Friday, May 17, 2019

Why True Business Transformations Are Never Finished - Forbes

Why True Business Transformations Are Never Finished - Forbes


Why True Business Transformations Are Never Finished - Forbes

Posted: 16 May 2019 07:02 AM PDT

Business leaders need to realise that going through a transformation is less of a one-off process and more about continually surfing waves of disruption. (Photocredit: Getty)

Getty

If there is a business watchword of the moment it is surely "transformation." This fits with the widely-held — and possibly true — conviction that the corporate environment is changing more and at a faster pace than ever before. But, in reality, while a lot of organizations talk about transforming themselves, they are often actually adapting. For the most part, they are generally essentially in the same business at the end of the process as they were when they started. What is likely to have changed — if they are lucky — is the way they do things. 

Cyance, however, can definitely be said to have gone through a genuine transformation. Started in 2007 as a marketing agency, it had become a successful player focused on demand generation in the B2B sector. Five years ago, though, Jon Clarke, who founded the business with Mike Housley, realised that something wasn't quite right and that the way people were making buying decisions was changing. In particular, he observed that organizations were no longer receptive to the interruption and disruption associated with received unsolicited calls and requests for meetings. Foreseeing also an increase in regulation of such activities, Clarke became convinced that B2B marketing as he knew it was dead and had to change.

He was equally convinced that the answer lay in using analytics technology to create a platform that could analyze prospects' activity and behavior in order to know when they were considering marketing decisions in order to be able to approach them with marketing opportunities when they would be more likely to be interested. It was a beguiling vision — transforming the business of marketing from chasing lots of so-called leads in the hope that a few would yield business to a much more scientific targeting of effort to those known to be interested. The only problem was that — as he admits — Clarke had no idea how to run the sort of business that would deliver on this promise.

Nevertheless, undaunted, he and a team of developers built a platform based around machine learning and Clarke took the calculated risk that Cyance would cease to be the marketing agency it had been and would instead become a software-as-a-service technology business. The decision split the board. Half agreed with the move. But the other half — worried that neither the company nor anyone in the team had any experience of running a technology business — disagreed and subsequently left. 

Nor were they the only ones to depart. In the end, as Clarke relates, only four members of staff at the company based in the U.K.'s Oxfordshire countryside made the transition from marketing agency to technology company. "I essentially had to rebuild the team," he said in a recent interview. "I realised that in most cases their skills were not transferrable." Dealing with this meant detaching himself from the emotional side and the relationships he had built up and working out what sorts of skills they company would need in the future.

Although an extremely difficult process, this was just one aspect of a highly challenging period. Describing the transition as embarking on a "program of blissful ignorance", he said if had known at the outset what was coming he probably would not have started. Learning to manage a technology company was "like going back to school", he added. On top of this, the business was being run in a different way. Cyance moved from being a profitable, privately-owned business to one that was in need of extensive investment in technology and was led by investors. "It was like going from a saloon car to driving a Formula 1 car. There was no margin for error," he said of the need to make decisions quickly and to operate with a laser-type focus on what had to be done to scale the business quickly. 

Another challenge was dealing with shifting from a services-based business to one based around a product that required renewal of subscriptions. But Clarke said Cyance was responding to this by not just selling software to the big companies that are its clients but also by helping them through the process. While, in his words, "the whole world is moving from the mass-marketing approach", Cyance remains an early adopter in Europe, with its competitors mostly based in the U.S. and so perhaps not so aware of the nuances of selling to customers on that side of the Atlantic. The company has invested significant amounts in setting up a "customer success team" to ensure that the customer experience is managed from the beginning and throughout the period of the relationship. As is clear, it has been a tough five years. But Clarke believes the effort is paying off. Its roster of clients includes Nokia, Canon and HP. Last year alone, the number of employees grew by 160% to nearly 30, while monthly recurring revenues rose 415%. Although many employees work remotely — which Clarke says enables the company to hire sought-after workers it might not otherwise be able to obtain — Cyance has also added a London office to its Woodstock base and has more than 20 agency partners.

