The 5 steps to optimise process development

The 5 steps to optimise process development

Sep 10, 2018 | Change, Management

 

Processes are the means by which we get stuff done, and are therefore an integral part of our personal and professional lives.

Mostly we just  allow them to evolve, usually in a pretty unthinking manner without much critical analysis. However, this is a mistake, as it leads to duplication, mistakes, omissions, personal idiosyncratic behaviour, and waste.

When valuing a business, one of the tell-tale signs of good management is the presence of a simple set of process maps which guide the way things are done, from the most mundane to the really important. This ensures, or at least makes the effort to ensure, that the same jobs get done in the same way every time, irrespective of who is actually doing the job.

The cost savings that result from this simple idea are enormous.

Creating a ‘process map’ or running sheet for the simplest to the most complicated process is pretty much the same.

The point however, is not to create a set of rules that can never be broken, it is just the opposite. A process to be optimised and improved  needs to be subjected to critical analysis on an ongoing basis, the written process just gives a stable starting point.

My experience with process mapping has involved 5 steps, that usually happen in an overlapping manner

 

Learn by observation and questions: Observe what happens currently, how things actually get done, consider the range of cause and effect chains in place, ensuring you do not confuse cause and effect with simple correlation. Go out and ask questions, seek insight into the hidden ‘wrinkles’ that exist in every process.

Experiment: An effective experiment requires discipline, primarily to test one thing at a time so you can accurately measure the impact of any change. The scientific method works: develop a hypothesis, test if it is true or false by collecting data, adjust the hypothesis and test again, until you find a hypothesis that holds true. As  Sherlock Holmes’s mentor said: ‘When you have eliminated the impossible, whatever remains, however improbable, must be the truth’

Codify: a process that remains in one persons head is no more than an opinion. To be effective the thought must be codified in such a manner that it can be accessed by anyone, and given the status of the ‘right way’ of doing something. I like visual process maps, they are easier to understand, and absorb quickly.

Distribute: once codified, the process needs to be distributed, and made easily available. There are now many digital tools around that enable distribution and simple reference. In the ‘old days’ processes would be in a manual somewhere that nobody looked at, even if they knew it existed. Nowadays there is no excuse, the process can be available to everyone with digital access.

Optimisation and creativity.  The paradox of all this is that with a stable process, you can now be creative, seeing alternative ways of delivering an outcome.  For improvement to occur you first need a stable system so the impact of changes are visible in measureable outcomes. This is the opposite to the chaos that people often consider to be a part of the ‘creative process’

Header acknowledgement:  Hugh McLeod at Gapingvoid.com

 

 

The 5 ‘Literacies’ required for superior performance

The 5 ‘Literacies’ required for superior performance

Sep 5, 2018 | Leadership, Management

Over the 23 years of working with medium sized businesses to improve their performance, the activities have all come from 5 common buckets.

  • Financial Literacy
  • Strategic Literacy
  • Operational Literacy
  • Business model Literacy
  • Revenue generation Literacy

 

Every action, strategy, and tactic employed comes from one of  them, but importantly has flow on effects on all the others, sometimes in unanticipated ways. In those cases, having the performance measures in place that show up the outcomes early enables you to double down on those that work, and back off those that do not.

Business improvement is an iterative process, ideally a tightly managed one, but iterative none the less. It also needs to provide the opportunity to incorporate ideas, insights, and new information that comes to light. What I call ‘Loose Tight’ management.

Similarly, each bucket has a hierarchy supporting it, and the more you go  into the weeds with the detail, the greater the apparent interdependence they all have.

However, thinking of them as buckets that require a series of decisions or actions helps to organise all the disparate things that get in the way of performance. You are able to sort out at each level in the supporting hierarchy which actions are important and which are not, which deserve the focus of resources over the others, recognising that you simply cannot do all the things that may seem sensible and important, no matter how big you may be. It also enables project management, timelines, cascading KPI’s and individual and group accountability to be clear.

You have to make  choices, and the choices in one arena inevitably impacts on those in others.

Add them together and you get superior performance as an outcome. The whole is always greater than the sum of the parts when done well.

A marketers explanation of Free Cash Flow.

A marketers explanation of Free Cash Flow.

Sep 3, 2018 | Governance, Management

The net flow of cash into and out of a business is to my mind the most vital measure of the success or otherwise of that business, captured in the cash flow statement.

The P&L, and Balance sheet, vital as they are as performance measures, can be susceptible to ‘management’. The flow of cash is less able to be similarly ‘managed’

It is however, like all numbers, subject to the context.

