Jan 25, 2016 | Collaboration
Wisdom.
Look at the good and bad decisions you have made, what led you to them?
What pressures were you under? Should you find yourself faced with the same set of circumstances again, would you now make the same decision?
Look at the decisions and moves your competitors have made, how did they work out?
What can you learn from them?
What about parallel industries, what went well, and what crashed and burned?
Of course, the most painful and therefore memorable source of wisdom is always your own mistakes. Learning from them creates wisdom, failing to learn is just stupid.
It all adds to the store of wisdom, an intangible asset of great value, but it takes time and energy to assemble, along with a healthy ability to recognise your own failings.
Do a good wisdom assembly job and the ROI will be astonishing.
However, It is possible to outsource, and in times of stress it makes great sense to do so.
Wisdom is hard-won, and there are those who will assist you apply theirs to your situation.
Call me for an injection of wisdom assembled over a long period of experience.
Dec 18, 2015 | Collaboration, Governance, Leadership, Strategy
Peter Drucker said something like “innovation is the only truly sustainable competitive advantage”.
Having just re-read his 1985 musings on Innovation and Entrepreneurship, after 20 or so years, the degree of his foresight is truly astonishing. It is great to finally have a Prime Minister who actually understands how to make a buck, and the strategic, commercial and competitive challenges of bringing new products to market. He may be one of the few in Canberra who do, but at least it is a fair start.
With much fanfare the Government on December 3 tabled in parliament a Senate report on ‘Australia’s innovation System‘ However, with the exception of Professor Roy Greens valuable contribution as an appendix, I see little of real value in the report beyond a few worthwhile observations and some useful changes to the tax treatment of entrepreneurial endeavours.
Our venerable Senators have had summarized for them documents (I wonder how much consideration these busy important people actually gave to the detail of the submissions) that may have started with some valuable ideas but which have been sanitised into a document long on rhetoric and disturbingly short on anything of value, which can only be delivered when someone asks the question “What now”?
As someone who has run an agency outsourced from the Federal bureaucracy charged with identifying and delivering innovation to a specific sector, I can attest from first hand just how powerful the cultural forces are against anything with even a hint of risk, change, or long term thinking in the now politicised public sector.
Successful innovation takes all three, plus a clear definition of the problems to be addressed.
There is little evidence of anything in the report that encourages me to think that the status quo will be truly challenged.
It is useful to look to successful models, and there are none more successful than the US since the second war. Most will now assume I am jumping to Google, Apple et al, but no. if you look deep enough you will see the hand of government at a deep level making very long term investments in basic science, building knowledge that the private sector then leverages with innovation into commercial products delivering new value.
A scientist named Vannevar Bush (no relation to the Bush pollies) was commissioned by President Roosevelt just before he died to report on what needed to be done to promote research and development and the commercial innovation it drives, just as this senate inquiry has done. Bush reported to president Truman in 1945, delivering his report, “Science, the Endless Frontier” which laid out the proposition:
“Basic research leads to new technology. It provides scientific capital. It creates a fund from which the practical application of knowledge must be drawn”.
Directly resulting from this report was the National Science Foundation. Defence Advanced Research Projects Agency DARPA and several other institutes charged with the charter to do basic science, of discovering new knowledge.
When you look at all the products disrupting industries up to today, and changing our lives, many if not most of them have their roots in the various agencies spawned by Bush’s farsighted ideas, and the ability of the scientific agencies concerned to outlive the political cycle.
Now compare that to Australia’s situation.
CSIRO used to be a great agency, capable of developing technology like the wireless technology in the 90’s now in every mobile phone after years on the shelf until a commercial use with smartphones was found. Scientific Capital at work.
Now CSIRO is a politicised dysfunctional rump of its former self, with a little of the funding ripped out over the last 20 years of hubris restored via this latest in a long line of Innovation “initiatives” to the sounds of grateful clapping. I see few practical remedies for the past 20 years of innovation vandalism being actually addressed, although at least a real start may have been made.
As I always say in workshops, “the best time to start an innovation initiative was 10 years ago, the second best time is now”.
Lets hope it is not too late for Australian manufacturing.
Oct 16, 2015 | Collaboration, Customers, Marketing, Small business
local business is your business
Small business owners seem always struggle to find the ways to build their business. B2B, B2C, does not matter, the challenges are similar.
How do you identify, engage, then build towards a transaction and relationship with people to whom your product or service solves a problem, and adds value too their lives?.
In my local area, there are a significant number of networking groups, ranging from community based ones to expensive franchise operations. I am a member of two groups, plus a local chamber of commerce. It takes work, but they do deliver results. In observing the behaviour in these groups of those who are successful, there are some pretty common things that can most small businesses can learn to do better.