The problem for leaders like Clarke is that even as dramatic a pivot as this is unlikely to be enough to ensure a prosperous future in the current climate. In a just-published book — Pivot To The Future — Omar Abbosh, Paul Nunes and Larry Downes of the professional services consultancy Accenture argue that "in the face of predictable unpredictability, a single large-scale 'transformation' just doesn't cut it." Based on their analysis of the challenges facing their own firm and its successful reinvention of itself, they assert that seeing off such threats "is not for the timid." Rather, it requires wisdom to strike a balance between course and speed, creating investment capacity and continuing to invest in the core business while at the same time venturing into new business frontiers and scaling innovations in a profitable manner to drive growth. 

What they call a "wise pivot" — a blend of the old, the now and the new — is encouragingly accessible. "Any business can execute its own wise pivot and turn existential threats into golden opportunities by freeing trapped value," they write. But they warn: "In markets driven by continuous technology-based change — increasingly, all of them — one pivot is followed by the next and the next, demanding a strategic approach that doesn't fight the tide as much as it surfs waves of disruption."

Trump’s Latest Move Takes Straight Shot at Huawei’s Business - The New York Times

Posted: 16 May 2019 01:19 PM PDT

BEIJING — The Trump administration has filed criminal charges against Huawei for stealing technology. It has all but snuffed out the Chinese tech giant's sales in the United States, calling the firm an espionage threat. And it has tried to persuade other governments to do similarly.

But Washington had not taken a straight shot at Huawei's ability to do business anywhere in the world until late Wednesday, when the Commerce Department announced restrictions on the company's access to American technology.

American companies including Qualcomm, Intel and Broadcom sell Huawei microchips and other specialized parts that go into its smartphones and telecom equipment. Google's Android software powers its phones. Of the $70 billion that Huawei spent on components and other supplies last year, $11 billion went to American companies, a Huawei spokesman, Joe Kelly, said.

If Huawei is cut off from these suppliers, the effect could be catastrophic for the millions of people who use Huawei smartphones — and for the mobile networks, across a wide swath of the planet, that run on Huawei gear.

It would be "the trade equivalent of a nuclear bomb," said Kevin J. Wolf, a partner at the law firm Akin Gump Strauss Hauer & Feld and an assistant secretary of commerce under President Barack Obama.

Much remains unclear, however, about the scope and potential impact of the Commerce Department's move. The department says it is putting Huawei on its "entity list" of firms that need special permission to buy American components and technology. How it decides to grant such permissions, and how broad a range of products the policy covers, will determine how badly Huawei's business is disrupted.

According to a notice posted to the Federal Register on Thursday, licenses for selling to Huawei and 68 affiliated companies around the world will be reviewed with a "presumption of denial," indicating they will likely be hard to obtain. The notice is scheduled to be officially published in the Federal Register on Tuesday.

Given the spiraling tensions between China and the United States on tariffs, the move against Huawei may also be short-lived. Talks to resolve the trade fight have stalled, and both sides are digging in their heels. The pressure is on to find common ground ahead of a potential meeting next month between President Trump and China's top leader, Xi Jinping, in Japan. Washington's campaign against Huawei could become a bargaining chip.

"In every other administration, the entity listing was purely a tool of law enforcement and national security," Mr. Wolf said. "The thing to watch is whether this will become a tool of trade policy and used as leverage in the negotiations."

In a statement on Thursday, Huawei said the Commerce Department's move was "in no one's interest."

"It will do significant economic harm to the American companies with which Huawei does business," the company said, and "affect tens of thousands of American jobs."

China's Ministry of Foreign Affairs and Ministry of Commerce condemned Washington's decision in regularly scheduled news briefings on Thursday.

"We urge the United States to stop these wrongful practices and to create favorable conditions for normal cooperation between the two nations' companies," said Gao Feng, a spokesman for China's Commerce Ministry.

[Read more about the executive order on foreign-made equipment.]

