Dec 15, 2022 | Innovation, Strategy
Many of us are concerned with two key questions that will impact the lives of our children and grandchildren.
- From where is the next wave of innovation is going to emerge?
- How can we put Australia in front of that wave, so we can reap the benefits?
The challenge in this country to the generation of real innovation, the creation of new value, is that we do not invest sufficiently to be in the game. In addition, we spread it around, compromising the depth of research in any one domain we can undertake.
This insufficiency comes from the politicisation of science, its underfunding, and the fragmentation across public and private sectors, as well as regionally by state.
With a few notable exceptions, Australian owned enterprises do not have the scale to fund the depth of research required, little culture of philanthropy that funds science elsewhere in the world, and multinationals that do have the scale generally are not interested in Australia. This has resulted in a brain drain, and we suffer from a tendency to look backwards and extrapolate to make the bets that will shape the future.
As any innovator knows, constraint is often the best catalyst for original thinking. This has been exemplified over the last few years by the rapid development of covid mRNA vaccines from research labs into available vaccines in record time.
Enough of the problems, what are the trends driving the shape of the future wave onto which we can hitch a ride?
Medical science.
Australia punches above its weight in medical science, despite the constraints. CSL and Cochlear are international leaders, Moderna has announced an mRNA development lab in Victoria. Australian expertise goes all the way back to Sir MacFarlane Burnett, and past successes from the vaccine for the papilloma virus, innovative cancer treatments, and Fiona Wood who pioneered artificial skin are considerable. We may have sequenced our DNA, but the function of the vast majority of the 3.2 billion base pairs we all carry is unknown, a vast trove of potential knowledge to be gained!
Quantum computing.
The Quantum unit at University of NSW led by Professor Michelle Simmons is a world leading research institute. The potential of Quantum physics to drive development across a range of fields, including those listed here is agreed by the experts, of which I am not one, to be immense.
Materials science.
Australia is uniquely situated as a stable democracy blessed with an abundance of raw materials from the traditional minerals, to rare earth minerals, and an overabundance of sun and wind. The materials that will drive the emerging world will come from those sources, powered by advanced computing and materials science.
In short, we do not need to spend piles of money trying to reproduce the Australian version of Silicon Valley. We need to find our own way based on the unique position we are in, and the potential for that position to be leveraged by intelligent and focussed public and private investment.
We have the opportunity to define emerging fields of science that will deliver over the long term the innovative products and services that will reshape our economy. I wonder if we will have the will and foresight to grasp that opportunity, or as has happened in the past, we pass on it and go to the beach.
Header credit: Irina Blok at www.irinablok.com
Dec 13, 2022 | Innovation, Strategy
Strategy requires difficult choices are made, and to be truly effective there must be time constraints.
Achieve this…. By…….
The view many have of innovation is a free for all, unconstrained by the usually corporate constraints of time, budget, and resource availability.
Nonsence.
BEHAG is a term often used in strategy to define a long term ‘what by when’. The classic example being Kennedy’s BEHAG to put a man on the moon and return him safely by the end of the decade, made in 1961. The advances in the following 8 years were staggering.
Those advances came from within the framework of the strategic BEHAG, and therefore had time and resource constraints. By contrast, budget seemed to be available to pursue any potentially useful contribution to the reduction of risk in any part of the project, while ensuring the objective was met.
A similar scenario has played out recently with the extraordinarily fast development of Covid vaccines. What would in less constrained times have taken a decade, was squeezed into 18 months. In addition, a new and untried technology Messenger RNA was brought to the market in addition to the vaccines emerging from the existing technology base.
There must be lessons for leaders in there somewhere.
Lesson 1. Budget.
When budgets are unconstrained, multiple paths can be trialled in parallel, and the most promising selected, rather than trialling in sequence which not only takes longer but captures the probability of ‘sunk cost thinking’.
Lesson 2. Risk.
Risk has many faces. Personal, corporate, financial, and reputation. We are a risk averse species, and given the opportunity will minimise those risks, with the result that little that is genuinely new emerges. Remove the constraint of risk, indeed, make risk almost mandatory, and the usual constraints on thinking are removed.
Lesson 3. Outcomes.
Defining exactly the outcome required when that outcome seems inconsistent with existing possible outcomes focusses attention and creativity and on stripping the challenge back to its basics. The jargon would call it ‘thinking from first principles.’ It encourages people to think about a problem in fundamentally different ways.
