Jun 17, 2020 | Analytics, Change
To measure anything in a meaningful way, you need some sort of baseline.
To say you have a 20% increase in market share sounds impressive, but if your starting point is a 5% share, it is less so. By contrast, if your starting point is 40% in a competitive market, a 20% increase is a great effort.
Setting this baseline from which to measure change can be extremely difficult. Finding a simple measure that captures the impact of a wide range of variables while adequately reflecting the whole story is never as easy as it sounds.
Look at Australia’s published rate of unemployment. Whatever it is on any given date, it is an extrapolated survey that includes a definition of ’employment’ as: 1 hour of paid work a week. Clearly nonsense, but what is the real measure? How do you gather reliable data that offers actionable insights into segments of the population which are subject to a myriad of differing drivers?
Climate scientists faced this problem when setting out to determine the rate at which the decay of vegetable matter, which emits CO2 during the decomposition process, was adding to the store of CO2 in the atmosphere.
This is an enormously complex problem, driven by variations in temperature, humidity, type of vegetation, and the state of vegetation, particularly as it relates to permafrost slowly becoming less permanent.
The measurement solution came to two scientists as they struggled to assemble reliable data from the varied sources, collected in varied ways, around the world. They buried two teabags in the same location. One which decayed quickly at first, then much more slowly, and the other that decayed in the opposite manner.
By establishing the quantitative impact of differing conditions on the two teabags, a reliable measure of the rate of decomposition can be calculated. That calculation holds irrespective of the location, establishing a baseline from which the amount of CO2 being emitted by decaying vegetable matter from that location, can be derived.
Subsequently, they have engaged with interested people around the world using the same two teabag types. By pooling data, they had arrived at a means to calculate with considerable accuracy, how much CO2 was being emitted by the process of decomposition of vegetation globally.
They had The Teabag Index.
Economists use a similar measure of purchasing power of currencies across the world, by converting the local price of a Big Mac into US dollars. This is pretty obviously called the Big Mac Index, and has proved to be a pretty reliable indicator for over 30 years.
Sometimes the best solutions to complex problems lie in being creative about finding a simple solution. This is rarely obvious, but sometimes hiding in plain sight.
What is your teabag index?
It will be those few simple numbers that are a reliable macro indicator of the performance of your business.
Jun 3, 2020 | Change, Leadership
Have you seriously considered the implications of the apparent recognition that remote working can, and will, be a greater part of the employment mix in a post corona world?
There is a loud noise that ‘everything will change’ reverberating, an echo chamber of that view amplified by digital tools. It seems to me that human beings are simply insufficiently flexible to change ‘everything,’ although it seems the trend towards remote work has been accelerated a decade by the bug.
I have worked remotely and in offices, mixed about in a pretty random fashion for 25 years. The recent past has brought into focus some of the factors that I think are worth consideration.
‘Industrial’ management, the norm for the last 100 years, made in the image of Frederick Winslow Taylor assumes that in the absence of close supervision, little work of value will be done. At the extreme other end of the scale, you have enterprises like ‘Automattic’ the parent company of WordPress, that has remote workers around the world, and no head office of any type beyond the current location of Matt Mullenweg, the CEO and co-founder. It is a continuum on which we all fall somewhere, and it is evolving quickly.
The change in management style to remote will be for some, too much, as it adds several dimensions to the task that many managers are simply not up to doing.
Managing remotely adds a number of challenging dimensions:
Tools are needed that are not familiar or easily learnt by many, so simplicity is key. In addition there is a host of newer challenges to be addressed relating to the provision of the tools from software to the hardware, and the security questions hanging over everything digital.
Behavioural norms established in an office environment have been thrown out the window. Suddenly, we need to consider things like the interruptions of children, the family dog, and flexible working hours. In particular, the move to being available at all hours which was evolving as a result of the digital connectivity we had while still working from an office, has been supercharged. Suddenly, working 24/7 risks becoming the norm, unrestrained by reasonable office hours. All of these, and many others indicate that a very different way of measuring performance will be required.
‘Meetings’ from the casual gathering around the coffee machine in the morning, to the established and regular formal meetings deliver a rhythm to the day that is suddenly absent, and needs to be replaced somehow. The formal meetings can be done using one of the many tools, but the casual, unplanned meetings that happen in an office, that can be hugely valuable, present a different challenge.
