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Where’s The Money Gone?

money gone 1A seemingly simple question for a business leader to ask and one that most would think it would be easy to answer. Unfortunately in many organisations it is not that easy to get a handle on where the money is going. If we take an average business in the manufacturing sector then perhaps 25% of the money goes out the door on the cost of people, 15% might be taken up on overheads and 10% gets kept as profit. So what about the remaining 50% of money that goes out the door? This is money being paid to third parties for raw materials, goods and services. Should be easy to get a handle on, right? In most cases the answer is it’s not so easy at all!

But we have an ERP or Purchasing system you might say! Again in most organisations Procurement only controls about 30% of the third-party spend. The purchasing files will only get you part of the answer. The next straw that is usually grabbed is to say that the ‘accounts payable records’ will give the whole picture. These will certainly get you more than the 30% procurement controlled spend but again still not the full 50%. What about expense claims, petty cash or corporate credit cards? All these are avenues by which money leaves the business to third parties.

Is this lack of clarity something to be concerned about you ask, our people are all ethical and operating in the best interests of the company! The key question is whether all the spend is being optimised, are you getting the best deal for all the dollars you are spending? Often the buying of the same goods and services is spread over several suppliers or products that are very similar are purchased separately again diluting the companies purchasing power.

So what to do about it! A process called “Spend Mapping” can help bring some clarity to where the company’s money is going and whether there are opportunities to aggregate spend to get a better deal. A Spend Mapping project will go through the following stages:

Business Expenses

 

Spend Analysis Step Step Detail
1. Identify
  • Search all sources of information on where the organisation’s money is going:
  • Purchasing Data – Payables Data – Purchasing Cards
  • Petty Cash Vouchers – Expense Claims – Etc
2. Gather
  • Create a single ‘database’ of information in common format (Take care as each source will come in a different format)
3. Cleanse
  • Correct errors, remove duplications, standardise descriptions and Units of Measure
4. Group
  • E.g. Purchases from IBM, IBM Corp and Cognos are in fact the same company
5. Categorise
6. Analyse
  • Basic question; “Are you getting the best deal?”, is all spend under contract, are only approved suppliers used, is there ‘rogue’ spend, are there Benchmarks?
7. Repeat
  • Continuous improvement

 

Once you have developed this information you are ready for the next stage – Developing sourcing strategies for each  category you have identified.  And of course tightening internal controls if not all the dollars are going where you would want them to!

By Andrew Downard – AD Supply Chain Group

Source: Business Leader Strategic Thinking

Leading With a Challenge

“People are tired of simple things. They want to be challenged.”

Umberto Eco

I recently finished reading an interesting book called The Challenger Sale, by Matthew Dixon and Brent Adamson. I’m not big on reading book reviews disguised as blogs, so I’m not going to spend 1000 words talking about the book. I’ll just strongly suggest it to business leaders everywhere. You can read more about it here.

change aheadThe short version is this: the predominant view of sales success in recent history is that the most successful salespeople are “relationship builders”. I think most of us understand what that means – the kind of people who are good at making friends, that people like being around, that make you feel comfortable, etc. The authors suggest (based on fairly exhaustive research) that while those people are good at making friends, they aren’t so good at making sales. Their theory is that the truly successful salespeople are those who make customers uncomfortable, who ask questions that customers can’t answer, who challenge customers. Those are the salespeople who demonstrate value.

The most interesting part of that theory to me is how that idea relates to leading an organization, beyond just the sales function. How do you lead your people? Are you challenging how they think? Are you making them uncomfortable?

I’m not suggesting you don’t encourage your people, or develop relationships with them, or that you should try to make them dread going to work. What I’m suggesting is that the status quo is not acceptable. Your organization has to change to thrive – or even survive – over and over again. In order to make that change, people have to be uncomfortable with their current situation. They have to question what they’re doing & how they’re doing it. And that mindset, that constant pushing against the way things are – that has to start with the leaders.

If the leader is OK with the way things are today, all the employees will feel the same way. People will get complacent. Your organization will develop the belief that the way things are now is as good as they can possibly be. Change will be viewed as something to be avoided. And in the world we live in, that’s a death sentence for any business.

How are you leading? Are you challenging your people? Are you pushing them outside their comfort zone? Are you preparing them for a great future – or no future at all?

By Matt Heemstra – Cain Ellsworth & Co

Source: Business Leader Strategic Thinking

The dark side of leadership development: overcoming our resistance to change

One does not become enlightened by imagining figures of light, but by making the darkness conscious

Carl Gustav Jung

In the leadership development work that I facilitate with both individuals and organizations I am most often focused on the positive side of development. The aspects of development that might characterize the ‘positive’ include defining aspirations and goals, building new capability, understanding and managing complexity, and taking small actionable steps to achieve individual or group objectives.

While positive development can yield tangible results and help organizations to foster more effective leaders it has become apparent to me that this approach is only partial. A more complete developmental picture also requires a focus on the negative side. More appropriate language might describe the work as helping people to overcome their personal barriers to change. As the earlier quotation by Jung suggests, full development only occurs when we are able to release that which has a hold on us and limits our potential to grow.

Leadership Development, leadership in business world

 

Leadership in Business World & Immunity to Change

One of the most powerful tools that I have been introduced to in order to overcome personal barriers to change is Robert Kegan’sImmunity to Change’ process. Keegan is the Professor of Adult Development at Harvard University and based upon his research exploring people’s capacity to change he developed a process he calls ‘the immunity map’. As well as encountering inspiring stories of personal resilience and rejuvenation that illustrated a willingness and capacity to change he was exposed to numerous examples of the inability many of us have to change.

