The critical ingredient that will empower remote working.

May 27, 2020 | Change, Leadership

Social capital

Like all new things, remote work was a small outlier in the world of corporations. It was something that a few dabbled with, mostly with specialist consultants and those for whom they had statutory responsibility, such as maternity leave.

That has now all changed, as the experiment at the edges has been forced to become mainstream in the face of the Corona crisis, and the world will not return to the previous status quo as the crisis dissolves.

Not only do many workers like remote work, as a relief from the daily commute, it has put a focus on the potential of substantial savings in expensive office space, and the opportunity to extend employment to areas where there exists a pool of available labour.

The change is a radical one, not one that would have happened inside a decade without the impetus of the Corona bug, but how do we make it work?

The critical ingredient will be Social Capital.

Are Social Capital and Trust synonyms?

Perhaps. However, to my mind, Trust is something that you give to individuals, and to the extent that those individuals are representatives of an institution, there is ‘rub-off’. Social Capital to me is an idea that encompasses the resilience of the culture in an organisation as well as personal trust given to individuals, and so is a much broader definition.

Pre-Corona, social capital was a function of the daily contact with co-workers of all levels in the corridor, around the water cooler, in meetings, all face to face. It was the glue that held everything together. It is the product of ‘culture’ forged by a combination of genuine leadership, and the instinctive behaviour of individuals, and groups of individuals.

Social capital is like any other form of capital. It needs to be built, strengthened, and renewed, or it dissipates as it is used.  Face to face contact is the primary mechanism for this process, and in its absence, any store of social capital will be quickly used up unless alternatives are developed and leveraged.

Those who just manage by exerting the institutional power  vested in their position in the pecking order will be emasculated. They never built any social capital, often did not see the need or have the ability. Others, the real leaders amongst a group, and they are not necessarily those with the slot in the pecking order, built social capital by their behaviour and attitude towards others.

The former group will hate this remote working thing, as their ability to direct is significantly diminished. They will fight the implementation. Meanwhile, the leaders amongst us will be less impacted, and will welcome the change as it makes the life of their co-workers, to differing degrees easier, while making theirs very different, and probably harder.

You will see the leaders amongst us very quickly, they will be the ones figuring out how best to replace the drivers of social capital pre-corona with new drivers in a post-corona world, and they will be shouting from the rooftops. The others will be in the long line of those swept aside by this tsunami of change.

Leadership lessons from the greatest marketers in history

May 22, 2020 | Governance, Leadership

Leadership lessons from the greatest marketers in history

I do not go to church, do not believe in the god of the Bible, Koran, or any other narrative that offers a solution to the failures of our humanity.

I have however, been in awe of their collective and individual capacity for marketing.

Let’s just take the three Abrahamic religions, Christianity, Islam, and Jew. They are old, old, have persisted, evolved, and successfully transitioned through the ages to remain a major point of faith for hundreds of millions of loyalists.

Great marketing, tapping into the emotional drivers of our behaviour.

In all three, the 10 commandments are central.

The Islamic form is a little different to the Christian and Jewish, but the sentiments about what constitutes a ‘good’ life line up almost exactly.

If god was all powerful, all consuming, why would he/she (to be politically correct) restrict the delivery of rules to just those 10? Why not go further, and ensure we did not stuff up the environment, or congregate in dirty cities, or give us the rules for building a house, and a million other things?

Instead, we got a framework within which to make our own decisions, a set of guidelines about what constituted acceptable behaviour in a civilised community. Within the boundaries of the guidelines, we could behave as we wished to deliver the outcome of a ‘good life’, one that contributed to those around us, as well as to ourselves.

Sounds a bit like a successful strategic framework, does it not?

Less is more.

Lead.

Are you a day trader or a marketer?

May 18, 2020 | Governance, Leadership, Management

Are you a day trader or a marketer?

It is a paradox to me that we treat investments in capital equipment for our businesses and various financial instruments for our own wealth generation, as items on a balance sheet. By contrast, we treat marketing investments, and particularly those made in various forms of communication, as discretionary items recorded in the profit and loss account as an expense.

Nothing is more critical to the long term commercial health of an enterprise than the investment in marketing. Identifying, communicating, creating transactions and building relationships with customers.

