Managing And Motivating For Marketing

Managing and motivating for marketing - an overview PART 1
by Franco Azzopardi, Katana Consulting
& Jakob Kegel, Zebcon
Malta Institute of Accountants 7 November 2007

Franco Azzopardi
Accountant and Auditor
Fellow of the Institute
Master of Science degree in Finance, specialising in Professional Service Organisations.
Spent several years in key positions within PSFs developing models aimed at building performance oriented organisations.
He runs his own boutique Katana Consulting providing strategic direction and business performance advice to various professional service organistations
Can be reached at fa@katanaconsulting.com

Jakob Kegel
Comes from Sweden
Master of Science in Business Administration, has studied Knowledge Development within PSFs.
Spent the last 3 years working close to Franco, identifying and implementing software based enabling solutions specifically for the PSF.
Runs his own business focussed on marketing through the internet, a passion he has had for over a decade.
Can be reached at jakob@zebcon.com

Today's agenda
Share our latest thoughts on marketing the PSF through managing and motivating people to higher levels of performance

Challenge assumptions
“ Challenge assumed constraints!!.”
[Ken Blanchard, ‘Leading at a higher level’]
Traditional paradigms attached to PSFs:
We only have time to sell
Revenue = Time available x efficiency x charge rate
Charged hours (efficiency) 65 – 75%
EBIT / Sales between 15 – 20%
Investment policy – mainly in office premises
ROIC – ???
Traditional accounting toolbox

But where is the human element?
Now that changes the whole chemistry of financial equations.
Henry Ford realized ‘Why is it that when I buy a pair of hands, I always get a human being as well?’ ... and this was the Industrial Age not the Information Age

Business is not just about numbers!
“ It is energetic, it’s about passion, it’s about creativity, it’s about service, it’s about growth and so on… and the numbers are fine… and profit. I love profit. I love obscene profit. Because if the profit is obscene guess what, you can hire the most fantastic people and take the most interesting business risks.”
[Tom Peters]

What is the ultimate scope of management?
TO ADD VALUE TO THE SHAREHOLDERS
by seizing all investment opportunities that have a positive Net Present Value. To maximise their value towards achieving the best exit price. A fine balancing act between Eating well and Sleeping well... the Saving to Consumption curve in basic economic theory.

Investment-Consumption Consumption Investment Income line New Income Line

What are our assets?
But how do we assess for the NPVs when we write off our most significant investments immediately! ?
Theodore W Schulz, Nobel Prize-winning economist, theorized in 1961 in American Economic Review, that investments in human capital should be accounted for in the same manner as investments in plant and machinery.

Knowledge worker productivity
‘ KNOWLEDGE WORKER PRODUCTIVITY REQUIRES THAT THE KNOWLEDGE WORKER IS SEEN AND TREATED AS AN ASSET, RATHER THAN A COST.
[Peter Drucker, 1999, Management challenges for the 21st century]

Lessons from soccer...
Soccer players have a market value that goes beyond the going compensation rate. The value of a professional player is correlated to the share of revenue streams he or she will attract to the club. The cost of the investment in a player is the cost of professional development. BUT what about PSFs?

What's a PSF?
So what is a PSF? What does a PSF have to market? Where does it compete? How can it compete?

Definition
Professional Services = Application of highly specialised knowledge
A PSF is a knowledge organisation intermediating in knowledge between the needs of the clients and the knowledge available in the form of Human Capital and Structural Capital.

Drucker’s foresight
‘ Knowledge is the business fully, as much as the customer is the business. Physical goods or services are only the vehicle for the exchange of customer purchasing power against business knowledge’.
[Peter Drucker, 1964, Managing for Results]

Which are your markets?
In which marketplace is a PSF competing?
CUSTOMERS
TALENT
EQUITY BUYERS

How does a PSF compete?
How can it compete? What marketing strategy should a PSF adopt?...

What is Marketing?
Marketing is the art of getting people to change their minds, or to maintain their mindsets if they are already inclined to do business with you.

The name of your business
The service
The location of your office
The advertising
Public relations
Web site
Branding
E-mail signatures
Voice mail message
Sales training
Problem solving
The growth plan
The referral plan
The people who represent you
You
Guerrilla Marketing: [Jay Conrad Levinson who invented Marlboro Country suggests in his book Guerrilla Marketing]

4P or 7P?
Price
Product
Place
Promotion
[and]
People
Process
Physical evidence

Complex?
If you are thinking that marketing is complex especially when you don’t have inventories,
then you are RIGHT!

That was the background
A PSF is a unique breed of organisation based mostly on intangible relationships with intellect workers and customers, and on knowledge repositories, and whose business is largely directed by professional values and ethics. How can we stitch up a marketing plan for the PSF?

Culture & Communication
Envision and cultivate the right corporate culture ...and
COMMUNICATE!

The traditional PSF paradigm
Profit =Revenue – Personnel costs – O/heads
where
Revenue = Time available x efficiency x charge rate.

The traditional PSF paradigm
In actual fact, revenue of a PSF is much more complex than just this algebraic equation as it involves the interplay of:
human capital (capital that leaves the elevator at night) ‏
structural capital (knowledge repositories, databases etc) ‏
and social capital (customers).

You don't sell time
For decades, PSFs have genetically encoded its members with the core belief that they sell only time.
Surely professionals are not successful because they sell hours, since
no customer buys hours!

The emerging paradigm
Profit is the applause of the level of:
motivation of its knowledge workers
and the
robustness of its client relationships .
Hence the TRIPLE BOTTOM LINE .

