Before we look at how you – as chief executive or as an ordinary manager – can create an environment where innovation will flourish, we should first demolish several common and highly pervasive myths.

The first is that innovation is the province of specific departments, notably research and development. Experience across a wide range of companies shows that, in reality, even technological innovations depend for their success upon innovation in other functions such as marketing and production. Innovation is a process that properly involves everyone in the company, from shop floor to boardroom.

The second myth is that the essence of innovation is having ideas. Not true. It is quite probable that everybody in your firm has at least one valid idea the company could conceivably make us of.

The problems lie in drawing them out of people in a manner in which they can be properly evaluated, in making sure the inevitable filtering mechanism within the organization does not reject the really viable ones, and in bringing them to fruition. More precisely, innovation is about putting the right idea into practice at the right time and selling it in the right way.

The idea is merely the starting point, and there are a great many hurdles to jump before it becomes a successful innovation. As we discussed briefly earlier, the paradox is that, in spite of the abundance of ideas inside and outside the company, top management in most companies actually receives far too few viable ideas for innovation.

Another common myth is that continuous innovation is the province primarily of the high-tech industries. In reality, the mature industries of ten show the greatest opportunity for innovation. Wherever established ways of doing things have become heavily ingrained, the regular march of progress is almost certain to throw up better ways.

Radical new approaches to steelmaking, for example, now hold out the prospect of enabling that beleaguered industry in the US and Europe to compete on more equal terms with developing countries where labor and energy costs are low. Similarly, a growing number of companies in distribution have used advances in information technology to seize a strong hold on specific markets.

In many developed countries, for example, a Hospital Corporation has locked out most of its competitors in the area of pharmaceutical supply by providing hospitals with a computerized ordering service. The service not only reorders drugs automatically, so the hospital pharmacy is never out of stock, but saves on the hospital’s staffing costs. Most of these hospitals are now dependent on the Hospital Corporation for almost all their supplies.

The fourth common myth is that most companies need to innovate only in order to get out of trouble. The company that waits that long is in deeper trouble than it imagines. As the hospital example above demonstrates, innovative choices facing tomorrow’s company are to seek competitive edge through effective use of innovation, or to risk being outflanked by a faster-moving, more innovative competitor. Could your company afford to be shut our of a large part of its market?

The fifth and last myth is that innovation is cheap. It is almost always more expensive than initially estimated. Moreover, most innovations take a while to pay off, and during that time they are likely to be a drain on profits or cash flow or both. It is therefore of little value to pay lip service to innovation without providing the resources to fund it not just in the ideas and investigation stages, but beyond into implementation and the long haul to market viability. That seems obvious, you may say. Yet, along with inadequate market research, insufficient funding is the most common reason for the failure of product innovations.

What Management can do

If innovation is to become part of the fabric of a company’s culture, it has to be taken seriously by everyone. Employees have to be aware that top management is committed to innovation as a means of progress and competitive advantage.

You will therefore need to establish a clear policy and objectives for innovation. It’s no use just telling people to innovate blindly. To be really useful, innovation has to operate within defined objectives. Top management needs to spell out to employees where the company is now; where it wants to be in terms of size, type of product and kind of organization; and the kind of innovations it requires to take it there.

The employees (and also the suppliers, if you have the confidence to involve them in this way) also need to know that their contribution is genuinely wanted. The limitation on corporate funds obviously limits the number of ideas the company can pursue. But involvement in innovation is a many-staged affair. At every stage of implementation, new, usually minor but sometimes quite significant innovations need to be made. Without all these smaller innovations by ordinary people, the big ideas either will not work or will not work half as well.

You need to keep plugging away at the innovation theme. Keep reminding people that innovation is important, and they will keep responding to the challenge. But if you slacken the message off, they will assume you have lost interest. So echo it whenever possible in company literature.

Most people like to work for an innovative company—particularly the bright youngsters you most want to attract. When shoe manufacturer C. & J. Clark let the least dismayed when the development project failed. On the contrary, it was delighted at the flood of high-caliber job applications it received from television viewers who were impressed that a company in such an apparently low-technology industry could give a thirty-two-year-old man the chance to lead a major projects. The program certainly also had a good effect in encouraging people inside the firm to push for further innovations.

The innovation policy sets out the main ground rules for managing innovation. Among other things, it should spell out where the company wants to be in the innovation stakes. Does it want to be the leader, with all the benefits that entails in terms of high market profile? Or does it want to be a less exposed follower?

The problem with being an innovation leader is that it is expensive. Not only do you have all the development costs, but you also have to overcome the acceptance barriers within the market – again, often a costly exercise. “Innovating second” allows you to watch your competitors remove the bugs and make the market aware of the product or service, before you launch into the same market having learnt from his mistakes. “Innovating last” is a recipe for failure, because the key players in the market will normally by then have an unassailable position. Few companies have the financial and sales muscle of an IBM to allow them to take over a substantial portion of a mature market simply on the strength of the brand name.