Culture. The glue that holds the workplace together, will undergo radical surgery. Human beings evolved in small groups that looked after themselves by looking after each other. While this has eroded somewhat over the last 250 years, the need to be ‘together’ is nevertheless hardwired into our collective DNA. I suspect this will be the largest hurdle for management of the remote corporations to address.
Recognise the ‘God Syndrome’ and kill it. I cannot help but wonder if the challenge of leading remote teams is no more than a light being shone on existing failures of leadership that went largely unnoticed. Those in senior positions do not have all the answers, often they have very few of them. Unfortunately, those in leadership positions are often there partly as a result of being able to convince others they are right more than anyone else, and they play ‘the game’ more effectively. The reality is that they are usually as confused and uncertain as the rest of us, they just hide it better, and sometimes ask better questions. The tide has gone out, so the rocks are exposed, the failures of leadership are more obvious. Humility is the common characteristic of every really good leader I have seen.
Deliver Psychological Safety. Everything I see and read about the psychology of human beings is that we seek ‘psychological safety’. This is the place where we feel safe to do and say things that really reflect what we think, without fear of any sort of retribution. Achieving this in any workplace is really hard, and is the result only of truly great leadership. Achieving it when many of us are working remotely, away for the ‘safety’ of those few we know well and truly trust, will be a monumental task.
When you strip it all away, the reason workers are congregated in offices is to achieve the objective of making money for their employers. It is however an artifice forced on us by the industrial revolution, and is somewhat inconsistent with the way we humans evolved. The recent past has demonstrated that this congregation may not be necessary to achieve that commercial objective. Almost certainly it is not necessary in the form that it evolved, as a means to find a way to manage operational scale. Therefore, a rational management will set about reducing costs, and expensive CBD office space has suddenly become a soft target.
Cartoon header courtesy Scott Adams and Dilbert.
May 27, 2020 | Change, Leadership
Social capital
Like all new things, remote work was a small outlier in the world of corporations. It was something that a few dabbled with, mostly with specialist consultants and those for whom they had statutory responsibility, such as maternity leave.
That has now all changed, as the experiment at the edges has been forced to become mainstream in the face of the Corona crisis, and the world will not return to the previous status quo as the crisis dissolves.
Not only do many workers like remote work, as a relief from the daily commute, it has put a focus on the potential of substantial savings in expensive office space, and the opportunity to extend employment to areas where there exists a pool of available labour.
The change is a radical one, not one that would have happened inside a decade without the impetus of the Corona bug, but how do we make it work?
The critical ingredient will be Social Capital.
Are Social Capital and Trust synonyms?
Perhaps. However, to my mind, Trust is something that you give to individuals, and to the extent that those individuals are representatives of an institution, there is ‘rub-off’. Social Capital to me is an idea that encompasses the resilience of the culture in an organisation as well as personal trust given to individuals, and so is a much broader definition.
Pre-Corona, social capital was a function of the daily contact with co-workers of all levels in the corridor, around the water cooler, in meetings, all face to face. It was the glue that held everything together. It is the product of ‘culture’ forged by a combination of genuine leadership, and the instinctive behaviour of individuals, and groups of individuals.
Social capital is like any other form of capital. It needs to be built, strengthened, and renewed, or it dissipates as it is used. Face to face contact is the primary mechanism for this process, and in its absence, any store of social capital will be quickly used up unless alternatives are developed and leveraged.
Those who just manage by exerting the institutional power vested in their position in the pecking order will be emasculated. They never built any social capital, often did not see the need or have the ability. Others, the real leaders amongst a group, and they are not necessarily those with the slot in the pecking order, built social capital by their behaviour and attitude towards others.
The former group will hate this remote working thing, as their ability to direct is significantly diminished. They will fight the implementation. Meanwhile, the leaders amongst us will be less impacted, and will welcome the change as it makes the life of their co-workers, to differing degrees easier, while making theirs very different, and probably harder.
You will see the leaders amongst us very quickly, they will be the ones figuring out how best to replace the drivers of social capital pre-corona with new drivers in a post-corona world, and they will be shouting from the rooftops. The others will be in the long line of those swept aside by this tsunami of change.
May 20, 2020 | Change, Leadership
May 4, 2020 | Change, Leadership, Lean
The huge benefit of the giant Corona jolt
For years I have been a proponent of what is loosely described as ‘Lean thinking’.
In effect it is a continuous process of removing waste by a combination of critical thinking and continuous improvement.
The biggest impediment to a lean process is always the mind set of those who need to change in order to reap the benefits. Change is really hard, especially when the existing state is comfortable. It usually takes a jolt of some sort to gain any sort of traction. There have been times when I have applied that jolt myself, as a means to remove complacency.