Tensions between the Trump administration and Huawei escalated after American officials arranged the arrest of Meng Wanzhou, the company's chief financial officer and a daughter of its founder, in Canada late last year. The company and Ms. Meng face criminal charges in the United States in connection with alleged theft of industrial secrets and violations of sanctions against Iran. Ms. Meng remains in Canada while officials there decide whether she will be extradited.

Washington's action this week against Huawei puts the company in the same position that ZTE, a much smaller Chinese rival in telecom equipment, found itself in a few years ago.

The Commerce Department added ZTE to the entity list in 2016 after determining that it had violated United States sanctions by selling American-made goods to Iran. Eventually, the department relented, and ZTE agreed to a hefty fine. But a year later, the Commerce Department said ZTE had failed to comply with the terms of the agreement, and American technology companies were barred outright from selling to the company.

Cut off from American microchips and other parts, ZTE halted production and was near collapse until President Trump intervened and softened the punishment to appease the Chinese leadership.

The episode galvanized China's government and business community. It revealed the extent to which the country's growing technological prowess had been built on American know-how, and how important it was for China to innovate on its own if its economy was to thrive.

Huawei also got a stark demonstration of the power Washington wielded over it.

The company has since stockpiled components "for uncertain times," Guo Ping, a Huawei deputy chairman, told reporters in March. The firm has also worked to build up a geographically diverse network of suppliers, Mr. Guo said.

"Huawei has made sustained and deep investments over the past 30 years, and I believe that has been of great help to Huawei's global supply," he said.

In particular, the company has invested for many years in producing its own microchips, a key area in which most Chinese firms are laggards. Sravan Kundojjala, an analyst based in Hyderabad, India, with the technology research firm Strategy Analytics, estimates that three-quarters of the smartphones that Huawei ships today contain chips developed in-house.

Mr. Kundojjala acknowledges that he was skeptical when Huawei's semiconductor unit, HiSilicon, began building its own high-end smartphone chips.

"Initially, I thought this was not going to work out," he said. "It's maybe a pet project. Maybe they just want to play games with their suppliers."

Instead, HiSilicon has become a formidable asset for Huawei, with chip technology that analysts say rivals that of market leaders such as Qualcomm.

Yet Huawei still depends on American suppliers for enough critical components that an all-out export ban from Washington would create a sizable headache, even if it does not lead to near-ruin as it did for ZTE.

"When you've got something as complicated as a router or a cellphone, even if there's one part you're not able to get, you can't deliver, because you don't have that widget to make the cellphone or router function," Mr. Wolf, the lawyer, said.

3 Ways to Acquire The Most Important Asset for Small Business - Inc.

Posted: 16 May 2019 12:57 PM PDT

"The most valuable assets of a 20th-century company were its production equipment," said management expert Peter Drucker. "The most valuable asset of a 21st-century institution, whether business or non-business, will be its knowledge workers and their productivity." In our world today, the greatest advantage any business has is not its products and services, nor its technology and data--but its people.

Your employees are the face and voice behind your business who will retain happy customers. They're the boots on the ground whose productivity will propel your business. And they're the drivers of innovation who will constantly improve your business. A great leader with a great idea will not succeed without great people.

So if talent is your most valuable asset, how do you acquire it, invest in it, and hold onto it? Capital One's Spring 2019 Small Business Growth Index reveals the top ways that small businesses around the country are recruiting and retaining great employees.

1. Get competitive with compensation. In order to attract top talent, the majority of today's small business owners are reaching into their wallets. Seventy-six percent of business owners say that they're providing industry leading or competitive salaries. And they're paying fairly across the board, regardless of gender--81 percent of small business owners say that they do not have a gender pay gap at their company.

2. Offer generous benefits. With Millennials dominating the workforce, it's becoming increasingly important to provide the best possible benefits package. According to Pentegra's Millennial Benefits Trends Report, an incredible 97 percent of respondents said that they take into account whether a job offers benefits when considering applying, with 39 percent rating 401(k) retirement savings" as "Extremely Important," placing it in first place just ahead of health insurance and pension plans. Survey participants from the HR side of the equation provided insight on what they're hearing from Millennial interviewees, with 64 percent rating health insurance as "Extremely Important," followed by vacation (rated "Extremely Important" by 55 percent).

