Our Beat

From the moment we were born, 'our beat' has been set.

No matter what we do or say, 'our beat' in life go's on. No matter who we are or pretend to be, we're not able to oversing or shout down 'our beat'.

In every phase of life we play a different tune. As baby sometimes clumsy, but charming. As a child ambitious, but still fuzzy. As adult classic and convincing, as if we have become 'our tune' instead of 'our beat'.

But we're neither the notes we play, nor the space between them. Our tune plays on the background and 'our beat' keeps leading, whether we like it or not. Others may help us to find out in life what other tunes fit 'our beat', but they wont be able to change 'our beat'

Until finally 'our beat' slows down and we have to face our final moment, when 'our beat' transforms our tunes, guided by angels, in a new universal image, that'll beat(le)s you.

You won't stay beatless, and you can't beat 'your beat' in life, but you may try.

Now with this in mind listen to the next song. Can you distinguish the tune from the beat, the baby form the adult, life form death?


Try me 2 |

Your life in 5.16 minutes...
(Play it loud on professional stereo equipment)

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Client Lifetime Value (CLV)

In a Harvard Business Review called "Why satisfied customers defect", Jones & Sasser explain that even a 80% 'satisfied clients score', is no guarantee for sustainable success.

Common management misconceptions are:

1. A client satisfaction level below complete or total satisfaction is adequate.
2. It's not profitable to invest in changing customers from 'satisfied' to 'completely satisfied'.

Their conclusion is that, in most cases, 'complete customer satisfaction' is key in order to secure customer loyalty and generate sustainable financial performance.

Loyalty & Satisfaction
Despite of what sometimes intuitively is assumed, the relationship between loyalty and satisfaction is in most cases not linear, but depends on the competition level of a specific market segment.

In a Dutch presentation, called "CRM Myths", direct marketing professor Janny Hoekstra confirms this relationship and shows that even 'satisfied clients' are in the so called 'indifference zone'.

The 'art of client management' is obviously to create 'Apostles' and to avoid creating 'Terrorists'.

So stimulate, instead of discourage, your clients to give you feedback and to complain, because this is the only way to create new apostles.

NPS
A relatively new and, according to Harvard (The One Number You Need to Grow), probably better method to measure client loyalty is the 'Net Promoter Score' (NPS). Simply score your clients on a 0-10 points scale on the question: "Would you recommend company X ?'

Now simply calculate the NPS score (%) as:
NPS = Promoters% (rating 9&10) - Detractors% (rating 6 or less)

NPS scores of 75% or more prove world class loyalty.

Loyalty effect
Another, intuitively driven, perception is that the more customers are loyal, the more they generate profit.

In general this seems true, however as Hoekstra shows: not every 'more loyal' client is also per definition 'more profitable'.

Just like Reinartz (Insead) stated in his article : 'Not all custumors are equal'.

Reinartz defines different client groups called: Butterflies, Strangers, True Friends and Barnacles.

Each group urges a different approach in a Customer Client Strategy.

Investing in 'True friends' appears essential and eventually pays out.



Customer Lifetime Value
Actuaries that combine marketing an actuarial sciences could help by defining and calculating what is called: The Customer Lifetime Value (CLV)

The CLV of a specific client(group) could be defined as the discounted value of the yearly margin (m = profits - costs), with discounting rate (i) and the (client) retention rate (r).

CLV:Rule of thumb
In the strongly simplified case with constant margin, the CLV - as a rule of thumb - could be defined as the margin (m) multiplied with the so called margin multiple = r/(1+i-r).

Example: Discount rate = i =12%, Retention rate = r = 90%, results in a CLV of approximately 4 times the yearly margin.

As is clear from the formula and table above, the choice and impact of the discount rate is only significant in combination with a high (>90%) retention rate.

Modeling and creating Client Value is not only in the interest of the shareholder, but moreover a case of creating creating added value for clients, in particular 'best satisfied clients'.

More info at: Modeling CLV(insurance), Customer Metrics

Aerodynamic Career Style?

Careers follow the laws of aerodynamics. There are two main opposite style types of making career. You may choose to become a "Balloon Career Maker"(BCM) or a "Wing Career Maker (WCM).