Measure what counts
Select the right KPIs ...
Personal Competencies Development, Knowledge Elicitation,
Leadership Development,
Customer success (versus customer satisfaction),
SCR, SRR, ...
focus on Leading rather than Lagging Indicators.
Simplify your dashboard.

How to treat staff
‘ Motivate them, train them, care about them, and make winners out of them… we know that if we treat our employees correctly, they’ll treat the customers right. And if customers are treated right, they’ll come back.’
[JW Marriott Jr, Chairman and President, Marriott Corporation]

Starbucks
‘ We built the Starbucks brand first with our people, not with customers. Because we believed that the best way to meet and exceed the expectations of customers was to hire and train great people, we invested in employees who were zealous about good coffee’
[Howard Schulz who bought Starbucks in 1987 and floated it in 1992]

Shared vision, mission & values
Is there a COMPELLING VISION, MISSION AND VALUES that are shared amongst all?
Is there an exit plan for the partners?
Is there flexibility, home-working, work-life balance, excitement, fun, freedom?
These will largely prophesise the type of intellect workers that will join the PSF and in turn predict the type of client and earnings capacity from that client.

How to hire
‘ The old school is to hire someone you need by offering 20% more money. Well try offering 100% more freedom or 100% more excitement.’
[Dale Dauten, 1999, The gifted Boss: How to find, Create, and Keep great employees]

How to evaluate staff
Ken Blanchard recommends ‘Partnering for Performance’ by creating
performance appraisal processes that empower rather than disempower people
[‘People already have power through their knowledge. The key to empowerment is letting it out.’]

How to evaluate staff
Partnering between manager and people entails mutual agreement on the level of development achieved, the targets and the leadership qualities to be provided by the PSF
( Directing, Coaching, Supporting, Delegating ) ‏
[ Enthusiastic beginner => disillusioned learner => capable but cautious => self-reliant achiever ]

Let them chat!
‘ Allow people time to pursue harebrained schemes or just sit around chatting, and you may come up with a market-changing idea; force them to account every minute of their day, and you will be stuck with routine products’
[Nonaka and Takeuchi, 1995, The knowledge creating company: How Japanese companies create the dynamics of innovation]

Park your brains at the door dude!!!
...Stick with the time sheet and hang the stopwatch round your neck!!!...
In a PSF it is not ‘working harder that counts, but WORKING SMARTER’
Lagging timesheets versus Project management

Set Goals
Set GOALS that are readable in one minute!
Goal setting is the single most powerful motivational tool in a leader's toolbox.
“ Not having goals is like not having pins in a bowling alley.”
[Ken Blanchard, Leading at a higher level]

Feedback
Feedback motivates as much as goalposts in soccer.

Per aspera...
The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it! [Michaelangelo]
And it is true that we like averaging.... But excellence will not be achieved if we do not aspire to achieve it and being average will not come close to excellence!!
[Tom Peters,]
Read for inspiration

END OF PART 1

Managing and motivating for marketing - a technology perspective PART 2
by Franco Azzopardi, Katana Consulting
& Jakob Kegel, Zebcon
Malta Institute of Accountants 7 November 2007

Facebook
February 2004: Founded
October 2007: Valuation $15 billion
50 million active users
130 000 new user registrations per day
$150 million in revenue
Microsoft buys 1.6 % for $240 million
Wikipedia, MySpace, NY Times, Joost, Brickworks, InfoSys

What does this mean?
The world is fundamentally different
Global interconnections
Global access to info and data
Global competitors
Global customers
Global suppliers

Globalization
Globalization 1.0 1500 - 1800 => Countries Globalization 2.0 1800 - 2000 => Companies Globalization 3.0 2000... => Individuals Source: T. Friedman (2005). The World is Flat.

Source: T. Friedman (2005). The World is Flat.

Future
160 000
number of US audit and accounting jobs outsourced by 2015
Source: Forrester Research, 2004
http://money.cnn.com/2004/10/14/news/economy/lawyer_outsourcing/

70 000 per year

Globalization continues
Cost of a Programmer according to IBM:
China: $12.50 per hour USA: $56 per hour Source: WSJ/01.19.2004

Creating enough value?
“ A bureaucrat is an expensive microchip.” Dan Sullivan, consultant and executive coach

What can be outsourced?
“ Short on Priests, U.S. Catholics Outsource Prayer to Indian Clergy”
- “Special intentions,” $.90 for Indians, $5.00 for Americans
Source: Headline, New York Times/06.13.04 ‏ , http://query.nytimes.com/gst/fullpage.html?res=9C02EFDB1330F930A25755C0A9629C8B63

What does this mean?
“ If you don’t like change, you’re going to like irrelevance even less.”
General Eric Shinseki, Chief of Staff, U.S. Army

Technology & a large chunk of imagination

Your web site
Take it from the techies
Beyond the ad
Improve your business

5 steps to heaven
Be visible
Keywords
Content strategy
Measure, measure, measure
Improve

Be visible
For humans AND search engines

Keywords
How will people find you?

Content strategy
Beyond form...
Tools
Information
Articles
High value content

Measure, measure, measure
Who are your visitors?
Where are they from?
Are they staying on the site?
What are they looking at?
Etc......

Repetitio est mater studiorum
Develop
Improve
Measure
“ Repetition is the mother of studies/learning”

“ Finish your home work because people in India and China are starving for your job”
Thomas Friedman

Thank you
This presentation and the articles
discussed can be found at www.zebcon.com
Jakob Kegel can be reached at
jakob@zebcon.com

Managing And Motivating For Marketing

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