Inside Sales Management

To understand sales, you need some psychology

To understand sales, you need some psychology

There are loads of books out there about sales. I was fortunate last year to have breakfast with the author of the best selling sales book of all time, Jeff Gitomer, who wrote ‘The Little Red Book of Selling‘. Jeff has an awesome ego, as one might expect, and was wonderful company. He cooked me a mean breakfast, and took the mickey out of me because I took milk in my coffee. He was exactly as I had expected, multiplied by six (as Megamind might say.)

Books on how to sell – there are a plenty. But there are few books on how to manage sales people inside a business. The best of these is Mark Wilensky’s 2006 ‘Inside Sales Management‘. Wilensky’s techniques explain how best to manage the sales manager, the team, and how they should respond to clients. Much of it is formed from the study of psychology.

Mark’s main point is that you need to grow your sales team to grow sales. Training in this never stops.

We start with a premise that we have three states – Parent, Adult or Child. We flit between these in nano seconds, and how we respond in various situations is governed (and explained) by which ‘state’ we are in.

  •      Parents say things like ‘you should
  •      Adults say ‘I think’
  •      Children say ‘I feel

You don’t want your sales people to be in the child state. A child can either be rebellious (manipulative, shrewd), natural (wants to play) or adapted (changes behaviour to fit in).

Nurturing parents are liked, but don’t close many sales.

The best sales managers know when to use their ‘critical parent’, ‘adult’, and their ‘nurturing parent’ state. If you want your sales team to grow, stay out of the ‘critical parent’.

Example – a client makes your sales person feel threatened, that sales person may fall into their ‘child’ state. It’s important the sales person stays in the adult, as the child can get stressed, whereas the adult skilfully navigates the otherwise stressful situation. There’s no such thing as a stressful situation, says Wilensky, there are only stressful or non stressful reactions.

The worst sales person blames the outside world (the economy, the competitor, the client…). It’s a childlike response. It’s commonplace. The best sales people realise they can affect change. When talking to a stressed out sales person, make the conversation adult to adult. What do you think? Keep away from emotions (child), stay rational (adult). If they get defensive, they are in their child, so snap them out of it. If they notice you getting critical (parent), then they must stop you!

Giving away discounts too easily smacks of need for approval (nurturing parent). Help them move together. Fear of cold calling is akin to a child’s fear of strangers, so reward them after they have done their cold calling. Take the emotion (fear) away.

Managing your ‘child’ sales people is a matter of identifying who is who. The ‘rebellious child’ is creative and manipulative. You can have fun with them, but there’s a limit. They are after short term wins, and will bend the rules. They could be playing you. It’s the most challenging personality type to manage. But they can get great results, although rarely long term.

Generally, a nurturing parent is better than a critical one, and a rebellious child is better than an adaptive one.

There’s a continuum from being too weak (wimp) in sales and going too far (overly aggressive, putting off clients and sales). On this continuum, you want your sales team to be nudging the ‘going too far‘ end of the spectrum, without going over the line. What seems ‘too far’ today may be perfectly normal tomorrow. Moving to the ‘too far’ end is the direction you should be taking them. Remember what you were doing 5 years ago, and where you were? What about 5 years before that? Could you have imagined 10 years ago where you’d be 5 or 10 years on? You need to keep pushing to get progress, says Wilensky.

The client will always throw things back at your staff, and you can train them to give better answers so they retain their poise when, say, the price is objected to, or the disadvantages of your solution, or the strengths of a competitor or some misinformation about your own services. Spend time in workshops talking these through.

Excuses prevent growth.

Often the client will sell an excuse to the salesperson, who in turn sells it on to the sales manager, who then sells it to top management. Excuses come from the child, not the adult.

Example – the client says they do not have the budget. Your reply is then, ‘Imagine you had the budget, would you then buy the solution?‘. This takes the client out of their child and gets them firmly into adult (thinking). From there it’s a short step to ‘Well yes, of course I’d love to do it, if I had the budget’ and your reply ‘Well, if you see value in our solution, then it’s just a matter of finding the budget and we’re there.’ Reiterate the benefits, get them thinking about the purchase having been made, and the benefits that would accrue, and the growth they would enjoy as a result. Job done.

All growth takes place in the adult state. If you’re a child, you cannot grow. It’s recognising these states, making the change, and then the sale becomes easier. Stop taking excuses, they are outside your control and come from the child. Be firm.

Run through meetings your sales members had with clients. Ask them what they think happened. What went right and what went wrong? Ask why? (how do you know?) Keep them in the adult at all times. Thinking, not critical, no excuses, no judgement. Finish with lessons learned.

Practice this with the team, use role play. How can you deal with tough questions and stay calm? In the adult. Sales people will either show real signs of growth or fade. Poor ones need to be dropped if they can’t change and grow. Medium ones might be worth the investment and time. If the C & D performers can becomes Bs and maybe even As, then morale in the team and whole company improves.