1. Elevator Pitch. It amazes me how few can state in a few words what they do, what problems they solves, what outcomes can be achieved, and why their services are worth consideration. It should not be hard, but it is. Developing a good elevator pitch should be a priority.
2. Think local. Most small businesses find most of their business in the local area. It seems therefore to make sense to invest in the activities of the local area, from being a voice in the community groups such as Rotary, to sponsoring the local kids sporting teams with playing gear. A little bit of time and effort, but very little money can go a long way in a community.
3. Be vocal. Communities offer all sorts of ways to engage and make it clear what you stand for. A builder might be a protector of the architectural heritage of an area, the local sports store agitate to turn the local dump into playing fields, a bike shop might be the lead voice in having some waste land rezoned to enable building a bike track. The list can be as long as your imagination.
4. Collaborate. Locasl can build scale by collaborating, cross promoting, and assisting each other in all sorts of ways. Again, being open to ideas and opportunities can reap large rewards. My local bottle shop holds tastings on a fairly regular basis. They secure the time of the winemaker of a high quality small winery, who then takes a small group through the current releases, a vertical tasting, or whatever is appropriate, and over the course of the evening, the Japanese café next door delivers some terrific ‘nibblies’ Everyone wins.
5. Leverage the network. Local networking groups of various types do deliver value, but like all things of value, success only comes with work. Others need to understand what you do, how you deliver value, why they should use you instead of an alternative, they need to find common ground and build some trust. Going to the meetings is just the start.
6. Referrals. An adjunct to the networking activity, it pays to ask for the job, or referrals. Network theory clearly demonstrates that the networks of those in your network are the most potent source of leads there is. Many people feel that asking for a referral is not good form, remove that notion from your mind. Members of a networking group are all there for the same reason, to build their business, so they will not mind, and so long as you are prepared to reciprocate.
7. Offers. Offering an incentive of some sort always helps. A friend runs a small suburban bistro, open 6 days a week. He is booked solid Friday, Saturday, and Sunday evenings, but has to carry the overheads of being open and able to provide services at other times. He is always creating offers of his slow times, two for one, a bottle of champagne on the table, cakes for birthdays, on and on, in order to get bums in seats in the slow times, and as a result has a thriving business, with many repeat customers across the week.
All this stuff can be done as a part of your general marketing activities, it adds a critical personal dimension very challenging and expensive to achieve with any form of media. The range of options for small businesses has never been wider, and never forget that people buy from people far more than they buy from businesses.
Apr 13, 2015 | Collaboration, Small business
Collaboration
Small businesses have 10 strategies I have previously summarised, that they can deploy in various ways to build success with the retail gorillas. Collaboration is the 7th, and often the most challenging, as the other parties to the collaboration are not by definition, under your control.
Successful collaboration relies, when all the jargon is scraped away, on both parties recognising at all levels where the collaboration ‘touches’ each other, that their individual best interests are best served by serving the best interests of the collaboration.
Having just claimed to have scraped away the jargon, that is a mouthful. However, the idea of the ‘commons‘ must be central to any collaborative exercise.
A key component of supermarkets business model is the reduction of transaction costs. They only want to deal with large suppliers, as it reduces their supply chain costs per transaction, delivering substantial efficiencies. It therefore follows that suppliers collaborating to generate the economies of scale to enable them to play by the supermarket rules, makes sense.
The flip side of course is that supermarkets use their power to get the best deal for themselves, subjecting suppliers to an ongoing game best described by the prisoners dilemma. In effect, if you do not give them what they are currently demanding, they will find a supplier who will.
Small suppliers to supermarkets have to find ways to apply some leverage to their opportunities. Collaborating to reduce various forms of transaction and supply chain costs , and marketing, as well as pooling data and data capabilities are logical if challenging tasks.
Many produce suppliers have found ways to collaborate, but their produce is unbranded, and commoditised by retailers, so they lack the consumer leverage that is enabled by a brand.
Branded packaged goods may have some consumer leverage, but collaborating with their competitors for shelf space if not for the consumers dollar is enormously challenging, but nevertheless possible.
Digital tools now make the communication component of a collaboration, which is profoundly important, relatively easy if the will is there.
Opportunities fall in three main areas:
- Supply chain. Collaboration to buy common inputs like boxes, freight, and commodity ingredient purchases like sugar, are increasingly common, particularly in regional areas where you have a number of small suppliers close by, all subjected to distance loadings of some sort. Contract packing a complete product is increasingly being used as it removes the need for investment by the marketer, and utilises unused capacity for the packer.
