The 5 Principles of Leadership, Part II

Posted on March 22, 2013

by futurist Richard Worzel, C.F.A.

This is a continuation of an earlier blog, which you can read here.

Third Principle: A leader places the organization’s goals above her own, and pushes her followers to improve.

 

Why do you lead? Is it to accomplish a specific goal? Or is it to feed your ego? If the latter, then you’re running a personality cult, and you probably don’t want to help your followers get better for fear they’ll surpass or challenge you.


There’s a possibly apocryphal story of an MBA student of one of the more prestigious B-schools (guess which one) who was asked, in a job interview, if he considered himself a team player. He replied, “Absolutely – if I’m the captain.”

If your devotion is to getting things done, to reaching your group’s collective objectives, then the faster your people hone their skills and increase their abilities, the more likely you are to achieve what you, collectively, set out to achieve. And this is as true whether you lead, or whether you discover someone who would actually be a better leader than you are, and cede the leadership role to him or her.


But if your goal is to feather your own nest and buff up your ego, then you are not leading, but rather misleading. In that case, the group’s goals are, at best, secondary to your personal agenda. Indeed, if you look at many of the problems in corporate leadership in recent years, they often stem from the head person’s desire to achieve personal goals (bonuses, stock options, corporate perks, etc.) at the expense of the corporation’s goals or interests. In my opinion, these people are liars, not leaders.

Think, for example, of Aubrey McClendon of Chesapeake Energy, who used corporate jets for personal reasons, borrowed $500 million from a company that’s an investor in Chesapeake, and ran a hedge fund with a direct conflict of interest with his day job of being CEO. Or what about Carly Fiorina, who paid herself handsomely, spent a lot of her time self-promoting, worked the lecture circuit and did media grandstanding, all while firing staff in order to cut costs, and leading Hewlett-Packard into a disastrous merger with Compaq. Then there’s Ken Lay of Enron, who defies the whole concept of leadership. He lied, cheated, swindled, and ultimately stole from investors, stakeholders, and the people who were supposed to be his clients. His company’s, customers’, and employees’ entire purpose for being, as far as he was concerned, was for the glorification and enrichment of Ken Lay. His company, Enron, became the ultimate example of corporate greed and dishonesty.

Until, that is, Lehman Brothers went bankrupt in 2008. Lehman Brothers not only exemplified Wall Street’s greed and corruption, gambling with other peoples’ lives and money to try to win huge bonuses for themselves, but almost took down the entire free market system with them. And Dick Fuld was the “leader” that drove Lehman on the rocks, yet remains unrepentant to this day.

The capitalist system works best when both parties are better off as the result of a transaction, if both sides profit. People who do not understand capitalism believe that the capitalist (the bad guy) is profiteering off the hard work of the exploited worker. In fact, the owner does benefit from the work of the worker, but the worker also benefits from the capital investment and market position created by the owner. And the purchaser benefits from the innovation and production of the producer, which in turn benefits by supplying the product or service at a price that is higher than its cost of production. Both sides are better off. But when this two way street breaks down, it’s no longer capitalism, but exploitation. And deliberate subversion of a leadership position for personal gain amounts to exploitation of both the people being led, and the customers or clients being short-changed.

But what about an entrepreneur or founder, someone who starts a company, movement, or organization? Don’t they have to lead the organization in order to accomplish their own personal goals? Indeed, don’t they hire people to help them achieve that specific purpose? No, generally they don’t.

If a founder’s entire purpose is to have people perform personal services for them, that’s one thing. That’s a service transaction.

But if you look at organizations that started off as entrepreneurial ventures, and then grew into something more, they change as they grow, and their objectives change as well. Take, for example, the early days of Apple Computer (now Apple Inc.). Steve Jobs and Steve Wozniak founded Apple Computer, but believing that they had something big on their hands, and that they needed both more capital and executive expertise they didn’t have, found both in veteran Mike Markkula, an angel investor who backed the fledgling company, and whom the two Steves lured out of retirement in 1977. Markkula brought not only money, but connections, financial savvy, and executive ability to Apple. He recruited the first professional CEO for Apple in 1977, and then assumed the role of CEO himself in 1981.

Markkula was devoted to the goals of the organization, not the two Steves. In fact, he overrode Steve Job’s early attempt to kill the Macintosh computer in favor of another project, backed John Sculley’s ouster of Steve Jobs in 1985, and then Sculley’s ouster in 1993. Markkula remained Chair until 1997, when Jobs returned to the company, and a new board was constituted. His devotion was to the objectives of the company, its employees, and its stakeholders, not to the founders.

My point is that although Jobs is now, in retrospect, seen as the archetypical visionary and entrepreneur, he grew into that role, and his path, and Apple’s, overlapped but were not the same. Jobs hired people to serve over him when he lacked the necessary skills, and although his story ends with him as the shining exemplar, the ultimate entrepreneur, what made Apple the world-shaking organization it became involved more than just Jobs’ leadership, crucial though that was to the company’s eventual success. Fortunately, Jobs and Wozniak were smart enough to realize early on that they needed to follow someone who was more experienced than they were – and that may be the greatest testament to their leadership abilities.

