Why Customer Experience Programs Fail?


Heralded as the last battleground for competition, customer experience management has become a core strategic imperative for many organizations. Building unique emotional ties with customers that are stronger and difficult for competitors to imitate is considered the cornerstone for organizations to achieve an unbeatable competitive edge in today’s market.

Known as “branded customer experience” the association of experiences specific to a brand has created mega organisations such as Apple, Zappos and Amazon. To deliver a great branded experience for customers, an organization must embrace customer experience management as their highest priority if they are to prosper in the future.

But where do you start, what actions do you take, what is the process that you should follow to achieve success? These are some of the key questions organizations seek to answer when they have accepted the value branded customer experience can deliver for them. Our research in this field identified that few organizations understand the complexity and areas they need to change to achieve the privileged position in the marketplace as a customer experience leader. This finding is supported by research conducted by Accenture in 2015. Accenture found that nearly 80% of organizations never achieve any growth in profits or customer numbers from their customer experience programs[1]. At best they achieve mediocre results.

There are a multitude of reasons for the poor performance achieved from customer experience programs. The eight top reasons we identified are as follows:

  1. The organization is not ready. Few check the readiness of their organizations prior to making the investment in a customer experience program. This initial ‘look into the mirror’ to obtain an honest view of whether the organization is in fact ready to embark on the journey of becoming a leading customer experience company is an essential first step to determine whether or not the organization should even attempt to take the next step in the process.
  1. There is no specific vision or financial metrics associated with the customer experience program. Organizations that are not ready to embark on a journey to achieve strategic customer experience advantages tend to implement programs that lack specific visions or have metrics that properly measure the success of the program. As a result the program tends to focus on no metrics or ones that give the illusion of success.
  1. CX initiatives address symptoms and not root causes. Without proper analysis organizations invest in initiatives that address the symptoms associated with poor customer experiences. Without addressing the underlying issues these problems reoccur and customers are no better off. Their investment in the initiates is ephemeral and leads to no sustainable benefits for the organization.
  1. Organizations don’t implement processes or structures to fix customer issues but instead focus on a single measure to determine their impact on customers. Organizations that build processes that enable customer feedback to be used as a catalyst for internal improvements achieve greater results than those solely focused on the score achieved in a customer survey.
  1. Organisations only focus on the customer side of the equation. Customer experience programs often underachieve because the majority of them only focus on the customer outcomes but fail to address internal leadership, culture, and people of the organization. Transforming the organization is pivotal in achieving the rewards associated with strategic customer experience.
  1. Inadequate governance and positioning of the CX program. Any implementation of any initiative to improve the customer experience needs to have the proper governance model in place to ensure there is ongoing monitoring, reporting and remedial actions to ensure the initiative is achieving its desired objectives. Not only does the governance model need to be functional but its positioning within the organisation is as critical. Incorrect positing can compromise the effectiveness of the people empowered to ensure the organization is achieving its customer experience objectives. Incorrect positioning within the organization can undermine the importance of the program ensuring any new behaviours never get embedded as part of the organizational culture.
  1. Outsource partners are not included as an integral component for the program’s success. Almost all organization outsource some component of their business. Any component impacting customers requires the organization to properly integrate the outsource provider into the customer experience program. Agreements with providers need to reflect the objectives of the customer experience program and a governance model needs to be in place to monitor the impact on customers from the outsource provider.
  1. The ability to effectively innovate and continually improve in customer experience is inadequate. Customer experience excellence in the marketplace is a constantly shifting target. What works today for customers is unlikely to remain relevant forever. Organizations without the ability to evolve and improve through innovation don’t achieve longevity in commercial benefits from their customer experience programs.

 

Achieving the rewards of a properly designed and implemented branded customer experience program requires the organization to be armed with knowledge about the breadth and depth of change required to transform the organization as a CX leader. For any progressive organization branded customer experience is the blueprint for growth in the current competitive landscape.