Practice has to be brutal, they have to fail in front of you, almost fall apart, and then be put back together. It will make them better for the tougher questions and clients. Role playing has to be seen as preparing to win. Let’s learn together. It’s OK to be uncomfortable. That’s why we practice. Practice leads to success. (Most will never do this, consistently, so by doing it you are already way ahead of the norm.)

When you are recruiting new salespeople, you need to find someone who can take control, knows the market and product and can prospect. Before you hire, you have to gauge their mindset. They always bring their child with them. You need to find someone who can sell with their intellect (adult), and stays out of their feelings (child). Important characteristics will be poise, strength, can handle rejection, control, dealing with excuses, and is a logical presenter.

Your sales team must has SMART goals (specific, measurable, achievable, realistic, time-framed). These must be tracked, probably within a CRM on dashboards. We can all see them; there are the KPIs around activity (calls, meetings, proposals) and results (closes). If you don’t track or measure it, it won’t get done. Goals are about the future. Forget the past, it’s over!

The most important information you can glean from clients is why they buy from you.

Every time they buy, it’s because there is a gap between where they are now and where they want to be.

When a prospect does not see a gap, they do not buy. Salespeople solve problems, they fill these gaps. So they need to know where the client wants to be, where they are going, or planning, or are wishing to go.

The client has to have a problem (step 1), and they need to be sure that they believe this problem exists (step 2) and want to solve it (step 3).

Too many sales people rush to solve the problem, being the consultant, without establishing that the problem exists and ensuring the client wants to act.

Without steps 1 or 2, your proposal will fall on deaf ears.

Your sales calls and meetings should be all about finding these gaps, and then persuading the client to act to bridge them.

Adult to adult:  (facts)

  • what’s the biggest challenge you face at the moment?
  • what’s your biggest opportunity to grow?
  • who is responsible?

Nurturing parent to adult:   (conversations)

  • how does <this> affect your department?
  • what impact would <this> have on your growth?

Nurturing parent to child:   (feelings)

  • if we implemented <this> how would it affect you?
  • that’s an ambitious target, what happens if you don’t achieve it?

Parent to parent:    (should, ought)

  • how will top management view <this>?
  • if you went for a cheaper option, would you still consider it?

You need to uncover the information in a few of these states, and the sales person does less talking than the client.

Ideally, the client asks for a proposal (you don’t ask to send them one), tells you clearly what their budget is, and when and who will be making the decision.

It’s easy to buy things. Anyone can go out and buy. And when they buy, usually all 3 ego states are used: Parent (we should buy this, it’s the responsible thing to do), Adult (it makes sense for our company) and Child (I like the idea of owning it).

When talking to buyers, it should be a dialogue (50:50 talking each) not a monologue (sales person 80 : 20 client). Often there is a trade off between price, quality and service. It’s unlikely you’ll ever get high quality, the best service and lowest price together. Find out which of these things are most important, so you can trade off the other. If your client says “I guess you get what you pay for” they are there. It’s much better than the salesperson saying it.

Why always drives what. The best salespeople uncovers the client’s why.

Prospecting never ends, and good sales people never stop topping up their pipeline. The rebellious child will put off cold calling, but the adult realises it’s the only way. And it’s not that bad really.

The ‘fear of missing out’ (FOMO) is one of the cold caller’s best lines. People may be busy, they’ve been interrupted, but can they really risk missing out on the information you might impart that could close the gap between where they want to be and where they are now?

Those on the end of line want to know 2 things

  1. What is this about?
  2. Can this benefit me (close any gaps)?

The answers you provide to these will determine whether they will spend the time with you (now or later). Don’t wimp out. Explain the benefits they would miss out on. Hone in on the gaps that will remain if they pass on this opportunity to learn more.

Don’t forget, some of your best prospects might be your existing clients. Have you provided them with all the benefits you can offer? Might there be some gaps here?

Good salespeople who operate from their adult are great at listening, not interrupting, and allow silences for thought. Child salespeople want to talk and talk, and interrupt the adult to get attention. Adult salespeople hear resistance from the client and listen, take it on board, and think. They do not try to score points, they determine what the issue is.

Resistance from prospects means they have either not understood the benefits, or something you’ve said, or are not OK with how you made your point or a combination of these. Good salespeople think ‘how did I allow this to happen?‘ and do not blame the client. They analyse what they said immediately before the objective arose, and their own body language and how they responded.

The worst thing to do is respond with ‘But’ or ‘However’.   Rather than saying, “Yes, our price is high, however…” (which is telling the client they are wrong), you could respond with “Yes, our price is high, and I bet even if price was more in line with your expectations, there would be other reasons that stand in the way, would I be right?”