So, to sum up this principle: a true leader is one that is truly committed to leading towards the organization’s goals, even when her personal goals are overridden by those of the organization.

 

Principle 4: A leader must promise success, and achieve it.
In many ways, this is the most important of all the five principles. If a leader doesn’t promise victory, either implicitly or explicitly, or his followers don’t believe he can deliver victory, they won’t follow him. Success in the agreed-upon goal becomes the ultimate test of leadership, and the ultimate reason why people will follow you.

There are many examples of this, but one of the best is a British general from the Napoleonic Wars, Roland “Daddy” Hill, who became the 1^st Viscount of Almaraz. The fighting men of the British army at that time were described by Lord Wellington as “the scum of the Earth” because they were largely convicts who chose to enlist rather than be executed for their crimes. (He also added that they were the greatest fighting men in the world, which Napoleon found out the hard way.) Discipline was more than harsh, involving floggings or executions for what we would consider inadequate reasons, and so it was in Hill’s command.

Despite this Hill’s men loved him, and called him Daddy Hill, for two reasons. First, he looked after them, both en masse, and individually. Despite the differences in rank, he would personally thank messengers and solders who served him, and make sure they were well fed and well treated. He showed his men respect, in other words, despite the apparently enormous social gulf between his military rank and social station, and theirs.

But the biggest reason he was loved was that he lead his men to victory, sharing their danger, showing his commitment, leading from the front, and almost being killed during the Battle of Waterloo, when his horse was shot out from under him. He won repeatedly, sometimes against fearsome odds and in difficult situations. In one encounter, at Arroyo de Molinos in Spain, his force inflicted 1,300 casualties on Napoleon’s army, while his troops suffered only 65 casualties. He inspired fierce loyalty and affection.

In contrast, let’s return to Steve Jobs and Apple. Outside of Apple, Jobs was celebrated as a visionary, someone who both saw and shaped the future. But he was hell to work for, often running roughshod over the people who worked for him, showing no interest in their feelings, well-being, or position, demanding unreasonable results, ruining their personal lives, treating them like idiots, and sometimes taking credit for their successes. He famously inspired fear, not love, and was known to have fired employees for things they said when he met them in an elevator.

But he delivered results, and people fought to work for Apple for the prestige of working for a company that could make technology cool, and invent the future. His success was more important than the questionable grooming habits of his early years, his uncompromising, inhuman perfectionism, or his raw, take-no-prisoners, domineering leadership style. He successfully led people where they wanted to go – and they willingly, eagerly followed.

So if you want to lead, you must be able to convince your followers that you will lead them to success. And eventually, you have to deliver that success. Everything else, from leadership style, to personality, to social standing, to skill, is secondary.

The Best Trainer May be Down The Corridor - Keeping and Using Corporate Expertise

Why does the mention of training summon up thoughts of expensive courses, and consultants for many employers?

We have found that much of a business's expertise is in the heads of some key employees. Waiting for it to float across and infect others or sending people off to external courses is often an ineffective and expensive way to transfer knowledge.

A systematic process for identifying what is needed, what you already have, who has it and who can share it can be very powerful.

Once the required knowledge, experience, skills or attributes have been defined, it is then a case of finding who, and it may be spread across several people, possess it. It is then a matter of transferring it. This may be by some of those people conducting an internal training course or, more often, it can be done by coaching, project work or on-the-job training.

A structured approach to doing this will be far more effective that leaving it to just happen.
After defining the above factors it is necessary to be quite clear on what the objectives are. After the transfer of this information, what should the "trainee" be able to do?

If the Sales Rep needs training on upgrading a customer from one level of product to a higher one, and the Sales Manager has this ability, then an objective needs to be written that describes the outcome. eg To be able to convert 50% of customers after one year from Product A to 90% use of Product B. The method to do this then needs to be agreed and documented with key dates and responsibilities. This may include reading technical manuals, researching customers, joint customer visits and practice role plays.

The same Sales Rep may need help with understanding certain technical issues. This assistance may come from someone else. Again the same process should be used.

Effective transfer of knowledge and skills is best achieved by a systematic approach that can be replicated across the organization. The first part of the process involves identifying learning and development needs. Another aspect is to help potential internal "trainers" transfer particular skills or knowledge and give them a simple process to do this without requiring a formal "train the trainer' program. 

A brief five steps of instruction checklist will help inexperienced people teach key skills.

1. Tell the trainee what you want them to do.
Put the trainee at ease, check existing knowledge, create an interest in learning, state the task or subject

2. Show them what you want them to do.
Do the complete task at normal pace, stress key points.

3. Let them try.
Have the task done or subject explained.

4. Observe performance
Check understanding of key points, check against standards

5. Manage the consequences.
Positive; provide reinforcement or praise, negative; correct faults, neutral; after correct operation several times, the positive response can be reduced. If a person knows they are doing something well and of value they do not normally need continuous feedback from others.