Free cash flow is the cash generated by a business less its Capital expenditure.

The summary formula is: Net operating cash flow – Capital Expenditure. (Capex)

It is a very simple calculation once you have the cash flow statement in hand.

Free Cash Flow can vary dramatically over periods of time, so the trends are a vital part of the consideration. A business might invest a lot today in capital that is expected to deliver profits in the future, and should not be penalised for doing so, rather it should be supported, so long as the investments are sensible, which is another whole set of considerations. Every business needs to invest in the productivity of existing assets by way of renovation and replacement, as well as supporting innovation and maintaining regulatory compliance.

The trends in free cash flow and Capex expenditure are key measures of commercial sustainability.

I have seen businesses being tarted up for sale that display impressive increases in free cash flow over a few years, but as always, the numbers can lie. When you go behind them, the Capex has been restrained to the long term detriment of the business, to make it more attractive in the short term.

As an antidote to the rosy picture that can be generated by reducing Capex, I like to see the free cash flow and capital expenditure trends on the same sheet of paper, and being a marketer, as a graph. You can go one step further and break up  the Capex into three categories:

Capex spent for regulatory and compliance reasons

Capex spent for productivity and capacity reasons

Capex spent on new products and processes.

The nature of the Capex can tell you a lot about the health of the business, and its prospects.

Cartoon credit to Scott Adams and Dilbert. 

11 hard lessons from 40 years of building and implementing successful marketing plans

11 hard lessons from 40 years of building and implementing successful marketing plans

Jun 18, 2018 | Governance, Management, Marketing, Strategy

 

The key word in that headline is ‘Implementing’. A plan is of little value unless it is implemented,  the lessons from the success and failures of that implementation incorporated into the next iteration.

This is not another post about the 55 things to do to have a great marketing plan, this is about the things most forget that are about the organisational and strategic elements that will hinder any successful implementation.

Marketing planning should be a continuous, iterative, and a ‘live’ thing, not a once a year pain in the arse, necessary as a part of the corporate budget process.

To build a plan that serves the purpose of managing the implementation of strategy is a challenging and iterative process of identifying options, and making difficult choices across a host of domains.

Contrary to folk lore, it is a highly data intensive process, with a lot of experience, instinct and skill required that enables connections to be made between pieces of data that may not at first glance  have any real relationship. It is not the ‘smoke and mirrors’ some like to think, it is a tough, demanding but ultimately extremely rewarding process when done well.

You need a strategy

A marketing program operates as a part of an overall strategy, without which it is destined to be an expensive indulgence. Marketing is a key  part of the  delivery mechanism for the strategy. Strategy is all about making the always difficult long term choices, the sort that shape businesses over time, which need to be reflected in the resource allocation and activity decisions which enable implementation.

The importance of context

No enterprise exists in a vacuum. There are a range of factors that exert influence, but over which the individual enterprise has little if any control. The best they can do is accommodate the context into the planning processes, always being aware that factors over which they have no control can change with little or no notice, so retaining the agility to adjust in real time is a profoundly important capability. These factors range from the regulatory regimes, competitive activity, availability of critical capabilities, to long term trends  impacting on the economies in which you compete.

The importance of process

Process is simply the way things get done, from start to finish, in effect it is the plan for  the plan, the framework upon which the plan is built. A marketing plan is a part of a larger business planning process, Strategic, Capital, Operational, Financial, all have a cause and effect role in overall business planning, and a sensible, achievable marketing program cannot be written in isolation from the other functional planning activities, and that of the overall enterprise. There is a natural flow to all these plans, of both timing and necessary cause and effect impacts. For example, there is no point in a marketing plan setting out to launch a product that requires capital to be spent in the factory unless the item is also included in the capital and operational plans. Equally, there is no point spending capital in the absence of a marketing plan to leverage the benefits of the expenditure.

Iteration, experimentation and learning

We are dealing largely with what might work in the future, and courses with credibility in ‘future- telling’ are few and far between. Therefore it pays to have as many options open as possible. This is  not to say we should allow a scatter gun approach to prevail, we should remain focused, but within the parameters of a robust well thought out and understood set of strategic  priorities. It is a balancing act, one that is hard to get right, indeed, we only can judge our efforts accurately with the benefit of hindsight. Management of your ‘experimental portfolio’ should be a key task of the senior marketing person, the one who has the power to allocate the resources and hold them accountable, and certainly not left to the junior just to record activities.

