from £6,475 to £7,475) from April 2011. Additionally, the higher rate income tax threshold (40%) will remain frozen at £37,400 until 2013/14.
• The Chancellor has lowered the threshold for the Annual Investment Allowance for qualifying capital expenditure on plant and machinery to £25,000 from April 2012. This had been increased in April 2010 by the previous Chancellor to £100,000.
• The UK government has announced plans to bring in legislation that will provide a temporary increase in the level of small business rate relief for one year from October 2010. This will provide relief to eligible businesses in premises with a rateable value of up to £6,000 and tapering relief to £12,000.
• The Capital Gains Tax (CGT) rate for basic rate taxpayers will remain at 18%. The CGT rate for higher rate taxpayers increased to 28% from yesterday, and the CGT relief for entrepreneurs is extended to the first £5 million of lifetime gains, up from £2 million.
• The 50p tax on landlines proposed by the previous UK government as part of plans to raise money to fund investment in super-fast broadband will not go ahead.
• A review of IR35 and small business tax, details of which will be published by the UK government in due course.
• The main capital allowances rate for plant and machinery will reduce from 20% to 18% while the special rate will reduce from 10% to 8% from April 2012.

Alcohol, tobacco and fuel duty

• The UK government has announced that it will look at the possibility of introducing a duty rebate on fuel in remote rural areas, with possible pilot schemes in Scotland.
• There will be no duty increases on alcohol, cigarettes and fuel but the UK government will review this decision in the autumn.

_________________________________________________________________________

 

The full Budget report and associated notices are available from HM Treasury at:
http://www.hm-treasury.gov.uk/junebudget_documents.htm

HM Revenue & Customs (HMRC) has a summary of the measures introduced by the Budget in terms of tax, National Insurance and VAT at:
http://www.hmrc.gov.uk/budget2010/index.htm

Source of press release www.cobwebinfo.com

 

 The India way of doing business

 

(from Incite ezine 71)

A recent review of the book “The Indian Way” caught my eye. India is one of the BRIC nations, and is fulfilling its role as one of the economic powerhouses of this century. The book by four professors of management promotes the way Indian business are applying fresh practices of their own in running successful companies. So instead of adopting management practices that dominate Western businesses, Indian business leaders are applying fresh approaches in strategy, leadership, talent, and organisational culture.

 

The authors claim that their story holds lessons for those who do business in the U.S., and no doubt in Ireland also.

 

Exploding growth. Soaring investment. Incoming talent waves. India’s top companies are scoring remarkable successes on these fronts and more.

 

In The India Way, the Wharton School India Team claim to unveil these companies’ secrets. Drawing on interviews with leaders of India’s largest firms, including Mukesh Ambani of Reliance Industries, Narayana Murthy of Infosys Technologies, and Vineet Nayar of HCL Technologies, the authors identify what Indian managers do differently, including: 1) Looking beyond stockholders’ interests to public mission and national purpose; 2) Drawing on improvisation, adaptation, and resilience to overcome endless hurdles; 3) Identifying products and services of compelling value to customers; and 4) Investing in talent and building a stirring culture.

 

Business leadership 

India has a way of doing business that brings together business leadership with national leadership and societal leadership. Many heads of business are deeply involved in matters from climate change to child nutrition, and they find it entirely appropriate and even necessary to make their views on such matters public.

 

Some of this has to do with a need for development. The heads of many Indian businesses believe that national growth is essential for their own profitable expansion. Also, India has a long-standing tradition of business largesse, with many companies committed to social betterment through philanthropic giving and investment in infrastructure near their facilities. But the melding goes well beyond private profit and public charity. Indian leaders care as much about national purpose as about financial results.

 

Thus the co-chairman and former chief executive of Infosys Technologies, Nandan Nilekani, has accepted a call to direct India’s mammoth effort to provide a unique digital identification number for every one of its 1.1 billion citizens, which will make possible more effective delivery of social services across the country. And thus Hindustan Unilever has launched Project Shakti, which has used the principles of microfinance to create a sales force in some of the subcontinent’s most remote regions. And big-name businesses have built community hospitals, grade schools and virtual universities across the country.

 The research

This India way of doing business has fuelled an economy that even in perilous global times remains a dynamo, driven by big companies that are bent on growing at prodigious rates. India’s gross domestic product has been expanding more than twice as fast as the U.S.’s. Infosys Technologies employed 10,700 in 2002, but more than 100,000 just seven years later.

They have conducted a study of some of the country’s largest firms, of businesses that have played a leading role in India’s rapid development and have come to serve as models of business enterprise for entrepreneurs and managers throughout the nation. Their aim is to understand the qualities of the India way that have made it so vital to the nation’s growth.

