It's all about the Talent

I have just spent a few days embedded with the Endura Racing (pro-cycling) team at their training camp in Nice and (apart from inspiring me to get out on my bike a bit more) it's had me thinking about the issues of 'managing talent' ... and the potential for the worlds of Sport and Business to learn from each other in this regard.


Talent in Business

The theme of hiring, motivating, nurturing, developing and retaining Talent is surely common to all business.
I started my career as an analyst in a strategy consulting business (OC&C Strategy Consultants) and went on to be a partner; so in that environment I have both been 'the Talent' and been responsible for developing 'the Talent'. The consulting approach to talent management is very simple and empirically very successful. In that world you find the smartest young things (academic over-achievers who can demonstrate an intuitive feel for business and a structured approach to problem solving) and you (implicitly) offer them the following deal:

• You'll get well paid; you'll get well trained; you'll be on a constant rapid learning curve; you'll get to be involved in deals you read about in the (business pages) of the papers; we will support you to maximise your productive time. We will make you look good, feel good and be proud of what you do.

In return for which

• We will 'own' you for the next few years of your professional life. You will find you are no longer 'comfortably the smartest person in the room' and this will make you insecure; we will use that insecurity to drive you to work harder; we will keep increasing the work-load you are given until you can't take any more (and only then will we back off); you will work harder than you have ever worked in your life.

It may sound harsh but in my view it's a good deal -- the consulting firm hires the best talent and motivates them -- the talent gets well trained and driven to achieve their best by being moved out of their comfort zone. Personally (if I am allowed to judge my subsequent entrepreneurial career as a success) I have to put a large part of that down to the learning I gained by accepting this deal.

Strategy Consulting may be one of the more extreme examples of a 'talent driven' business -- but anybody involved in managing and growing businesses will (or should) have some version of the above 'Faustian pact' in place. You seek to identify and nurture talent; you make a (normally implicit) deal with that talent; you succeed or fail on your ability to identify, develop, exploit* and retain that talent.

Talent in Sport
From the perspective of an interested but largely peripheral observer, the parallels with developing a pro-sports team appear striking to me -- let me repeat the 'deal' outlined above and see how much tweaking is required to fit this to the sporting world

• You'll get (well) paid: in many cases simply being a professional sportsman meets the financial objective here
• You will get well trained and be on a constant rapid learning curve: In the last few weeks the Endura Racing guys have been lining up and holding their own alongside seasoned Tour pros ... and are being coached by Olympic and World Championship medallists.
• You will get to be involved in deals you read about in the (business pages) of the papers: Substitute 'deals' for 'races' and 'sports for 'business' and you are there -- next week the guys are competing in 'la Vuelta a Murcia' lining up alongside Armstrong, Contador et al
• We will support you to maximise your productive time. That's what being in a pro-team and being looked after on trainng camps is all about
• We will make you look good, feel good and be proud of what you do. Well, they are wearing Endura kit, riding top-end hardware and being well covered in the cycling press so they should!

In return for which

• We will 'own' you for the next few years of your professional life. Of course you don't 'own' your riders (particulalry in an environment where individuals have Commonwealth, Olympic and World Champioship objectives and National Coaches to satisfy) ... but we are certainly looking to develop the riders while getting the best possible exposure of and representation for the Endura brand
• You will find you are no longer 'comfortably the smartest person in the room' and this will make you insecure; we will use that insecurity to drive you to work harder. Switch 'smartest' for 'fittest' and this summarise perfectly how (hopefully) the step up to being in a competitve pro-team will lift the riders training work-load, motivation and ultimately performance
• We will keep increasing the work-load you are given until you can't take any more (and only then will we back off); you will work harder than you have ever worked in your life. Again, for 'work' read 'riding' and this is surely what being in a pro-team is all about

The Common Lessons
I don't want to stretch the idea too far here or become overly prescriptive; let me make a couple of simple observations though;

• Business people developing talent could do worse than read what David Brailsford has had to say about motivating athletes and building a team structure
• Directeurs Sportives (or Sports Team Managers more generally) could learn a lot from the discplines that exist when it comes to developing talent in business (how about formalised appraisal processes and written reviews? Explicit 'promotion' objectives? Mentoring programmes?)

Enough: comments welcome


* Used here in the non-perjorative sense: to utilize, esp. for profit; turn to practical account ... to advance or further through exploitation; promote

Exploding the Multi-Channel Myth ...

The following is developed from a reply I placed to a posting in catalogue-biz. The question was about online businesses developing catalogues ... what follows explains why I believe that specialist online retailers will always be able to exploit market opportunities that 'multi-channel' retailers can't reach if they stick to the pure online model (ie. avoid catalogues) ... It also explains why I believe there are opportunities for specialist off-line retailers to develop distinct online retail brands that are free to compete online without fear of conflict with the offline brand.

*****

I have worked in an advisory capacity for many catalogue and bricks and mortar retailers and (with Greenfingers.com) have a successful online business that used to be a catalogue business and has gone from strength to strength since we stopped producing catalogues. Also, with Petplanet.co.uk we experimented with catalogues a few years back and concluded they were a bad idea for us; Petplanet now dominates its category online in the UK.