While it pays to innovate first sometimes, if only to maintain the organization’s sense of pride in its ability to develop successful new ideas, the drain on resources may be enormous. One option we recommend is that the innovation policy spells out the circumstances in which it wishes to innovate first and those in which it wishes to innovate second. The aim is to seek a balance between the two that allows your company to retain its reputation as an innovation leader without bankrupting itself through rushing headlong into uncertainty on too many fronts.

Andrew Robertson, a researcher at the Polytechnic of Central London, describes these two options as offensive and defensive innovation, pointing out that defensive innovators spend on average only half as much on fundamental research and 60 per cent on applied research as offensive innovators. He also points out that

. . . many managers seem to believe that ‘first to market wins’. In most cases this is a myth. The exceptions are to be found in a handful of large-scale process industries like industrial chemicals, where an original process which cuts costs and improves quality can compel competitors to consign their older process plants to the mothballs. Two examples: the plate-glass industry revolutionized by Pilkington’s float-glass process, and the chemical industry, where Standard Oil of Ohio’s acrylonitrile process caused similar upheavals.

The choice of whether to innovate first, or offensively, is therefore primarily strategic, and relates both to the threats and opportunities the company foresees and to the resources it has to meet them. You can’t normally advance in all directions. First top management has to take those strategic decisions, then it has to communicate them in policy terms as guidelines for people lower down the organization to search out specific opportunities.

One other thing the policy document should make clear is that, where the company innovates second, or defensively, it will only in the rarest circumstances be willing merely to imitate. However good someone else’s idea may be, it is always capable of improvement. Ensuring that it is improved should be a matter of pride – and that, in this context, is far from an irrelevant consideration, for pride is a major component in the motivation of the typical person to generate and participate in innovation.

(Peter Frans – Managing Partner – Trimitra Consultants)

A leader gathers as many facts as possible, consults with stakeholders and then decided on a course of actions. Once the decision is made the effective leader does not waste time on second thoughts. The thrust of such a person is always forwards – looking for the next challenge, focusing on the next decision.

Every effective leader occasionally makes a poor decision. When this occurs, what counts is how the leader handles the situation. Those that willingly admit their mistakes and take coordinates do not expect their leaders to be perfect. They are willing to accept some errors as long as the leader holds to the principle of trying to do what is right for the organization as a whole. What they do resent, however, is a leader who reverse a decision when pressured by a few vocal individuals or a special interest group.

In today’s work environment it is imperative that stakeholders be involved, one way or another, in the decision-making process. People in the work force are better educated and more self directed than their elders. They do not expect to make all of the decisions themselves, but as a minimum they want to be consulted and be able to fully express their thoughts and ideas before important actions are taken.

Why is it important to involve stakeholders in decision making? The obvious reason, of course, is that better decisions are possible when different opinions and ideas are considered. More importantly, people carry out decisions that they have participated in making much more enthusiastically than they carry out orders from the boss. It has been proven over and over again that involvement leads to commitment.

Most effective leaders entrust able members of their company / department with the responsibility of solving their own problems whenever possible. Such leaders facilitate and guide this process to ensure that decisions are timely and do not adversely affect other work groups. For most matters the approach by asking subordinates to study a problem and then take appropriate action, will result in excellent decisions, not only in the quality of decisions, but also in developing subordinates into leaders.

However, do not permit such latitude when the issue is controversial or when an unpopular decision must be made. Under such circumstances always seek the opinions and advice of your stakeholders and then make the decision yourself. Try to give everyone a chance to be heard, to agree or disagree as they see fit. At times do deliberately encourage debate by taking an opposing position to the majority viewpoint or by asking another staff member to do so. Open, spirited discussion creates a sense of satisfaction and commitment to the decisions that are eventually made. After hearing all sides and asking numerous questions, either make the decision on the spot or set a final date for doing so. This way everyone knows that action will be taken.

Obviously, you cannot please everyone with your decisions nor should you try. The important thing, once again, is that stakeholders have a say about major issues that impact them. After that the leader must make the tough calls by saying, “This is what we’ll do.”

(By Peter Frans – Managing Partner Trimitra Consultants)

1. Recruitment.

Has your organization identified the critical skills that its managers must possess? Do you evaluate candidates based on specific traits that are appropriate for your corporate culture? In short, do you know what you’re looking for? The first step in developing effective managers is clearly identifying the skills and competencies that your organization needs. When competencies are appropriately chosen and defined they serve as important criteria against which managerial candidates can be evaluated. Some examples of competencies are: delegating responsibility, establishing strategic direction, operational decision-making, building trust, communications skills or financial acumen. The process of identifying competencies can be time consuming and requires consensus and commitment at the top level of the organization, but it is an important first step in building an effective management staff. Whether promoting managers from within or looking outside the organization, you should only hire those individuals who have the requisite skills and characteristics you’ve identified as key to success in your organization. An employee with strong technical skills in a particular area is not necessarily a good choice to move up the corporate ladder. Yet in too many organizations that’s exactly what happens.

