The Business Side

1The Business Side. TTT Conference, Bled. @RichardMBrooks

@[email protected]+44 1908 557 900

www.k-international.com

THE BUSINESS SIDEHotel Kompas, BledFriday 24 October, 20149AM



HELLORichard Brooks. CEO K International

@RichardMBrooks+44 1908 557 [email protected]


#tttconf#L10n #i18n #CAT #MT #xl8 #t9n

#localization #translation #language#Bled #Slovenia

“this presentation is brilliant #tttconf”

“@tttconference please invite @RichardMBrooks next year”

“the best presentation of all time #tttconf”

“almost all his jokes were new #tttconf”


WTF!?


Agenda• Creating a strategy

• Translation as a commodity good

• Pricing strategies & case studies

• Growth, Leadership and EQ


Strengths

Opportunities

Weaknesses

Threats

Located in UK

From outside the UK

Not be located in UK

Located in UKPrivately

FinancedPrivately Financed

Privately Financed

Privately Financed

More nonsense

More nonsense

More nonsense

More nonsense

Stupid Waste Of Time


“Let’s get a consultant in”


“Let’s get an MBA in”


Tools to Help you Analyse

• PEST(LE) Analysis• Porter’s Five Forces• 9 box SWOT• Business Model Canvas• Strategy Canvas


Environmental AnalysisPESTLE Framework

Political Environmental Social Technology Legislation Economic

• Capital flight from Russia.

• Largest election in history happening in India.

• War on terror. NSA/GCHQ aka big brother.

• Break up of Great Britain.

• Turkish government control over social media.

• Violence in Venezuela.

• CSR awareness in companies.

• International standard for

• Social appeal of recycling. Recycled products seen as better for the environment.

• Consumers prepared to pay more for ‘green’ products.

• Diverse home market.

• Developing economies demanding more services.

• Growing world middle class.

• Arabic Spring. • Russian

expanding borders.

• By 2030 1 billion Chinese will live in cities.

• Chinese workers strike over poor conditions.

• Billions and billions of people not yet online… coming online soon.

• Application of translation technologies now differentiating factors.

• R&D tax relief and grants for software development.

• Demand from clients on workflow rather than language solutions.

• Cloud based technologies.

• Big data.

• Legal obligation to translate for some markets.

• Employment law becoming more complex.

• New legislation effecting demand for translation.

• Tax breaks for software development and R&D.

• UK strongest growing economy in European Union until 2016.

• Low inflation.• Bank of England

interest rate tied to unemployment not inflation.

• Coming out of depression cycle.

• Southern European economies in trouble.

• Nigeria becomes Africa’s largest economy.


Industry AnalysisPorter's five forces of competitive position

Threat of New Market Entrants

Threat of Substitute Products

Rivalry within the Industry

Bargaining Power of Buyers

Power ofSuppliers


Bargaining Power of Suppliers

Suppliers are POWERFUL if...

• There is a credible forward integration threat by suppliers.

• Suppliers are concentrated.

• There is a significant cost to switch suppliers.

• The customers are powerful.

Suppliers are WEAK if...

• The product is standardized.

• There are many competitive suppliers.

• They are supplying commodity products.

• There is a credible backward integration threat by purchasers.

• There are concentrated purchasers.

• The customers are weak.

What does the bargaining power of suppliers in our industry look like?


Bargaining Power of Customers

Customers are POWERFUL if...

• There are a few buyers with significant market share.

• Buyers purchase a significant proportion of the output.

• Buyers possess a credible backward integration threat.

Customers are WEAK if...

• Producers can threaten forward integration, taking over customers’ position.

• There are significant buyer switching costs.

• There are many customers – significant influence on a particular product or price is small.

• Producers supply critical portions of the customers’ input

What does the bargaining power of customers in our industry look like?


Use Five Forces Analysis to help your customers develop

their strategy.

For bonus points…


CUSTOMER SEGMENTS

Who is your customer? What market segments are you providing a service/product for?


What value do we deliver to your clients? or To your client’s supply chain?Is it based on > performance, brand, value, convenience, price…

VALUE PROPOSITIONS


CHANNELS TO MARKET

How are you going to get your product/service to your clients? Is it virtual? Or is it a physical product?Are our channels integrated into our client’s supply chain?


CUSTOMER RELATIONSHIPS

For each segment… what's the relationship like?Transactional, self-service, account/relationship managers, community.