However, we are currently in the middle of a giant jolt delivered by the bug, which should have created the greatest potential for lean traction I have seen in many years.
A lean process will progressively remove any activity that does not add value to the end customer, and seek to compress the time it takes to deliver that value.
In other words, if it is essential it stays, non essential, it is on the list to be dumped.
Suddenly we are all looking at the services we saw as part of life and re-evaluating them with the question: ‘Is that essential, how does it add value?’
We are involuntarily applying a critical eye to everything we do, seeking to identify and line up for removal, anything that is not essential, that is just consuming time and resources for little or no value.
To use lean parlance, the ‘Current state’ as it was pre Corona is recognised as no longer an option, and we are by necessity experimenting with the elements we need to survive commercially. In that process, will seek to understand how the ‘Future state’ might look. In every case, you can make some assumptions, and apply them as guiding principles to the things you are considering.
For example, will it be part of the ‘future state’ for office workers to commute, often multiple hours a day, to sit in expensive offices in a CBD to do their work? For the last 20 years, despite the amazing communication tools suddenly available, it has been for most. The dominating management culture, mostly the child of old white guys like me, who substituted a bum in a seat for useful outcomes, said it was so.
This current experiment with remote working has demonstrated the nonsense of this formerly dominating view. We do need however, to substitute the humanity of the casual conversation and social networks built from personal contact.
We can save ourselves a lot of time and money by working from home, partly from home, or perhaps decentralised mini-offices. Reducing commuting time is like reducing machine changeover time: it releases capacity otherwise being wasted. For no cost beyond a change of mindset and perhaps a few modest enabling tools, we can free up huge amounts of potentially productive time.
Ask yourself the Question; ‘how much time per person can we save by the removal of the necessity to commute’? When you have answered it, ask if there was a better way, for the people concerned, and the stakeholders in your business, to have spent that time.
Header photo courtesy Dominic Freeman
Apr 28, 2020 | Change, Customers, Strategy
What you may ask, is a ‘Rundle’?
A new word, made up to represent a ‘Recurring Revenue Bundle‘, an idea whose infancy was spent in software, but that is now reaching puberty in other markets.
The result of this pubescence is that business models are in the midst of radical change from ‘Ownership’ to ‘Usership’. The revenue and marketing models of software have moved from purchase to subscription, and following will be, almost everything that can be bundled as a service.
This is not a new idea, it is the foundation of the success of Xerox, charging by the copy, rather than selling copying machines, and Gillette in its early days, giving away the razors in order to sell the blades.
Given the boldness of that forecast, there is another thing that will emerge: Control of distribution will be essential. If you have a recurring revenue model, and no control of your distribution, you will be screwed.
Let’s consider cars, personal transport. Are we beginning to see the trend now, as differing companies place cars for ‘digi-rent’ in heavily populated neighbourhoods around the inner city. If you are going to digi-rent a car, it will not usually matter what the car is, beyond a functional definition: takes four kids, has a bike rack, and so on. So, the power of the brand of car will move towards the platforms that rent them out. If you are running Ford, or Mercedes, you need control of the platform from which the cars will be Digi-rented, in order to keep being able to move cars off the end of the production line.
What then will differentiate the Ford platform from the Mercedes platform?
Distribution.
You can see the beginnings of the battle to come in the subscription entertainment services. Netflix Vs HBO Vs Stan, and all the rest, now including the newly launched Apple TV and Disney. There is not room for them all, so there will be billions thrown at content, and most will end up in the hands of the few who control the distribution, building arithmetically on the recurring revenue.
My prediction is that Disney will be one of the last standing. They have a great brand, huge back catalogue, the cash reserves to churn out more great stuff, but their most important asset is the extension of the subscription services into other revenue sources. Licencing, Disney world, holidays, games, and all the other areas where the Disney brand has an existing or expandable position. The other winner will be Amazon, who have a platform, including Prime, that is in 55% of US homes, and rapidly taking over in other geographies. Distribution is automatic and bundled. The current leader, Netflix, is out on its own, great first mover advantage, but lacking the broad competitive base of Disney and Amazon.
The rest, beyond the very specific, super focussed services that will inevitably emerge, are toast.
Instead of products, you will be seeking to create ‘Rundles’ or Bundles of a value proposition to keep people coming back for more, rather than marketing to convince people to buy again.
The strategic task: Build barriers to churn.