We’re not trying to prove the client wrong. The client has their own reasons, values and beliefs, which we need to uncover so we can direct our efforts better. The client will resist if you get argumentative, and will feel manipulated. So get on their side, be the nurturing parent in this case. The client may even open up a bit. Once you’ve dug down on the reasons, and answered those in an adult manner, perhaps the price now does not look so bad.

The final point Wilensky makes is that everyone is different, so don’t try the same lines on everyone. Some are more open that others, some are more direct than others.

  1. Bulls (closed/direct) – are domaneering types (critical parents), so keep things concise, on message, demonstrate bottom line results. If you have a 30 minute meeting, take no more than 27. Allow questions, listen. Don’t take any brusqueness personally. Lambs (not great salespeople) can’t sell to Bulls (big ego CEOs and C-suite types).
  2. Owls (closed/indirect) – are cautious and analytical, so be rational, don’t make sweeping generalisations, don’t touch anything on their desk (they’re private), give balance, don’t force a decision, give detail, it’s OK to say you don’t know (but find out the answer and provide it in a timely fashion). Tigers (usual sales types) find Owls (usual technical buyer types) hard to sell to.
  3. Lambs (open/indirect) – are nurturing parents, so listen patiently, empathise, provide solutions that don’t ‘rock the boat’, be soft in closing and indirect (‘your entire company will benefit‘), they may compliment but still not buy, they don’t like to say no. Tell them it’s OK to say no. There are a lot of lambs out there.
  4. Tigers (closed/direct) – are natural extroverts, so make conversation stimulating, they like to talk about themselves, so stories and name dropping works better than analytical reasoning. Allow them the glory of the solution, get them dreaming, but close quickly as their concentration is limited.

So, where are we?

From now on,

  • Consider the psychology of your clients
  • Never present the same way again to all
  • Move people out of their states, as relevant
  • Don’t fall into the wrong state yourself
  • Practice, practice, practice
  • Stop buying excuses
  • Start coaching
  • Set goals
  • Turn sales meetings into psychological workshops
  • Role play constantly, and, most of all
  • Enjoy growing your sales people and your business.

Promoting the positive force of business people

Australians of the Year

For the past 55 years, every Australia Day, the ‘Australian of the Year’ is announced, usually by the Prime Minister in a ceremony outside Parliament House. It’s become a major occasion, and is televised.

The Award was originally designed to bring some deeper meaning and a focal point to Australia Day itself. These days the winner is picked by the National Australia Day Council (NADC), in order to honour the Australians who make us proud to be Australian.

Glancing down the list of 59 (no doubt worthy) recipients, we see a distinct skew towards Science and Sport ~ with 15 Scientists and 14 Sportspeople honoured. That’s half the total list. 9 politicans & activitists and 9 entertainers make them quite a common category as well … then it’s a bit of a drop off to 4 business people, 3 military personnel, an artist, an author, a Bishop, a Cardinal and a judge. There are only 9 women, so it’s 85% male.

I love my sport like the next guy or gal, but surely they get enough recognition already? And not to mention their many accolades, wages, endorsements and everything else. When 4 win it in a 7 year stretch from 1998-2004 you think things have gone a bit over the top, even considering the sports mad Prime Minister we had at the time. How can you really compare the spray on skin brilliance of a Prof Fiona Wood with a tennis player, or an Indigenous leader with a cricketer?  And why so few women?

If we are trying to inspire our kids, then whose example are we trying to promote? Science is for boys and sports are so important the best ones are to be placed on another pedestal?

All hail Rosie Batty, the 2015 recipient and a campaigner against domestic violence. I’d like to see far more women, and more business people honoured too.

The first business person was Alan Bond in 1978 (oops!), then Dick Smith in 1986. Recently there has been a bit of a rush on  with Simon McKeon (2001) and Ita Buttrose (2013), who were honoured more for their post business work than what they did in business.

4 business people in 60 years? Slim pickings you might say.

Is this the tall poppy syndrome rearing its ugly head? Is it somehow ‘dirty’ to be successful in business? Are we only interested in what James Packer is up to with Mariah Carey, or Clive Palmer’s latest absurd remark? Are there no other admirable people in business who have served their organisations and communities well, creating jobs, wealth and happiness for tens of thousands? Well, yes there are, and I could name plenty. I’ve found the higher up you go and meet people, the more impressive they are. Not show offs, but working people, working hard, with the right attitude to their staff, clients and the community in which they operate. Most of them quietly get on with it. They give back in bucket loads. They pay a lot of tax, as do their companies. They pay dividends.

It’s not bad to be successful, and we should applaud those that are. Those that have worked hard over many decades, created the backbone of the economy, and have made this country the one that simply has the best lifestyle in the world. No exaggeration, even our cities get in the best places to live. And Australia gets even better when you step out of the cities!