REVENUE STREAMS

For what value are our customers willing to pay for? Per unit charge, hourly, subscription, licenses, leasing. Price discrimination or fixed price.


KEY RESOURCES

What key resources do we need for the right hand side? Are they human, intellectual, financial or physical.


KEY ACTIVITIES

The most important actions needed to make you business model work. e.g. problem solving (for consultants).


KEY PARTNERSHIPS

Who do you need as your key partners.Used to optimise your business model, reduce risk or acquire resources.


COST STRUCTURE

Describes all costs involved in operating a business model. Is this business… cost driven, value driven, % of fixed and variable costs and are there economies of scale/scope?


It gives you the power of conversation







A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers.

Commodity Good?

from Investopedia.com


Is translation a commodity good?


No it bloody isn’t.But some of us sell it on price, so it feels like price is the only differentitor (a bit like a commodity).


Pretium = PricePretium = ValueThe thinking in 10 B.C.

Price = ValueThe problem in 2014 A.D.

Price ≠ Value

Pretium


… 4G is “the communications equivalent of the change the jet engine made over steam”

>>> Inability to monetise value creation

Olaf Swantee, CEO EE

3G1GB£31

4G1GB£26

When Value > Price


Becky Williams M&S Apology

When Price > Value

>>> lack of understanding of an emotive reaction to a small price change


• The last time you met an Accoutant?

• The last time you met someone from procurement (or vendor management?

• The last time you met someone from the pricing department?

Rich ponders…


Of all the 7 Ps Price has the single most immediate effect on

the bottom line. (put this on twitter its profound)


“the single most

important decision in

evaluating a business

is pricing power”

“if you’ve got the

power to raise prices

without losing business

to a competitor, you’ve

got a good business.

And if you have a

prayer session before

raising the price by

10% you have a

terrible business”

- Warren Buffet/MIT 2011


What does a 2% rise in price do to your profits?


P&L #1

Income £100 000

Cost of Sales

-£50 000

Gross Profit £50 000

Overheads -£40 000

PBIT £10 000

Interest -£5 000

Tax -£1 000

Profit £4 000

P&L #2 (2% increase in price)

Income £102 000

Cost of Sales

-£50 000

Gross Profit £52 000

Overheads -£40 000

PBIT £12 000

Interest -£5 000

Tax -£1 400

Profit £5 600


2% rise in price =40% Increase in profits

All other things being equal (tax calculated at 20%)


5% 10% 15% 20% 25% 30% 35% 40%

2. and your present gross profit is ..........

1. I

f yo

u c

ut

you

r p

rice

by

…

3. You need to sell this much more to break even ............

1%2%3%4%5%6%7%8%9%10%11%12%13%14%15%16%17%18%19%20%21%22%23%24%25%

%25.066.6

150.0400.0

---------------------

%11.125.042.066.6

100.0150.0233.3400.0

1000.0----------------

%7.1

15.425.036.450.066.787.5

114.3150.0200.0275.0400.0650.0

1400.0-----------

%5.3

11.117.625.033.342.953.866.781.8

100.0122.2150.0185.7233.3300.0400.0566.7900.0

1900.0------

%4.28.7

13.619.025.031.638.947.156.366.778.692.3

108.3127.3150.0177.8212.5257.1316.7400.0525.0733.0

1115.02400.0

-

%3.47.1

11.115.420.025.030.436.442.950.057.966.776.587.5

100.0114.3130.8150.0172.7200.0233.0275.0328.6400.0500.0

%2.96.19.4

12.616.720.725.029.634.640.045.852.259.166.775.084.294.4

105.9118.8133.3150.0169.2191.7218.2250.0

%2.65.38.1

11.114.317.621.225.029.033.337.942.948.153.860.066.773.981.890.5

100.0110.0122.2135.3150.0166.7

Discount Table


Cost Plus.Amounts to a mark-up on costs… is widely used but rarely the most profitable.

Competition driven.Amounts to using price within a game theoretic framework for strategic advantage.

Customer Driven.Amounts to using price to achieve short-term sales objectives rather than profits.

Value Based.Amounts to understanding the value created and then maximising its capture.

Pricing Strategies


The butter costs more than the corn and the paper bag/cup it comes in costs more than both

together.


Created shareholder value by forecasting revenue streams.

