Jun 6, 2022 | Change, Collaboration
Fragmentation of supply chains is the reality post covid, and now with the turmoil in Europe, evolving attitude of the world’s factory, China, Brexit, polarisation of the US, and the increasingly fragile geopolitical world order.
Many businesses I see have spent considerable effort internally, progressively optimising their own operations. Very few have spent anything like the same effort externally, optimising the interactions with others in their supply chain with the objective of increasing the strength of the whole, rather than just increasing their negotiating leverage.
Making one link in a chain stronger is great, but it is the strength of the weakest link that is critical.
One of my SME clients faces this dilemma.
His business is in a rapidly growing segment of a very large and well established market. He is the last link in the chain to the client, and has done an excellent job over the last couple of years building the foundations that will enable him to scale at an increasing rate. He has a number of suppliers for a key part of his offering, to which he then adds the value to the end client. Each of those suppliers has their own set of challenges, but the common feature is that they are modest sized, often relatively new businesses, all are underfunded, and management structures and discipline are generally poor. To varying degrees, and in differing ways, they present barriers to my client’s growth.
Question is, how does my client inject the ‘improvement DNA’ into his suppliers, so that they can grow together, make the pie for both parties bigger?
Collaboration is the easy answer, it is just that the distance between where they are now, and a fruitful collaboration is significant.
In my experience, there are four critical steps to be taken. These are not always sequential, although the deeper you become involved, the harder it becomes to extract yourself should that be necessary.
Pick the right partner.
Choosing a partner for a long-term collaboration is not unlike picking a partner for life. None is going to be perfect, and it will take time and effort, but in the absence of the right foundations, it will not work. Jim Collins in his book ‘Good to Great’ offers the advice to: ‘start with the who and then focus on the what’. Seems to be good advice.
Your chosen partner, and making a choice is essential so that you can focus resources where they will have the greatest impact, must be aligned with your strategy, and vision of the future. Only then can you engage collaboratively in the journey.
Learn together.
We humans learn better in groups than we do individually. The greater the variety of input and perspective the better decision making. Quicker recognition and wide acknowledgement of errors, and understanding of why they were made, leads to more robust recovery from those errors, and growth.
Leverage each other’s strengths
Every relationship requires ‘give and take’. When you assist a partner to improve their operations, you will benefit. That benefit may not always be directly evident, but indirectly it will be there. Reciprocity is a powerful motivation, on top of the commercial benefits that accrue from optimised operations. Often it is the case that the strengths of one partner fills the hole left by the weakness of the other, greatly benefitting both.
Measure together.
‘What gets measured gets done’ holds true, although you must be cognisant of Goodhart’s law. This states that when a measure becomes an objective, it ceases to be a good measure.
Both parties should be on parallel and intersecting continuous improvement efforts. Where these intersect there is significant opportunity for mutual improvement. Most often that is where there are shared measures. The most common I have seen are ‘DIFOT’ (delivered in full on time) and production scheduling and inventory measures. For example, years ago a business I worked for built a small number of measures that had shared production scheduling and inventory measures across the two collaborators. The result was a radically increased rate of ‘flow’ between the raw material and production scheduling of one party and the inventory and volume offtake of the other. Both parties benefitted enormously.
Such collaborative efforts, when they are successful provide the most effective antidote to the fragmentation of supply chains. While your competitors struggle with the fragmentation, you and your collaborators can leverage your success into market share and sustainable profitability.
Apr 4, 2022 | Collaboration, Leadership
Ask them for their advice, rather than an opinion.
When you ask for advice, you are doing the right thing, you are getting people inside the tent.
When you ask for an opinion, you are often doing the wrong thing.
You are giving them the opportunity for them to go back inside themselves, weigh up their views, and then tell you what they think you should do. Once said, it becomes harder for them to accept when the action you take is different.
When you by contrast ask for their advice, one word only is changed, but you have them inside your tent, they are a part of the solution you then present.
It seems logical to use props to make your position clear before you asked for something, setting out to engage others before you ask. However, it does not work all that well.
If I was collecting for the wilderness society, I would not dress up in a koala suit and hang around corners with a bucket asking for donations.
Instead, I would ensure that I was neatly dressed, and approached people who looked similar to me, and ask if they felt that there was enough being done to save the environment. Most would say ‘no’, which is then the time to ask for a donation to do more.
When they agree with your proposition, you have them inside your tent, the one that is concerned about the degradation of the environment. Under that circumstance they will be more likely to give you a donation, than they would if you accost them on a corner in a koala suit.
Nov 22, 2021 | Collaboration, Leadership
When the owner of a medium sized business is thinking of selling, the road in front to complete a transaction is a rocky one.
On top of the pressure and tension of financial and strategic due diligence, there are always questions about employee reaction.
- Will it impact on the value of the business?
- Will productivity drop?
- Will key employees leave?
- Will they disrupt the process?
- How will I replace any that leave when the business is for sale?
These questions, and more will be out in force.
Given that the large majority of private sales processes do not end in a transaction, the long term impact of a failed process can be significant.
Is it better to take employees into your confidence, and include them in the process, giving them the opportunity to contribute, or better to keep quiet and hope they do not find out?
Employees in a medium sized business are generally close to each other. Rumour and assumptions that might impact them, accurate or otherwise, get around very quickly. It is also the case that employees are rarely stupid, they can see when the owner is getting near retirement, has had an approach, or just getting tired of the grind, and draw their own conclusions.
The stress of uncertainty is far more corrosive the certain knowledge of difficult things to come.
