Have we reached a moral watershed with private data?

Have we reached a moral watershed with private data?

Apr 20, 2018 | Governance, Leadership

Privacy has been a question on the table for some time, pretty much since the dawn of the digital age. However, there has always been a deep paradox between what was generally said, indeed legislated for, and what we did.

The aspect rarely considered is the moral one.

For a moral stance to be effective, it must be proactive, rather than  reactive.

Legislation is reactive, protecting us against ourselves, usually because we are unable or too stupid to protect ourselves, and in this country  we have a library of laws just about discrimination, just a small sector of the regulation of how we live our lives.

This is the case with the digital privacy conundrum. Well meaning, clogging the system with legislative plaque, much of which is ineffective, and getting in the way of people having to make moral and usually sensible decisions,

Where is the moral line in the sand as regards our personal data and the social platforms we all use?

There is a difference between selling data, which none of the better known platforms like Facebook would do, and enabling that data to be used in a manner that you have at least tacitly agreed to by its provision. It may be a fine line to some, but the line is there, as the choice to give the data is yours, only you can make it.

Most do  not seem to realise, or choose to ignore the fact that the free platforms they use are not really free. The price is access to their personal data which the platform uses to target advertising, which they need to make it free.

While we struggle to share potentially life saving information in domains like healthcare, in case our friends found out we had a cold, we lavished personal and often highly sensitive information onto digital platforms, for use as a way to attract advertisers, so they can blast us with specific and personalised messages to buy their stuff. The first situation is as stupid as the second.

When faced with a problem of Gordian proportions, never trust the guy with a simple answer, especially when they have something to sell you. Unravelling the knot we have got ourselves into with privacy is such a Gordian knot.

The many data breaches and sheer commercialisation of our data, highlighted with the Facebook/Cambridge analytica fiasco recently have perhaps brought things to  a head, but it just keeps on coming. Grindr’s problems over the past week with data security and just plain lying, are just another in a long line, that will keep on coming as long as we post stuff.

Corporations, and their directors have to navigate a way through this maze of inconsistency, public good Vs individual rights, and the primal urge to legislate that seems to drive what passes for political discourse.

A  simple test for individuals: If you would not want to see it on the front page of the Sydney Morning Herald (showing my age there) do not post it!

 

Photo credit: Angelo DeSantis via Flikr

 

The two crucial leading indicators of business performance.

The two crucial leading indicators of business performance.

Apr 18, 2018 | Governance, Management, Small business

‘Simplicity is the ultimate sophistication’. So said Steve Jobs and he was not only right, but just one of a long line of people saying similar things.

Aristotle, Marcus Aurelius, Mark Twain, and my personal favourite, a marketing guru of great stature, although known for other things, who said ‘Everything should be as simple as possible, no simpler’. Albert Einstein.

It is also very useful to have a few simple but reliable forecast measures that give you a ‘heads-up’ about rough waters ahead.

Therefore when doing a StrategyAudit of a business, I try to distil everything down to its most simple form. That way not only can most (including me) understand it, but there is less room for error, misunderstanding, evasion, finger pointing, and all  the rest that goes on.

Two words capture the essence of a successful business, irrespective of size, structure, location and market. Having done many StrategyAudits, using a whole range of tools, some simple, some pretty sophisticated, there are just two words that underpin everything.

‘Cash’ and ‘Flow’.

Let me explain.

Cash.

Cash is the lifeblood of every business. Every activity, in one way or another is connected to the consumption or generation of cash. When you are doing something that is not contributing in a positive way to cash generation, even if it costs cash (such as advertising), stop. It does not matter how grand the vision, how well meaning the mission, how creative the advertising, how innovative the products, unless it generates cash in excess of its cost, stop.

So, I look at the cash. How it is managed, committed, deployed, forecast, leveraged, and disbursed.

The three fundamental parts of an accounting system are the cash flow statements, Profit and Loss statement, and Balance Sheet.  Both the P&L and Balance Sheet can be ‘managed,’ just look at Enron, Dick Smith, FAI insurance, State Bank of SA, One-Tel, and a host of others for proof. However, look closely at the Cash Flow, and without sophisticated fraud, it cannot be ‘managed’, and if there is fraud, a close look will reveal it fairly quickly to an experienced eye.

