How could Samsung stuff it up so badly?

How could Samsung stuff it up so badly?

Oct 21, 2016 | Branding, Governance

Once again, we are the observers in what will become another in the great ‘How to manage a marketing cluster****’ course.

I am talking about the public reaction of Samsung to the exploding Galaxy Note 7 phone.

Recent history is littered with lessons on both sides of the equation, how best to handle the meltdown as it happens,  and how to really stuff it up. You would think that an operation with the size and apparent sophistication of Samsung would have learnt, but it seems not.

The Galaxy 7 was launched in August, in a race to beat Apple to the market with their new ‘Apple iPhone 7’. There were almost immediately reports of the batteries blowing up, initially treated with some scepticism, as the fail safe levels built into the design and regulatory testing regimes should have identified any problems. Ooops… Samsung test their own batteries, whereas others all have third party tests done.

At the point of recall, Samsung had produced 2.5 million units, sold about 2 million, and there have been 35 reported explosions. Not quite a 1 in a million chance, but not far off it, so I guess they just thought it a minor glitch.

On October 10, Samsung announced ‘We are temporarily adjusting the Galaxy Note 7 production schedule in order to take further steps to ensure quality and safety matters.’  For the couple of weeks prior, Samsung had been recalling the phones, but calling it an ‘Exchange program’. When a couple of the exchanged phones also went ‘Boom’ they ended production, with the ‘temporary’ announcement above.

From October 11 until October 17,  when the US Federal Aviation Authority put on a blanket ban on carrying the device, describing it as ‘forbidden hazardous material’ airlines had started banning carrying the Note 7 on board off their own bat, recognising the public concern and real safety question.

There is a pretty large gap between ‘forbidden hazardous material’ and an ‘exchange program’.

Samsung’s statements are in competition for the ‘Biggest Blooper-statement in history’ Oscar with then BP Managing Director Tony Hayward who said ‘There is no-one who wants this thing over more than I do. You know I want my life back’  in the days after  Deepwater Horizon blew up in April 2010.

By contrast, when Arnott’s had a recall of Monte Carlo biscuits in 1997 prompted by an extortion bid, MD Chris Roberts was up front, recalling all Arnott’s products from the retail trade, explaining the reason and how Arnott’s was dealing with it. While it cost a lot of money, the Arnott’s brand was probably enhanced in the long term. Similarly, in 1982 Tylenol, the market leading US analgesic brand was found to have caused the death of a young woman after she consumed a poisoned pill. Johnson & Johnson immediately recalled all Tylenol from the shelves, and committed to completely redesigning the packaging to ensure tamper evidence. J&J garnered considerable public support, and Tylenol rapidly regained their market leading position after the relaunch.

These are just a few of the best known but very many examples Samsung should have considered. Had they done so, the short term cost would not have been as high, and the damage to the brand not as severe. Coming on top of the recent exploding washing machine episodes you would have thought they had sufficient practise to get it right.

The cost to Samsung will be huge, in both short term cash losses and longer term damage to the brand. Apple must be loving this!

As an aside, you would think that Samsung would have taken down their digital marketing material on the device, particularly with the tag-line ‘Rethink what a phone can do” but at the time of post publication, had not.

How will Australia regulate for ‘Culture’

How will Australia regulate for ‘Culture’

Sep 28, 2016 | Governance, Leadership

As a Fellow of the Australian Institute of Company Directors, I look forward to the events put on by the institute, and attend when I can, when the topic of discussion is of particular interest.

Annually there is a general ‘Director Update’, the 2016 version is currently rolling out, and I attended in Sydney last week.

Amongst the items of interest, one particularly took my attention. The emerging focus on ‘Culture‘, has belatedly come onto the radar because the legislators are beginning to use the word.

This begs the question of how you define ‘Culture’, certainly those in Canberra writing the rules have no idea, despite setting out to legislate for it. It is a bit like legislating for ‘Motherhood’. Everyone agrees it would be great to have it, successful people have benefited from it, but definition is a bit tricky.