2. Awareness.

Do your managers know, specifically, what is expected of them? For example, what is management’s role in responding to employee complaints? Are they expected to address organization issues themselves, with support from HR, in concert? What is management’s role in supporting the direction and decisions of the organization? If managers are expected to provide input at an appropriate time, participate in the decision-making process and then support the decision regardless of whether they personally believe it was the right direction to take, do they realize that this is an expectation? Are you sure? Too often organizations “assume” that managers know their role, but this can be damaging to the organization. Expectations should be communicated during the hiring process, upon orientation and throughout a manager’s tenure with the organization. Be clear about your expectations of managers. Don’t assume an awareness or understanding that may not exist.

3. Guide managers through critical tasks.

There are certain tasks that every manager will be called upon to perform in most organizations — hiring, orientation and training of staff, evaluation of staff, coaching and discipline. Have you assessed your managers’ skills in these areas and done whatever you can to help them through these processes? For example, are “toolkits” available to help walk managers through the hiring process? Through the evaluation process? Again, don’t assume that management staff knows what is required of them, understands the processes in place in your organization or is comfortable in performing all of the duties required of them. By providing clarification — even step-by-step instruction — for various common managerial tasks, you can help to simplify and streamline these activities for your managers and minimize the anxiety and uncertainty they may feel. You’ll also ensure fair and consistent treatment of employees, minimizing legal liability for your organization in the process.

4. Make training an ongoing requirement for all managers.

Some of your managers will be new to their role, others will be seasoned veterans. Both need training, albeit different types. While general managerial training courses can serve some value, it is better to design training to meet the specific needs of individual managers. New managers will be overwhelmed if required to attend training designed for more experienced managers. Experienced managers will be frustrated if required to attend basic skills training sessions.

5. Teach managers how to communicate effectively with staff.

Communication is a critical function for managers. Few organizations, however, offer specific training or guidance on how to communicate effectively. Managers should know how to effectively:

* Give constructive feedback.
* Respond to employee suggestions.
* Deal with conflict.

They should know how much and how to share information with employees based on the organization’s communication preferences and philosophies. To ensure consistent communication, particularly with regard to key organizational issues, consider developing resources and materials for managers like “speaking points” or “handouts” to share with employees.

6. Provide managers with the tools they need.

Your organization’s managers are important customers for the HR department. The more effectively you can work through them to serve the needs of employees, the more efficient you will be in meeting the organization’s needs. Time spent on developing tools — communication tools, training resources, counseling and support resources — to meet the needs of your managers will be time well spent. Not only will you be able to increase efficiencies for the HR department, you will ultimately increase the satisfaction of both managers and employees.

7. Step in quickly to correct behavior when necessary.

Sometimes managers need “course correction.” Sometimes managers simply are not qualified for the job they’re being required to perform. In either case it’s important that HR move swiftly to work with the appropriate people to correct these situations. The impact of one manager on an organization can be immense — that impact can be either positive or negative. A poor manager can negatively impact performance, productivity, morale and turnover. Those are problems you don’t need.

Organizations can’t afford to ignore employee relations issues that can have a negative impact on recruitment and retention. A strong managerial staff is your first-line offense against low morale and high turnover. Make sure that managers know what is expected of them, provide them with the tools and resources to do the job and act quickly to correct behaviors or performance that don’t support the organization’s goals or philosophies.

(Chris van Overveen – Senior Consultant – Trimitra Consultants)

There are three main areas that must be addressed to ensure that the planning process and resulting strategic plan are valuable and useful for the organization:
The process that is used to develop the plan can guarantee success or failure. Credibility and ease of use are often direct results of how the plan was created.

• The format of the plan will influence how and when people use the document in the workplace. Complex, outdated documents are doomed to remain on the shelf.
• Top Management’s use and respect for the plan influences the acceptance for the rest of the staff and board members. There is no reason for managers to refer to established goals and objectives if the executive director does not.

Ensuring the Plan Has Impact
During the strategic planning process, it is important to include the following process, content, and usage elements to ensure the usefulness of the strategic plan to the organization.

Process Elements

• Engage leadership; Include the informal and formal organizational leaders when conducting a process. Active involvement communicates a message of organizational importance and priority.
• Work from a common understanding; Provide training on the process and establish a list of expectations and results to ensure that everyone is working towards the same outcomes.
• Include individuals who will implement plan; Encourage all levels of staff to contribute to the process. Involving these individuals will ensure that the plan is realistic and help motivate staff to implement the plan.
• Address critical issues for the organization; Failure or unwillingness to put these critical issues on the table for discussion and resolution might lead staff to implicitly or explicitly challenge the credibility of the plan, its priorities, and/or its leadership.
• Agree on how the plan will be made operational; Specify who will implement which parts of the plan, scheduling routine evaluation meetings to review progress.

