The cost of a fact free media

The cost of a fact free media

Jan 29, 2019 | Communication, Governance

EEEERRRRHHHHH

Excuse me, I just threw up on myself after being assaulted by another ad by a fat billionaire exhorting me to ‘Make Australia Great Again’ by voting for him and his dodgy party.

That nasty experience got me wondering about the nature of advertising in the digital world.

While we have people in Canberra who still think that regulating for diversity in media ownership is a thing on which they should  be spending time, Google, Facebook , and Alibaba (the latter almost exclusively in China) have sucked up 62% of the worlds digital ad spend of US 327 billion, last year.  Bringing up the rear is a rapidly improving Amazon, aggressively chasing a bigger share of this largess. These huge numbers leave what is left of the rest of the media, particularly the ‘old media’,  scrabbling to pay the rent.

The owners of the ‘Old’ media which interrupted me with the ad that started this thought are no doubt pleased to have the fat billionaire as a paying customer. Their priority is to  get the dollars in any way they can, to pay the rent, not make judgements on the veracity of the claims made by their advertisers. Facebook also faces this problem of fact neutrality, magnified geometrically by the reach and ‘stickiness’ of the platform, combined with its capacity to target and deliver messages to a very specific audience . 

However, our society has been built, at least to some extent, on the foundation of a free and diverse press that has the funds and bottle to be the ‘policemen’ of the standards and performance of those in power, political and corporate.

These media businesses have largely disappeared in the last decade, overwhelmed by the shift of advertising dollars, the foundations of their business, to digital outlets.

This has left the place without any police.

Look no further than the 2 recent Royal Commissions for any evidence you may need. If it was not for Kate McClymont, and a very few other investigative journalists with a passion for the truth, and the now defunct Sydney Morning Herald, these two rocks would not have been kicked over. The roaches hiding underneath would still be free to engage in their brand of hyper-hypocrisy, with most of us unaware of their corrosive and immoral activities.

Advertising funded investigative journalism via a neutral and responsible press is almost dead in this country. Without it we are deprived of the major driver of publicly minded behaviour.  We want, and need corporations to be publicly minded, to act in the best interests of  the community they serve. However nice those words may be, the officers of corporations are charged with the responsibility to deliver shareholder returns, and generally they do so without reference to the long term public good. The corollary is that personal agendas, and greed,  also get a very solid run.

We have conferences and forums where these corporate officers and politicians tell us what they are doing for us. However, the reality is they are mostly reading from a PR script, while attending a firefighting conference that only invites arsonists.

Advertising is increasingly becoming a tax on the poor, those who cannot afford to pay to be ad free. All this does is add weight to the confirmation bias we all have by removing any contrary voice that we may have seen and heard in the past.

That emasculation of media, the demise of a broad based, investigative and community minded press has consequences for the amount, type and quality of public debate, none of which I like.

Cartoon credit: Hugh McLeod at gapingvoid.com

How can a bureaucracy be intelligent?

How can a bureaucracy be intelligent?

Jan 11, 2019 | Governance, Management

 

Bureaucracies evolved as a means to assemble and deploy the resources necessary to do a job.

As organizations grew, so did the bureaucracies that supported them grow in sympathy. Somewhere along the way, size gets in the way of efficiency.

An organisation of 20 people requires an organising template, a bureaucracy of a sort. However, the people all know each other, so the ‘rules’ do not inhibit communication, everyone knows what they need to know and do via the personal networks.

Go to an organisation of 100 people, particularly when they are not co-located, and the social system starts breaking  down, being substituted by communication within the walls of every persons place in the functional hierarchy. We tend to see up and down the silo, rather than between people who need a piece of information.

Once you get to a large organisation, the bureaucratic silos have become impenetrable barriers.

Technology has given us the answer, as used well, it empowers the  personal networks in a highly leveraged manner. However, to be cross functionally successful, the culture within the organisation has to change, as the personal networks cannot break down the silos by themselves. To do that, leadership is required, making it explicit that functional responsibility is no longer the only relevant factor, in fact it is the lesser of  two responsibilities.

