Communication: Making it personal multiplies effectiveness.

Communication: Making it personal multiplies effectiveness.

Apr 5, 2017 | Governance, Marketing

Two weeks ago I received a piece of junk mail.

Not unusual, my letterbox seems to be the local junk repository despite a polite sign saying go away. However, as it was addressed specifically to me, with no mistakes in the spelling of my name, the  address was complete, and it was not a windowed envelope but one that was obviously not just a standard cheapie from Officeworks, so I opened it.

Open rates on old fashioned snail mail are very high, not the junk ‘To the Householder’ stuff,  the letters addressed to individuals.

By contrast, email open rates, the second best alternative for unsolicited mail vary from miniscule to around 10%, and  higher, depending on a host of factors with the common theme that the  better you know the recipient, and can direct the email to an individual, the higher the open rate.

Back to my story.

The note inside was short, printed on high quality paper,  and focussed laser-like on a specific pain point currently on my plate. The result is that they now have what their marketing person would probably call a marketing qualified hot prospect for the sales people to convert.

So what is the point of the story?

The process of building a brand, the conversion of awareness and of the value proposition of the brand takes a long time. It is a 10,000 piece jigsaw of individual actions by the marketers and reactions from those both in the target market and in the supply chain that delivers the product. At the end of it is an individual, in every case.

When selling a small value consumer item, you do so to an individual who makes a selection where there is little risk so some level of ‘autopilot’ decision making takes place.  Selling a power station is entirely different.  The transaction is at the end of a long process of selling to a series of individuals and probably committees of some sort , but at the end, there will always be someone with the right of veto.

A key part of the process is the impact the marketer has on the neural systems of the intended buyer, how the branding and selling efforts impact on their senses.

Human beings evolved over millions of years depending for survival on our 5 physical senses, and the 6th one, the ‘gut’ feel that comes from the experience of the individual, and of the ‘tribes’ in which the individual lives and works.

Logically, the more of the senses you can engage in a positive way when marketing to a prospect, the better your chances.

Back again to the direct mail piece.

All my senses had been successfully engaged by this piece of direct, unsolicited mail.

It engaged my eyes, as somebody had put a lot of thought into the visual appearance of the piece. It engaged my brain, as the headline and copy were clearly directed specifically a me, and to engaged me physically, as the stock on which it was printed was, like the envelope, clearly not a standard low cost stock, it was a premium quality  parchment type stock.

In the 30 seconds it took me to open, read, and understand this piece of unsolicited direct mail, the only option for me was to believe that somebody who knew me very well had specifically sent it to me in order to ensure I did not miss this opportunity to address the current pain point.

Depth of marketing to an individual prospect, building on years of building a brand with claims to quality and integrity, which is breadth, works.

The only point left to consider before I sign up is how  the hell they got so much detail in advance of sending the mailer.

 

 

 

The 4 levels of a successful business improvement project 

The 4 levels of a successful business improvement project 

Apr 3, 2017 | Governance, Leadership, Management, Strategy

My clients are mostly small and medium sized manufacturing businesses. They usually come to me when they are in a spot of bother, as word does get around.

Over a period of over 20 years of working with these businesses, a process has evolved. It is repeatable scalable, and can be applied to any business of any size. This is not because it is a complex set of algorithms that account for every contingency, just the opposite. It is a simple way of approaching a performance improvement project, that recognises the beauty of Einstein’s quote that “everything should be made as simple as possible, no simpler’

It is not rocket science, it is common sense, first principals.

My entry point is usually strategy, marketing & sales, or as I prefer to call it, ‘Revenue Generation’. The functional distinction these days between marketing and sales is utterly redundant. It never was relevant to customers, it just made the organisation chart easier to understand.

When someone is in trouble, and that is where I usually come in, the standard call is ’get more sales’. However, 9/10 times I see other things that need fixing, so in order to do that, I go back to the foundations, to the first principals of business.

In the end, Business is pretty simple, make and sell something for more than it costs you, and ensure the value to the purchaser is greater to them than the cost, and all will be well.

An improvement project can be treated as being in four parts, or levels, and each will contain numerous sub projects and elements that need to be addressed.

However, they need to be addressed in some sort of logical order, starting with the most urgent, as well as those that will deliver some quick returns. The quick wins are not just for commercial and financial reasons, it is because any change will inevitably be disturbing and potentially disruptive, so having a few quick wins makes the pain of change go away, or at least be more palatable.

Foundation.

These are the things that no matter what else you do, absolutely need to be done.