 

Experience My Brand is a book written to exclusively help companies avoid commercial failure from customer experience programs. With clear data to complement the text, Experience My Brand puts theory into practice in a way that is practical and easily understood. Readers are provided the tools to effectively implement transformational change and create a unique and sustainable experience for their customers.

To learn more visit the website: www.experiencemybrand.com

[1] Accenture Strategy: 2015 B2B Customer Experience: https://www.accenture.com/t20161216T021856__w__/us-en/_acnmedia/PDF-27/Accenture-Strategy-B2B-Customer-Experience-2015-Research.pdf

Branded Customer Experience: CEO Perspective


Customer experience management has become one of the hottest topics in recent years. More specifically the topic of how customer experience can differentiate an organization in the marketplace and give an unfair advantage over its competitors has become a central theme in modern business.

What makes branded customer experience special from other varieties of CX? The answer to this question lies in the outcomes it provides an organization. When we read about CX we often come across how companies have improved their customers’ experiences by doing A, B, or C. We often read about CX in terms of single initiatives or changes in a department. We also tend to read about CX in terms of metrics such as Net Promotor Score (NPS), Voice of the Customer (VoC) and other systems for capturing and measuring how customers rate the level of services delivered. While it’s great to read the stories of companies improving their customer experiences there is a fundamental flaw in their strategy. When you take a closer look at these organizations you find their initiatives are primarily tactical in nature. Even worse, when you take a closer look at their financials you cannot correlate their efforts with any measurable or sustainable positive difference in their bottom-line. In many cases the expenditure made in CX programs doesn’t lead to any positive Return on Investment (ROI). The difference with branded CX is that, if executed properly, it will lead to long-term profits and increased customer loyalty. The only problem with branded CX is that it’s not easy to implement. Until now!

I have spent the past 18 years as CEO growing business services companies using CX strategies. At the time of doing this CX was not a hot topic as it is today. However, I recently began reviewing my strategies and specifically the ones that led to bottom-line profits. These strategies led me to write a book on the subject: Experience My Brand: How Successful Compacover_final_reduced8nies Develop Loyal Customers and Increase Profits. I wrote this book to give business readers a CEO’s perspective into branded customer experience by providing a staged process for creating a branded customer experience with a particular focus around having a solid financial case to ensure your CEO can champion the program.
The book is not only based on my experiences as CEO but also on research of major companies and how they have used it to strategically position themselves ahead of the competition and have achieved sustainable growing profits and increased customer loyalty.

The book is comprehensive and provides over 300 pages of strategies and insights on how to achieve a branded CX. The book will be released in the US and online through Amazon in early 2017. To register your interest please visit www.experiencemybrand.com .

Strategy Development Best Practices


strategy paper cover

What is Strategy & Why is it Important?

The definition of strategy is multifaceted. Its broadest meaning is to provide a game plan for how the organisation will achieve its stated goals. This game plan is typically focused on achieving commercial and/or positioning success in the marketplace. This type of strategy will outline a series of tasks and actions required to execute the plan and achieve objectives within a defined period of time. They can take on different directions in their effort to achieve a winning outcome. The key directions identified by business authors[1] tends to fall into three main categories:

  1. Doing something new.
  2. Building on what you already do.
  3. Reacting opportunistically to emerging possibilities.

Designing a winning strategy has become a necessary perquisite for companies and government entities to succeed in today’s hyper-competitive environment. Aggressive competitive forces exist in almost every industry and government sector. These forces are driven by globalisation, sophisticated technologies and disruptive business models. Together these forces have diminished the ability for organisations to compete on traditional dimensions such a providing low prices. Today, organisations are required to be innovative in their strategies to avoid becoming irrelevant in a fast-changing and crowded marketplace. To achieve market differentiation organisations need to apply best practice methodologies for strategy formulation. This will enable them to achieve a game plan that is realistic, achievable and designed using a fact-based approach.

