To focus, ask the ‘Framing Question”

To focus, ask the ‘Framing Question”

Jan 16, 2019 | Management, Operations, Small business

 

One of my acquaintances is in a real muddle, and stressing out beyond the point of sensible.

His business is circling the drain hole, and he is drowning in things that he thinks he needs to do, and things that his various service providers, suppliers and customers have told him he must do, now, or sink.

Problem is, they are all different, and all come from the perspective of the person offering the advice.

Over a beer, during the Christmas break he observed I had been the only person he knew who played in this space, and had not offered a ‘perfect solution’ to his problems, so he asked my opinion.

I do not have all the details of his situation, so have no solid base from which to offer a view, but suggested he ask himself what I call ‘The Framing Question’

‘What is the one thing I can do, such that by doing it, everything else will be easier or unnecessary’

Answering this question will lead logically to several others, such as ‘How’,  which leads onto a set of steps, which begins to sound like a plan!

You can have a plan that is really long term, which often resembles a dream until you put specific milestones and performance measures in place, and work towards it progressively. Exactly the same thing can be said about the tasks that confront you on a daily basis.

Making sure that the daily tasks build towards the longer term one is simply a cascade of the daily answers building over time. The daily answers will vary, the longer term answer should not.

In my acquaintances case, the answer was ‘Cash’

He is now working on executing a plan we developed on the back of a coaster that manages his cash better, and will generate more of it.

The plan was for 90 days, which was all he had left if nothing changed, with targets and tasks, and he now has a cascade of monthly, weekly  and daily priorities that he and his staff will work on before anything else. 

What is the one thing I can do…..?

A simple question, but clear and with no room for wriggling.

 

 

How can a bureaucracy be intelligent?

How can a bureaucracy be intelligent?

Jan 11, 2019 | Governance, Management

 

Bureaucracies evolved as a means to assemble and deploy the resources necessary to do a job.

As organizations grew, so did the bureaucracies that supported them grow in sympathy. Somewhere along the way, size gets in the way of efficiency.

An organisation of 20 people requires an organising template, a bureaucracy of a sort. However, the people all know each other, so the ‘rules’ do not inhibit communication, everyone knows what they need to know and do via the personal networks.

Go to an organisation of 100 people, particularly when they are not co-located, and the social system starts breaking  down, being substituted by communication within the walls of every persons place in the functional hierarchy. We tend to see up and down the silo, rather than between people who need a piece of information.

Once you get to a large organisation, the bureaucratic silos have become impenetrable barriers.

Technology has given us the answer, as used well, it empowers the  personal networks in a highly leveraged manner. However, to be cross functionally successful, the culture within the organisation has to change, as the personal networks cannot break down the silos by themselves. To do that, leadership is required, making it explicit that functional responsibility is no longer the only relevant factor, in fact it is the lesser of  two responsibilities.

The first is to the success of the organisation, measured by the delivery of outcomes, followed  by the functional responsibility.

It is every persons individual responsibility to ensure that those who need the information others  have are in a positon to get it and use it without the bureaucratic silos getting in the way.

Achieve this, and you will have combined the scale that is enabled by functional silos, with the agility of small groups.

An Intelligent bureaucracy!

Wouldn’t that be nice to see?

The 8 most viewed StrategyAudit blog posts of 2018.

The 8 most viewed StrategyAudit blog posts of 2018.

Jan 5, 2019 | Leadership, Management, Marketing

 

Over 2018, the StrategyAudit blog attracted 19,948 page views from 10,568 individual visitors, about 65% of whom are repeat visitors. To me this repeat visitation is a vital number. I would rather have 1 person who demonstrates that the musings I publish are of value by returning, than  10 casual visitors who read and leave, never to return. Also important is the simple fact that on average, each visitor visited almost 2 posts. Averages are misleading, many visitors leave quickly, others engage with 2,3,sometimes 4 posts, and sign up to the feed so they do not miss further posts. It is this engagement that delivers the value to them, and is the reason I persist.

To some, 20,000 page views across a year would constitute a disaster, they get that in a week, but to others, it is a significant number. I am just pleased that the number is well up on 2017, despite the increased ‘noise’ from so called content that now infests the web.  

These numbers are in addition to  the thousands of views that occur from second party platforms, most often LinkedIn. These are valuable, but long term digital marketing success is dependent on the quality of your own digital ‘homebase’ where you control the rules. For example, back in August, LinkedIn changed their algorithm, and the visitors from LinkedIn halved overnight, and the geography changed from 75% Australia, where there is some potential return for me from the effort of writing the posts, to 75% from the US, from where I will not be able to leverage any benefit. I do  not mind helping the Americans, they need all the help they can get, but it is nice to have some hope of receiving a benefit in return, which Linkedin, and their colleague ‘Social’ platforms are making increasingly difficult unless you pay for it.