“Culture eats strategy for breakfast” is now a commonly used phrase, shortened from the original by Peter Drucker who wrote: ‘Culture eats strategy for breakfast, technology for lunch, and products for dinner, and soon thereafter, everything else too’

Lou Gerstners view expressed in his terrific insiders view of the turnaround of IBM  “I came to see in my time at IBM that culture isn’t just one aspect of the game – it is the game. In the end an organization is nothing more than the collective capacity of its people to create value.”

Building a positive culture depends on leadership, not regulation. Absolutely not regulation.

This remarkable TED talk by Simon Sinek is talking about leadership and the culture good leadership builds. I think anyone in authority should watch it and absorb the message, and set about trying to articulate what it means in their context.

ASIC (Australian Securities & Investments Commission) Chairman Greg Medcraft in his speech opening the 2016 ASIC Annual forum failed to give any hint about the definitional questions around Culture, simply pointing out that it led to good commercial and social outcomes. He did add that “We are incorporating culture into our risk based surveillance reviews’ which is terrific but it would be nice to know how one of the key regulators is going to measure it. Back to the politicians?

On occasion I have been critical of the AICD for its focus on the compliance issues of listed companies and their directors, often seen as the ‘big end’ of town. This focus is not unreasonable given that every organisation has to focus on what is seen as the main game in one way or another. However, it does tend to marginalise the unlisted and family company block which constitutes the vast majority of enterprises, and the overwhelming majority of those in the role of ‘Director’ often without knowing anything about the fiduciary responsibility that goes with it.

However, in this case, starting to talk about Culture, the Institute has kicked over a rock that requires a lot of consideration and debate, so well done.

I look forward  to that conversation.

Credit: Thanks once again to Hugh McLeod for the inspired cartoon.

4 easy questions to help get stuff done

4 easy questions to help get stuff done

Sep 15, 2016 | Governance, Leadership

Taking action is the hard part of getting stuff done, the talk is easy, but when the rubber has to hit the road, then you see who is really adding any value.

The 4 simple questions I ask are:

Who is responsible?

Who is accountable?

Who is to be consulted?

Who is to be informed?

Lack of an answer on any of them is a sure indicator of a hole that will swallow some of your efforts.

Last night I was at a forum hosted by the local council for sporting organisations in the region.

The forum had no real objective beyond some institutional need to ‘consult’ , a useful process, but the organisers seemed to have no idea about the framework on which they were seeking input.

As the answer to each of these 4 questions was “nobody’ or ‘not sure’ I do not expect to smell the rubber any time soon.

9 reasons to be wary of marketing automation

9 reasons to be wary of marketing automation

Aug 16, 2016 | Governance, Marketing, Small business

Marketing automation is the new game in town, it builds leverage onto marketing investments. Absolutely right, and I am a believer. Scott Brinkers amazing work illustrates just how rapidly it is advancing.

Automation delivers the opportunity for huge leverage when used well.  For small and medium enterprises it offers the opportunity to look and act like their much larger competitors, and win by outmanoeuvring them with their inherent agility.

However, there are risks not being talked about very much, if at, all in the rush into the automated tools.

  1. A tool is not a strategy.

There is so much smoke and mirrors and just plain bullshit being sprayed around by the vendors of many tools that the basics risk being ignored. When you need to drive a nail, the tool you need is a hammer, not an all singing, all dancing, multipurpose expandable screwdriver. Digital tools are all driven by algorithms and logical progressions, based on assumptions. Problem arises when the tool does not accommodate the myriad of behavioural realities that occur in the real world. I am seeing automation seen as a strategy way too often, without due consideration of the context in which the tool will be used, and the outcomes that can reasonably be expected.

2. Ownership delivers leverage.

Those who ‘own’ the tool are able to use the output to further their particular perspective. Outcomes predicted by some tool often takes on a credibility greater than it should simply because somebody has done the number crunching through a tool. These things do not think, they do as they are told, so being constructively critical of outcomes that appear at odds with common sense is usually a pretty good practise. The next time I see a course of action that sits uncomfortably with my instincts being pursued just because it appears justified by some algorithm will not be the first. Getting the balance between the wisdom of experience and domain knowledge and the output of some algorithm wrong is akin to letting the kids loose on a 1000cc racing bike. Great for a while, but destined for a nasty prang.

