Sep 16, 2022 | Change, Governance, Strategy
In an economy desperate for productivity, how often does stupid, mindless bureaucracy get in the way?
This is not an argument against bureaucracy, rather it is an argument for strategic common sense. It is a nonsense to apply one standard across a myriad of differing circumstances, allowing no margin for reasonable error, then penalising tiny acts of reasonable noncompliance that do no harm.
A tale of woe.
One of my mates runs a small freight company based in a town in the central west of NSW with his two sons. He carries a range of agricultural goods, from grain to fertilisers to live animals, and has built a successful business by skilfully providing specialised services requiring investment in customised trailers designed to meet these specialised needs.
I spoke to him on the phone yesterday as he fumed at yet another example of bureaucratic stupidity making his life a misery.
One of his sons had been pulled up earlier in the day and fined $600 for being 40kg overweight in a 68,000 kg load of grain, loaded from a farm silo without a weighbridge. This is an error margin of .059%, hardly earth-shattering, presenting no danger to anyone, and absolutely understandable given the lack of expensive public infrastructure at the loading dock. The monitors on his axles, properly calibrated and checked, showed no overweight at the time of loading. His assumption is that one axle was in a very slight depression not visible to the naked eye in the loading area.
This is the second time in a few weeks this has happened.
His solution: get out. He can retire, remove the stress of running a small capital intensive business, and his sons will make more money doing something else. Meanwhile, the grain, and live animals he transports either stay where they are, or the costs of moving them go up dramatically as the haulage contractors either charge more to cover the risk of such tiny errors, or simply take less on board.
These standards are set and enforced by the ‘National Heavy Vehicle Regulator’ which has operations in each state. In NSW, there are 310 admin staff and 250+ compliance inspectors, according to their website. I wonder if any will jump in a truck to move the freight when my mate closes his business?
Who knows how the standards are set.
My assumption is that the big operators, Linfox, Toll, and perhaps a few others sit around with a few bureaucrats, agree some stuff, and go to lunch. The big operators go from weighbridge to weighbridge, they are unlikely to ever go up a muddy track to a paddock to take on a load of cattle or sheep to go to the abattoir, or a load of grain in an isolated silo going to a processor.
Is it any wonder it is getting harder to keep the supply chains moving, when the experienced owner-drivers are being driven from the chain by bureaucratic short sighted stupidity imposed for no good reason. The undertrained and inexperienced drivers being pushed in to fill in the gaps are a greater danger to themselves and everyone else on the road than a truck 0.059% overloaded, driven by an experienced driver with skin in the game.
Update: September 23, 2022. This ABC article dramatically underscores the point made in the post.
Sep 14, 2022 | Change, Management, Strategy
Scaling is the objective of every SME I have ever dealt with; they all want to get bigger. In every case they have the same three challenges.
Which activities do they Eliminate?
Which ones do they Delegate?
Which ones do they Automate?
EDA: the challenge of every SME.
The common challenge in them all is that they require change, and human beings, particularly busy ones, avoid change. This is the case even when they recognise that in the longer term, the change is necessary. The problem is finding the time to invest in figuring out what that the change must be, as that is an investment of time that is at a premium, without an immediate return. Besides, change makes us all uncomfortable.
Elimination.
This should be easy, but is often hard. The test is to define the value of the action, and if it is less than the cost, eliminate it. Before desktops, managers relied on regular printouts from mainframes to give us the information needed. Those under fifty may not remember the big dot matrix printed files that emerged in continuous sheets, often for further analysis by hand. These reports tended to multiply like rabbits on heat. One report responding to a once off information request resulted in that report being produced every time the report cycle ran, weather it was needed or not. In an effort to reduce this tree killing activity, I once put a line through most of the list of reports produced weekly for my department, not telling anyone, waiting for the screams. They did not come, nobody noticed. Eliminated. A simple example of what often needs to be done.
Delegation.
If it cannot be eliminated, can it be delegated? Someone who costs 150/hour doing a task that can be done by someone costing $50 is simply a non-productive use of resources. Again, delegating is easy to say but often hard to do. Everyone has established routines and delegating requires trust and change.
Automation.
When a task is necessary, cannot be delegated, and is done more than once or twice, it should be automated. The opportunity for automating tasks is limited only by imagination, the determination to do it, the time to specify it, and usually a modest investment of time and money. Automation of what used to come to me in huge printed blocks from a mainframe has been done by the advent of personal devices and ‘apps’. Information can easily be consolidated and tailored for the specific needs for which it is required. While the goalposts are continually moving as to what can be done, there is no task in an SME I have seen that cannot be at least partially automated.
EDA should be a standard item on every management improvement agenda.
Sep 12, 2022 | Customers, Marketing
What we purchase and what we pay for it can be a deeply psychological process.
The cost is one element, the value or utility delivered is often an entirely different matter.
The vast majority of purchases of a car represent a mix of the rational with the irrational, heavily weighted to the rational. Reliable transport to get to work, meet the specific needs of the individual and family, and take the kids to soccer safely. Some cars absolutely defy this rational logic. Why would you need to pay a million dollars for an Aston Martin, or $23 million for a Rolls Royce boat-tail, with plenty of options between these two if the rational was to prevail?
Economists who work with mathematical models have trouble reconciling the irrationality of behaviour with their rational models. This is why the seminal work by Daniel Kahneman, published for public consumption in ‘Thinking fast and Slow’ is so important. Important enough to win him the Nobel prize in Economics when he is a psychologist.
It is also why your value proposition and the definition of your ideal customer are so intimately entwined.
Your ideal customer will find some mix of objective and subjective utility in your product not available elsewhere, and be prepared to pay for it.