Move from providing a product to a bespoke service.


Built in the quality of the product to the pricing model. Extracting the right about of $$$ in relation

to the value added.


“… a unique mix of attributes that companies provide through their products, interactions, ethos and pricing to create loyalty and satisfaction in targeted customer segments.

It is the unique set of benefits a business offers its target customers.”

- P Kotler

Value Proposition


IMPACTThe value that you can/could deliver to the customer’s business.

IMPACT and COST must balance!

CAPABILITYThe things that you can/could add value to the customer’s business.

COSTThe overall price position that the customer will have to pay to use the value proposition.

Value Proposition


Add Value…

Think how the impact, capability and cost change as you increase the complexity of your product/service to have a larger impact on your customer. Increasing (and demonstrating) value as you go.

… and extract some of it


The Total Share of Wallet

Made up of• What you do for the client

• What your competitors do for the client

• What the client does themselves

• What the client doesn’t do but should


Therefore Different Strategies

Or Marketing Approaches…• To retain our key clients

• To take business from competitors

• To convince the client to outsource

• To educate the client


time

Cum

ula

tive c

ash

flow

/ ‘

pro

fit’

$0

Starting to level out as market matures

Breakeven point (may be 2 years)Heavy

investment at the start of the relationship

Barrier to Entry


P&G paid $57 Billion for Gillette (in 2005) but they only acquired $6 Billion of tangible assets*.

*David Haigh, Brand Finance, Marketing Magazine, 1st April 2005



£4.98/

Ltr

£2.47/Ltr


•Better price•Higher sales•Lower prices •Better terms•Higher Search Engine Results•More partners•Better retention •Lower salary expectations•Better qualified candidates•Higher PE ratio•Lower volatility•Lower borrowing costs

In other words… Revenues upCosts downRisks downProductivity up

What does a Brand give you? Its way more than your logo…


PAGE 63



A Model for GrowthGreiner’s Curve

1

2

4

3

5

Larry Greiner, “Evolution and revolution as organizations grow”. June 1972 HBR


Phase 1: Growth Through CreativityHere, the entrepreneurs who founded the firm are busy creating products and opening up markets. There aren’t many staff, so informal communication works fine, and rewards for long hours are probably through profit share or stock options. However, as more staff join, production expands and capital is injected, there’s a need for more formal communication. This phase ends with a Leadership Crisis, where professional management is needed. The founders may change their style and take on this role, but often someone new will be brought in.

Phase 2: Growth Through DirectionGrowth continues in an environment of more formal communications, budgets and focus on separate activities like marketing and production. Incentive schemes replace stock as a financial reward. However, there comes a point when the products and processes become so numerous that there are not enough hours in the day for one person to manage them all, and he or she can’t possibly know as much about all these products or services as those lower down the hierarchy.This phase ends with an Autonomy Crisis: New structures based on delegation are called for.

Phase 3: Growth Through DelegationWith mid-level managers freed up to react fast to opportunities for new products or in new markets, the organization continues to grow, with top management just monitoring and dealing with the big issues (perhaps starting to look at merger or acquisition opportunities). Many businesses flounder at this stage, as the manager whose directive approach solved the problems at the end of Phase 1 finds it hard to let go, yet the mid-level managers struggle with their new roles as leaders. This phase ends with a Control Crisis: A much more sophisticated head office function is required, and the separate parts of the business need to work together.

Phase 4: Growth Through Coordination and MonitoringGrowth continues with the previously isolated business units re-organized into product groups or service practices. Investment finance is allocated centrally and managed according to Return on Investment (ROI) and not just profits. Incentives are shared through company-wide profit share schemes aligned to corporate goals. Eventually, though, work becomes submerged under increasing amounts of bureaucracy, and growth may become stifled. This phase ends on a Red-Tape Crisis: A new culture and structure must be introduced.

Phase 5: Growth Through CollaborationThe formal controls of phases 2-4 are replaced by professional good sense as staff group and re-group flexibly in teams to deliver projects in a matrix structure supported by sophisticated information systems and team-based financial rewards.This phase ends with a crisis of Internal Growth: Further growth can only come by developing partnerships with complementary organizations.


Daniel GolemanThe daddy of emotional intelligence.