3. The danger of complication.

Steve Jobs has been credited with the words “simplicity is the ultimate sophistication’ which is simply an extension of what we have known for ages. Einstein said (amongst many other insightful strategic observations) ‘Everything should be as complicated  as it need to be, and no more’. Automation has within it the opportunity to overcomplicate, when the simple is all that is needed. I still have (SME) clients to whom Excel pivot tables represent automation of their sales analysis, and sometimes that is all that is needed. Setting out to implement a ‘marketing stack’ in this sort of environment, with this existing level of digital sophistication will only lead to tears.

4. Business is not absolute.

The formulas in a tool are absolute, they do exactly as they are told. As noted, business is not absolute, there are multiple shades of grey all over the place, often confusing and conflicting. Digital algorithms are yet to be able to learn and apply the judgements born of that learning to a situation facing them, and indeed, in analysing adequately the situation confronted.

5. Marketing ROI.

Marketing has long suffered from the accusation, that it is all smoke and mirrors, supposition and judgement along with the long lunches, and too often the accusations have had some merit. “Where are the numbers?’ is a pretty common question when marketing is chasing its slice of the available resource pie, and in their absence, Marketing is the first to be cut in a squeeze. Now there are tools that supposedly, and in fact do deliver an ability to do reliable calculations, they are often grasped like a drowning man will grasp anything that floats by. Pity an attractive lead weight can be tarted up to look like a life jacket.

6. Financial ROI.

Implementation of marketing technology is no cheap exercise, as anyone who has had anything to do with this stuff will attest. The cost of the software is only the beginning, and the time taken to project completion usually confounds even the most pessimistic forecasts made in the blush of the original ‘let’s do it’ decision. In many instances I have seen, taking some of the money thrown away in marketing automation, and putting it against genuine customer oriented activities would generate a far superior ROI.

7. Automation for its own sake.

Automating a crap process just leaves you with automated crap. One of the most common mistakes I see is believing that an implementation will solve a problem, when in my experience, automation just makes an existing problem worse, harder to find, and more expensive to fix. Never automate until the existing processes are working seamlessly, or alternatively, when you automate, throw all existing processes out the window, and start with a completely fresh page. The danger here is that without a rigorous outside intervention those that allowed the former processes to resemble a dog-pile will be the ones writing the new routines. Usually not sensible.

8. Automation is different to decision making.

Automating can deliver information that provides the data required to make informed decisions, but cannot in itself make decisions that require judgement. At best an automated decision tree can be an ‘if that then this’ logic sequence. If ever you needed convincing of this; just look at the May 2010 ‘Flash Crash‘ of the Dow Jones. The decisions surrounding resource allocation are challenging, requiring a multidimensional view of the options that balance the relative outcomes, risks and rewards.

9. It all becomes too easy.

Let’s face it, life is really busy and stressful, so when there is an answer provided that has corporate  credibility, the easy way is to go along with it, not rock the boat, and often not run the gauntlet of questioning the status quo.

 

My thanks to Tom Fishburne for the header cartoon. You continue to demonstrate the power of the cartoon to make a serious point.

Census night melt-down was expected

Census night melt-down was expected

Aug 11, 2016 | Governance, Leadership

Human beings are pre-disposed to trust, is it a part of our evolutionary DNA, we need each other to survive. We all know we are stronger in a group, relate to those similar to us, who share similar histories and beliefs, and who are held to us by shared relationships.

We need to feel that someone we know and trust ‘has our back’

British anthropologist Robin Dunbar proposed in the 1990’s that there was a cognitive limit to the number of relationships an individual could hold at any one time,  of 150, now known as Dunbar’s number.

However, and it is a huge ‘however’, trust has to be earned over time, it is never just given without thought and an emotional commitment. It is this emotional component of trust that leads to the  depth of emotion when we are let down by someone we trusted, because it is not just a let down, it is a betrayal.

