Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen My Amazon Authors' page Twitter:@ jacolineloewen Linkedin: Jacoline Loewen Profile

December 21, 2010

Needed Words for Your Strategy

I make every effort to read new business strategy books and articles. In 90 percent of cases, I can dismiss neither the author's thought process nor his or her evidence—but I am always taken aback by the abundance of "clever" and the absence of any discussion or consideration of the ability to implement the suggestions made or implied. There is total silence around the subject. For example, I did a quick analysis of the Index of one "famous" strategy tome circa 2007—words like "people" and "customer" and "leadership" and "implementation" and "execution" were literally missing.

December 20, 2010

How Deming would have loved Private Equity

Private equity fulfills one of Deming's key ideas - that profound knowledge generally comes from outside the system, or the business, and is only useful if it is invited and received with an eagerness to learn and improve. 
When private equity is invited into a business, the owner-operators are ready to hear suggestions on how to improve. New comments by the Private Equity team will be anticipated and absorbed. This power to influence is one of PE's main differentiators from the public market financing where faceless investors have little impact on strategy or operational priorities.
Deming believed that a system (business) cannot understand itself without help from outside the system, because prior experiences will bias objectivity, preventing critical analysis of the organization. Critical self-examination is difficult without impartial analysis from outside the organization. Also, insiders can rarely serve as hostile critics who speak frankly without fear of reprisals.
According to Deming, the journey from the prevailing management style to quality requires the understanding of systems. A system is composed of interrelated components. Quality is the optimization of performance of the components relative to the goal or aim of the system. Individual components of the system will reinforce, not compete with each of the other components of the system to accomplish the aim of the system.
Surprisingly, a lack of clearly defined purpose is common in U.S. organizations, particularly long-range purpose. Short-term thinking, quarterly and annual performance evaluations, and bottom line thinking forces attention to quick-fix solutions. Even if long-range plans exist, prevailing short-term thinking distracts from long-term behavior toward real solutions.
Quality is a systematic process: 

  1. First, establish the aim: vision, mission, goals or constancy of purpose of the
  2. system. According to Deming, without aim, there is no system (Identity).
  3. Identify the components
  4. Map the processes 
  5. Examine the interrelationships of the components within the system (relationships).
  6. Constantly improve on the processes of the system (Information/Learning/Knowledge.)

December 17, 2010

Why every private equity firm should read Deming

The best private equity partners strongly support that management must be judged not only by the quarterly dividend, but by innovative plans to stay in business, protect investment, ensure future dividends, and provide more jobs through improved products and services.
It is recognized that Private Equity is about the deal and, although they do leave the people side to the owners running the business, the best PE guys know operations and long term success do not flow from the numbers but from the passion of the people.
Talking about Deming in my past blog, and how much he impacted on my approach to strategy for growth, made me stop by Wikipedia and read about this extraordinary man who was honoured by the Japanese with the Deming Prize.
It took me back to my MBA days to review Deming's extraordinary impact that he made in the late 1980's. His focus on the people, despite being a statistics and measurement boffin, did inspire me to write my first book: "Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment."
Deming had such an impact on humanizing business as his 14 points focus on how to motivate the brains in your business. Too many managers ask their team to check their brain at the door. Ford took over the world leader in cars - GM - after consulting help from Deming. 
Ford Motor Company was one of the first American corporations to seek help from Deming. In 1981, Ford's sales were falling. Between 1979 and 1982, Ford had incurred $3 billion in losses. Ford's newly appointed Division Quality Manager John A. Manoogian was charged with recruiting Dr. Deming to help jump-start a quality movement at Ford.[17] Deming questioned the company's culture and the way its managers operated. To Ford's surprise, Deming talked not about quality but about management. He told Ford that management actions were responsible for 85% of all problems in developing better cars. In 1986 Ford came out with a profitable line of cars, the Taurus-Sable line. In a letter to Autoweek Magazine, Donald Petersen, then Ford Chairman, said, "We are moving toward building a quality culture at Ford and the many changes that have been taking place here have their roots directly in Dr. Deming's teachings."[18] By 1986, Ford had become the most profitable American auto company. For the first time since the 1920s, its earnings had exceeded those of arch rival General Motors (GM). Ford had come to lead the American automobile industry in improvements. Ford's following years' earnings confirmed that its success was not a fluke, for its earnings continued to exceed GM and Chrysler's.
In 1990 Marshall Industries (NYSE:MI, 1984-1999) CEO, Robert Rodin, trained with the then 90 year old Deming and his colleague Nida BackaitusMarshall Industries' dramatic transformation and growth from $400 Million to $1.8 Billion was chronicled in Deming's last book "The New Economics", a Harvard Case Study, and "Free Perfect and Now".
In 1982, Dr. Deming, as author, had his book published by the MIT Center for Advanced Engineering as Quality, Productivity, and Competitive Position, which was renamed Out of the Crisis in 1986. Deming offers a theory of management based on his famous 14 Points for Management. Management's failure to plan for the future brings about loss of market, which brings about loss of jobs. 

