Values matter in BUSINESS more than ever before as Ikea have just found out
In today’s information driven world, how you do business matters as much as the business you do, as Ikea the iconic Swedish furniture retailer, has just found out. Ikea’s green credentials have been dealt a massive blow in consumer’s minds. Ikea’s failure to support sustainability in its products leaves customers questioning its real values as a business. Heres, why values matter in BUSINESS more than ever before as Ikea have just found out to their cost! Here’s why you cannot just talk about values, you must live them!
Ikea only uses 16% sustainable wood!
Ikea’s failure to achieve its own most modest target of 30% of its wood products to be from certified sustainable wood, will damage it its credibility heavily with its key audiences. The fact that it only hit 16%, has a massive blow on the values it professes as promoting sustainably sourced materials and to its environmental positioning. Compare that with Homebase (78%) and B&Q (77%), which won the best green award 2010.
The excuse given in its defensive press statement is that it has sacrificed the values of sustainability for rapid growth and protecting its profitability (£2.3billion). But short term greed like this can cost dearly on both growth and profitability over the long term.
Ikea’s staff not telling the truth
This corporate failure was made worse by staff telling customers in store that its products are from sustainable sources. When in fact they are from illegal logging in places such as Russia. This insatiable drive for growth, which so often undermines trusted names, may damage the Swedish brand’s position as the leader in the flat pack market significantly. This expose means that Ikea will now undergo microscopic environmental and customer scrutiny.
Greenwash Marketing is NOT acceptable
Ikea’s soft “long term” aspirational statements on their website with links to the Rainforest Alliance are unlikely to be seen as enough in the modern world where green wash marketing such as this are quickly exposed and penalised. When the spotlight of the green world is turned on, it is difficult to hide in the shade.
The World Bank suddenly in the late 1980’s promoted its ‘green credentials’ by promoting itself as having employed ‘an environmentalist’, to offset its image of chopping down forests for cash crops. This green wash story was quickly exposed when it was pointed out the World Bank employed some 5,000 economists, what difference would/could one environmentalist make?
Business Values must be transparent
The way you provide your product or service and to whom, says more about you than how much business you do. Being a big turnover company in a highly segmented world is no longer the determinator of success. How you do your business now determines your current credibility and future success. Credibility is as much about your values in becoming successful as about the success you have. The question of size as measured by turnover raises questions about how you do business.
Real Business Values Recognise Real Carbon Footprints
Too often businesses have slick marketing messages, from slogans and statements, rather than understanding what impact they are making on the world in everything they do, their carbon footprint. As Carbon footprint becomes clearer so businesses must adapt to reducing it throughout their entire impact upon the planet and reflecting that in the values they actually demonstrate.
Your values as an organisation as demonstrated by everyone inside your organisation matter to both existing and potential customers in choosing to do business with you. People have choices and they can now exercise them more freely than ever before, and that means customers can access information instantly to make choices that are more informed. Ikea’s staff misinforming undercover Times reporters about their sustainable and certified sourced products at a number of shops are one symptom of Ikea’s rapid growth boardroom culture.
Values Must Live In The Moment
Almost everything in life is in real time and instantly communicated to circles of influence and beyond. A restaurant having bad night can have a poor reputation before the starter has even been cleared away as customers post live feed back to sites such as Qype or Trip Advisor . Therefore, before the waiter, maitre d’ or chef knows what’s happening the world outside already does by Twitter and Facebook and are cancelling their reservations in their droves.
Why clean lavatories matter?
The old adage that if you want to know how clean the restaurant kitchen is, inspect the lavatories. This is because they tell you how the restaurant values cleanliness, is a great example of modern customer awareness. Do you live your values or just post them on your website? Is the question customers want to know in establishing and experiencing trust with you and your brand.
You can spend as much as you like on your website, Google reviews and trip Advisor comments, but simple first impressions such as the state of lavatories matter more to customers.
Rail companies are learning fast
The recent story of the man on the train talking too loudly causing enraged customers to Tweet complaints about his behaviour which was picked up by a duty manager hundreds of miles away who then contacted staff on the train to track down the loud caller and asked him to quieten down.
This story is very much testimony to the growing demands of customer expectations, immediate online response, not waiting for passing train staff to react. This story is part of the reputation shift that train companies are actively pursuing.