So, come on NADC. Let’s see some positive reinforcement of the excellent business people out there. Women and men. Good people who can inspire the young of today, show them they can get out there and do it. Show them that they don’t need to settle. They can build up a  great company themselves. Yes, they can do science and maybe sport or entertain, but equally they can create a whole organisation, or go into one and transform it, building wealth for many (yes, including themselves) in the process.

Maybe not Clive Palmer. But perhaps Michael Chaney, Gail Kelly, Scott Farquhar, Jack Cowin, Stan Perron, Janine Allis, Radik Sali, Carla Zampatti … and many more besides. If you look, you will find thousands to choose from.

Being slightly behind can be a winning situation

Churchill

So it’s half time. You are behind by a goal (or a basket, or a stroke …). You take a breather, reassess your situation and fire yourself up for the second half. And what happens? More than likely, you end up winning.

Much has been spoken of the emotional half time Churchillian speech from the coach, an inspired substitution or reorganisation… but the simple fact is that if a team or a group or an individual believes it is just behind, but with enough time left (such as half the game) they can refocus and be motivated to play better and get over the line.

It doesn’t work if you’re way behind. Invariably, people give up – it’s just too hopeless. 5-0 down isn’t much fun. It’s demotivating. But if you’re just behind, there’s a chance, and things can be turned around. You can sense victory, within reach.

Intuitively, this makes sense. We’ve all been in situations (or seen them) when teams have come back afresh in the second half, 1-0 down, to win, say 2-1. There have been (rarer) instances of teams being 4-0 up at half time and then losing it. Ouch. Although I read that Man City has not won a game in 20 years having been down at half time. (Quiet hurray!)

So, the theory is that a team is more likely to be motivated, play better, and end up winning if they are only just behind at half time. In other words, you’d almost prefer the team to be in this situation. Unless their opponents are hopeless or the gap in abilities too wide, teams that are just ahead can stutter, their nerves a-jangle, they make mistakes, play too defensively, and forget what put them ahead in the first place.

So what does the research say? It concurs. Jonah Berger (he of the ‘STEPPS’ Contagious findings) and Devin Pope found in 2011 that if teams thought they were just behind at half time they had a slightly higher chance of winning in the end. Studying 18,000 professional basketball games, they found teams that were 1 point behind won more games that teams that were 1 point ahead. They found that being behind at half time was only half as advantageous as playing at home. And we all know playing at home can be a massive advantage.

Berger found the same results when he put people into a competitive typing situation telling certain groups they were slightly ahead, another they were even, and another they were slightly behind. It did not matter where these people were in fact. What mattered was where they thought they were, compared to the other groups. Those told they were slightly behind massively increased their keystrokes per minute (their increase was higher by a factor of three.)

So, here we are near the end of the calendar year, half way through the Australian financial year. If you’re slightly behind to budget, be fired up for the second half. Spend some time relaxing, getting away from things, and then come roaring back in January to June.

Merry Christmas.

Bootstrap yes, but don’t skimp on a good lawyer or accountant

Google don't like lawyers

Google “I like lawyers” and the top results are articles such as “Why do people hate lawyers so much?” and “People like lawyers less than you think”.

Even Google can’t find a positive result.

It might be easy to knock them, but finding a good lawyer or accountant is critical to the success of any business. I wonder why they get such a bad rap? Perhaps its the legalese and financialese that some find perplexing, or the $100’s per hour fees charged in 6-minute blocks that wrangle.

While it’s important to conserve cash when starting (and running) a business, as my wise business professor used to say: “Never skimp on a good lawyer or accountant; doing so will be a false economy. Find a good one, and these people will save you tens of thousands of dollars in the end.”

I can certainly attest to that…

When our fledgling online business was still in ‘bare survival mode’ in the early 2000s, I became aware of a relatively new government scheme called the ‘R&D Tax Rebate*’ (or ‘R&D Tax Incentive‘ as it’s now known). I remember asking our existing accountant (twice) whether we qualified, and being told unequivocably that we did not. At the networking function around this time, I got talking to a city accountant who had been at the same uni as me, and he mentioned that we would definitely qualify. I followed up with him, and not only did he manage to get us over $50,000 cash back that year, he backdated the process (as we’d missed out in its first year of operation, the year before) so we duly won two years worth of rebate, over $100,000 in cash. At the time, this was the difference between sink or swim.

We changed our accountant.

[* The scheme allows businesses investing heavily in R&D to convert a portion of their losses into cash back from the ATO. Once profitable, you can use it to minimise tax. I would estimate this scheme returned us half a million dollar benefit over the course of the subsequent 7 years.] 

Also around this time, we were made aware that a rival website was taking data from our site, and displaying it as if it was theirs. I became perplexed as to how this could be legal, but various lawyers I spoke to did not seem to know if we even had a case. Until I met a brilliant IP lawyer, who had used our site before (so he was a fan, which was nice), and seemed confident that we were in the right, and they were in the wrong. The upshot of his work was that other site shut themselves down.  You can read the ensuing media coverage of this case here.