December 16, 2010

Why "Hey, I'm in a community" makes people work

In baseball, a guy hits a home run, goes around the bases, and all his teammates come out and they give him a high five, and that’s awesome. And then every time somebody hits a home run, they do that.
In private equity, people tend not to do that enough, so when Loewen & Partners achieves a goal, we have to go celebrate. When I did my MBA, we had a third of our mark based on a proper Masters' thesis, which was the best part of the MBA for most of us. I wrote my Masters' thesis on Total Quality Management, TQM, which the Japanese had embraced to leap frog themselves ahead of the Americans. I discovered the writing of Deming and his 14 points to achieve TQM. The last point stunned me - celebrate!
And there are two reasons why we need to do just that - throw a party. As human beings, we’re not emotionally and anthropologically different from who we were on the plains of Africa 100,000 years ago. We need to feel that "hey, I’m in a community."
The second reason is that out of everything that I could be focused on during a year, the thing that gets rewarded with a party will be the thing that I really focus on. So I’ll tell everyone, if we hit this mark or we hit that mark, we’re having a party. Then it’s been concretely expressed to the employees that that must be the important thing. So it’s a way to double and triple underline the really important goal.

December 15, 2010

Morley Salmon passes leadership of EMDA to Brian Koscak

How to get more from your people

I came out of Business School having used the case study method, where the professor speaks 10 percent of the time, and the students do the rest. It’s tremendously valuable in private equity to ask questions rather than do all the "telling". When you need the company to grow, you’ll get better answers than if you, the C.E.O., try to come up with most of the ideas and impose them. You actually get better work out of folks as a result of asking them to bring more to the strategy of the business.
Let me say something that’s going to sound surprising. As C.E.O. today, you actually can’t get anything done without your people. 
We can all understand this as we have all been at the bottom of the ladder, with bosses who inspire and some who do not. As a leader, if I have a really good idea and I go tell people, “Hey, you have to go do this,” or I impose it on them, people wonder, what does she really mean? It’s open to so much misinterpretation and confusion that actually you’re doing more harm for the organization than you are good.
So the job of the C.E.O. becomes, “Hey everybody, what are everybody’s good ideas? O.K., and what’s yours? That’s awesome. What do you think of that? Hmm,.."
Now, anybody can have a different view and it strengthens decision making.
I was reminded of this by a book recommended to me by one of Canada's leading coaches, Sharon Ranson who runs The Ranson Group, coaching executives in the financial industry. The Leadership Challenge is written by Kouzes and Posner and I assumed it would be a quick flip book but slowed down to appreciate the detailed examples. The Leadership Challenge is well worth a read over this holiday season, perhaps with a glass of eggnog?
You can reach Sharon Ranson at sranson At theransongroup.com 

December 14, 2010

Want to improve, get a coach

Getting a coach is the best thing that you can do. I’ve done four years with two different coaches, and it is just fantastic. There’s what you say and there’s what people hear, and the gap between those two is sometimes enormous. What really matters is what people hear, not what you say.
Being a manager also isn’t about trying to become perfect. You’re not going to stop making errors. But it’s about having a mature appreciation for the fact that you’re a flawed human being. Probably everyone around you is a flawed human being. What are your flaws and how are you going to manage around them? What are your strengths? How are you going to optimize those?
I also learned a good trick, which is to ask somebody, “How are you doing?” They’ll usually say, “Good.” And I’ll say, “No, no, really. How are you doing?” And they’ll answer, “Good.” But then I’ll say, “Tell me what would you say if you weren’t doing good? How would you express that to me?” And then they tell you things. It’s partly little tactics, but the more important part is making it clear that you want to hear what they have to say.

December 13, 2010

2 Job Interview questions asked by Private Equity

Q. What’s an effective question that you use in most interviews?
A. What’s the best and worst career advice you’ve been given in your career? That gets to the underlying point about what people think is important. The best career advice part gets to what they think is important; worst career advice kind of tells you whether the person is trying to snow you. I want to know if you’re trying to snow me under the stress of the interview and try to tell me things that you know aren’t true — that you don’t make bad decisions, that you haven’t gotten any bad career advice, that type of stuff.
The point is that the interview is uncomfortable, but so are budget review meetings and so are a lot of meetings in day-to-day life. We’re not a bunch of perfect people who work together. We’re all people with flaws. I want to know if you’re somebody who feels comfortable enough to talk about dumb things that you’ve done or dumb advice that you’ve taken. Phrasing it in the form of, “Hey, what’s the worst advice you got?” at least gives you a half-step of distance to it. It tells you something about the character of the person.
Q. What’s the best question people should ask in an interview?
A. When they ask you, “Hey, do you have any more questions?” ask them, “How do I help you get a gold star in your review next year?” The person who’s interviewing you had to go through a lot of effort to get this opening, particularly in this economy. Be empathetic and realize that they are hoping that this position is going to make their life better. Ask them how you can be a part of that.

