In June, the US central bank upped its benchmark interest rate by three-quarters of a percentage point, the largest hike since 1994. This increase followed a quarter-point increase in March and a half-point increase in May.
In the coming months, further rate hikes are expected. On average, Fed policymakers said they expect interest rates to rise to approximately 3.4% by the end of this year, up from the 1.9% increase projected back in March.
Speaking to CNBC, Scharf said that while the consumer and small businesses have remained strong, the impact of rising rates has not been properly taken into consideration with regard to the broader economy.
“We know rates are going up, it couldn’t be clearer,” Scharf told CNBC on Wednesday. “We know that consumers and businesses, while strong today, are going to see deterioration, and we’re going to act surprised when it happens.”
“That doesn’t mean the world is coming to an end,” Scharf continued, though added that “we should do our best to recognise that and focus on what the solutions are.”
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The multi-billionaire entrepreneur has said he will “acquire all of the outstanding Common Stock of the Issuer not owned by the Reporting Person for all cash consideration valuing the Common Stock at $54.20 per share.”
The proposal was delivered via a letter to Twitter on 13 April, with Musk saying that Twitter needs to go private in order for necessary changes at the company to occur.
Musk has said that he would need to reconsider his position as a shareholder if Twitter does not accept his offer.
Following the news, Twitter shares are up over 13%.
James Pow, senior retail adviser at business advisory firm Quantuma, analyses the departure of Asos CEO Nick Beighton and the reasons for the profit drop the company is expected to see.
The departure of Nick Beighton from Asos as chief executive should not have come as a complete surprise. There are multiple reasons for his departure, culminating in the profit drop the company is expecting to see throughout the remainder of this year and into 2022.
Asos had become a darling of the online sector, selling well over 850 brands globally and the share price had performed extremely well in the last year. However, the retailer had warned of slowing revenue growth and attracting increased costs related initially to Brexit, but with growing issues in the global supply chain becoming increasingly evident. All this was against a positive background of reported revenues accelerating to circa £1.3 billion for the four months to 30 June. This was well up on the £1.1 billion of like for like revenues of last year.
The immediate impact of the pandemic on its supply chain, freight and associated indirect labour costs have started and will continue to dampen profits. The company reported that it still expected to meet annual profit expectations and not surprisingly the shares closed 18% wiping circa £750 million from its market valuation and thrusting it to its lowest stock level in almost a year.
Reading behind this somewhat contradictory statement on expected annual profit, the group stated that the costs of shipping from China had risen ten-fold along with increased airfreight associated costs and further premiums now being incurred with fewer planes in the sky. It went on to state that Brexit had added two weeks to its existing supply chain between the UK and Europe. The company acknowledged that this was negatively affecting consumer anticipated delivery and one would ascertain that their existing systems were struggling to respond to these mounting changes on demand.
What is concerning and illustrates in some part the downgrading in the share price, is that this was not factored in earlier in the company’s risk assessments as most other companies would have done in their strategic response, particularly with strong balance sheets.
Nick Beighton initially said that customer prices for Asos had not risen and that the company had “invested heavily” in keeping prices low and was committed to continuing to do so. The chief executive said the company would be “mindful of the continued impacts of the pandemic on our customers in the short term” adding that the changes brought about by COVID-19 would still benefit online retailers in the long run.
There is a degree of contradiction in Beighton’s remarks, suggesting strategically that Asos would maintain lower prices to its customers while announcing such increasing costs on its retail model. All of this while declaring the expectation of meeting the annual profit outturn.
The recent quarterly drop in the margin of 1.5% due to higher freight costs and unfavourable foreign exchange rate movements is another factor and reason for the Asos share price drop and the CEO’s departure.
The Asos share price had performed well over the last year. However, the share dropped after the company released its trading statement. Management cited the continued uncertainty brought about by the pandemic, inclement weather and supply chain issues as contributors to their weak market demand. This clearly raised fears of the sustainability of their share price.
Like other businesses, management urged caution on the outlook for the rest of 2021 in light of the rising cases of COVID-19. Travel restrictions, delayed and cancelled holidays were a factor in making planned wardrobe purchases difficult. Total group revenue did grow by 21% to £1.3 billion, mainly driven by the strong performance of 36% in the UK domestic market. Impressive growth in the USA of 20% market share also assisted in driving the active customer base from 24.9 million to 26.1 million at the end of February 2021.