Let's start with the most traditional way to make career

The Wing Career Maker (WCM)
As a WCM you use the aerodynamic Lift effect to get higher on the career ladder.
Although the lift of an airplane is a combination of several effects, a substantial part is what's called the Bernoulli Effect. In short, the airplane gets lifted because the curved shape (airfoil) of a wing forces the air that flows above the wing to a higher velocity than the air under the wing. Depending on the shape and the angle of the wing, this causes a low pressure above the wing and a high pressure under the wing. The result is the desired lift. In formula :

L = K . v² . A

(L = Lift, K = shape dependent constant, v= velocity, A =wing Area)

The WCM works just like that. By being more productive (= increase speed v), creating support for his ideas and actions (= create a larger area A), the 'beginning manager' relieves (the stress of) his superior managers (= under pressure above the wing) and - at the same time - puts pressure on his employees to perform (= High pressure under the wing). The result is he gets promoted (= lifted).

As the formula shows, 'being more productive' has an emerging quadratic effect, while 'creating support' only has a simple single multiplier effect on promotion.

By being conscious of the lift formula effects, the WCM has the opportunity to change his management style (= shape) and approach (=angle) in a way that he may reduce and calibrate the employee 'pressure effect' to a healthy (optimal) level. Reduction however, will have a negative effect on his career speed. On the other hand this healthy pressure level will motivate his employees for better performance and eventually lead to better company results on the long term.

The crucial question here is, does senior management have sight and steer on these 'long term' effects or are they only managing short time result? In the first case, promotion will lay ahead.

Now let's look at the opposite style.

The Balloon Career Maker (BCM)
The BCM makes use of another aerodynamic effect called Hot Air Balloon Lift. The heated air inside a balloon weighs less than the surrounding ambient air displaced by the balloon. The difference in the air weights is the gross lift. In formula:

L = V.g.(ρ_a - ρ_i)

(L = Lift, V= Balloon Volume, g = gravity constant, ρ_i = density inside, ρ_a = density ambient )

As BCM you don't seem to worry about your productivity and career speed. You focus on your desires and needs. You cultivate the fire that's burning within you (= heating of the air).
You invest (=heat) in yourself through study and training and expose your skills to your environment (= the air gets hot).

As a consequence you'll get noticed by higher management, who'll recognize your knowledge. Your star will rise (= Volume increases), you'll get promoted (=Lift),because you're a professional help instead of a higher management threat.

What's best?
There's no 'best way' to make career. Just be who you are and try to take advantage of thermal updrafts so that you may fly, rise and fall, like a thermal plane without working like a hound dog or studying like a madman. Enjoy life, be a glider!

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Zorro Decisions

In times of change, success depends, more than ever, on taking the right decisions that have the support of your team or family.
Because of the importance of such decisions, by nature we're not inclined to take any alternative or more risky solutions. Instead we go on 'Save' and base our decision on our passed experiences and our preferred and filtered ways of taking in information and making decisions.

As team or family member we all are selective in what we see or hear. More over, in changing times most of us avoid unnecessary conflict. Neither do we like extra challenge, as our bow cannot always be bent. We're captured in what is called our confirmation bias.

To prevent possible failures in decision making, it's important to include the different views and (decision) qualities of our team (family) members in a balanced way.

To help to make better and more considered decisions, we may use the so called Z-Technique, that Sue Nash uses in her action learning programs. This technique is based on the Myers Briggs Type Indicator (MBTI).

To remember it better, Steve Roesler , related this technique, that he called 'Decision z', to the tv and movie character Zorro. So we might call it the 'Zorro Decision' technique.

The Zorro Decision technique is based on 4 steps:

• Sensing
  Walk through and write down all possible facts and factual details.
• Intuition
  Take a 'big picture' approach to think 'long term'.
  Write down all opportunities, possibilities, and connections between cause and effect.
• Thinking
  Write down and discuss all possible solutions. Each with their pros and cons, risks, benefits, consequences and likelihood.
• Feeling
  What impact does the decision have on other stakeholders or group members ( the 'people factor') How will you feel about the result? Will it gain support or meet opposition?

Remember Zorro next time you're about to take a group decision!

Sources: Sue Nash Consulting, Roesler Consulting Group

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Manageable?

In order to succeed in a certain action, we often develop an action plan, a process that defines sub-actions in terms of who, what, when and where.

To guarantee that we succeed as much as possible, we have to maximize the control of this process of sub-actions. Make the process manageable.



In managing this process it's important to identify the nature and co-dependency of your sub-actions.