The first is to the success of the organisation, measured by the delivery of outcomes, followed  by the functional responsibility.

It is every persons individual responsibility to ensure that those who need the information others  have are in a positon to get it and use it without the bureaucratic silos getting in the way.

Achieve this, and you will have combined the scale that is enabled by functional silos, with the agility of small groups.

An Intelligent bureaucracy!

Wouldn’t that be nice to see?

Do not make resolutions, set goals.

Do not make resolutions, set goals.

Dec 31, 2018 | Governance, Marketing, Strategy

It is the morning of the last day of 2018.

Tonight most of us will gather with friends and family, watch the fireworks, have a few sherbets, and consider what 2019 might bring.

Some of us will make New Year’s resolutions.

Things we decide to do to change our lives, some will be tiny, others huge, most will be things we have had in our minds for some time, and new year’s eve is the traditional time to trot them out (again) for a moment of feel-good.

Most will be discarded a few days into January.

If we know anything about resolutions, it is that they fail unless there is a clear path towards the achievement, and usually we call them goals, or objectives.  

‘Resolutions’ are even easier to discard than goals.

To achieve a goal, there are a few simple steps:

  • It needs to be worthwhile.
  • There needs to be a clear path towards the achievement made up of incremental steps that are individually achievable.
  • We need to be committed to the goal. Hope is not a strategy, we need to be serious and commit.
  • There needs to be performance measures along the way so we can see progress, measure what works and what does not, and adjust as necessary.
  • Be public. Public goals are way better than private ones, let others know, and you will be more committed.

Take those steps, and your chances increase.

Some ‘resolutions’ do not fit the typical path above, such as giving up smoking.

Every smoker and former smoker I know failed many times to give up, and giving up smoking incrementally does not work. When I gave up, 35 years ago, I used a simpler method. I did not give up smoking, again, as doing so had failed comprehensively many times, and is a deprivation, something none of us like. I took up ‘non-smoking,’ a practice that had seen me happy and healthy in the past. It worked; it was a positive goal, not a negative one.

Try seeing your New Year’s goals as positives, things to which you aspire, things that make you feel good, rather than focusing on the negatives.

Don’t set out to deprive yourself.

Have a great 2019, see you there.

The where, why and how of enterprise value creation.

The where, why and how of enterprise value creation.

Dec 17, 2018 | Governance, Management, Strategy

 

The balance sheet of an enterprise is a snapshot in time of the financial value of an enterprise. The comparison of balance sheets over time delivers a picture of the value creation, or destruction, of the enterprise over time.
The ‘Financial trio’ Balance sheet, Profit & Loss, and cash flow, together generate a picture of the performance of an enterprise, and are the foundations of performance management.
However, these are not enough for a thoughtful management.
To build a clear picture of the intrinsic value of a business, we need to look beyond the financial accounts, to the ability of the business to create sustainable value for customers. In other words, provide solutions to problems that cost less than the amount customers are prepared to pay for those solutions.
Therefore a closer look at the parameters of value may be useful.

Value cycles.
When the return on capital exceeds the cost of that capital in a given period, value has been created. Looking at the cycles in isolation can give a distorted picture, driven by seasonal sales mix, competitive activity, operational changes, product launches, and many other factors. These cycles always have in them a mixture of the short term challenges faced, and the longer term factors almost always driven by trends external to the business, such as technology adoption, regulatory changes, and the emergence of new competitive business models. Understanding the cycles of value creation and consumption can assist not only in smoothing them out, but doubling down on the good times, hunkering down in the bad, and ensuring that your strategic thinking is tuned to the evolution of the external environment.

Where is value created or consumed.
This can be pretty granular to geographies, product lines, market segments, brands, and so on. Understanding the variations, and applying pressure to them can dramatically increase the average value creation by isolating areas where it is routinely being destroyed, and fixing them. In many instances, the value destruction in the short term is deliberate in an effort to build value for the future. However, often the destruction is unseen in the mix of activities in every business. Innovation is in the short term generally a value destroying activity, but essential to the long term value creation, and this is a delicate balance that requires a strategic framework to be consistently applied to the allocation of resources.

