WHAT’S NEW
MANAGEMENT FOR DESIGN Spring 2017
Strategy, leadership and where it all goes wrong
In many businesses strategy is often confused with operations, resulting in a lack of alignment between strategy and execution. Furthermore, strategy and leadership are frequently viewed and discussed as very separate concepts that exist in independent, distinct boxes. Just think about books you may have read on these subjects over the past few years. They are all about either strategy or leadership, but never about both or about the relationship between the two that is a necessity for a business to succeed. In reality, you can’t have one without the other. In our experience, business strategy gets set and the leaders rely on others to execute most of the time. There are several reasons why this ends up happening, but, for strategy to work and to be accepted throughout a business, it needs to be executed by those at the top. The issue here is that most employees in any business have other things they are working on and unless strategic change is modelled clearly then most people will just continue working on what they were already doing and no real change occurs. It is up the leaders to set an example.
Execution of a business strategy is the most valuable part of the strategic process. Execution is about how you deliver and create value. The problems with execution eventuate when there are vacuums around strategy communication and priority. Employees will always focus on their own ‘urgent’ task list that may not comprise true priorities for business leaders. In these instances, strategy clearly isn’t filtering down. Here are a few ways to improve business strategy: 1. Consider how you will execute before you commence 2. Have a clear understanding of why you are doing it and the impact it will have 3. Understand where the pain points and challenges are 4. Communicate the strategy throughout the business 5. Make sure priorities are set with timeframes 6. Your strategy needs to excite 7. Keep communication open, keep talking about it 8. Update the strategy as you go — keep it current 9. Utilise available information and data 10. Don’t withhold information down the chain. Remember that business strategy is more than just a plan that sits in your desk drawer. It is an ever-evolving element of your business that needs to be nurtured and nourished.
How does your financial management measure up? Management for Design recently conducted a study with business leaders in the AEC and creative sectors to review how well their finances are managed. The results provide insights into how other firms are tracking and provide some benchmarks against which you can measure your own financial management success.
Our findings indicate that: •
50% of respondents have a positive, yet inconsistent cash flow
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25% of respondents have budgets but they don’t really adhere to them
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25% of respondents regularly review their balance sheet ratios and use them in their decision making
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12.5% of respondents have no project costing system in place
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50% of respondents do not know their project specific profit margins
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25% of respondents said their financial data is not easy to interpret and doesn’t add value to their business.
As a business leader, ensuring your financial data is consistently updated, tracked and analysed makes a dramatic difference to the value it can bring to your business. If finances are not consistently managed, it can quickly become difficult to stay in control of your cash flow, financial position, balance sheets, budgets, future forecasting and resources. Reviewing information on a regular basis and making sure it is set out in a way that is easy to interpret is essential to making effective and informed decisions about the future growth and success of your business. Having an effective project costing system also allows you to differentiate between direct and indirect labour costs on a project by project basis — ultimately allowing business leaders to make changes in the workplace where necessary to maximise profits.
While finance isn’t the heart of your business, it is the blood that flows through every part of it. Having full control of your finances makes all the difference in the success of your business. Don’t let your finances get lost among the day to day operation of your business — take the reins and set up processes that make it easy to manage your cash flow, set up budgets and accurately forecast to maximise your future success.
Deltek Insight
We are looking forward to attending the annual Deltek Insight conference in Nashville from the 23–27 October with some of our clients. We’ll be investigating, learning and interrogating the Deltek developments and collecting as many insights as we can to maximise our solutions and to use the systems to the best possible advantage. We’ll no doubt have a lot of useful information to share on our return and will be able to pass this on to our clients using the Deltek platform.
The networking opportunities are always terrific at the Deltek conference and we’re looking forward to making the most of our time there to collaborate with like-minded businesses and other users. This year’s keynote speaker is Mike Rayburn, an inspirational speaker, author, comedian and world-class guitarist. He will be drawing on his experience as a successful entrepreneur to discuss increasing profitability and impact by inspiring teams to lead by creating change. Alongside what is sure to be a great keynote speaker there are many expert-led breakout sessions that we are looking forward to attending. Be sure to watch this space to hear about our highlights from the trip.
M4D Business Conditions Survey Each year Management for Design conducts a Business Conditions Survey. The aim of this survey is to assess the prevailing economic and business climate and to drive thinking and decision making. In turn, the results assist businesses to work through current circumstances and deliver sustainable growth. This year’s Business Conditions Survey is coming to you soon. We are creating the survey now so keep an eye on your inbox this September for this year’s survey — coming soon.
Get more out of your business Are you getting the most out of your people and your business systems? To ensure your business is running effectively you must first optimise the key levers that allow people to do their work efficiently and productively. Without properly functioning systems you will not be maximising their potential, the value your systems can bring to your business and people. It is no easy task to run a business, so make it easier for yourself and your employees by ensuring your systems are finely tuned to be the best they can possibly be.
Here are some quick tips to optimise your workplace. Keep your employees up to date: Bringing in new systems and software to increase productivity is all well and good but unless your employees receive adequate and effective training in how to use them you won’t reap all the benefits. The more your employees know and understand the systems and software you use, the less likely they will be to make serious mistakes. Properly understanding the systems and software will also increase their productivity and job satisfaction. A lack of understanding of systems and software can easily lead to employee frustration and low morale. This is especially important for new employees — you must ensure that they all receive the appropriate training and feel that they understand how things work in their unique environment. Keep your systems tuned up: Maintaining continually high productivity requires not just setting up your systems and letting them go, but also setting up regular updates to ensure they are functioning at maximum effectiveness. Updating your systems allows them to be more likely to cope with newer software and technology to keep your business moving forward. Internet Speed: As your team and client base grow the speed of your internet service will become increasingly important. Every time an extra person logs on to your internet service the bandwidth decreases for everyone else. You need to ultimately make sure all your people can gain access when they need it, without concerning themselves with capacity issues. Ensuring your router is in the key production areas will reduce the likeliness of weak blind spots. If your office spans a large space, WI-FI extenders can benefit to boost the signal in weaker areas. When all your employees have adequate internet access and speed their productivity will increase dramatically.
