Apr 23, 2021 | Analytics, Management
Every plan I have ever seen, business plan, strategic plan, house plan, office layout plan, is made up of a set of assumptions about the future.
To varying degrees these assumptions are based on two sorts of ‘facts’. These so called ‘facts’ are not accurate reflections of reality, but expectations with varying degrees of validity. They seem to fall into two categories:
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- ‘Facts’ about the future, often distorted by perspective, misunderstanding, incomplete information, and a host of other variables.
- ‘Facts’ that are really just an extension of the status quo extended into the future.
These ‘facts’ are then fed into a process of some sort and used to develop a plan in the mistaken belief that the future will look little different to the past.
Therefore, the first responsibility of anyone doing a plan is to find a mechanism to test the key assumptions in the plan, and adjust as necessary.
Failure to test the key assumptions, which are the drivers of the performance of the plan when implemented, is the best way I know to really stuff it up.
Having a plan that does not reflect reality ensures either: that every decision that will be made during implementation is suboptimal, leading to poor outcomes, or that the plan is discarded, and normal chaos resumed.
I am never sure which is the worse outcome.
Apr 16, 2021 | Analytics, Change, Operations
‘Digitisation’ like many other ‘ation’ words has become a cliché, thrown around with no specific meaning that is consistent and generally understood.
It has many parts, ‘Industry 4.0’, IoT, AI, AR, and so on, but what do you have to do to ‘Digitise’? It is way more than upgrading your ERP and CRM systems, it requires wholesale change from the way most businesses have evolved.
Following is a partial list, gleaned from those with whom I work, and the experience that has come from those interactions.
Have a goal. Like any journey, digitisation is nothing without a goal, something to work towards and measure progress against.
Leaders walk the walk. Again, generic advice for any behaviour you want to see in an organisation, it will be absent unless the leadership displays it. An enterprise that aspires to ‘digitise’ when the leadership stubbornly refuses to digitise themselves, will not see much progress down the ranks.
Recognise digital is a culture, not a set of tools. Tweaking current business models and tool sets will not be enough, there needs to be a change in the way the enterprise engages with the world and manages itself.
Customers first. Success has always come to those who put customers first, but it has never been as apparent and such a source of competitive advantage as it is now. When a customer can actually see you putting them first, or not, they are able to make quick choices. They will either become your extended marketing team, or if not happy with you, potentially do a lot of damage.
Do not adapt, adopt. Adding bits on, making a hybrid, as you would when you extend your house, will not work. You must design the digital experience inside and out from the ground up with the objective as the guiding light.
Employee power. We are talking about harnessing the intellectual power and motivation of stakeholders, and particularly employees in this exercise, without whom, it is no better than window dressing. Empowering employees is a core part of the culture change required; they go hand in hand.
Collaboration and co-creation. Progress is increasingly being achieved by ecosystems, rather than enterprises on their own. Figuring out how you collaborate to compete is necessary.
Kill the legacy. Legacy systems only hold you back, you must be prepared to move them on as you would an old piece of equipment in the factory. Often legacy systems work well, you are comfortable with them, but they no longer offer the key ingredient to digitisation, the ability to communicate with other systems and deliver useable, leverageable data.
Make it measurable. As in any project, being able to measure progress towards the goal, ensures resources are allocated appropriately, and that accountabilities are clear is essential to progress.
None of this is easy. Anyone who tells you it is has never done it. It is however essential, and like everything that is new, it pays to take small steps first, gain some confidence, understand better the costs and benefits, find some skilled help, and keep moving forward.
Header cartoon credit: Dilbert once again delivers enduring wisdom.
Apr 1, 2021 | Analytics, Marketing
So called ‘Digital Marketing’ has become an end in itself. Instead, it should be a potentially potent tool in the marketer’s toolbox when used well in the process of delivering value. I see it often spoken of and treated as if it were a separate functional discipline, then it fails. All sorts of rubbish is then wheeled out to explain the failure and move responsibility elsewhere.
