CIML Global

I’ll never forget the questionnaire handed to me midway through a flight from Los Angeles to Sydney. It was massive. Page after page of detailed tick-the-box or circle-the-response questions – it seemed to me it would take the full 13-hour flight to complete. I started, but it was too much work and I abandoned it halfway through. I thought to myself: does management really believe they get valid and reliable data from these surveys? For many organizations, surveys like this qualify as “talking to the customer.” They’re ubiquitous – appearing in hotel rooms, after online purchases, and in hospital emergency departments. But do they really qualify as customer consultation? Or are they a symptom of an isolated management just putting on a show of interest? What can be done instead? The obvious answer is to talk with customers directly. But executives are often put off by the idea of interviewing customers individually, believing that it involves many hours and massive expense. Instead they get together in a group and guess what the customer — or any stakeholder — wants, with only the flimsy, half-hearted responses of customer surveys to guide them. It usually results in the wrong answers and the wrong strategies. If only they knew just how simple and straightforward a customer interview process can be, and how rich the rewards, if you know how to ask the right questions. At the beginning of my public workshops on strategic planning I conduct an exercise which has a profound impact on my audience. I choose a convenience store as my business example, since everyone has been a customer of one, and I ask what seems like a benign question: “How do you decide to shop at one convenience store versus another?” This is my audience’s first step on the path to strategic thinking and strategic planning. The responses come quickly and they always yield the same six criteria: location, hours of operation, range of goods sold, store presentation, customer service, and price. I label these the particular “strategic factors” of running a competitive convenience store. I explain how every business can define a list like this as the basis for developing customer strategies, for differentiating a business and for achieving competitive advantage. What my audience does not appreciate at the start of the workshop is that it took a group of people to come up with all six factors. No one individual would have articulated the complete set. That’s because each person’s recent experiences at a convenience store has pushed his or her recall towards one factor or another. If someone chose the store due to its easy-to-navigate design, presentation springs to mind. If someone else sought help getting the groceries into the car, customer service was front and centre. If price was the main factor, that’s what leapt out. None of this neutralizes the relevance of the total final list of six factors. My audience always signs off on its validity. But how does this translate into gaining insights from customer interviews instead of surveys? Consider a company I worked with recently that provides a range of civil engineering and planning services to clients nation-wide. I’ll call it Command. Its clients are large organizations involved in massive mining projects, multi-story buildings and big residential developments. In preparation for a strategic-planning exercise, which I was to facilitate, the CEO at Command asked me to interview a dozen of their key clients. If you’re like a lot of people, your initial response might be: “Twelve clients? The sample is too small. It’s not enough to tell you anything useful.” But in conversations with clients, you’re after quality not quantity. You want to know how they think about issues and how they make decisions. You want to get inside their minds. You want to get a feel for their needs, wants and pain. You can’t get that from a questionnaire. In the interviews, some of which were conducted in person and others by phone, I asked this key question among others: “What criteria do you weigh up in deciding to engage Command or the competition?” Notice that the question is open-ended. Note also the similarity between this question and the one I asked my audience about the convenience store. However, there was a key difference in the process. In my public workshops on strategic planning, I had a group of convenience-store customers all in the room at the one time. For Command, I was talking to one client at a time. The full picture was bound to emerge more slowly – drip-fed, if you wish. Like the convenience store exercise, though, I didn’t expect a single client to provide me with the full list of criteria/strategic factors. Their responses depended on their individual experiences. For example, one client made “safety” paramount, because this factor was front and centre in his company’s policies. Overall, the clients nominated seven factors: capability (ability to execute the work required), client service (personal and tailored), quality (meeting professional standards), image (reputation in the industry), cost, location (of offices across the nation), and safety (in terms of prior record and systems in place). Apart from this valuable list, several other important outcomes emerged from the interviews. One concerned the list of strategic factors itself. The clients came up with a far crisper set than the management team had been able to. The clients’ focus was “outside-in” and driven by needs, whereas management’s focus was “inside-out”, muddied by internal politics and functional biases. A particularly useful insight related to Command’s assumptions about future development. The company had grown recently by acquiring several other businesses, both in its core area and in related industries. This broadened Command’s range of services and took the company nation-wide. The company’s management and board believed that Command would obtain a competitive edge through this. But this was not borne out by the customer interviews. Clients explained that they saw no special connection across the expanded service range. Further, they pointed out that their offices made decisions locally, rather than nationally from head office. While the expansion “felt” like a natural fit