Content Elements

• Include an internal and external focus; Remember to address structural, board/staff development, and communication issues in your plan.
• Do not get too detailed; Use the strategic plan to articulate the broad framework, direction and, priorities of the organization and its programs. Extremely specific plans become quickly outdated and end up on the shelf.
• Create a balance between the dream and reality; Ensure that your plan is grounded in the reality of what can and cannot be accomplished.
• Keep language, concepts and format simple; Make sure that the language is easy to understand, especially for those that are unfamiliar with your organization. Structure the document so that it is user friendly.

Usage Elements

• Actively use the plan as a management tool; Actively using the plan for short-term guidance and decision making will establish a model for use.
• Incorporate sections of the plan in everyday management; Formalize the usage of the plan into the day-to-day activities of the organization. For example, one organization reads the mission statement at the opening of every business meeting to remind the membership of the organization’s focus and purpose. In another organization, the executive director requires that all ideas for program changes or expansion directly address how the changes relate to the organization’s mission.
• Organize the work of the organization in the context of the plan; Establish operational goals and activities within the context of the strategic plan (e.g., include goals and objectives in individual and program evaluations or have program directors refer to the plan to provide guidance in decision making).
• Design a system for controlling the process; Ensure that there are mechanisms (e.g., evaluation meetings, monthly reports against plan) to inform management on progress.

By employing the strategies listed above, you can be sure that the effort you put into the strategic planning process will direct your organization and become a useful tool to both management and staff.

(By Peter Frans – Managing Partner of Trimitra Consultants)

Step-by-Step Method

By taking the steps of systematic problem solving and decision-making you can prevent problems from recurring. They include:

STEP 1 : Problem Recognition
STEP 2 : Problem Labeling
STEP 3 : Problem-cause analysis
STEP 4 : Optional solutions
STEP 5 : Decision-making
STEP 6 : Action Planning

STEP 1
Problem solving and decision making begins by recognizing that a situation needs resolution. This boils down to listing of all hard and soft symptoms relevant to the problem. Even when the troubles are obvious, it is a good idea to start with Step 1. No matter how serious or stressful the first encounter with a problem may seem, it is usually only a symptom of the underlying trouble or real problem. Symptoms may be trivial, like one minor defect, or they may be serious issues that must be dealt with quickly, such as falling production levels. Regardless, they are often simply just side effects of the real problem that lies beneath the surface.

STEP 2
After completing Step 1, you should have a wealth of data on your problem. It may be confusing and you still may not know what kind of a problem you have. People may have different interpretations of the same issue. A problem will look different from different vantage points. Those doing the looking may label it with different words even though they’re talking about the same issue. Whether differences of opinions are about details or major issues, disagreement blocks the necessary teamwork to resolve things. Step 2 attempts to identify and label both sides of the conflict in a way that everyone can accept. The result of Problem Labeling is a simple agreed-upon statement of the common denominators of the problem. You need to identify the central issue that needs resolution. This should give you a unifying statement of the main problem.

STEP 3
Problem-Cause Analysis produces the true problem definition. So why have we taken valuable time with Steps 1 and 2? Because it is extremely difficult to sort through the mental and emotional issues that cloud a problem. Previous steps helped create general awareness of what the problem is and isn’t. These steps helped sort out the causes, contributing forces or stimuli that raised the problem in the first place from the effects, the symptoms, and by-products of the causes. Step 3 looks for the root cause of the problem. The root cause is a controllable, solvable force which explains why the problem exists.

STEP 4
Step 4 is called “Optional Solutions” because the goal is to complete a list of conceivable alternatives. You’re looking for any strategies, which will address the root cause and resolve the problem once and for all. Insisting on a comprehensive list prevents you from rushing off impulsively with the first idea that sound good. There’s a chance that if you follow the first off-the-cuff proposal, it will be inferior, inadequate, or unbalanced. You’ve come this far by avoiding short cuts. Don’t give in to the temptation now. A complete list of alternatives is essential before proceeding to Step 5.

STEP 5
Step 5 allows you to choose one alternative solution as a course of action. You make a value judgment on what to do about the problem. The result you want is a firm joint decision on the chosen optional solution. This means selecting one strategy from the list in Step 4 that everyone will respect. The philosophy of Step 5 is analysis and evaluation. This means lining your ducks up, weeding out the worst choices, and weighing remaining choices against each other. You will consider ranking, prioritizing, and scoring the alternatives to make your choice. The goal is to find the “right” solution using a practical, scientific process.