It seems to me that the failure of understanding the real nature of digital marketing falls into 7 distinct buckets.
- ‘Digital marketing’ is seen as an event, a set piece, and not part of an ongoing commitment to delivering information and value to customers and potential customers.
- There is no sense of the end point, a vision, the picture on the jigsaw cover. The absence of a clear objective makes consistent production of compelling communication virtually impossible.
- There is a lack of commitment from the top. Many inhabitants of the corner office are older guys trained in accounting, engineering, and the law. Many still consider marketing to be a cost, to be managed short term, rather than an investment in the long term. Often so-called marketers do too little to address this misunderstanding. Instead, they continue to sketch out a few bits of ‘content’ to throw against the digital wall, hoping something works.
- No-one holds accountability for the work, and its results. Digital marketing tends to be a subsection of the overall marketing and sales programs, and it tends to be the least understood. As a result, it is pushed off to the juniors, after all, they know all about this technology stuff.
- All things to all people rather than highly relevant to a few. Digital is mixed up with a mistaken understanding of genuine inbound marketing activity. Inbound sounds nice, but how are we going to set ourselves up as an expert in the face of the competition. Nobody can be all things to all people. If you are a small business, be the expert in your specific niche, your geography, with those on your list of current and lapsed customers. You do not have to be the biggest in the world, just the best to a select few.
- Results are not measured properly, vanity measures are all that are collected, and they tell you nothing about cause and effect.
- The work is done quickly, without thought, passion, creativity, so does not grab a potential customer by the purse. It is just another deadline hit, then move onto the next one, tomorrow. The search for the ‘big idea’ that resonates and differentiates seems to have been replaced by many mediocre bland and ‘safe’ ideas. The big idea remains elusive, and of great value, but we seem to be no longer looking for it as we are distracted by the acceptance of the many mediocre ideas. Not a great exchange. Occasionally you find the big idea, hiding in plain sight, which is where it usually hides, but is so hard to identify.
- A final one. There is no permission, as in Seth Godin’s definition of permission marketing, as requoted in Tom Fishburnes cartoon narrative, with which I absolutely agree. This is all about the consumer, and treating them with respect, something that increasingly many so-called marketers do not do.
Header cartoon credit: Tom Fishburne at www.Marketoonist.com
Mar 15, 2021 | Analytics, Management
We are all familiar with the Pareto Principal: the 80/20 rule, first articulated by Italian mathematician Vilfredo Pareto in 1906. Pareto saw this unequal distribution in all sorts of unexpected places, after first noticing that 20% of the pea pods in his garden produce 80% of the peas. (what is it about peas and scientific insight?) At the time, he was studying the distribution of wealth in Italy, and noticed that 80% of the land was owned by 20% of the people. Further study confirmed the ratio of roughly 80/20 held firm across just about everything he looked at.
In the years since, the ratio holds, and has become a point of ‘first principal’ in every field of endeavour from science to sport, nature, and our personal lives.
Why is it so?
The reason is simple when you think about it.
‘Accumulative advantage’ and the 1 percent rule.
We all understand that a dominating force in our lives is that the winner takes all. Nobody remembers who came second! To win, you only must be fractionally better, 1 percent, than the next best, but you get to take all the advantages. You win once, collect the advantages, which facilitates winning again tomorrow, and again taking all the advantages, and moving away just a little more from those that come in second. Over repeated cycles, the accumulated advantage of being just a fraction better means you take the lion’s share of the rewards.
The rich get richer!
