WHAT does a business owner and leader have to do to be in the best position possible to overcome a potentially tough 2016 and beyond? It is a question organisation design and development specialist Peter Gwizdalla has been wrestling with, in order to better assist his clients, and he has broken it down into three main focuses.

He urges business leaders to first focus on de-cluttering their businesses and clarifying leadership structures; then getting all business leaders “good at honest, motivating, evidence-based performance conversations”; followed by accelerating staff engagement “using the high impact, low cost strategy of acknowledgement”. 

Mr Gwizdalla today runs his own organisation development and design advisory service to companies large and small and he is building a reputation for not simply problem solving but long term strategies to drive better performance. He has runs on the board with both Hay Group as well as Chandler Macleod.

“Many of my SME (small-to-medium enterprise) clients are prudently concerned about the economic environment and preparing for a tough 2016,” Mr Gwizdalla said. “They’re also keenly aware that it’ll be theirs and their people’s efforts alone meeting challenges around revenue, quality, cost and innovation issues.”

Mr Gwizdalla said they key approach was to work out what ‘people and organisation’ foundations business leaders had to have in place in order to thrive while others struggle.

Top of his list was to “de-clutter, strengthen and clarify your leadership structure”.

“Company size notwithstanding,” he said, “enormous amounts of time and energy are burned when leaders do things such as not passing down to their reports enough of what they require for success, doing work better done – and paid for more cheaply – at lower levels, and having a too narrow focus on short term results at the expense of longer term considerations.

“Do you know how much your leaders might be actually inhibiting the performance of their direct reports?

“If you don’t, you’re not alone,” Mr Gwizdalla said. “Out of hundreds of leaders I’ve interviewed I estimate more than 70 percent are suffering at least one of the above productivity sapping problems.

“The most concerning aspect of these issues is that, because of the systemic nature of leadership in organisations, they automatically create problems for other leaders. For example, the leader that does the work of lower levels, automatically drags down their own leader to do the work they are ignoring.

“Either that, or the work simply does not get done-witness the executive level leader that gets too involved in day to day operational issues instead of looking ahead, anticipating and planning for what the company needs to deal with in the future.”

Mr Gwizdalla said to address such issues, business leaders needed to collect data on the breadth and depth of what every layer of leaders in your organisation thinks they should be contributing.

“Aggregate the data and you’ll soon see the gaps, overlaps and narrowed thinking, especially if you compare them to a practical generic leadership model like Drotter’s Performance Pipeline,” he said.

“From there, educate your leaders about what you have found and how things need to change.”

CLEAR MOTIVATION

Mr Gwizdalla said with effective leadership role clarity, the next phas can begin: “Get your leaders good at honest, motivating, evidence based performance conversations”

“At least once a month, in addition to normal day-to-day work conversations, every leader should be meeting with their reports to discuss overall performance in the whole job,” Mr Gwizdalla said. “The focus needs to be mainly on the future with a collaborative problem-solving approach. Discuss what work is coming up, the obstacles and risks that might be faced in getting it done, how they might be approached and what help is needed, and where improvements could be made.

“Find out what is important to them about the job, how they do it and what they think about their future. Share your own ideas and approaches in a helpful coaching style.”

Mr Gwizdalla said this approach motivates people because it provides information and helpful responsiveness to what is nearly always most important to them – their self interest.

“By the way, if any of your leaders tell you they don’t have the time to do this, they should be deployed back into a technical role, or let go,” Mr Gwizdalla said. “It is the 21^st century after all … there is no room for leaders that don’t lead.”

ACKNOWLEDGEMENT WINS

Mr Gwizdalla is a big believer in accelerating staff engagement – and it does not have to be a costly exercise. To the contrary, Mr Gwizdalla said a most effective high impact, low cost strategy could be abased around simple acknowledgement.

would be to simply acknowledge staff  

“The research evidence in pretty clear. Praise and acknowledgment are very effective as motivators,” he said. “Let’s be clear though, we’re not talking about the ‘every child is a winner’ brand of praise. Here the most important guidelines for best results.

“First, praise efforts as well as results. The tendency is to notice and reward successful results achieved while overlooking the importance of efforts made.

“In a world where innovation through prudent risk taking and trial and error is becoming increasingly important to success, you need to acknowledge out of the ordinary efforts that ended in failure. You never know, the next effort may be the one that strikes gold,” Mr Gwizdalla said.

“Second, praise personal bests as well as comparative performance. Make sure you notice people who aren’t the stars, but are kicking goals  on a personal progress basis.

“Third, acknowledge with specificity and context. Let people know exactly what behavior or result you’re noticing and how it links to your company’s success.”

