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Global Advisors’ Thoughts: How Daniel Rowland is relevant to your business success
Recently Global Advisors hosted multi-stage ultra-marathon runner Daniel Rowland as he gave a talk about his training and racing approach. The talk happened prior to Daniel racing in the Kalahari Augrabies Extreme Marathon 2013 – a 250km multi-stage race that takes place over 7 days through the extreme heat and difficult terrain of the Kalahari Desert. Competitors carry their own food, bedding, etc – water and sleeping tents are provided.
Daniel won in a course record time. Earlier this year Daniel won the Atacama Crossing – another 250km multi-stage self-supported desert race across the Atacama Desert (the driest place on earth) and part of the prestigious Four Desert Series. The Four Desert Series attracts some of the finest Ultra-Marathon athletes in the world who compete only for the prestige – there is no prize money. These two races are Daniel’s first two multi-stage races in his first year as a professional runner.
There is no doubt that Daniel is a talented sportsman – he represented Zimbabwe as a triathlete and trained as a potential Olympian. But there are many talented athletes that fail to achieve sporting success. What makes Daniel as successful as he is?
Daniel abandoned his Olympic ambitions to study a Business Science degree at UCT. He was selected as a McKinsey intern. Following this he went on to work for Anglo American in South Africa, Alaska and Chile. Two-and-a-half years ago, Daniel entered his first ultra-marathon beyond 50km – the 100 mile Sustina race through the depths of the Alaskan winter, battling snow and night. Daniel finished fourth. Following Daniel’s blog (www.dwrowland.com) as an interested spectator and recreational runner with no real ambitions of running an ultra myself, I was struck by the regimen that Daniel adopts to life in general and running in particular. Even in his early ultra exploits, Daniel exemplified a simple approach that underlies most key management theory – Plan, Do, Review (PDR).
Plan appropriately for the execution against the goals that you aim to achieve, Do what you planned to and Review your execution against the plan.
This is not a once-off process – it can be repeated many times within a broader cycle and even within execution itself. Organisations might set five year strategies and budgets and then repeat the cycle on a yearly, quarterly or even short interval basis (for example, agreeing and reviewing plans at the beginning and end of shifts – a process typically referred to as short-interval controls). A rugby team might agree a game plan and evaluate its success during stoppages and breaks.
The PDR cycle is followed either consciously or subconsciously by outstanding performers in every field from arts to sport to business. It is a discipline. And like all disciplines it takes practice and fine-tuning to meet the needs of individuals and companies.
Daniel exemplifies the approach. He chooses a goal that is aligned to his interests and who he inherently is. He chooses a race goal and works backwards to fit in all the aspects of training, testing and recovery. He prepares a tailored program with his coach based on his knowledge, Daniel’s input and past performance. Daniel describes execution as doing what he knows he needs to do to achieve his goals.
Daniel is fastidious about all these aspects. He trains in blocks that ramp up to race distances and conditions. He tests all aspects of race conditions, including the diet he will live on in the desert, with the exact pack and equipment he will run with and in conditions on the race course or as close to these as he can find. His approach to optimizing his back pack illustrates this.
Daniel’s Augrabies pack weighed 6kgs and included 3,6kgs of food. Most of his competitors’ packs were 10kg or more. To accomplish the optimum pack weight required much more than selecting equipment against a recipe. He chose a pack that was lightweight and that he found comfortable. He trimmed excess strap lengths. He took the required equipment list (things like eating and cooking utensils, emergency equipment, etc) in their most minimally adequate form. He created a race diet that had the highest calorie to weight ratio possible. And he trained with the pack and on the diet, gradually tuning his choices and becoming utterly familiar with the diet and running with the pack for the periods and conditions matching those of the race. He blogs about all of his choices and tracks progress with data from his heart rate monitor supplemented with his logs of how he felt and his thoughts on what worked and what could be improved.
Every two weeks, Daniel runs a test on the same 12km route, in the same heart rate zone with the same pack weight and as-close-to-optimal body weight. He tracks his time on the test for improvement over the 30 week program leading up to a race.