Be specific about what you learnt, which forces clarity, and how you know, which forces objectivity in the place of fluffy subjectivity.  An intensive After Action Review process should be a core part of any marketing implementation.

Critical thinking

Marketing has always suffered from the tendency to be seen as fluffy, unscientific, and subject to leaping from an inadequately defined problem to a convenient solution. It has lacked credibility in the boardroom, where the big decisions are made. Often in the past that has been a fair characterisation, but there is no longer an excuse.

Most board discussions are based on objective data of one sort or another, which usually means it comes from the past. By contrast, marketing is about the future. It relies on assumption, speculation, and ‘mental models‘ as drivers, so carries less credibility than purely objective data.  We now have tools that can deliver some reliability in the cause and effect chains we seek to influence, so long as the hard intellectual graft is done.

If you are to have resources allocated to marketing over the long term that it usually requires to be effective, rather than tied to a changing annual budget cycle, with some artificial calculation tied to sales forecasts, you need credibility. This is where the critical thinking becomes (sorry) Critical! Use of marketing jargon, buzzwords, clichés and opinion may go well in a razzamatazz sales meeting, but where it really counts, at the point where long term resource commitments are made, they are counter-productive. Data and critical analysis is what counts.

In a past corporate life, leading a large marketing function, I insisted on sales forecasts for an initiative of any sort that was going to consume a significant chunk of a marketing budget to be done from several perspectives, and using differing sets of assumptions. The assumptions and perspectives were the subject of the interrogations, rather than just looking at a convenient  extrapolation. While we never got a forecast right, the outcomes were generally in the realms of  reasonable error, we did better the next time, and most importantly, we had the confidence of the board.

Compass Vs Roadmap

Dwight Eisenhower said ‘In preparing for battle, I have always found plans to be useless, but planning is indispensable’.  This is simply a variation on the adage that no plan survives the first contact with the enemy, but adds that the planning is essential. When applied to marketing planning, the same rules apply. To be effective they must drill down to and articulate the drivers and measures of success, provide a framework within which the activity needs to happen, but without dictating the details of the activity. Those facing the situation need to be able to respond to it within the frameworks of the overall strategy and objectives, in real time.

It is the achievement of the objective that is important, not necessarily the means by which it is achieved.

Activities are not outcomes

Too often activities completed are used as performance measures. It may be good to know that an agreed activity has been completed, but of way more importance is the understanding of what happened as a result of the activity.

The better KPI is the behaviour that is the driver of outcomes, rather than some assumption that an activity will deliver an outcome, or some simplistic extrapolation of the past. Results are the outcome of activities that are implemented after consideration of those things both in and out of your control, and will never be as forecast.

Cross Functional

Organisations build a structure to suit their internal processes, it makes the scaling of activity easier. However, customers do not care about your structure, they care about the level of service, quality, timeliness, and all the rest of the factors that add value to them, all of which are all cross functional concerns. Why would you not organise yourself in a manner that reflects what it is that customers are looking for?

Ensuring there is engagement of all functional areas in the development of the marketing plan is essential. They will all play a vital role in the delivery of the plan, and the CMO never has the functional responsibility for them all, so they must be led.

Clear Accountability 

Unambiguous accountability tends to focus the mind on the outcomes, which generally leads to better performance. Accountability also however comes with the requirement that the resources are made available to get the job done, properly, which is code for being accountable for the outcomes. The power to allocate resources is a key part of real accountability, rather than just its sibling, ‘responsibility’ which implies completing a specified activity.

In recent times, we have moved from individual accountability to team accountability, which has significantly complicated the management and leadership game, while offering the potential for huge gains in outcome. Holding an individual accountable can be done with just ‘management’, but effectively holding a team accountable for an outcome requires true leadership.

Plans should tell stories

Any plan, to be effective, must tell a story about the journey, the anticipated problems, alternatives considered, and the value of the outcome.

Marketing and importantly, brand building, are all about the stories we tell ourselves, and others, that illustrate how something has given us ‘value’ in some way.  Without a simple, illustrative story, all the rest just boils down to price on the day. All the great marketing we see tells a story of some sort that evokes a positive emotion towards the product. Apple tells a story, as did Meadow Lea (they stopped 20 years ago, but the effect lingers) Nike, Coca Cola, so tell yours in the plan.

