More of the same from Microsoft?

The search for a new Microsoft CEO is almost over and it seems highly likely the board will announce this week that Steve Ballmer will be succeeded in the top job by Satya Nadella.

Who? Most of the businesses world will never have heard of Satya Nadella, unlike the two other rumoured shortlisted candidates: Alan Mulally of Ford and Steven Elop of Nokia. As an ex-Ford CEO, Alan Mulally would have brought a fresh perspective on some of the strategic choices Microsoft needs to make soon, but as Microsoft has a strong track record of outsiders having short tenures, it would have been a risky approach. The appointment of Steven Elop would also have had some risk, given the politicisation of his short period at Nokia, as an ex-Microsoft employee.

So it’s possible that a degree of risk-aversion has crept into the thinking of the Microsoft appointments committee in appearing to settle on Satya Nadella. He’s a Microsoft insider, serving the company for twenty two years in a number of roles. Most recently and significantly, Mr Nadella has been the head of Microsoft’s cloud computing, and the server and tools divisions. Those divisions are the most important aspects of the long term future for Microsoft, as use of desktop computing declines, and the cash cow which is Microsoft Office on the desktop begins to look a little old fashioned.  Mr Nadella has been central in establishing Microsoft’s growing advantage in the key developer and business customer sectors.

But is this choice a little too safe? For the thirty eight years of its history, Microsoft has always been a fast-following innovator rather than breaking much new ground. That approach served the company well in the boom years of regular PC replacements with accompanying new versions of Windows. More recently, sluggish adoption of new versions of Windows such as Windows 8, and the fragmentation of use of computing devices have made the future for Microsoft not quite as predictable as it once was. Perhaps now is the time for bigger, bolder steps rather than more polished versions of the same.

Sixty six percent of Microsoft’s profits are earned from the business divisions. Focussing on the rapidly changing needs of business customers is the most important target for the new CEO. Anything else is a distraction.  So please, Mr. Nadella, get rid of Xbox, Bing and the other consumer divisions. Your competitors are better at them, and they will distract you from what your company is best at: business software.




Well done Steve Ballmer


Steve Ballmer did everything right. Mostly.

There has been much criticism of Steve Ballmer’s track record in charge of Microsoft since his decision to retire. Almost all of that emanating from institutional shareholders expressing their concerns after Steve Ballmer decided he had had enough of them. A pity so few of them did not have the mettle to engage in a dialogue earlier. The voices of a few activist institutions or individuals providing a rallying point for those who cannot speak without incitement does not mean that the voices are correct.

The main and apparently sole concern of the activist voices has been that Microsoft was slow to react to the market shifts away from PCs and towards mobile devices. Speed of reaction is of course a relative measure. How quickly have bankers reacted to the new market and government expectations of them? How well have hedge funds done in meeting the need for a speedy transition to transparency and better governance?

Steve Ballmer and Bill Gates have led the growth of one of the world’s most innovative and successful companies. Since becoming Chief Executive, Steve Ballmer has led sales growth of 300%, a 200% growth in net income, and a 16% increase in total annual profit growth.  In the same period, the company has become the dominant force in business computing, with Windows Server, and Windows desktop being the product of choice for most SMEs . Microsoft’s Business Division and its Server Division are each larger and more important to the company than Windows desktop or mobile devices.  Microsoft continues to invest $10bn annually in research and development, and has one of the strongest balance sheets ever. These achievements represent one of the best business performances by any company leader in recent years.

Steve Ballmer has also begun to tackle the company’s long-standing silo mentality. By removing the separate structures and uncoordinated activities of divisions within the same company, Steve Ballmer is following some of the good advice probably given to him by Jack Welch: create a simpler company, and run it as one. The only way to do that effectively is to provide the Chief Executive with a more central role, which is exactly what Steve Ballmer planned to do only weeks before the announcement of his retirement. His decision to simplify and centralise was another good decision, which many other companies would benefit from copying.

Now, after his decision to retire from the environment inhabited by corporate investors comes the announcement of one his best moves yet, albeit a little late, the acquisition by Microsoft of Nokia. How’s that for a move into mobile devices?

So what did not go so well? The share price. That and the dividend stream are the only things some shareholders are interested in, often to the detriment of a company’s overall well-being and prospects. Many institutional shareholders are represented by people with no experience whatsoever of actually running a business of any type. Their experience is in observing, analysing and gambling on the success or failure of the efforts of others. They advise without ever having done.

Well done Steve Ballmer. You did a great job running the business.




Red tape growth shock!

