Mar 27, 2020 | Change, Leadership
As we hesitantly, with stumbles, come out of this lockdown, we will see the landscape has changed. For some, it will be a land of opportunity, for others, a wasteland.
Rather than seeing it as a calamity, those who choose to see it as an opportunity, will be able to look and see that what has actually happened is that the lockdown has dramatically accelerated many trends that were already slowly impacting on our lives. They were all evident before to those who were looking, now they are in ample evidence to everyone who is not completely blind.
The more obvious ones, are:
‘Digitisation’.
So called digitisation has taken off, whatever digitisation means in your context. Suddenly ‘digital’ is the new normal. From remote control of factories to grannies interacting with their grandchildren via Zoom, nobody has been immune.
Remote work
Working from home, cafes, the car, has been developing for a decade. Suddenly, it has been accepted as an alternative to expensive office space in central locations. What will probably evolve is some combination of decentralised ‘meeting places’ and working from home, serviced offices, and cafes. The trend has been pushed along a decade in 5 months.
Retail delivery services.
Similarly, delivery services have been pushed ahead a decade. Everything from the local restaurant to the supermarket, and department store now must be geared up to deliver or lose the sale. This will change the nature of retail from transactional to more ‘showrooming’, a trend harnessed by Apple a decade ago while everyone else was cutting retail prices and locations to save money.
The end of ‘purpose’ marketing.
The focus of marketing, at least by corporate marketers, will have pivoted from the banality of the ‘purpose driven’ marketing of the last few years. In the absence of a compelling idea, marketers deluded themselves that people really cared about their empty statements of ‘purpose’. Your potential and current customers will be demanding evidence that the statements carry weight in the behaviour of those seeking their money.
Politics.
Politicians have had a huge wakeup call. We voters really hate the division and spite of the practise of politics as usual pre corona. We long for some evidence that those elected to lead, do so, rather than just taking the trappings of office for their own benefits. The pressures on politicians and the political orthodoxy that has dominated to date will have to be revised. The basic assumptions about what services government provides, and from who and how, the necessary funds are raised to pay for them, have moved.
Not since 1939 have our politicians been confronted with the profoundly difficult choices that now face. I wonder if they are up to the challenge?
The economy.
The economy has suffered a major stroke, one for which substantial rehab over a long period will be required. It would be naive to believe it will recover to look much like the pre stroke version, but recover it will, over time. For those willing and able to push the boundaries, there will be opportunity everywhere, from the remaking of supply chains, to the potential of rebirth of sophisticated niche manufacturing, and new export markets. Digitisation of just about everything that has been accelerated massively, will demand investment and different business models and enterprise capabilities. These will offer great opportunity as well as what for many will be a terminal challenge. None of this will be easy, but it will happen.
As we ‘wake up’ from the corona coma, there will be an inclination to revert to the known, and comfortable. Succumbing to that urge will be a mistake, as we have all been forced to move on, to push the edges of our comfort zones. The economic and social climate has changed dramatically, and those that seek the comfort of the Pre-Corona status quo will find themselves isolated and falling behind their competitors.
Picking your way through all this will take effort, experience, and careful planning. When you need the injection of those skills, give me a call.
Mar 23, 2020 | Change, Governance
A Corona, heavily disguised as a Black Swan
There is a quote by Earnest Hemingway, when asked how he went bankrupt. His response was: ‘Gradually, then suddenly’.
The same thing is happening to us now, as the Corona bug cuts a swathe through economies worldwide.
For the last 25 years we have become interconnected and interdependent, as individuals, businesses and economies. This added to the stability of the system as a whole, and while all goes well, in the absence of some black swan event, we continue to slowly dig deeper into interconnectivity.
Along comes the black swan, and all that interconnectedness and interdependence pivots in an instant, from being a source of stability and certainty, to the catalyst that suddenly brings the whole system crashing down.
Imagine a group of climbers on a rock face. They are all roped together so that if one falls, the others are strong enough to hold him, and allow him to recover back onto the rock face. That is the case almost always, it is why climbers rope themselves together, as it reduces the risk to the individual. However, if the system fails, a vital piton pulls out, or a holding rope breaks, momentum builds almost instantly, and the whole group falls. The risk to the individual is lessened dramatically by the presence of the ropes, however, if the black swan flies in, the group falls.
It seems Corona is our black swan.
In Australia we have had consistent growth since late 1991, 28 and a bit years. In that time we have hollowed out manufacturing, sold off public and private assets, more often than not to international groups, embraced the ‘gig’ economy of casual and short term employment, and forgotten how to think strategically and for the benefit of the group. In its place, we have lauded individuality, immediate gratification, and the expectation of something for nothing.
It seems we are now about to pay a high price.
The rope has come loose from the rock face.
I wrote an article last weekend for an industry forum, expecting it to be published on Monday or Tuesday after the editor had a look at it and got organised. The pressure of ‘The bug’ got in the way, and it was not published, but I just had a look at the draft, just 7 days later, and it is out of date.