Asos did have cause to celebrate following the announcement of its partnership with
US-based multi-channel retailer Nordstrom, based on the West Coast. Nordstrom is embarking on a minority interest in the company’s brands including Topshop, Topman, Miss Selfridge and HIIT and previously sold Topshop and Topman clothes in the US when the brands were owned and run by Arcadia.
In securing the collaboration, Nick Beighton had performed well. The deal demonstrates the future need of businesses to team up where over-lying synergies exist in their consumer profiles. This is a strategically important requirement that intelligent businesses will embrace as they seek to both retain and increase their customer numbers.
Asos revenue growth has been exemplary in the past, notably benefiting from the pandemic as High Street retailers were closed. This led to a windfall and strong demand for e-commerce platforms.
However, changes to customer habits were cited by management in Asos’ earnings statement as a factor; the inclement weather assertions drove customers to winter wear from spring/summer wear. This all points to pressure on their current systems in dealing with these fluxing impacts from the supply chain, the pandemic, Brexit and resultantly the management of the cost base.
The recent quarterly drop in the margin of 1.5% due to higher freight costs and unfavourable foreign exchange rate movements is another factor and reason for the Asos share price drop and the CEO’s departure.
With the easing of COVID-19 restrictions and the opening of retail, I would expect that the demand for online retail may soften somewhat. In my view, the company has experienced timing mismanagement of expectations - both in its statements and trading updates, worsened by the contractions alluded to earlier.In realising this, the Asos board were left with no other option than to part company with its chief executive in a bid to appease disgruntled shareholders and the financial analysts who had reacted so alarmingly to the trading releases. Moving forward, Asos will appoint a new chief executive, hoping to resolve their current fall from grace under the new leadership.
“Barclays and Mr Jes Staley, Group Chief Executive, were made aware on Friday evening of the preliminary conclusions from the FCA and the PRA of their investigation into Mr Staley’s characterisation to Barclays of his relationship with the late Mr Jeffrey Epstein and the subsequent description of that relationship in Barclays’ response to the FCA,” the statement said.
“In view of those conclusions, and Mr Staley’s intention to contest them, the Board and Mr Staley have agreed that he will step down from his role as Group Chief Executive and as a director of Barclays.”
Barclays pointed out that the investigation had not found that its CEO “saw, or was aware of, any of Mr Epstein’s alleged crimes.” Jeffrey Epstein was arrested in July 2019 on child sex-trafficking charges but hung himself a month later in a Manhattan federal prison.
Subject to regulatory approval, C.S Venkatakrishnan is set to take on the role of Group Chief Executive in place of Staley with immediate effect. The bank has said it is confident that under Venkatakrishnan’s leadership, it will “continue its strategic direction and improve performance in line with the progress of recent years.”
The Financial Market Supervisory Authority (FINMA), Switzerland’s financial watchdog, announced on Wednesday that it had opened enforcement proceedings against Credit Suisse over a spying scandal that came to light in 2019.
In a statement, FINMA said that it would “pursue indications of violations of supervisory law in the context of the bank’s observation and security activities and in particular the question of how these activities were documented and controlled,” adding that such proceedings “can be expected to take several months.”
Credit Suisse announced that it would cooperate with the investigation “to ensure a complete and expeditious conclusion of the review of this episode and incorporate lessons learned.”
FINMA’s announcement follows the completion of a review of the bank’s corporate governance and its surveillance of former employees. The employees targeted were former head of wealth management Iqbal Khan, who was leaving for a post in Suisse Credit rival UBS, and former head of human resources Peter Goerke.
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Credit Suisse CEO Tidjane Thiam resigned in February amid the investigations, maintaining that he was not aware of the spying operation. An internal probe by the company concluded that COO Pierre-Olivier Bouee bore responsibility, leading to Bouee’s termination.
Thiam has since been replaced as CEO by banking veteran Thomas Gottstein.
Last week, news broke that EY auditors refused to sign off on Wirecard’s accounts for 2019, citing a missing sum of €1.9 billion that documents purported to be held in two bank accounts in the Philippines. CEO Markus Braun claimed that the company was the victim of “the victim in a substantial case of fraud,” and COO Jan Marsalek was suspended, later to be terminated. Braun then resigned from the company on Friday.
Braun turned himself over to Munich police on Monday evening after a warrant for his arrest was issued. He is suspected of recording false transactions to artificially inflate Wirecard’s sales, increasing its value in the eyes of customers and investors. Philippine authorities are also investigating the whereabouts of Marsalek as part of a broader probe into the company.