A lot of it is ‘underground’ as most foundations are, largely unseen, nevertheless, without a solid foundation, whatever else you build will  not last.

It is also true that the foundations wear out, become depreciated, and without renewal, which is a continuous process, you will still fail.

  • Basic financials. Cash management is essential, as cash is the oxygen of business. No business should be without weekly cash flow forecasting. The Profit and Loss statement measures your trading outcomes. It is less immediate than cash management, and gives a better picture of the items that are consuming and generating cash, so they can be managed appropriately. The P&L should be done monthly, along with the relevant performance measures against expectations in whatever form they have been articulated, usually a budget. The balance sheet is a picture at a moment in time of the performance of the business in creating or consuming wealth for its owners. These three basic financial measures are a part of the statutory accounts of any registered business, but a fourth that is not, is a simple measure of the break-even point in a business. At what point in trading do you go from loss in a period to profit. Knowing your break-even point is a bit like knowing when swimming if your nose and mouth are in the water, or out of it.
  • ‘Why’. Being able to articulate the purpose of your business is a huge competitive and cultural benefit that shapes the evolution it will go through. For those who have not stumbled across the various writings of Simon Sinek, it is time to start.
  • Business model. This is the means by which you turn your product into money. The foundations of a wholesaler will be different to those of a retailer, or on line supplier of products. The way you build the foundations will similarly be different. Different business models do not easily mix in the one business. Barnes and Noble should have invented Amazon, not been put out of business by them. Similarly, Blockbuster was in the prime position to invent Netfliks, not become their victim.
  • Regulatory requirements. These are a do it or be prosecuted choice, which for most is no choice at all, but you would be surprised how many businesses I walk into that are (mostly) unknowingly breaking the law. If you are running a child care centre, better get the regulatory stuff sorted!
  • Operational capability. Setting out to run a business, you need to be able to deliver a product of reliable quality, on time, and in budget, that delivers value to the customer. Pretty simple, but I have seen many business plans that seem to think that a product will come about like manna from heaven, just because it is ordered.

The advent of digital has changed forever the manner in which you approach a number of these elements and I would contend, is continuing to change them, almost weekly. I was tempted to put digital capability as one of the Foundation elements, but digital is a bit like breathing, you do it or you are history.

 

Revenue generation.

Commonly called Marketing & Sales, but as noted the distinction is redundant.

No business survives without revenue, and it is my view that all  the processes aimed at generating that revenue, directly or indirectly, should be seen through the one lens.

Marketing is a huge topic, way too much for a single blog post, but there are some basics that should be clear.

What is the profile of your ideal customer, How do you find and engage them?

What is the value proposition, how will the customer make the choice between your product and the alternatives, How will you go about building a brand, what are your best distribution channel options, which communication channels and platforms do you use,  which customer profiling methodology, lead generation and conversion, NPD & C, customer service, Strategic key Account Management, value proposition, advertising, market research,  and so on and on and on.

I ‘bounce’ between revenue generation and the foundation activities. While you have to have the foundations in place, you also have to be generating revenue to pay for the investment, one without the other is still a ‘fail’. Therefore there is a continuous and parallel improvement in both, it is not sequential, it is a parallel journey.

One of the traps of all the digitisation that has taken place in the revenue generation space is the sudden availability of new shiny toys to play with. Each in its own way promises to deliver at least some part of the silver bullet you are seeking. The temptation to chase the newest shiny tool is overwhelming for many, but also equally daunting for many others. The right mix is somewhere in the middle, as usual.

Identify the tools that solve your problems in the manner that best suits your strategic and financial objectives and limitations,  without losing sight of the foundations of your business, and you will be OK. Being seduced by the tools is as bad as ignoring them.

 

Leverage & Scalability

This is where the fun really starts.

We all understand the concept of leverage, of doing more with less. The tools available in the revenue generation space give you leverage in your current markets. They also provide the opportunity to leverage capabilities outside your immediate markets and customers. This sort of leverage can be applied geographically, to adjacent markets and customers, in new value propositions, new technologies, and to gain a decisive advantage over competitors.

Having built a stable and profitable business by solid achievement in the foundations and revenue generation stages, you will free up the time to enable the leveraging and scaling of your processes, assets,  capabilities, collaborative demand chains, and importantly spread your process improvement successes wider.

 

Sustainability.

Commercial sustainability is the rarely stated, but often considered objective of all this commitment. The best metaphor for this stage is nature. As the environment changes, the organism evolves to accommodate and leverage the changes to its benefit, and this happens without added effort. It is commercial evolution at work.