In 2007, the European Investment Bank issued its first green bond, a EUR 600 million equity index-linked security, whose proceeds were used to fund renewable energy and energy efficiency projects. A year later, the World Bank followed suit, and by 2017, over $155 billion worth of public and corporate green bonds had been issued, paving the way for the Seychelles government to issue the first ever “blue bond” last year— a $15 million bond to fund marine protection and sustainable fisheries. The success of these instruments reflects the fact that investors are increasingly conscious of the social and environmental consequences of the decisions that governments and companies make. They can be quick to punish companies for child labor practices, human rights abuses, negative environmental impact, poor governance, and a lack of gender equality. Pair this with an increase in regulatory drivers post-2008 crisis, and a deepening understanding of the impacts of climate change and associated risk to performance, and we begin to see more clearly the need for investment models that will better address investors’ concerns. The result has been an increasing demand for integrating Environmental, Social, and Governance (ESG) criteria into investment decisions. In the beginning of 2018, $11.6 trillion of all professionally managed assets—one $1 of every $4 invested in the United States—were under ESG investment strategies, a sharp increase from 2010, when the amount was close to just $3 trillion overall. Inevitably, the financial services sector has responded with a host of innovative financial instruments, some like those mentioned above, others quite different. The through-line that ties together these new investing models and strategies is quite simple: While they have generated competitive returns, it so happens that they all positively benefit society as well.  Essentially what investors want is the performance promise of financial engineering combined with the assurance of a better tomorrow. Many of the innovations have been driven by a collaboration between public, private, and philanthropic institutions. At The Rockefeller Foundation, we recognize the value of engaging private capital markets for societal good and have stepped in to fund the research and development of new instruments that can bring capital to cause.  We have increasingly seen, firsthand, how readily these instruments meet not just investor needs but also values, and how interrelated the two can be. Let’s look at some particularly interesting examples. Risk-sharing Impact Bonds Fixed income is one of the largest asset classes as determined by asset owner allocation and market size. Compared to the other asset classes it has the lowest expected returns, hence also has the lowest cost of capital.  At $4 trillion the US municipal bond market is one of the largest fixed income markets globally. Climate change is becoming increasingly important for the US municipal finance sector. On one hand US cities need to raise more capital to implement environmental projects – many of them based on innovative climate solutions – to protect their economies and communities from the effects of climate changes – e.g. green infrastructure to manage flooding, waste to energy micro-grid to prevent power outages during hurricanes. On the other hand, if they do not show meaningful results, they won’t only risk economic losses from disasters but also risk seeing an increase in their overall cost of borrowing. Rating companies such as Moody’s are increasingly assessing climate riskas a negative factor when assessing credit ratings. Environmental impact bonds – in many ways an extension of green bonds market – offer a solution to this problem, because they can draw in investors interested in taking on the environmental risk in exchange for potential monetary reward.  These securities are municipal bonds that transfer a portion of the risk involved with implementing climate adaptation or mitigation projects from the public agency on to the bondholder.   A good example is a $25 million bond issued by the municipal water board in Washington, D.C. in 2016. The water board used the bond to fund the construction of green infrastructure to manage storm water runoff and improve water quality. The return to investors is linked to the performance of the funded infrastructure, which allows DC Water to hedge a portion of the risk associated with both constructing green infrastructure and, once it’s in place, how well it works. Another such bond is currently under development by the city of Atlanta, for approximately $13 million worth of green infrastructure projects in flood-prone neighborhoods on the city’s west side. In the case of the DC Water bond, investors receive a standard 3.43 percent semi-annual coupon payment throughout the term of the tax-exempt bond.  