Apr 25, 2024 | Culture, Leadership
‘Resilience’ is a word we are hearing a lot these days and will hear more today.
On this ANZAC day 2024, there will be a lot of words sprayed around that amount to acknowledgement of the resilience of ANZAC troops.
They clung to the cliffs on the Gallipoli peninsular, died in the mud of Passchendaele, slogged across the Owen Stanleys a couple of times, and lived under rocks in the seaside splendour of Tobruk.
It is used to describe both the personal characteristics required of the individual, and the culture of organisations.
The dictionary definition leaves a bit to be desired, referring to the ability of a person or organisation to return to a previous state. ‘Elasticity’ is a common simile.
How do we measure resilience? If we cannot measure it, as the saying goes, we cannot improve it.
What is the measure of resilience shown by the ANZACS in those meat grinders? Indeed, how do we measure the resilience of those at home, watching as the casualty lists were posted?
In a commercial context, resilience implies the degree to which an enterprise is able to absorb and adjust to the unexpected. Usually, it refers to the short term from the decisions made by others that drive an unexpected outcome that changes the status quo. Substantial competitive moves, new products that deliver new value, or the emergence of something that could be classed to some degree as ‘disruptive’.
Measuring by financial outcomes is misleading. Financial outcomes are the result of other decisions taken on the inputs to the business. Do that well, and you become financially secure, do it poorly and you go out of business.
The allied high command on the Western Front measured the outcomes of their initiatives by two things: the ground gained, and the casualties incurred. Of the two, the first was the more important to them. Field Marshall Haig never got close enough to the lines to understand the resilience required to ‘jump the bags’, again. The linkage and enormous gap between his orders, written in the splendour of the Château de Beaurepaire, and the squalor and death on the front lines that was the outcome, was never meaningfully acknowledged.
Measuring outcomes is always easier than measuring the inputs, then allocating cause and effect to the decisions but is rarely useful. Just as measuring your weight every morning will not assist you to lose weight in the absence of resulting reduction in calories, throwing yourself at a machine gun nest will not win ground.
It does however require resilience, courage, and dedication to both those beside you, the wider objective, and willingness to ‘do the work’.
In our modern world, despite the continuous marketing of the silver bullet products promising the contrary, there is no substitute for domain knowledge, planning, optimised resource allocation, and the sheer resilience to stick at it in the face of adversity.
It comes down to the culture at the micro level. How the individual behaves, and how that behaviour translates to the immediate group.
It has always be so.
It is a lovely autumn day in Sydney, as we reflect on those that gave us the opportunity to enjoy the freedoms we take for granted. It is also my beautiful daughters 38th birthday. Happy birthday Jenn!
How time flies.
The header is an arial photo of the gorge, hidden in the Wollemi State Forest, after the fires of 2019-20. The green spine is made up of the only stand left of Wollemi Pines. They have survived since the dinosaurs roamed the area. Resilience.
Apr 17, 2024 | Change, Leadership
The following is a post that I drafted at the beginning of the Corona epidemic but did not post.
It is a personal reflection on ageism, that becomes increasingly relevant as older, retired workers I see around me now going bonkers from boredom. Few want the pressures they had as youngsters climbing the slippery corporate pole, or struggling to manage and grow an SME, but they do wish to remain useful, relevant, and earning a bit of pocket money.
By ignoring this growing cohort, we are also ignoring the wisdom of hard-won experience, and 4 years later, thought it worth the question.
At 34 I landed my first job as Marketing Manager of a stand-alone business, a significant FMCG manufacturer.
The business was an absolute basket case, and in the middle of a major investment in new facilities in Western Sydney that was financially and operationally irrational. However, the move of location encouraged a number of the marketing personnel I inherited to leave. This gave me the opportunity to recruit people who I thought had the skills and mindset to contribute to the massive task of rebuilding.
The process was a standard one for the 1980’s, via a head-hunter who provided a big list of potential people against the brief I had provided. Amongst the guidelines was a requirement that he find people who had a different background and skill set to my classic FMCG marketing history. On that list was an older bloke, late forties, who fitted pretty well the profile of what I was looking for, and who in addition, was desperate for the job. His previous employer had ‘re-engineered,’ which was one of the management fads at the time, and he had been a victim of that ‘re-engineering’.