We have previously written about Individual Development Plans (IDPs) that list the key development objectives and actions and who is responsible for their transfer. These are a vital tool in preserving, transferring and increasing the corporate knowledge. IDPs have the added advantage of tracking employees' growth and this can be a contributing element to motivating and retaining key staff in times of a talent shortage.

Business implications
While the approach described above will have obvious cost savings over external training, what often happens is not much unless someone deliberately makes it happen!

Retaining the expertise that gives your business its competitive advantage should be as important as looking after the physical assets - maybe more so because the physical ones can usually be replaced.

By: Paul Phillips
 

Paul Phillips is a Director of Horizon Management Group; a specialist human resource management consulting firm. He has over 30 years experience in HR and, while based in Australia, has worked in a number of overseas locations. www.horizonmg.com

8 Common Bad Habits That Ruin Client Relationships

 By Vivian Giang

When you’re running a small business—especially in the early stages—it’s easy to simply focus on how to stay afloat. The problem is, that mindset will keep your company mediocre at best and fighting for survival at worst.

In the first months of launching their real estate company Those Callaways, Joseph and JoAnn Callaway learned just how much real growth starts with client relationships. In that situation, they decided to forfeit a deal because it was the best choice for their client. Since then, their business brings in around $100 million in sales annually and reached $1 billion worth of resale in the first 10 years of business.

In their book Clients First: The Two Word Miracle, the Callaways discuss where most business owners go wrong when developing relationships—and how to fix the problems. Most employers are guilty of these bad habits without even being aware of it, and these habits can not only ruin relationships, but they can negatively affect business too.

1. Being too sure of yourself.
The Callaways say that when you have a healthy perspective of who you are, it will help you stand apart from your competitors, but when you’re too focused on recognition, you may veer off “onto a destructive path.”

“No client likes working with someone who has a patronizing attitude or constantly sings his own praises,” Joseph says. “Your job is not to be the most important person in the room or to put others down. Believe me, when you take care of your clients first and foremost, they will take care of you through their loyalty and appreciation.”

Instead, Joseph advises that you should always focus on your client. Don’t try to find a common interest just so you can bring the conversation back to yourself.

 

2. Thinking it’s just a job.
The only way you can honestly put a client first—time after time—is if you actually really do care about your job and what it means to society. If you have to, try to make a connection between what you do and how that affects the bigger picture.

“Whether you are a CEO or installing brake pads, you can learn to love what you do in that you feel pride in your work and strive to be better,” Joseph says. “Having any other attitude will only make you miserable and drive clients away.”

To fix a negative pattern of thinking, the Callaways say you should think of specific things you can do to ensure you’re always growing professionally. For example, look into seminars related to your field and continually network so you can meet and learn from people in your industry.

 

3. Telling “white lies,” which includes exaggerating.

If you’ve ever told your client you’re sick just so you can have a few more days to work on a project, then you’re guilty of not being entirely honest with someone who is paying you to be honest.

“When you cultivate a reputation for rock-solid honesty—for laying out all your cards even when it doesn’t benefit you, for telling the whole truth, for never holding back or sugarcoating—you’ll gain customer loyalty that money can’t buy,” Joseph says. “Clients will trust, respect and refer you, and your own life will become easier."

 

4. Being too professional.
Do you see your clients as business opportunities and sources of income, or do you see them as actual human beings with likes, preferences, quirks and stories? If you want to truly put your clients first, you need to think of them as more than sources of income. You should treat clients—and potential clients—as if they’re different from any other.

5. Thinking you’re always right.
The Callaways say that it’s easy to think you’re always right, especially if you’re the expert and the most qualified to make decisions. Although this may be true, it doesn’t mean that other opinions don’t matter.

“No matter what industry you’re in, you need to turn your viewpoint around and make a sincere effort to see yourself and your business as your client does,” Joseph says.

You can always ask the client what they think about your business, especially if the deal fell apart and they no longer conduct business with you. If you’re willing to accept this feedback and change your business model based on it, you can stop yourself from making the same mistake with the next client.


6. Being stingy with time and money.
Yes, your time is valuable, but the first sign that you’re trying to wrap up with a client quickly so you can get to the next one will probably be the last time you get that client’s business.  

“I remember being very apprehensive about donating a large sum of money to build a Habitat for Humanity house as a Christmas gift for our clients,” Joseph says. “I thought I’d never see that money again. But in the years since, I’ve learned that new clients chose us—and even that a bank gave us all of their foreclosures to sell—because they had learned of that donation.”
That might not be the scenario for every case, but Joseph says it shows the time and money you use for something will eventually “come back to you with interest.”

 

7. Failing to express genuine gratitude.
If people don’t feel valued, they’ll likely take their business elsewhere, so it’s risky to take people for granted.

“JoAnn and I have realized that there are many ways to say ‘thank you’ to clients, and not all of them are verbal … you can show clients just how much you appreciate them by getting to know them personally, forgiving occasional bad behavior, and staying up-to-date in your field so you can give them the highest level of service,” Joseph says.