This is the vision painted by so many of those trying to get into your pockets, of the 4 hour work week, taken remotely while on an island paradise collecting magically recurrent income. It never happens, at least I have never seen it. Even those who claim to be making millions via the web selling all sorts of dreams, are doing more than they tell you. It is true that web based products, a new  commercial option still only a decade old have made a huge impact, and there are a few who have made it big, but they are as rare as those who made it big in manufacturing in the last century were. Nevertheless, having a goal of sustainability in your sights, and working towards it will see your business prosper, and you will be able to enjoy the fruits of that prosperity.

So what now?

You can only do a very small number of things at once.

Therefore where I start is with a ‘StrategyAudit’ where I go looking for the holes then prioritise them into an action plan, and gain some sort of agreement  that the plans will be followed. A realistic assessment of the current situation is an absolutely crucial first point of any improvement project that offers the genuine chance of enhanced performance.

 

10 sources of motivation you can leverage

10 sources of motivation you can leverage

Mar 31, 2017 | Governance, Leadership

It  happens that one of the regular issues emerging from conversations with those I work with is about how you develop and maintain the motivation of those in the business, particularly in the more operational roles.

Over the years I have seen a lot of operations, manufacturing and other wise. Sometimes as you walk in the door, you can just ‘feel’ the energy, other times, it is clearly a place everyone would rather avoid.

Some of the common factors in the good ones I have seen follow, and the absence of these factors is also apparent.

Motivation is contagious. A few of the right people, clearly motivated and excited to be there, and doing a job well has a huge impact on a workplace. It is even more contagious when it comes from the ‘ranks’ as everyone expects the boss to be motivated,  but not necessarily the storeman.  Seek out those people in your recruiting, and celebrate them.

Motivation builds momentum. While it is contagious, it also builds its own momentum. The hard bit is getting started, to get the ball rolling, then it tends to feed on itself, so long as the environment provides the nourishment.

Urgency creates motivation to take action. We see this every day, particularly in a sales context. ‘One day left’ ’24 hour special’ . Inside a business this urgency is used to get attention, make change, and create alignment to a course of action.

Motivation and optimism have a strong link. Having a workplace full of optimists, those who see the bright side, who feel ‘alive’ and communicate that feeling has a positive impact on the ‘motivation quotient’ in every workplace I have seen. The converse is also true. There is also a strong social component, when a few of those seen as the leaders in any place of work, and these are not necessarily those whose place in the organisation chart says they are the leaders, are optimistic and motivated, that has a clear social effect. I am sure the wallies will have a fancy name for it. I just call it the ‘social effect’, and seek it out when hiring.

Motivation is also individual. Having noted the social effect, every person is motivated by different things, and differently in different contexts. It is a very personal thing, often a choice made consciously at some point, that just becomes ingrained. it also means that an effective leader manages their relationships with each of their fellow workers in an individualised manner.

The environment creates motivation. This may often be called culture, the ‘Way things get done around here’, to quote Michael Porter. Again, it is a social component of the workplace, something that is never articulated on an organisation diagram, but which nevertheless has a profound impact on performance.

FOMO. Fear of Missing Out is a well understood and deeply research psychological factor. It is a strong motivator, way stronger than the prospect of gaining something by participating.

Coercion and manipulation are not motivation. Indeed, if anything, they are strong eroders of any intrinsic motivation felt by individuals and a group. We are very good at picking when they are being applied to us, and we resent it and react accordingly.

Scarcity creates motivation. Scarcity, just like urgency, acts to motivate action now. ‘Only 2 left’ is a common tactic. Now emerging often is the non recording of webinars, so if you do  not catch it live, there is in backup.

Risk creates motivation: for some. Every now and again, we watch someone who takes risks, and do not understand why they do it. When asked, the answer is usually some version of  ‘because we can’, or ‘because it is there’. Just as most of us would not consider trying to ride a wave as clearly dangerous as the one in the header photo, chances are the bloke in the photo went out again, after recovering from the impending huge wipeout. It is intrinsic to the individual

Finally, money is a lousy motivator. People want to be valued and acknowledged, on top of having a pleasant and productive workspace, able to shape the way they spend their days. When that is in place, money is secondary, but in the absence of those things, money becomes the only motivator and when it happens, you are in deep trouble.

 

Photo credit: Mobilqajmd via Flikr

 

How to understand the answer to a question.