Why is value created.
Linking the creation or destruction of value to specific assets and capabilities, again delivers the opportunity to optimise the investments you make. What makes you sufficiently different that you can create value? Is it short term or is it longer term, and how do you maintain the momentum, as superior value creation always attracts competitive capital in time.

How is value created.
Very simple to say, but hard to do. Value creation always comes down to solving a problem, or creating an advantage, for an individual, group, or enterprise.

Market position and long term decision-making obviously play a key role in value creation, and none of this happens by accident or over a short term. It is tangled up in your relative market position, the evolution of the market you are in over the lifespan of the market, and your competitive position in that market.
This sort of analysis enables a complete picture to be put together. If you have enough information to make judgement about your major competitors, those that might emerge from the pack, and those from the sidelines which are usually missed, this will inform the decisions you make that will impact on future value creation.

The root of all this is strategy.

The golden rule of marketing in regulated markets.

The golden rule of marketing in regulated markets.

Dec 13, 2018 | Governance, Management, Strategy

‘He who has the gold makes the rules’

I had to go to Sydney airport last week, and needed to park for a while, the plane was late.
It almost required an extension of the limit on my credit card.

It was just another brush with the cost of doing business with someone who has the inside running in a regulated market that I have had the misfortune to tangle with over the last few months. In this case, the airport is a monopoly, that was privatised. Governments seem to think that when they sell off a public asset to the private sector, the buyer will continue to price it at ‘social’ levels. They then act all surprised when the new owner with the regulated monopoly suddenly starts pricing at monopoly levels.

Consider what has happened to your power bills since the ‘privatisation’ process kicked in. Pretty obvious that the sale process included some sort of ring-fencing of competition to beef up the price so the press release looked better, as in the case of the sale of Port Botany and Port Kembla now being brought to court by the ACCC.

Pretty much all markets are regulated to some degree, from a very little to a whole lot, on top of the basics of incorporation, and paying taxes (which seems to be increasingly optional for MNC’s). Adding to the complication, there are three levels of government in this country all regulating different things in different ways creating an alphabet soup of bodies that have to be navigated before you can trade.

In highly regulated markets, it is reasonable to assume that most if not all incumbents will move aggressively and creatively to protect what they have. Claims of public interest, safety, loss of employment, are common, and are generally the reason the monopolies are there in the first place. However, what they have is a position that enables them to charge rent, rather than achieve success through a superior value proposition.

Understanding the structure of the rent seekers business model will help to see ways to invigorate or disrupt it.
The taxi industry is a classic. Around the world it was a regulated market that delivered regulated profits to the few who owned the licences, which therefore accrued a capital value, until Uber came along. Similarly, the milk industry in NSW was regulated until it became unmanageable to continue, and then there was a decade long 10 cents/litre levy to pay down the capital value of the regulated milk runs.

Having an understanding of who has the power in any market, the basis of that power, and the means by which it can be wielded, is vital to the construction of a viable business model and value proposition.

Header Photo credit: courtesy Jason Heller.

Focus delivers productivity

Focus delivers productivity

Dec 10, 2018 | Governance, Management, Uncategorized

When you fail to focus, you are scattering your capital.

Most importantly,  you scatter the vital Intellectual Capital it takes to succeed, as well as the financial capital that is a vital enabler of success.

Limited resources need to be focused on the point where they will do the most good, generate the most leverage.

The familiar investment advice to spread your investments, ‘do not put all your eggs in one basket’ holds when you are a passive financial investor.

However, when you are an active investor, not just of your financial resources, but of your limited time and energy, it is better to follow Andrew Carnegie’s advice to ‘Put all your eggs in the one basket, then do not take your eyes off the basket’

This advice holds equally as you consider your long term plans, what outcome do you truly want, to planning your day today. Ask yourself ‘What is the one thing I really need to get done today that will take me one step closer to the goal’

As Confucius is reported to have said somewhere around 500 BC, ‘Every journey starts with a single step’. That advice is as valid in today’s world as it was then, so make sure you take that step every day, and that it is one step closer to the goal.