 

8. Doing everything yourself.
When you truly care about the success of your business—and about the well-being of your clients—it can be hard to let go of any aspect of your work. The thought of allowing someone else to take over any area of responsibility is extremely difficult, but necessary. In actuality, one of the most important aspects of running a successful business is understanding how to delegate responsibilities to others. Otherwise, what ends up happening is that “you become stretched too thin, feel overwhelmed and actually become less effective,” Joseph says.

Although it may be common to think about your business on a short-term basis, such as making enough money this month to pay the bills, the Callaways say that building the long-term relationship with clients is what will keep you in business and set you apart from your competitors.

“Most business owners are so concerned with paying the bills that we instinctively put ourselves first,” he explains. “It’s a behavior fueled by fear. But when you really put the customer first, and put your own needs second, a whole lot of other things naturally fall into place. Decisions will become easier, your business will flourish, and your relationships will be based on true transparency.”

Vivian Giang

Vivian Giang is a reporter for all things career-related at Business Insider. Previously she freelanced for Dan Rather Reports and worked in public relations in Colorado. She's had internship stints with CBS, CNN and TBS. 

Her work has also been published in The New York Times' Local East Village blog, CBSnews.com, Yahoo!, The Financial Times, The Fiscal Times, Flagpole Magazine and Southern Distinction Magazine.

Vivian has an M.A. in Business and Economic Reporting from New York University and a B.A. from the University of Georgia. She resides in Chinatown and is working on a collection of short stories.

Business to business social media explained: Using brand advocates in B2B social media marketing.

By Tamsin Oxford on Mar 27, 2013

 

Content drives communities. It keeps community members engaged and interested and ensures they will come back for more. In order to create relevant content, you first need to identify and understand your community, and specifically, the key influencers in that community. Who are they? What websites do they visit? What type of content do they read and post? What social networks do they participate in? What do they care about?

 

Says Head of Think at digital marketing agency Quirk Sam Beckbessinger: “Be smart about identifying your influencers. Don't just chase those who have big follower numbers on Twitter, or anyone with a vaguely relevant blog. You're looking for the sweet spot between the people who influence others, and the people who actually care about your brand. If someone cares about what you're offering, communicating with them is easy. 

 

“A great example for me is Crocs SA (@crocs) and Sarah Britten (@anatinus). Sarah Britten has a fairly large number of Twitter followers, and more importantly, if you dig in and look at who follows her, you'll see that many influential people are influenced by her. Sarah also happens to love Crocs (yeah, I don't get it either). All Crocs had to do was send Sarah a care bundle with some free shoes, and talk to her occasionally. Now Crocs can send Sarah news about what they're doing, and Sarah will talk about this. Why? Because she actually cares - she's a natural brand advocate. This is a B2C example, but the same principles apply to B2B.”

 

Joseline Mudede-Macdonald, Marketing Manager at WhatUsersDo, an online user experience and useability testing site, agrees: “At WhatUsersDo our B2B audience is unique and niche. Remote user testing as a product is beneficial for anyone with digital assets they would like to optimise, but very few professionals are actually responsible for it. Targeting and finding influencers has to be refined and segmented. The user experience influencers we are seeking will come from design, marketing, Internet or eCommerce backgrounds and possess captive audiences of their own on social media.” 

 

“The things I would look for when seeking influencers on, for example, Twitter, include frequency of postings, number of followers versus number following and their organisational reach,” she comments.

 

 

Communicate clearly

 

How big is your potential community? According to Social Media Around the World 2012, by inSites Consulting, 50% of consumers post information about brands, products and/or companies on social networks.

 

In their last report into the power of brand advocates, Zubrance stated: “A global word of mouth study on 2006 by Gkf Roper found that the average consumer recommends 3.7 brands. The Zubrance in study in 2012 found that on average, brand advocates recommend nine brands, products or services per year. The study also found that 16% of brand advocates recommend ten or more brands, products or services with 16% recommending 15 or more.”

 

How often do you use the following platforms to send information about products, brands, sales or stores?

[SOURCE: BzzAgent]

 

A simple Google search using key terms relevant to your market will reveal who is talking about your topics online, whether on Facebook, Twitter or their blog. Social networks like LinkedIn, which specifically cater to professionals, are also good places to go - a premium account costs very little and can yield tons of useful information. If your company is already engaging via social media channels look at the users that are talking to you and about you, and start talking to them.

 

Says Mudede-Macdonald, “What has always astounded me about companies seeking to approach influencers is that they do not ask their audiences. The best way to ascertain how and if you should approach is to ask. Creating a survey or poll to understand their content consumption and preferences for contacting them helps you to respond to their needs. Going forward, the results from a survey can dictate the type of content your network needs and at what part of the production cycle they will need it.”

 

“There are some smart tools that will help you identify who these people are,” says Beckbessinger, “NodeXL is my personal favourite - it allows you to map fairly complex influencer relationships and looks for real influence, not just how many followers people have). ORM tools like BrandsEye and Radian6 will also help, but only if there is already some conversation about your company.”