Strategies can serve multiple purposes. In an organisation there are usually multiple strategies operating at the same time. A master business strategy provides the whole-of-company plan for how it will succeed in the marketplace.  Secondary market supporting strategies will define specific strategies for achieving success with customers. These market supporting strategies would cover such areas as: go-to-market, marketing, and customer experience. The third level of strategies provide the plans for organisational support. These strategies cover departments such as Human Resources, IT, and Finance. Therefore, there are three levels of strategy typically operating in any organisation.  These strategies need to tightly align with the master business strategy and achieve individual objectives and targets if the organisation is going to be successful in achieving its overall larger goals.

The methodology used to design a strategy will ultimately determine whether the design achieves the purpose it was intended for. Too often strategies are developed using poorly conceived ideas and practices that lead to equally poorly executed plans unable to achieve their objectives. The primary focus of this paper is to outline best practices in strategy formulation to help reduce the risk of failure.

Problematic Practices in Strategy Design 

There are some common mistakes made when organisations embark on an exercise to formulate a strategy. The fundamental problem associated with poorly conceived strategies lies in not following a structured process when formulating the strategy, or taking short-cuts along the way. This type of approach leads to incorrect conclusions and flawed strategy design.

The importance of adhering to a structured process is not properly understood. On the surface the task of formulating a strategy may appear simple, but there is enough evidence of poorly conceived strategies to highlight areas of concern. These issues reinforce the need to take a structured approach for strategy design to avoid the downstream consequences of an ill-conceived strategy. Some of the common mistakes include:

  1. Poor scope of work definition for external consultants: the requirements for the strategy design are flawed so everything developed by the consultants is also flawed
  2. Assumptions are not validated: a number of assumptions are used to formulate a strategy but no validation is made to verify the accuracy of the assumptions. The foundations to the strategy are flawed leading to incorrect conclusions
  3. Internal capability is not adequately considered: without proper consideration for the organisation’s ability to execute, the strategy becomes unachievable
  4. No validation with the marketplace: strategies lacking external market validation often do not achieve their end objective
  5. Implementation plan poorly scoped: the game plan without clear implementation tasks and milestones is likely to be poorly executed making it of little value to the organisation

All of these problematic practices can be avoided if you follow a structured process based on best practices.

Best Practice Methodology for Strategy Design

Strategies that achieve their objectives have some key characteristics. These are:

  1. The strategy is tightly aligned with the organisation’s high level business goals
  2. They are based on factual evidence or validated assumptions
  3. They closely consider the organisation’s capabilities and capacity to execute
  4. They validate the assumptions of the strategy with the marketplace before executing
  5. The implementation plan for execution is achievable within the set timelines

Best practice strategy development is based on two fundamental pillars:

  1. A scientific approach is adopted: this means conclusions are drawn from facts rather than opinions or secondary sources
  2. The organisation can execute the strategy: regardless of how great the strategy might be, if the organisation is unable to execute then the strategy is worthless.

These pillars are the basis for any well-developed strategy. By following a structured process you can achieve a strategy based on these two key pillars. The best practises for developing a strategy are based on 13 key steps. These steps should be followed to enable you to achieve a strategy design with the highest probability of meeting its objectives and adding the desired value back to the organisation. The steps to take are as follows:

  1. Organisation’s vision and mission needs to be clear and realistically achievable: all strategy development should aim to align with the master organisational strategy. If the vision of the organisation is vague or unachievable then all subsequent strategies developed to meet the vision will be flawed. Avoid flowery and vague statements like “we want to be number one in the marketplace…” This type of statement leaves it open for interpretation and strategies may end up achieving a multitude of different outcomes. Specific statements about how the company intends to differentiate itself in the marketplace will focus people and their thinking when formulating the strategies to meet the organisation’s higher level objectives.
  1. Adopt a top-down approach to strategy design: The best way of ensuring your strategy achieves the higher goals for the company is to adopt a top-down approach to formulating the strategy. This means top management have to articulate the concepts of what they want to achieve and departmental managers have to determine the various aspects of their department that need changing to meet these objectives. The top-down approach ensures the tasks to achieve the strategy are fit-for-purpose. Adopting a bottom-up approach can lead to a strategy that encompasses weaknesses in the organisation. The design of the strategy, using this approach, can end up shaped largely by internal interests as opposed to wider market-driven forces.
  1. Identify what the strategy is for: This may sound like an obvious step but as outlined previously there are many types of strategies operating in an organisation. It’s important to be as specific as possible about the area the strategy is designed to impact and its purpose. Start by answering the following questions:
  1. Which area of business is this strategy for?
  2. What is the strategy designed to do?
  3. Who is accountable for the development of the strategy and its execution?