While Daniel is clinical about the technical aspects of a race, he recognizes the critical importance of emotions – confidence and enjoyment are key to his success. He underpins what he does with a healthy and sustainable lifestyle. This includes enough sleep and recovery time and the community he surrounds himself with. Besides the general community of friends, Daniel’s core team is made up of people he trusts and who create confidence for him because they are present and contributing with a collective goal in mind. This team is comprised of his partner, coach and sponsor – a small and completely trusted core team.
It is an impressive routine and discipline for someone who not long ago, started out training in the very early hours of the morning prior to a demanding corporate job. All the discipline would mean little without stressing himself to the optimum level, and showing incredible willpower and drive. Daniel has willpower and drive in bucket-loads. What stood out to me is that while a level of willpower and drive is a product of who we are, Daniel manages this aspect carefully too. He takes care to push himself enough to develop greater levels of performance while managing the risk of illness and injury – an optimal stress level. Technical training, emotion and health all contribute to setting this optimum. Daniel recognises willpower is a limited resource and ensures he makes focused use of his reserves through routines and removing obstacles. He creates drive through seeing the excellence in others, momentary inspiration, his enduring motivation and the performance of competitors.
When Daniel left Global Advisors after his presentation, we were in little doubt that Daniel had done everything he could to prepare for the Augrabies race. We were confident he stood every chance of winning the race. But more importantly, so did Daniel – in his quiet, unassuming way.
Pick up most management books or business textbooks and you will find the PDR elements described above. We see them in place in the best businesses and clients. They are expressed in tools such as well articulated strategies, balanced scorecards, project management approaches, management and financial reporting. What is far more difficult than the adoption of a set of tools is the institution of the accompanying processes and culture. Discipline is hard enough for an athlete – successfully inculcating the PDR disciplines in a corporate setting requires strong leadership with a soft touch. It relies as much on the belief and cooperation of the team as a well-thought out approach. Just as hard as it must be for Daniel to ensure he preserves the space around him for a community that reinforces his process, beliefs and spirit, it is unbelievably hard to do the same in a business setting. My personal experience is that successful leadership requires walking a fine line between creating and implementing an optimal PDR approach / culture and creating some space to allow those who fit within that culture to find a place within it. That won’t always work out. You will lose some good people along the way as well as those who don’t belong. It is critical to ensure your team sees the benefits of your chosen PDR approach to ease their journey. It takes time – years – for the PDR approach and culture to develop a rhythm, The role of a core supportive team at a management level or on a project is critical to reinforce the PDR disciplines and build confidence. Daniel believes in “controlling the controllables” – the role of his core team illustrates this.
Daniel’s approach is not unique in its elements. Bruce Fordyce famously kept detailed notebooks of his training and races and was meticulous en-route to nine Comrades victories, the London to Brighton Marathon three years in a row and the 50 mile and 100km world records. He too focused on a holistic approach and kept mood records along with the details of his technical performance.
What I have become convinced about is that just as a management / PDR approach is required to prepare and practice for execution, so the approach must be applied and finely tuned over time. As I watched another amazing Kenyan marathon performance, I tweeted how ridiculously easy the lead runners ran at below 3 minutes to the km. Elana Meyer responded, “Practice makes excellence in action look easy.”
Daniel Rowland, Bruce Fordyce and Elana Meyer are inspirational examples of the power of a well-executed PDR process in sport. The same process exists in a well-executed dance routine, well-written academic career and of course in winning businesses.
What is your approach to running your business? How does it incorporate Planning, Doing and Reviewing? Would your approach support the creation and maintenance of a world-class athlete? Is your PDR approach communicated and understood? Is your culture supportive of the approach? Are you practicing the approach and adapting it for your company? What is the PDR mood?
Daniel is racing the Sahara Race (part of the Four Deserts series) in February 2014. You can follow his progress on the Four Deserts website or on Daniel’s blog.
This photo essay of the Atacama Crossing 2013 by Richard Bray will give you some idea of the challenge posed by multi-stage desert running and Daniel’s accomplishments.