Organic reach from third party platforms is almost a thing of the past, something  to think about as you plan for 2019.   

To the most viewed posts of the year.

The 4 dimensions of project planning. Published July 2016

It looks like this will become one of the most viewed posts over an extended period, as the numbers keep climbing every month, 2018 being 40% higher than 2017. It is only a short post, 300 words, but summarises the challenges faced by every team planning a project, from a tactical initiative to a major enterprise changing implementation.

7 tips on how not to be boring while presenting. Published March 2018.

This post garnered may views in the days after it was posted, but attracted little attention thereafter. This is  not an uncommon pattern amongst those posts that have a ‘long tail’. They start slowly after an initial  flurry, then build over time. I am hopeful this happens with this post, as several readers have let me know that the tips have helped them enormously.

3 essential pieces of the supermarket business model. Published November 2014

This post would be on this list for every year since 2014, clearly it struck a chord.  Although 2018 was below 2017, it delivers readers to the blog every day. Along with Loose/Tight management further down this list, it is the most viewed post I have written. On several occasions, this post has been the basis of a successful keynote to various gatherings.

11 trends that will influence success in 2018. Published January 2018

January and  February were big months, presumably as people planned for the year, with little since. However, the trends noted for 2018 are all still present as we face 2019, so I would expect (hope for)a revival.

How do you measure culture?. Published May 2018

May and June were heavy, with modest numbers subsequently, but this post is building momentum slowly, as we come to realise the vital role enterprise culture plays in success, and failure. Perhaps I should send it to some of the senior executives in the financial services industry, as they contemplate their navels and bonuses in the wake of the royal commission.

Loose/tight management. Published October 2010

This is the most surprising post, delivering pretty consistent numbers month in month out since posting, in the early days of this blog. it is short, and specific, must be the headline that catches ‘googlers’. However, I note a recurring flurry of readers in April/May every year, so assume that somewhere an academic has cited the post in course material.

What is the number 1 job of the CEO? Published July 2018.

Published at the end of July this post was seen mostly in August, with few views since then. A short post that concludes that the number one job of the CEO is to create the environment in which employees can flourish, thereby delivering the strategic and financial outcomes required for sustainable economic success. In a word, the number 1 job of the CEO is ‘Culture’

10 considerations to make better pricing decisions. Published July 2018.

Significant readership in the days around posting, then almost nothing. Perhaps it is a lousy headline, a good one is vital to attracting readers. This is unfortunate, as I consider it to be one of the posts that can deliver  immediate and meaningful outcomes to readers after consideration of the issues noted. It has also been the basis of several seemingly well recieved keynotes.

These top 8 posts are only 15% of the total post views over the year, a strong indication of the longevity of posts that add value to someone, somewhere.

Now, on to 2019. Thanks for reading, your feedback and good wishes during 2018.

 

The where, why and how of enterprise value creation.

The where, why and how of enterprise value creation.

Dec 17, 2018 | Governance, Management, Strategy

 

The balance sheet of an enterprise is a snapshot in time of the financial value of an enterprise. The comparison of balance sheets over time delivers a picture of the value creation, or destruction, of the enterprise over time.
The ‘Financial trio’ Balance sheet, Profit & Loss, and cash flow, together generate a picture of the performance of an enterprise, and are the foundations of performance management.
However, these are not enough for a thoughtful management.
To build a clear picture of the intrinsic value of a business, we need to look beyond the financial accounts, to the ability of the business to create sustainable value for customers. In other words, provide solutions to problems that cost less than the amount customers are prepared to pay for those solutions.
Therefore a closer look at the parameters of value may be useful.

Value cycles.
When the return on capital exceeds the cost of that capital in a given period, value has been created. Looking at the cycles in isolation can give a distorted picture, driven by seasonal sales mix, competitive activity, operational changes, product launches, and many other factors. These cycles always have in them a mixture of the short term challenges faced, and the longer term factors almost always driven by trends external to the business, such as technology adoption, regulatory changes, and the emergence of new competitive business models. Understanding the cycles of value creation and consumption can assist not only in smoothing them out, but doubling down on the good times, hunkering down in the bad, and ensuring that your strategic thinking is tuned to the evolution of the external environment.