The "how are you doing" job interview

The “How are you doing?” interview for private equity partnered firms has about a 50 percent chance of success. That kind of interview is just a social call, right? You’re not actually seeking to find out anything about somebody’s performance. All you’re talking about is vague generalities, some task ability and whether there is cultural "fit".
In the Loewen & Partners' Talent method, the structure is more, “What have you done in the past relative to what this job needs?” So if I’m hiring a CFO, we’ll have the CEO and the family business owner and two more in the interview committee, usually Board members. We’ll sit down first and say, there are 51 different areas that could be important that we’re looking for in somebody — a good coach, analyst, public speaker, all these different areas that could be important. 
We have to pick six, and it’s really interesting to have these discussions with your colleagues. In some cases it turns out that everybody’s got a different six, and that’s a problem.
Once you decide on the six characteristics that are most important for the particular job you’re trying to fill, then there’s a series of questions for each one, always focused on past performance. It’s no guarantee of future performance, but it’s the best predictor. What are the tasks to get done and has the person exposure to that work before.

Private equity management style is all about the deal

“If you want to build a ship, don’t drum up the men to gather wood, divide the work and give orders. Instead, teach them to yearn for the vast and endless sea.”
Private equity is about the deal and the numbers, so interest in human side of managing is not as visible. I enjoy the people side of growing a business. So the management style that I have is first, share your passion. Explain to people why it’s an exciting idea and how they can be involved in it. In an entrepreneurial business, the most important thing, the thing that creates the most excitement and value and interest in the business is the big picture — where are we going. You can destroy little bits of it by all these little errors that you make. But if you fix all of them and you don’t have the big picture, then you’re never going to get there. Really engaging people in that big picture is way more important, I think, to success.
So I’ve learned to do the big-picture stuff, and I can be really great at the analytics — sitting down and running the numbers. What I’ve had to learn over time is the middle part about, O.K., how do you build a team? How do you assign a team to do something? How do you give them enough rope to be successful, and when do you take it back? The middle part has been trial and error for me.

5 Leadership commitments to make today

This list reminds me of Deming, the father of TQM, and his 14 point plan for top quality companies. The 5 Practices of Leadership come from a highly recommended book written by Kouzes and Posner. They identify what they call "five leadership practices common to successful leaders".
Kouzes and Posner go on to suggest ten practical "behavioral commitments" among those leaders studied. I liked the reminder and I know this will inspire you once you see that you are probably trying to do them already.
Here they are:

1 Practice: Challenge the process 

(1) Search for opportunities and 
(2) Experiment and take risks

Practice: Inspire a shared vision

(3) Envision the future and 
(4) Enlist others

Practice: Enable others to act

(5) Foster collaboration and 
(6) Strengthen others

Practice: Model the way to the desired objectives

(7) Set the example and 
(8) Plan small wins

Practice: Encourage the heart of everyone involved

(9) Recognize individual contribution and 
(10) Celebrate accomplishments 

December 10, 2010

Where did the 40% rise in M&A happen?

The number of Canadian M& A transactions remained relatively unchanged from the previous quarter at 268 transactions.  Cross-border activity, mega-deals and financial sponsors all played a significant role in driving up the value of Canadian M&A as each category saw significant improvements over the second quarter. 
Overall, it is exciting to see that Canadian M&A activity demonstrated a strong recovery in Q3 with a 40% increase in deal value to approximately $48 billion.  
Four interesting points for the Q3 results:
  1. Canadian buyers continued to be acquisitive abroad, outnumbering foreign acquisitions of Canadian businesses by a ratio of 2.2-to-1
  2. Bucking the trend, the value of Canadian-led acquisitions abroad exceeded that of foreign-led takeovers by a ratio of 4.1-to-1
  3. Activity in the mega-deal segment of the market (deals valued in excess of $1 billion) rebounded to ten transactions valued at $32.2 billion
  4. The Real Estate, Oil & Gas and Industrial Products sectors were the key drivers of M&A activity in Q3 representing 53% of announced transaction volume 