Capital One's Small Business Growth Index shows that small business owners are stepping up, with 47 percent of business owners saying that they're providing more benefits to employees, and 43 percent saying that they're marketing their business as a great place to work. Perhaps unsurprisingly, Millennial business owners (66 percent) are more likely to offer more benefits than their older counterparts; 38 percent of Gen X and 53 percent of Baby Boomers say that they compete for talent with benefits.

3. Be flexible with workplaces and schedules. Today's workforce doesn't just care about standard perks like 401(k)s and vacation days--they want to be able to work in the way that they perform best. According to the 2018 Work Environment Survey, employees are evaluating workplace flexibility and design when deciding whether to stay at their current job or considering a new job. In fact, 83 percent said they have their best ideas when working in flexible space options. But it's not just where they work that's important. Seventy-three percent of workers say that a flexible schedule is in their top two reasons to stay with a company, and flexible hours were the number one thing they cited when asked what they expect from their next employer (58 percent).

But just because employees are demanding flexibility doesn't mean that employers have caught up to the trend. Only 35 percent of business owners admit to investing in modern office perks, and just 29 percent are providing flexible work environments.

In order to recruit and retain top talent, make sure that you're doing everything you can to demonstrate how much you value them. For today's workers, that means competitive compensation, generous benefits, and flexibility. After all, your employees are your most valuable resource--you'll never regret investing in them.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

Business this week - The Economist

Posted: 16 May 2019 08:15 PM PDT

China said it would increase tariffs on a range of American goods. This was in retaliation for Donald Trump's decision to raise duties on $200bn-worth of Chinese exports following the breakdown of talks that had tried to end the two countries' stand-off over trade. In addition, American officials said they were seeking to extend levies to all remaining Chinese imports to the United States. Both sides are holding off on imposing their punishing tariffs for a few weeks, giving negotiators more time to try to end the impasse. Even if there is a deal, it is unlikely to reduce tensions between the two powers over trade, and other matters. See article.

The transfer of technology is another contentious issue for China and America. A few days after the collapse of the trade talks, Mr Trump and the Commerce Department signed orders blocking Huawei, a Chinese tech giant, from involvement with American mobile networks and suppliers. America has pressed its allies to shun the firm, citing security worries, but has had only limited success. See article.

The Chinese economy may be slowing more than had been thought, according to new data. China's retail sales grew at their slowest rate in 16 years in April. Industrial production expanded by 5.4%, the slowest rate in a decade.

Germany's economy grew by 0.4% in the first three months of the year compared with the previous quarter. That brought some relief for the government following a six-month period when the country almost slipped into recession. Officials warned that global trade rows could still knock the economy off course. In Britain, GDP rose by 0.5% in the first quarter, helped by businesses stockpiling goods ahead of the now-missed Brexit deadline of March 29th.

Bayer lost a third court case in America brought by plaintiffs claiming that a weedkiller made by Monsanto, which Bayer took over last year, caused their cancer. This time the jury ordered the German conglomerate to pay $2bn in damages to an elderly couple, a sum far greater than that awarded to the plaintiffs in two previous trials. Bayer's share price plunged.

Officials in San Francisco voted to make it the first American city to ban the use of facial- recognition software by the local government. Legislators worry that the technology, which is spreading rapidly, is unreliable and open to abuse.

What's up?

WhatsApp, a popular encrypted-messaging app owned by Facebook, reported a security flaw that allows hackers to install surveillance software on smartphones by placing calls in the app. It was reported that a team of Israeli hackers-for-hire had used the vulnerability to inject spyware onto phones belonging to human-rights activists and lawyers.

America's Supreme Court gave the go-ahead for iPhone users to sue Apple. The case centres on whether Apple's App Store, which takes a 30% cut of all sales, constitutes an unfair monopoly. Unlike Android-based rivals, Apple's phones are designed to prevent users from installing apps from other sources.