STEP 6
The best solution ever conceived and agreed-upon won’t solve a problem if it isn’t put into action. An action plan outlines who will do what, where and by when. An action plan organizes tasks which implement the decision in actual practice. Timing, personnel and other resources must be considered and choreographed into action.

Setting performance standards plus a follow up monitoring mechanism, is vital to ensure that the plan is carried through.

Always consider Murphy’s Law; “That which can go wrong, will.” No matter how well you predict the future, think through the sequence of implementation, or estimate time and resources, your plan will rarely go as conceived. It is better to anticipate problems and prepare as best you can. The best action plans include contingency thinking to avoid Murphy’s worst effects.

(By: Peter Frans – Managing Partner Trimitra Consultants)

Most common types of problem people and how to deal with them:

• The non-communicative person. Ask open questions that force him to explain what he thinks.
• The person who doesn’t listen. Ask him to repeat what you just said to see if he got it right.
• The daydreamer. Give him a task to share with someone else so he’s constantly on his toes. Don’t give him monotonous work.
• The loner. This person may be more comfortable talking on the phone than face-to-face. Exploit his talent for detailed, independent work on long-term projects.
• The secretive person. Make requests for information very specific and put it in writing.
• The sulker. Hear out him complaints, but don’t give in just because he seems unhappy. If given the silent treatment, ask a question and wait for the response so he is forced to answer you.
• The over-sensitive. Never make a critical remark about their work in front of other people. Build up their self-confidence by offering positive comments more than negative ones.
• The martyr. Don’t allow him to take on so much work. Have a private talk and point out your concern for his health, and that he shouldn’t stress himself out.
• The moaner. Before he complains, ask if he needs any help.
• The pessimist. Ask for specifics on why he thinks the proposal will not work. Remove his fear of failure or risk by relieving him of responsibility. Make it a team responsibility.
• The prejudiced person. Team up the chauvinist pig with a group of women who know how to handle difficult jobs. Don’t reinforce his prejudice with remarks about women drivers, etc.
• The jobsworth type. When asking them to do something that’s not in their job description, let them know you are asking them for a favor. Respect them by making it easy for them to say no.
• The control freak. Sit them down and ask what is the worst possible scenario if this new action goes wrong. Often it’s really not that bad.
• The know-it-all. Don’t humiliate them in front of others; you’ll just antagonize them. Give them credit where it’s due, but make them share it with other team members.
• The domineering type. They tend to pick on the youngest, weakest, or least experienced one on the team. Stand up for this person if he or she cannot stand up against the domineering one. When the domineering personality tries to shout someone down, stay cool. Don’t react. If everyone else ignores him he’ll soon realize how foolish he looks.
• The primadonna. Do not respond to this type. If she becomes childish, opt out of the conversation until she is calm and rational.
• The rowdy type. Give him his own space where he won’t bother others.
• The over-competitive type. Encourage them to beat their own targets.
• The aggressive type. Stand up to them whenever you need to.
• The manipulator. Talk openly to bring out what their hidden agenda really is. Don’t be too critical, but be friendly and nice.
• The rule bender. Take disciplinary action or warn them that they will be reported.
• The buck-passer. Make it clear that taking responsibility means you are responsible no matter who actually does the work, and whether you’re there physically or not. Put instructions in writing and be specific.

(By Peter Frans – Managing Partner – Trimitra Consultants)

jakarta, indonesia, trimitra consultants, management, strategic, human resources, hr, organization development, training, marketing, business development, project management, procurement management, customer service, supply chain, purchasing, csr, leadership, personal development, jakarta, indonesia, trimitra consultants, management, strategic, human resources, hr, organization development, training, marketing, business development, project management, procurement management, customer service, supply chain, purchasing, csr, leadership, personal development, jakarta, indonesia, trimitra consultants, management, strategic, human resources, hr, organization development, training, marketing, business development, project management, procurement management, customer service, supply chain, purchasing, csr, leadership, personal development .

Some firms considering mergers today might better pursue a strategic alliance, either as an end in itself or as an interim step toward a subsequent merger.

Very few mergers of professional services firms promise true synergy likely to increase long-term profitability of the merged entity. Synergy in the form of improved profitability only occurs when a merger results in increased leverage, utilization of people and other resources or billing rates.

These improvements happen only if the aggregate volume of work of the two combined firms actually increases as a result of the merger, resulting in increased utilization or leverage, or if the quality of work dramatically increases, raising rates and realization. Overhead almost never decreases, as economic survey data have consistently shown that there are no economies of scale in professional services practice.

On average, large firms spend more per professional on overhead than smaller firms. Also, the transactions costs incurred in a merger frequently result in decreased margins in early years.

As a result, a merger definitely should not be considered for any of the following reasons, although they turn out altogether too often to be the underlying rationale for ill-conceived mergers:

• To achieve economics of scale.
• To satisfy partners’ egos.
• Just to get bigger.
• To become full service, as an end in itself.