How to understand the answer to a question.

Mar 22, 2017 | Governance, Leadership, Management

I ask questions for a living.

No, I  am not a policeman, journalist, or a head-hunter, all of whom need good questioning skills, but in some regards I am a detective.

My job is to see what can be done to improve the performance of businesses, and to do that effectively I need to understand with clarity what is holding  the current performance back. Therefore I need to be able to analyse and understand the current performance through an independent  lens, a perspective  that is different to that of those who are paying me, and which leverages the experience and domain knowledge I bring to the table.

As a consultant, especially one that works in a space usually over-filled with clichés, emotion, personal prejudices and views presented as facts, the real skill is in asking the right questions, and knowing when it has been answered satisfactorily, then following up with the next one that further opens the oyster.

Asking the right question is a matter of experience, domain and technical knowledge. Knowing when it has been answered is all about being a good listener, and entirely different set of skills.

As I listen, I try and break down more than what is being said, and why it is being said, it is just as important to see what is not being said, and to be able to follow up with the question that gets to the area of discomfort, that is best left unsaid, in their minds.

So here are the things that in one way or another I do when listening, apart from observing the old adage that evolution gave us two ears and one mouth for a reason.

What is being left out. Where are the gaps, the inconsistencies, and the evasions, as they will tell you a lot about the person. An HR manager I once worked with used to spend what I initially thought was an inordinate amount of time on the sequence and timing of stated jobs in an applicants resume.   Then I realised he was just looking for the gaps, and he almost always found a few, which usually told us more about the person than they had included.

Where are the contradictions? As with gaps, contradictions can be well hidden, and are often unconscious. They are not just contradictions about timing and  ‘things’ that matter, it is more about contradictions about their personality. I had a product manager working for me a long time ago who  told anyone who was listening that his personal credo was honesty and transparency, but then took staplers and pens home from the office supplies cupboard. A little  thing perhaps, but a contradiction that told me something about him that proved useful.

Why are they telling me this, and not that? People can go on and on about ‘stuff,’ the words fill a hole in the conversation, stuff that really does not matter. Wondering why they are telling you this ‘stuff’ and not something useful or that adds to the ‘picture’ you are developing can be enlightening.  This is particularly so when you know of something that perhaps they are unaware you know, but is relevant to the conversation. I recall the lawyers adage of never asking a question of someone giving evidence without knowing the answer in advance.

What about this makes it relevant to the question? People like to talk, usually because they like to be listened to, and so can go on and on about things of limited or no relevance to the question, simply because they have the floor. Generally we are polite, so do not interrupt the flow, but it can be useful sometimes, particularly pointing out the irrelevance of the tsunami of words that just emerged.

What are the facts? There is a huge difference between facts, things that are demonstrably true, and opinion, suppositions, and the outcomes of ‘managed’ data. The last of these is often the most tricky to tell from the real story, as they purport to be facts, as evidenced by the data. It is just the data or the interpretation of the data that is dodgy.

Did they answer the question directly.  Listen to any politician talking on any night, and you will most likely hear them answer a question in a manner that bears little or no resemblance to the information being sought. Unfortunately it seems to be the standard state of public office, but in a commercial environment, I dismiss it with the contempt it deserves. To be fair, politics gets played pretty hard in many commercial environments, and so is sadly, little different.

Tone of voice. Body language and tone of voice also delivers a message. Just think of the myriad of meanings the word ‘bastard’ has in Australian vernacular, all are conveyed by the same word, with entirely different meanings dictated by tone of voice and body language.

At the end of an answer to a question, I often repeat what I have heard and understood from the answer to offer the opportunity to correct and modify my understanding as necessary. It is also a good tactic when  seeking to assess the truth of an answer.

 

 

Budgeting: The crappiest time of the year

Budgeting: The crappiest time of the year

Mar 20, 2017 | Governance, Management, Small business

It is that time of year again, budget time.

In most businesses around Australia, at least those that will be around in a year or two, people are wondering where they will find the time to do the budget preparation for the coming fiscal.

To make it easier, following are some simple guidelines to apply to your thinking.

Where are you  now.

Before you set out on the planning of any journey, it is useful to know the starting point. This tends to avoid a lot of wasted effort and cost, and unnecessary frustration. Having a very clear picture of your current position is vital, but if you have left the development of that picture to the planning sessions pre budget, it is probably too late. Developing a deep understanding of your current situation, and most importantly the drivers of that outcome, needs to be an incremental and inclusive process that is happening in real time, all the time.