 

They interviewed the people at the top of the pyramid, the leaders of these largest firms, because they make the critical decisions at the most important companies, including the strategic choices that have helped define India’s distinctive approach to business. They went to 150 of the largest publicly listed companies by market capitalization, and secured time with more than 100 of their executives.

 Act in Indian

The essence of the India Way is best expressed by those business leaders themselves. We “think in English and act in Indian,” observed R. Gopalakrishnan, the executive director of Tata Sons, the holding company of the Tata Group. The Tata Group comprises some 98 enterprises that employ 290,000 and book annual revenue equal to 3.2% of the nation’s.

For the Indian manager,” Gopalakrishnan explained, “his intellectual tradition, his y-axis, is Anglo-American, and his action vector, his x-axis, is in the Indian ethos. Many foreigners come to India, they talk to Indian managers and they find them very articulate, very analytical, very smart, very intelligent – and then they can’t for the life of them figure out why the Indian manager can’t do what is prescribed by the analysis.”

 

They reveal from the two-year study of Indian business leaders that their “x-axis” is defined by four distinctive elements of managing:

 

1.  Holistic engagement with employees. Indian business leaders see their firms as organic enterprises, where sustaining employee morale and building company culture are critical obligations and the very foundations of their success. People are viewed as assets to be developed, not costs to be reduced.

 

2. Improvisation and adaptability. Improvisation and adaptability are also at the heart of the India way. In a complex, often volatile environment with few resources and maddening red tape, business leaders learn to rely on their wits to circumvent the innumerable hurdles they recurrently confront. Anyone who has seen outdated equipment nursed along a generation after its expected lifetime with retrofitted spare parts and jerry-rigged solutions has witnessed this in action.

 

3. Creative value propositions. Given the enormous and intensely competitive domestic market and the country’s discerning customers, most of them of modest means, Indian business leaders have of necessity learned to be highly creative in developing their value propositions, delivering entirely new products and services with extreme efficiency. A case in point: Tata Motors now produces the Nano automobile at a sticker price of just $2,500.

 

4. Broad mission and purpose. Indian business leaders place special emphasis on personal values and on having a vision of growth and strategic thinking. In addition to serving the needs of their stockholders, like CEOs everywhere, they also stress broader purpose. They take pride in enterprise success but also in family prosperity, regional advancement and national renaissance.

 

Bundled together, these principles constitute a distinctly Indian way of conducting business, one very different from other countries, especially the U.S., where the blend centres more on delivering shareholder value.

Company managers in the West, they conclude, can usefully learn from India’s example. Whether this is a good moment to invest in the subcontinent they leave to those more versed in the ways (and caprices) of the financial markets. But they believe the time is right to better understand what is driving the Indian economic powerhouse, the company practices they call the India Way.

 A different opinion

An alternative, less academic and leader centric perspective on the Indian way is provided by Gautam Chikermane of the Hindustan Times is his article ‘The Indian way is littered with inefficiency management & culture”  see link

www.hindustantimes.com/The-Indian-way-is-littered-with-inefficiency-management-amp-culture/Article1-541438.aspx

 

The authors (Peter Cappelli, Harbir Singh, Jitendra Singh and Michael Useem), are professors of management at the Wharton School of the University of Pennsylvania and are the co-authors of The India Way: How India’s Top Business Leaders Are Revolutionizing Management (Harvard Business Press, 2010).

The article on the book is from Forbes.com, and was originally shared in Incite 71

  

Time to do it is now

  

Looking back we now recognise the negative influence of PR agencies, lobby groups and spin doctors hyping up the property speculation of the Tiger years. Much of the PR industry here mimicked the activities of their lobby group colleagues in Washington, promoting short term policies and deregulation. (And, strange to say, on radio these days we often hear the same people “talking up” their clients’ prospects, defending the HSE, the actions of state sponsored companies or acting the role of “objective” commentators on current affairs).

 

Hélène Rey of London Business School identifies where the malign forces of the lobby groups receive their strongest direction (and cash), from the financial institutions of Wall Street. She explains that current economic trauma will continue unless those who created the problems are brought under control. And the time to do it is now.

 

 

What happened

The worldwide economic downturn sprang largely from the US and, more specifically, from the investment banks, rating agencies, Washington regulators and other players in big-time Wall Street finance.