I have used this same IP lawyer ever since.

I can tell you that both the accountant and lawyer mentioned above were extremely reasonable with their charges, and sensitive to the fact that we were but a small startup with limited funds. It felt good to have some experts on your side, and to get good outcomes as a result. I could not have done any of this alone.

So, do not skimp on a good accountant or lawyer. But bootstrap your startup. It sounds paradoxical, but it’s probably the best advice I can give you.

Innovation, the new buzz word

Einstein thinking

Since new PM Malcolm Turnbull, in his first address to the nation, challenged Australians to embrace change and innovate, everyone seems to be talking about ‘innovation.’

But what does it mean, and why’s it so important?

Technically, ‘innovation’ means ‘new’, as in a new method, a new way of doing something, or a new invention. It’s synonymous with being clever, successful and on the cutting edge. Turnbull, a successful businessman in his own right, has experience in these things. He went from lawyer to investment banker to IT entrepreneur and made multi millions in the process.

Rabbiting on about innovation is not enough, but grasping the challenge, seeing the positive and actually doing some different things, is important. As Albert Einstein reminded us – “we cannot solve our problems with the same thinking we used when we created them.” He also famously said that the definition of ‘madness’ was trying the same thing over and over and expecting a different result.

We have to try new things. You get points for trying. Seriously, you do. Because you learn, and no one will forsake you if you give something new a try. The Finnish company Rovio Entertainment spent 6 years and laboured over 51 failed games before their smash app hit Angry Birds came out in late 2009. Since then, its been downloaded 3 billion times – 3 billion! – plus various spin offs such as multiple versions, merchandise, a TV series, a movie and several theme parks. From an app. From a multiple-failed game developer. In Finland. If that’s not inspiring, I don’t know what is.

Six years on, even Rovio cannot rest and is having to innovate further. They’ve recently laid off a third of their workforce, mirroring staff cuts at Zynga (who make the Facebook game Farmville) and King (Candy Crush). The more successful you get, the more imitators and competitors try to knock you off your pedestal. You knocked others off to get there. That’s how the world works.

Nice though Australia’s resources base is (many countries would kill for this, and, often, do start wars over this stuff), we are not a cheap place to do business, and need to occupy the technological heights if we are to remain competitive and continue living the life we’ve had so good for so long. 23 years of uninterrupted economic growth is under threat. It’s no time to rest on our laurels, or pretend that new things aren’t changing how the world works, fast. As the PM says, we need to embrace technological change “as our friend“.

Consider the following:

  • In latest Global innovation rankings, Australia is 17th, no change from our 2014 position. Sweden, Switzerland and the UK occupy the top 3. The US is 5th, Singapore is 7th … Germany and New Zealand sit above Australia
  • According to a Deloitte Report (2015) one third of Australian companies face imminent and substantial disruption by digital technology and new business models
  • Another report from 2014 suggests 25% of Australian GDP is under attack in next 10 years
  • San Francisco-based Uber has taken 9% of Aus taxi industry ($450m of $5bn) from a standing start inside 2 years (~ consider how well entrenched, regulated and supported this industry thought it was pre-2013)
  • In the Crossroads’ economic complexity map, Australia ranked 74th in world – we are just too reliant on too few traditional industries. Sweden is one of the most diverse.
  • In 2014, $47bn was invested in Australian resources while $1.5bn was invested in tech
  • In the last 5 years, Australian startups added 1.5m jobs. Meanwhile, large businesses are culling staff numbers. In the US 80% of new jobs (in a run lasting now 67 consecutive months of net job creation) have come from new/small business.

Consider further…

  • Singapore has allocated $14bn over next 5 years for investment in startups/tech
    – funded 15 incubators
    – matching funds 85% to 15%
  • Israeli government supports 22 incubators, invests ~ 85% of their budgets
    – has led to 5x private investment in follow on funding
  • Meanwhile, our WA government invested $6.9bn in royalties for regions, and $20m into tech startups
  • Other States in Australia have a Minister for Innovation, but not WA

We’ve got a way to go to catch up, but perhaps the message will get through. To the innovative belongs the future. It’s always been thus.

Can someone develop a complete car parking app please?

traffic warden

I try not to drive my car around the city for meetings; often it’s much easier to walk, take a CAT bus or use Uber. But sometimes, an event may be on the other side of the city in the late afternoon or evening, from which I want to get home afterwards. My only option is the car, and finding a nearby car park or spot on a side road.