I had several conversations with him over a couple of weeks, and eventually decided against hiring him. At the time, I rationalised this decision as being sensible, as he was late forties, seeking a job for which he was overqualified in a number of ways, working for someone who was significantly his chronological junior. I assumed he would move on as quickly as he could, leaving me with a problem I simply did not need.
Even at the time, in the back of my brain, I also knew I was intimidated by someone so much older, with far more experience across a range of areas where mine was lacking. How would it look, risking being shown up by someone who formally reported to me?
Over the subsequent 10 years as we dragged the business kicking and screaming into the 20th century, as Marketing Manager, but also controlling several other functional areas for 8 years, then GM for 2 years, I reflected on my decision about this man. How much would his experience have contributed, even if just for a short time, as we transformed the business from the basket case it had been, to the much larger and very successful business it had become.
Almost exactly a decade later, I found myself ‘re-engineered’ after ongoing differences of opinion with the Managing Director of the corporate of which we were a division, reporting at the bottom line.
It was then that the frustration and desperation he must have felt really hit home. I discovered I was too experienced to be a Marketing/Sales manager, but too inexperienced to be a General Manager/MD. It is also possible that the reality is that I am not as ‘pretty’ as some, and believe strongly in expressing views in as frank and open manner as possible. This is a toxic combination in an interview process for a corporate role.
It also seemed that at 46, and dispirited, which I had become after 18 months of relentless looking, I was too old.
Ageism had a face, and it looked back at me every morning as I shaved. In no way was that ageism deliberate, or even more than partially recognised at the time, but it was there, lurking in the background.
As a result I started to take seriously some of the conversations, advice, and a few paid ‘quick fixes’ I had delivered over the 18 months of ‘gardening leave’. The paid ones utilised not only my skills and experience, but attitude. None evolved into a long-term job. However, they paid some of the bills piling up with a young family, which was at the time gnawingly stressful.
I look on now and consider the manner in which the carnage being wrought by the Corona Virus will impact on a huge number of peoples lives. I shudder at the number who are experienced, qualified, and who will not be able to regain employment that leverages those skills.
At 68, I think I am in a better place to make a contribution than I was at 45, 55, or even 65. (I am now 72, and the observation holds)
I wonder how many Millennial, or Gen Y managers will want to risk being shown up by someone who has seen and survived a bunch of booms and their subsequent busts over a long commercial life? Just as I feared I would be shown up back in 1985.
Despite the progress made over the last 25 years in recognising the value to be contributed by genuine diversity, I fear that as we start the long road to recovery, ageism will again rear its ugly head. It will leave huge amounts of experience, resilience and capability withering in the lines of unemployed, or at best, underemployed.
Apr 15, 2024 | Governance, Leadership
We lost an intellectual giant last week, Daniel Kahneman.
Psychologist and Nobel prize winner in economics, he along with long term collaborator Amos Tversky, created what has become known as ‘Behavioural Economics’.
So what you say.
In 2010 Kahneman published research that demonstrated that income was strongly correlated with happiness at lower levels, but above a seemingly modest level (US 75K at the time) it had no effect.
In 2021, a Wharton academic Mathew Killingsworth published a paper that came to the opposite conclusion.
In order to reconcile these conflicting outcomes, Kahneman teamed up with Killingsworth and a third, neutral researcher to establish the truth.
The result was a case of diminishing returns.
It found there were substantial gains in happiness up to 200k income, but after that, diminishing returns kicked in. The ‘happiness curve’ flattens out, eventually delivering no increase in happiness with an increase in income.
This seems to make sense to me.
At a point, an increase in income does not increase happiness (I aspire to discovering that point) it just becomes a scorecard, no different from the one used on a golf course.
Given this instinctively sensible outcome, should Dr Chalmers add a level to income tax?
At a point above an income level few will ever see, impose a further meaningful tax rate on the increments?
Despite the inevitable screams, they will not miss the money, and you never know, it just might make those few happier.