Probably the easiest way of judging the health of a business is to look at free cash flow. Cash coming in – cash going out, excluding capital expenditure. If positive, at least there is some hope, negative, start resuscitation immediately, or run for the lifeboats. This assumes a reasonable period of time. My recommendation to most clients is a rolling 13 weeks. Long enough to be somewhat immune from the day to day stuff, but short enough to give a fair indication of the overall health of the place quickly while giving enough time for any necessary corrective action.

Every business I work with is strongly encouraged to do a weekly rolling 13 week cash flow forecast. Those that resist strongly usually end up former clients for one reason or another. Once set up, the routine makes it easy, takes little time, and removes a whole lot of stress.

Flow.

This is probably a bit unexpected, but when you think about it, every business is made up of many processes, sub processes, and sub, sub processes. Draw a ‘map’ of your sale to cash process, and there are a number of steps, preparation and dispatch of the order, proof of delivery, invoicing, supporting book-keeping steps, and debt collection. Similarly, all the processes in your business have stages, points at which there are necessary interventions, potential changes, interruptions, delays, mistakes, rework, and a myriad of admin things and performance measures that need to be completed.

Keep drawing process maps and see how they become entangled, are dependent and interdependent, and can create uncertainty, opacity, and opportunity for error, as well as being necessary to get the work done.

I think about flow as you would a river. Water flows smoothly and predictably while there is no interference, but insert a rock, or bend, or shallow bits, and there is interruption to the flow. The greater the interruption, the more unpredictable the flow, and the more energy is required to move the water through. The velocity of the water through a part of the river is a measure of the productivity of that part, and again, the greater the interruption, the less the productivity.

I therefore look at the ‘flow’ of processes through the business, and seek to simplify, and accelerate all of them by removing the ‘rapids’. It is an incremental and never ending task, but one that delivers great financial and emotional rewards. In most cases, there has been little process mapping done, so that becomes a priority in any improvement project, but the current state of the ‘Flow’ is a very good indicator of the health of the business.

When you need a bit of help considering these two crucial performance indicators, give me a call.

Is your mentor asking you these 8 key questions?

Is your mentor asking you these 8 key questions?

Apr 9, 2018 | Governance, Leadership, Uncategorized

Successful people can always point to one, or a few people who over the years have contributed to their success. A great mentor does not tell you what to do, or how to do it, rather they examine motivations, objectives and options to help you determine which path you will follow, then provide feedback and suggested options for consideration.

The tool of an effective mentor is searching, challenging, and enlightening questions.

What does success look like?

This is a question that adapts itself from the little tactical things, to the big strategic challenges that need to be defined and faced. Creating a conversation where the goals are articulated by the mentee  creates ownership in their minds. ‘Owning’ a challenging  goal is the first essential step in achieving it.

What do you want to be different in 3 years?

This question is a follow up and supporting question to  the first one, and it gives a time frame, a powerful motivator to action, as it requires commitment. Together these two questions add up to what I call ‘hindsight planning‘.

What are the major obstacles being faced.

The obstacles we face are a mix of personal, and commercial, identifying the shape of them is the first step to developing strategies to overcome them. Like any problem, and obstacle undefined is never addressed in an optimum manner.

How do we measure progress?

Having defined what success looks like, and identified the major roadblocks, you have to at some point act, and measure progress towards the goal. Fine words without the actions to achieve them are just hot air.

What can you control, and what is outside your control?

Focused effort on leveraging the variables under your control that deliver the outcomes you want,  is essential. However, ignoring the things you cannot control, is a huge mistake. The best you can do is see, and have a deep understanding of how these uncontrollable factors may impact on the performance of your businesses and achievement of key objectives. Then you should  plan to enable the leveraging of potential opportunities that may emerge, while mitigating the potential negatives.

What are the options available?.

Encouraging wide and analytical thinking is necessary in the face of complex problems. This is a question to be asked every day, in relation to every action. Dealing with any uncertainty is always helped by understanding the options available, and only committing when they have been analysed, and then only when you need to progress. The danger of course is that there is an over-consideration, which becomes procrastination.

What would you do next time?