Which got me thinking the other day – why can’t I park, and an app tell me how much I have to pay, with payment taken at the end of my time based on how long I was there for? (The ‘Uber of car parking’, if you like.) The app would estimate the charge for the time. Even if overshoot my time (say, the event goes on longer than expected), it need not matter as I would be charged when leaving (the app could let me know the new total charge – and I could decide to stay on or leave). The phone would know where I was, when I arrived and left the parking spot and therefore how much to charge. The funds would then be taken automatically, and go to the local council, or Wilson, or whoever (private car bays could be used as well). The app would take a small % as a enabling fee.

It wouldn’t be that hard to develop. Most of the effort would be in getting all the car bays loaded on, and the permission of those that owned them. You’d get the larger car bay companies and councils on board first (explaining how this was going to save them costs and ensure all bays were paid for, making them more revenue). Private car bay owners could then have an uploading and admin system built for them.

No more overdue tickets, no more fines, no more paying more for what you use, no more fumbling around for coins at the nearest ticket meter in the rain. Indeed, no more parking meters or ticket inspectors. (There would be a transition period during which you’d still have the existing system but overtime the old would be phased out, and we’d wonder why we ever had them.) If you tried to park without paying, you’d get a warning, and if you did not agree to the ticket you would be fined. Appropriate warnings would come as notifications.

A central command would know where possible bays are, and could guide you to them. They’d know who’s parked where, who’s paid and who has not. Totally efficient, no one would get away with not paying, indeed no one need be be fined. All done on an app, every time.

Over time, an efficient use of all car bays would make for better use of vehicles on roads, less time wasted trawling around for car park spaces, less angst, and a better use of all space available.

There are many car parking apps out there, but none of them do this. Some find car bays that are on their system, some try to hook you up (AirBnB style) with private spaces for hire, and some know how many bays are available in real time in the larger city parking spots. But no one pulls it altogether. Someone will, one day.

P.S. No, I have not been fined recently (!); I’ve just been mulling this over. Now, over to you…

Photo: Dom Joly’s Traffic War

Leadership is about taking others with you

Turnbull

There’s a line in an old episode of The West Wing that goes : ‘What do you call a leader that no one follows?    Just someone walking around.’

In the past week we’ve seen another change of political leadership at the top, our 5th Prime Minister in 5 years, which some refer to as “the new normal”, while others blame everything from the media, the 24 hour news cycle and even social media.

I see it differently. A leader is (by definition) someone that others follow. The art of leadership is to move other people in a direction, perhaps worked out together, that they would not have moved to on their own accord. They move en masse, as if led by an invisible force. A leader articulates the mission, where they want to get to, and why, and motivates and stirs the masses to action. Together, everyone achieves far more than they could on their own. It’s what Churchill did so well in the 1940s, what Lincoln did in the 1860s, and many others before and since.

Simply put, when a ‘leader’ (or someone in a leadership position) does not (or cannot) take the people with them, they are simply a person walking around. Leadership has disappeared, all but for a few rusted on acolytes. Ergo, Rudd, Gillard and now Abbott.

In 2007, and well into 2008 and 2009, Rudd took the Australian people with him. With his snappy freshness and Mandarin-speaking abilities, he looked like the ‘PM for the times’. A country weary of 11 years of the political machinations of John Howard, while still respectful of his achievements, cast the old aside and ushered in the new. Rudd had no real Labor stronghold, just his hold on the people, and when, after a few missteps, that waned in 2009/2010, his party unceremoniously threw him out before the end of this first term of office. How the mighty had fallen.

His replacement, Julia Gillard, Australia’s first female PM, was a feisty fighter, but the legitimacy (or lack of) her ascension and its anti-democratic nature (there was not even a caucus vote), plus her broken promise over the carbon tax (people do not like new taxes, as a rule, especially one you’ve promised on the eve of an election not to impose) saw her whittled away to an ultimately undignified exit. She never had the people, and never took them with her. After her minority government limped on through 2010-2013, the assassin turned PM was replaced by the PM she assassinated, and Rudd was back as PM, if but for a few months, as a damage limitation exercise to save the deck chairs as the ship sank to its inevitable defeat to Tony Abbott’s Coalition.

Two years on, for the third parliamentary term in a row, we witness another elected PM taken down before their first full term is up. Was Abbott more a Rudd or a Gillard? I would say the latter. He had the political apparatchiks behind him, but he never took the people with him. Pretty much anyone as leader of the Liberals would have won in 2013 after the disunity and tragi-comedy of the Rudd-Gillard-Rudd years. The ‘I don’t like him but I’ll give a go’ nature of the Australian public allowed Abbott to sweep to power.

It turned sour pretty quickly. Never before had a 1st term elected government lost the popular support (as measured by polling) so fast. It took only 3 months. Three months! 30 polls in succession since bear witness to Abbott’s government falling behind in the popularity stakes to a rather blandly led Labor opposition with Bill Shorten as leader. Australians looked at both sides and switched off.