There are 3 basic strategies considered by financial investors

  1. Index investment. This is a low risk strategy, sticking to stocks that reflect the particular index against the performance measures that will be applied. The most usual are the reserve bank interest rates, and the top 200 stocks.
  2. Arbitrage investment. Essentially this is a short term strategy that assumes the investor is smarter than the market. It involves a lot of buying and selling of stocks, essentially bets that the short term is higher or lower than the current. Over the long term, there is plenty of research around that indicates that the performance is around the major stock indices. This is also a high cost strategy, in that the constant trading incurs transaction fees, usually not included in the published performance metrics.
  3. Value investment. Investing for value is a strategy that involves taking a long term view of the businesses in which you invest. This means you engage deeply, not just with the numbers, but with the management and culture, as well as taking a view of the marketplace in which they compete. It is a ‘filtering’ strategy, one where a lot of research boils down the potential targets to a very few, in which you take a significant position. It is a focussing of resources at the specific points where you see there is long term returns available, and are prepared to accept the vagaries of the short term focussed market gyrations.

If you apply a similar frame to the manner in which businesses make investments in marketing, there is a remarkable similarity.

  1. Index marketing. Doing what everyone else is doing, being average, a follower, and risk minimiser. It also ensures you do not stand out from the crowd, which in a cut-throat marketing world means nobody notices or cares about you, so perhaps you should save your money.
  2. Arbitrage marketing.  Those following this strategy are just applying tactical actions to situations they see, there is no underpinning strategy, just advertising and promotion, usually driven by a budget that has to be spent, and KPI’s that measure the activity, not the harder to measure  outcomes of that activity. The driving word is ‘campaign’. A string of tactical activities will be seen as a campaign, and usually there is little flow from one campaign to another. This tendency has been accelerated to stupid proportions by digital, where the cycle time of a campaign, limited as they are, has reduced from months to days. No longer are we looking for the ‘big idea’ that will engage and motivate customers over a long period, we are looking for 10 ideas for the Facebook and Instagram posts in the next 24 hours.
  3. Value marketing. Successful marketing requires a solid strategy, well executed with a long term perspective. Over time, you will fiddle with the details as you become more familiar with the minutiae involved, and you fine tune the application of funds as you learn, but it is a multi-year commitment, not a short campaign, and certainly  not a few ‘cat photos’ on Instagram. Such ‘cat photos’ may be a tiny part of the tactical execution, but are never a component of the strategy. This takes time, resources, and most importantly, a laser focus on what is important to the selected group of primary customers. Over time, you communicate your value proposition that defines why they should do business with you rather than someone else, and do so at a price that delivers you a premium return, while delivering them premium value.  Then you retain their business, increasing your share of wallet, innovating, reducing customer churn, all of which delivers sustainable returns. 

 

If any of the above arguments hold true, then it must be that the measures we use to make decisions about our financial selves should be able to be adapted to the investments we make in marketing.

Step one is to see it as a long term investment in prosperity, and not a short term expense to be reported and forgotten, hidden in a monthly P&L.  

Step two is to have a robust, well thought out, and agile strategy.

Step three is to implement relentlessly.

None of this is easy, there are no templates of any value around that you can just download and apply. The requirement for success is the wisdom that comes with long and deep experience, not some superficial knowledge of the advertising algorithms in Facebook.

 

Header cartoon credit xkcd.com

 

 

The huge benefit of the giant Corona jolt

May 4, 2020 | Change, Leadership, Lean

The huge benefit of the giant Corona jolt

For years I have been a proponent of what is loosely described as ‘Lean thinking’.

In effect it is a continuous process of removing waste by a combination of critical thinking and continuous improvement.

The biggest impediment to a lean process is always the mind set of those who need to change in order to reap the benefits. Change is really hard, especially when the existing state is comfortable. It usually takes a jolt of some sort to gain any sort of traction. There have been times when I have applied that jolt myself, as a means to remove complacency.

However, we are currently in the middle of a giant jolt delivered by the bug, which should have created the greatest potential for lean traction I have seen in many years.

A lean process will progressively remove any activity that does not add value to the end customer, and seek to compress the time it takes to deliver that value.