As an example, he said, “Was it the resilience they showed in working through obstacles? Or perhaps the willingness to spend personal time to get an important job done?”

Mr Gwizdalla said one of the most powerful acknowledgements was to do so at unexpected times in unexpected ways.

“Give someone personal praise early on a Monday morning. Call an impromptu short meeting. Write a thank you card. Buy some flowers for someone’s desk or team area. Shout an unannounced morning tea. Ask people for their opinion on something a little outside their usual area.”

Mr Gwizdalla said this advice should be used by business leaders as a “checklist diagnostic for your own situation”

“Perhaps there’s value in convening a working group of your most senior managers and staff to uncover where the biggest gains are to be made in applying these ideas,” Mr Gwizdalla suggested.

Ends

PHARMACIES throughout Australia are missing out on developing better customer and community relationships – and losing vital revenue at the same time.

That is the concern of pharmacy business solutions educator Martin Millane, who has been urging pharmacists, who are more likely to be focused on the compounding aspects of the business, to re-work and re-energise retailing and marketing systems for better results all round. 

Apart from the business sense of it, Ravens Pharmacy Sales leader Mr Millane believes pharmacies should be a key catalyst in the much-needed transformation of health services in Australia, as governments struggle with increasing costs and medical practitioners manage soaring demand for their services.

“Chemists are scientists. In the dispensary side of things they are very good at knowledge of the pharmaceuticals and compounding,” Mr Millane said. “However, when it comes to running as a business and respecting what the front of the shop should be doing for their business overall, often they need assistance.”

Mr Millane helps chemists around Australia re-organise and re-prioritise their retailing, marketing and ‘front-of-shop’ for better business results. He also advocates they extend their health advisory role by providing information and knowledge to the community – and that they collaborate with other health professionals in their communities.

Mr Millane has seen pharmacies become an integral part of boosting health in their local areas, by working with doctors, dentists, physiotherapists and becoming a rallying point for local activity. The retail elements of those businesses have been boosted through understanding what the local community wants and needs and providing it at the right price.

Mr Millane often uses case studies of successful approaches by innovative pharmacies to encourage pharmacy businesses to develop their own localised approaches. One example is a Melbourne pharmacy that identified weight loss product demand and developed a walking group which helped to start a chain of positive local community health outcomes.

“If you are going to be a leader in weight loss, you have to drive that category and be a leader in your area,” Mr Millane said. “An example is an Amcal pharmacy in Melbourne which organised a walk group.

“Every Monday morning he had about two dozen people who would come to his pharmacy wearing his tee-shirts. There would be a card table there with pure orange juice etcetera on it and then, with one of his staff, the group would go on a 2km walk. When they came back there would be orange juice and other things there for them, right next to the weight loss section. He also had exercise bikes there he’d hire out.

“He was driving the category. It’s how you create local demand for that category is what the challenge is.

“That’s why there is more science going in to how to drive your front-of-shop categories, because it is not just a matter of having something on a shelf. It’s how much you can drive it.”

Mr Millane said a pharmacy business had to be organised to develop new areas – and that often required staff training to allow for delegation.

“If he or she doesn’t have the time because of their role in the dispensary, then having the right staff is vital,” Mr Millane said. “You need a staff member who is responsible for driving this category through the right kind of local activity. It’s about ‘us’ as a destination.”

Mr Millane said successful modern pharmacies increasingly identified local health needs and interests and focused on becoming a destination that helps to meet those needs. In the future, he believed pharmacies would become lifestyle hubs for communities.

SPORTS MEDICINE

A good example of how pharmacies fit in to communities is the sports medicine category, Mr Millane said.

“Sports medicine is a category that is very under-utilised. If you are going to drive sports medicine as a category I recommend it be done by having two staff in every pharmacy that are qualified as a level 0 or level 1 sports trainer.”

It is a strategy Mr Millane employed in a past role with the National Pharmacies group.

“We’d go to the local sports clubs who did not have trainers allocated to them, or the money to afford trainers,” Mr Millane said. “We would then promote to those clubs that, at the pharmacy, there were people qualified as sports trainers.

“If they needed to have their ankle taped or their fingers taped, they could come in and do so.  If they were injured, then they knew they could go to the pharmacy and get the correct gear – whether it be a cold compress, analgesics or whatever – and the correct advice on when to apply or treat the injuries.”

Mr Millane said pharmacies that focused on sports medicine in this way built great long-term relationships with sporting clubs and their communities.

Another aspect of sports medicine Mr Millane believes should be fostered is the relationship with local physiotherapists.