The cost in dollars is the same for everyone, and everyone understands it. The utility derived from ownership is entirely personal.
Peter Drucker said many things, amongst which was ‘The only purpose of a business is to create a customer’
And he was right.
To create a customer, you must offer them value they cannot get anywhere else.
To create value, you must understand ‘Utility’: the physical and psychological benefit customers receive from owning and using your product.
Utility is highly personal and context sensitive, driven by psychology.
Germans are stereotypically rational, process oriented people. It seems unlikely that they would be as susceptible to emotional purchases as say, Italians, who have the opposite stereotype.
Not so. Two classic examples from Frederick the Great of Prussia, and his great great grandson, also Frederick.
The first Fred, king of Prussia from 1740 until 1786, saw the potato’s potential to help feed his nation, and lower the price of bread. In 1774, he had issued an order for his subjects to grow potatoes as protection against famine. The refusal was absolute. Nobody wanted potatoes, nobody liked them, even the dogs would not eat them, so why should they? Faced by this general refusal Fred had to use psychology.
Trying a less direct approach to encourage his subjects to begin planting potatoes, Frederick got creative. He planted a royal field of potato plants and stationed a heavy guard to protect this field from thieves.
Nearby peasants naturally assumed that anything worth guarding was worth stealing, and so snuck into the field and snatched the plants for their home gardens. Of course, this was entirely in line with Frederick’s wishes.
Fred number two needed to fund the war against Napoleon. In 1813 he urged all families to donate their gold and silver jewellery to the cause, and replicas were given to them made from caste iron, by a specific iron foundry in Berlin. The wearing of caste iron items became the symbol of the sacrifices the family had made to the war, and was highly valued.
When you can articulate and reflect the utility your ideal customer will receive from you in terms unmatched by competitors, where else would they go?
Is the price simply a reflection of the exchange of value made up of both rational and non-rational componets?
Sep 9, 2022 | Uncategorized
When crafting a selling message, make it simple so that the intended audience knows exactly what the offer is, who it is for, the problem it solves, the value it delivers, and what life will be like if you pass.
We have a brain that filters out anything not immediately and specifically relevant to us. Deep in our brains, automatically, we preserve the maximum cognitive space we can, which facilitates instant response.
I am not a fisherman, in the sense that it is something I do regularly. However, as a kid I was taught to fly fish by my father in the mountain streams of the Kosciusko National Park and surrounds. Two things are relevant to a hungry trout:
- Does the fly look inviting as a feed?
- Is it easy to get to?
Trout do not wait for food to come down the river in the fastest part, the ‘runs’ as we call them. They wait on the edges where the going is easier.
Why? it takes up too many calories, energy to swim against the flow in the fastest part, so they hang around the edges from where they can duck into the fast water and pick off the juicy meals that are easy to get.
It is no different when trying to attract a customer.
Make it easy, and clearly juicy for them, and they might bite. Make it too hard to understand, not immediately relevant, insufficiently ‘juicy’, and their automatic brain filters will ensure the message goes past unnoticed.
Keep the message simple, directed at a specific audience that has a specific problem, and show them the outcome of taking a bite. Do that well, and you might have a convertible prospect.
Get in touch when you have trouble figuring out how to build the ‘juicy’ and where to put it so it gets seen by your ideal customer.
Sep 7, 2022 | Change, Leadership
‘Business coach’ seems to have suddenly become a go-to moniker for former corporate executives looking for a new gig. For someone who recognises that a coach might be a valuable performance enhancing addition, how do you pick the right person?
I had a conversation on this topic recently in the pub with some colleagues, a beer with a few people who run SME’s, that used ‘networking’ as an excuse for said beer.
(Aside, Christ beer in a popular pub is expensive!)
The conversation was initiated by a ‘techo’ who was just folding his 5 year side gig up, after very considerable investment of time, money, and emotional commitment.
He needed, he said, to learn how to be a ‘businessman’ rather than a ‘techo’, and needed a coach, or mentor, but did not know how to pick the right one.
The response I gave him was
- Been there, walked in your shoes
- Able to relate at a really human level to the coached
- Part psychologist, part headmaster, part collaborator, to drive accountability
- Able to bring together the confusing and fluid interaction of financial management, revenue generation, operations, and all the necessary support and regulatory stuff. They cannot be an expert in all these, nobody can, but they acknowledge their limitations, and have a group of trusted specialists available as needed.
- Ask good questions and happy to be proven wrong.
- Prepared to tell those being coached the ugly truth.
- Leaves you better off after every session, although from time to time, that is hard to see at the time. Bit like going to the gym, the impact is cumulative over time.
- Widely knowledgeable beyond the domain the ‘coached’ is operating in to bring in different perspectives
- Holds themselves and those they coach accountable.
- The coach ensures they dedicate the time to discover ideas and observations from other domains that may be useful, then package them up for those they coach.
- They will always be a great listener and have a keen understanding and appreciation of your point of view.
- They can personalise their own experiences in a way that the coached can relate to
- They make the agreed goals of those being coached their own for that relationship.
- They demonstrate patience and perseverance, while being assertive.
However, there are two problems in all of this. It is highly unlikely you will find all 14 in one person, and there is a further huge catch for you:
A real ‘kicker’
Even if the coach you choose has all these characteristics in spades, it will not be enough.
There is a further absolute requirement for a successful coaching relationship.
You, the one being coached, must be open to change.
Coaching is all about changing behaviour, modifying responses, being more open, and understanding. In short, able to be coached. In the absence of that ‘coachability’, nobody can help you get better, you have to do it yourself and suffer the consequences.
Header credit: Yoda from Star Wars series.