Explicitly learning from experience separates the successful from the rest.  Conducting a formal ‘After Action review’, a term that evolved from  the US army learning processes is common in large businesses after a capital expenditure project is completed. Critical review of actual outcomes compared to the plan is far less common in non-financial areas than it should be. The discipline is a crucial one, from the major strategic decisions to the tactical and team based projects on a shop floor. Those familiar with process improvement often use the term  ‘Plan Do Check Act’ which is a core discipline of process improvement.

Tell me more.

This is always a question to apply in any situation where you are trying to uncover the motivations, cause and effect, and implications inherent in any situation. The simple act of asking the question  ensures that the one being questioned has another look at their preconceptions, and barriers.

When you think you might benefit from this kind of collaborative performance management, give me a call. After 40 years of doing it, I have learned a bit that may be of value yo you.

What do Mark Zuckerberg and Steve Smith have in common?

What do Mark Zuckerberg and Steve Smith have in common?

Apr 5, 2018 | Governance, Leadership

It seems on the surface little, but when you look at it more closely, a lot.

Both are (or were) leaders, who found themselves in that place through performance, and the promise of more to come.

Both are young, and you cannot put an old head on young shoulders, no matter how much you would like to, and how smart they might be.

Both are in the public spotlight, and have been for some time, without any real preparation.

Both are leading organisations in  which many of us have a lot of emotion invested.

Both are paid outrageous amounts of money. OK, Zuck is a multi billionaire, and Smith just has a lazy 10 mill or so in his accounts, but how much does one person really need?

Both have made unbelievably stupid decisions that have destroyed the trust most had in them and their institutions.

This led me to think about the questions a leader should ask themselves in their quiet moments, those  they have available for a bit of introspection.

How should we make smarter decisions?

What is the best way to get the job done?

What do we have to change?

What does success look like?

How will we prosper?

What disciplines need to be in place?

How do we attract customers?

How do we innovate and differentiate?

What really gets the job done?

What sacrifices do we need to make?

What does leadership mean to me?

How do we become the best we can be?

How do I want others to see me?

Pity they both did not subject themselves to these questions, and perhaps many others, before they forever dumped on themselves.

They did however ask themselves one of the key questions left, but came up with the wrong answer.

How will we win?

Mark of course can afford to retire, and do anything he likes, any time. I assume Steve can as well, should he choose to, although early retirement may not be what he planned, and the comfort of it may be compromised. I personally hope he does not, but waits out the ban, then regains his place in the test team on performance. I question however his right to ever again be captain, but the wisdom gained from current experience will be valuable to whoever may be so honoured.

 

 

 

Am I (as accused) just a cranky old curmudgeon?

Am I (as accused) just a cranky old curmudgeon?

Apr 3, 2018 | Governance, Leadership

SME network meetings can be very useful, and sometimes amusing, as well as being a considerable consumer of time and patience. They often seem to be infested with ‘life coaches’ and various brands of ‘personal coach’.

Coaching plays a crucial role in all our lives, our parents give it to us, those around us at work give it to us, our boss gives it to us, and if we are very lucky, we find at some point, or points in our lives, a mentor who is able to lift our performance significantly. Even Roger Federer, the greatest tennis player I have ever seen, has a coach.

However, at a network meeting I attended, I found myself chatting to someone who had a business in ‘corporate wellness’ who doubled as a ‘personal coach’ in everything from physical training, to it seemed, marriage counselling.

When asked, he was not able to define what a ‘Wellness coach’ did, and did not even have an elevator pitch that made any sense. It seemed he was there to make peoples life easy, help  them deal with stress, to anticipate stress and encourage practises that would help when stress came around again. It seems that he is doing OK, nicely dressed, a  nice car, but who knows, perhaps his mum gave them to him.

Maybe it is just me, but I failed to understand what he did, and why someone would pay him to do it.

When he finally asked me what I did, after blanketing me with fluffy bullshit for 10 minutes, I told him it was the same thing he did, but I had only two tools:

Communication and Transparency.

Communication.

Encourage and coach the leadership of businesses to ensure they have a coherent, well thought out strategy, along with the plans to implement and adjust as they manage their business across all the functional areas in as close to real time as possible. In addition, they have to accommodate the pressures from outside over which they have no control, but which will influence performance.  Then they need to communicate all that to everyone in the business, from top to bottom, so all know it, and understand it, relate,  and live to it.