Towards the end of a five-year term – at the mandatory tender date – the reduction in stormwater runoff resulting from the green infrastructure is used to calculate and assign an additional payment. If the results are strong (defined in three tiers; tier 1 being best performance) the investors receive an additional payment ($3.3 million) – bringing their interest rate effectively to 5.8 percent. If the results are as expected, there is no additional payment. And if the infrastructure underperforms, the investors owe a payment to DC Water ($3.3 million) – bringing the interest rate to 0.8 percent. Financially Passive, Socially Active Funds One of the most interesting of the new generation of ESG-driven financial innovations can be seen in the Exchange Traded Fund (ETF) sector, where we are starting to see the passive investment movement linked to activism on key social and environmental issues through in ESG-themed ETFs.  The first ESG ETF, iShares MSCI USA ESG Select ETF, was launched in 2005, and the model has caught on so quickly that today there are at least $11 billion in assets under management across 120 ESG funds globally; stateside, the growth of assets in ESG funds is up over 200 percent from the past decade. BlackRock recently predicted that the investment in ESG funds will rise to more than $400 billion over the next ten years. A good example is the NAACP Minority Empowerment ETF, or NACP.  Issued by Impact Shares, a non-profit fund manager, the specific criteria for

Many countries have term limits for their leaders. The premise is that term-limited politicians will spend less time campaigning, amassing political power, and catering to special interests. Instead, they will focus on making policy, working for their constituents, and bringing fresh energy and ideas to government. Although less common, term limits are also used in business. Consulting firms ZS (the firm we founded) and McKinsey have term limits for their CEOs. At ZS, CEOs can serve a maximum of three three-year terms. A periodic change in leadership at the top brings a diverse and updated perspective that keeps up with environmental change and benefits employees and clients. We are not aware of any companies that have term limits for sales leaders, such as the vice president of sales. But should they? Term limits could help ensure that once-effective sales leaders are replaced before situations such as the following arise. The sales leader gets out of touch. As the leader spends more time at headquarters, they can get disconnected from customers and from younger generation sales team members. Meanwhile, evolving customer and employee needs, new distribution channels, technological innovation, and other sales environment changes put the leader at risk of becoming obsolete. For example, today many sales leaders are slow to adapt to the changes that digital and social channels are bringing to sales. The sales leader develops blind spots. Even the most effective leaders have flaws. Unfortunately, self-awareness of these flaws is often limited. Over time, a leader’s blind spots can weaken the sales team. For example, one sales leader’s strong managerial skills helped him address critical operational weaknesses to get the “sales machine” back on track. But once the immediate problems were solved, the leader’s continued focus on short-term tactics ahead of long-term strategies caused the sales force to drift. Subordinates cower as the sales leader’s personal power grows. A leader’s power comes not only from their knowledge and expertise, but also from the position itself. The leader controls the career progression and compensation of sales team members. Subordinates may start to curry favor, shower the leader with praise, or fear speaking up with ideas counter to the leader’s views. The situation gets worse if the leader abuses power by intimidating subordinates. The sales leader locks in on favorite team members. As the leader’s bonds with sales team members get stronger, personal relationships that were once a source of strength may cloud the leader’s perceptions and impede good choices. This creates complications when it’s time to make difficult personnel decisions about performance evaluations, promotions, or job assignments. One reason the notion of term limits for sales executives isn’t commonly discussed is that generally speaking, sales leaders don’t stay in the job long enough for these situations to arise. Instead, many companies face the opposite problem: managing the high cost of frequent sales leader turnover. When sales executives depart too quickly, their initiatives don’t have enough time to make a significant impact. In addition, the learning curve gets disrupted and the company fails to benefit from the leadership wisdom gained through experience. Instead of thinking about whether sales leaders stay in the job too short or too long, however, companies should actively think about making the time they spend in the role better. Rather than term limits, companies need strategies for helping sales leaders excel over time. Solutions require improving sales leader selection, development, and performance management, while creating a company culture that encourages sales leadership success. Effective strategies include the following: Selecting a sales leader who is a lifelong learner. The best sales leader candidates are self-motivated to continually search for new knowledge and to adapt to environmental change. Companies can support leader development by providing new experiences for leaders, such as the opportunity to participate on a product marketing strategy task force. Companies can also provide leaders with opportunities to participate in executive education programs or attend industry conferences where they can share best practices