December 7, 2010

Mad rush to China for Private Equity

In a rush to tap China's booming private equity market, Morgan Stanley will be partnering with the eastern city of Hangzhou to launch yuan-denominated funds.
Morgan Stanley has signed a partnership agreement with the local government and has decided to establish its China headquarters for private equity investment in the city, the Hangzhou government said on its website.
Morgan Stanley and its partner aim to raise 1.5 billion yuan ($225 million) in the initial phase, a source with direct knowledge of the plan told Reuters. It will invest in non-public companies.
Earlier this week, Chinese media reported that U.S. private equity giants Warburg Pincus WP.UL and Kohlberg Kravis Roberts & Co (KKR.N) planned to set up units in Shanghai to launch yuan funds, following in the footsteps of rivals Blackstone, Carlyle and Bain Capital.
China is encouraging the development of the private equity industry, hoping to channel more liquidity into the private sector to aid economic growth. Beijing also expects to use foreign expertise to improve corporate governance.
"We hope that the partnership with Morgan Stanley would help boost private sector investment, accelerate economic restructuring and boost the local private equity industry," the Hangzhou city government said in a statement.

December 6, 2010

Groupon - Who Knew?

"I don’t know the third act of the transformation of media," says Michael Eisner of Disney fame. "I don’t even think we know the second act. We’re probably still in the first act or the prologue."
With the surprising offer for Groupon at $6B (yes, BILLION) from Google, there are reasons that it is hard to see where the next venture capital hit will emerge.
As Michael Eisner puts it: 
"I’ve gone to conferences where some people are getting carried around on top of shoulders like they just won the Super Bowl, and two years later it’s “whatever happened to that guy?” I sat at the Allen & Co. conference a couple of years ago and this guy Mark Pincus [CEO of Zynga, the company behind Farmville] was sitting at the table. Who knew that two years later he would have the best room at the lodge?"
Well done to pushing through the hard times, Groupon and Zynga. Let's keep at it.
Here is BNN show, The Pitch, from a week ago, where business owners talk about their companies and are seeking investment capital. The private equity people have not heard of Groupon. I am sure they know the name now. 

India making Private Equity exits difficult

A regulatory backlash against Indian microlenders is complicating the exit strategies of private equity and venture capital investors.The practice of focusing on loans in poor areas largely shut out from traditional banking services gained prominence globally when Muhammad Yunus won the Nobel Peace Prize in 2006 for his role in founding Bangladesh's Grameen Bank. 
Microlending in India has expanded at an average annual rate of 62 percent over the past five years in terms of number of customers and 88 percent in loan volume, according to Micro-Credit Ratings International, a rating firm in Gurgaon, India.
The tougher regulations in Andhra Pradesh, a southern state that accounts for 30 percent of India's microlending market, arose from concerns about overlending to low-income borrowers, interest rates as high as 50 percent, and coercive debt-collection techniques that the state government claims have led to impoverishment and suicides by borrowers. There were 9.6 loan accounts for every poor household in the state, according to a report released on Nov. 15 by the nonprofit group Access Development Services. The upshot? "I don't think private equity investors will recover their money at the rates they thought they would," says Sanjay Sinha, managing director of Micro-Credit Ratings International.

December 5, 2010

Here's a seasonal surprise

Junk food choir takes the world by storm. This is sheer delight. Turn up loud and set to full screen.
And it's Canadian.