Apr 8, 2024 | Change, Leadership
The only way to solve a problem, particularly a significant one is to understand the cause of the problem and eliminate that cause.
Rip the band-aid off.
Taking a short-term action to address a symptom of a problem is just kicking the can down the road. The problem will return unless the root cause is addressed.
In a previous life working in a regulated industry, I observed many problems that were never addressed. Simply, they were papered over with a short-term fix that looked good as action had been taken. However, they only served to compromise performance and leave the problem to someone else. The industry ended up with a huge pile of band-aids obscuring and complicating the identification of the root causes of the problems that continued to emerge.
Deja vu is upon us.
The current housing crisis is an outcome of decisions made progressively over the last 40 years. Some were made with the best of intentions, others for purely political reasons. However, the chickens are now crapping all over the hen house in the form of a housing crisis that will not be solved by sticking another band aid, or even a couple of boxes of them, over the symptoms of the problem.
The solution hides in addressing the cause.
Progressive governments have given investment in real estate significant tax advantages. This diverts that investment from alternative more productive uses, leaving us with the current shortage of housing, and stratospheric rents.
Ripping the band aid off now will be extremely painful for tax advantaged investors, but is essential.
There is a budget due in a few weeks, I expect more band-aids.
The current government when in opposition lost an election by proposing some sensible but relatively painless, to most, measures that started to address the root cause. The then government, now the opposition, was relentless in painting the sensible moves as robbery by the government.
It was as stupid and false as to claim that electric vehicles would kill the weekend.
Most of us would be better off with changes being made, our children and grandchildren most certainly would be.
Unfortunately, the battle for political power outweighs consideration of real debate, long term perspective, and benefit to the majority.
The longer we leave it, the greater will be the pain when the time comes that we have no option but to rip down the mountainous pile of band-aids.
Mar 28, 2024 | Leadership, Small business, Strategy
Success of an SME means they have crossed that shark filled river where most SME’s fall over.
They have sufficient scale to employ functional personnel to address the day to day running of the business, and are returning the cost of capital and a bit more to the owner.
For some this is a level of comfort that is satisfactory, but to most who have strived to get across that river, it will not be enough, they are of a personality type that will be looking for the next challenge.
So where should they look?
Do yourself out of a job.
When you can go away for 3 months and wonder why nobody missed you, the business has reached the point where you are no longer needed daily. Accept that and get a life, or knuckle down to scale the business. For many that might mean becoming a non-executive chairman, staying engaged, but well away for the week-to-week challenges. You have created a manager system and ‘bench’ that does that. Leverage it.
Identify the industry constraints.
Every industry has a set of constrains that are rarely even noticed, they are just the edges of the status quo. Every useful innovation that has evolved, has done so by addressing a constraint that few, if any had even seen. The outcome of this insight is to deliver the opportunity for significant value addition.
The exempla was Steve Jobs. He saw the constraints in personal PC’s when he saw the work being done at Xerox Park developing a Graphical User Interface. When deployed in the Mac, the GUI changed Apple from a hobbyist into a leading PC. He repeated the magic with the original iPod, then the iPhone, and the App store. Each of them operated in an existing environment, with existing technology that could be deployed in ways that removed the accepted industry constraint, changing the face of that industry. You do not need to be a huge organisation to do this. In my local area there is a plumber who guarantees his work, and guarantees the time he will turn up to do it. Failure to address either means the client does not pay. He charges a significant premium, and now has a number of vans on the road, simply because he redefined an existing constraint in this local area.
Identify and remove internal constraints.
As with an industry, every business has a range of internal constraints that together become the culture and status quo in that enterprise. There are always opportunities to do things better, but are often overlooked, by simply not being seen, or miscategorised.
A former client removed an internal constraint and added 10% to his gross margin overnight by doing so. The business, a medium size in his industry had kept three suppliers of the core item in his manufacturing operations holding roughly equal share of his business, for roughly equivalent products. There was little to no internal competition, each of the suppliers did so from their price list, while maintaining very friendly relations with the MD and purchasing manager. We instituted a competitive bid for a guaranteed 80% of the purchases, with the remaining 20% to go to the runner up as a consolation prize, and ‘backup’ to the major supplier. The cost reduction that came from that relatively simple exercise dropped straight to the bottom line.