On Thursday, the company said in a statement that it would apply to the Munich district court to open insolvency proceedings as a result of its “impending insolvency and over-indebtedness.”
The company’s shares were suspended from the Frankfurt Stock Exchange before the announcement was released.
Wirecard was long regarded as a star in the German fintech scene – a DAX 30 company which was once valued at €24 billion. That value has plummeted through the floor as the week of revelations continued, though it saw a brief 27% uptick on Tuesday following the news of Braun’s arrest.
Trading on Thursday saw Wirecard’s value drop by a further 76% once news of its insolvency broke.
So, how will the 2019 general election affect business? We take a look at the predictions and what they could mean for commerce.
It’s an election that prime minister Boris Johnson had been chasing for weeks in an attempt to break the Brexit deadlock, but the vote has come sooner than expected for business leaders and the public.
Pundits are calling it a once-in-a-lifetime ‘Brexit election’ and, given those stakes, the impact on British business could be seismic.
Navigating major change from inside the C-suite is rarely a smooth ride. It means creating a backup plan for your backup plan, then running the numbers for each.
Fortunately, corporate speakers and expert journalists were on-hand to offer their insight just as the possibility of an election descended on the City of London at a night aptly called ‘Preparing for Unprecedented Change’.
At the event, former BBC business correspondent Declan Curry stressed that Brexit is just one of the big changes Britain could face in the fallout from the election.
The business and economics speaker said executive teams are also busy making plans for the possibility of a Corbyn-led Labour government.
“Businesses are hearing the commentary that we’ve had since 2017 – that polls indicate that he has absolutely no chance whatsoever of being the next prime minister,” he told the crowd of corporate guests in Barbican, central London.
“But then they remember the polls running up to the Brexit vote were wrong, the polls running up to the 2017 election were wrong, and in 2015 they weren’t exactly models of prediction either.
“And business leaders like to be prepared,” he adds. “So in most major companies there will be someone somewhere – an executive in an office with the door closed – drawing up the plans for ‘what if’.
“What if John McDonnell is the chancellor, what if the idea of having trade union representatives forcibly on boards is enacted? What if there are bans and restrictions on bonuses?”
As we speak, many businesses are preparing for this possibility just as they are preparing for Brexit. Declan added: “This is being mapped out as a theoretical enterprise.”
The event was organised by international speaker bureau Speakers Corner, whose 7500-strong portfolio of orators and experts have already been called on many times to help businesses navigate the uncertainty of Brexit.
In fact, Declan Curry revealed he himself takes professional guidance on the levels of Brexit fatigue in a given audience before taking to the stage.
He was also keen to point out change can bring opportunities as well as risk. Near the Irish border in Donegal, people are “excited for the return of the ancient art of smuggling,” he joked.
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“Brexit will throw up opportunities, too,” said Declan, pointing to law firms currently profiting from all the uncertainty. The former On the Money radio show host said economies are suffering and pondered the idea that another financial crash could be looming – something that could magnify the risk to British business.
This speculation comes as both major parties enter a public spending bidding war that the Institute of Fiscal Studies has said may be undeliverable.
General elections often make markets unstable, but the combined uncertainty around Brexit and the UK’s economic direction is heightening the impact on shares – especially for companies like BT, which could even be partly nationalised under Labour plans.
Still, some business leaders see the vote as an imperfect path to preventing the damage of a hard Brexit. Sonia Sodha, chief leader writer at the Observer, also spoke at the Knowledge Guild event – and she is sympathetic to this view.
“You can see a path to a Labour-led coalition government with Lib Dem and SNP support if Boris Johnson loses a significant number of seats,” she said, but feels an election is not the best way to deal with the Brexit question.
Business owners and C-suite executives have expressed concerns about the risks of a chaotic Brexit since 2016 – and despite continued delays, the risk of no deal remains. The implications could include increased taxes on imports and exports, supply chain delays and staffing supply problems.
“We are going to be talking about Brexit for years to come, whichever outcome,” Sonia told the crowd of central London executives.
For executives concerned with risk management, the turbulence runs in many directions. The only certainty is the election result will spark significant change – whatever the result.
Private equity has gotten a bad rap throughout the years, thanks in part to the popular image of an uncaring operator who buys and sells companies without concern. For a truly successful modern PE company that accomplishes high multiples through attention and care, that couldn’t be further from the truth.