An example of our sometimes-chronic inability to change is his research into individuals who have a compelling (even life and death) reason to change but still fail to do so. Kegan looked at people with major health concerns who were told by their doctors confronting truths such as ‘if you don’t make dramatic changes to your lifestyle in the next twelve months you will most likely die.’ To his astonishment only one in seven patients who were delivered such an ultimatum were able to make the significant lifestyle changes required. So what limits our capacity to change?

It is Kegan’s contention that what often creates our immunity to change is a core belief that we have about ourselves that most often resides in our unconscious (or subconscious if that is your preference). He calls these limiting beliefs our ‘Big Assumptions’. While we may not all have big assumptions that stop us overcoming something like a major health crisis; to a greater or lesser extent we are all challenged by big assumptions that stop us from developing as completely as we might.

Although we are typically unaware of our big assumptions they can and do influence our beliefs and behaviours in profound ways. An example of a big assumption that lies in the unconscious of individual is: ‘I’m not worthy of success, I’m a fraud and one day people are going to discover this’. It’s amazing how many CEO’s and highly successful business people have an assumption like this eroding their confidence and self-belief. Keegan’s work suggests that the big assumption is often incorrect, inaccurate, or no longer relevant however they become so engrained and powerful that they can author our behaviours and sense of well-being. Other examples of big assumptions that I have heard are listed below:

• I need to be unique and different in order to be loved
• It’s not safe to be honest and authentic in the world
• If I’m not successful people will abandon me
• I need to take control in order to be safe and happy
• It’s not OK for me to speak up and voice my opinion

The immunity map that Keegan developed seeks to provide people a pathway to uncover their personal big assumption/s. By bringing our big assumptions into awareness we can work to overcome them and increase our ability to change and to grow as human beings. The process to identify our big assumptions can take anywhere between two hours and two days but typically follows the highly abbreviated four-step process outlined below:

  1. Identify a personal (or leadership) commitment that is highly important and has been challenging to realize.
  2. Document the barriers to this commitment. What are you doing or not doing that is stopping you from achieving your goal?
  3. Recognise why these barriers have been getting in the way and confront the truth about what is really worrying you.
  4. Identify what you are subconsciously committed to based upon your worries and fear and define what you believe your ‘big assumption’ to be.

The process should ideally be facilitated by psychologists or practitioners familiar with Keegan’s work however the book referenced at the bottom of this article can provide powerful insights for people looking to undertake this type of work.

The big assumptions that people uncover are often primal in nature (the unconscious tends to work this way) and many have developed during the formative stages of our lives. The important thing to recognize is that they are just stories that we have been (unconsciously) telling ourselves and they can be overcome using the tests and processes Keegan illustrates.

The ‘immunity to change’ model may not be suitable to everyone and most healthy adults can live full and meaningful lives without having to confront the shadows that lie within the recesses of their minds. For those of us willing to take the journey however the immunity map can help us to overcome some of the self-limiting beliefs that stop us from becoming who we truly want to be. It is hard enough fighting the battles of the outside world, it is harder still when the toughest enemy is our very self.

Contributed by Nicholas Oddy – Nicholas Oddy Consulting

Nick recently joined Mindshop and specializes in leadership development and innovation work. He delivers two corporate postgraduate leadership subjects for Swinburne University and works as a member of the Banjar team with Mike Boyle.

Source: Business Leader Strategic Thinking

3 Key Ideas for Success for Business Leaders in 2014

Is your sales team full of relationship or challenger sales people?

Greater business complexity and uncertainty is driving a rapid shift in the way customers are buying. Logically this is also rapidly changing the requirements from you and your sales team to achieve success. The perception is that the requirements for a successful sales person in the current business environment is one that has a close, friendly relationship with the customer. However research as part of the book “The Challenger Sale” by CEB (a must read!) have demonstrated that those sales people who are “The Relationship Builders make up just 7% of the top performers in sales while those they define as “The Challengers” make up 39%. The Challengers have a deep understanding of the customers industry, challenge their views and love to debate. So while it is great to have close relationships with customers ensure you and your sales team adopt a “challenger” style approach to gain greater success in 2014.

business leader success key

 Are you trying to be all things to all people?

Too often leaders in business are expected to be brilliant mentors, visionary, financially aware, sales savy, great presenters, strategic and much more in a long list of attributes. It’s near on impossible to be all of those things wrapped up in one neat package as a leader however socially that is typically the perception when you pick up a magazine or read a blog article relating to a business success story. The most effective leaders are those that have a great self-awareness of their strengths and weaknesses. They focus on their strengths and surround themselves with quality people to cover their weaknesses. Be careful of the trap of trying to be all things to all people and get clear on your strengths for the year ahead.

What’s on your technology stop doing list for 2014?

At this time of the year it’s always a fantastic time to look at what are the 20% of things you do that create 80% of the benefit and what therefore of the remaining 80% of things you do could you delegate or stop doing all together. Many do this for the various day-to-day activities / processes they are involved with but have you done a similar exercise with regard to the technology you have embraced? Between time on smart phones, blog posts, twitter accounts, email checking, phone calls, logging activity into CRM’s, posting to project management systems there is a HUGE amount of waste. Why not apply the stop doing logic to your current technology usage when planning for 2014 and reap the benefits of a dramatic increase in time / capacity.

Source: Business Leaders Strategic Thinking