“I have heard that some physiotherapists do not have the highest opinion of pharmacies because they see a shotgun approach to their product mix,” Mr Millane said. Discussions with physiotherapists and taking advice on what to stock would optimise shelf space and add value.

“For a pharmacy or a (chemist) group to be recognised for sports medicine and to be driving it, they (would) do some cross marketing. Say, if there was a gap or space in the physiotherapist’s diary, they could set up in-store and offer customers some basic first aid advice. Then that’s a win-win.

“The customer gets good advice and the physio lifts his profile and the pharmacist gains by providing a value-added service to his customers. The physio might refer a patient to the pharmacy because he knows they have the correct items, for instance, like compression garments.

“That’s where the cross marketing develops with other allied health professionals to drive categories,” Mr Millane said. “With that comes loyalty. With loyalty, you do not have to worry about selling things like extra confectionery bars.

“It’s not about impulse buying. It is about developing categories where there is loyalty.”

RETAIL SENSE

Mr Millane has found pharmacies lacking in strategy and good retailing sense – even among some of the bigger groups – often because there was a lack of focus on the front-of-shop experience. While this was understandable for busy pharmacists, many also hung on to old ‘impulse buy’ beliefs and had not adapted to modern retailing trends.

“For example, if a pharmacy is positioning to be very health orientated, but you still see, when you walk into the stores, in prime-key positions, things like confectionery,” Mr Millane said.

“And they hang on to their old theory about impulse buying and adding more dollars to the cart. However, that doesn’t work.

“Some of the ideas behind it, even stocking things like Kleenex tissues, and I’ve mentioned the confectionery, are these high consumable brands or products where 99 percent of the market share belongs in the supermarkets. But the theory is that ‘if we stock some of these high consumable items, while the person is there buying the Kleenex or buying the chocolates or whatever, they will drop in their script or they will buy a Visine’.

“But it is the other way around,” he warned.

“The amount of money invested in space and in hanging on to stock of these low profit items – and the space it takes up – when you compare that to what they could be selling or investing in –  makes it chalk and cheese on what they could be actually delivering (to the customer).”

Mr Millane constantly urges pharmacists to focus on core business.

“Put in something in the health orientation,” he said. “Look for some new segments which may be innovative – for example, organics is a growing segment in the food area.

“Some of the new remedies, like aromatherapy. Those type of segments which are under-represented in pharmacy.

“It would be very easy to remove things that might cost you 70 cents and you sell them for $1 – and replace them with something far more profitable. You need to make your percentages.”

Mr Millane lamented that, at present, the level of investment by pharmacists in fitness and health is minimal.

“Moreso, the investment has been in things like your weight loss brands and products,” he said.

“The problem with weight loss is that it is such a fickle segment of the market.”

He gave the example of a grapefruit slimming tablet that his pharmacies once stocked that seemed to do well in some years but performed poorly in others – because the weight loss sector is notoriously trend-driven.

“We deleted that brand from out list of products, because we never knew one year to the other whether it was going to be a big year in weight loss or a poor year,” he said, warning that there were many other products in the sector that were not in stable demand, affected by trends, fads and advertising.

Mr Millane’s business is focused on educating pharmacists in how to develop their businesses sustainably, encouraging them to think about the future of their industry and how to adapt to new community needs and demands.

“A pharmacy industry magazine’s research, in February this year, showed only 28 percent of pharmacists had a legitimate interest in their front-of-shop, because they are basically scientists and pharmaceutical people,” Mr Millane said.

“When you have less than a third of pharmacists interested in their front-of-shop, it shows how under-utilised and under-performing that area probably is. That’s where we come in.”

www.ravens.com.au/martin-millane.html

ends

INTERFINANCIAL  managing director Sharon Doyle has a word of advice for SMEs struggling to make headway: it’s never too late to get your act together.

To realise the value of your business – and give yourself choices – you cannot avoid getting your business into the  kind of shape that might attract investment or buy-out offers. In fact, InterFinancial has seen new avenues of investment coming available for Australian businesses this year.

InterFinancial Corporate Finance is more than your average business advisory service.  It is an organisation of SME specialists who are as equally at home advising on mergers and acquisitions (M&A) as they are in sourcing capital for growth – and helping companies get ship-shape to maximise that growth. 

InterFinancial is one of the organisations that International Leaders founder James Paulsen describes as a “go-to” organisation for leaders and owners of fast-growth companies – in fact InterFinancial has been part of the Leaders’ Industry Expert quorum for many years.