Strategy Tools
Strategy Tools: Opportunity/vulnerability matrix – “The Bananagram”
Logic suggests that high relative market share (RMS) should translate into higher profitability (unless the firm was not using its potential advantages or pricing to penetrate the market further). This suggests that a “normative curve / band” exists to describe this phenomenon i.e. the expected profitability of the average business segment in a particular industry according to normal expectations conditional on the segment’s relative market share. This normative band is shown in the figure below as the area between the two curves.
The Opportunity / Vulnerability Matrix
The curve is best explained using data / businesses that have been correctly segmented. In practice such data can only be obtained after analysing the organisation and having a good understanding of any relationships. The band used to be shown coloured yellow, hence the chart became known as a “bananagram”.
The implication of the curve is that high relative market share positions, correctly segmented, are valuable segments / businesses. Managers should therefore strive to achieve / participate in these segments / businesses.
Another implication, in some ways obscured focusing primarily on the growth share matrix (especially where “dogs” are concerned), is that it is useful to improve relative market share in a business segment whatever the starting position. The bananagram enables one to calculate a rough estimate of the equilibrium profitability to be expected from any particular position (relative market share). Therefore it is possible to estimate the potential benefit of moving any particular segment position against the cost of doing so – extra marketing spend, product development or lower prices. This allows one to quantitatively assess whether it is worth trying to raise RMS and which segment / business investments give the best return to shareholders.
Empirical evidence suggests that the majority of observations would fall between the two curved lines and it would be unusual for businesses to fall outside this band. There are two possible positions where a business segment can find itself outside of the two curved lines – this is depicted in the figure below.
The Opportunity / Vulnerability Matrix – Example
Business A is earning (for example) 45 per cent return on net capital employed, a good return, but is in a weak relative market share position (say 0,5x, or only half the size of the segment leader). The theory and empirical data from the matrix suggests that the combination of these two positions is at best anomalous, and probably unsustainable. Business A is therefore in the “vulnerability” part of the matrix. The expectation must be that in the medium term, either the business must improve its relative market share position to sustain its profitability (the dotted arrow moving left), or that it will decline in profitability (to about break-even). Why should this happen? Well, the banana indicates that the market leader in this business may well be earning 40 percent or even more ROCE in the segment. What may be happening is that the leader is holding a price umbrella over the market, that is, is pricing unsustainably high, so that even the competitors with weak market share are protected from normal competition (especially where pricing is concerned). What happens if the market leader suddenly cuts prices by 20 percent? They will still earn a good return, but the weaker competitors will not. The leader may opt to provide extra product benefits or services, instead of lowering prices, but the effect would still be a margin cut. It is as well to know that business A is vulnerable. If relative market share cannot be improved, it is sensible to sell it before the profitability declines.
Now let’s look at business B. This is a business in a strong relative market share position – the leader in its segment, five times larger than its nearest rival. It is earning 2 percent ROCE. This is a wonderful business to find. The theory and practical data suggest that such a business should be making 40 percent ROCE, not 2 percent. Nine times out of ten when such businesses are found, it is possible to make them very much more profitable, usually by radical cost reduction (often involving restructure), but sometimes through radical improvement of service and product offering to the customer at a low extra cost to the supplier, but enabling a large price hike to be made. Managements of particular businesses very often become complacent with historical returns and think it is impossible to raise profits in a step function to three, four or five times their current level. The bananagram challenges that thinking for leadership segment positions, and usually the bananagram is proved right. After all, high relative market share implies huge potential advantages; but these must be earned and exploited, as they do not automatically disgorge huge profits.
Source: Koch, R – “Financial Times Guides Strategy” – Fourth edition – Prentice Hall – page 313-316
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We discuss effective transfer pricing within organizations, highlighting the prevalent challenges and proposing solutions. The core issue is that poorly implemented internal pricing leads to suboptimal economic decisions, resource allocation problems, and interdepartmental conflict. The hosts advocate for market-based pricing over cost recovery, emphasizing the importance of clear price signals for efficient resource allocation and accurate decision-making. They stress the need for service level agreements, fair cost allocation, and a comprehensive process to manage the political and emotional aspects of internal pricing, ultimately aiming for improved organizational performance and profitability. The podcast includes case studies illustrating successful implementations and the authors’ expertise in this field.
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