- Data acquisition, management and analysis. Lots of variations here, but everyone needs data to participate, even in the most basic of category and performance reviews. Scan data acquisition is challenging as there are revenues and margins attached to both the retailers and their data wholesalers that will be protected. However, when that hurdle is run, managing data is an activity that responds well to scale as the costs are in the overheads, the marginal costs of data management are very small, and can all be outsourced. Data analysis is more challenging, but interpretations of data can be very specific. Turning data into useable market intelligence is the end game, and is not necessarily compromised by collaboration on the basic components, acquisition of raw scan data, storage and distribution of the data, and even generic information like market sizes, share movements, category drivers, and the like.
- Marketing. Collaboration in marketing efforts need to explicitly exclude any hint of price collaboration, collusion, which of course is illegal. However, there are numerous ways small businesses can collaborate in their marketing programs to compete, not only reducing their costs but also increasing their opportunity to appeal to customers. Complementary products, joint promotions of various types and locations, collaborative and complementary media placement, the list of possibilities is limited only by imagination. There are complications of packaging, product numbers, and the rest, but they can be relatively easily overcome.
The real challenge is to visualise the future, see industries and their structures in new and different ways, and to recognise the opportunities that are there, and find collaborative ways to leverage them.
Mar 23, 2015 | Collaboration, Innovation, Leadership, Management, Strategy
Plan backwards
All sorts of planning activity is aimed at defining the point where we want to be, then assembling the resources and capabilities to get there.
That is how planning is done, almost always, because by and large, it seems to work, and it keeps the spectator crowd happy.
Libraries have been written that describe all sorts of methods and models that can be used. They can be very useful and thought provoking, providing a framework to help articulate the factors that will impact the business, and the options you have in responding, but they rarely offer an antidote to the malaise affecting the development of really distinctive capabilities, genuinely new products, processes and business models.
The real innovations, the things that change everything seem to come from a different place, “left field” being the most common description.
Most planning ends up being just an extrapolation of the past, despite the well meaning and significant effort to make it something else.
Perhaps a better way is to put yourself in the future place, then work backwards, identifying the steps that need to have been taken to reach the point where in your mind, you are now.
Be specific about the end, articulate it clearly, and then “Plan Backwards” by considering the factors that delivered value for you. I generally call this process ‘Hindsight Planning’.
- What did you do that worked, and conversely, what might you have done that did not work?
- What capabilities did you need to develop?
- What trends drove changes to the industry you were able to leverage?
- Where did the technical innovations you leveraged come from?
- Which markets and customers were successfully addressed?
- What big customer issues were addressed?
- What did the business model(s) you used look like?
- And finally, How were you able to extract value for all these things?
This sort of analysis, if it is to lead to a positive outcome, requires that you recognise and deal with two types of barriers:
Management barriers.
People like consistency and predictability, so when the forecast future looks very like the past, just a bit blurry, they are happy with it, endorse it, and resource it. By contrast, being the harbinger of change that will affect the status quo is no way to get ahead in most organisations. However, it remains a truth that the future never looks the same as the past, no matter how much we would like it to be so.
- Idea averaging. Management absorbs and usually just “averages” or applies committee thinking to a good idea, but at worst, just rejects them for a range of reasons that sound absurd and utterly naive with the benefit of hindsight. Existing businesses are rooted in the networks and frameworks required to make them successful today, and are usually intolerant of new things that involve risk. Usually successful incumbents are well evolved, so are resistant to change, their current way has enabled the current business to be successful, why change? There are many examples of this phenomena, Kodak being a standout, Polaroid another, Cobb & Co another. The current attempts by the taxi industry to resist the encroachment of Uber in my hometown, Sydney, is an example unfolding, and the music industry prosecuting their customers for using their products is an example of one that is just about folded.
- New business models. The successful commercial execution of a real innovation generally requires some new way of delivering the value to customers and extracting value for the suppliers. In short, a new business model. Industry incumbents rarely completely disrupt themselves, by definition, they have too much to lose. Therefore, there needs to be new strategies and supporting business models developed by those outside or on the fringes in some way of an industry. Uber and Apple came from way outside the industries they disrupted, and can you imagine Hilton, or Accor funding that mad idea AirBnB that was gong to crucify their budget tourist dollars?
- The Profit paradox. Profit is counted by looking backwards rather than forward, rewards came after the fact. Forecasting profit, or “fortune telling” is inherently risky, as the only think you know for sure is that you will be wrong, the real question is by how much, but the consequences of getting this brand of fortune telling wrong are significant. However, in the long term, you are only truly profitable if your returns are greater than the cost of capital. If they are equal, you may as well put your money in the bank, because it is safe, less than that and you are long term destroying capital. This simple fact is ignored in almost every profit forecast, statement or review I have ever seen. The conundrum is that to generate a return greater than the cost of capital you must take risks and do stuff differently, some of which will not work out, or only work out in the long term, therefore risking the current profit. It is pretty easy to ramp up the profit made today at the expense of tomorrow, but in this case, tomorrow does actually come.
