Sep 29, 2022 | Collaboration, Leadership
A business is like a money machine.
Put a dollar in, and get 2, or 5, or 10 back, and you have a good business.
Put a dollar in and get 0.90 back, is a big red sign that the machine is broken.
The caveat is that it may be a start-up, in which case, a dip before returns start is both inevitable and foreseeable.
Put simply, it is the return on Investment. ROI.
However, when you get the money back is almost as important as how much you get back.
The value of a dollar returned in a years’ time is less than the value of a dollar today. In a decade, it will probably be almost worthless.
It is also important to note that you must put the money in the machine before there is any chance of getting anything back, which is the chicken, and which is the egg is very clear.
In a world increasingly dominated by intangibles, what is inside people’s heads, the equation becomes much more complex.
To what extent do you need to invest in stakeholders heads, as distinct from investing in the tangible assets of the business, or are they increasingly the same thing?
In which case, the challenge is to figure out how to maximise the content of your stakeholders heads, and how best to leverage that content to mutual benefit.
Sep 7, 2022 | Change, Leadership
‘Business coach’ seems to have suddenly become a go-to moniker for former corporate executives looking for a new gig. For someone who recognises that a coach might be a valuable performance enhancing addition, how do you pick the right person?
I had a conversation on this topic recently in the pub with some colleagues, a beer with a few people who run SME’s, that used ‘networking’ as an excuse for said beer.
(Aside, Christ beer in a popular pub is expensive!)
The conversation was initiated by a ‘techo’ who was just folding his 5 year side gig up, after very considerable investment of time, money, and emotional commitment.
He needed, he said, to learn how to be a ‘businessman’ rather than a ‘techo’, and needed a coach, or mentor, but did not know how to pick the right one.
The response I gave him was
- Been there, walked in your shoes
- Able to relate at a really human level to the coached
- Part psychologist, part headmaster, part collaborator, to drive accountability
- Able to bring together the confusing and fluid interaction of financial management, revenue generation, operations, and all the necessary support and regulatory stuff. They cannot be an expert in all these, nobody can, but they acknowledge their limitations, and have a group of trusted specialists available as needed.
- Ask good questions and happy to be proven wrong.
- Prepared to tell those being coached the ugly truth.
- Leaves you better off after every session, although from time to time, that is hard to see at the time. Bit like going to the gym, the impact is cumulative over time.
- Widely knowledgeable beyond the domain the ‘coached’ is operating in to bring in different perspectives
- Holds themselves and those they coach accountable.
- The coach ensures they dedicate the time to discover ideas and observations from other domains that may be useful, then package them up for those they coach.
- They will always be a great listener and have a keen understanding and appreciation of your point of view.
- They can personalise their own experiences in a way that the coached can relate to
- They make the agreed goals of those being coached their own for that relationship.
- They demonstrate patience and perseverance, while being assertive.
However, there are two problems in all of this. It is highly unlikely you will find all 14 in one person, and there is a further huge catch for you:
A real ‘kicker’
Even if the coach you choose has all these characteristics in spades, it will not be enough.
There is a further absolute requirement for a successful coaching relationship.
You, the one being coached, must be open to change.
Coaching is all about changing behaviour, modifying responses, being more open, and understanding. In short, able to be coached. In the absence of that ‘coachability’, nobody can help you get better, you have to do it yourself and suffer the consequences.
Header credit: Yoda from Star Wars series.
Aug 26, 2022 | Governance, Leadership
There is an additional and dangerous downside to former Prime Minister Morrison’s grab for power I have not seen aired anywhere.
Like everyone else, I have watched the emerging revelations with amazement.
The weight of commentary against the actions he took is total, even his supporters in the Liberal party are having trouble even talking about it, let alone justifying it. The solicitor general’s report confirmed what others had assumed. It concluded that there was no illegality in his actions, but that they were ‘inconsistent with the principle of responsible government‘
We live in a highly volatile and complex world, one where the cycle time required of decision makers is contracting, as the need for wise input born of diverse knowledge from different perspectives into decision making is increasing.
This is where I believe the other great threat to good decision making in the nations interest lies.
Our political system is good at weeding out any diversity of view, it demands adherence to the party line, and as a result, decision making suffers, badly. Good people with good ideas and wisdom inconsistent with that party line do not get a say. As a result, we have a parliament and supporting systems filled with careerists who understand the way to progress is to be yes men.
Anyone running any sort of enterprise facing complex problems understands the challenge. The best way to address those complex problems is to seek a variety of views from experts looking at the complexities from different perspectives. You then blend those views into a decision making process that enables clear accountability and continuous improvement of the outcomes as results emerge. This requires a culture that encourages diversity and transparency.