My kids first dog, ‘Tamba’ was a great friend to them all. She/it played with them for as long as they wanted, protected them, and gave unconditional love, seeking nothing more than a pat behind the ears and a bit of ‘doggy-love’.  One day Tamba was a bit subdued, obviously with some version of doggy flu. Off to the vet who gave us some pills to administer, along with instructions. At home I shoved the pill to the back of Tamba’s throat, and held  her mouth shut for a while. As I let go, to her obvious relief, thinking the pill would be swallowed, up it came, back into my hand, a mess of dissolved pill and dog saliva. My neighbour, a ‘dog whisperer’ recommended I hide the pill in a spoonful of Vegemite on a square of toast, and offer it to Tamba. Whoof… gone! No pill.

I am constantly reminded of this story as I talk to clients, and watch marketing activity designed to generate a response. It is all facts, data, dry boring old stuff that has no emotion. It is like trying to get Tamba to take the pill, impossible until it was wrapped in something she loved.

Even the best plan does not implement itself

Planning is only the first step, one that without implementation is pointless. As my old dad used to say, 1/10 for the plan son, the other 9 points are reserved for implementation.

 

 

Mary Meeker 2018 KPC&B Internet trends report

Mary Meeker 2018 KPC&B Internet trends report

Jun 6, 2018 | Governance, Management, Strategy

 

The 2018 KPC&B report is now out, and gathering views on Slideshare like a runaway train.  The amount and speed of the attention given to this now annual report is evidence that it has become the benchmark for analysis of the digital communication trends that we live with every day, but do not necessarily see.

The report has become one of the most influential pieces of content published, and it is a monster!

While I have no intention of trying to summarise, a few  things just jump out.

  • While growth of the net may be slowing, at a reach now above 50% of the worlds population, what would you expect. Within that total reach, US platforms remain the global giants, but being hunted by the Chinese who are spreading out of home base where they utterly dominate to the rest of the world.
  • Buying via the net, so called ‘e-commerce’ is now so deeply entrenched, that it is now just another part of ‘commerce’. Amazon outside China dominates, and is also dominating in R&D spend, translating into an avalanch of innovation. Inside China, it is a very different picture. The Chinese platforms are all there is, and are in the early stages of going after an international presence. It seems that the Chinese have jumped the hard asset stage in the development of communication and payment systems, going straight to mobile.  No legacy questions of any type to be negotiated, which can only accelerate the potential rate of growth.
  • Ad spending on mobile is now more than half digital ad spending. The implication of this is the degree to which the ads will evolve rapidly towards highly personalised messages, when combined with AI and geo location.
  • Of particular interest to Australian FMCG retail, is slide 108 which shows the price and market share changes in the top 20 US grocery retailers. We have the top two gorillas here still retaining above 70% market share, not the 20% that Walmart holds in the US as the gorilla brand. If the US experience is mirrored here, and I see no reason why it will not, the message would be a ‘sell’ on Coles and Woolies shares. Not a happy thought for either as they must be contemplating large investments just to remain in the game, let alone retain their current position.
  • The nature of work continues to evolve way faster than our capacity to absorb the changes. I suspect the social dislocation that will result in this country are only just beginning to be felt.
  • There is plenty of data coming at us that tells us video is the new big guy in town. This report confirms it, again.

This report is required reading and deep consideration, for anyone thinking about digital, and the shape of the world we will be living in, and isn’t that all of us?

 

How do you measure culture?

How do you measure culture?

May 14, 2018 | Change, Governance, Management

With an increasing regularity, ‘Culture’ emerges as an item to be ‘managed’. I fully expect it to be front and centre before the end of the current Royal Commission into the financial sector, as most of the poor practises we have seen , immoral, unethical, and some down-right illegal, stem from a poor culture, lack of leadership in the true sense of the word, and a failure of governance.

Culture pervades every organisation of more than  1 person. It is how we interact, behave, collaborate, and deal with other people in the pursuit of whatever objectives, personal, and commercial that are front of mind, but mostly is just about how the job gets done.

Mundane as that is, culture is the determining factor.

It truly bothers me that an outcome of the Royal Commission may be that a legislated  regime be put into place to regulate culture.  The boffins in Canberra have no idea what it is, and how to define it, but that may  not stop them regulating for it.

It is also a fact that ‘culture’ is an outcome, like a brand, of a host of small  behaviours, interactions, and processes over time that added together deliver an outcome we call ‘culture’. It is not an item to be managed as you would an expense item  in the P&L.

To my mind, culture is grown from the inside, but it responds to the outside environment. Growing a culture is not dissimilar to the Japanese art of ‘Bonsai’, the cultivation of dwarf plants, grown into all sorts of intricate shapes.