Answering these basic questions enables you to narrow down the scope of the strategy and also ensures there is no overlap with other strategies operating in the organisation.

  1. Set a high-level objective aligned to the Company’s master strategy: strategy formulation will involve multiple stakeholders in brainstorming sessions to design the strategy. Often this can lead to disparate views and directions. Identifying a high level objective for the strategy will help ensure the stakeholder’s are focused. It’s a good idea to make the objective clearly visible for all participants in any workshop to easily refer back to the primary objective of the strategy and realign the brainstorming towards a common goal. The objective should be clearly aligned to the Company’s master strategy for how it intends to compete in the marketplace. For example, if the organisation primarily aims to compete on low prices then a strategy to be developed for supply chain needs to provide the plan for how supply chain will enable the company to achieve these low prices for customers.
  1. Gather facts: before embarking on any workshop for strategy formulation start by collecting facts. These facts should cover all relevant areas related to formulating your strategy. It’s important to take a fact based approach to creating your strategy to ensure it is based on sound empirically sourced information rather than hypothetical or opinion based information. If, for example, you are designing a marketing strategy you should collect some of these key facts:
  1. Marketing budget
  2. Current cost to acquire a customer
  3. Customer lifetime value
  4. Cost of customer retention
  5. Target customer profile
  6. Response rate per medium
  7. Cost per medium for 1,000 prospects reached

This is not the entire list but having these facts on hand will help ensure your marketing strategy is based on factual information and not guesses.

  1. Undertake a S.W.O.T. analysis: once you have gathered the important facts you will need to apply a S.W.O.T. analysis to your strategy formulation. This is the first of the brainstorming sessions you need to hold to form your strategy. In this analysis you need to identify the external opportunities and threats that are most likely to influence your high level objectives. Also, the internal strengths and weaknesses of the department or company need to be identified. The outcomes from the S.W.O.T. analysis should reference factual information gathered in the previous step to enforce the basis of the conclusions drawn. The S.W.O.T. outcomes should be visible on a large display to enable stakeholders to easily refer to them and achieve the next step of the process.
  1. Leverage strengths & opportunities and identify gaps: the S.W.O.T. analysis will provide you with the key elements to build a strategy to differentiate yourself in the marketplace and achieve your higher level organisational goals. Leveraging from existing strengths enables you to build on what you already do well. Drawing on these strengths gives you a higher probability of executing your final strategy since it’s based on existing attributes rather than new ones. Leveraging external opportunities also enables you to capitalise on market conditions in your favour. At the same time you will have weaknesses and threats that may compromise your objectives. Any gaps impacting your high level objectives should be identified at this stage. 
  1. Formulate a 1st draft of the strategy: after completing all the previous steps you should now be in a position to create the first draft of your strategy. This draft needs to draw conclusions for the previous facts and analysis. These conclusions should enable you to answer questions such as: 
  1. How you will achieve your objectives
  2. Why this strategy will work and meet higher level company objectives

The draft strategy does not need to be perfect. It does however need to be substantive enough to enable you to progress to the next step.