December 4, 2010

Buy Ontario shuts down innovation in health and medical businesses

Job growth and the big economic development resulting from these new work roles is now proven to come from the successful incubation of "small, entrepreneurial employees--not a few big companies." Even adjusting for variables such as tax or industry, Glaeser and Kerr, in a recent Harvard Business Review article, observe, "the relationship between small firms and job growth rate stands." 
In other words, industries with smaller firms and more start-ups had faster job growth than an industry without a cluster of start-ups.
Our government has introduced a program called “Ontario Buys” for all institutions it supports, such as schools and hospitals. Ontario Buys is encouraging institutions to buy in bulk as a means to save money. Quite simply put, purchasing from fewer suppliers is the Walmart model of “buy in bulk and save”.  
At first sweep, it does seem sensible to buy from fewer suppliers  and save money by simplifying processes and consolidating costs of doing business.
 Unfortunately, this well-meaning government program is killing long term, future innovation since large numbers of smaller Canadian companies are being shut out simply by not having the size or product breadth for this bulk game. As Glaeser and Kerr’s research show, small companies lead to big companies.  
It is alarming that the Government buys from big suppliers as it is already crushing small companies. Then, where will be future innovation or competition. Maybe another question to get more of a response would be the shrinkage in government jobs for those experts trying o help business owners.
As an example of how the Ontario Buys program works, a medical device manufacturer who is under $40M in revenues is refused even an appointment with the several buying groups tasked with following this new initiative for the health care industry because of their small size. The bulk of orders go to large corporations. 
You may think: Wonderful, these large corporations produce Canadian jobs through their Canadian offices, but they are actually American multi-national corporations with subsidiaries that have been set up in Canada. They do create jobs, but profits are more than likely invoiced back to the American Parent as management fees to avoid our higher Canadian Tax Rates. The goods are imported into Canada from American manufacturing parent corporations, avoiding any manufacturing in Canada. We therefore do not get the benefit of manufacturing or higher paying jobs.  If you ask health care industry people about the Buy Ontario program, they approve because, generally, they are working for these large companies.
This same medical device supplier is peppered with calls from government experts offering all manner of programs to help the business, from R&D tax breaks or government experts to build better online catalogues, and so on. But if there is no buyer, these government initiatives will be of limited use.
Ironically, the US has implemented a minority owned mandate under the Federal Initiative “Minority Owned Contract Opportunities” which forces buying groups to ensure that a percentage of the products purchased are purchased from Minority Corporations, inclusive of SME companies.  
Canadian politicians should take into account the research by Glaeser and Kerr showing that a gnat like cloud of small companies buzzing around larger companies will be a far better boost to job growth than incentives for large companies. Our politicians need to be doing a lot more to protect our future by mandating that a small percentage of purchases be from SME Canadian businesses in conjunction with the Ontario Buys initiative. The percentage could be small but it would ensure a fair and open process at the table for all Canadian Manufacturers.
I will end here but I do get frustrated hearing about R&D grants or financing being given. That is not the problem - it is the buying end. Why give all our support to US owned companies who have a branch office or corporation in Canada, but shut out our SME’s who truly are our Canadian future.
416 961 0862

Medical industry interesting for Private Equity

Dental implants is a highly cyclical business. It’s an underlying high-growth sector, especially in the U.S. and other markets where the population is aging, but is correlated to consumers’ ability to pay out of their disposable income.
During the crunch, as one would expect, many potential patients put off treatment, opting instead for cheaper alternatives such as crowns and bridges, or indeed doing nothing at all. As a result, revenues fell, profitability was trimmed and stocks in the space got hammered.
The very short-term outlook doesn’t look bright either. But a private equity (PE) powerhouse such as Kohlberg Kravis Roberts and Co. or a consortium comprising say Bridgepoint Capital, Permira and Cinven could bet on a cycle upswing, with growth accelerating and valuations returning to mid-cycle levels of around 20x Ebitda by 2013–not to mention the expected efficiencies that PE ownership would bring, which in turn would boost the PE exit. That is if the cycle does happen as the current bears say.

December 3, 2010

Why do we chase stars?

Three themes appear to characterize many of the responses to this Harvard Business School's column which posed the question - Why do we Chase Stars?
Three themes came up: 
  1. leadership talent is portable, 
  2. the reasons that we chase stars are traceable to human nature, and 
  3. women have qualities that explain why they have greater success in porting their talent from one organization to another.

Several discussants maintained that portability is high for certain leadership talents. C. J. Cullinane stated, "The manager who is experienced in cost-cutting and turn-arounds can use this talent in many different situations and be successful." Philippe Gouamba said that "Management performance is 75% portable … (but) today's tough environment has forced upper management to adopt a 'welcome to the team, good luck, here is the deep end of the pool, hope you survive'" approach. Guy Higgins added, "Management is highly portable if people will take the time to learn their new company's management processes." Stephen Basikoti put it this way: "The fact that some transplanted leaders do not succeed does not negate the fact that management performance is portable; it simply points to the uniqueness of the learning curve for each change."
Transferability was thought to be particularly difficult in a move from a large, successful organization to a smaller, struggling one. In Gerald Nanninga's words, "If you put a super-operator in a place where the position is poor and resources are weak, they have nothing to leverage. Their skill-set is wrong."
We chase stars for a number of reasons: "… corporations and the media encourage stardom and discourage team work" (Nauman Lodhi); "It is the expectation that some 'miracle worker' or 'hot shot' can come in and fix issues without the board facing the pain and agony of doing the hard work themselves." (Phil Clark); "It's about selling the dream that the star will add to the bottom line fast with new clients, etc." (Jacoline Loewen); "Rather than create succession plans to hone existing talents, it's so much easier to scavenge for those floating around in the industry." (Vanitha Rangganathan); and "We chase stars because we are fallible …Glamor always is enticing." (Vadeed Lobo)
Women are particularly successful in porting their skills because "… women are more associated with transformational leadership," according to Fidel Arcenas. As Ratnaja Gogula put it, "…traits (that) make women better contenders for talent portability (include) … women's ability to better cope with stress, better communicate and multi-task …" Tom Dolembo asks "are women really different, or have they simply evolved in management by gender bias with skills and talents so alien to their male counterparts that they are uniquely powerful in an information world?"