Values are in the detail
Values matter, they define the real differences between companies. How British Airways treats its customers through the values it embeds in its entire organisation is what makes it different to other premium airlines and distinguishes it from them, and from the bucket providers such as Ryanair.
However, as everyone de-layers in response to changing business models, cost and modernisation requirements, values can be lost in the rush to modernise and compete in new ways. BA’s changes to its premium dinner menu, introducing exotic main courses such as crocodile and ostrich sounded good but simultaneously cutting the After Eights, so there was not to go around 1st class passengers was a classic example of getting its values wrong in its customer’s eyes.
Values Must Involve Everyone in the organisation
If you value your customers then remember everyone needs to smile in their role, if you believe in providing excellent customer service then don’t cut your front of house staff numbers.
Too many companies’ ideas of communicating values are to place a statement on a website, brochure, at reception and on the induction training programme. How many companies look at the strategic advantage of values and embed it into people’s roles, asking staff to define their role by those values by redefining their role to live those values? How many companies review those values as outcomes in winning and retaining customers?
Business Values as seen by Employees and Customers
Customers, potential and existing, are drowning in choice. What makes you stand out to them is the values you own and can demonstrate as a business. Statements on walls and websites always sound good, (possibly, because they are written by marketing people who do not work there) but unless the company lives them, then they do more damage than good. Over promising and under delivering is a growing experience for everyone today.
Whether it is a London hotel, stating it’s exclusiveness, as evidenced by its 5 star, pretty pictures on the website of its presidential suite and over the top statements such as “sumptuous 5 star accommodation” the jaw dropping price tag. When you turn up and find a broom cupboard with not enough space to turn around in let alone swing a cat, and you are one of 500+ rooms filled with bus loads of tourist on a package holiday then company values are under pressure.
The same is equally true for staff. Why should people stay loyal to you if you don’t live those values and enshrine them in every one of your people. Do they live it or lip service it?
New company’s leadership must create and live their true values
New companies have the unbridled opportunity to define their values from the start. By building them into their business model throughout the entire process from the beginning, providing value and clarity with every new role and new person, they can use their values to maximum leverage for attracting their chosen customers and staff.
So Googles’ “DO NO HARM” value won many plaudits, breaking down the concern about the is was then rightly questioned by their policy in China of being seen to be supporting censorship (try typing Tienanmen Square Massacre into Google in China it never happened!). Now there is a good argument that rightly says any Google is better than no Google, but the contradiction against their stated values upset many Google Supporters elsewhere in the world.
Your values should come from within. What do you stand for? What does your company do? How should everyone do it? What does excellence look like? Some classic questions to understand the values you offer. I often ask people to think of an animal or car which best describes there organisation
Keeping Values Alive
Established companies inherit values, often without realising they have them in place, “its how we do it around here” type phrases are often values hidden inside everyday activity. Keeping values alive is often hard in rapidly changing under-pressure environments. Changes in leadership, particularly when cross industry leadership is introduced or when new pressures are introduced from changing ownership for example often end up throwing out the hidden value of a brand in the race to achieve short-term results.
Everyone entering a company, particularly top executives, must understand the core heritage values any organisation has, how they are owned and expressed. The best way to achieve that is for new people to present those values back under peer group review and add to them with the changes they intend to introduce. New products / services need to incorporate core values and learn to demonstrate them in new ways as new channels of communication are opened up. Here is a simple checklist for business leaders to use to answer honestly and thoroughly about where you are with your business values.
Values Check List
- Are your values visual to your team and customers?
- Does everyone know your core values, have you checked?
- Can all your people translate them into their daily role?
- Do people see the company values in other people’s roles within the organisation?
- Do customers comment on those values in their dealings with your company in formal and informal feedback channels?
If you can only answer confidently to points one and two then you are not living your values as a business. If you cannot hand on heart even answer those two, them it’s probably time to look at your values in a lot more detail. Spend time to think through what you and your business stands for and get in touch if you need any assistance in creating values which matter to you.
Leadership Strategy
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Business Success: Starts with the END in mind
Here’s a simple question to ask any business owner, why are you in business? The answer to such a simple question can be very enlightening. The flippant answer is to make money: an honest, if not inspiring answer; but there is a fundamental flaw in that statement which many business owners fails to comprehend. They start a business, typically through experience in, or a passion in the field or because they have seen an opportunity to make money, but fail to achieve that ultimate goal because they fail to plan their exit strategy. Planning your exit strategy on day one of setting up upper business is the hidden key to business success. So remember that business success: starts with the END in mind.