Currently the evolution of AI is creating huge opportunities for enterprises to deploy tools that will optimise existing processes and enable scaling at little or no added cost. There is a learning curve, an investment required, but not engaging means you will quickly fall behind competitors, while ignoring the opportunity to go quickly past them.
Build performance consistency.
For those with a view to one day selling the business they have built, there is no substitute for being able to show consistency of performance over time.
Even when an exit is not even contemplated, seeking ways to build consistency has the result of simplifying an enterprise which almost automatically adds margin and cash.
To build performance consistency takes time and effort. It requires a combination of being ‘in the weeds’ implementing processes that recognise and address tactical and operational improvements daily, and taking a ‘helicopter’ view that enables strategic positioning. This combination is easy to say, hard to do.
A buyer is buying two things, both of which are extremely valuable, irrespective of the inclination to exit the business:
- Optimise the existing business processes and infrastructure,
- Map the path that best delivers future cash flow.
Demonstration of positive performance consistency on both these parameters will give you back time, and optimise the buying price if and when you exit.
Header credit: My thanks to Hugh McLeod at gapingvoid.com
Feb 29, 2024 | Change, Leadership, Marketing
If you asked a room full of marketers if marketing had changed in the last decade, you would get most of them telling you it had changed radically.
On the surface it has, the digital revolution has taken marketing by the neck and given it a great big shake.
There has been an explosion of sales, media, connection, and payment channels, customers are more wary, and do their own research before a marketer knows they are in the market. So called ‘content’ has almost infinite reach, but the frequency is rubbish, as there is so much digital noise, and so much competition for attention, that most of it is the digital equivalent of yesterday’s fish wrapper from the newspaper obituary section. The investment in marketing technology to manage all this has also exploded.
There is a welter of research and opinion that confirms the notion marketing has changed, some by very credible organisations.
I asked myself the question again, after stumbling across this report by Adobe, one of those credible organisations that supports the ‘yes’ vote, and came to a partly different conclusion.
Marketing has changed, absolutely, at the tactical level. The means by which marketers create and deliver a value proposition, then turn it into a transaction is unrecognisable from just 5 years ago. However, tactical implementation is just a small part of the pie.
Organisationally, marketing has changed a bit. Generally, it is still a function in a group of functional silos that reports to a CEO. A range of new titles have emerged, Chief Marketing Officer, Chief Engagement Officer, and so on, but that does not change the essential reporting and accountability of those in senior marketing roles. The marketing organisation in large enterprises has also siloed, now there is digital, customer service, technology, and a range of other functional roles within marketing not present 5 years ago.
Strategically, marketing has changed little if at all. The role of marketing is to tell the future and adjust the value proposition to customers ahead of the changing preferences and behaviour. That has always been the case, and remains so.
The only strategic change I can see is one of leadership.
In the past, marketing has generally been a passive corporate player, relegated to the role of managing one of the largest expenses in the P&L. Now the value of enterprises is so much more in the hands of intangibles, that marketing is increasingly demanding a seat at the big table. This requires that marketers are able to lead their peers and boss. Unless they can achieve this position of leadership, they will remain the simple gatekeepers to one line in the P&L, rather than being responsible for the future health of the enterprise.
Look at it from the top down.
Marketing has changed little strategically, but strategy is by far the most important component.
It has changed organisationally, and while it is important, in most areas, it is not a game changer.
Tactically, marketing is unrecognisable, but who really cares. Tactics are short term, able to be changed in real time as the situation evolves. Marketers need the organisational capability to be able to change in real time, but the impact of failing to do so is limited.
The marketing groups that will be successful into the future are the ones that are successful leaders of their organisation. To achieve this role of leadership, they must be able to identify the priority areas for investment and activity, as well as being able to remove the organisational constraints that operate in every enterprise, that are not directly accountable to marketing.
Well, they are not accountable until marketers are in the corner office, which should be happening more and more as they are the future tellers. Those who currently occupy that office are usually the engineers, lawyers, and accountants who are good at reading the past in the data, and hoping the future looks similar.
Who is next in your corner office?