with peers. Company culture also plays a role in encouraging leaders to seek constant improvement and adapt to change. Using performance management to make sales leaders aware of their blind spots. Although financial results (such as sales and profits) are a key metric for evaluating sales leader performance, leaders also need feedback about how they contribute to results. Do they have the necessary capabilities? Are they engaging in the right activities? Coaching by superiors and mentors is critical for helping leaders avoid blind spots and strengthen their leadership skills. It’s also important to choose leaders who possess characteristics such as self-awareness and open-mindedness. Creating a company culture that discourages intimidation and favoritism.Company culture has a big influence on sales leader behavior. A culture that promotes long-term customer success over short-term sales goal achievement discourages sales leaders from pressuring subordinates inappropriately to make this quarter’s numbers. A culture that encourages decision making based on data and frameworks, rather than on opinion and instinct, brings objectivity to sales leaders’ personnel decisions. Selecting a leader with the right personality characteristics helps reinforce the desired sales culture. In the end, all sales leaders know that the limit of their term is tied to their own success at driving results. Perhaps that is enough.

Thanks to TV shows like Shark Tank and Dragons’ Den the world of pitching for business investment has lost some of its mystique. But if you’re an entrepreneur looking for funding, perhaps for the first time, how do you make a winning pitch? Four seasoned investors share some insights on how to improve your chances of landing a deal. What does a great funding pitch look like? A clear confident pitch goes a long way to demonstrating you can perform under pressure, says Tim Mills, investment director of the Angel CoFund. “Remember, you may be pitching to investors who lack familiarity with your sector and may be a little detached having seen countless other presentations. This is where numbers, a universal language, can help substantiate the business opportunity, but be mindful that numbers won’t tell a story on their own. They need context and should support what you are saying.” Taylor Wescoatt, co-founder and partner at Concrete Venture Capital, adds: “We need to see a clear problem, with a smart, well-articulated solution, in a sizeable market with huge potential. Startups are all maybes, especially right at the beginning. Investors are backing the team at the start, so it’s good to see a founder carefully explain the path they will take to higher confidence.” David Murray-Hundley, aka ‘The Grumpy Entrepreneur’, who has experienced both sides of the pitching process says media training can boost your prowess. “I spent years bumbling along before deciding that junior race drivers are much like entrepreneurs,” he says. “I went to the Oracle of this in motorsport, Louise Goodman, and let her tear me apart for four hours – four hours I have never forgotten.” What should founders do to make an investor feel they are the one they really want on board? Alberto Yepez, co-founder and managing director of ForgePoint Capital, says founders should do their homework to really understand why the particular venture firm they are meeting with will be able to help. “Researching their prior relevant investments can be useful, as is identifying common acquaintances in fellow entrepreneurs, co-investors, board members and advisors,” he says.

It’s scary how many entrepreneurs play contract roulette. They sign a terrible agreement. Nothing bad happens. So they just keep signing until something blows up—like their business. Some agreements go boom more often than others. Ever since Eve and the serpent signed that infamous catering agreement, the following five contracts have caused the most disasters: 5. Leases Most execs spend more time picking their carpet and paint than they do reading their lease. Who can blame them? Most leases are 60-page tomes with no pictures. So they think/hope, “It’s all standard. Everybody signs these things.” Careful, now. There are a lot of gotcha-clauses in all of that fine print. The landlord may be able to veto the sale of your business. Or, you may have to pony up a small fortune in additional rent when the landlord finally decides to fix all of the code violations in the building. Worse, plenty of landlords want the ability to “renovate” your building. You and I would call it “demolish and rebuild.” They turn the property into a construction site—while you’re still in it. In one case, the landlord ripped off the exterior walls of a posh office building and tacked up plywood boards for a year or so. All day, trucks beeped, compressors clanked and workers jackhammered (interrupted only by everyone’s favorite heavy metal band during worker breaks). All the amenities of a door-less porta-potty, but the same high rent! The tenant’s signature on the lease pretty much wiped out any ability to complain. Here’s the lesson of 1,000-plus lease negotiations squeezed into a simple winning formula: Read the entire, miserable, infuriating screed. Revise it so that it is acceptable to someone with a functioning brain. Get at least one backup location. Start early enough so you can credibly threaten to walk away from a bad deal and move on to a good one. 4. Loan Agreements You think you’re just borrowing money. But, if you hold the loan agreement up to the light, the watermark says “Hostile Takeover.” Surprise! You sign and now the bank controls your business.