As a kid I was a reasonable tennis player. The club at which I played held regular ‘social’ tournaments broken down into age groups. In my age group, there was a bloke who was marginally better than me, based on results. He beat me almost every time, it was always close, always hard to pick which of us was the better player while playing, but the results spoke for themselves. 1 percent (maybe in this case, 2 percent) made the difference, and I was the forgotten runner up almost every time. Since 2000, there has been 77 grand slam tournaments played, 2020 had only one, the US Open for the obvious reason. Of those tournaments, 3 players have dominated the men’s singles: Federer, Nadal, and Djokovic. Between them they have won 60 times. A spread of 77.9%, and hardly anyone could name more than 1 of the other winners over those years. Within those numbers, if you just look at the French Open, played 15 times since 2005, when Nadal won for the first time, he has won 13 times.
In a memo dated October 2, 2002, then Microsoft CEO Steve Ballmer wrote to staff ”
“About 20 percent of the bugs causes 80 percent of all errors, and–this is stunning to me–1 percent of bugs caused half of all errors.”
Both are just more of the examples of accumulated advantage, the tiny ‘1 percenters’ that add up to a dominating number.
It is this tiny 1 % advantage that drives the 80/20 rule, the accumulated advantage that goes to those who have a tiny advantage, in a winner takes all environment.
In my work with clients, I use the Pareto principal as a core of the investigation into the sources of ‘baggage’ all businesses accumulate that can be eliminated. Then go a step further and encourage them to ‘Pareto the Pareto’. In other words, take Steve Ballmer’s insight, when you have identified the 20% that cause the 80%, go looking for the 1% that cause the 50%.
Mar 8, 2021 | Analytics, Governance, Operations
One of the significant problems in making any change is the articulation of the need to change, and the outcomes that are expected as a result.
Overcome those two, and change is suddenly easier, albeit still really hard.
The first hurdle is the articulation.
In order to communicate and have complex ideas generally understood, you do not use technical, academic jargon backed by data, you use stories and metaphors in a way that connects with the audience.
Communicating industry 4.0 is such a complex challenge.
What is it, how will it affect me, why should I be interested?
Answering these questions is a core foundation of gaining acceptance, followed by action that becomes automatic as it gets buried in the auto-response system.
Remember the last time you put your hand onto a hot stove.
Before you felt anything, you had reacted by pulling your hand away, a totally unconscious, instantaneous, action then, it started to hurt like hell.
Think about the processes involved in this.
First: the ‘data’ that indicated the stove was hot was collected by the nerves in your fingers and hand.
Second: the ‘data’ is sent for processing to your brain, the CPU between your ears. This processing concludes your hand is in danger of being burnt.
Third: That conclusion is sent to the muscles that control where your hand is, with firm instructions to remove it immediately.
Fourth: Your hand is pulled back out of danger.
Fifth: It starts to hurt like hell, and the memory of that hurt is stored deep in your personal CPU for future reference should your hand stray again.
The astonishing thing is that the first four happen without thought, instantaneously, and the fifth is a long term ‘frame’ through which you unconsciously ‘feel’ the hurt and approach the stove warily. It is a neural network that collaborates, communicates, drives action, and learns.
Industry, or more specifically, Factory 4.0 is, similarly, a set of tools that collects, analyses and acts on data without direction, and learns from the experience, adding to the auto-response ‘memory bank’ and adjusted based on the ‘learning’ that occurs as data on outcomes is collected. The system becomes more Automatic than Artificial.
Header cartoon credit: Tom Gauld in ‘New Scientist’ magazine.
Jan 4, 2021 | Analytics, Social Media, Strategy
Which StrategyAudit posts gathered attention during 2020?
The StrategyAudit blog, and supporting research is both a personal archive of ideas, that vary from complete to really half-baked, a recitation of the things I see and learn from those I work and interact with, and the lessons that come from those interactions.
Over the course of the year, there were 120 posts published on the StrategyAudit site. It seems like a small return for the effort. Luckily, I did not keep a count of the hours spent thinking, researching, writing, and editing these 120, or I would probably have to counsel myself to do something more useful to my retirement fund with the time.
The 3 most popular posts published this year.