  1. Undertake a comparative study of other organisations: once you have created a draft strategy its then time to sanity check it. The first check will be to determine how unique your draft strategy is to competitors with similar characteristics as your organisation. Research should be taken on competitors to identify what similarities and differences exist in your approach. In this analysis your aim is to collect factual evidence why your strategy is likely to work and why it is different enough to give the Company a unique advantage. This comparative analysis should always occur after your initial first draft to avoid stakeholders from imitating a competitor strategy that is not unique to their organisation.
  1. Formulate the 2nd draft of the strategy: findings from your comparative study should enable you to revise your initial first draft of the strategy to create a more considered second draft. The revised draft strategy is again drawing on new factual evidence you have gathered about how your competitors are doing things so the second version of the strategy should now be getting closer to hitting the desired target. 
  1. Outline key initiatives & timelines to execute the strategy: after your second draft you will be in a position to outline the key initiatives you need to achieve to execute your strategy. The tasks to complete need to be accompanied by timelines and a definition of how each milestone will help achieve the strategy objectives. Keep the tasks at a high level at this stage as sub-tasks can be developed once your strategy is approved. If you are developing a customer experience strategy you may identify a task as follows:
  1. Measure organisational customer centricity: 8 weeks to complete: required to determine areas of change within the organisation to become more customer centric.
  1. Validate the strategy with impacted people and/or customers: every strategy that is executed will impact people in the organisation and customers in the marketplace. The only sure way of determining if you have a strategy with a high probability of success is to go directly to the impacted people and ask them some questions. Validation of your strategy is an important step before finalising your strategy. This is the key step that most organisations tend to falter on. Market research is required to gather the likely responses of key stakeholders if the strategy is implemented. The validation needs to confirm a causal relationship between the organisation doing x things and y outcomes occur. The stronger you can validate the impact of the two variables the higher probability your strategy will actually work. Validating the strategy in the field is similar to creating a prototype of a product before mass production. The prototype gives designers a final opportunity to review all the results and make appropriate changes before launching a final strategy. At this stage it may be worthwhile testing more than one strategy to determine which is likely to achieve the desired results. During this testing phase you are likely to come across new and unexpected responses from stakeholders. The results from this research will form the final set of facts required to formulate the final version of your strategy.
  1. Finalise your final version of your strategy with an implementation plan: after completing your validation with stakeholders in the organisation and externally, the final step is to review the findings from your research to formulate your final version of the strategy. Tweaking your strategy by using the findings from your research is an important step towards ensuring the final version of your strategy will achieve the desired outcomes from stakeholders and meet the objectives originally outlined and aligned to the master organisational strategy. Once you have made the necessary changes to your strategy, and the implementation plan, you are now ready to get final approval from higher management.

The Value of a Good Strategy

Unfortunately the value of a good strategy is only ever realised when an organisation experiences the impact of a poorly designed strategy that misses its objectives on all fronts. The enormous cost to the organisation can run into the hundreds of millions of dollars and in the worst case can end bankrupting a company. The cost of implementing a poorly designed strategy significantly outweighs the investment in developing a strategy using the best practices outlined.

The 13 steps outlined may appear too detailed but each step is required to build a case based on facts and reliable evidence. The final validation of the strategy with stakeholders is also a required step in the process to ensure assumptions used in the formulation of the strategy are a true reflection of the likely causal relationship and outcomes to expect if the strategy is implemented.

Most strategies that don’t achieve their outcomes are formulated around exaggerated projections that have no scientific basis. Caution should be made about the use of research firm findings for determining the size of a marketplace or projected growth of a particular product offering. Many organisations have fallen foul of this trap and have paid hefty prices for basing their strategies around lofty and unrealistic numbers. Ultimately, it’s better to have a strategy you can execute and achieve a realistic positive outcome than to create a “Disney-like” strategy that ends disappointing a large number of stakeholders.

[1] What is Strategy, Again? Andrea Ovans, Harvard Business Review, May, 2015

What Do Gulf Customers Expect?


What Do Gulf Customers Expect?

This paper is a summary of some of the findings we have seen over the years of servicing customers in the gulf region. It is intended to provide a snapshot for busy executives and to encourage further dialogue. We do not intend to present a single view of customer expectations in the region but aim to highlight that customer expectations in the region are often not aligned with how companies deliver their services in the region. We believe significant opportunities exist for companies to re-align their services to expectations to achieve significant and sustainable market share over their competition.

What Profile of Customer Are You Catering For?