Legitimate reasons for merger can include both offensive and defensive strategies for long-term profitability improvement. Offensive merger strategies are calculated to exploit opportunities, while defensive merger strategies are intended to cure a weakness or avoid an external threat.

Adding new practice areas that current clients of either firm need and in which they will direct new work to the merged firm is an example of an offensive strategy, as is gaining access to new geographic markets where clients of either firm actually will use the resources of the merger partner.

Examples of defensive strategies are creating a new firm management that can implement a decision to downsize to a profitable combined size or filling age or experience gaps to assure future continuity, succession, client retention, and growth. Either type of strategy can provide a justifiable reason to merge.

Of course, even if there is sound business reasoning behind a merger, there still will be risk, arising from factors including the following:

• Client reaction.
• Possible clashes of cultures of the merger partners.
• Incompatibility of management styles.
• Economic disparities.
• Conflicts of interest.
• Personalities of the professionals
• Post-merger shake out of productive partners.
• Disparate firm, debt, retirement obligations, or capitalization.

Most new business potential in professional services firm mergers comes form existing clients of the two firms, through cross-selling of new services and professionals to both clients. But most firms are so ineffective at cross-selling even their own practices that they are unable to cross-sell successfully those of unfamiliar professionals. If post-merger cross-selling does not occur, revenues and profits are at best static, and may even decline.

It is here that the benefits of a strategic alliance become apparent. Two firms with complementary practices and client bases can and should be able to accomplish almost the same revenue and profit benefits of a merger without all of the attendant costs and risks if they can actively cross-sell each other.

Indeed, the fact they are discrete entities requires active cross-selling. If effective cross-selling can be achieved, merger at a later date is much less risky, since inter-firm cross-selling is a means by which potential synergies arising from a merger can be demonstrated.

Firms that might want to consider strategic alliances include:

• Those with mutually compatible specialties. For instance, HR consulting Firms and law firms could ally themselves to better handle industrial relations disputes
• Those with mutually complementary practices that might be cross-sold to the other, such as labor-employment firms and corporate/tax boutiques.
• Those in different jurisdictions, domestic or foreign, whose clients might need reliable representation in the other venue. Examples include Indonesian and Chinese firms or U.S. and European firms. Geographically diverse alliance partners might also share entrepreneurial risk in establishment of joint venture offices in third jurisdictions.

In business, strategic alliances are not new. U.S., Japanese, and European automakers have used them to compete more effectively in foreign markets. Airlines use them as well. Given the dismal results of so many law firm mergers in the past, a well-conceived strategic alliance between complementary firms provides the potential upside of a merger without its risks. But it does require a quid pro quo—reciprocal referrals—and a benefit to both parties, especially when professionals cannot share fees without disclosure and acceptance by the client.

Of course, strategic alliances are not risk-free. One party might attempt to steal clients form the others. One could “bail out” on the alliance and not fulfill its marketing responsibilities. Firms could try to steal professionals from the other. Firms might mutually conclude they are not compatible and walk away from the deal with all of their assets intact.

In such circumstances, the alliance should terminate, freeing both parties to operate independently or seek other alliance partners, if they so choose. Even if the strategic alliance does not work, each firm is a little further along the road to knowing itself better, usually leaving it better off than before, and neither firm is encumbered by the legal and public relations morass of trying to undo an ill-conceived merger.

On the other hand, a successful alliance could result in a merger, or the participants might continue the alliance indefinitely. If the alliance evolves into a merger, its prospects for success should be much better than they would otherwise.

In today’s volatile professional services market, a merger is risky. Strategic alliances, managed effectively, provide a way to reduce the risk in amalgamation and test the potential synergies that might emerge, with the tacit or implicit understanding that a merger might follow.

(By Chris van Overveen – Senior Consultant – Trimitra Consultants)

However, today there is a growing trend toward outsourcing HR functions of a more strategic nature as well. This shift in paradigm raises its own set of unique questions about how this practice might serve to the advantage and/or disadvantage of an organization.

For this reason, Klaas and Gainey, has conducted research that focused exclusively on the outsourcing of training and development. Below are the highlights of their study.

Purpose of Study

Firms are increasing the use of outside vendors to meet their training and development needs. However, the strategic importance of certain training and development programs can introduce unexpected and unique challenges for organizations outsourcing this important function. To better understand the effects of outsourcing in this strategic area, the authors used three methods of analysis to identify factors thought to impact client satisfaction with external training vendors: transaction cost economics (TCE), social exchange theory and the resource-based view.

Methods of Analysis

Transaction cost economics (TCE): When firms outsource an activity, they are relying on “market governance” to protect their business interests. However, due to the difficulty involved with defining a deliverable between a client and a vendor that is explicit enough to guarantee a high level of client satisfaction, this alternative makes the client vulnerable to opportunism by the vendor. When opportunistic behavior occurs, the client perceives that the psychological contract between vendor and client has been breached, and client satisfaction suffers as a result.