M4D Business Systems Survey We recently conducted an important Business Systems review of professional services businesses in partnership with the Association of Consulting Architects Australia. This review was conducted to assess the use and effectiveness of the various business systems across the Architecture, Engineering and Consultants industry. There are a myriad of Business Management Systems available to businesses and the industry to manage your finances, projects, clients and documents. Yet there is minimal information describing the effectiveness of these systems and minimal expert assistance about making the right choice for you and your business. Having now collated the data it is interesting to analyse which systems are the most effectively used in running AEC businesses. For instance, a staggering 64% of respondents don’t use a CRM (Client Relationship Management) system at all. CRM systems help you to keep track of all your customers, leads and contacts as well as all interactions with clients from everyone in the business. Having such information helps anyone new to the client, while also providing a communication history to draw upon to enhance client experiences. In accounting, our results show that the most commonly used accounting system was MYOB. Xero, however, was shown to be more effectively used — 45% of users finding it a very effective accounting system compared with MYOB’s 20%. Similarly, for all business systems the most commonly used was not necessarily the most effective.
Here is a quick look at the most used vs most effective business systems: System Accounting Time and invoicing Project control Resource management CRM Document management Contract administration
Most used MYOB MS excel MS excel MS excel MS outlook In house MS office/excel/word
Most effective Xero Xero Union Square MS project Union Square ArchiAdmin ArchiAdmin
If you would like a review of your business systems and information on how you can use them more effectively contact Callum Bruce, Head of Business Systems at CBruce@m4d.com.au.
An Insiders View of the Property Market We recently hosted a networking event at the Management for Design office here in Melbourne — An insider’s view of the property market. We were very fortunate to be joined by our guest speaker Andrew Leoncelli, industry leading Victorian Managing Director of CBRE. Andrew is currently managing several Melbourne’s highest profile and exciting residential projects including Australia 108. An industry leading, highly capable professional, he single-handedly established the Residential Projects business
Gordana Milosevska, Director of Management for Design.
Andrew Leoncelli, industry leading Victorian Managing Director of CBRE. line for CBRE in Victoria in 2010. Andrew has extensive experience with several large listed domestic developer clients as well as some of Asia’s largest residential developers from Singapore, Malaysia and mainland China. During the evening, Andrew shared his insights into the procurement process, engaging the design team, the intricacies of collaboration and marketing, and delivering the “highest residences in the southern hemisphere” — not forgetting what’s planned! We walked away with a greater understanding of the current and predicted property markets. Andrew covered the relationship between migration patterns in Victoria and the average house price as well as the key drivers for international interest in Melbourne property. Tellingly, 11 years ago there were only 5 suburbs in Melbourne with a median house price over $1 million and as of 2016 there were 102 suburbs with a median house price over $1 million. It was great to see this comparison drawn so clearly, to visualise just how much the property landscape has changed in a very brief period and how that growth is driving demand for more affordable housing alternatives such as apartments and town houses. It was also interesting to hear about Andrew’s work with Australia 108, the highest residency building in the southern hemisphere. With Melbourne being consistently voted the world’s most liveable city, massive population growth that is set to outstrip Sydney by 2030, increased availability of alternative housing plus stamp duty benefits, it’s easy to see why Melbourne is an attractive market to buy into for a range of buyers at various stages in their lives. The event proved to be a wonderful opportunity for us to meet and mingle with colleagues and business leaders across the architecture, engineering and design sectors. Our Director Rob Peake also gave a presentation on business performance in the AEC industry, giving our guests a guide to benchmark their performance in several aspects of their business. If you would like to receive an insight into the presentation please contact Rob on rpeake@m4d.com.au.
READING LIST Beyond Harvard Mark H. McCormack The publication of What They Don’t Teach You at Harvard Business School in 1984 introduced the world to the Mark H. McCormack street smart, nuggets of wisdom offering accessible insights into how to get ahead in the real world of business.
Outliers Malcolm Gladwell In this stunning new book, Malcolm Gladwell takes us on an intellectual journey through the world of “outliers” — the best and the brightest, the most famous and the most successful. He asks the question: “what makes high-achievers different?”
Grit Angela Duckworth In this instant New York Times best-seller, pioneering psychologist Angela Duckworth shows anyone striving to succeed — be it parents, students, educators, athletes, or business people — that the secret to outstanding achievement is not talent but a special blend of passion and persistence she calls “grit.”
Thinking Fast and Slow Daniel Kahneman In the international best-seller, Thinking, Fast and Slow, Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, takes us on a ground breaking tour of the mind and explains the two systems that drive the way we think.
Tools of Titans Tim Ferris For the last two years, Tim has interviewed more than 200 world-class performers for his podcast, The Tim Ferriss Show. The guests range from super celebs (Jamie Foxx, Arnold Schwarzenegger, etc.) and athletes (icons of power lifting, gymnastics, surfing, etc.) to legendary Special Operations commanders and black-market biochemists.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