 

So at this juncture — when the US Congress is considering financial regulation reform and the US Securities and Exchange Commission (SEC) has at last brought action against all-purpose bad guy Goldman Sachs — we would do well to take a look back at what we learned about the origins and unfolding of the American financial crisis, so we may take an informed look ahead at whether we may reasonably expect reform of US financial regulation potent enough to avert a similar future collapse.

 

Looking back

With a nascent economic recovery seemingly underway, a number of participants and observers of the financial collapse have come forward, willingly or not, with treatises, letters, testimony, books and seemingly numberless email messages — a critical mass that permits some conclusions regarding the origins of and reactions to what became a global financial crisis:

 

• The massive consumer indebtedness and current account deficit of the US preceded, and contributed to, the crisis — as did the US Federal Reserve’s monetary policy, which held interest rates too low for too long.

 

• The structure of compensation within large US banks (and Irish banks!) encouraged wild risk taking, while regulators were too complacent or too indulgent in the face of the banks’ charm offensive.

 

• A revolving door of officials who have shuffled over the years between Wall Street’s major players and various US presidential administrations — particularly those of Clinton and Obama — has raised more than a few eyebrows.

 

• Ratings agencies, wishing to protect their ever-increasing profits from Wall Street, failed to properly assess risk of the overly creative and complex financial instruments built on the shaky foundation of sub-prime mortgages.

 

Some economists warned of the inevitable bursting of the “housing bubble”, but others were vocal in their flimsy justifications of unprecedented increases in house prices. When the financial mess moved from Wall Street troubles to worldwide economic crisis, policy makers reacted more often with confusion than assertiveness. In the institutional collapse that we now know most merited a US government bailout (that of Lehman Brothers), the US Treasury Department declined to act and thus contributed to the further destabilisation of financial markets. (In his subsequently released memoir, then-US Treasury Secretary Hank Paulson attempts to shift blame to the British Treasury for this failure. The latter, he claims, blocked the Barclays takeover of Lehman Brothers at the last minute, due to surely justified fears of a devastating impact on stability of the British financial system.)

 

While the US government failed to aid Lehman as it should have, its multiple rescues of insurer AIG appear to have been misguided. The principal beneficiaries of the government’s AIG assistance — no surprise — have been the largest of Wall Street’s banks.

 

Looking ahead

Just about everyone in Washington — from the White House to the regulatory agencies to Congress, on both Democratic and Republican sides of the aisle — is agreed that significant reform and strengthening of US financial regulation must occur to prevent another financial collapse and further bailouts of Wall Street by American taxpayers.

But one must wonder if this across-the-board momentum toward reform will be turned back, or watered down to ineffectiveness, under the withering lobbying firepower of Wall Street’s powerful financial institutions. From January through September 2009, financial institutions spent $126 million to influence Congress. The financial sector’s frenzied lobbying is already hammering away at stopping or weakening proposed regulation of derivative products, particularly the credit default swaps at the heart of many speculative strategies.

 

Prospects for meaningful financial reform may be called into question with a look at recent scholarly writings that examine the effectiveness of US lobbying activities by financial institutions. For example, a recent research article (“A fistful of dollars: Lobbying and the financial crisis”, www.imf.org/external/pubs/ft/wp/2009/wp09287.pdf ) poses an important question: why was the regulation of the mortgage market so faulty before the economic crisis? The authors respond simply and precisely: the financial institutions implicated in the excesses of the sub-prime market are those that spent the most money lobbying the US Congress.

 

Between 2000 and 2006, American financial institutions spent from $60 million to $100 million annually on lobbying efforts. Most of these efforts were focused on proposed legislation dealing with real estate lending and securitisation. Securitisation, more than any other factor, led to both the transfer of toxic assets to the balance sheets of many financial institutions, pension funds and government units and to the deterioration of credit quality. Banks that securitise and sell financial products to other institutions have little incentive to be concerned about the quality and ratings of the loans they sell off.

The financial institutions that spent the most money on showering Capitol Hill with campaign funds, lavish trips and other favours are also precisely the institutions that issued the riskiest loans, resorted to securitisation the most and had the fastest-growing portfolios of ever-riskier real estate loans. It seems reasonable to suppose that these same institutions were able to influence the quality of market regulation with their lobbying prowess.

 

Given the revenues, profits and compensation schemes of Wall Street’s heavy hitters in lobbying, it’s hardly surprising that they’re now throwing all their weight into shaping regulation of the financial system in a way that would preserve their rents. Will Congress, the White House and the regulators be able this time, unlike previous times, to resist?

 

 

Hélène Rey, Professor of Economics at London Business School

http://www.london.edu/newsandevents/news/2010/05/Avoiding_another_financial_collapse_1118.html