Each country in the region has its own unique demographics and social and economic profiles. Countries like Saudi Arabia have a large local Arabic population whereas countries like the U.A.E have a large expatriate community from a diverse range of countries. The first step in understanding your customer expectations is to understand the profile of customers you service. There are many approaches to profiling of customers but the ones we believe lead to the greatest insights involve direct interviews with a statistically sound section of various segments of your customers.

Once you undertake this research you should identify common themes for each segment that clearly identify the expectations of your customers.

What Are Some of the Common Themes Identified With Gulf Customers?

The research we have undertaken with Gulf customers is based on our experiences and external market review of what Gulf customers expect. The themes we have identified that are common across the region are as follows:

  • Customers in the region want honest and transparent business practices.
  • Customers want companies and government to deliver their basic services exceptionally well
  • Customers want to feel valued for their business
  • Customers want personalised service
  • Customers do not want to be transferred to multiple different departments to get their issues resolved
  • Customers want their problems fixed within 24 hours without having to do their own follow-up
  • Customers expect companies to keep their promises
  • Customers want a choice in how they interact with companies. They don’t want to go to a retail outlet and take a ticket for basic services
  • The majority of customers are willing to wait around 1 minute to be answered if the service agent at the contact centre can resolve their issue the first time
  • Value-added services are not considered appealing to customers if basic services are not delivered well and with honesty
  • Complicated products and offerings are frowned upon by customers
  • Customers want no hidden charges and simple costs that represent good value

Where is the Misalignment in Business & Government in the GCC?

There are several areas we have identified in business and government in the GCC where there is misalignment between customer expectations and the servicing of their customers. The key areas of misalignment are as follows:

  • Contact centre Key Performance Indicators (KPIs) are measuring the wrong metrics in the contact centre leading to the wrong behaviours with their staff. For example, many centres in the region focus on how quick they can answer a call. Once the call is answered there is little focus on the actual outcome of the call itself. This is completely misaligned with customer expectations
  • Little or no agent empowerment with front line staff dealing direct with customer issues. This leads to customer issues being escalated to multiple departments before an issue is resolved. First time resolution in the region is low compared to the industry best practices are around the world
  • Poor technology and design of customer service systems leads to lack of transparency and insufficient information for the front-line staff member to effectively resolve issues efficiently and effectively
  • There is a significant reliance on retail outlets for customers to get serviced. It is not uncommon for a customer to wait over 20 minutes in the GCC to get a basic transaction actioned from retail outlets
  • There is an insufficient range of effective alternate channels to get service. Self-service solutions in the GCC are lagging the rest of the world. Effective social media management of customer queries is also considered inadequate compared to other more mature markets
  • Front-line staff are often poorly trained to deliver world class service and incorrectly motivated to achieve better customer experiences on an ongoing basis

The Roadmap to Alignment

An opportunity exists for companies and government in the GCC to align their services and how they treat their customers with the expectations of their customers. This opportunity will enable companies and government to position themselves as world class making them aligned to international best practices. This will provide both the global recognition but also position these GCC organisations as globally competitive.

The roadmap to alignment requires companies and governments in the GCC to undertake the following:

  • Undertake a thorough assessment of the current ways customers are currently being serviced
  • Benchmark this assessment to world best practices and to actual customer expectations
  • Identify your goals for where you want to be in the next 2-3 years as an customer service organisation
  • Identify the gaps in the business that need to be realigned to achieve your goals
  • Secure CEO and board sponsorship for your goals and the project to re-align the business
  • Ensure you have the right resources, external partners and funds to achieve your goals
  • Have realistic expectations of what can be achieved in the time frame given your current position and internal culture.

What is the pay-back?

One of the key obstacles faced with re-alignment to customer expectations is the pay-back to the organisation. This is the question that will be asked in the board room and will ultimately determine whether the company decides to make changes or retain the status quo.