 

Turning an interaction into a relationship takes a bit of effort, beyond initial introductions. And here, content really is king. Says Beckbessinger: “Influencer engagement works best when supported by a robust content strategy. For most B2B companies, the primary benefit of social media is that it offers you a free, open publishing platform around which organic communities can coalesce. Creating useful, interesting content will naturally draw people around you into a community.”

 

“One of the best ways to build relationships is asking influencers to provide guest blogs,” comments Mudede-Macdonald. 

 

“Most of the B2B social media campaigns I have managed include an element or stage that facilitates face-to-face contact,” she adds. “For instance, we recently published an extensive industry survey, The User Experience Survey Report 2013, which was promoted and supported purely by social interactions. In return for filling out the survey all respondents were invited to the launch event. Like every relationship, there should be some give and take. You cannot continue to roll out calls to action without giving something in return.”

 

Close the loop

 

And if things go wrong, as they do in relationships from time to time, have a plan in place to handle it gracefully. Salesforce.com Product Marketing Director Xabier Ormazabal has six pieces of advice:

 

1. You can't react if you don't know.
2. Be quick to acknowledge.
3. See it from their point of view.
4. Take it out of the spotlight.
5. Say sorry when it's your fault.
6. Don't feed the troll.

 

It's as important to listen as it is to talk to your communities and influencers. There are a number of listening platforms available. 

 

Cisco Social Media Marketing Manager LaSandra Brill says the Cisco team takes an ABC and 1-2-3 approach to listening. “First, we identify what the “action-based conversations” are (ABCs for short) then prioritise them with a 1-2-3 priority. Cisco is currently mentioned five to seven thousand times a day and roughly 3% of those conversations are actionable. Our Social Media Listening Centre allows us to visualise those conversations, and enable our 1500+ social ambassadors to have meaningful engagements with customers.”

 

For B2B companies nurturing advocates once they have been identified is vital to the long-term development of the social media relationships that are not part of every business.

The Do's and Don'ts of Cash Management

By: Bronwen Roberts

Working capital is a highly effective barometer of a company's operational and financial efficiency and effectiveness. The better its condition, the better placed the company is to focus on developing its core business.

The early, primitive attempts at maximizing cash management can be traced back to the late 1970s. Unbelievably, there are still some companies who haven't yet understood that putting cash trapped in the balance sheet to better use can give them a competitive edge over their rivals.

A most recent report shows a further reduction of working capital in companies in the US and Europe compared with the previous year, of between 3 per cent and 5 per cent. This demonstrates the continuing increase in the importance of working capital management to help companies achieve their strategic objectives.


How to do It
There is more to working capital management than simply telling a company to collect its debtors as quickly as possible, to delay paying its suppliers as long as possible, and to keep stock levels as low as possible. A properly conceived and executed improvement program will certainly focus on optimizing each of these components, but will deliver additional benefits that extend far beyond the merely operational. It will demonstrate the need for ambitious corporates to integrate working capital management into their strategic and tactical thinking, rather than view it as an optional bolt-on extra.

There are a number of dos and don'ts to help guide corporate thinking. Firstly, do think of working capital management as a strategic objective that can enable your corporation's goals. We cannot over-emphasize this opening point. The same factors that drive a company's working capital also drive its operating costs and customer service performance. Therefore, by addressing the drivers of working capital a company will also experience significant improvement in operating costs and customer service.
 
For example, a company's working capital is deteriorating due to an increase in past due accounts receivable (AR). A review of the overdue AR illustrates a high level of customer disputes. The disputes are taking on average 30 days to resolve and consuming significant amounts of sales, order entry, and cash collectors' time. By tackling the root cause of the disputes, in this case poor adherence to pricing policies, the company can eliminate the disputes, thereby improving customer service.

This will free up the time of staff in sales, order entry and cash collections, enabling them to be more effective at their designated roles. This in turn increases productivity, reduces operating costs, and potentially increases sales. Working capital will improve, as customers will have fewer reasons to hold payment. This example illustrates how working capital is one of the best indicators of underlying inefficiency within an organization.

Consider Another Perspective
Don't think of things only from your own company's perspective. If you can help your own customers plan their inventory requirements more efficiently, for instance, you can match your production to their consumption, efficiently and cost-effectively, and do the same with your own suppliers. The potential implications for inventory levels are huge. By aligning ordering production and distribution processes, you increase inherent efficiency and achieve direct cost savings almost instantly, as a by-product. And then you discuss the best way to bill or to pay.

Do educate your organization to consider the trade-offs between different working capital assets when negotiating with customers and suppliers. Depending on the usage pattern of a raw material, there may be more to gain from negotiating consignment stock with a supplier versus pushing for extended terms. This could apply particularly in cases of long lead-time items, or those that require high minimum order quantities.

Agree Formal Terms
Do agree formal terms with suppliers and customers and document those terms carefully. Keep them up to date, and communicate those payment terms to employees throughout your business, particularly those involved in the customer to cash and purchase to pay processes, including your sales organization.