In general it's important to characterize sub-actions as follows:

Characteristic	Understandable	Predictable	Solvable
Simple	++	++	++
Complicated	+	+	++
Complex	-	-	+
Chaotic	--	--	-

Examples

Characteristic	Example	Description
Simple	Doorbell	Single component/ process with defined output
Complicated	Watch	Several components working together with defined output
Complex	Weather	Many interdependent components with hardly predictable output.
Chaotic	Clouds (form)	No sub components to identify, output unpredictable

Always analyze and characterize the components or sub actions of your action plan.
Not doing so will certainly cause trouble.

Example
One of the causes of the 2008 credit crisis is that we try to manage an in essential 'chaotic process' as a 'complicated process'. More traditional regulation rules (or governance back up) won't stabilize the banking system on the long run (in fact they make it worse), because these rules would imply that the nature of the financial markets is known and can be captured in a controllable mathematical linear system.

Financial markets are complex and chaotic systems, just like the weather. This implicates that regulation should be much more focused on "Plan B" measures than on detailed rule based regulation.

This means that regulation has to be formulated in such a way that Banks, instead of proving more and more that they will 'never' be insolvent (e.g. calculated risk=0,5%, that can't be calculated!), are forced to deliver Plan B's in which they state how they'll act in the 'unexpected' case of insolvency or iliquidity (average at least once in 200 years).

Just like you've got an umbrella in your car (Plan B), because you know that even though the weather forecast was 'sunny', you never can tell precisely when it's going to rain.

Most processes in life turn out to be chaotic on the long run. Analyze and control them, but don't forget to (always) carry your "Plan B" in your pocket.

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Performance equation

What's result, what's performance, how can you manage it and does HR really help?

Difference between Result and Performance
Let's first distinguish between Result and Performance, simply stated:

Performance = Result / Potential

However, after setting the goals (i.e. the expected Results) the Potential (maximal Result that can be achieved) will almost certainly change due to all kind of changing external, non controllable or non influenceable, circumstances.

Performance related rewards and agreements should therefore always be made for different Potential-scenario's (bandwidth).

Board members, directors, employees, colleagues, friends, our kids, in short 'the contractor', should always be judged and rewarded on their actual performance and not on the results.
One of the main questions in this process is: Can the contractor control or influence the Potential?

Example
You committed to sell 100 books this year, being 0,1% of the national book market (Potential = 0,1% x 100.000 = 100)

Potential	Result	Performance
100	100	100%
50	75	150%
200	150	75%

From this it's clear that if national book sales (potential) would slink to 50%, selling 75 books results in a 150% performance. You would have done a great job, given the Circumstances!
The reverse, of course, is also true.

Performance: rule of thumb
On a personal level, Performance could - as rule of thumb - be defined as:

What you get done
=
[What you have]
x
[What you do with it]
x
[When, Where and How you do it]

Research done by John Purcell, Boxall and others, based on original marketing research of Jaworski(1989), show that successful firms have better people and better processes.

It seems that High Performing Organizations create success based on three pillars:

• Human Capital Advantage (HCA)
  
• Organization Process Advantage (OPA)
  
• Organization Citizenship behaviour (OCB)

The AMO model
Professional people management is vital in creating these advantages.

Research and practise led to the development of the so called AMO Model.

P = f (A, M, O)

With P = Performance, A = Ability, M = Motivation and O = Opportunity.

Simply said,people perform well when:

• they are able to do so
  
• they have the motivation to do so
  
• their (work) environment supports and stimulates them

Although the relationship (e.g. covariance, etc.) between the AMO elements (A, M,O) can be complex, it's clear that if one of them is zero, the Performance itself will also be zero. That's why the AMO equation is sometimes simplified as:

P = A x M x O

The performance equation
Another similar development by Douglas Peters led to "The Performance Equation":

P = At * ([ K + S ]/ ER)

Where P=performance, At=Attitude, K=Knowledge, S=Skills and ER= Environmental Roadblocks.
Peters sets Attitude in place of Motivation, combines Skills and Knowledge in Ability and defines ER as negative (opposite) aspect of Opportunity

Motivation revealed
Motivation is one of the most important drivers behind High performance.

Let's dig in to the several aspects of Motivation. Motivation has been analyzed by Victor Vroom. Vroom's Expectancy Theory (1964) is based upon the following three beliefs:

• Valence
  The employee's defined (outcome) value of extrinsic rewards [money, promotion, time-off, benefits] or intrinsic rewards [satisfaction].
  