The pay-back is different for government and for private enterprise. Government can expect to reduce the cost of service delivery as well as raise how satisfied their citizens are with their government and the services they provide. For private organisations the research strongly indicates the pay-back is well worth the investment. A study undertaken by Harvard Business School in 2005 surveying over 2000 large and medium sized enterprises showed that those who had both fully engaged employees and full engaged relationships with their customers were on average 3.4 more successful in financial terms than those who failed in these capabilities.

Where to Next?

Kinetic BPO is committed to helping GCC companies and government provide world class customer services through our solutions. We would be happy to discuss with you how we may be able to assist.

Directors are Warned of their Personal Risks


I recently attended the Australian Institute of Company Directors’ (AICD) briefing on the essential Directors’ Up-date. During this 3 hour briefing, members were given the heads-up on current issues facing company Directors. A good proportion of time was spent discussing the James Hardie case. The judgment against the Directors makes this a landmark case and one that is likely to be referenced for some time. For those unaware, the Directors of James Hardie that were embroiled in the 2001 Board meetings linked to a media release were both personally fined and excluded from becoming company Directors for varying lengths of time. The James Hardie case has drawn significant attention to director’s personal liability and the risks that Directors are carrying. The judge found the Directors had contravened numerous sections of the Corporations Act 2001, including key areas such as: 

  1. Breach of duty of care and diligence by director or officer (sec 180(1)).
  2. Breach of the duty to act in good faith (sec. 181 (1))
  3. Failure to keep accurate minutes in a timely manner (sec 251A (1) (6)) 

There are numerous lessons learnt from the James Hardie case. The ones that stand out are: 

  1. The directors’ duty of care cannot be delegated to co-directors, management or expert advice.
  2. Directors cannot rely on management’s advice in place of their own consideration of an issue which is within the board’s responsibilities.
  3. Directors should formally object if the issued board minutes do not reflect what accurately took place in the board meeting.
  4. Directors should not vote to pass a resolution unless they have properly reviewed and understood the terms of the resolution. 

One of the clear themes that came from the briefing was how vulnerable company directors have become. The James Hardie case serves only as a warning to practicing company directors. The issue is that there are more than 600 state and territory laws in Australia imposing personal liability in individual directors and officers for corporate misconduct. Gabrielle Upton, Legal Counsel at AICD, highlighted key findings from a survey of 600 directors from ASX-200 listed companies. The results of the survey showed that 78% of respondents considered there was a medium to high risk of being personally liable for decisions they or their boards made in good faith. Similarly, 78% believed that the risk of personal liability had caused them, or their board on which they sat, to occasionally or frequently take an overly cautious approach to business decision-making. The survey also highlighted the negative impact of personal liability on board retention and recruitment: 

  • 71% of respondents had declined the offer of a company directorship because of the risk of personal liability
  • 75% knew of other people who had resigned from a company directorship because of the risk of personal liability.  

These responses come from experienced board directors of public listed companies. What hope does the small business company director have a private company? The Corporations Act 2001 does not make special allowances for the size of the company. Small business owners are often poorly informed about the extent of personal liability imposed as company directors. Many of these companies are comprised of a small number of directors and are often governed more as a partnership than under a formal company board. Their legal structure, often advised by the tax accountant, is a corporation. The company constitutions are often never tailored to reflect the true decision-making processes of the partners. The tax accountant is likely to purchase a template from a legal ‘vending’ machine instead of customising the constitution. Where does this leave the small business director? 

From my own research it leaves the company directors of a small business terribly exposed and ill-informed. I would like to see a survey undertaken of small business company directors to test their knowledge regarding key aspects of the Corporations Act 2001 and see the results. It would not be a surprise to many of us if a large number would fail this basic knowledge test. The courts have demonstrated that ignorance, feigned or otherwise, is no defence in a legal case. Small business directors are often confronted with different issues to those of directors of public listed companies. These issues are often related to the lack of preparedness in governing the company under a proper board of directors. For instance I know of a number of company directors in small businesses who have been entangled in expensive oppression litigation under sections 232 and 233 of the Corporations Act. Oppression cases are more common than most people realise and are almost always related to shareholder and director disputes of private companies.