Tuesday’s census was a debacle. It makes absolute sense (no pun intended) to collect the data electronically, unless of course the arrangements made to receive the information are inadequate. Predictably as soon as the servers crashed, the inevitability of which was widely assumed outside the cocoon of Canberra, nobody was prepared to recognise the stuff-up for what it was. The Canberra two-step blame game was in immediate view.

‘Of course it was  not a stuff up, it was the hackers’ is not a defence that allays any of the cynicism of the population, sick to death of the self serving bullshit fed to us in the expectation that we will just keep on believing.

Our so called leaders wonder aloud at the drastic decline of public trust in our institutions over the last 25 years, and I wonder why they are so publicly naive, as few of them are completely stupid.

Trust comes with consistent over-delivery on undertakings. We listen to the words, but it is the actions that really count. It is no different in small groups to the whole community, business and elsewhere, we trust those who do as they say, and say as they do.

Our political institutions in all their manifestations have consistently and significantly over-promised and under-delivered over the last 25 years, and that is the sole reason we do  not trust them, and the census night debacle has been met with a collective sigh of resignation to the inevitable.

Credit to Larry Pickering for  the header cartoon

PS. Two further thoughts that occurred during the day.

  1. How reliable will the data really be? I can hear the blathering now, assuring us that all is well, but where have we heard similar assurances before?
  2. Will those who failed to fill in the forms on Tuesday be fined, or perhaps they will the sue the Bureau of Stats for making false promises? Make false promises in advertisements and public utterings in the private sector and you have the the consumer protection grizzley’s after you.

 

 

Has Woolworths done enough?

Has Woolworths done enough?

Jul 29, 2016 | Governance, Leadership, Management

I have been around long enough to see Coles and Woolworths swap places a couple of times. It seems that just like most blood sports, there is room only for one at a time at the top. This is understandable given that between them they have 70% plus of grocery sales, depending on whose numbers you use.

While Woolworths are still on top by most measures, Coles are rising like a phoenix from the ashes, and Woolies are desperately trying to halt the slide they embarked on several years ago.

Mondays announcement of job cuts, store closures, and a $967 million write-down has been a while coming, and must be a bitter pill following on the heels of the decision to exit the Masters hardware business after  incurring significant losses.

They have been progressively winding down the Thomas Dux, business, which in my view will prove to be a short sighted decision, symptomatic of the strategic malaise that has haunted Woolies after a decade of stellar performance.

The announcement also indicated 4 of the ‘Metro’ branded stores will close, presumably because they do not deliver the required return. While those stores, like Thomas Dux, might not be performing to expectations, they should both be seen as experiments at the edge, in anticipation of the acknowledged trends slowly transforming our lifestyle. In the case of Dux, a desire by a small but growing number of consumers for the unusual, products of superior quality, with clear provenance, and for Metro, the convenience for commuters, and CBD dwellers.   The potential strategic research value of both, assuming they were well managed (which Dux was not towards the end) would be well worth the slightly less than benchmark returns, as in reality the absolute numbers would be tiny.

Nipping on everyone’s heels is Aldi, whose success over the last 15 years or so has been substantial. There are now 423 stores, and Aldi is currently opening 4 or 5 new ones a month. The Aldi business model is hard for Woolies and Coles to beat with their current set-up, so they probably should stop trying, and find another way. 1000 Aldi Sku’s vs 12-20,000 in Woolies and Coles keeps Aldi  transaction costs low, as does the uncomplicated trading terms with suppliers. In store, Aldi pay far fewer staff very well by comparison, and by observation lead and motivate them very well, benefiting from the resultant productivity. Meanwhile they generate store traffic with the low prices, and quirky weekly specials that promise to be sold out quickly, creating a sense of shopper urgency. In addition, their fixed overheads on stores would be much lower than the two gorillas due to the smaller floor space, and less expensive locations.

After all the financial engineering is done, I trust that Woolworths management and more importantly the front line staff will remember that it is the little things in the stores  that really counts to their customers as they spend their money. They could  not care less about the head office  shenanigans, they can always go down the road when they see better value for their ‘hard-earned’.