Social exchange theory: All relationships have give and take, although the balance of this exchange is not always equal. Social exchange explains how we feel about a relationship with another person or entity depending on our perception of the following factors: the balance between what we put into the relationship and what we get out of it; the kind of relationship we feel we deserve; and the chance of having a better relationship with another party. In deciding what is fair, we develop acomparison level against which we compare the give/take ratio. This level will vary between relationships, with some giving more than others, and will also vary greatly in what is given and received.

Resource-based view: Training and development programs that are tailored to meet the unique needs of a firm have the potential to cultivate and create resources that may allow for sustainable competitive advantage. When training and development has the potential to create such resources, outsourcing these activities may well increase the risk of imitation by competing firms. An important concern raised by the resource-based view is that the outsourcing of the training and development function may make it difficult to develop core competencies that lead to competitive advantage. This is because core competencies normally develop through a complex process requiring a high degree of social interaction (i.e., social capital) in a natural work setting.

Key Findings

1. Respondents provided an interesting profile of the nature and extent of outsourcing in the training area. On average, firms indicated that they used outside suppliers for approximately 30% of their overall training needs and 26% of their training budget was spent on outside vendors. Additionally, 58% of the respondents noted that they used five or fewer outside suppliers to provide their training.
2. In terms of the type of training outsourced, 25% of the respondents indicated that they used training suppliers most often for management development programs, while 23% indicated that they outsourced technical training most often.
3. Survey results revealed that there were no significant differences in client satisfaction in relation to the primary type of training outsourced.
4. Of the 10 relationships hypothesized in the model, eight received substantial support and two were not significant: vendor dependency, and idiosyncratic training and client satisfaction.
5. Vendor dependency—It was anticipated that suppliers who rely on a particular customer for the majority of their work would voluntarily adapt to meet the needs of that customer. And, because adaptive behavior is the foundation upon which trust is built, it was thought that trust would increase as a result. However, when a vendor is highly dependent, it was discovered that adaptive behavior is not seen as an indicator of genuine concern for the other party, i.e., the client. It is possible that adaptive behavior is instead seen as behavior to serve the vendor’s own interests. If true, the client would be less likely to reciprocate. Reciprocation is needed if socially-oriented trust is to emerge (see definition of social exchange theory above).
6. Idiosyncratic (company-specific) training and client satisfaction—The authors predicted that when company-specific training was entrusted to outside suppliers, client satisfaction levels would be lower. This prediction turned out to be inaccurate. Apparently, client firms did not feel as vulnerable to opportunistic behavior from training vendors because they were able to engage successfully in adaptive behaviors to reduce concerns to protect their interests before entering into their contractual agreements for training and development (see definitions of transaction cost economics and resource-based view above).

The trend in outsourcing is expected to continue unabated for the foreseeable future. The study conducted by Klaas and Gainey offers a number of practical recommendations and insights for the HR practitioner to follow when preparing a request for proposal for the outsourcing of a training and development program.

(By Christ van Overveen – Senior Consultant Trimitra Consultants)

Is it a term that hinges around the monetary aspects of a manager’s work, or is it a term that deals with the character and make up of the manager in question, or their ability to deliver quality work?

All of these factors figure into the equation.

A professional in any occupation is a person who is paid for a service with which they are providing. Whether this service is under an exclusive contract from a particular company, or is being provided as work for hire, the professional is being compensated for their work monetarily. However, money by itself, as attractive as it can be, doesn’t make a professional. More important than the financial rewards that can be allotted to a manager or their abilities, is a clear understanding of what it means to act in a professional manner.

The building block around which a manager constructs his/her professionalism, is attitude. A positive attitude is the one thing that can benefit a manager more than anything else. A positive attitude can not be an imposed behavior modification on the part of any manager, or person for that matter. Rather, it is something that has to be learned through acquiring a competence for the correct way in which to behave, to present yourself, and to use criticism as a tool for advancement. It can be tailored to fit the individual, because not everyone who possesses a positive attitude, displays it in the same manner.

The foremost ingredient to attaining a positive attitude, is self esteem. As a manager it is the crucial primary factor behind performance. If you don’t take pride in yourself and your work, your work will suffer for it. An easy equation to remember is that your self esteem is almost equal to the value of your work. In a manager’s case his/her own performance and that of his/her unit/team.

Another crucial factor in my definition of a professional manager, revolves around the ability to honor commitment. A manager who can’t be depended on to honor commitments is unprofessional and intolerable.

Finally, when I define a manager as professional, I think of a person who respects his/her profession and has the dedication to deliver competent performance time and again.