Morrisons power grab is that he removed any sense that there was a valid opinion on any topic other than his own.
Everyone comes to any situation with a perspective of their own, moulded by their life experiences, beliefs, and positions taken in the past. This is entirely normal. It reduces the cognitive load required to get through the day by allowing us to act almost on auto pilot for most of the time, leaving cognitive capacity to deal with the unusual.
Complexity by its nature has all sorts of second and third order impacts when you set about addressing that complexity. No one person can hope to see them all, or even a small proportion of them. It takes a wise group of diverse minds to focus on the problem from differing perspectives to anticipate those second and third order impacts.
So, just at the time when collaboration, diversity of opinion based on fact, and transparency is vital, the former PM goes the other way, looking at the problems faced by the nation only through his own particular version of the truth, an overload of confirmation bias.
He is the one who exhorted a church audience in Perth a few weeks ago not to trust governments, presumably in total ignorance of the reasons why public trust has been trashed, and the blatant hubris and hypocrisy of his words.
Wouldn’t you love to be a fly on the wall the next time he meets some of his former colleagues in private?
Aug 24, 2022 | Governance, Leadership, Management
There has been an awful lot of trees cut down to accommodate the blather about the new world of post covid work. In an effort to condense the ‘debate’ and save a few trees, the following is what I have gleaned.
Humanity.
We humans are social animals, we need other people around us for our own psychological health and creative productivity. Therefore, the idea of general remote work becomes a potential mental health time bomb. We will adjust to it by mostly going back to the office. it is very unlikely to be 9 to 5, there will probably be more satellite offices, short term but regular meeting schedules, but back we will go in some form.
Proximity.
Physical proximity enables deeper communication than any other form. Even the distance apart in the office makes a difference to the nature of the communication we have with each other. Not just about work, but the tiny things that we do not notice until they are not there, and even then, often with hindsight only.
Trust.
Trust enables teams to work together. The less face to face contact, the harder it is the generate that trust, making teams harder to assemble, generate productive outcomes, then disassemble and reform for another project or purpose.
Belonging.
We are sustained by a sense of ‘belonging’. We are drawn to ‘people like me’ but when we do not see them, or see them only occasionally or over Zoom, the sense of belonging frays, leading to eroding productivity and sense of community.
WFH.
Working from home for many has been great, not having that commute every day. It is convenient for many. However, convenient is not always good for us. Going to the gym every day may not be convenient, but it is good for our health.
Leadership.
Leadership and the nature of that leadership has never been more important. In the past we had a few leaders, and a lot of managers. In a world where remote work is a consistent part of the output, just being a manager will not cut the mustard. We need more leaders, and have not trained them, which indicates problems for many, and opportunity for the few in the coming few years.
Alignment.
The alignment of priorities and performance measurement and the place each individual has in the scheme of this is critical. When an individual cannot see how their efforts contributes, to both those in their immediate vicinity and to the overall objective, the effort will become diluted. Working remotely in the absence of that focus on priorities and outcomes will lead to real productivity challenges for the enterprises, and personal ones for the individuals.
Culture.
Culture is a function of the leadership, and how the leadership permeates the organisation. Building a culture in a remote workforce is more challenging than when face to face is the norm. Some have done it well, but mostly they are the enterprises that have started life as remote enterprises, so those who join, and remain, have the right ‘remote work DNA’ from day 1. The holding company of website builder WordPress, Automattic springs to mind. Founder Matt Mullenweg set out to make the company completely remote from day one, but even he has co-working spaces in places where employees are concentrated.
Technology.
Technology is what has made this remote working possible, but it is also planting the seeds of our own disassociation with those we need around us for our own well-being. Like most things, too much of anything good becomes a problem.
Clearly, we are not yet ‘Post covid’. However, the workplace has changed over the last 2 years, and while the jury is still out, when it comes back the status quo will not be the same as pre covid.
There has also been a lot written about the great resignation, and its relationship to covid. My suspicion is that it is not covid specifically that has driven the change, although covid was the catalyst. The model we have been using to get the work done was over a century old, and getting pretty creaky. Covid acted as the catalyst for many to simply reconsider their working lives in the light of the tools that have emerged in the last 10 years, and they chose to make a change. Enterprises must adapt to these new models of work. Those that can’t will become rapidly extinct.
What have I missed?
Header cartoon credit: Tom Gauld
Aug 15, 2022 | Leadership, Strategy
Strategy is an exercise of informed fortune telling.
What will happen if we do this? Is that better than if we do that? How will others react, do the ducks really all align the way they seem to?
A thousand questions we set out to answer to allocate our resources to best leverage the outcomes we plan/hope will emerge.
