Jul 16, 2021 | Change, Collaboration, Operations
Nothing these days is done in one place, by one person, beginning to end. There is always a process in place, a chain of events that has to all work together in a co-ordinated manner to optimise the outcome.
We all know that old cliché, a chain is only as strong as its weakest link.
This is how it is with any process; it is limited in output by its weakest link.
Therefore, rather than spending resources in vain attempts to boost process performance by doubling down on the obvious bits that work well, find the weak link, fix it, then move on.
Eli Goldratt, the brain behind the Theory of Constraints, wrote a book called “The Goal” to articulate his theories in simple form. Boiled down in the book is a story of reverse engineering the process chain in a mythical factory. The management identifies the weakest link, works with it until it is no longer the weakest link, then moves on to the next identified target, now the weakest link in an improved process chain. This is an ongoing process of continuous improvement.
As Aiden Kavanagh, one of the best ‘Lean Thinking’ implementers I have seen in my travels put it succinctly in a comment on a previous post: ‘Tune the system to the pace of the bottle neck and make sure everything else has capacity to make sure the bottle neck never stops’
Is this how your improvement initiatives work, or are you continually making investments in new shiny things that always seem unable to deliver the promised outcomes?
Header photo courtesy of Daniel Stojanovic
Jun 30, 2021 | Change, Governance, Marketing
I have been at this ‘marketing’ game a long time, long enough to know that the bits you see, as a customer, prospective customer, or just by accident, are only the tip of the iceberg.
For many so-called marketers, what you see is the whole iceberg, they are ignorant, wilfully, or otherwise of the underlying factors that go into making a success of the process of ‘marketing’.
Despite the market research, social tracking, customer satisfaction measurement, and all the other stuff that we can do, the customer is often ignored.
Why is it so??
- There is little ‘fit’ between the market and the product/service being offered. This is usually because there is no ‘seat in the boardroom’ for customers. This should be the responsibility of the marketing people, but they so often revert to cliches and fluffy qualitative assertions that they are ignored. I really like the practice of Amazon, where there is an empty chair in every meeting, signifying the customer.
- Products are designed back to front. Businesses assemble the resources they have available, and build products they think customers will buy, rather than identifying customer problems and working backwards to assemble the resources that solve them.
- Marketing is usually seen as a subordinate function. The heads of the accounting, engineering, and operational functions are more likely to wield corporate influence than marketing. Partly this is the fault of marketers, who have systemically failed to speak the language of the boardroom. Marketing, which is about the future, tends to speak ‘qualitative’ whole other functions are all about the past, and can speak authoritative ‘quantitative’. This difference makes them more believable, as our brains like the certainty of quantitative. Partly also it is a failure of leadership. How many CEO’s are you aware of that have ‘marketing’ as their core skill?
- KPI’s rarely involve customer metrics of any value. I am a huge fan of tracking performance, but measures that do not relate to the manner in which the job done satisfies customers is a metric that is only looking internally. Some are necessary, but most are not, in my experience. Then, you see the occasional customer metric touted, and it is the number of likes on a social platform, vanity measures that again mean nothing. In fact, such measures are worse than nothing, they are misleading.
- Marketers by their nature are looking forward. This tends to enable them to be blinded by the newest shiny thing that emerges. This constant response to the shiny object serves to erode any focus and consistency of brand building, customer awareness and loyalty. When you are constantly moving around from video to podcasts, clubhouse, Tik Tok, and all the rest, you become hard to follow.
- Poor key strategically important customer definition. Too often marketers are unable to focus on the niches where the really powerful returns hide. The old cliché that you cannot be all things to all people prevails. The more important to the few who will buy your products and nothing else you are, the better. The temptation however to try and broaden the appeal, just a bit, to get a few more customers just dilutes the power of the value proposition.