In practice, a great private equity fund is one that meets investor needs with a full appreciation and understanding of what makes these companies tick. Portfolio company CEOs make a choice. You can be remote and uncaring, buying and selling without true involvement in the day-to-day and hope your changes work. Or you can roll up your sleeves and do the work necessary to create real benefits. That’s more than opening up the hood and taking a look around; it’s a deep dive into a portfolio company’s everyday workings. Francesco Liistro, Chief Enhancements Officer at KL Industries, says that it’s a process known as operational intervention.
A full investment
It’s not a secret, I’m happy to share it with anyone who cares to listen. The transformative ability of these methods doesn’t lie in some arcane formula; it only depends on your willingness to implement it completely. That’s where the difference lies.
Private equity investment managers, take note: you will never add value without fully investing yourself in the task. Operational intervention, as its essence, starts with learning by fully weaving your work into the business you’re intervening in. You wouldn’t drive a car by sitting in the backseat! Only by first performing the groundwork of assessment followed by insightful changes can you deliver the value that your acquisition promised.
Operational intervention, as its essence, starts with learning by fully weaving your work into the business you’re intervening in.
The big obstacle to this work, for many in the field, is the sheer effort and exertion that it requires. Things weren’t always this way. Traditionally, underperforming companies have been served by a temporary consultant who flies home on the weekends, staying only until their initial set of goals has been met. Today’s environment simply doesn’t accommodate that style any more.
Implementation is now a 360-degree process. Successful private equity operations need a holistic assessment of what’s going right and what needs work, and that can only be accomplished by getting down into the details. That includes knowing not only what the company needs, but who it needs, and installing a new CEO who can guide them to greater heights of profitability and value.
Boots on the ground
Often, a strong portfolio company CEO is not sufficient on their own: the company being intervened in lacks professionals experienced in making the necessary changes, and that needs to change...fast. That is why smart operational PE funds build a highly effective team of specialised professionals around their Portfolio Company CEOs, people specialised in different fundamental fields. It’s what I like to call the task force.
While I’m doing the heavy lifting as CEO, the task force attacks the details. Made up of experts in the niche the portfolio company in question inhabits, their experience and knowledge makes them crucial to the job. Talented task forces are the best weapon in my arsenal: precise, powerful, and thorough.
Frame of mind
There’s a certain attitude that underlies all of this as well. A driving force that ensures we deliver the best results. Process alone won’t get great results--it also takes the right mindset.
A trend I’ve seen that’s truly disconcerting is a shyness among PE funds when dealing with portfolio companies. They’re more concerned about stepping on toes than with doing what they’re expected to do: add value. They’ll call themselves a “sparring partner” to the management team rather than take on the full responsibility of rejuvenating an underperforming company. Worse yet, some will stake out a spot on the board of directors, one voice among several, and feel as though their work is done.
Often, a strong portfolio company CEO is not sufficient on their own: the company being intervened in lacks professionals experienced in making the necessary changes, and that needs to change...fast.
Half-measures don’t work for creating value in a portfolio company. It’s not rude to step in and make your opinions heard--that’s what your investors are paying you for. They say that fortune favors the bold, and finding a fortune in private equity comes from a similar boldness: one that’s backed up by all the groundwork you’ve done.
Another misconception is that operational intervention is only for struggling companies. In truth, the work pioneered by turnaround specialists has generated a streamlining process that can work for any company seeking improvement or growth.
In the end, successfully positioning a portfolio company to perform at its best requires you to excel as well. With the proper preparation and research, followed by thoughtful implementation, operational intervention can position PE funds at any level for their next big jump.
About Francesco Liistro
Francesco Liistro is Managing Partner at KL Industries, a leading performance improvement consulting firm based in Switzerland. An industry leader, Francesco Liistro collaborates with private equity funds, venture capital, and family offices to reimagine and transform underperforming portfolio companies.
For more information, go to https://www.linkedin.com/in/francescoliistro/ or email francesco@klindustries.ch
With businesses embracing big data, new tech and digital media, the role of traditional CFO is evolving from financial expert to strategic partner, data analyst, talent curator and more. With the support of several data streams, James Booth, Chief Financial Officer at Instant Offices explains for Finance Monthly what this new era of the multidiscipline strategist means and how there is more potential than ever for CFOs to be the architects of change within business.
