Apr 8, 2021 | Leadership, Management, Operations
Have you ever started to read a book, and decided to miss chapter 1?
I guess few ever have.
Miss chapter one, and you miss the foundation of what is to come. It is the first impression, creates the context in which the book is set, irrespective of it being fiction or non-fiction.
Why then do most businesses and their advisors not read chapter 1 of the business improvement handbook?
I know they do not, simply because Cash is such a low priority in these conversations. It is left behind by management clichés and fluffy words about visions and missions.
These things are all important, but in the absence of cash, beyond reach.
How much cash does it take to run your business?
How long is your cash conversion cycle?
What are the sources of the cash you are using?
What are the trends in your free cash flow?
These should be chapter 1 of the business improvement handbook.
When you know the answers, you can move on to the things you can do better to free up more cash, then to the operational, customer and strategic challenges being faced, knowing how much cash you have at your disposal to address these challenges.
Let me know when you need some experienced assistance sorting all this out.
Mar 29, 2021 | Change, Leadership
We seem to accept that the world is getting faster.
The tempo of activity is picking up in just about everything in our lives, and the 2020 pandemic did nothing to slow anything down. Instead, it operated as a catalyst to an increase in tempo across the board.
Trends that were evident, emerging slowly, suddenly took on a huge leap in tempo. The pace of government decisions, the evolution from supply chains and business models, remote work, and others, all accelerated. Perhaps the most astonishing is the speed at which a vaccine for Corona has been developed, tested, and is into the early stages of distribution. A process that would normally take years, condensed down into 10 months.
John Boyd spoke about Tempo as being the determining factor in the OODA loop. The combatant that could realign their tempo quicker than their opposition won the fight.
Several Cafes in my local area of which there seemed to have been a pre-Covid oversupply, have not reopened. A characteristic of those that have reopened is that during and since the height of the closedown, they were able to evolve their business model. They introduced new products and services quickly, way more quickly than would have been the case in the absence of the virus.
In the natural world, the tempo of climate change appears to be quickening. The melting of the polar ice is now happening at a rate higher than the worst-case scenarios predicted just a decade ago. Compounding that is that the tempo of the melting is increasing as the seas warm, as a result of the reflective ice being gone.
All around us, the tempo of life is speeding up, and the speed is reflected in the speed at which changes in direction occur. As a result, it is becoming increasingly easy to be left behind, even when you are diligent about continuous improvement of your own operations, and in scanning the environment in which you compete for signs of ‘movement’.
It seems to me that long term survival will require significantly more attention to be focussed on the wider context of your competitive environment than has been the case in the past.
Finding the right means to deliver that wider and deeper understanding of the competitive pressures will evolve into a determining factor in commercial survival.
Tempo.
Tempo of activity, of decision making, of change, and of competitive action.
Do not be left behind, you will be shot down.
Header photo: John Bonham, legendary Led Zeppelin Tempo man.
Mar 24, 2021 | Change, Leadership
There has been a lot of commentary on what we as a manufacturing cohort, and the government should do to haul Australia out of the steady decline of manufacturing.
Most of it is good, thoughtful commentary, but we seem unable to move forward meaningfully on many fronts.
Question is, how will we know what works and what does not in the absence of specific and apolitical (in the widest sense of the word) measures?
Following are some thoughts distilled from the commentary, and relying heavily on the 2016 paper by the Australia Institute. On re-reading this paper, it seems obvious from my interactions that the numbers may have changed somewhat, but the trends are still in place, and probably more advanced. An update would be immensely valuable.
It seems sensible to me to articulate a few boundary items that need to be addressed before any detail can be reasonably considered.
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- If we are to effectively manage investment and activity across the economy, we need a common base and clear definitions of what is included under ‘manufacturing’. In short, a common nomenclature.
- Following nomenclature clarity, we then need what is in effect a national manufacturing P&L, undiluted by fuzzy numbers from other sectors, free from confirmation bias, and understood by all. While we do have a range of measures currently via industry bodies, the ABS, and various government departments, there is no common base for measurement. This lack of commonality just serves to obscure the numbers, and more importantly, the trends.
- Having such an explicit set of manufacturing numbers would enable valid comparisons against which to measure progress. Comparisons to other parts of the economy, similar economies around the world, the components of the total numbers, items like employment, sources of inputs, impacts of investments, supply chain agility, all the things we do routinely for our own businesses. This would not be an easy task, but to my mind, it is a vital one.
- Having solid articulation of the current situation is the core of any sensible strategic planning. While we all know the plans will be flawed, and need to evolve with circumstances as implementation progresses, the process of strategic planning is essential.
- Eliminate the prospect of ideological change as governments change by deepening the recognition that for the economy to be sustainably prosperous, manufacturing is a foundation stone. Businesses will be more likely to invest when their time frame of policy certainty is longer than a few short years and managed by a bunch who spend their time watching what the loonies on Twitter think is a policy input. The debacle with energy policy, and lack of it, over the last decade should be a salient lesson for the future.