7 days, and some of the observations and predictions I made have been passed by events, predictions just a few days old have become utterly redundant.
That is how quickly this thing is moving, and we are struggling to curb its momentum.
Header photo courtesy Simon Murray.
Mar 18, 2020 | Change, Management, Uncategorized
The critical key to reliable forecasting: Be less wrong.
Thomas Bayes. 1701 – 1761
The key to good forecasting, that magic elixir most of us take, is not to be right, but to be increasingly less wrong.
We know the future will be different, being less wrong about that difference is better than consuming resources trying to be right, because you never will be.
For a decade, several decades ago, as marketing manager of a very significant business, I did a weekly sales record for about 50 SKU’s, by hand. It was in the late eighties, early nineties, the days before this was made easy.
Every Monday morning, I took about 15 minutes to record the sales on a sheet, with a 5 week rolling average, and a 5 week rolling forecast. Every month I did the same, but it took a little longer, as there were comparisons to the relevant quarter the year before, and budget, which took about 45 minutes.
In 10 years, I only ever got one forecast right, but was usually very close. Nobody took any notice at all of the forecasts of the sales force, despite them being part of the sales KPI’s. When manufacturing had choices to make about factory utilisation and what not to make, they came to me, and ignored the rest.
This was simply the building of a qualitative knowledge over time.
We routinely defer to ‘Bayesian’ statistics, a theorem proposed by English statistician Thomas Bayes in 1763, that dealt with the probability of a future event, and how that probability becomes more certain with the addition of information relevant to the outcome. We see Bayesian thinking all around us all the time. Every time we see an outcome to an action, and adjust before we repeat the action, we are using Bayesian thinking. Artillery is the obvious example. Use one cannon to get as close as you can, observe the degree to which you are long or short of the target, and adjust accordingly. When you land one on the target is when all the other cannons in the group adopt the same settings and blast away.
In business, we can spent inordinate amounts of time and energy trying to get the last 5% accuracy, when it would be far better to take a decision, and move ahead knowing that the chances are you will be wrong, but able to adjust and accommodate the degree of ‘wrongness’ with far less effort. This is the basis of continuous improvement, Plan, Do, Check, Act.
Bayesian theory at work, every day.
Mar 16, 2020 | Change, Strategy
My eldest son has been talking to his employer for some time about remote working.
He and his family wanted to get out of Sydney, with its attendant challenges, and have a simpler lifestyle.
Problem has been, the simpler lifestyle also limits the job opportunities, particularly in the relatively narrow field where he has developed experience and expertise.
He conducted an experiment, both for himself and his employer, by working remotely for 6 weeks, from Tasmania. His boss was happy, as was he, and so the idea flourished to the point where he sold his unit a couple of weeks ago, just after his boss’s boss informed them that remote working was not on the agenda, and not acceptable.
This was all before the great dunney paper rush motivated by ‘The bug’ over the past few weeks.
I wonder if the attitude has changed? I know Geoff and his family are committed, and in the absence of a job, will move anyway and try their luck, cashed up as they are.
What does Geoff’s employer have to do to make remote working a part of the way they work?
They have to undergo a digital transformation, supported by a cultural one. In a global company in a regulated market, this is not easy. In fact, the only easy thing about it is to kick the can down the road, so it is someone else’s problem to solve.
However, Millennials are not the same as us baby boomers. They are looking for something more, and are very mobile, risk takers, and unlikely to stay with an employer who does not meet, or even try to meet their needs.
I have prepared a list of the elements Geoff’s employer needs to think about, if they are to transform, and have the chance at retaining the training, commitment and intelligence Geoff, and his cohort bring to the table.
- Change of this nature requires leadership and overt commitment from the very top, cascaded through the organisation. This means that there is a mandate to change from the top, and the necessary resources and leadership are made available. When change is slow, or not forthcoming, the leadership needs to remove the roadblocks, ensuring the ball keeps rolling, building momentum.
- All stakeholders need to understand the reasons for the change, and the value that is created by the outcome. In the absence of an articulated reason for the change, it will stutter.
- Organisation structures need to change from vertical siloes to cross functional collaboration. While this is organisationally and operationally difficult, it is logical, as the customer does not care which part of the organisation addresses their needs, they just care that it is done in a timely, reliable and efficient manner. Organisation structures have to evolve to reflect the customer journey, they can no longer dictate how that journey will be fulfilled. Siloed organisation structures generate ‘transactional friction’ for customers, and the millennials amongst them generally will no longer tolerate it, so they will go elsewhere.
- These changes are not a digital transformation, they are an organisational transformation that uses the evolving digital tools to add value to customers. Too many become obsesses with the tools, when it is the outcome that counts.
- Transformation of any type ultimately boils down to the people, it is them who will engage and push the cultural transformation needed, it just requires the permission and tools to do so.