Five Factors Keeping CFOs Up at Night
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Brexit
Around 75% of CFOs worry Brexit could have a negative impact on business in the long-term, compared to just 9% who don’t, according to Deloitte. Along with Brexit risks, weak demand and the prospect of tighter monetary policies are ranked as the top worries for CFOs in 2018. Despite high levels of uncertainty across the board, research shows CFOs are still highly focused on growth plans, and the level of desire to expand business over the next year is at its highest since 2009.
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Skills Shortages
According to research, 44% of CFOs have reported recruitment difficulties and skills shortages in 2018. To add to the challenge, The Open University Business Barometer revealed a massive 91% of UK organisations say they have had difficulties hiring skilled employees in the last 12 months.
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Rising Stress Levels
78% of UK CFOs believe stress levels are set to rise in the next two years as workloads increase, business expectations grow, and companies face a lack of staff, according to Robert Half. Research also shows CFOs expect their finance teams’ workloads to increase, while 52% are planning to hire interim staff as a short-term solution.
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Big Data
Research firm IDC predicts that by 2025, we’ll see 163 trillion gigabytes of data output every year. And a recent study by Accenture suggests that by 2020, 90% of a CFO’s time and efforts will be spent on working with data scientists to turn data into actionable insights that organisations can use for strategic decision-making.
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Increased Cyber Security Threats
Studies from Verizon show that 59% of cybercriminals are motivated by financial gain and are likely to target finance and HR – areas which fall into the CFO realm – suggesting CFOs are going to be expected to take a proactive approach to cybersecurity.
Top Five CFO Priorities for the Upcoming Year
In Q2 of 2018, CFOs listed the following as strong priorities for business in the following 12 months:
- 49% say increasing cash flow is the top priority
- 47% say reducing costs
- 37% say introducing new products and services and expanding into new markets
- 18% say expanding by acquisition is a priority
- 14% say raising dividend or share buybacks
What Skills will CFOs Need by 2020?
The CFO Must Become a Leader of Innovation: New tech, including AI, will become a core part of the innovation strategy within businesses looking to remain competitive, and CFOs will be required to understand the opportunities presented by new tech to drive growth. By 2020, 48% of CFOs are set to be using AI to improve performance.
CFOs Must Embrace Big Data: According to a report by the ACCA and IMA, the CFO and finance team is set to be at the heart of the data revolution. In order to make sense of the large volumes of data the world will be generating by 2020, CFOs will need to be able to accurately interpret data to generate quality, actionable insights for CEOs and board-level decisions.
The CFO Must Manage Risk Under Scrutiny: As tech grows and presents more complex risks to business, expectations on the CFO will be high. They’ll be required to implement and manage cutting-edge risk management processes within the finance department and business as a whole. A proactive approach towards threats will be key. One report by NJAMHA showed four in ten finance chiefs currently own or co-own cybersecurity responsibility within their organisations.
The CFO Must Prepare Talent for the Future: Prepping talent for a finance role was once the domain of HR, but in order to prepare new employees for the future of finance, CFOs are going to be required to increase involvement to ensure new employees can multitask, show technical competence and handle business strategy. Around 42% of CFOs are also prioritising soft skills as a key element for future hires.
The CFO Must Be a Leader in a Rapidly Changing Workplace: With the consumerisation of real estate becoming a global trend, more businesses are choosing an agile approach to office space to expand into new markets, reduce costs, increase networking opportunities and improve staff happiness. Tied into this, the modern CFO will need to develop leadership skills to not only manage talent but also implement development strategies that work across remote teams with geographic and language differences.
Today, the role of the CFO has evolved from financial expert to a multidiscipline strategist. In addition to traditional accounting and finance responsibilities, by 2020 research shows the top priority for CFOs will be keeping pace with technology and harnessing big data.
Nowadays, CEOs expect CFOs to have an impact on business direction and strategy more than ever before. And while the question of who owns analytics is still an open question across sectors, according to a report by Deloitte, finance is the area most often found to invest in analytics at 79%, and CFOs can use it to bridge the gap between strategic and operational decision-making.
Finance Monthly recently spoke with Rajeev Tandon, CEO of Xavient Digital - powered by TELUS International, about how future competitiveness will be determined by those who make digital evolution a part of their core DNA to continuously adapt ahead of their competitors.