“We work mostly with mid-range businesses who might be making a couple of  million dollars profit a year through to $20-$30 million profit a year, helping them to grow their businesses and helping them to access capital to grow their businesses,” Ms Doyle said. “And ultimately helping the owners to realise that financial asset that they have built. Basically, we work with owners and their management teams as their businesses grow.”

When the time comes, InterFinancial helps shape and implement exit strategies.

“From a market perspective, we work with an owner to explain how an investor or a bank might provide you with capital along that path. How would they look at your business? What would they think is valuable and important?”

Ms Doyle classified the current business environment as “very interesting times”.

“We see lots of interesting companies,” she said. It always fascinates us how people get the idea to even start this business and build something new, always in a market in which we might think, surely someone’s already tackled that? And then they bring in this business and you say, wow, that’s really exciting. In the last six months we have been seeing businesses coming in that have found a niche that is very rapidly taking them global.” 

One Brisbane company they are working with has created something new “that international parties are saying, we’d love to work with you to take that international because it has captured an opportunity that nobody else has been able to tackle”.

“And they need funding, obviously to be able to do that,” Ms Doyle said. She said businesses at the moment with innovative products had two recent advantages.

“One, the internet has made it easier for companies to validate that their product has global application. The second thing is that I think growth capital has become more available in this market in the last 6-12 months … it’s like the response has shifted in the market from, ‘it’s great that you have got a good idea, but no-one will ever fund that’ to ‘actually that’s really interesting and we can see the global application’ and there are people in the market now willing to fund those early stage businesses.”

Innovative SMEs may find their funding in the sun is about to come.

“I think now people have realised that this market is exciting – the scalable return you can get on technology investments – and that has started to attract the money,” Ms Doyle said. “We are seeing a lot of family (based funds) and small private equity funds start to spring up in the market which didn’t exist two years ago.

“I’ve got to say, it is an exciting part (of the market) but it has historically been very difficult to get money into it – there was a big gap between government funding and small angel funding, and then the much bigger venture capital investors would start investing. There was a large gap there. It was through that gap that you really needed a little push along.

“What we have found now is that the small family offices and the small funds, a couple of which are listed, have started to say we will write a cheque between $1-5 million – and that area just hasn’t been serviced well in the past.

“This particular money I am talking about is Australian. It is frequently families who have built a great business and they have sold that asset and they have a substantial sum of money – so it is, if you like, large angels. … who understand business and have built something themselves. They understand that sometimes you need a little bit of a push to get across that growth hump. They have got a willingness to accept some risk – which I think is something that has been missing in the market.”

But that is not the only source of capital InterFinancial has seen come on recently.

“The other source that we have found to be more flexible and available in the last few years has been strategic investors,” Ms Doyle said. “Trade players, larger companies who see that what you are doing is interesting and aligned to what their business might be. We are seeing them take minority stakes to support growth.

“I think a lot of the venture money will still gravitate towards technology or IP rich companies. There is a view that they can scale rapidly and you get a better financial return.”

While funding for business growth is more available than it has been for many years, but Ms Doyle warned, “Let me be clear, it’s not easy. But it is not impossible any more.

“It’s still quite challenging and there is a supply and demand in balance. But good strong businesses, with a well-articulated growth story, are definitely having more than one opportunity to secure an investor.”

Importantly mergers and acquisitions had bounded back.

“M&A is up,” she said. “Remarkably so. It has been escalating over the last year. This year we have seen a substantial increase in enquiry.

“Interestingly there was a sense that the push for M&A would be owners of businesses that were tired from operating in a difficult market for an extended period of time, who simply wanted to exit.

“Instead, what we have seen is that larger players are taking advantage of a market in which there are very low interest rates, and a view that there will be sustained low interest rates, to make strategic acquisitions that help them achieve their own organic growth goals.”

The risk is that a business may not be ready for such an approach, which is where InterFinancial comes in.

“Many of these businesses are on an interesting growth plan,” Ms Doyle said. “If you take a look of their historical earnings, that really doesn’t give any value for the upside that they are creating and the opportunities they have invested in over the next several years.

“But to capture value for the future, you need to be able to tell a very clear story.  Often the owner knows and understands and sees it, but is not used to having to articulate it. To be able to have somebody else who is able to say, here are the things that we need to put in place to be able to demonstrate the vision and capture that value, it’s pretty important.

“That’s where we come in. It is also important to manage the risk in those transactions. If you have a competitor coming to acquire you and you are sharing a lot of data, it’s a bit tricky.”

www.interfinancial.com.au

ends

EXTRA >> CYBERSECURITY and succession planning are two of the main strategic deficiencies in Australian family businesses, a global business report by EY has flagged.