Thyssenkrupp and Tata Steel abandoned a plan to merge their European steel assets because of stiff resistance from the EU's antitrust regulator. Pushed by activist investors demanding reform at Thyssenkrupp, the proposal had been announced in September 2017. The German company will now spin off its lifts division, its most profitable business.

British Steel told the British government that it needs more state aid because of "uncertainties around Brexit". That is in addition to the £100m ($130m) loan from the government the company had recently secured to pay its EU carbon bill. A no-deal Brexit would hit British Steel hard, subjecting it to 20% tariffs under WTO rules.

Global investment in renewables has stalled, according to the International Energy Agency, taking the world further away from meeting the goals of the Paris agreement on climate change. This is aggravated by the continued expansion of spending on coal-fired power plants, especially in Asia. Investment in coalmining rose by 2.6% in 2018. By contrast, growth in new renewable installations was flat for the first time since 2001.

Taken for a ride

The most eagerly awaited stockmarket flotation in years turned out to be a damp squib. Uber priced its IPO at $45 a share, the low end of the offer's price range, which did little to entice investors. The stock closed 8% down on the first day of trading, valuing the company at $70bn, well below most expectations. Optimists pointed to the experience of Facebook, which, despite a poor IPO and share price that sagged for months, eventually became one of the world's most valuable companies. Pessimists said Uber's ride-hailing business will struggle to make sustainable profits.

Trump's Financial Disclosure Shows Mixed Results for His Businesses in 2018 - The New York Times

Posted: 16 May 2019 03:20 PM PDT

President Trump's family business saw its overall revenues decline modestly in 2018, according to his annual financial report released Thursday, suggesting a disconnect between the Trump brand and the still-growing national economy.

The revenue declines were most pronounced at some of Mr. Trump's best-known properties, including the Mar-a-Lago resort in Florida, which experienced a nearly 10 percent drop. Hotels in Chicago and Hawaii, as well as golf courses in Los Angeles, Philadelphia and the Bronx, also saw declines, suggesting that sales are being affected by consumers deciding to turn away from the Trump brand, industry analysts said.

The results were somewhat better for the Trump International Hotel in Washington, which has become a favored spot for Republicans, lobbyists and some foreign governments and accounts for nearly 10 percent of the Trump Organization's revenues.

The hotel took in $40.8 million, up about 1 percent from what it reported in 2017. The intersection of Mr. Trump's business and his official role at the Washington hotel is at the heart of lawsuits accusing him of violating the emoluments clauses of the Constitution, which seek to limit the financial benefits a president can receive from foreign and state governments.

The fresh look at how Mr. Trump's businesses have performed during his presidency comes as the Trump family is facing increased scrutiny from government investigators, in part focusing on business operations at the Trump Organization, which is now run by two of Mr. Trump's sons, Eric Trump and Donald Trump Jr. The filing, which totals 88 pages, covers the 2018 calendar year.

The company had small upturns at some properties, including an improvement at its single-biggest revenue-generating property, Trump National Doral in Florida, which the Trump family purchased in 2012 and then spent $250 million renovating. Trump Doral's revenue in 2018 increased to nearly $76 million, up about 2 percent from the previous year. The Trump golf course in Turnberry, Scotland, also had a considerable jump in revenues, reaching $23.4 million, up 15 percent.

In total, Mr. Trump reported 2018 revenues of at least $434.9 million, down about 4 percent from the $452.6 million he reported a year earlier. He reported assets worth at least $1.4 billion, about the same as 2017.

The disclosure made public on Thursday was the fifth that Mr. Trump has filed since declaring his candidacy for president in 2015. With his refusal to make his tax returns public, the annual disclosure offers an accounting of his assets, investments and debt related to his private business ventures. Mr. Trump reported investment and cash accounts with holdings of at least $47.5 million last year, down from $58.1 million in 2017.

The disclosure is limited; it does not show profits or losses, and assets are valued only in ranges, making it impossible to pinpoint Mr. Trump's precise net worth.