(By: Peter Frans – Managing Partner Trimitra Consultants)

To answer this question, one needs to understand that the CRM industry identifies itself through the evolution and capabilities of technology. If the user community obligingly buys into that definition, senior management is likely to approach a CRM initiative as a systems project and charge middle management with the task of so make it so? Despite senior management support, this orientation and action represents abdication when perhaps in good faith, senior management thinks it is empowering the organization to act.

To better understand why this is true, one needs to go back to the definition of CRM. Based on a definition created by the Gartner Group several years ago, CRM can be segmented into two components:
1.CRM is a business strategy that commits the organization to being driven by the customer or otherwise being customer centric.
2.Technology is used as an enabler to deliver profitable value to customers through the understanding and anticipation of their needs.

This definition tends to turn current wisdom on its head because it positions CRM as first and foremost a business strategy. As a business strategy, senior management must be leading not merely supporting the initiative. Technology follows this lead by providing the infrastructure to deliver value and capabilities that enhance profitability. It is not about technology for technology’s sake.

For there to be a radical shift in the reported success rate for CRM initiatives, there must be a fundamental shift in the end-user community’s visibility and leadership of senior management. Without credible and meaningful input from the end user community, the industry will pursue differentiation through technology as opposed to practical solutions to end user requirements and profitability.

Who Is Really Customer Centric?

Few organizations would claim that they are not customer centric. Most would admit to needing improvement and that leads to the purchase of technology with the naive notion that the technology will somehow fix any perceived deficiencies. If it were that easy, then why the failure rates? Best practices relative to implementation have been widely publicized since the beginning of CRM, so perhaps 10 percent ignore these warnings; this still does not explain the failure rate phenomenon.

Most organizations remain structured in the traditional stove pipe functional configuration. In this definition of responsibilities, no one is really responsible for the customer, so how can the organization be customer centric? Want more proof? Consider the following:

The typical sales function is driven to achieve a revenue goal subject to maintaining expenses within budget levels.
Marketing is typically organized and driven by performance that relates to products, services, and programs.

Customer service has customer in its title but performance criteria tend to be driven by productivity measures. Further, by examining the business rules and policies that the function operates under, one often finds that the real objective is cost and risk containment.

At this point, you may say yes we have these characteristics but we measure customer satisfaction. This is certainly a good thing to do but what is really being measured and what actions does it enable? Further, to what degree can the organization link (more accurately correlate) customer satisfaction with customer behaviour metrics? It is customer behaviour that is the focus of CRM. Independent studies have shown that customer satisfaction is often not correlated with customer retention (a key customer behaviour).

So the take-away here is that CRM is not a natural state for most organizations. No organization or function is trying to drive customers away, but the collective action of the organization often inadvertently achieves this result or otherwise dilutes its impact on the best or most profitable (includes potential) prospects and customers. This is what needs to be fixed.

The Profitable Acquisition of Customers and Delivery of Value

There is general agreement that customers perceive value as the total experience associated with the product or service. Delivery of the total experience occurs through horizontal processes that cross-functional boundaries. The focus of enterprise level CRM is to provide tools, data, and infrastructure to enable the profitable acquisition of customers and the development of their potential over the life cycle of the customer. The challenge of this endeavour (CRM) however, is that the organization is attempting to deploy a common set of tools and technology across functions that are basically operating to the beat of a different drum. It is a recipe for delays, miscues, cost over-runs, and resistance.

Enter the CEO

It should be very clear by now that the organizational issues are more likely to derail a CRM initiative than it is the technology. Organizations have lived with less than perfect technology since the discovery of the vacuum tube. However, when a system is introduced that changes the balance of how things are done, influences who wins and why, and has operational limitations, the prognosis is often terminal. CRM can represent fundamental change, therefore senior management cannot be on the sidelines they have to be on the field.

If CRM is a business strategy, then senior management must understand it, be committed to its success, and accurately assess its ramifications (consider the cost). The CEO is the person the organization looks toward for the direction of the company and its philosophy. In this regard, it is the responsibility of the CEO to sell this direction to board of directors, financial analysts, direct reports, and perhaps customers.

As indicated previously, the profitable acquisition of customers and the delivery of profitable customer value are achieved through processes that cross-functional lines. To the extent to which performance metrics and accountability issues get in the way of optimising these processes, the CEO (COO/President) is the person who must reconcile these issues and create an environment where everyone is pulling together relative to CRM.

The CEO must recognize CRM as a major organizational change initiative. The CRM project needs more than support, there must be commitment and leadership. The initiative must be firmly rooted with organizational goals and have specific success metrics and criteria. Without this foundation, the initiative will be like a sailboat without a rudder. Similarly, without a specific destination, a rudder is of small assistance.

The failure statistics speak to this issue loud and clear, a very high percentage of initiatives lack specific success metrics and goals. Selling an initiative on emotion may get the project to implementation but few if any reach success. CRM is all about business and only leaders need apply.

(By Chris van Overveen – Senior Consultant of Trimitra Consultants)