The situation lurched on for another 18 months before Abbott’s ultimate denouement. The Liberals did not want to be seen to take down a sitting PM in their first term, in stark contrast to what the Labor party had done in recent memory. Unity and steadfastness was promoted as strength, making the ‘tough decisions’ that had to be made after the ‘disaster Labor left us’. However bad Abbott got, and he was not all bad by any means, this argument was his strongest suit. Surely the Libs would not ‘do a Gillard’ on their own 1st term PM?

Back in February, some disenchanted Liberal MPs called for a leadership election. This became a double embarrassment for Abbott, in that not only was this a back bench revolt (neither heir apparent Turnbull or deputy and potential rival Bishop initiated it hence could not be neutered by defeat), Abbott only won 60% of the vote against nobody. 39 of the Liberal caucus voted for “no one” rather than their leader and Prime Minister. Ouch. Abbott was mortally wounded after that, given another 6 months and then it was all over fairly swiftly.

Abbott’s leadership could have worked if he took the country with him, but he didn’t. In truth, he never really had them. They gave him a go, they suspended their worries for a while, but they never loved him, never even liked him. Most breathe a sign of relief now he’s gone, and it’s Malcolm Turnbull’s job now to see if he can communicate better to the people, persuade them that his way is the best way, and take them with him.

For a digital/business person like myself, I applaud the positive argument Turnbull made in his victory speech Monday night, about the future that Australia needs to become as digital disruption and technology becomes more and more important….

“We have to recognise that the disruption that we see driven by technology, the volatility and change is our friend if we are agile and smart enough to take advantage of it.

“There has never been a more exciting time to be alive than today and there has never been a more exciting time to be an Australian.

In that brief statement, he articulated his vision and the battleground for the economy, and how he will distance himself from Shorten. Not beholden to old ideas, he will seek to argue we need flexibility, resolve and intelligence to win the day. He clenched his fist as he spoke, his voice rose and you could see the passion and belief come through.

This looked like leadership, born of someone who’s actually been there and done it in business. Let’s see if he can take the people with him.

Farewell iiNet

Michael Malone looks on as iiNet shareholders vote in favour of sale to TPG

Tomorrow TPG take over Perth’s (as yet only) billion dollar tech startup, Australia’s #2 internet service provider iiNet, with financial settlement on the deal.

Founded in his Mum’s Padbury garage in 1993, because newly graduated Michael Malone wanted to continue to use the internet post university, the rise of iiNet is testament to Michael’s audacity, vision and hard work, and in latter years, as an example of a company that truly understood (and lived and breathed) that the customer was always at the centre of things.

In the mid and late 1990s, with government-owned Telstra slow to get into national broadband, a whole host of small ISPs were established in Perth. iiNet was quick to soak them up as it grew to its own IPO and beyond. Michael took the company public in 1997, acquiring Wantree, Networks and Net Trek along the way. In the 2000s, a dozen other acquisitions occurred including Malcolm Turnbull’s own Ozemail, and New Zealand’s iHug.

As iiNet grew so it went head to head with Telstra, and then, in 2005/6 a stutter occurred, which was almost terminal. Due to some accounting problem post a recent takeover, results sent to the market were later revised, causing the stock to be suspended for weeks, and a decimation in share price. This brought in new board members and the sale of iHug.

It proved to be a mere misstep, from which the subsequent acquisitions of Up’n’Away, Westnet, Netspace and Internode pushed it past Optus into 2nd place in the residential broadband market in Australia, with only the now privatised Telstra ahead of it.

In 2008, peering from afar was an unlikely foe – the Hollywood movie industry. In attempt to knock off a small fish on the other side of the world, as some test case for further legal action elsewhere, a class action was brought against iiNet by 34 movie and TV companies including the mights of 20th Century Fox, Warner Bros and Village Roadshow. They claimed iiNet should have done more to prevent illegal downloading of movies by its customers, which iiNet argued was akin to blaming road building companies for every car crash. iiNet famously won the case, and two subsequent appeals. Other ISPs around the world breathed a sigh of relief.

After 20 years in charge in 2013/14, Michael took 6 months off to go mountain climbing and respected former Brit and CFO David Buckingham took over in an interim role. When Michael returned, his heart was not really in it, and he left for good in mid 2014, still a major shareholder and no less passionate, but with other things on his mind. He remarried and moved to New South Wales, buying himself a large mansion in the country. He joined a few startups as a board member.

When low cost provider TPG made an offer to iiNet earlier this year Michael was incensed, claiming the board had lost all growth plans for the company and were folding too easily. In a prescient warning, he said the board and TPG were “appalling silent on the impact this would have on our staff and customers.”

Michael had made ‘serving the customer‘ the be all and end all of the company. Everyone, including him, was remunerated on NPS (net promoter score) – a gauge of how evangelical your customers are with your service. iiNet won award after award for this.

A few months later a rival bid came in from M2 which prompted TPG to up their initial offer. In July Michael bowed to the inevitable and 95% of shareholding went along with the deal. He looked saddened (see picture) but also must have felt pride in the final valuation.