#WADTW is the regular post that looks at everyone’s favorite behemoth, Amazon, from a variety of angles from specific moves, acquisitions, fringe/subsidiary activities, new patents, partnerships and beyond over the last seven days. The aim? Be your one-stop-shop on Amazon every Sunday. Did I miss something? Email or drop me a line via Twitter NUTSHELL: A week dominated with political strife in the US meant Amazon could have had a pretty clear week, ‘could have’ being the operative words. Amazon ended up doing a good thing (ish), it then a bad thing(PRwise at least) followed by responding to some hefty Chinese spy chip allegations. All in all, not the best, certainly not the worst. Amazon promised to raise wages to $15 dollars and decided it wanted “to lead” but as with all capitalist ventures the money couldn’t come from profits and instead Amazon announced (after the blazing PR had subsided that it would also lose bonus programs, including stock and monthly bonuses, that usually boost paychecks will be eliminated starting November 1. Bezos giveth and he taketh away. CNN summed it up; it’s Amazon’s world, we’re just living in it. RETAIL (.com, ads, Prime, books, GO, Whole Foods)| Amazon is buying up more high-street space and at an accelerated rate. /// Amazon is accused of poaching eBay sellers (by eBay). /// Amazon is creating more private label items. ///  Amazon.com Inc is testing using bulletproof trucks for the delivery of high-value goods in Brazil with Goldman Sachs-backed startup. /// Amazon ended ‘Instant Pickup‘ after one year. /// Amazon has been putting its own products below competitors (which is apparently a surprise to many). /// Amazon opened a pop-up bar in Ginzo, Japan. CONTENT (Prime Video, Music, Audible, TWITCH, Goodreads, Ads…) Amazon signed major deals with Neil Gaiman and Bear Grylls. /// Amazon’s MMO ‘New World’ has new footage in the wild. TECH (Alexa, Dash, AWS, Kindle…) Amazon (and Apple) denied China chip hack claims. /// Amazon announced a new 4K Fire TV stick. /// Amazon’s new Fire stick will work with or ‘support’  Kodi. /// Alexa now has a new tool enabling devs to use featuresfrom other Alexa apps, limited to printing and reservations for now. /// Amazon and Iridium Communications (a satellite communications products and services company) have signed a deal to create a new global IoT network. /// The Alexa app is getting a redesign (praise, Jesus). ///

There are many times when I pause to reflect on the power of one connection and how it’s forever-altered my trajectory. Walking into a boutique in college turned into a job, which catapulted me into a career in fashion (as well as a deep friendship with the store owner). An introduction for a lunch meeting turned me into a writer, which ultimately led me to this Forbes column. A woman I met in my college sorority was the catalyst for the genesis of my second company. An introduction to go on a retreat turned into a lot of wonderful outcomes, one of which was meeting my beloved partner. How about for you? Who is that one person whose introduction to you changed your life? In a time where we are more connected than ever, we’re oddly the loneliest and most disconnected. I’ve found that so many mistake connection for transactions; people hope that each person they meet will help get them to where they want to go. However, they have little regard for the other person’s aims, let alone looking at them as the potential for a long-term relationship or someone from whom they could learn something. Because of this, I set out to find stories of people who had one connection change the course of their lives, in ways big and small. So, I turned to Bumble Bizz to speak with their users. You may be familiar with Bumble as a dating app. After hearing from their users that they wanted a new way to network because traditional networking can feel antiquated (hard to access, uncomfortable, and time-consuming), they created a swipe-based networking platform where users can connect with other nearby professionals to network, find a mentor, or meet up for coffee. And, if you’re worried about being mistaken for dating, you can turn that portion of the app off! My hope is that these stories inspire you to be curious about your interactions. When in doubt, remember these examples of how common career challenges can be turned around by one connection.