Canadian business owners in Health Care in demand by Private Equity

Healthcare in Canada is admired by many Americans. Jeff Immelt spoke in Toronto last month and said, "Canadian health care should be a #1 expertise exported to the world." GE is benefiting from Buy Ontario where the government is trying to reduce costs by buying from big suppliers, like GE, but shutting out small Canadian companies.
Our Canadian Government needs to support Canada more.

A full story on this appears in this week’s LBO Wire.

Health-care reform and stimulus spending were pilloried in the recent American election, but the government’s drive to digitize the sector has found support from private equity.
One of the main objectives of reforming health care is to improve the quality of the care while reducing costs. Health-care information technology companies that focus on capturing revenue and implementing electronic medical records provide important tools necessary to achieving that outcome.
Making sure that hospitals and doctors get paid is an increasingly difficult task as providers grapple with bad debts and face tighter reimbursements from insurance companies, Medicare and Medicaid. Revenue cycle management software that boosts reimbursements, clears insurance eligibility, and helps the uninsured find coverage is in big demand.
There have been several PE deals in this area recently. In October, for example, health-care payment systems provider Emdeon Inc., backed in part by General Atlantic LLC and Hellman & Friedman LLC, bought PE-backed reimbursement specialist Chamberlin Edmonds & Associates Inc. for $260 million.
“Wiring the system,” as the industry puts it, is another driver behind health-care IT investments. The plan to adopt electronic health records — championed by the oddly allied Newt Gingrich and Hillary Clinton in 2005 — is getting a big push from the 2009 federal stimulus package, which will spend about $40 billion by 2016 to help hospitals and doctors go digital.
Although there is a lot of money floating around, picking the winners in the fragmented health-care IT market is a challenge for investors, especially as a wave of consolidation unfolds in the sector.
Large hospitals, which evaluate vendors based on their track record and ability to invest in upgrades and services, will likely award contracts to the dominant players, said Dr. Bruce Darrow, a cardiologist and assistant professor at Mount Sinai Medical Center, who is leading the implementation of the hospital’s new electronic medical records system.
“We look for companies that are actually going to be around when you’re done implementing the system,” he said.

December 2, 2010

Tony Clement blames business for not hiring employees

Tony Clement is blaming business owners for not hiring more employees, says a CBC report today.
I find that hard to believe as Clement is one politician who does get out there with business owners and he must have heard their issues with minimum wage, hiring and firing legislation and the amount of taxes taken from employee payroll.
One comment that I hear all the time from business owners is that they want to hire Canadians and they want to keep their current staff, but they simply cannot compete with the price of goods coming in from overseas competitors.
So do we blame Walmart?
If there is someone to blame, don’t pick on business owners, let’s pick on the Canadian consumer making the cheaper choice.
I wish I had $100 for every owner who has told me they are sending jobs to China and they do not want to make that decision but the buyers of their light bulbs, plastic bags, T-shirts, etc. have made the cheaper choice. Canadian business owners are heartbroken about laying off their long time staff. Do you think that is easy? Canada Goose is still manufacturing here but it is a challenge and their coats are expensive.
Our Canadian government is a boy scout in the world. We are playing checkers while the USA and China are playing chess.

Number one leadership trait for a family business owner is Humilty

When I first heard a CEO say that the most important leadership trait was humilty, I was confused. At the time, I was working with Deloitte and starry eyed about CEOs but have since realized the truth of that definition.
The top family owned business in Ireland is a supermarket, Superquinn. Here is a family business owner who has stayed at the top where so many companies want to be, and surprise, he says his leadership trick is humilty. No Harvard MBA required for that.
Feargal Quinn says, "customer-service innovation and public service demand the same defining trait: humility."
Quinn likes to remind business leaders that they should make only five assumptions, which he calls his five lessons in humility: 

  1. My customers know more than I do. 
  2. My employees know more than I do. 
  3. Neither my employees nor I can be creative all of the time. 
  4. What I knew yesterday is not enough for today. 
  5. I'm not responding fast enough for my customer.