But the financial disclosure underscores how the president's business, the Trump Organization, has become a more modest company than it was just a few years ago, when Mr. Trump spoke of a large pipeline of new deals even as he pledged to back away from any involvement in its management. Since he took office, the Trump name has been stripped from some buildings, and his company has shelved plans to start two new midrange hotel chains.

Mar-a-Lago, where Mr. Trump regularly travels during the winter months, had one of the largest declines of the company's major assets. The company said the drop-off could be attributed to fewer new memberships being sold, at a cost of $200,000 apiece.

Eric Trump said in a statement that he was pleased with the company's continued performance.

"Our company had an exceptional 2018," he said.

That retrenchment appears driven mostly by political factors, given that the economy has been relatively strong for the past several years. Mr. Trump's polarizing policies and increasingly intense clashes with Democrats have turned off some potential customers and clients, particularly in heavily Democratic cities like Chicago.

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The Mar-a-Lago resort in Florida had one of the largest declines of the Trump Organization's major assets.CreditSarah Silbiger/The New York Times

Hotel analysts said that the Trump family's hotels in Chicago and Hawaii appeared to be lagging behind hotel market trends, in terms of average room revenue, while the hotel in Washington appeared to be performing better than the overall city hotel market.

"You have the president of our country being on a hotel brand and being very controversial," said David J. Sangree, an Ohio-based hotel industry consultant. "You have some people who are choosing not to stay there. But in another market — Washington — he is gaining share."

Golf courses, by and large, showed mixed results, with revenue increases at the clubs in Bedminster, N.J., and another near Washington that Mr. Trump frequents on weekends, but declines at clubs in the Bronx and Jupiter, Fla.

The president's disclosure included 14 loans for at least $315 million, including a new financing of $5 million to $25 million from Florida-based Professional Bank, which stems from the $18.5 million purchase of a mansion from Maryanne Trump Barry, Mr. Trump's sister.

Mr. Trump is battling efforts to get further information about his personal finances, including demands by House Democrats for his tax returns, while the Trump Organization has gone to court to halt requests from Democrats for other financial records. The company also faces scrutiny from state and federal authorities for its insurance practices and other aspects of its business, including its relationship with one of its major lenders, Deutsche Bank.

At the same time, Mr. Trump's complex financial history was the subject of a recent New York Times investigation, which showed how he generated huge business losses in the 1980s and 1990s — undercutting the image he has long promoted of himself as a real estate baron with a golden touch.

Last year's financial disclosure report showed that Mr. Trump had personally repaid $100,000 to Michael D. Cohen, his longtime fixer and a Trump Organization lawyer. Mr. Cohen this month began a prison sentence stemming from his guilty plea in a hush-money scheme to silence women who said they had affairs with Mr. Trump.

Given the intense scrutiny and the political headwinds, the Trump Organization has largely turned inward, focusing on its core portfolio of golf courses, hotels and real estate, while abandoning any short-term hopes of expanding.

Properties that the Trump name has been removed from in recent years include hotels in Toronto, Panama and the SoHo section of Manhattan.

To date, the performance of the family business appears to have fallen short of the gains that critics predicted when Mr. Trump declined to divest his assets upon beginning his presidency.

Eric Trump has acknowledged a change in posture, saying as early as December 2017 that it might be necessary to "take a break" while his father is in the White House.

This year, blaming the political climate, the Trump sons shelved their plans to roll out the two new hotel brands in cities across the United States, effectively abandoning their biggest new business initiative since Election Day 2016.

Instead, the Trump Organization has been battered by a series of questions about its own business practices, and how they square with the president's policies. The Times first highlighted its use of undocumented workers, revealing that such employees had worked for years at Mr. Trump's golf course in Bedminster and elsewhere — a contrast with the president's "America First" policies.

But financially, the results also have not been as bad as Mr. Trump has made them seem at times.

Upon taking office, Mr. Trump pledged to abide by various restrictions to his business activities, including a ban on new deals in foreign countries, where the company had enjoyed significant growth over the past decade.

Mr. Trump, in an interview in January, complained that his election had caused him to lose "massive amounts of money," calling his decision to seek the presidency "one of the great money losers of all time."

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