It is a messy business, full of uncertainty, mistakes, dead ends, and outright failures, most of which we hear little about. Instead, we hear a lot about the few successful exercises in strategy, the few that work as hoped, or as is usually the case, not as planned, but great outcomes.
We read about the success because people can analyse them with the benefit of hindsight, which delivers to those developing the strategy, some level of prescient certainty that they almost never deserve. Fact is, your strategy will never be spot on, the magic is in the ability to adjust on the run, while achieving the outcome for which you planned.
The strategic process benefits from being subjected to informed and critical thinking being applied to the inputs, both quantitative and qualitative. The greater the level of critical thought and diverse thinking that can be brought to bear on a strategic challenge the better.
The context of strategy implementation is always different to the context in which you do the planning, simply because it is the future, and things evolve in unpredictable ways.
I expect that in about 12 months there will be a rush of erudite papers and articles reporting on successful Corona instigated transformations. These will make the protagonists look like they had great foresight others lacked, when in fact, while they ended up with the lollies, they were as confused and muddled as the rest of us during the lolly fight.
They had the benefit of hindsight to clean up their bedrooms before anyone came along for a look.
Strategy is messy because it lacks hindsight
Aug 10, 2022 | Innovation, Leadership, Strategy
When are the funds for an innovation initiative generally available?
At the beginning of a project.
When are the funds for an innovation project generally needed?
Increasingly towards the commercialisation, or completion of a project.
To me, this usual pattern of financial resource availability is arse about.
At the initiation of a project, the resource needs are peoples time, lab space, and the commitment from senior management., The need for financial resources is usually limited. However, it is this time that projects need to gather momentum, which means financial resources and forecast outcomes are included in budgets, and formal planning processes. The best way to ensure a project is supported is to ‘boost’ the promised returns and shorten the lead times.
Unfortunately, this locks in expectations that have impacts on the way projects proceed.
A project that promises 25% IRR in 18 months will almost always win the resources race over a project that forecasts 30% IRR in 5 years. This sort of financial analysis is how choices are usually made, ignoring the strategic implications of the differing projects. This is because we have not found a way yet to reliably tell the future, and immediacy is a powerful motivator.
On top of that you have the favouring of evolutionary ‘innovation’ over ‘revolutionary’ innovation.
Most successful businesses become successful by incrementally improving products and processes over time, and are prepared to spend money to keep the evolution going. The challenge of this is that it crowds out the revolutionary innovation, the ones that have the potential to change markets, rather than just do more of the same but just a bit better.
The examples of these abound.
When I was working for Cerebos in the early 80’s, we marketed a muesli under the brand ‘Cerola’. It was in the days when there were only a few breakfast cereals on the market, unlike today. Similarly, confectionary was less fragmented. We came up with the notion of a muesli bar, a ‘healthier’ snack than anything then available, with the convenience and taste of confectionary for kids lunch boxes. We did extensive product development, several pilot plant trials, and a little market research. In the early stages I had done a forecast profit and loss, timeline, and we had established the capital costs necessary for the changes to the existing muesli line. These were included in the Cerebos budgets as project ‘M’. The numbers were modest, but at the time, pushed as far as I felt comfortable. When it came to the final go/no go decision, the project was binned, as the forecast IRR based on my modest sales forecasts did not meet the hurdle. A year later, Uncle Toby’s came out with pretty much the same product and positioning, and did my annual sales forecast in the first month. Opportunity missed, and lesson learnt.
Kodak, that well known exemplar of the missed opportunity, not only invented the digital camera in 1975, they brought out the first viable digital SLR, the Kodak DCS-100 in 1991. While it was bulky, and expensive, it was the first. In 1994 Kodak supplied Apple with the ‘Apple QuickTake’ manufactured in China to a Kodak design. Also in 1994, Kodak brought out the NC2000 designed for photo-journalists.
So, Kodak did not miss the digital camera revolution, they led it, but simply failed to see beyond the boundaries of the photography business model as it had evolved over the previous century. They saw innovation as an evolutionary process, not revolutionary, as that carried the risk that their existing hugely profitable model would become redundant. None of the senior management over that time wanted to fund the risk of shooting the cash cow upon which they all depended.
Cerebos by contrast were shackled by a short-term focus on an unrealistic financial expectation that ignored the strategic value of the opportunity to generate sales, and also to open a new market that carried and solidified the Cerola brand.
In both cases, a huge opportunity that emerged from the fringes of their markets were subjected to a muddle headed and front-loaded financial calculation, ignoring the strategic implications of the opportunity.
Header source: The extensive StrategyAudit ‘slide bank’ built up over 30 years.