Today’s businesses are focused on digital transformation more than ever before, with many CEOs and CIOs listing it as a top priority in 2018 and beyond. Why is that the case?
Digital transformation or digital enablement - the changes associated with integrating digital technology to enable innovation in all aspects of a business - is increasingly top of mind for many companies because of its significant impact on a brand’s ability to deliver superior customer experiences compared to their competitors. The trend towards digital is also being exacerbated by disruptive companies that continue to shake up traditional business models and steadily gain market share.
In the digital age, consumers want next-gen technology-enabled user experiences today - not tomorrow - from the brands they support. These predictive and hyper-personalised interactions, which must also be available when, where and how they want, are quickly becoming the norm as opposed to a ‘value added’ feature. In addition to making every customer touchpoint and interaction more meaningful, evolving digitally also helps on the back end, improving processes and driving operational agility - critical factors in a rapidly evolving marketplace.
Importantly, companies must recognise that digital transformation has no clear finish line, but must be repeatedly executed in order to keep pace with new technologies entering the market.
What are the top factors driving digital enablement?
Customer experience is arguably the topmost factor driving digital enablement as a captivating customer journey goes a long way in establishing unflinching customer loyalty. In fact, customer experience is becoming increasingly recognised as a fundamental competitive differentiator - even more so than the product in many instances.
Rising competition in this regard has brought dynamic technologies such as Artificial Intelligence (AI), Internet of Things (IoT) and blockchain among others to the forefront. When harnessed as part of an overall digital enablement strategy, these technologies can help brands develop a deeper understanding of their customers’ expectations in order to better align their products and services to meet, and oftentimes, anticipate their needs.
Additionally, as tech-savvy Millennials overtake Baby Boomers as the largest segment of the population, brands need to up their ‘digital game’ in order to create engaging user experiences. Whether companies seek to accomplish this internally, or look to develop a trusted outsourcing partnership externally, this is how brands will thrive today and into the future in the new age of the digitised customer experience. Moreover, brands need to focus on delivering personalised services and shorter time-to-market, as both significantly contribute towards delightful customer experiences.
Are there specific industries that should be focused on digital enablement?
Regardless of product or service type, the size of your business or your industry, leveraging some aspect of a digital evolution will enhance your performance. This is because the true power of digital doesn’t live in the technologies themselves, but in how they are selected, customised and integrated with one another and into all aspects of a company, including customer service. Where there are customers, there will be patterns in their behaviours, expectations and attitudes, and digital enablement is about arranging all customer touchpoints into a connected network that is proactive, agile, intelligent and analytical.
Financial services and FinTech are industries where digital enablement has flourished in order to meet the needs of consumers who are continually seeking more efficient, accessible and personalised experiences from their providers. Traditional banks, for instance, can no longer get by with simply a website and an app, they need to be able to offer far more features than the ability to check an account balance to keep up with the new products and services being offered by non-financial brands such as Apple Pay and Google Wallet.
But, when FinTech providers focus entirely on launching new products or rolling out more flexible options, customer service can get left behind. By partnering with a customer experience provider to help sustain the brand experience, FinTechs can balance innovation with exceptional customer service.
All in all, digitally-enabled businesses reduce customer effort, which leads to satisfied customers, increased brand affinity and top-line growth.
What are some of the challenges that businesses face when undertaking a digital enablement strategy?
While some worry about being able to keep pace with the latest technologies, others fear falling in the gulf between the initiation and finalisation of large-scale initiatives, or are hesitant to invest in new technology before they realise a financial return on a legacy system.
These are valid concerns and challenges, however, they should not stop companies from pursuing a digital enablement strategy. Instead, they should inform how you design and execute it, as there are various ways to incorporate many different aspects of digital capabilities into your business.
Digital enablement does not mean that a business needs to transform its operations overnight, nor does it preclude a major initial investment. It is a process and companies can begin by taking small steps, such as integrating a chatbot or an AI-powered analytics platform into their existing operations.
It’s also important to understand that technology adoption alone does not equal digital enablement. The overall corporate evolution, with an emphasis on strategy, operations and culture is the star - technology is the supporting cast. In this regard, another challenge organisations can face is internal resistance to change by employees.
Not everyone welcomes a new way of doing things, and if widespread, this lack of curiosity and experimentation often deprives businesses from discovering new and better ways to operate, work more efficiently and deliver enhanced customer experiences. A risk-averse mindset can be similarly detrimental, so it’s critical to foster a culture that embraces change, has a growth mindset, and is agile. Training and education also go a long way in executing a solid digital strategy.