Where is value created or consumed.
This can be pretty granular to geographies, product lines, market segments, brands, and so on. Understanding the variations, and applying pressure to them can dramatically increase the average value creation by isolating areas where it is routinely being destroyed, and fixing them. In many instances, the value destruction in the short term is deliberate in an effort to build value for the future. However, often the destruction is unseen in the mix of activities in every business. Innovation is in the short term generally a value destroying activity, but essential to the long term value creation, and this is a delicate balance that requires a strategic framework to be consistently applied to the allocation of resources.

Why is value created.
Linking the creation or destruction of value to specific assets and capabilities, again delivers the opportunity to optimise the investments you make. What makes you sufficiently different that you can create value? Is it short term or is it longer term, and how do you maintain the momentum, as superior value creation always attracts competitive capital in time.

How is value created.
Very simple to say, but hard to do. Value creation always comes down to solving a problem, or creating an advantage, for an individual, group, or enterprise.

Market position and long term decision-making obviously play a key role in value creation, and none of this happens by accident or over a short term. It is tangled up in your relative market position, the evolution of the market you are in over the lifespan of the market, and your competitive position in that market.
This sort of analysis enables a complete picture to be put together. If you have enough information to make judgement about your major competitors, those that might emerge from the pack, and those from the sidelines which are usually missed, this will inform the decisions you make that will impact on future value creation.

The root of all this is strategy.

The golden rule of marketing in regulated markets.

The golden rule of marketing in regulated markets.

Dec 13, 2018 | Governance, Management, Strategy

‘He who has the gold makes the rules’

I had to go to Sydney airport last week, and needed to park for a while, the plane was late.
It almost required an extension of the limit on my credit card.

It was just another brush with the cost of doing business with someone who has the inside running in a regulated market that I have had the misfortune to tangle with over the last few months. In this case, the airport is a monopoly, that was privatised. Governments seem to think that when they sell off a public asset to the private sector, the buyer will continue to price it at ‘social’ levels. They then act all surprised when the new owner with the regulated monopoly suddenly starts pricing at monopoly levels.

Consider what has happened to your power bills since the ‘privatisation’ process kicked in. Pretty obvious that the sale process included some sort of ring-fencing of competition to beef up the price so the press release looked better, as in the case of the sale of Port Botany and Port Kembla now being brought to court by the ACCC.

Pretty much all markets are regulated to some degree, from a very little to a whole lot, on top of the basics of incorporation, and paying taxes (which seems to be increasingly optional for MNC’s). Adding to the complication, there are three levels of government in this country all regulating different things in different ways creating an alphabet soup of bodies that have to be navigated before you can trade.

In highly regulated markets, it is reasonable to assume that most if not all incumbents will move aggressively and creatively to protect what they have. Claims of public interest, safety, loss of employment, are common, and are generally the reason the monopolies are there in the first place. However, what they have is a position that enables them to charge rent, rather than achieve success through a superior value proposition.

Understanding the structure of the rent seekers business model will help to see ways to invigorate or disrupt it.
The taxi industry is a classic. Around the world it was a regulated market that delivered regulated profits to the few who owned the licences, which therefore accrued a capital value, until Uber came along. Similarly, the milk industry in NSW was regulated until it became unmanageable to continue, and then there was a decade long 10 cents/litre levy to pay down the capital value of the regulated milk runs.

Having an understanding of who has the power in any market, the basis of that power, and the means by which it can be wielded, is vital to the construction of a viable business model and value proposition.

Header Photo credit: courtesy Jason Heller.

Focus delivers productivity

Focus delivers productivity

Dec 10, 2018 | Governance, Management, Uncategorized

When you fail to focus, you are scattering your capital.

Most importantly,  you scatter the vital Intellectual Capital it takes to succeed, as well as the financial capital that is a vital enabler of success.

Limited resources need to be focused on the point where they will do the most good, generate the most leverage.

The familiar investment advice to spread your investments, ‘do not put all your eggs in one basket’ holds when you are a passive financial investor.

However, when you are an active investor, not just of your financial resources, but of your limited time and energy, it is better to follow Andrew Carnegie’s advice to ‘Put all your eggs in the one basket, then do not take your eyes off the basket’

This advice holds equally as you consider your long term plans, what outcome do you truly want, to planning your day today. Ask yourself ‘What is the one thing I really need to get done today that will take me one step closer to the goal’

As Confucius is reported to have said somewhere around 500 BC, ‘Every journey starts with a single step’. That advice is as valid in today’s world as it was then, so make sure you take that step every day, and that it is one step closer to the goal.