- Somebody, somewhere, has to build and approve the business case for all this. Change is risky and potentially expensive, but is a necessary part of commercial sustainability. In the absence of a business case that finds a way to articulate the desired outcome, in a manner that everyone understands, the change process will grind to a halt under the weight of the status quo.
The bug may be the catalyst that kick starts remote working. If I was a share market punter, I would be tumbling all my spare cash into businesses whose product was enabling this move. Zoom, for example, as well as the integrated cloud systems, Microsoft, Cisco, Zoho, et al. My son is well down in the pecking order of a very large corporation, and seemingly irrelevant to the success or otherwise of the organisation, but losing him, and others like him, will slowly rot the business from the core.
Header cartoon courtesy Mike Luckovitch
Feb 5, 2020 | Change, Strategy
Generating rapid growth in a business entails a constant choice that simply must be made, but is usually missed.
It is the choice between ‘growth’ and ‘optimisation’.
They require different skills, strategies, and resources.
Let me explain.
‘Growth’ implies something less than a double digit year on year increase. While that may stretch resources, it is often ‘Doable’, while very challenging. ‘Rapid growth’ is much harder, requiring the acquisition of many new customers, assets, movement into new markets, product or geographic areas, and a higher risk profile. It is often aspired to, even budgeted, but is relatively rare.
‘Rapid growth’ is also usually very scrappy, you are fixing things on the run, adding resources, are short of cash, and so it requires people comfortable with ambiguity, uncertainty, and a drive to do new stuff.
By contrast, optimisation is taking what is currently done, and improving it, bit by bit, on a continuous basis. The scrappy, seemingly undisciplined and almost random frenetic activity of a rapid growth enterprise makes them uncomfortable.
Think about Olivetti, the king of the typewriter market.
They made wonderful typewriters, best in the business, optimised continuously for 75 years. Into this mix comes a scrappy unreliable substitute, the word processor and attached printer, that costs more than an Olivetti, and does not deliver the same quality of output.
To Olivetti management, it was less than a threat, more of a nuisance, that would soon go away, so they continued to optimise their machines, rather than recognising that the scrappy, word processor would rapidly steal not only their market, which was typing pools, but destroy them, and create new ones. The word processor was an entirely different tool, one that gave everyone the ability to type and print from their desk, a much quicker, more flexible, and hugely democratising change in organisational life. Olivetti was obsessed with their machine, not seeing the customers as anything more than users. Word processors gave everyone a power that had been concentrated in the executive suite, creating a terminal strategic change that Olivetti failed to see.
Is your strategy clearly making the distinction between optimisation and growth, as they are different beasts, requiring different capabilities.
Header photo courtesy Paolo Bpnassin via Flikr
Jan 19, 2020 | Change, Governance, Leadership
I recently found myself in the position of refereeing a ‘debate’ over lunch on climate change between 2 zealots, one from either side.
One who was a passionate advocate of the argument that it was real, and would kill us unless we did some challenging things, the science was in 30 years ago, and we have barely moved. Our public institutions have displayed, and continue to display, criminal negligence in that inaction.
The other, was a passionate advocate of the ‘why bother’ story. As Australia is a tiny contributor to global warming, unless the rest of the world did something, destroying our way of life was an irrelevant act of self -immolation.
Thinking about it later, three things came to mind, that reflect the barriers to any major change in the way we work and live.
Denial. It is not happening, we cross our fingers and hope it goes away. Through history this has never worked, it is the ‘peace in our time’ solution.
Money. Making the change will not make any money, just impose unnecessary and unrecoverable costs. This assumes that tomorrow looks just the same as today, which is always wrong, we just cannot see the potential. Steve Ballmer dismissed the first iPhone as an expensive toy that would never work, Blockbuster did not see the potential in Netfliks, and Kodak, who invented digital photography, failed to commercialise it. With the short term dominant in our institutional and public governance, the immediacy of money being generated is a powerful argument for inaction, despite the evidence to the contrary.
Optimisation. We have optimised our current organisations, they are good at running exactly what it is now, and change is messy, expensive, risky, and dangerous to the personal advancement of those who advocate for it. In addition, the short term prospect of generating a return on investment is low, so our institutional risk aversion kicks in, often on steroids. Both time frames have their costs and benefits, quantifiable with significantly variable degrees of certainty. On balance, my money is on the ‘do something’ button, as history suggests those who do not change in the face of undeniable change around them, get run over by those who take the prizes. IBM and Olivetti used to own the typewriter business, Kodak owned photography, Hoover owned vacuum cleaners, all optimised businesses for the maintenance of the status quo, and none survived.
As I write this, the east coast of Australia, gripped by drought, has been on fire. We are only in the early part of what is usually called the ‘fire season’, so things could easily get worse, although there may not be much left to burn. I suspect the views of both sides of the debate my lunch colleagues had will not have changed much as a result, a microcosm of the policy problem facing us.
However, every problem is accompanied by opportunity.
Climate change is a problem for everyone, a challenge for policy makers faced with the reality of short term populism to keep their jobs, and an opportunity for the few who see the problems as challenges to be solved.