Business coaching is an educational process that significantly enhances the economic achievement of individuals. It concentrates on helping people – especially entrepreneurs – substantially grow their businesses. According to Heather Hansen O’Neill, President of Find Your Fire and author of bestselling books Teams on Fire! and Find Your Fire, “Today, driven entrepreneurs possess more potential to excel. Meanwhile, many of them are not coming close to realizing their full potential. Business coaching can help entrepreneurs break through barriers that are holding them back and focus on the actions necessary to achieve their goals. In addition, many business owners now have tremendous interest in investing in coaching for their leadership teams to improve the performance of everyone at their companies resulting in greater synergistic success.” It is clear that a great percentage of entrepreneurs are looking for ways to ratchet up the performance of their businesses. “Based on our survey of 759 entrepreneurs, almost one out of six of them are turning to business coaches to become more professionally capable,” says John Bowen, co-founder of BSW Inner Circle and co-author of Reaching for the Stars: How to Fast-Track Your Business Success by Leveraging Mastermind and CEO Groups. “For some entrepreneurs and accomplished individuals, business coaching is just what they need to generate greater achievements.” Without question, the demand for business coaching is extensive and growing very quickly. The opportunities for high-caliber business coaches of all stripes are probably better than ever. This leads to business coaches being able to charge respectfully more for their expertise. Because of the increasing demand for business coaches, more professionals are becoming them. For those capable of coaching, the key issue, therefore, becomes cultivating a substantial high-quality clientele. “We’ve found that accomplished entrepreneurs turn to business coaches for a number of specific reasons and decisions. Topping the list is when the selected coach can show how his or her assistance translates into greater company and personal financial success,” says Bowen. “By explicitly and precisely explaining the processes and methodologies a business coach uses and how these approaches produce results, the coach’s practice grows quickly. It’s all a matter of connecting the dots for the entrepreneurs.”

Although there is not any precise information on the quantity or increase in single-family offices, strong anecdotal evidence shows that the number of single-family offices is increasing at a significant rate. The growth is a likely function of the rise in the ranks of the super-rich (net worth = $500 million or more). As more and more single-family offices are being set up, a complication for a substantial percentage of them is that they were set up poorly resulting in them severely underperforming compared to expectations. Many super-rich families make three critical mistakes in establishing their single-family office: Not being very clear about the goals of their single-family office Not ensuring their single-family office is operationally and structurally flexible Not allying senior management with the agenda and structure of their single-family office According to Angelo Robles, founder and CEO of the Family Office Association and author of Effective Family Office, “Usually, the overarching principal motivation for setting up a single-family office is control. At the same time, a particular extremely wealthy family will set up a single-family office often due to idiosyncratic reasons. Being attentive to these objectives and structuring the single-family office accordingly will get superior results, but this is unfortunately not all that common.” To ensure the viability and ability of single-family offices to deliver outstanding results long-term usually requires a high degree of structural and operational flexibility. “The very best single-family offices are able to adapt to changing circumstances,” says Rick Flynn, managing partner of FFO Business Management & Family Office and author of The High-Functioning Single-Family Office. “The way they work is tightly aligned with their goals and objectives with the capacity to pivot when appropriate. Being too regimented usually results in subpar performance.” To get great results, senior executives have to be appropriately motivated. According to Usha Bhate, a leading international authority on single-family offices, “Being able to meaningfully compensate senior executives for their contributions to the success of the single-family office can be foundational to the effectiveness of the operation. There are a variety of ways to ensure senior executives are really in synch with the ultra-wealthy family and failing to do so tends to cause problems from poor performance to even expensive and painful lawsuits.”