I’ve written before about the repeated promises made by UK Governments of any type to cut the burden the state imposes on small businesses.

The UK small business sector accounts for more than 80% of the country’s economic activity, across all industrial sectors, so it’s not surprising that every Government in office over the past fifteen years has pledged to help it.

Helpful-sounding pledges from Ministers have consistently included cutting out the pointless, the arcane, the intrusive and the obsolete from the long list of regulations which those who run small businesses have to endure.

Those Government promises have often been accompanied by great fanfares and worthy speeches, with suitable media coverage in specialist business publications. How has the reality compared with the undertakings given by politicians? It will come as no great shock to anyone with experience of running a business of any size to hear that the real burden imposed has actually increased in recent years.

The latest in the Government’s list of unpaid jobs it requires small business owners to do on its behalf is to implement a new system of Real Time Information for payroll systems. Now, every time I pay myself, I have to tell the government there and then, on the spot, using software I am required to buy from someone else. This new task I have no choice about is in addition to the VAT return, EU sales statistics, P11D, P35, P60, Annual  return, CT600s, Registered office changes, and countless other items the state thinks my small business should complete this month.

What is the point?

Any business turning over less than £5million, or having less than ten employees should simply be relieved of any of this wasteful imposition. The workload required is entirely disproportionate to the overall benefit the state receives. Every hour wasted on state bureaucracy is an hour I cannot spend on my business.

Government encouragement of small, nimble, fast-moving businesses and support for them to grow rapidly will help everyone in the UK move out of the deep economic pit so expertly dug by some ex-bankers. Shackling small business with the state’s bookkeeping simply erodes the lifeblood from most businesses, and their owners.



Ten Lords a-leaping

The ten lords in question are not those in the Christmas song The Twelve Days of Christmas, but rather the ten members of the UK Parliamentary Commission on Banking Standards. In fact only four of the ten members of The Commission are peers, but otherwise the body is the usual collection of the great, the good and the inexpert.

One of the recurring themes of such bodies is the tendency of the members to speak their minds, often hilariously so. Lord Lawson, ex-Chancellor of the Exchequer did just that this week when he described another peer, Lord Stevenson, also an ex-something, as “Living in cloud-cuckoo land”. Not bad for Their Lordships, often so particular in their exercise of courtesy to each other.

So what provoked Lord Lawson’s ire to such a further degree that he went on to describe Lord Stevenson, who is in fact the ex-chairman of HBOS, as “dishonest or delusional”? It was the belief of the ex-banker that HBOS was being run in a way which was “rather good”.

Lord Lawson’s somewhat intemperate remarks are the ones which have attracted attention since his lambasting of the hapless Lord Stevenson, but headline-grabbing as they are, they focus on a different issue to the one affecting most UK banks, which is the real root cause of their present condition. Lord Stevenson may or may not have been out of touch with the risks being taken in the commercial lending division run by Peter Cummings, but what he displayed no understanding of was the extent to which management of the basic operation of day to day business and corporate banking at HBOS was failing.

As a business customer of HBOS, I speak with first-hand knowledge of how the former independent Bank of Scotland changed as it lost the take-over battle for NatWest to RBS, and then slowly disintegrated, being taken over by the entirely unrelated business of the Halifax Building Society, before becoming HBOS. In that period, the Bank of Scotland lost a great deal of talent, in particular those with an understanding of how to actually operate the business of a large scale bank. Operating a bank, or any business, is not the same as leading it, and certainly not the same as being chairman of it. But the basic operation of the core of any business is what separates the successes from the failures. It’s the job of the chairman and the board to make sure that effective real linkages exists to connect  what is actually happening in the basic operations with what the board think should be happening. It sounds as if Lord Stevenson’s business did not have enough of those links.

In the period of drift from a three hundred year old respected commercial and retail bank to being an adjunct to a building society, HBOS also acquired the bad habits which affected many of its competitors. The bad banking habit which has attracted almost all headline writers and public anger since the banking crisis began in 2007 has been investment banking. Although the risk-taking, complex derivatives gambles and short-selling activities of bank traders attracted a lot of attention, the results were really never beyond prediction, since all gambles can end in failure, just as easily as they can succeed.

That type of gambling activity by those with no experience of actually running any business has nothing to do with the fundamentals of running a bank, and a focus on it has deflected attention from the basic management and skills problems in UK business and corporate banking. I am not referring here to the highly regarded services which many banks offer in a range of specialist disciplines few of us ever see. I am referring to the simple day to day operation of the basics of any business.