My distilled view, for what its worth, is that there are very few successful online businesses that would benefit from developing a catalogue. Why? Some of the reasons would include;

• The difference in the fundamental economics between offline and online trading (ie. the required margin structure and therefore appropriate pricing strategy),
• The potential conflict between appropriate online and offline pricing (driven by the above)
• The different buying and merchandising cycles required (print deadlines and mailing dates can come to dominate the rhythm of the business at the expense of the 'continuous' processes required to optimise the web; the optimum range online is different from the optimum range offline)
• The problem of dependency on Royal Mail and their pricing policies for catalogue retailers
• The 'big picture' issue that posting millions of catalogues is simply 'system inefficient'

... I could go on.

Of course if you already have an established retail brand with customers who value your 'range editting' on their behalf then catalogues may continue to play an important role ... but personally I believe (and have for a while) that print catalogues are the past and online is the future (and most if not all of those arguing the value of print are those with vested interests in keeping that 'channel' alive). *UPDATE* The Sunday Times Fast Track 100 adds some weight to my argument about the death of catalogues, read more here,

Similar arguments apply for bricks & mortar retailers developing the online channel. Of course this represents a great opportunity for them and is a fundamental requirement ... but they will always struggle to compete with online specialists because of the conflicts between optimising price and merchandising online versus off-line.

I would not be surprised to see 'off-line category killers' start to experiment with additional online propositions under a different brand from the off-line business so that they can compete properly online.

Basically I think there are 2 kinds of online retail businesses: 'off-line retail brands trading online' and 'pure online retailers' ..

IMHO off-line brands are missing an opportunity unless they realise that to compete effectively with 'pure online retailers' they need to develop a specialist online brand that can be managed without concern for conflict with the existing off-line brand.

Voucher Code Affiliates

Why is it that so many e-commerce websites have failed to cotton-on to the fact that they are leaking enormous amounts of cash to Voucher Code sites through their affiliate programmes?

Here's How it breaks down ...

• Affiliates are a 'good thing' if they drive traffic to your website that you would not otherwise receive and/or if they provide reassurance to punters (who have already found you but are searching further) by redirecting them back to you.
• Voucher Code (aka Coupon Code aka Discount Code) affiliates rarely if ever do this ... having analysed the traffic paths in some detail (thanks to Hitwise) the reality is that most Voucher Code affiliate commissions are generated as a result of the user searching for your website brand name and 'voucher codes' (or equivalent) after they have decided to purchase from you and normally when they are at the point in your check-out process where a voucher code could be entered
• Of course they don't need to succeed in finding a voucher code for you to leak the commission, they simply need to click one of the links on the Voucher Code site's page to now be tracked as the last referrer for this transaction
• And if you think it through, it get's worse; if the transaction had been referred by another affiliate, the Voucher Code affiliate 'hijacks' that commission by being seen as the last affiliate referrer before the order is placed ... and of course if a voucher code does exist and the punter finds it on that site you are now paying affiliate commission and funding a voucher discount on that transaction (so chances are the transaction is economically marginal for you anyway)

Of course there is an argument in favour of the voucher code sites which goes something like this: bargain hungry customers start their journey at the voucher code site (or are prompted by an emailer having signed up to a voucher code site) and follow the journey that goes 'this retailer is offering a voucher so I will shop at this retailer now' (rather than its competitor, presumably). I simply don't buy this logic (even for those firmly established retail brands where the consumer is more likely to respond to the prompt to shop from this retailer because of the Voucher Code offer itself). Certainly for the majority of web businesses the cost of the 'leaked' and 'hi-jacked' commissions far outweigh the benefits of true 'new traffic' generated.

This is relevant not just for those running affiliate programmes of course -- if I was a 'good' affiliate myself I wouldn't want to be driving traffic to a website that is dominated by voucher code activity as I would know my affiliate commission is likely to be hijacked by a voucher code site at check ot.

Glad I've got that off my chest.

And yes, I have been through the process of paying a fortune to Voucher Code affiliates (when the programme was being managed for me by an idiot) and I have observed what happens when you tur them off (no discernible impact on traffic or revenue generated, massive saving on commissions and funded voucher discounts) so for my sites at least I have tested and validated the hypothesis that Voucher Code sites are mostly leeches and to be avoided.

And yes, it irritates me that I know they are highly successful and they make a fortune ... which is why I have written this blog in the hope that the bubble will burst for them soon!

Maybe we can coin a new term: "Vouchasites" (Voucher Sites + Parasites)

My Business Ramblings Blog ...

Planning this to be a rambling blog about life at the bleeding edge of the New Economy (or should that be the 'och-aye-the-noo' economy?); a chance to get some issues off my chest and hopefully help keep me and others in touch with the issues that affect small and medium sized entrepreneurial business (with an obvious bias to my main business activity of ecommerce).

For those who are interested, my 'day job' involves looking after
Greenfingers.com
Petplanet.co.uk
... and I retain an active shareholder interest in
Endura