- Innovation is messy, suboptimal, and experimental. Marketing and strategic development, whether it be of product, brand, customer groups, geographies, always has significant elements of trial and error, risk, and the inevitable failures. In enterprises that run on continuous improvement and optimising processes, this ‘messiness’ is unacceptable, and so is minimised. The result is the evolution of the enterprise stalls for lack of innovation, and marketing cops the blame. The corollary is that marketers are intimidated by their KPI’s and the status quo, into not making waves, so are always playing safe. This results in bland, undifferentiated marketing that has little impact.
- Marketers are not often the smartest people in the room. It seems to me to be a sad fact that this is often the case. From the outside, marketing looks easy, so those who do not seek or are unable to make the grade into professional training often seem to gravitate to marketing. Of the outstanding marketers I have seen and hired, many seem to come from a professional background. Scientists, lawyers, accountants, engineers, looking for something that values their creativity in bigger doses than their first profession. Running a marketing function in a large company for some time, I always went looking for these people when hiring, although it did take me some time to figure it out.
- Marketers fail to engage the other functions that are critical to success. Marketing is the only function that needs the co-operation of others over whom they have no functional control, to be successful. While this is a great test of leadership, it most often ends in tears. How often have you seen an operations manager whose KPI’s are all about factory efficiency, take a hit because the marketing manager wants to do a factory trial of something the ‘Ops’ people regard as a fantasy?
- The pace of superficial change is faster now than ever before. However, human behaviour does not change easily. The tools we use are becoming like our underwear. The reasons we wear underwear do not change, but the brands, types, cuts, and colours of the underwear we buy can change easily. This profound difference is most often shovelled under the carpet, kicked away by the seeming attraction of an apparent change in short term choices we make, which are at odds with the underlying drivers of behaviour. The unfortunate added outcome of this is a dilution of the creative impact of advertising communication. When you have to produce volumes of ‘content’ on a short term timetable, the impact of that communication is necessarily diluted. We fail to give the creative part of the communication process sufficient time to generate the attention and magnetism required in a frenzied world of fragmented communication.
- DIY syndrome. Marketing, like everything else has become increasingly fragmented, and specialised. No one person can cover all the required bases, any more than a doctor can be a specialist in more than one narrow niche of medicine. Yet many fail to recognise the competitive necessity of engaging specialists for specialist tasks. This can be addressed in large companies by very specific job descriptions and skills of those employed, but in SME’s, it requires often expensive specialists to be engaged on an ‘as needed’ basis.
The good news is that all these shortcomings can be overcome. The bad news is that it takes large doses of experience, leadership, and time, to do so
Header cartoon credit: www.TomGauld.com in New Scientist.
Jun 10, 2021 | Change, Governance, Management
Culture change is perhaps the hardest challenge to be faced by any leader. It can evolve over time, with patience and commitment, but every successful change I have seen comes after a catalytic event of some sort.
Many years ago, I worked for a manufacturing business that had built a new factory in the west of Sydney, which had more than its fair share of teething problems. The production the factory was supposed to absorb and build upon came from an inner-city site that had been operating for almost 100 years.
In those years there had been built up a powerful culture of management Vs workers, and fierce demarcation battles between the many unions on the old site, several with only one or two members, desperately trying to build their position.
This toxic mixture was transferred to the new, automated site with the predictable results. Manufacturing productivity was appalling, labour relations non-existent, demarcation disputes ongoing, the place was on the brink of being closed as the biggest disaster since the Titanic.
In a desperate dispute, to make a point, someone (no charges were ever laid) resorted to arson in the warehouse. The damage was extensive, and the already hobbled ability to produce saleable product was almost destroyed.
However, it was a monumental catalyst for change.
In the middle of the night, I found myself driving a forklift, working shoulder to shoulder with warehouse and production staff clearing stock from the refrigerated warehouse into trucks for transport to outside storage.
This would have been absolutely unthinkable just 24 hours before.
Suddenly, everyone in the plant recognised that their jobs were about to go, forever. The unionised workforce recognised that those in so called ‘management’ were just people who wanted, like them, to do as good a job as they could. We found it was easy to communicate without the artificial barriers that had existed, and we all had a common purpose, to survive.