Read more

Medical companies shut out of Health Ontario purchasing

Our government is damaging the future innovation in the health and medical industry with “Ontario Buys”, which encourages institutions to buy in bulk as a means to save money. At first sweep, it seems sensible to purchase from fewer suppliers--the Walmart model of “buy in bulk and save” proven to save money by simplifying processes and consolidating costs of doing business.
Unfortunately, this well-meaning government program shuts out large numbers of smaller Canadian companies because they do not having the size or product breadth for this bulk game.
As an example of how the Ontario Buys program works, a medical device manufacturer under $40M in revenues is refused even an appointment with the several buying groups tasked with following this new initiative for the health care industry because of their small size.
This same medical device supplier is peppered with calls from the government offering all manner of programs to help the business, from R&D tax breaks to government experts to build better online catalogues, and so on.
But if there is no buyer, these government initiatives are pointless. The bulk of orders go to large corporations. 
You may think: Wonderful, these large corporations produce Canadian jobs through their Canadian offices, but they are actually American multi-national corporations with subsidiaries that have been set up in Canada. They do create jobs, but profits are more than likely invoiced back to the American Parent as management fees to avoid our higher Canadian Tax Rates. The goods are imported into Canada from American manufacturing parent corporations, avoiding any manufacturing in Canada, keeping the benefit of manufacturing or higher paying jobs in America. 
Ironically, the US has implemented a minority owned mandate under the Federal Initiative “Minority Owned Contract Opportunities” which forces buying groups to ensure that a percentage of the products purchased are from Minority Corporations, inclusive of SME companies. 
Our politicians are keenly aware of the importance of small and medium sized companies.  Research by Glaeser and Kerr, in a recent Harvard Business Review article, show that a gnat like cloud of small companies buzzing around larger companies will be a far better boost to job growth than incentives for large companies. Even adjusting for variables such as tax or industry, Glaeser and Kerrobserve say "the relationship between small firms and job growth rate stands."
In order to protect our future, Ontario Buys needs to be modified to require a small percentage of purchases be from SME Canadian businesses. I do not support gender or skin colour as a reason to buy, but companies with revenues under $500M should be factored into the purchasing decision as this would ensure a fair and open process at the table for Canadian manufacturers.
I will end here but am happy to discuss with you in more detail as I get frustrated hearing about innovation and R&D grants or financing programs. That is not the problem - it is the buying end. Why give all our support to US owned companies who have a branch office or corporation in Canada, but shut out our SME’s? , in a recent Harvard Business Review article, If you ask health care industry people about the Buy Ontario program, they approve because, generally, they are working for these large companies.
As Glaeser and Kerr’s research show, small companies lead to big companies.  It’s alarming that the Government buys from big suppliers as it is already crushing small companies. Then, where will be future innovation or competition. Maybe a question to get more of a response from government would be to ask, “What companies will still be around for all those government experts to help”

December 1, 2010

Canada needs to give more support to its biotech companies

As I listened to the biotech, health and medical experts at a meeting I put together at the Granite Club, I realized there are structural issues our government needs to get fixed. It is becoming evident that Canada is playing checkers, while the US and others are playing chess. As I keep saying, pure business competing against pure business is over as China and the US already know. 
Our government action is key to future success and innovation.
Thank you to Kathryn Simpson, formerly GalxoSmithKlein, who sent me an article supporting the issue that Biotech is needing support from the government. Mark Lievonen, Sanofi Pasteur, says that Canada is just not giving business the support enjoyed in other countries. Come on, Tony Clemenhttp://twitter.com/#!/TonyClement_MP, spend some time on this industry. Let's look at what The Sun says:
Canada needs to cut red tape and give more support to its biotech companies or risk losing billions of dollars in investment — and related expertise — to other markets, said Mark Lievonen president of Sanofi Pasteur.
Weak patent protection, lack of access to financing and more attractive tax and investment regimes elsewhere are all posing a risk to the sector here, said Lievonen, whose company helped develop vaccines for diptheria and polio and commercialize insulin.
Investment capital in technology based industries has dropped to the lowest level in 13 years, according to the Canadian Venture Capital Association, while Ernst & Young estimates the number of operational biotech companies here has fallen by a fifth because of lack of access to capital.
Companies are also failing to capitalize on their research by successfully bringing their products to market, Lievonen said.
“We need to create some success stories,” he said in an interview after an Economic Club of Canada lunch in Toronto. “We need to create and support our own winners and ensure investors get a decent return.” Read more:

November 26, 2010

The 4 Brutal Questions

As requested, here are the 4 Brutal Questions I spoke about on BNN's The Pitch.  These four questions are taken from Warren Buffet: he uses these points to analyze any business in order to see if it will be profitable over the long term, making it an attractive investment. This list is very useful for the start-up right up to the mature owner-operated business looking for private equity. As adapted from Money Magnet: How to Attract Investors to Your Business. (Now available in Kindle too). The 4 Brutal Questions:
  1. Are you the right people to make this happen? While there is a place for planning, successful businesses rely on the execution. The teams most likely to attract money will be those that demonstrate they will roll up their sleeves, get on with the unglamorous grunt work of operating plans and do things just a little bit better. Anyone new to running a company who has a good idea and now wants funding, probably will not get the money, no matter how smooth they appear. No one, except your mom, is going to fund your learning curve.
  2. What is the investment opportunity? Next up, once you have jumped the people hurdle, it's the investment opportunity. Is there a real business? Are there people digging into their wallets to pay for what you produce? What is going to bring in beaucoup cash? as the French say. To illustrate the business, begin by defining your company around the customer and theirpain. Then position your company to solve that problem. Remember to do the math, because your investors will.
  3. Is it sustainable? Do you have a unique and sustainable competitive advantage? If your intellectual property or technology is similar to what's already in the market, that will pop the profit balloon.

    Demonstrate that customers will reach out to your basket of goodies, pushing aside the competitor's basket each and every time. Your competitive advantage is the cornerstone of your presentation. But be prepared to identify the risks. What could be the worst thing competitors could do over the next two years? If you are vague on the answers, do not start the conversation.
  4. What's the return on investment? If you've gotten through the first three questions, investors are ready to get serious and decide if they are going to give you the money. Do not make the mistake of going with your story and expecting them to figure out the amount of money you need and how you are going to pay them back. To get the chequebooks flipping open, you will have to prove three things:
  • What is the growth rate to make the business worth backing? 
  • What is the return on investment? This depends on company size, but can range from 8% to 25% to 40% plus.
  • How will your investor get out his money (exit) within his desired time frame? Demonstrate that you get the importance of an exit plan for the investor

The Pitch - Business News Network with Andrew Bell

Business owners looking for capital should look for the Business News Network's new weekly show on Wednesdays called “The Pitch”, hosted by the positive Andrew Bell. I was on this past week and was impressed with the courage of these business owners to pitch. Here were the two companies both seeking under $2M in capital.
  • First up was Gary McCone, President & CEO, Preo Software, who discussed his software management system, which helps large companies save money and trees by printing less. It is a public company and has signedon some big name clients.
  • Then there was Marcus Anderson, President, Broadplay, who has a mobile marketing and application development company looking to expand vertically and geographically.
Each firm is looking for between $750k and $1 million.

November 19, 2010

5 Factors to Make You Happy

Keeping yourself motivated for business is critical. Does your personal happiness levels have an impact on your company's performance. It seems logical that happiness and motivation go hand in hand. But business people are struggling along and it is very 1982 right now. Is happiness also elusive? You may have heard about The Happiness Project best seller helping people maximize their own joy, and hopefully those around them too - Tiger Woods had his own Happiness Project and we know how that impacted on his family...
Researching how to get happy, expert Gretchen Rubin, writes:
I recently read the very interesting collection, C.G. Jung Speaking: Interviews and Encounters. In 1960, Jung was interviewed by journalist Gordon Young, who asked, "What do you consider to be more or less basic factors making for happiness in the human mind?" Jung answered:
 "1. Good physical and mental health.
2. Good personal and intimate relationships, such as those of marriage, the family, and friendships.
3. The faculty for perceiving beauty in art and nature.
4. Reasonable standards of living and satisfactory work.
5. A philosophic or religious point of view capable of coping successfully with the vicissitudes of life."
Jung also added, “All factors which are generally assumed to make for happiness can, under certain circumstances, produce the contrary. No matter how ideal your situation may be, it does not necessarily guarantee happiness.”

November 18, 2010

10 Steps to Get Your Staff Ready for A New Hire

With a new hire, the people within the company may get their feathers ruffled by not being involved early enough. Managers are busy and sometimes it is easier at the time not to bother with managing the human emotions of new hires. I was reminded by Jocelyn Cossar, an expert in managing change, of the importance of getting organized and it really takes such a small amount of time with big pay-offs. Cossar gives The 10 Steps For Good Change. These were appreciated by my client, and I asked Jocelyn if I could share her process:
"Many have said, although sometimes hard to believe, that change is a good thing. We all know that employees resist change because they feel they stand to lose once the change goes through.  A good approach to resistance to change is to see it as an opportunity for engagement. Below you will find a step-by-step guide to change management."
  1.  Consult with employees during the decision-making stage
  2. Discuss with employees the reasons for the change
  3. Ask for feedback on the proposed change
  4. Clarify everyone's role in the change process
  5. Involve employees in the implementation strategy
  6. Develop a timeline on specific actions of implementation
  7. Determine the priority of actions
  8. Provide training on new systems or procedures
  9. Review the progress of the change
  10. Maintain open lines of communication
Jocelyne Cossar, CHRP
office: 905.582.4379
mobile: 416.333.7081