Don't allow prolific new product introduction without a clear product range management strategy. Poor product range management creates inefficiency in the supply chain, as companies are required to support old products with inventory and manufacturing capability. This increases operating costs and exposes the company to an obsolete inventory that may have to be disposed of.

Collect your Cash
Don't forget to collect your cash. Many businesses fail to implement effective ongoing collection procedures to prevent excess overdue funds or build-up of old debtors. Ask customers if invoices have been received and are clear to pay. If not, identify the problems that are preventing timely payment.

Confirm and reconfirm the credit terms agreed upon with the customer. Often, credit terms get lost in the translation of general payment terms and what's on the payables ledger in front of the payables clerk. Do devote the requisite amount of time and attention to the critical issue of dispute management.

Don't set top-down targets uniformly across the business. For instance, too many companies impose a 10 per cent reduction in working capital for each division. This fails to take into account the potential opportunity within a division and can result in setting an impossible target that acts to de-motivate. Instead, balance top-down with bottom-up intelligence when setting targets.

Targets Drive Behaviour
Do set targets that drive the desired behaviour. Many companies will incentivise collections staff to minimize the aged AR over 60 days. Does this mean that customers who pay one to 60 days late are good payers? No, aged AR over 60 days will result in increased costs and time it takes to collect the debt. By incentivising staff to lower the amount over 60 days, you keep your costs down. Do educate staff, customers and suppliers that cash and cash management are important, and are an integral part of a successful business relationship.

Look Within Yourself
Don't assume that all the answers are to be found externally. Before approaching existing customers and suppliers to discuss cash management goals, fully understand your own process gaps so you can credibly discuss poor payment processes.

Do treat suppliers as you would like your customers to treat you. Far greater cash flow benefits can be realized by strategically leveraging the relationship you have with suppliers and customers. In addition, a supplier is more likely to support you in an emergency if you have treated them fairly.

Don't however, treat everyone the same. Use segmentation tactics to split your customer supplier into similar groups. This may be based on a basket of criteria including profitability, sales, AR size, past due debt, average order size and frequency. Define strategies for each segment based around the criteria and your strategic goals.

Do celebrate success in hitting targets. Emphasise the actions that helped you get there.

Conclusion
To summarise briefly, following the dos and don'ts will enable you to optimize cash and to highlight inefficiencies in your processes that must be remedied to better serve customers. It will enable you to build stronger partnerships with your suppliers across the total working capital value chain. This translates ultimately into improvement in bottom-line results, often a good deal quicker than you might expect, and helps clarify the senior management focus on strategic imperatives. 

Author Bio
REL Consultancy Group www.relconsult.com are global specialists in generating cash improvements, cost reductions and service enhancements by optimizing working capital. They are the only international corporate financial consulting firm that focuses exclusively on increasing operational efficiency from working capital and operations. They work with people to transform your organization, your customer's and your suppliers in more than 60 countries around the world.

Analyzing the ROI of Social Media Marketing

People responsible for marketing budgets want to know if there is any ROI value in social media. Is the ROI of social media marketing capitals being thrown away?

Patricia Redsicker, an expert in the Edison Research exploration, takes a look at the statistics in the USA.

Here are the 9 most interesting discoveries in the study:

1. Almost 58 million Americans visit social media networks every day.

The “Social Habit” is defined as “the tendency to visit social media websites a few times per day.”

 

Shown in the diagram below, by the middle of 2012 the number of Americans who had “The Social Habit” increased by 22% (approximately 58 million people), while only being 18% in 2011.


Why are people visiting social media websites?

• 89% of people do this to stay in touch with family and friends
• 67% - to entertain themselves
• 66% - to learn about new products and services
• 48% of people visit social media networks for their career

The main conclusion is that consumers spend more and more time on social media - so you may need to consider finding new means to establish the contact with users and to interact with them throughout the day.

For example, you may post a short poll or a question on your Facebook Page in the morning, publish a useful article in the afternoon, and upload an interesting picture or a short video clip in the evening. Do not forget about the week!

It is important to understand the consumers needs and apply social media efforts accordingly.  

2. Twitter draws new active users
Twitter continues to draw more and more new users - it is evident by the figures on the diagram below. The author of the article mentions that the level of interaction between Twitter users increased by 69% in 2011 to 76% in 2012.

The main conclusion is that engagement on Twitter is on the rise. Give useful guidance and information (such as links to articles) in reply to users questions instead of just publishing promo content. In Redsicker’s opinion, this will help you to establish a confident online presence as an thought leader in your industry sector.

3. Approximately 40% of American people hear about tweets through traditional mass media
The research data indicates that more than four in ten Americans hear about or read tweets almost every day in media. The author gives an example of TV shows such as Piers Morgan Tonight and Anderson Cooper 360 on CNN, which use their Twitter and Facebook accounts for advertising purpose and extended discussions.