Within a few months, after enormous effort and collaborative changes unthinkable before the fire, the business had been transformed. The fire had been the catalyst for a determination to acknowledge the failures of the past, and to accept massive change was necessary, welcome, and in the interests of every stakeholder.
In a small way, this is what is needed in Australia.
A common purpose, clear and consistent communication, determination, and goodwill.
This does not mean there will not be fierce debates, and difficult decisions that need to be made, but it does mean that there is a general understanding of why those decisions were made.
After royally stuffing up the reaction to the fires in December 2019 and January 2020, the government recognised their failings when the Corona virus took hold. It served as a catalyst, and suddenly there was bi-partisan and general community agreement that change was needed.
We moved forward.
As things quietened down, the collaboration and goodwill dissipated, partisan politics and apparently ill-considered and reactive decisions taken by fragmenting politics at all levels re-emerged, driving people apart.
Question is, can we restore the emergent culture of goodwill and collaborative communication that served us well in the crisis? It is the same question commercial leaders need to ask of themselves after experiencing a catalytic event.
Do we have the leaders capable of driving the culture change necessary?
How do we assemble the resources necessary?
Can those with vested interests in the status quo, resistant to the changes, be shunted to the sidelines?
In the case of ‘Australia Inc’, failure to respond will leave all our children and grandchildren poorer: financially and emotionally.
Header cartoon credit: Dilbert, again. Scott Adams and his mate have a knack of hitting that vital nerve.
May 24, 2021 | Change, Strategy
The product lifecycle is a well understood concept. Introduction, growth, maturity, decline, illustrated usually with a nice even normal curve, which almost never reflects what happens in the real world.
Despite its distance from the real world, it remains a central core of many strategic planning exercises.
However, it is not the only cycle to impact on the commercial sustainability of enterprises.
The life cycle of enterprises is shortening radically. Many of the dominating companies in the Dow Jones top 100 were not there 20 years ago. A number had not even been born. The emergence of tech companies into the top of share market valuation has been astonishingly quick, as has the demise of many of those that were the standard bearers 20 years ago.
The hand-over has been driven by the emergence of a host of new business models. No matter how great your product, loyal your customers, deep your IP and brand protection, how actively marketed, when the business model erodes, everything else goes with it.
Amazon killed off bookstores in quick time. The bookstore business model became obsolete as they watched. Air BnB is an entirely new business model to that successfully leveraged by hotels for 50 years, themselves a business model that killed off the local tavern as a place a traveller could get a meal, a drink, and a bed. Perhaps the most telling is the end of encyclopaedias, which seemed to happen in the blink of an eye. Microsoft first launched their Encarta digital encyclopaedia on CD in 1993. Encarta was itself disrupted and destroyed by Wikipedia in 2001.
The leadership challenge is how to manage the portfolio of eroding and potentially emerging business models that will support growth in the future, while also managing the contracting and often conflicting lifecycles of their product and product development portfolios.
The leadership of enterprises spends the bulk of its time in one way or another searching to maximise the leverage it can build from finite resources. So, what happens when someone comes along and suggests that they take some of those resources, and allocate them to some new thing, that is inefficient, scrappy, and will deliver lower returns, if any at all, than the existing business? It gets canned, few managers will proceed, it is against the existing ethos of maximising efficiency.
The net result is that the incumbent enterprise tend to ‘pass’ on taking up the very things that will replace them.
I have a client, an emerging SME in a market that is in its early stages, growing rapidly, with very few ‘rules’ beyond the expectations set by the incumbent industry players, backed by regulation. At some point the pressure to revise the regulations will become irresistible, and the dominant existing business and manufacturing model will become compromised almost overnight.
I was in the dairy industry in the leadup to deregulation in NSW. I clearly remember the resistance to change, and the resulting organisational and financial chaos when it did arrive. The chickens did not just come home to roost, they crapped all over the pre-deregulation incumbents, and none of the major businesses survived in any form that resembled the pre-deregulation organisation.