The bonsai gardener starts with the raw material of the plant, and the environment in which it will be growing, then over time, it encourages the characteristics they want, and cuts off those that do not want before they can take shape and become an integral part of the plants physiology, disfiguring the outcome. A leader who acts as a bonsai gardener for the growing evolving culture, will fertilise the behaviours that add to the development of the envisaged end result, while nipping in the bud those that do not add to the end result, all the time training others in the art of bonsai.

 

Making a commitment to the cultural style that suits the strategic and competitive choices being made is a first step.

What culture do you want? It seems to me that the starting point should be envisioning where you want to end up. No different from setting any other objective, as it provides a consistent framework for making those difficult trade-offs and compromises that become necessary. Therefore decide what sort of culture you want, one obsessed with customer service, innovation, operational productivity, attention to detail, whatever it may be, and behave accordingly. All will have elements of each of the others in them, but there should be an overriding objective.

Are you committed for the long term? Culture is not something you erect in a financial year, it is an incremental process, built over time and very dependent on the CEO. It is the boss who makes the running with the culture that prevails, and the boss must simply walk the talk, every single day, in every way. This can be painful, and the board of a business that has the wrong boss needs to make a choice about the culture it wants and recruit accordingly.

What measurement tools do you want to use? There are a lot of choices out there, a simple google search may lead you to the conclusion that this is a task that can be outsourced to a fancy consulting firm with pretty measurement tools. Those that in my experience try and either ignore or outsource ‘culture,’ end up with at best a neutral result, and usually a poor one. Most of the tools used are pretty simple when pared back to their essential elements.

However, the common element is that they are subjective, and only really relevant as a measure of change over time. Treating a measurement of ‘culture’ as an objective measure of performance at a point in time as you would with a P&L to measure profitability will be misleading. It is the trends that really count, not the quantum of any measurement you might take.

Measuring ‘Culture’ like most things can be, and should be, made as simple as possible. This is itself is a challenging notion. Much easier to have a series of complicated dashboards that measure all sorts of things, but are really there just to make those in authority feel better.

Employee referrals and sales leads.  An employee is hardly likely to refer their own networks to the business if they are unhappy.

Customer complaint responses. Timeliness and follow through are always good indications of a customer facing culture. Every business needs customers, and dealing with problems that arise should be a first order task.

Employee turnover, and rehires. A turnover of people is natural, and I would regard as healthy. The tipping point is around the point where they are leaving because they are tired, bored and not learning anything, and where they have acquired new skills and are keen to test them in new challenges. Similarly, capable people who wish to return is a good indicator. Large businesses can also track the internal movement of employees across functions and geographies for the same reasons.

Employee exit surveys. Understanding why employees leave can be a vital piece of information about the culture, and existing management. At exit, employees are often more likely to ‘tell all’ than under other circumstances. Such an interview should be routine, friendly and constructive, and not conducted by the exiting employees line manager, and certainly not  by the HR intern, but by someone of stature in the business.

Employee Survey.  Regular employee surveys  can deliver quantitative data across a range of cultural variables that makes measurement of changes over time possible. It is always better that they are anonymous and done by a third party.  It is usually the truth that you get when you engage with the operating level employees, those on the production line, the truckies, warehouse hands, they see and suffer from the impacts of poor practises every day.

Customer survey, as above.

Supplier survey, as above, and even more important that they be done by an external party, and certainly not by the sales force, or including only those recommended for interview by the sales force. Suppliers are often in a position to give great insights into cultural drivers.

Employee Net promoter Score. NPS is now an established measure amongst customers, there is  no reason  I can see  not to use it amongst employees. It is a more complicated version of employee surveys.

The ‘carpark’ test. If it is a race to get out at 5.00, it is a sign of employee disengagement, a poor cultural outcome, and easily assessed rather than measured simply by being there and watching.  The behaviour being exhibited by operational staff is the ultimate test of ‘culture’, and you can and should observe that in many ways.  How many smiles and greetings does the ‘Boss’ get during a factory walk-through, how happy are staff to interact with senior staff on matters trivial as well as important, how well do senior staff listen to and provide feedback to operational staff, and so on. While I call it the carpark test, it is really just being respectful  of others, building their their sense of personal value, irrespective of their role.

 

As a final point, we all talk about culture as if it was a ‘thing’. It is not, it is as noted, the gradual, incremental outcome of thousands of individual interactions. You can dictate culture all you like, but it will have no effect. It is only when you change the individual interactions, one by one, that the evolved culture will slowly emerge.

Photo credit: Dave Gammon via Flikr