LEADERSHIPJOHARI WINDOW

Known Unknown

Unknow

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now

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Self

1Open Area

3Hidden Area

4UnknownArea

2Blind Area



Known Unknown

Unknow

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Self

1Open Area

3Hidden Area

4UnknownArea

2Blind Area

• ‘Open self/area‘, 'free area‘, 'public area', 'arena‘

• Also known as the 'area of free activity‘• Information about the person - behaviour,

attitude, feelings, emotion, knowledge, experience, skills, views, etc -

• Known by the person ('self') and known by the team ('others').

• The aim in any team is to develop the 'open area' for every person, because when we work in this area with others we are at our most effective and productive, and the team is at its most productive too

• The open free area, or 'the arena‘ - the space where good communications and cooperation occur, free from distractions, mistrust, confusion, conflict and misunderstanding



Known Unknown

Unknow

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now

n

Oth

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Self

1Open Area

3Hidden Area

4UnknownArea

2Blind Area

• ‘Blind self' or 'blind area' or 'blindspot‘: what is known about a person by others in the group, but is unknown by the person him/herself

• Could also be referred to as ignorance about oneself, or issues in which one is deluded

• Not an effective or productive space for individuals or groups

• Also include issues that others are deliberately withholding from a person

• The aim is to reduce this area by seeking or soliciting feedback from others and thereby to increase the open area, i.e., to increase self-awareness

• Team members and managers take responsibility for reducing the blind area - in turn increasing the open area - by giving sensitive feedback and encouraging disclosure

• Managers promote a climate of non-judgemental feedback, and group response to individual disclosure, and reduce fear.



Known Unknown

Unknow

nK

now

n

Oth

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Self

1Open Area

3Hidden Area

4UnknownArea

2Blind Area

• ‘Hidden self' or 'hidden area' or 'avoided self/area' or 'facade'

• What is known to ourselves but kept hidden from, and therefore unknown, to others

• Represents information, feelings , etc, anything that a person knows about him/self, but which is not revealed or is kept hidden from others

• Also include sensitivities, fears, hidden agendas, manipulative intentions, secrets - anything that a person knows but does not reveal

• Relevant hidden information and feelings, etc, should be moved into the open area through the process of 'self-disclosure' and 'exposure process'

• Organizational culture and working atmosphere have a major influence on team members‘ preparedness to disclose their hidden selves

• The extent to which an individual discloses personal feelings and information, and the issues which are disclosed, and to whom, must always be at the individual's own discretion



Known Unknown

Unknow

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now

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Self

1Open Area

3Hidden Area

4UnknownArea

2Blind Area

• ‘Unknown self‘, 'area of unknown activity‘, 'unknown area'

• Information, feelings, latent abilities, aptitudes, experiences etc, that are unknown to the person him/herself and unknown to others in the group

• Can be prompted through self-discovery or observation by others, or through collective or mutual discovery

• Again as with disclosure and soliciting feedback, the process of self discovery is a sensitive one

• Uncovering 'hidden talents' - that is unknown aptitudes and skills, not to be confused with developing the Johari 'hidden area' - is another aspect of developing the unknown area, and is not so sensitive as unknown feelings

• Managers and leaders can create an environment that encourages self-discovery, and to promote the processes of self discovery, constructive observation and feedback among team members

• The unknown area could also include repressed or subconscious feelings rooted in formative events and traumatic past experiences, which can stay unknown for a lifetime


Do stuff with your team.Get to know them.


Known Unknown

Unknow

nK

now

n

Oth

ers

Self

1Open Area

3Hidden Area

4UnknownArea

2Blind Area

Known Unknown

Unknow

nK

now

n

Oth

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Self

1Open Area

3Hidden Area

4UnknownArea

2Blind Area

Established TeamNew Team


Storming(leader needed to coach)

Forming(team dependant on leader)

Norming(leader needed to facilitate)

Performing(delegation stage)

time

perf

orm

ance


You all right fatty?


http://hackthesystem.com/blog/why-i-hired-a-girl-on-craigslist-to-slap-me-in-the-face-and-why-it-quadrupled-my-productivity/




Look after yourselfThe speed at which you recover from stress is linked to your level of fitness.


Richard Brooksuk.linkedin.com/in/richardbrooks

twitter.com/@RichardMBrooks

plus.google.com/+RichardBrooks_L10N

0044 1908 [email protected]

In MemoriamBrigitta Béres


We have time for some easy questions