On several occasions, once in defiance of instructions, I have taken employees into my confidence when a plant has been nominated for closure. In every case, all I did was confirm what they suspected, and knowing the truth proved to be much better than the uncertainty of not knowing. In every case, the plant closure, or sale process has been greatly assisted by the employees, who now had a clear picture of what lay in front of them, and of the measures put in place to assist.
Similarly, I have been in several situations where the closure of a plant or sale of a business was kept as confidential as was humanly possible. In every case, the corrosive impact of the suspicion that something was up amongst employees greatly impacted the outcome negatively.
My recommendation: Always assume employees are not stupid, and that they will react positively to being taken into your confidence, and even assist the process, not just for your benefit, but for theirs. There are many examples around the world of the impact employees can have on the success of a business. I have been in a small way involved in several. The current poster-boy for employee engagement is Chobani founder and CEO Hamdi Ulukaya, who turned an old, broken yogurt plant in upstate New York into a global success by engaging employees, then told the story in this TED talk.
Cartoon credit: www.gapingvoid.com
Questions in cartoons
Sep 1, 2021 | Collaboration, Governance
Trust in our institutions is generally accepted as being on a slippery slide to zilch. I am certainly one who has loudly carried that message.
It is easy to say, but what are the essential elements of trust amongst a group?
If you look up the wisdom of Dr. Google, you will see a library of articles, posts and opinion that varies in the words used, but when boiled down, are saying pretty much the same 7 things.
Trust that others have your back. When things go wrong, you will not be left to carry the burden yourself.
Trust in common values and objectives. This implies that the values and objectives are an outcome of the group, rather than having them imposed on the group. Objectives and values can be superficially common, as in a group put together for some specific task. However, those objectives and values will not necessarily be shared, which comes from the interactions of the group with each other over time.
Trust that we will keep each other’s confidences. Inability to keep confidences indicates a lack of integrity, poison to any level of trust.
Trust in our willingness to learn from each other. This is a two way street, and is not driven by artificial hierarchy such as position on the organisation chart.
Trust that people will do as they say they will do. No further explanation required.
Trust that we are free to express our views and ideas. Often, we refer to ‘psychological safety’ as if it were a fence constructed in some way to keep the nasties out. However, it is a fence only in our individual and collective minds, but is critical to building relationships.
Trust that we are able to be critical without being personal. We need to be able to be tough on our friends, without damaging the foundations of friendship and respect. Commonly I refer to this as ‘transparency’. It is not inconsistent with the requirement to be sure that confidences will be kept, it is more a foundation that enables those critical confidences to be shared and kept. Nothing is as corrosive as uncertainty, whether it be about your performance of a task, or how long it will take for the taxi to get to you.
In an HBR article from February 2019, the authors cited three elements a leader must have to hold the trust of those for whom he/she is responsible:
Positive relationships. Meaning a leader must demonstrate empathy, balance results with concern for people, resolve conflict as it occurs, and deliver honest and helpful feedback.
Good judgement and Expertise. People being led will be willingly led, as distinct from managed by someone who demonstrates good and consistent judgement in decision making, seeks and absorbs the opinions of others, and has the expertise relevant to the task.
Consistency. This is simply walking the talk, following through, setting a good example, and being prepared to do what is necessary.
To my mind, the 7 elements cited above contain these three, with a perspective that is a bit closer to the sorts of situations individuals find themselves in over the course of time. They are more specific, less generic than the three cited in the HBR article.
I recently heard a definition of the point at which you have a ‘group’ that is more than an assembly of people looking to achieve a defined outcome, which I like:
“A group is when you do not need to look around to know everyone is doing the right thing, but you do look around to see that everyone is OK’
Cartoon header courtesy www.gapinvoid.com
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 28, 2021 | Collaboration, Marketing, Sales
In many major companies, there has been a number of new positions created in the last decade to try and accommodate the changes in the strategic and competitive environment.
Among them has been the ‘Chief Revenue Officer’ (CRO)
In some cases, this reflects the need for increased collaboration and sometimes convergence of marketing and sales. In others, it is just the fashion, the latest management fad.
This seems to be particularly the case in businesses where another of those-acronym driven fads has evolved, ABM, (Account Based Marketing)
The barriers to the integration of Marketing and Sales are high, and deeply set into the functional status quo of most organisations, and highly resistant to change. However, the emergence of digital tools has accelerated the trend, and the recent Covid challenges have been a catalyst for further and quicker evolution than would otherwise have been the case.
For years I have been advocating ‘Alignment’ of marketing and sales to the needs of specific customers, and the ways to achieve that outcome.
Removing the Marketing and Sales labels has proved to be useful to the integration. The emerging combined function recognises that the responsibility of each is simply Revenue Generation, or ‘RevGen’
The first substantial consulting assignment I had 25 years ago introduced my client, a domestically owned multinational supplier of ingredients to the food industry, to Strategic Key Account Management. (SKAM)
We went through a process of identifying the specific needs of key customers, and tailored our marketing and sales effort, to the expressed and often jointly uncovered needs of customers, with whom we engaged in the process.
Those workshops and subsequent implementation efforts are as relevant now as they were 25 years ago, probably more so. It is now just a component of Revenue Generation, a descriptor of the best way to make profits by delivering value to customers.
The core assumption of SKAM is that that only by doing one or more of the following, could we be successful.
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- Assisting our customers to increase their sales,
- Actively reducing their costs,
- Increasing their productivity.
We set ourselves the task of identifying how we could achieve at least one of those three things, preferably two, and focussed our efforts on delivering those outcomes.
Predictably, it was a successful initiative, customers loved the collaboration. Inventory levels reduced, as customer service levels and responsiveness increased, generating increased trading profits.
Perhaps it was too successful, as the business was then sold by its parent company, at a very high multiple to a multinational competitor.