EY’s Oceania family business leader, Ian Burgess said the report was a warning that family businesses, as an essential source of prosperity and stability to both local and global economies, needed to ensure they were not “putting their heads in the sand” when it came to the two critical areas of succession planning and cybersecurity. 

“Australian family businesses have a generally positive outlook when it comes to business conditions, with over two-thirds believing that their markets will expand in 2015 and over half expecting to expand their workforce,” Mr Burgess said.

“While it’s heartening that Australian family businesses have a generally positive outlook, they’re behind on two key issues that they should be addressing to ensure their continued sustainability and growth into the next generation and beyond.”

The Staying power: how do family businesses create lasting success? report, launched by EY and Kennesaw State University’s Cox Family Enterprise Centre in June, surveyed 25 of the largest family-owned businesses in each of 21 global markets, including Australia.

ONLINE RISK

The report revealed Australian family businesses were lagging behind their global counterparts when it came to their awareness of cyber risk.

About 41 percent of Australian family businesses reported having no knowledge of the impact of cyber risk on their company – much higher than the global average of 25 percent.

Even Australian respondents who were aware of the risks were fairly evenly divided about the scale of its potential impact on their business, with 32 percent rating it as low and 27 percent rating it as medium to high.

Mr Burgess said in an increasingly connected, digital world, family businesses needed to place greater emphasis on their cyber security.

“Even with the near-constant news of cyber breaches, leaks and the resulting financial losses, Australian family businesses seem to be worryingly relaxed about the risk of cyber threats and potential impact on their business,” he said.

“By their nature, family businesses face some particular increased risks beyond the usual hacking and data breaches, such as social media risks, reputational risks and personal safety concerns. For this reason, cybersecurity should be at the top of the agenda for any family business.

“Around the world, there are thousands of cybersecurity breaches each year – it’s the new reality of doing business. The biggest hurdle to family businesses in this space is recognising the most critical threats and understanding how to address them,” Mr Burgess said.

“The good news is that, due to their concentrated ownership, once family businesses are aware of the risks they have the advantage of being able to make and implement decisions quickly. This allows them to put effective plans in place to help minimise cybersecurity risks.”

EY’s Asia-Pacific information security leader, Mike Trovato said learning to anticipate cyber-crime was critical when it came to organisations transforming themselves from easy targets for cybercriminals to more formidable adversaries.

“Too many organisations fall short of mastering the key components of cybersecurity,” Mr Trovato said.  “Organisations lack focus at the top and the right procedures and practices to anticipate new threats. This is a major concern.”

WHO LEADS THE FUTURE?

EY’s Oceania leader for family office services, Richard Boyce said, with half of all the Australian family businesses surveyed still in the hands of the first generation, having a strong and clearly defined succession plan in place is essential to their continuing success

“Succession is arguably the most critical issue a family business has to face, yet it is often one of the most difficult to navigate,” Mr Boyce said. “Complicated family dynamics and the emotional connection that business leaders and family members feel towards their companies can make addressing the issue a potential minefield.

“Our survey found that Australian family businesses most commonly left succession planning in the hands of the CEO (42%), followed by owners or family council (32%). This is in contrast to the global results, where 44 percent of businesses surveyed said their board of directors had primary responsibility for succession planning.”

“If the intention is for the business to remain in family hands, succession must be considered a process, not an endpoint. It needs to be embedded into the day-to-day operations of the business, through training and education of the next generation.

“Succession is also about creating an enduring business model that can evolve and innovate, therefore the leadership required to be able to last through generational change is far more sophisticated and experienced than ever before.

“Family members must be willing to address the issue of succession planning head on through an open and ongoing dialogue. Getting this right will free up the CEO, board and council to focus on the wider business,” Mr Boyce said.

SHAPE OF FAMILY BUSINESS

The Staying power: how do family businesses create lasting success? Report also revealed a great deal about the shape of family business in Austalia.

About 50 percent of Australian family businesses currently have a first generation leader, 25 percent second generation, and 13 perent are led by third and fourth generations.

Australian family businesses rank lowest in terms of the number of countries they operate in, with an average of 2.3 compared to the global average of 15. In contrast, family businesses based in Germany operate in an average of 39.4 countries, Canada in 13.8 and China in 19.3.

About 90 percent of Australian family business respondents were satisfied with the performance of their board of directors, rating it as either good (60%) or excellent (30%).

Average return on equity for Australian family businesses is about 5 percent – on par with Spain and South Korea.

Corporate social responsibility and giving back to the community is important to Australian family businesses, with 73 percent engaged in philanthropic activities.

www.ey.com/au

ends