Lesson 4. Time.
We humans work best when we are on a timetable. It is however a two-edged sword. When time constraints are seen as impossible, it induces stress and a range of productivity killing behaviours, so is not helpful. By contrast, having time constraints enables prioritising and the allocation of accountability, both very helpful to achieving an outcome. When combined with the freedom to experiment, for the individual or group to discover the ‘how’ the outcome is to be achieved in the time frame, it becomes an encouragement to creativity.
These four drivers are like a balloon. You can exert pressure on one point and the shape changes. Putting pressure on multiple points creates internal pressure as well as modifying the shape. There exists within the way these four drivers are combined a vast range of choices to be made. Therein lies the link to strategy, which is also a series of choices.
Therefore, the core choice is the role that innovation will play in the achievement of a corporate objective. Depending on that choice, you can exert pressure on the ‘innovation balloon’ that best fits with the wide range of other choices made in articulating a strategy. Innovation becomes just one of the processes that needs to be in place, rather than the ‘outside normal hours’ status that it often carries. The implications for this integration into the strategic and management timetables have many impacts. Most particularly it will impact the way KPI’s are set and managed. KPI’s are usually set in functional silos, a practice which will be at odds with the incorporation of innovation into cross functional choices, and the implementation of those choices.
Innovation is the lifeblood of commercial sustainability, and few do it well. To be one of those few, you must to quote Apple advertising, ‘Think different’
Dec 7, 2022 | Change, Strategy
Too often I hear the term ‘Digital Strategy’ used as if it were an outcome, some discrete set of activities to be completed.
To my mind, this is a misuse of the term.
As it is usually used, the word ‘Digital’ is all about the devices, the technology, whereas the value in digital is elsewhere. It is in the ability to do things, and get things done, differently, more quickly, efficiently, and in a distributed manner by those best able to complete the activity with the minimum of organisational friction.
Digital technology is a toolbox enabling new business models, greater understanding of customers, and the ability to visualise and communicate ideas clearly. It is not about the RFID tags, VR, and all the other enablers of digital, it is the outcomes that count.
Your strategy may be enabled by digital, but you do not need a digital strategy any more than you need a telephone strategy. They are both just tools to be leveraged, the challenge is to recognise the nail, and grab the right hammer for the job from the toolbox.
Management of these changes is confronting, there is not much precedent to guide you. While there is a lot of advice around, usually it is given by those with a stake in the outcome, so caveat emptor. However, it seems to me that there are a few simple parameters worth considering.
Functional Silo thinking is poison. The communication enabled by digital is inherently cross functional, better reflecting the way customers and suppliers see us and want to interact. Functional silos have little to do with optimised outcomes anymore.
One step at a time. While the pace of change is getting faster, and the pressure to keep up increasing, we all know what happens when we try and run down a hill really fast. We end up falling arse over tit. Matching the speed of change to the pace at which your enterprise can absorb the changes is pretty sensible. Of course, if you are the slowest in the competing pack, it may be better to get out while you can.
Digital is a team game. Hand balling digital responsibility to the IT people is a mistake, you will end up getting what they think you might need. The real challenge is engagement of people not really focussed on digital. The primary example is in the space of marketing automation. Suddenly it is exploding, way beyond the capabilities and experience of most marketing people, who are nevertheless now investing more in tech than the IT people. It is essential that the right capabilities are built in the right places. Finally, everyone affected, which is everyone, needs to be in on the secret, with all the options, challenges, and opportunities transparent. The unknown is the father of all sorts of ugly children.
Think long term. Digital transformations are not just about which software you will install to automate a process. It is more about what the business may look like in 5, 10 years, and what steps do you need to take over that time to remain relevant to customers.
Long live strategic thinking!
Dec 5, 2022 | Leadership, Management, Strategy
The current ‘argy-bargy’ around wages policy makes the mistake of assuming it is a binary equation. Pay a dollar more/hour for labour and profit is reduced by the equivalent amount.
This assumes that people working for you are only doing so for the money, and money is directly proportional to output.
We all know this is crap.
While it is clear that many, mostly female dominated jobs, are underpaid compared to the costs of living, and simple value equivalence with other jobs. It is also true that people are not rational, they make decisions on many dimensions, of which price is only one.