The main conclusion is that every day the TV audience deals with a wealth of information about Twitter and the communicative capabilities it provides users with. If your company advertises on TV (or is about to do this) you should advise your audience to follow you on Twitter and participate in online discussions.

4. Brand following behavior in social sites doubled over the past two years
This has become a real revelation for Redsicker. Indeed, the diagram shows the brand following behavior on social networking sites for the last 3 years. Redsicker predicts it is most likely that the trends will hold. 

The main conclusion: free offers and special deals for existing customers and interesting entertaining content may be pointed out as the major reason why users follow brand pages in social media networks. Therefore,  promote special offers from your website on your social media networks pages as well. These may be free research reports, webinars, or giveaways with products and/or services.

Get creative and vary special offers as often as possible to keep the users interested.

5. Facebook is the dominant platform for brand following behavior
79% of users prefer using Facebook to connect with brands and products, while only 9% of users prefer using Twitter. Why Facebook? The author replies:
● Facebook is a well known territory. Consumers spend a lot of time in social networking sites communicating with their relatives and friends; that is why it is not difficult at all to connect the brand.
● Secondly, Facebook users are strongly inclined to trust the opinion of their friends. If their friends like the brand they will most certainly “like” it as well - birds of a feather flock together!
● And finally, Facebook has more convenient and visually interesting interface that other platforms have. This allows brands offering daily deals, contests, prizes, etc. with maximum efficiency.

 

The main conclusion: to increase the number of your subscribers on Facebook, consider giveaways and providing entertaining content. You may also reward dedicated subscribers and attract the new ones providing significant discounts on goods and services you offer (i.e. 50% and more discounts, but not just 5% or 10%).

6. Young Facebook users have lots of friends
Redsicker draws attention to the diagram that illustrates 18-24 aged Facebook users having most of the friends as opposed to adults. Taking into account that birds of a feather flock together, brands subscribers’ friends on Facebook, as a general rule, act the same as their subscribers.

The main conclusion: increase your brand visibility on Facebook. Target not only your fans on Facebook but also their friends. Study the profile pages of your subscribers and determine their demography, interests, social behavior, etc.

This information will help you create the content that will be targeted at your subscribers. Then, create a message you can share, for example -  specials that require voting (if your subscriber votes, his or her friends may want to vote too). The goal is to frequently show up on the feeds of users, by that encouraging your subscribers’ friends to interact with your brand.

7. Nearly one-quarter of social networking users use “Daily deals” sites and services
In author’s opinion American people are not crazy about special deals like Groupon offers at all. Only 23% of social media users are registered users for “daily deals” services. There are a lot of customers who made a purchase on Groupon and shared their negative opinion in numerous resources about their experience.

Nowadays this segment of business is totally covered by Amazon and Google. Marketing specialists are supposed to watch the interesting reaction of their customers over the next 12 months.  

The main conclusion: in Redsicker’s opinion,  Groupon’s business model is pretty doubtful. But from the customers’ point of view, everybody likes special deals. That is why you just need to be careful and make sure there is social media marketing ROI, in case you use this type of service.

8. One third of social networking users are “Silent”
The majority of people on social networks are active and post status updates to social networking websites regularly. Nevertheless, 34% of social media users do not ever post status updates for various reasons. Some of them are observers (those who just watch and absorb information), and others are newcomers who are yet to improve their social and/or communication skills.

The main conclusion: those who are “silent” or newcomers may not communicate via social media but still, they are able to hear you and can be useful to your business.

If you noticed silent observers among your subscribers, try to address them directly via message. They will most likely answer the question or the suggestive comment. To encourage newcomers to communicate with your brand, try to share some sort of behind-the-scenes information or photos that will appeal to them.


9. “Check-In” Behavior Stalls
Networking services such as FourSquare witnessed a decline in users’ “Check-In” activity in 2012. 57% of users almost never have used a “Check-In” service to post a status update that provided location.

The main conclusion: if your marketing strategy is based on location, try to attract new customers with special deals and discounts. Taking into account people feel worried about their privacy and safety, your offers should be unique allowing them to check in.

Let’s summarize.
Nowadays marketing specialists have wonderful possibility to take into consideration Redsicker’s conclusions. Knowing what social media marketing ROI requires they are able to develop strategies adjusted for users’ behavior.

Redsicker advises to consider Facebook and Twitter’s popularity, as these platforms attract many new users. On the other hand, the author cautions against sell-out services, as users are not fond of them. Lastly, it is strongly advised to offer special deals and discounts.

What are your recommendations regarding measuring social media ROI?

Written by: Roman Viliavin, Vice CEO at Promodo Online Marketing Company.
Roman is an unconventional thinker and candidate master of chess. Roman has been working in the field of search engine optimization since 2005 and is the moving spirit of the company. Participant and speaker of all major events in SEO business. Roman has successfully completed dozens of projects and gladly shares his experience with SEO community via articles and various online and offline publications. Follow Roman on Twitter and Facebook.

Connect:

Authored by:

Cara Tarbaj

Linear Income vs. Residual Income: Knowing the Difference Will Change Your Life!