Start with the END in Mind: Strategy
Most business owners focus solely on profitability as their key measure of success. Yet making a profit from a business is more than just yearly profitability. It is also about building a business which is an asset that your target buyer is looking to buy. If you can’t get out making the money you intended to when you sell up, then why did you set up the business in the first place?
You have a great idea, you work on it, and spend your energy (and life) building it until it becomes you. It succeeds, and you enjoy the lifestyle it brings then the challenge of maximising that income to free yourself up and retire or do something else with your success. That final stage often becomes impossible because you are the business and it is you, its lifeblood, main cheerleader and driving engine.
This typical scenario of being a business owner, is driven by the passion to run the business day-to-day overshadowing the failure to plan your exit strategy from the start. That is building a business with a clear objective to enable the owner to get out and maximising their income from what they have achieved. Nearly all business owners focus on building a successful business, but not on making sure they maximise their returns from the successful ownership of the business.
The END in mind
The real payback from all that hard work in creating and setting up a business for an entrepreneur is the final payback, the exit payoff. It is the value creation in within the business, the shareholder value being realised by a sale of that business, which makes al the hard work worth it. Few owners think about realising their shareholder value. Most being more interested in the Profit and Loss than the Balance Sheet when making key decisions about the business. That approach is effectively summarised in the phrase;
Turnover is vanity,
Profit is sanity but
Cash is king,
This great motto in the running of any business successfully. Cash flow is the lifeblood of business success. But, this does not hold true in achieving a successful exit strategy. Success as a business owner is not measured by turnover, profit margins or the mountain of cash your business generates, but what the business delivers back to those who own it. So I would add to that classic phrase;
true business success is the shareholder value it generates.
Achieving shareholder success is the key motto to follow if you want to have a saleable asset. Shareholder value reflects the true value of your business when you decide to sell up and move on.
Business Success
Business owners need to focus on developing an exit strategy from day one which will enable them to achieve their personal goals. While profit and cash rule the day, building a valuable asset requires building shareholder value, through building sustainable long-term profitability. Building the business assets, the real shareholder value, needs to include strategies around Intellectual Property (IP), long term profitable contracts, strategic relationships and operational excellence that maximise the company’s value to targeted purchasers.
Successful Business Planning: Starts with the End in mind
Success in business requires owners to build a business which you own, but one you are not concreted into the foundations of its success. Building a forward strategy for your business is a vital first step in building your exit strategy, it is the old adage that you need to work on it not in it which underpins all successful entrepreneurs.
Building the forward strategy to exit, is therefore different that just building a successful business. Planning from start to exit, means focusing on the exit strategy requirement of increasing shareholder value which is recognised as valuable assets by target buyer audiences.
Short-term profitability is always an important goal, but long-term share value is a strategic consideration which owners need to consider in building the value of their business. If you would like to discuss this article further or further information about our services in working with business owners in achieving successful exit strategies then contact us at enquiries@cowdenconsulting.com or see our contact page for further options.
Successful Leaders Plan Their Business
Business Planning
Business planning often gets a bad press. Yet those who do sit down and plan their business are so much more focused, confident, and successful than those who float along with the economic tide. Successful leaders plan their business, so they can focus on leading their team to deliver their plan. Over the past ten years as a strategic planner we’ve worked with hundreds of business owners and seen how those that create a plan and implement it. Those that plan their business do so much better than those owners who try aimlessly lead their business on a wing, a prayer or a dream. Successful leader’s plan their business, so that everyone knows where they are going what their role is in achieving that success.
According the latest BERR report, Small and Medium-sized Enterprises (SME’s) together accounted for 99.9 per cent of all enterprises, 59.8 per cent of private sector employment and 49.0 per cent of private sector turnover. SME’s really do matter to the British economy, and yet they receive little effective support from Government agencies despite being the backbone of the economy, employment, and innovation.