• Expectancy
  The employee's confidence end expectation of what they are capable of doing.
  
• Instrumentality
  The perception of employees whether they will actually get what they desire even if it has been promised by a manager.

Vroom states that these three aspects interact psychologically to create a motivational force such that the employee acts in ways that bring pleasure and avoid pain.

So according Vroom Motivation could be defined as:

M = E x I x V

Or in words, Motivation =

• Expectancy: Perceived Probability of Success x
  
• Instrumentality: Connection of Success and Reward x
• Valence: Value of Obtaining Goal

Opportunity
Opportunity can be seen as everything in the environment that is necessary, supports, helps or sometimes blocks (negative opportunity) the performance of the contractor.
Charlie Cook defines Opportunities as Resources.

In fact Opportunities could be defined as:

O = R x H x C

With O = Opportunity, R = Resources, H = Help or support, C = Circumstances

Just to demonstrate: If you planned a BBQ and got enough meat (R) and matches (H), but it's raining cats and dogs (C), it's not what you would call a big opportunity.

Wrapping up
Wrapping up all Insights, Performance could be defined as:

P = A x M x O = S . K . E . I . V . R . H . C

With: S=Skills, K=Knowledge, E=Expectancy,I=Instrumentality, V=Valence, R=Resources, H=Help or support and C=Circumstances

Remember Performance is everywhere, not only in business.
Success in performing!

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The Collapse of Chaos in your life

Perhaps you think that if you have a consistent life-philosophy, your control your life and no great changes will take place?
Well,




you're probably wrong !
Even if we act in a stable consistent way, we keep interfering with our environment and our environment responses to us.

At first this response seems meaningless and of no value. You think you're consequent and your work and achievements in life seem relatively stable, perhaps a little bit chaotic and of no great significance. But in repeating the right things endlessly





Something will change
This change often will not appear as an evolution in your life, but as a kind of revolution, suddenly and most often unexpected.
Fore example, when you study, you'll probably once in a while think: what progress am I making?

But don't worry, if you keep on your track, there'll be a day your future suddenly comes to you (out of the blue: as a kind of emergent property) instead of "the you trying to make your future" in this Game of Life.







A good demonstration of this principle is

Langton's ant Langton's ant is an virtual ant that starts out on a grid containing black and white cells, and then follows the following set of rules. If the ant is on a black square, it turns right 90° and moves forward one unit. If the ant is on a white square, it turns left 90° and moves forward one unit. When the ant leaves a square, it inverts the color. The result is a quite complicated and apparently chaotic, but relatively stable, motion. But after about 10.000 moves the ant starts to build a broad diagonal "highway".

So keep on your track and wait for



The collapse of chaos in your life

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Trust or distrust?

Without trust you can't live. It's "the" basic element in politics, business, management, friendship, love and life.









Now, trust is not an easy subject.

For example:

• Research showed that women and men both lie about three times every 15 minutes in a simple conversation.
• The average credibility of a CEO in western countries is below 30%.
• Only just 40% finds it (very) easy to trust an accountant.

So you could ask yourself,






What is Trust?

There can be no trust unless you give it first.
And even with someone you fully trust, you'll have to cope with distrust.
If you think you won't.. Just the fact you consciously decided to trust someone, means that you implicitly considered the theoretical possibility that he or she could betray your trust. So distrust was on your table. Not considering distrust is naive or even risky and will in most cases end in a disappointment.

Let's look at some properties of these trust relationships:

Trust relationships:

• are bipolar : Trust and Distrust
• include ambivalence: Degrees of [dis]trust, Simultaneous trust and distrust
• are multifaceted: We can both trust and distrust the same person in different contexts

Trust relationships are also two dimensional:




Let's look at how you can manage trust and distrust in the same relationship.




From this matrix we may conclude the next rules of thumb:

• 'Just' managing distrust, won't bring more trust.
• If there is not enough trust, trying to manage distrust will escalate and lead to apathy and frustration. Once you're in this position, your relationship gets 'locked' and the both of you won't be able to manage your trust anymore.
• Always start managing trust first.
  In a situation with "low distrust" by giving 'more freedom', 'stimulating each other' and 'creating happy moments'.
  In a situation with "high distrust" first by 'creating rules' and 'agreements' and (re)gain confidence in each other.

That's not all folks! It's just the start. Trust me.

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