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.

 

The formula for trust, and how to lose it.

The formula for trust, and how to lose it.

Mar 26, 2018 | Governance, Leadership

Building trust is a process, long term, incremental, and very fragile.

Trust given has always been earned, it is never just ‘given’. Sometimes trust applies to institutions.  We expect anyone holding office in an institution to act in particular ways that reflect the trust earned by those who have gone before.

This is why we no longer trust politicians, and many others in various forms of public life. Individuals have tainted the trust we have in the institution by their individual actions, and it affects all who are associated.

Reflecting yesterday on the disgraceful efforts of the so called leadership group of the Australian test team,  I felt personally let down, even somewhat soiled. Cricket seemed to be one of the last bastions of the  Australian ethos of tough, competitive fairness, and looking after your mates.

No longer. It is just another bunch of overpaid, self-interested ego driven dopes who do not deserve to wear the ‘baggy green,’ a symbol of what has gone before.

There is a formula for trust that I have applied to those with whom I work, encouraging them to think deeply about the components, then behave as the formula demands, every day.

Trust = credibility + reliability +Authenticity     divided by perceptions of self-interest.

Apply that formula to the current bunch and they fail, badly.

It is reasonable to think that the pressure of the moment got the better of their judgement, that deep down they are better than that, but then apply the formula, and the result tells a different story.

Steve Smith, perhaps the best batsman in a generation, will forever be remembered for this piece of stupidity, no matter what he has done, or will do, the decision to cheat will forever be an indelible stain on his reputation and credibility.

How can we trust him to lead an Australian icon.

Does he even deserve to remain in the team, irrespective of his prowess at the crease.

He is no longer a leader who we can trust, therefore he is no longer a leader, at best, just an incumbent.

The Kiwis, still smarting after the underarm bowling incident in 1981 will be laughing at us, and muttering ‘Told you so’

Cambridge Analytica and Facebook stretch the boundaries of digital privacy.. Further…Again

Cambridge Analytica and Facebook stretch the boundaries of digital privacy.. Further…Again

Mar 22, 2018 | Change, Governance, Strategy

The Channel 4 expose of Cambridge Analytica last week has started a firestorm of commentary.

Rightly so, but  is it not ironic that the tools CA used to swing the US presidential election are now being used against them after the tactics were revealed?

Facebook, and all the other digital platforms are just wholesalers of eyeballs, in business to collect then monetise their access to personal information, freely given. This how they make their money, exchanging access to the very detailed personal information they collect on their platform users, to advertisers for money.

I wonder if any of us should be surprised at the revelations? This is what they do with our cooperation. The problem in this case is that 50 million of the people whose data was skimmed did not know it was happening and had not given permission for it to happen.The tensions inside Facebook, and the other platforms, between those whose job it is to generate the revenue, and those charged with the responsibility for data security must make for some pretty lively conversations!

The access to the a wider set of eyeballs, via the downloading Apps, games, surveys, and the rest with ‘Friends permission‘ such as the popular game ‘Farmville’ enables access to the personal data of friends of those who are engaged. This Friends access allows ‘thousands of layers of personal information on millions of accounts‘ to be collected. That data was then analysed by Dr. Aleksandr Kogan using the principles developed by  the Psychometrics Centre at Cambridge University. Dr Kogan analysed the data collected for Cambridge Analytica, that had the objective of developing and delivering messages specifically targeted at an individual in order to move their voting behaviour.

Truly scary stuff, science fiction just a few years ago.

Facebook has since suspended Cambridge Analytica and associate SCL (Strategic Communication Laboratories) from facebook, while defending their own actions claiming ‘Protecting peoples information is at the heart of everything we do‘. Suspension is apparently, the ultimate sanction. I guess that we should all be grateful they are looking after our privacy so well, and not going out hawking it in the local bar.