Price. Key word.
Why don’t we consider the cost of labour as just the price of it, and consider our labour strategies in the same way we apply pricing strategy for our products to the marketplace?
When we do this properly, which too few do, price is only one factor in the equation. Depending on the context, it can often play only a minor part in the strategies we deploy.
Price is rarely a binary choice, just take it or leave it with no other options. It is also rarely considered how unfair it is to pay people whose performance is unequal, the same amount. We usually address this with piecework pay, which often has a detrimental impact on value delivery to customers. Just look at what is happening to Qantas currently in the handling of baggage for the evidence. It is a fine line between paying for customer value delivered, and piecework payment.
What would you rather have?
Better paid people who care about quality, DIFOT performance, productive time, and all the other things that lead to superior value delivery to a customer, leading to financial performance, or more lower paid people who do not care about any of those things?
Thinking in a binary manner will deliver the latter, never the former.
In these unusual times of inflation coupled with a flat economy, you need to find the most productive people you have, and model their behaviour to others, and compensate them appropriately. You may end up with less, but better paid and more productive people.
Trends in labour cost equations can be an extremely sensitive lead indicator of performance. Labour cost/dollar of revenue or gross margin can tell you a lot about future performance. By contrast, labour cost as an absolute can tell you nothing beyond how much you spend.
The question management needs to ask itself, is not how much labour costs, but how can we make labour a driver of performance.
Header cartoon credit: My thanks again to Hugh McLeod at gapingvoid.com for putting it so accurately
Dec 2, 2022 | Collaboration, Strategy
There are a lot of misconceptions about workshops, and having run many, they are hard work, although participants rarely see that work. ‘Blue sky’ thinking is sometimes necessary, but in the absence of strategic discipline, can become completely disconnected from the real world where implementation occurs.
Here are some things workshop are not:
Workshops are not a democracy.
Someone must lead, show the way, and the bigger the group, the greater the call on the workshop convenor to be a real leader if there is to be any useful outcomes
Workshops are not an unplanned free for all.
Planning is a core part of a successful workshop. Planning the content and the flow of the discussions, having the appropriate breaks and discussions to elicit the creative insights being sought, and in the makeup of the group is essential. As a convenor, you sometimes do not have much control over the participants, and in this case, it is vital to assign ‘roles’ very quickly to participants based on the behaviour in the very early stages, then manage those individuals appropriately.
Workshops are not the same for all participants.
Everyone’s role is different, based on what is assigned to them and what their individual personalities, position in the external hierarchy, domain knowledge, and many other factors. Recognising as a convenor that the participants are all seeing the proceedings through their own eyes is important as a key to gaining collaboration, and developing a set of useable actionable outcomes that are aligned with the objectives sought.
Workshops are not stand-alone activities. Workshops that work are not a day (or three) out of the normal management processes, they should be an integral and rich part of the flow of planning, review and adjustment processes that optimise performance. If not, you just wasted your time, and a lot of money.
Facilitating workshops is not easy, but in the best of them, it just seems so.
Over an extended period of both facilitating and being the ‘facilitated’, it seems there are a small number of characteristics of the best of them.
- The best facilitators are listeners. They do not impose their views on the group, they use what they know to steer from the back
- They have no skin in the game beyond creating an environment for the workshop to generate the best outcomes. When a facilitator has skin in the game, the expectation is that there will be a vested interest that is being pushed.
- There must be a well-rounded knowledge of the context of the questions being examined.
- The ability to put together disconnected ideas and together make them stronger. They see connections that are not obvious to others.
- They are smart enough, and sufficiently well grounded in the key business attributes necessary to the workshop topic to add value to the thinking of those in the group.
- They can clearly articulate different perspectives from the status quo, different ways of seeing the questions and options being examined, and the context in which they will be answered.
- They are willing to serve all interests represented at the tabl. In the case of a business’s workshop, the facilitator needs to be able to assist the individuals, and have the credibility and trust to be able to do so.
- Preparing for a workshop is time consuming when done well, as is the reporting process. A skilled facilitator will spend a lot of time considering the discussion and output that occurred to pull together the fabric of the discussions into a form that can be leveraged.
A successful workshop can be the circuit-breaker so often required when any sort of change is necessary to future success. It is just unfortunate and poor management that most are little more than a pleasant interlude before you get back to the office, and business as usual.