Try it. Pick up the phone today, and call HBOS about business or corporate banking. Try to engage them in a transaction. How did you feel about it afterwards? Do you feel it was a good business to deal with, with the right fundamentals in place at the moment of contact with you, the customer?

Now, try the same thing in your own business, division, department or office. How does it feel to be a customer of yours?



The top ten proposal mistakes

I frequently read Proposals from existing and potential suppliers as their response to Requests for Proposals or Prices – RFP from my client companies.

These RFP are deliberately drafted to be as straightforward and uncomplicated as possible. So, they should represent a simple golden opportunity for suppliers to present their company and its products or services in the best possible light to an interested audience.

This is an invitation to sell, which should be any company’s dream. Many respond to the invitation very well, and present a compelling business case for their offering. There are more who respond in a way which makes their sales message difficult to understand, and a struggle to decipher. So what are the top ten most common mistakes that suppliers make when responding to an invitation to prepare a proposal? I’ve listed here the ones I see most often.

 1. Not reading the invitation or brief

This one is so obvious; but it’s still a constant surprise when I see proposals which clearly show the author has not read the brief fully. I even know of one supplier who told me they had submitted a very low price without even opening the invitation.

2. Not answering specific questions in the brief.

If the brief contains particular questions, such as: “What is your annual widget manufacturing capacity?” the answer is clearly something we’d be like to know. So, without answers to those sorts of questions, it’s hard to assess what the supplier is offering. It also suggests the supplier is not interested in the customer’s needs.

3. Wordiness

Before contacting a group of particular suppliers, we will have done our research. We’ll already know a fair amount about the supplier company, so that’s why we usually say that any standard presentations may be of interest, but are unlikely to be specific enough to answer what we’d like to know. Despite that, some suppliers still insist on providing twenty pages of standard corporate PowerPoint containing information we already knew.

4. Tradition

This can be a challenging one for some to overcome. It’s the “We’ve always done it this way” approach to proposals and presentations. That may be a good approach in some circumstances, but these circumstances are ones of change, so it’s important to be flexible and think of new ways of presenting as well as new ways of engaging customers in business. If there are ten proposals to choose from, you need to stand out, so try a break with tradition.

5. Leaving it to the night before

I’ve found that business people tend to fall into two groups: those who use a to-do list, prioritise their tasks, and allow the right amount of time for important tasks (such as selling to a potential new customer); and those who leave everything to the last possible minute. The latter group usually lose more proposals than they win.

6. Leaving the last client’s name or logo on the proposal

We all have templates or formats we’ve used in the past, and it makes sense to re-use something which has time and effort invested in it. But when I see proposals which still contain logos or references to the last customer the template was used for, it simply says that the supplier has not taken enough time and care over the proposal.

7. Thinking about the proposal from your own perspective only

Most proposals I see concentrate heavily on the view of the author and their company. They begin with long explanations of what they do, how they organise their business, and what process they will apply in providing their xyz service to us. That’s important and relevant, but not as important as how the customer views the world, and what they think they should receive. It’s much better to read a proposal which begins with a well-researched and presented summary of the customer and their needs. Which brings me on to….

8. Not thinking about the customer

If you’re writing a proposal for a C-Level (Chief-anything) Executive at a potential new customer, the Chief has presented to you a business opportunity and a courtesy. The RFP will contain a description of the customer’s business and their needs. But that should simply be a starter for you to write your own research-based summary of the customer’s industry, business, needs, and fit with what you offer. Beginning your proposal by simply writing about what your company does is unlikely to be as persuasive as demonstrating your understanding of someone else’s business.

9. Forgetting the basics

There are some things which seem so obvious, we can often take them for granted, and expect them as a given in any potentially valuable proposal or sales presentation. These are the simple aspects which everyone writing proposals should get right, but it’s very surprising how many don’t. I group them into two straightforward categories: form and content.  The content describes what you’re offering, and needs to be clear, simple and short, but with references to separate detail if needed. The form is how your proposal is written and presented, and must have correct grammar, spelling and punctuation, and be set out in a presentation style which is easy to follow. The simple courtesy of thanking the Chief for the opportunity is also something to be encouraged.

10. Not going the innovative mile

In any RFP there will be some standard requirements, questions, and formats. The document will include all of the usual needs for the product or service the customer would like to buy. But, we also always encourage suppliers to suggest new ideas or approaches to a product, a service, or account management which we may not have thought of. Demonstrating that a supplier has spent time and effort thinking about how they can help improve a customer’s business is always a great way to stand out.