 The James Hardie case serves as a timely reminder for directors of private and public companies that as a director you are personally exposed. Pleading ignorance on the issues will not absolve you of any wrongdoing. The message is clear: if you are a director, then ensure you know the Law well; ensure you know what processes you need to follow if you are asked to make a decision at board level; and ensure you take total ownership for your decision-making.

What makes a leader truly great?


The question of this title blog can be answered in so many different ways. There are no right or wrong answers to this question. However, given the current state of the economy and world affairs I feel it is a question we should all be asking. Why, you ask? Well, given the way the world is at the moment I figure there are a lot of people out there currently hurting as a direct result of poor leadership. A primary outcome of poor leadership is the declining effectiveness of companies and strategies in numerous industries. Many of the underlying reasons as to why companies fail to produce good results are because their people are not caring enough or are not encouraged to do so. People stop excelling at their work, innovating and taking risks, when they are uninspired, unmotivated, not given direction and feel cheated by their employer. Complacency and greed have become the basis of so many of our current ills.

So what makes a leader truly great? Is it meeting shareholder financial targets? Is it meeting trade deficit targets? Is it increasing staff bonuses? My short answer is that it is none of those things. A leader can not be identified as being “great” for simply meeting the requirements of the job description. The financial compensation of CEOs more than justifies the proposed baseline outcomes we would expect from anyone in the top job. In government we see many leaders who have failed the basics: balancing budgets, providing basic health to all, providing employment opportunities, and protecting citizens and property from physical harm. What we should be looking for in a leader are the ‘qualities of greatness’. Once we look for those qualities, we will better off collectively. So what are those qualities of greatness? Before I attempt to give you what I think they are, I will begin by stating what qualities result in poor leadership. They are: empire-builder, greedy, self-interested, egotistical, unimaginative, cowardly, un-motivating and impersonal.

If we look at many of our leaders today, a large number of them have been hired on their abilities to be “good engineers” of the business or a country. Unfortunately entrepreneurial leaders are often overlooked in favour of the “engineer”. I submit that the entrepreneurial trait in a leader can lead to greatness. The entrepreneur is the architect and visionary. The engineers implement the architect’s vision.

 A great leader is someone who can inspire, motivate and courageously make decisions that lead to greatness for all. A great leader has to be in touch with the people he/she is leading. He/she needs to know their plight, their fears and frustrations. He/she needs to know how to inspire their people and deliver the hope of something greater than what they are experiencing. We are fortunate, after many years, to finally see a leader like Barack Obama display the hallmarks of a great leader. Obama has given the people hope, he has inspired them to change and strive towards something better. Moving a nation of people towards a greater good is the ultimate test of a great leader. History confirms that any leader that can unite their people to a single common cause will succeed. As long as Obama can maintain unity for a “better America” then he and the people will ultimately triumph.

From my perspective, a great leader is someone who can unite people and make them work towards a higher purpose. A great leader is able to convince the people with sincerity and factual evidence, that if they triumph, their labour efforts will far exceed their current state of being. Therefore, a great leader is an expert at understanding change and transforming an organisation or a nation. A great leader is someone who is able to act on their convictions, and (regardless of how difficult or risky the road ahead may look) is able to take the necessary steps forward. A key trait is courage. A great leader is someone who is courageous. Over the years we appear to have undervalued and lost the importance of traits such as chivalry, courage and honour. We simply no longer speak of our leaders in that manner unless you live in a monarchy. People have been let down by so many leaders that they no longer respect leaders or admire their role. We no longer measure courage or honour in job interviews for the top job. It is no wonder so many companies and nations have been underperforming and there are so many disenfranchised people. The first step in attaining more great leaders is to recognise the traits that make great leaders. Once there is an acceptance that these traits are paramount we need to begin measuring them when we hire great leaders. Lastly as a society we need to foster and teach these values to future generations to ensure we breed future great leaders. The alternative of having more average leaders means many more people will live lives of struggle and will continue to battle for the basics: food, employment, health and housing.