Transparency

Transparency leads to accountability, due diligence and honesty, all of which adds up to trust.  It leads to understanding of what good performance of the business, their work groups and themselves specifically means, and what the impact of their performance has on others.

Easy.

Do all that and the need  for corporate wellness coaching goes away, as stress is managed and shared.

Recently I labelled myself a cranky old curmudgeon to a long term mate in a conversation after a ‘sherbet’ or two. He clarified by pointing out I had also been a cranky young curmudgeon. A bit harsh, although perhaps true, but I would prefer to call it ‘leadership’.

 

 

 

 What retailers can learn from the Game of Thrones

 What retailers can learn from the Game of Thrones

Mar 28, 2018 | Change, Governance, Leadership, Strategy

The ‘Game of Thrones’ series is an unlikely metaphor for Australian FMCG retail. There are however commonalities. Intrigue, politics, intense competition, vendettas, invasion by ‘wildlings,’ dumb decisions motivated by ego, desperate defence of the status quo, and more.

However, the world of retail is changing around us, just as did the world around Westeros, and potentially with similar bloody results.

The business model that has served so well since Piggly Wiggly invented the supermarket in 1916 is becoming redundant.

The incumbents are fighting to save the status quo, the invaders are looking everywhere for weaknesses to exploit, and the natives are restless, irritable, and open to offers.

All retailers, from the corner store to Walmart, Amazon, local farmers market, and the two Australian FMCG gorillas, Coles and Woolworths, work from a similar business model. All that changes in the model is the emphasis put on the different components.

StrategyAudit.com.au

All retailers are facing the pressure of change from the digital transformations of our world, what interests me specifically is the manner in which the Australian retailers are adapting, specifically Coles and Woolworths to the changes.

The gorillas consolidated their market power, still somewhere north of 70% by the relentless growth of market share through competitive pressure, and ruthless optimisation of their supply chains over time, leaving consumers with little option but to shop with them.

However, optimisation has a down side.

It breeds resistance to change, a dismissal of the minor disturbances that happen on the fringes, which are seen as little more than an irritation, unlikely to have any impact, and complacency. Just as Netflix was an irritation to Blockbuster, unlikely to be relevant, until it was, and then it was too late for Blockbuster.

It seems to me that the incumbents in Australia are paddling the same boat. Woolworths opened, then closed down Thomas Dux, in what I regard to be a great example of short sighted strategic stupidity, but at least they are consistent.  Then they botched in spades their foray into hardware with Masters, closing it down ironically as Wesfarmers buys into Homebase in the UK in an effort to spread the gospel of Bunnings. That did not turn out too well, Wesfarmers taking a $1.3 billion hit in February, and more recently announcing that the Coles business, apart from Bunnings and Officeworks would be flogged  off into a separate listed entity.

In other words, the incumbents are paddling around in the same warming pot as interlopers turn up the fire.

There is a lot going on at the fringes. Companies and technologies as varied as Amazon, Costco, Farmers markets, Harris Farm, Kaufland, various ‘pick your own’ schemes, organic, home delivery, and all the rest interrupt if not disrupt the market, and around the corner you have Alexa, AI, AR, Blockchain, personalised communications, Robomart, and who knows what else knocking at the door.

Optimising the existing model is coming to the end of its usefulness, the gorillas need to get out and get a bit messy.  They do not need to make huge bets as with Masters and Homebase, but they do need to clean out their own business model to make them easier to deal with, thus prolonging the profitability of their current investments, while building the retail model that will sustain into the future. If the best they can do is remodel an old crappy store into a very nice new one with better ranges, layout and lighting, as Woolworths has with Marrickville, then they are in trouble.

This is a big call, telling the future is not a productive pastime outside the circus tent, but having a lot of small bets on what it may look like would be useful. Take a long view, nurture some of the more looney ideas, and assume that the march of technology will not stop at a point of convenience for them, and one or two of the bets might turn out to be trumps. (whoops, not sure of I should use that word any more)

When I can help you consider the impact of all this change on your business, its profitability and longevity, get in touch, and I will be delighted to apply my knowledge and experience to solving your challenges.