Creative barriers.
Creative barriers evolve around points of the assembly of ideas, where information, insight, experience, are mixed up to create the otherwise unlikely connections that are the foundation of a creative solution to a problem, situation, or challenge. These are the barriers that most businesses try and get around by the off site strategic planning sessions that rarely seem to be able to deliver the promise of the day. The energy and drive in the workshop room gets absorbed by the day to day of being back in the business. Removal of the barriers is a high priority challenge for management.
The barriers to creativity are many and varied, often overlapping in many places. Following is a ‘brain-dump’ list of the ones I consistently find.
- No commitment from the ‘top’
- It is not OK to be wrong.
- Give up too easily. Edison’s famous quote “Now I know 999 ways that do not work” whilst experimenting to develop the lightbulb resonates still.
- Creativity is hard to quantify, and is therefore often not measured. The old adage what gets measured gets done is right, so creativity is extinguished.
- Lack of resources, time, equipment, money, are all used as excuses for being too willing just to accept the status quo.
- Enterprise culture eliminates risk as far as possible, and creativity is inherently risky and “out there”.
- Rules rule. Particularly in public enterprises, and creativity is not in the rules.
- Challenging orthodoxies, assumptions and the status quo is frowned upon.
- Lack of what I call ‘environmental intelligence’ or an understanding of the macro trends and individual movements in the commercial and strategic environment in which you compete. Seeing trends that impact an enterprise, and their intersections is a rich source of creativity.
- Lack of discipline. Perhaps counter intuitively, creativity includes a range of activities that if subject to some disciplined and focused thinking can deliver great results.
- Not having the right people. Creativity is perhaps the most collaborative of human activities, well, almost. Not having the right people is a commonly owned albatross.
- Everyone can say “no”. Formal layers of approval for ideas act on creativity like a wet blanket on a campfire.
- Creativity is not a required contribution from everyone, it is assumed to be the product only of the young, or the marketing department, of the boss’s wife. Creativity should be everyone’s job!
I could go on, the list is huge, it is a wonder that creativity survives at all given the barriers.
An idea is the outcome of all that has gone before, and the triggers around at any given time, rarely is it the ‘Eureka’ moment. Ray Kurzweil who has a stellar track record in seeing the future in technology believes we need to become comfortable with what he calls “Hybrid thinking” and I can only agree but see that the ideas he articulates have a far greater range than just creativity and innovation in technology.
Jan 19, 2015 | Collaboration, Communication, Small business
Great communication is a two way street!
Working with a colleague over Christmas to assist in the development of a presentation that was a really important opportunity to build her personal brand with the audience. Creating presentations that work is a process, and hard work, so to start, we broke the task of building the presentation down into three components.
- Twitter Pitch. Twitter has its detractors, but the huge unintended benefit for those communicating ideas as distinct from the minutiae of their lives is that it forcse us to distill ideas into 140 characters, what I call the” twitter pitch“. Applying this discipline to the preparation of a presentation is usually the same sort of challenge as presented by developing the elevator pitch for your business. In this case, the challenge was to articulate in one sentence the central idea that was to be conveyed. Not easy.
- Know what you want to happen. Clarifying this really has three parts:
- Define what it is that you want the audience to know as a result of the presentation
- Know what you want the audience to feel during and after the presentation
- Know exactly what it is you want them to do with the information you provide, and deliver them the means to do it. A “call to action” if you like.
- Create a structure for the presentation that delivers on the points above. Again, there are three factors at work:
- Have a logical, sequential structure of some sort for the presentation.
- Gain the trust of the audience, listening but not believing is a waste of everyone’s time.
- Do it with feeling. People rarely remember facts, but they do clearly remember the emotions they felt while the facts were being recited. I do not remember the date of the assassination of JFK, but I do remember (yes, I am that bloody old) exactly what I was doing at the time, and how I and those around me reacted to the news.
Delivering a presentation is a difficult to obtain opportunity to sell. An idea, a product, your skills, the reason your business exists, it varies, but the common point is that those in the room have given you their time and attention, their most valuable resource, don’t waste it for them, and miss the opportunity for you.
On a final note, you may also notice that all of the above is in “threes”. For some reason I do not understand, the human brain is very efficient at remembering things in threes. If you organise your presentation into blocks of threes, you will be better able to manage the flow, remember the sequences and words, and deliver.
None of this is easy, and rarely is a great presentation prepared alone, and it is never done at the last moment and without practise and a critical eye.
Need a critical eye, and sounding board? I can help.
