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

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

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

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

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

“ 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

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]

“ 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.

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.

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]

‘ 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?

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?

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.

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]

‘ 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

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?...

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.

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]

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

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

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!

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?

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!

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.

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).

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!

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 .

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.

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]

‘ 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]

‘ 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.

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]

‘ 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.’]

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 ]

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]

‘ 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

...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]

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.

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

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

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

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

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.

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.

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/

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

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

“ 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

“ 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

“ 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

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

Keywords

Content strategy

Measure, measure, measure

Improve

Be visible For humans AND search engines

For humans AND search engines

Keywords How will people find you?

How will people find you?

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

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......

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”

Develop

Improve

Measure

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

“ 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

This presentation and the articles

discussed can be found at www.zebcon.com

Jakob Kegel can be reached at

jakob@zebcon.com