In other words, if it is essential it stays, non essential, it is on the list to be dumped.

Suddenly we are all looking at the services we saw as  part of life and re-evaluating them with the question: ‘Is that essential, how does it add value?’

We are involuntarily applying a critical eye to everything we do, seeking to identify and line up for removal, anything that is not essential, that is just consuming time and resources for little or no value.

To use lean parlance, the ‘Current state’ as it was pre Corona is recognised as no longer an option, and we are by necessity experimenting with the elements we need to survive commercially. In that process, will seek to understand how the ‘Future state’ might  look. In every case, you can make some assumptions, and apply them as guiding principles to  the things you are considering.

For example, will it be part of the ‘future state’ for office workers to commute, often multiple hours a day, to sit in expensive offices in a CBD to do their work? For the last 20 years, despite the amazing communication tools suddenly available, it has been for most. The dominating management culture, mostly the child of old white guys like me, who substituted a bum in a seat for useful outcomes, said it was so.

This current experiment with remote working has demonstrated the nonsense of this formerly dominating view. We do need however, to substitute the humanity of the casual conversation and social networks built from personal contact.

We can save ourselves a lot of time and money by working from home, partly from home, or perhaps decentralised mini-offices. Reducing commuting time is like reducing machine changeover time: it releases capacity otherwise being wasted. For no cost beyond a change of mindset and perhaps a few modest enabling tools, we can free up huge amounts of potentially productive time.

Ask yourself the Question; ‘how much time per person can  we save by the removal of the necessity to commute’? When you have answered it, ask if there was a better way, for the people concerned, and the stakeholders in your business, to have spent that time.

 

 

Header photo courtesy Dominic Freeman

Have we only ourselves to blame for ‘The Bug?’

Apr 23, 2020 | Governance, Leadership

Have we only ourselves to blame for ‘The Bug?’

We have a political situation of our own making.

It is very hard to convince people to invest against the possibility of something that may happen at some time in the future. The cost of the investment is immediate and measurable, the benefit unknown, and perhaps some time in the future.

In a democracy it is very hard to get people to vote for something they cannot see and feel, immediately. We moan, and I am a chief moaner, about the lack of foresight and planning evident, that has enabled the bug to run riot through our economies, but do we only have ourselves to blame?

There are three types of actions that can be taken by any organisation, public or otherwise.

  1. Reactive. These are decisions and actions taken after an event.
  2. Responsive. Actions and decisions taken as events are unfolding
  3. Pre-emptive. Actions and decisions taken in anticipation of an event designed to mitigate the impact.

If we were to categorise the performance of our various governments over the past 12 months, I would say that in relation to the fires that started in September last year, they were reactive, and even that is being very kind. The floods, now almost forgotten in February, the response was again reactionary, and sadly lacking substance. In relation to the Corona bug, they seem to have done better and been responsive, taking decisive action as events unfolded, and being prepared to adjust the response as more data becomes available.

Coming out of this, I would like to see some sort of pre-emptive actions taken to mitigate the impacts of the next catastrophe, whether it be another bug, fire, flood, or financial meltdown. As a country we have to build our operational resilience, meaning the ability to invest so that the impacts do not drown us.

Do this, and we will be a much stronger nation. Alas, in a democracy this is really hard, as it requires a collective desire to invest now without any idea of the outcome or payback, and electorates are not good at this.

This difference neatly explains the quick and substantial reaction to the current Corona crisis, but our almost total of lack planning and investment to mitigate the impact of climate change.

The current idea of a location app on our phones is a great example of the dilemma we face.

It makes absolute sense that we are able to track the movements of people in the face of a highly infectious disease, to see with whom they interact, even by chance, so that we can throw a ring fence around the bug. Most would probably agree,  but the downside is that we do not trust the politicians and ‘forces of evil’ to turn the thing off, and leave it off, when the crisis is over, thereby impinging on our rights to privacy.

In a democracy, like , this will probably mean a very good idea is thrown away. However, I bet that in a different system, it would be embraced, as public sentiment would not matter, and is kept private anyway as a means to stay out of the spotlight, which can be a dangerous place to be.

 

Header cartoon: courtesy David Rowe, AFR.