Why Business Leader’s Don’t Plan
“If you don’t make things happen, things will happen to you” Lanes Company Having questioned business owners over the last decade the reasons why owners have not put a plan in place and then executed it, the excuses range from not having the skills, make the time, or have the conviction of their thoughts. Owners know they should have a plan ‘we had one when we first started, but have not looked at it since’ is a common theme. The other is being too busy fire fighting to realise that preventing fires starting, is the best way to not have to fight them. Do business owners not see the value in developing a plan for their business? On the other hand, is the classic perception for business owners that frenetically staying alive is seen as being successful? For many not knowing how to plan is one major reason why people haven’t and don’t plan their business. Where to start, and how to know what they are trying to achieve immediately puts people of planning.Faults in Business Planning
Business planning is also often at fault here. The most common reason new start up businesses create a business plan is to secure funding from banks, that’s when banks did fund business start-ups (now they just offer a high interest mortgage backed by the Government). Therefore, once people have received funding they no longer see the main advantages of planning (and the real advantages are not around money).
Business Planning Skills – Have some GOALS
“The discipline of writing something down is the first step toward making it happen.” – Lee Iacocca Planning takes time, resources, (grey stuff) not the executive trip to some exotic away weekend planning, but some time allocated to review where you are as a business, how your sector and industry are performing and what you want to achieve in the future. Whether it is looking at the next year or planning the next five years, everyone who owns or directs a business is responsible for setting its direction. However, just having a plan in your head, with the classic defence of ‘its flexible at the moment’ is either ducking the responsibility or deluding themselves. The only way to have a plan rather than a dream is to have it written down, turned (if it is not already) into an action plan which is resourced and owned by someone to deliver. Only then do businesses go forward in a deliberate purposeful way. Only then do the right things happen because you made them happen and only then can everyone, employees, shareholders, customers, channel partners and even other halves, see your dream, share your dream, deliver your dream. That’s when planning works. It is a written document, which lives within your company, and it doesn’t matter if you are a one-man (woman) band or running a multi-national Plc.What Business Planning Delivers
A clear business plan is the result of a process. It starts with thinking, then writing it down. That commitment itself is a sense-check, it creates a reality and makes the writer accountable for their thoughts. By writing down your business plan a leader takes a dream and begins to make it a reality. Others can see, critically evaluate, and judge the business idea and review the opportunity the plan intends to address. By doing this a business idea is viewed in the round, looking not only at the idea, but the actuality of what needs ot happen across all busienss area functions to turn the idea into reality.| “In the absence of clearly-defined goals, we become strangely loyal to performing daily trivia until ultimately we become enslaved by it.” – Robert Heinlein |
Planning provides focus in strategic direction. It provides clarity of where the business is and where it is going as well as a vehicle for getting from where you are to where you want to be. Planning time out of the business provides time to reflect on personal and corporate goals, time to share and channel new ideas while reviewing existing activities.
Planning in a structured and open format develops clarity of purpose and a clear understanding of the organisational and individual skills people have and can use to leverage advantage. Bringing in outside views widens the planning horizon, a fresh perspective to drive businesses forward. This is why many successful businesses use non-executive directors or outside specialists to help drive their business forward. That is one reason why so many people volunteer to get support from people like the Dragons from Dragon’s Den, they are looking for expertise and advice which gives them confidence to go forward as much as the money.
Plan More For Success
British business owners need to plan more often to keep being successful. Good planning creates and sees opportunities as owners and directors lift their heads up from the daily grindstone. How often should you plan? Well it all depends on the speed of your market’s evolution, but even stable and stagnant businesses should review their business every year, and not just a light dusting (add ten percent and change the year) but strategically review what and how well they are doing. It is only by looking for fresh opportunities and how to take best advantage of them, by planning your business around those opportunities, that companies successfully compete in today’s business environment.Business Planning is not a four letter word
“An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage” Jack Welch
The old adage, compete or get beat, is more relevant today than it has ever been. The rise of the Internet means there are no secrets, competitive advantage lies with those who can see an opportunity and adapt fastest to take advantage of it. Those owners and directors who see and go for opportunities become the stronger ones. That is where good strategic business planning provides it real advantage. That’s why successful leaders plan their business to achieve that success. By orientating a company to where it can retain better, win new and develop existing customers companies that plan their success out compete in their sector, and equally importantly have everyone focused on where they are going. From the smallest to the biggest every business needs to have a plan that is written down, owned and guiding your business in the direction you want it to go. Good Luck| Richard Gourlay |