What are some of the ways brands are leveraging next-gen technology to change the way they do business?
Innovation in technology has empowered companies from start-ups to mature brands, to create disruptions in their industry in order to gain a competitive edge by reimagining the possibilities for their customers. Next-gen technologies are helping them better understand the needs of their customers today and can more accurately predict what they will want in the future in order to guide the necessary improvements to their tools and technology architecture.
AI-powered analytics platforms that aggregate agent-customer interactions from various channels into intelligent patterns are in high demand in an age where customer expectations are at an all-time high. Brands are profiting from these platforms’ abilities to use voice recognition, natural language processing and even sarcasm detection to decipher customer intent with reliable probability to detect critical issues that need immediate resolution and to drive recommended actions.
At the end of the day, successfully implementing a digital enablement strategy also requires having highly-skilled and knowledgeable customer service agents who can fully leverage these new technologies across different platforms and customer contact points. In the months and years ahead, these types of universal agents will continue to be key to providing high-tech, high- touch brand experiences.
About Xavient Digital
Acquired by TELUS International in February 2018, Xavient Digital - powered by TELUS International, provides advanced, next-gen IT consulting and delivery services, including Artificial Intelligence (AI)-powered Digital Transformation services, User Interface/User Experience (UI/UX) design, Open Source Platform services, Cloud services, Over-The-Top (OTT) solutions, Internet of Things (IoT), Big Data services, DevOps, and IT Lifecycle services.
With a focus on supporting fast-growing tech, travel and hospitality, telecommunications and healthcare clients, the combined company of more than 30,000 inspired team members is a leader in the customer experience and digital services markets.
Website: https://www.xavient.com/
https://www.telusinternational.com/
Berkshire Hathaway CEO Warren Buffett speaks to CNBC's Becky Quick about what he thinks about the state of the markets today.
Martin Schneider began his professional career in Consulting Engineering. He then worked for ABB and ALSTOM in various international functions up to senior management level and restructured a US-based technology company. As of 2004, he’s the CEO of the BRAINFORCE Group, and as of 2007 – its owner.
BRAINFORCE Group has been a leader in interim management and expert solutions for almost 40 years. Headquartered in Zurich, Switzerland, the company has subsidiaries in Europe, the Baltics, Russia, Africa and Asia, as well as a strong network of partners in the Americas. Here, Martin tells us more about his company and the benefits of interim management.
In your opinion, how important is it to have first-hand experience of running a business in order to be an effective interim manager and to provide valuable insight to other business leaders?
Business leaders are typically people with strong self-confidence about their knowledge, capabilities and skills. If they realise that their counterpart has an equivalent level of knowledge and experience, they tend to trust and accept them. Interim Managers are usually needed in difficult, non-routine situations. The goal is to achieve sustainable results as quickly as possible, based on their past learning curve, an above-average ability to lead and motivate people, and last but not least - an entrepreneurial mindset. The same way a ‘silverback ranger’ knows his forest inside-out, an interim CEO knows his profession and has been successfully steering operations through tough challenges for years.
Why is an interim manager more effective to optimise organisations? How can cultural and historical challenges be overcome?
I believe that a manager who has previously led, optimised or restructured e.g. three different management structures has a higher success rate to do the same with the fourth management structure. An interim manager comes in with an analytical mind and an unbiased view. He also has no aspirations to stay there forever, which eliminates the negative political aspects. Furthermore, he brings in leadership skills, cultural sensitivity and a portfolio of best practices from his several previous assignments in different company cultures. All these aspects are essential for the success of an interim manager. Once an interim manager “changes sides” and becomes a permanent employee, the dynamics and perceptions around him change. His gaze, as if blinkered, is restricted to the part of the road that lies immediately ahead of him and thus, the value-added of the interim management approach vanishes, from our experience, within one or two years.
An interim manager usually is able to gain the trust of the people in the company within a few weeks due to his seniority, objectivity, empathy, cultural sensitivity and strong professional track record. An interim manager usually gets to know what truly is going on in an organisation amazingly quickly. People start to talk as soon as they realise that the interim manager is there to help and to give the credit for the achievements to the internal people who were actively involved in the project.
What do you find are the most common issues that organisations struggle with, from a management perspective?