By: Dimitri Turner

If you don't know the differences between linear income and residual income, then you definitely need to spend five minutes and read the remainder of this article. Knowing the difference will change the way you think, in return, changing the decisions you make and ultimately change your life from this day forward.

These income concepts are what divide the rich and the poor, the wealthy and the struggling middle-class, the knowledgeable and the ignorant. Linear income and residual income are the two ways that people make money in the world. This article will show you which income concept is best, or let's just say, preferable.

First off, let's address what is understood to be linear income. Employees, independent contractors, and self-employed business owners make up the linear income bracket. Linear income earners are only paid for the specific time expended, or paid directly proportional to the number of hours invested in their job. Linear income earners must be physically present or "clocked in" to get their paycheck.

Now here's the biggie! Linear income earners cannot leverage their time and efforts. Leveraging is what creates the wealthy/rich social class, and the absence of leveraging is what creates the middle to impoverished social classes. I will discuss leveraging in depth when we talk about residual income earners.

Linear income earners can be fired or "down-sized" at any time. For example, an employee could be the perfect worker within their company. But now a bigger and better company has bought out (acquire and merge) the smaller company, and the bigger company now "downsizes" several workers of the original company. What's sad in this situation is you were the perfect employee, but because you were working for the wrong company at the wrong time, you are now out of a great job with great benefits. You have no control whatsoever of the situation.

In addition, in the linear income bracket, the height of your success is determined by your boss, not you. You have very little control of your achievement within the company that employs you. You must work and hustle in an effort to be recognized as valuable to the company, but only for your superior to get the credit for your work and hustle while you remain in your current position. That sucks doesn't it!

If you're self-employed, you do have control of your personal achievement which is great, right? Now tell me this, what happens to your business if you're in a car accident and/or hospitalized, and it takes you three months to reach full recovery? Because you're self-employed, you'll more than likely miss that money!

Let me ask this question. As a linear income earner, can you pass your job down to your children or grandchildren? I don't know too many jobs that allow you to do that. And even in the corporate world, in order to be promoted, your superior either has to be promoted or demoted.
In summary, linear income earners have little control of their success, they live paycheck to paycheck, they can be fired at any time, they cannot pass their job down as an inheritance, and they are participants of the "dog eat dog" world which thrives on the destruction of co-workers' and superiors' reputation in order to receive promotion.

Now, the alternate income bracket is the residual income earner. I'll let you decide which the better of the two is.

Residual income earners consist of business owners, network marketing associates, and investors. Their income continues to be generated after the initial effort of building the business has been expended. Residual income earners don't worry about "clocking in," they can be absent for periods of time and still see consistent income from their business. As a residual earner, you could be in the shower, in the hospital, or in the Bahamas, and you'll still see checks in the mail or direct deposit transactions on your bank statement. Doesn't that sound like fun!
Remember when I mentioned the word "leveraging" earlier? Leveraging is basically using someone else's time and money to benefit you. Now wait just a second. I know that sounds very harsh and cruel but think about it first. Isn't your boss leveraging your efforts? When I put it that way, you start to get the picture of how this concept separates the wealthy from the not so wealthy.

A residual earner's income stems from their business or businesses. They are the boss; they have total control of their business's success and achievement. Wouldn't you like to be in that position if you aren't already? With your own business, you can pass it to your children, and they can pass the business to their children in return, you are leaving a family legacy. You are able to leave your children with a ready-made pipeline of income versus working your job, retiring, and leaving your kids with nothing but debt.

With a residual income business such as a network marketing (multi-level marketing) business, you benefit only by helping others to be successful. I personally don't know of too many instances where corporate employees are helping others they work with to become successful.
The two major separations between linear income earners and residual income earner's is the linear-minded people work, scrap, and hustle for money. Most are only after a quick paycheck. Residual-minded people work, scrap, and hustle for freedom. By freedom I mean, freedom with their time, freedom with their lives, and freedom with their finances.

So which would you rather be? Would you rather be the linear individual living from paycheck to paycheck, no control over your success, unable to spend quality time with your children, and always sick because you have dreams and goals but are unable to achieve them? Or would you rather be the residual individual who possesses full control of their life, spends quality time with their kids regularly, is able to leave an inheritance for the future, doesn't have to sit on their goals and dreams, and can show others how to do the same?

I'll leave it up to you!

Now I would not explain those two concepts without providing a means to crossover from the linear mindset to a residual mindset.

http://www.payitforward4profits.com/dlturner3183

Check out the website above. This company will provide you with free information and they will simply introduce you to the most prominent and successful businesses that you can build out of your home and/or online. Aligning with this program will make the transition from linear income to residual income a smooth one.

If you want something you never had, you have to do something you've never done, period!


Author Bio
Dimitri Turner is an Internet Marketing Guru out of Memphis, TN. He writes in-depth and passionate articles about the network marketing industry as well as inspirational and motivational articles that encourages his readers to maximize their potential and maximize the present moment.