A bit of an unfair advantage accrues to those published earlier in the year. However, the pattern across the decade of this blog has consistently demonstrated that most views of most posts happen over the week or so after publishing. It is the minority that then pick up later and continue to deliver multiple views weekly over a long period.
Reflecting on the new management challenges created by Covid, the April attempt at predicting the impact of Covid came in first. Perhaps understandable, and with the benefit of now 8 months hindsight, I am very pleased with the accuracy of the predictions. That will be the subject, as promised at the time, of a separate post. Second place goes to a June post that looked at what I saw as the 6 critical challenges of remote work, a topic we were all thinking about, and at that time just coming to grips with. Third was a bit of a personal rant, which obviously struck a chord at the time, after that idiot MP Craig Kelly jumped on British morning television in January, telling all and sundry that the fires, then ravaging the east coast of NSW, bore no relationship to the hoax that is climate change.
I am going to stretch the friendship a bit and give a dead cat bounce award to a post that I think had some considerable value as I review it, but that got no traction at all. I set out to describe the benefits that may flow from the Covid crisis, reflecting on the adage that there is a silver lining in every cloud. As with the winner in the category, I feel vindicated that the predictions made have been pretty accurate. Perhaps it was just a lousy headline?
The 3 most popular posts of the year.
This is a hands down to a post published over 6 years ago that describes the business model of supermarkets. It has continued to be the most viewed post every year since it was first published. Coming in second is the perennial runner up published in 2016, describing the 4 dimensions of project planning. Third was a welcome surprise, from early 2018, a marketers explanation of the accounting term Net Present Value. Many of those who run small businesses have a disturbing lack of understanding of even the most basic financial management tools, of which NPV is a common and very useful one. There are several other similar posts on accounting related ‘accounting type’ topics that also contributed significantly to the numbers.
Ideas that got no traction, but that seem valuable.
Some of the ideas I post may be a bit whacky, at least to some. However, it is not my job to reflect the consensus, it is my job to stimulate thought, and create some disturbance to the status quo by throwing in stuff from left field.
This one from 2019 combines two ideas. The first that the demarcation between marketing and sales is artificial nonsense created for the convenience of corporate management, and the second, that the accepted sales funnel is as redundant as a knife in a gunfight. Checklists on just about everything abound on the net. This post from late 2017 summarises a checklist I use when assessing the health of a business, was prompted by a similar idea published in the AICD magazine written by Phil Ruthven, for whom I have a very high regard. In 2013 I stumbled across an article in Fast Company magazine that started to explain the OODA loop, an idea that evolved from the fertile and obsessive mind of US air Force colonel John Boyd. I have since read a biography of Boyd, and spent considerable time reflecting on the competitive implications of the OODA loop, which I think is a seminal idea, highlighted this year by the speed and destructive spread of the Corona virus. Those who have successfully re-oriented themselves to get inside the ‘turning circle’ of their competitors, and the spread of the ‘Bug’, and been able to pivot their businesses in the face of the unexpected, have followed, mostly without knowing, the wisdom of the loop to their collective benefit. This follow up published in October 2020 was, sadly, a very strong contender for the dead cat award for 2020.
Finally, one of my personal favourite posts, viewed only once this year, published in 2016 after the death of Leonard Cohen. It has nothing to do with running a business, but is a deeply personal post, reflecting on a couple of the pivotal events in my life.
I look forward to interacting with you throughout 2021, which is getting harder, and harder. The combined impact of the continuing increasingly intense battle for your attention, and the squeezing of organic access to those who may be interested by the ‘social’ platforms makes life a challenge. (with the number of links in this post, LinkedIn is likely to stick me in solitary and throw away the key) If you find value in my thoughts, subscribe to them directly from the website, and spread the word amongst your networks. I promise not to follow you around when you do.
Have a better 2021 than 2020, perhaps an easy goal for most, and the basis of continuous improvement, finding a way to do a better job every day.
Header cartoon: once again, my thanks to Hugh McLeod at gapingvoid.com for the header