Facebook is really under the regulatory gun in all this, coming as it does on top of the revelations about Russian troll farms and the possible influence they had on the US Presidential election results. However, they should not be the only ones under scrutiny for the use of personal data for profit. That is simply the business model that has evolved in front of us as we all use social platforms of all types and names. Facebook just happens to be the biggest, and best suited to electoral ‘management’ if not fraud.

While the personal information zealots cry about making potentially life saving medical records available on line, and politicians of all colours bleat about how important information privacy is, a hard argument to beat, we all continue to give it away happily for access to ‘cat porn’ and the menu of the local pizza shop.

The debate should be a wider one.

How much power do we want concentrated in the hands of so few providers of digital tools, and how will we  regulate them to ensure they play a constructive role in the development of our communities and society. The follow up question is I suppose, do we have the political machinery with the skills and balls to do anything about the obvious answer.

 

Header cartoon credit: Partial ‘First dog on the moon’  cartoon The Guardian 21/3/18.

Update: March 23

Mark Zuckerberg has released a statement that acknowledges the problem, gives a timeline of what Facebook has done to secure information, but goes nowhere near an apology. I suspect there will be some flurries meant to make Facebook look better, and as a salve to those calling for regulatory action, but little if anything of any consequence will change.

Second update March 24.

I just stumbled across this editorial by Mitch Joel, to my mind one of the interesting and informed thinkers in this space, that really gives some added context to the conversation. It supports the view that none of us should be surprised, we have willingly participated in the end of privacy, and besides, use of social data to manage (code for swing) electoral outcomes in this way is well known.

 

Third update April 16. 

I was sent this very useful explanatory video produced by the NY Times, describing the sequence of events. Thanks Geoff!

Fourth update May 24.

Aleksandr Kogan, the data scientist behind SCL has his say in an interview with Buzzfeed.

Why Wesfarmers is taking Coles through the checkout

Why Wesfarmers is taking Coles through the checkout

Mar 21, 2018 | Governance, Management, Strategy

It is no great surprise to me that Wesfarmers are spinning off the Coles supermarket business, and associated liquor and variety businesses. It also makes sense that they are keeping Officeworks and Bunnings, both stunningly successful businesses in Australia. Bunnings However, has failed miserably in the UK expansion, consuming capital and morale like a starving gypsy. It seems ironic that Coles thought they could beat the odds in the UK, just as Woolworths thought they could beat the odds with Masters here at home.

I do not think it is just being smart with hindsight to have foreseen the spin-off. Wesfarmers always seemed to me to be an owner that had adopted a culturally different and troubled although talented child, and was not too sure what to do with it. Despite pumping a lot of capital (around 8 billion) into the business and successfully turning it around beating the incumbent FMCG thug, Woolworths at their own game for a number of years, it still seemed to be an odd adoption.

A new Managing Director will always be keen to take the opportunity to ‘clear the decks’ of underperforming assets freeing up capital to deploy elsewhere in the hope of better returns.

New Wesfarmers MD Rob Scott is no different. Coles was a weight on the Wesfarmers balance sheet, accounting for 60% of capital employed, but returning only 30% of EBIT. Coles while a strongly cash positive business, is also the second player in a very mature market that faces a volatile future. However, it has played a role in the impressive increase in Wesfarmers value despite the nightmares that must have engulfed then MD Richard Goyder when the 2008 market crash occurred just after the $22 billion Coles acquisition in July 2007.

The FMCG market is entering a volatile period.

The channels to the consumer continue to fragment and enable the entry of innovative business models, and cashed up innovators. Aldi continues to make significant market share headway, Costco while a minnow is continuing to invest, Kaufland appears committed, and the shadow over everything is what Amazon may, or may not do.   Meanwhile, online shopping is increasing, while at the extreme other end of the spectrum, farmers markets, and even ‘pick your own‘ schemes are growing like mushrooms after rain.

Sounds like a good time for Wesfarmers to sell out of what may become a ‘legacy’ business over the next 10 years, and to put shareholders capital to work elsewhere.

 

 

Header credit: David Rowe Via Australian Financial Review.