2 weeks ago the deal passed its last administrative hurdle, with the ACCC allowing the merger to go ahead. The following week TPG acted swiftly, removing the CEO David Buckingham, and many management reporting lines were changed. An interim board was put in place, which disbands tomorrow. The swiftness of these moves were a shock to many inside, and outside, the company.

Time will tell if the customer-focus essence of iiNet will remain. Many fear that if their well renowned devotion to customers drops away, so may the client base. 600 staff inhabit 502 Hay Street in Subi – how many will be there by Christmas, or the same time next year?

Whatever happens will not diminish the achievements  of this son of an Irish fence maker, who built up a billion dollar company from scratch, taking customer calls by his bedside at all hours of the night in that Padbury garage back in the early 90s. Over 20 years this brought him many admirers, amazing experiences and enormous wealth. It’s been quite a ride.

Photo : Philip Gostelow

Ecosystem done. What Perth startups need now are success stories

Startup Weekend

Almost exactly three years ago I attended the first Startup Weekend in Perth. 100 plucky individuals bought tickets to attend. 40 or so got up on Friday night to make a 1-minute pitch (if they went one second over, they were stopped in their tracks). From these 40 pitches 15 or so teams formed by 9pm that night, and they were off and running.

By Sunday evening the teams had to pitch their ‘completed’ ideas to some judges. Some had almost complete products out on the web, or in the Google play store. They had branding, cool designs, working products, had engaged in customer validation and had learnt a tremendous amount. Perhaps 6 or more months of learning had been crammed into a frenetic 48 hours. Most would wake up a little bleary Monday morning and return to their day jobs.

I was one of the mentors on that first weekend, and I remember the ‘Breakeven app’ who I worked with ended up in 2nd place. The leader of the team had attended two Startup Weekends in New York previously and thought Perth’s one was better. Better in terms of the quality of the attendees, mentors, judges and ideas.

Wind on three years and there have been 5 startup weekends. There are now 5 tech accelerators in Perth (a year ago, there were none). There have been 3 iterations of Founders Institute. There are half a dozen co working spaces. The Perth morning startup meetup has 1500+ members. I have accumulated a list of 250+ startups that I know of (there are probably way more, and I am finding out about new ones every week).

The ecosystem is full and vibrant. None of this existed 3 or more years ago.

A well known Perth-based VC Matt Macfarlane told me once, “first comes the ecosystem, then the success stories, then the investors.”

We’ve got the ecosystem, now we need some success stories.

Newspaper circulation falls, and falls, and falls (again)

Circulation on the downer

The latest newspaper circulation figures for Australian media organisations make for more sorry reading. Every title, no matter how they try to dress it up (and, boy, have they tried) is in the red, as the graphic above shows (courtesy: ABC News).

Fairfax media seem to have totally given up on print’s future, calling the newspaper circ numbers a “historical production metric” (translation: they are so bad, we are not going to pay much attention to them anymore, in fact, they are a thing of history).

The bright side in all this is the growth in digital subscriptions to newspapers… err, sorry, media organisations.

‘Digital only’ paid subscriptions to the Sydney Morning Herald and The Age now surpass the ‘print and digital’ offer (interesting) and are almost as large as the ‘print only’. Total subscriptions though are well down, although the pace of decline has slowed.

Even our local print monopolist, the West Australian (apparently the most expensive, and best performing daily in the country) has seen subscriptions fall another 4.3%.

The Fin Review has (so I am told) 15,000 digital subscribers (not many for a national product) and the Australian around 55,000. Meanwhile, the Financial Times has 700,000+ print/digital subscribers around the globe, 70% of them are digital mix or digital only. The New York Times has 800,000 subscribers, and a team of 300+ staff to manage them.

A migration to digital platforms is now gathering pace. People who want quality news, specialised news, niche news, are increasingly OK with paying for it. Most people get their general news from free web sites, TV news broadcasts and (increasingly) Facebook feeds (i.e. the news that friends of theirs post daily). Facebook has even begun experimenting with its own Facebook news product (‘Instant Articles‘), so publishers can post directly onto newsfeeds of its 1.1billion or so users.

This major ‘print to digital’ trend is now the main game in news media organisations, and within digital (now the largest media category) there is a move to social and mobile.

Will print die? Interestingly, some commentators think it might still have a role ‘in the mix’. Albeit a smaller one.

When a wily investor like Warren Buffet forks out US$344 million for 28 local newspapers in the States (in 2013), then you know there is something of value still there. His reasons for this included the power local papers have to disseminate news to a community, who, bored of the depressing nature of the global news, turn to something they are a part of, and can understand. Newspaper organisations with a ‘sensible Internet strategy’ will do the best and can still make good earnings.

We live in interesting times.