Where is it you want to go.

Again, obvious, but often overlooked. Good businesses have a strategic framework in place that delivers clarity and priority to the long term outcomes being sought, so the annual budget is just another step along the path. However, in the absence of a strategic framework that makes sense, a disturbingly frequent situation, set yourself some goals to be achieved, and the annual budget is the operational plan to get there.

How will you know when you get there.

Measurement for measurement’s sake is dumb, but having the few key measures of performance that really tell the story of your progress towards the end point is essential. Knowing what ‘success’ means is a core part of the planning process, but again, when that is left to the planning sessions, it is too late.

1/10 is not enough.

Another of the mumblings of my old Dad who used to say, ‘Son, you get 1/10 for  the talking, the other 9 are for the doing’. In a business context, the planning is essential, but of no value unless it is implemented. Just like a holiday, you can have some fun planning it, but the real fun is when you are actually on the holiday.

Profit is a two way street.

To make a bob, you have to sell something to people who really want at a price that is more than it costs you to produce and deliver it. Pretty sensible, and pretty simple, but understanding your costs and really understanding the value your product delivers to the specific target markets is a touch more complicated.

Everyone is in marketing.

The days of marketing being relegated to the back office are gone. Customers now have all the power, and they are exercising it in all sorts of ways not contemplated just a decade ago. Highly sensitive, fragmented, and focussed communication channels are being used by everyone, and amplification happens at the stroke of a social media pen. Everyone who comes into contact with your products can have an influence, and everyone in your business  is an agent of marketing. For heavens sake do  not leave it to the kids who have marketing in their title, thinking they have it under control, because nothing could be further from the truth. The most valuable asset you have is the position your product holds in the minds of your customers and potential customers, commonly called your ‘brand’. It is not normally listed on the balance sheet, as the accountants cannot agree how it is to be valued until a business is sold, when it is called ‘goodwill’ but it is the leverage that enables you to be able to stay in business.

Count outcomes before dollars.

Financial results are just that, results. Dollars are just easy ways to count the outcomes of more complicated stuff. Spending time understanding the drivers of the outcomes being counted is a far better way to invest your planning time that just manipulating the variables in spreadsheets. What is it that persuades someone to buy from you and not the opposition, how can you reduce the hidden transaction costs in your business, how can you increase your stock turn and reduce your working capital, and thousands of other questions that need your time and attention before the budget profit and loss is locked away.

The smartest people are not in the room.

No matter how big you are, and how much money you spend on expertise, the vast majority of the smartest people, and those who could influence your outcomes are working somewhere else, some of them for your competitors. This simply means that you have to find ways to be sensitive to the competitive, strategic and regulatory environment in which you are operating, and feed that intelligence back into the way the business is run. From going to local networking events, to travelling to leading markets and suppliers, to hiring expensive consulting knowledge, to ensuring the operators in your business have a voice at the table, all serve to add to the store of ‘education’ the business has to call on at budget time.

When you have done all that, it becomes time to go and punch the spreadsheets, not before. One last point, seems to be a common last point in my various musings, look after the cash. It is the lifeblood of the business, if you do nothing else, look after it as you would your first born.

 

Consider the moment of Opacity

Consider the moment of Opacity

Mar 16, 2017 | Governance, Small business

We are all familiar with the ‘lightbulb’ moment, that time when suddenly, all seems clear, the idea that has been buried in the depths of your brain, unable to be born, suddenly sees the light.

Ever thought of the opposite?

The moment of Opacity?

That moment when you suddenly realised that something you had accepted as the norm, the way things were, a certainty, was suddenly revealed as a Furphy?

This is not something many of us think about much, if at all.

Perhaps it is not fashionable, but the moments of opacity are as important as the lightbulb moments.

My job is working with businesses to facilitate change, to move from the status quo, to something new, something that is almost always considerably outside their comfort zone.

To do that, I have to create those moments of Opacity, when my clients recognise that the way forward is different to the way they have followed to date.

Usually they are not moments, that is just a convenient metaphor.

Change is normally a process of recognising and revising the assumptions and behaviours that drive activity and priorities to accommodate a new reality, small bit by small bit.

Einstein is reported to have said something like ‘The most powerful force in the universe is compound interest’  and the legend of the chessboard is a well known example of just how powerful compounding really is.

Change is no different.

Small changes, compounded over time make a huge difference in time. The hardest bit is getting started, generating some momentum, but when that has happened, compounding can become an unstoppable force.