In a nutshell, I would say that weaknesses we observe are often connected to weak internal communication, slow decision-making and ‘over-engineered’, rigid and bureaucratic internal processes. An experienced interim manager has learned how to communicate effectively at all levels.
Due to the work overload and limited management resources, management decisions are not always implemented to the last consequence. An interim manager brings in additional management capacity and is dedicated and responsible for the completion of implementation.
Today’s world is heavily regulated, even over-regulated in many areas. As a consequence, management at all levels are motivated to make ‘safe’ decisions only, as opposed to brave ones and even worse - to sit out problems. Such managerial shortage is cascading down organisations.
Another major problem that I’ve seen is the belief that IT systems lead to better decisions. They should only be supporting the decision-making process, not substituting it. As there is no perfect information in this world and ambiguity is more common than clarity, despite Big Data, the human decision power based on previous experience and intuition generally leads to better results. Why are the ‘Hidden Champions’ typically family-owned and/or family-style managed companies and not corporates? Why is one of the key factors of successful corporates their ability to keep entrepreneurial behaviours alive?
100% standardised and measured processes kill people’s ability to think out-of-the-box, to respond with common sense in exceptional situations and to nourish positive creativity.
An experienced interim manager has the capacity to judge where and to what degree of sophistication new processes should be introduced, and existing ones optimised or simplified. They take a more entrepreneurial approach.
Last but not least, today’s trend towards ‘the cheapest solution is the best solution’ is detrimental to companies’ sustainable performance. In most cases, the ‘cheap’ internal solution turns out to be the most expensive solution due to the learning curve needed. Simply put, time is money. This expensive learning curve can be avoided by deploying an interim manager who has already gone through the learning curve previously. The value-added of an interim manager generally exceeds the cost of a learning curve by far.
Can interim management play a role in developing managerial talents within the business?
Certainly. In fact, we often observe businesses burning young talents by promoting them too fast to the next level when there is an unexpected early departure of their superior. In such a situation, the deployment of a well-picked interim executive for a few months can save the business a lot of money. Why? The interim manager will build-up the young manager’s skills step-by-step by assigning him new responsibilities and being his neutral mentor during this phase. An example: a young manager talent without previous restructuring experience was assigned to restructure a complex engineering and manufacturing operation. The perspective was to lead this international operation as their CEO after restructuring. The corporate management decided to save the investment for an experienced restructuring interim manager who would have further developed this young manager during the restructuring phase as his deputy. The result was that the young, promising and capable managerial talent was overwhelmed by the complexity of the restructuring situation, and left the company before the completion of the restructuring. The corporation lost time in the restructuring, as well as a good future managerial talent.
What are the advantages and disadvantages of promoting senior positions from within, vs. external recruitment?
Promoting senior positions from within is the traditionally preferred approach by most companies. The reasons are manifold: familiarity with organisation and processes, cultural fit, known strengths and weaknesses of the individual promoted, etc.
However, there are also substantial disadvantages. Without ‘fresh blood’ entering from outside, there could be rope team building, less innovation and lower agility. A typical statement one can hear very often is: “We have done things the same way for 20 years, why should we change our way of getting things done?”.
To fill senior positions from the outside is particularly important if an organisation is in a phase of transition (e.g. cultural change, disruptive technologies challenging the business such as Industry 4.0/IoT/Digitalisation, etc.). Interim managers particularly bring in the required “’fresh blood’ instantly and due to their unbiased view and changing management experience are able to break up rope teams and change the culture into a new direction. Once a new desired state is achieved by the interim CEO, he hands over the company to the new permanent CEO selected with the appropriate profile.
What are BRAINFORCE’s philosophy when helping clients with interim management and consulting services?
Our philosophy is to provide managerial solutions within days at a high-quality level, and to achieve results which exceed the investment for the interim or consulting assignment by far.
What makes your company unique?
We are a fully integrated service provider and work with our own people. We do not believe in the franchise model in this demanding management field. Founded in 1979, we have a wealth of experience in the field and are proud to say that we are the ‘original’ in the interim management provider industry in continental Europe. Over the years, we have perfected our professional, quality-focused M.A.S.T.E.R.3-Pool Management and customer-relationship processes.
BRAINFORCE’s experts stand out for their extensive leadership experience, with proven successes in design and implementation, as well as having a positive mindset and a winning personality.
Contact details:
Phone: +41 44 448 41 41
Email: management@brainforce-ag.com
Website: www.brainforce-ag.com