- Invest in education and research, the underpinning that businesses need to harness to deliver innovations products. We have a fine record of research on limited budgets, but a lousy record in the commercialisation, although there are individual examples that run against this observation. The intellectual infrastructure that delivered this fine record has been rotting for 35 years or more, and we are seeing the impact now. The cycle time of science to marketable product is more like 30 years than 3, and that time frame requires public investment. Sadly, we seem unable to grasp this simple notion. As a result, we have bureaucrats trying to pick winners in a 3-5 year timeframe, and the continuing erosion of investment in education.
We should take advice from some of the real geniuses that have passed through.
‘You cannot manage what you cannot measure’ is Peter Drucker’s often used quote with which I agree, partly. Einstein, speaking on the same topic also said, ‘Not everything that counts can be counted, and not everything that can be counted, counts’.
Two geniuses having different views on the same topic. How confusing is that?
No wonder the Canberra clown factory and its state based training camps cannot get its head around the challenges.
Header cartoon courtesy Tom Gauld at www.tomgauld.com
Mar 21, 2021 | Governance, Leadership
I have been dismayed by the quality of the language coming from our leaders, deteriorating as it has for the last 45 years I have been watching closely.
With several notable exceptions on both sides of the house, the standard, if measured by the insight and understanding delivered to the listener, has dropped to the level of a Sunday school teacher proselytising for their invisible friend.
“Political language……. Is designed to make lies sound truthful, and murder respectable, and to give an appearance of solidarity to pure wind’
So said George Orwell in his essay ‘Politics and the English language’ published in 1946.
Orwell thought this manner of language use to be a ‘contagion’ devoted to hiding the truth.
It seems to me that the contagion has well and truly dug deeply into our political ‘leaders’ now, with Scotty from Marketing being the current flagbearer.
I almost miss Pauline Hansen’s outrageous mishandling of not only the language, but people’s common sense and the truth, when listening to Scotty blather on. It is easy to dismiss Hansen as a looney, of little consequence beyond a small and decreasing group of loonies. It is way harder to dismiss the impact of a Prime Minister defending the indefensible, taking credit for anything good that happens despite his ministrations, and abrogating any form of responsibility for those that tank.
A little bit of truth, transparency and humility would go a long way to restoring the shattered trust, we the electors have in those who end up in the various parliaments around the place.
Mar 11, 2021 | Change, Leadership, Marketing
Every successful strategy I have seen, heard of, read about, or imagined, has three common factors. The first is obvious, the second and third less so.
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- The strategy is implemented.
- The strategy is communicated widely as a story, that draws stakeholders in, giving them an emotional stake in the outcome. It is backed by research facts and figures, speculation, and opinion, but at its core, it tells a story.
- The strategy is modular, evolved from the bottom up, not delivered intact in final form by the hand of some commercial demi-god. One section builds on, and in turn relies on other parts of the strategy, for the wider impact. Each part is interdependent of all other parts, to some extent.
This organic structure enables strategic evolution in response to the changing external environment and internal learning as the strategy implementation evolves, without losing sight of the objective. The path to the end has many possible sub paths, but the end is clear.
A successful story has a beat, a rhythm to it that responds to some sort of incident, observation, or crisis, and a resolution, all built up in a series of ‘beats’ each of which has each of these elements escalating into sequences and a climax of some sort.
The emergent strategy, like an organic structure, has a range of base materials organised as self-contained units that combine to form an ever increasingly complex and interdependent system.
Developing a strategic model that has the potential and opportunity to evolve is not something that comes easily from a template, or ‘packaged’ advice. It is extremely context sensitive, fragile in early stages, requiring constant expert attention and nurturing.
Call me when you need some of this ‘strategic gardening’ to enhance your performance.
Header cartoon is once again courtesy of Scott Adams and Dilbert
Feb 22, 2021 | Change, Leadership
I cannot help but be amazed by (what I regard) to be delusional crap coming out of the mouths of politicians from both sides, after Facebook exercised its power and chopped Australia off the map.
Michelle Rowland, the Labor shadow communications minister wondered if ‘it was the beginning of the end of Facebook in Australia. This reflects the mutterings of the Minister, Paul Fletcher, who should know better, and I am sure he does. However, he is gagged by the naive simpletons in the government who simply have no idea of the power of the platforms they have allowed to dominate the landscape.
I well recall the confected emotion generated by the debate about media diversity in the 80’s and 90’s. The claim that our democracy, and perhaps even lives would be threatened by the erosion of a diversity of ownership across what are now legacy mediums, and how the regulations put in place to ensure that diversity would benefit us all.
So much for diversity. Two global multinationals dominate in some areas, while an American media magnate dominates across the legacy mediums, making billions in profits, and crying for help against those who ate his digital breakfast.
The threat by Google to cut off search in this country, now seemingly off the table, is being seen as a win for the government. ‘Google backed down’ is the claim.
No, Google simply took a step back to see what would happen next. The clusterf**k that would have been the landscape of Google cutting Australia off the map is almost unimaginable. Geometrically worse than Facebook taking the same action, as so many businesses use the tools provided by Google to run their internal processes.
We have two lessons coming from this exercise in global power.
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- The shallowness of the strategic thinking going on in Canberra, and to be fair, most other world capitals, and how their power has been knackered by a couple of digital unicorns.
- How absolutely necessary it is for businesses, particularly SME’s who are very vulnerable, to take back control of their own digital lives.
When you need a catalyst for your thinking on these sorts of existential risks, let me know, I can help.