The evolution of often competing business and product models happening in real time, creating a raft of organisational, cultural, and financial conflicts is unprecedented. It will also open up opportunities galore for the agile, and crevasses for those less nimble to stumble into.
The demand for strategic creativity and an action-oriented culture have never been greater.
May 9, 2021 | Change, Governance, rant
As I look at the current state of the economy from my spot as a boomer who has largely lived my life in times of peace and easy excess, it is becoming clear to me that there are two tracks at work.
The first is the one along which is driving those who work for a wage, pay taxes in the absence of choice, and struggle to feed, house and educate the kids. In the decreasing incidence of the traditional nuclear family, both parents tend to work, often multiple jobs, and seemingly get nowhere.
The second is those who own stuff. Specifically, property and shares. They are doing OK in the enormous inflation of price that has occurred.
The problem for our society and the glue of community is that the latter group are living on what economists call ‘rent’.
Income from ‘rent’ comes from what you own, rather than what you produce. In the absence of producing greater income ‘producing’ than from ‘owning’ you get what we have now, a two-speed economy.
It further seems to me that the system is weighted towards those who own, so can charge rent. Our tax system and increasingly education system which is the gateway to ownership is increasingly weighted towards ‘rental’ at the expense of ‘production’ by those in control. The controlling group are themselves renters, and so set the rules favourable to them, rather than being equitable to all.
This is not a simple challenge for us to address. It has been a long time in the making, and will be a long time in the fixing, which makes it unlikely to be fixed in the absence of strong political leadership that is able and willing to look beyond the current electoral cycle.
The economic problem posed by renters is that they tend to double down on what is producing the income today. In other words, optimising the short term at the expense of the long term, which is messy, uncertain, and therefore subject to greater risk. Risk minimisation is core to a renters mindset. That is why small enterprises are more innovative and less risk averse, they have much less to lose, and are reaching for the point where they can become renters, a much easier life.
When looked at through such a lens, the source of the current malaise in this country is obvious. Too many renters, owning way more than their ‘fair share’ of the largess we have inherited.
I wonder what constitutes a ‘fair share’? This is not something you can legislate, and in any event, the legislature is controlled by renters, so no joy there. In a democracy, we the great unwashed are supposed to be able to bring about change via the ballot box, but that seems unlikely in the short term. Again, the game is rigged to exclude anything other than very gradual change from the edges, and that is too hard for the renters to think about and accept the minor risk it might entail. The outcome of the last federal election when the Labor party put a few anti renter ideas on the table, they were scuppered. To my mind this was the result of incredibly poor marketing rather than the ideas being lousy.
I am first and foremost a strategist, one who looks at the big picture and articulates the principals by which the resource allocation and tactical decisions are made. As such, I propose two principals by which the foundations of our economy, and therefore the society we should be aiming for are sourced.
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- Education. Make this more accessible to all, from preschool to advanced tertiary, and everything in between. We need not only the scientists, doctors, and managers, that make the industries and services we want work, but the plumbers and toolmakers who actually make things that produce income. It is that latter group that have been killed off by policy decisions based on something other than the long term good of the community.
- Funding. It is a simple matter that the aspiration above needs to be paid for, somehow. Increasingly the tax burden is supported by the ‘workers’ while the renters get a pass. This simply must change. Not a proposition easily accepted by those who will ‘lose’. It will be resisted with all the resources at the disposal of the renters, and their allies. First target should be the multinational corporations that infest our industries, who reduce their tax, legally, to close to zero by a mix of entirely legal strategies, usually involving transfer payments to head offices domiciled in places where the rates are lower. This is an international problem, not just ours, so the benefit is that others need our cooperation as much as we need theirs, and the economies of the Bahamas and Cook Islands can be assisted in other ways to play their role in a fairer world economy. Then there are multiple soft targets in our domestic tax system that need to be progressively addressed so the balance is reweighted towards those making, at the expense of those renting.
We need to share the largess of the golden goose more widely by re-weighting the distribution of the gold, rather than the ownership of the goose.
It is Sunday morning, and clearly, I am dreaming!
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.
