Feb 7, 2014 | Change, Leadership, Management, Operations, Strategy
Scaleable.
My world is SME’s, helping them to be more profitable, more commercially sustainable, more accountable, by being focused on customers and their own processes and priorities. The outcome is that most successfully remain SME’s, avoiding the many death traps that lurk, and a few make the leap and become SLE’s, or sustainable larger enterprises.
Watching this evolution occur over many years, different in the detail every time, but following a few core principals, there is one principal, “StrategyAudit’s second law” (the first is “Look after the cash, and the cash will look after you”) that keeps coming up, time and time again.
The second law is “Solutions to problems are specific, and generally do not scale, but principals by which decisions are made can be successfully scaled”
Building scalability into the solutions of problems is about as fundamental lesson in growing a small business into a larger one that I have seen.
Principals scale, single solutions usually do not.
Jan 23, 2014 | Communication, Governance, Management
Peoples reaction to a question, choice, or situation is always coloured by their experience, education, background, and a myriad of other qualitative factors. Where there is a divergence of views, it can become heated, as people invest emotionally in an outcome consistent with their existing mental frameworks. This step from a simple divergence of views to an emotional disagreement can be very small, and quick to make.
Mediating many disagreements over the years ,I have found that arriving at a sensible conclusion rather than just a compromise, is usually achieved in a three stage process:
- Recognise and agree on what is data, supposition, and opinion.
- Understand what the data tells you, and what you can agree on
- Ask what would have to be true for the parties to the conversation to alter their position on an issue.
This simple device of separating what we think from what we know, identifying the gaps, then filling them with data that is agreed serves as a useful tool to both diffuse volatile discussions, and usefully identify information gaps needed to be filled for a sustainable decision to be made, rathe than a compromise reached that falls apart under pressure.
Try it, next time ask “what would have to be true” when faced by a decision, emotion, and a lack of objectivity.
Jan 21, 2014 | Branding, Change, Governance, Management, Strategy
It has been pretty certain that control of Warrnambool Cheese and Butter (WCB) would change since the opening bid by Bega Cheese in September last year. It rapidly became an auction as rival bidders emerged, and WCB shareholders struck the short term jackpot.
The only real question left was whether control remained in Australia, or it went overseas. Seems that question is now answered, as Canadian Saputo becomes the beneficiary of Bega’s 18.8% holding lifting their stake to nearly 50%, with a rush of acceptances expected in the last few days of the offer period.
Progressively, the Australian dairy industry in particular, and Australian food manufacturing in general has been sold off, slice by slice, overseas to the point where there is not much left. Now that the $A has retreated,so that on paper it looks like local suppliers should be more competitive with the global supply chains of the major retailers, there is buggar all locally owned manufacturing left.
It may be seen by some to be a bit jingoistic to want to have control over the supply chain that feeds us, but I see it as common sense. Australia is an efficient, technically advanced supplier of commodities, from grains to meat, wool, and minerals, but the further processing and value adding is very limited.
Realistically, there is little the Government can do beyond developing robust industry policy, then applying that policy with apolitical consistency, something neither side of politics seems able to do. Policy consistency seems to be trumped by short term political expediency every time, and in the long term, we are all the poorer for it.
It is up to Australian management to see the opportunities and invest for the long term, and they have largely failed to measure up. In addition, it seems persuading the suppliers of capital that returns sometimes take longer than the next quarterly period to emerge is a large barrier. The pool of genuine risk and venture capital in this country is very shallow indeed.
Jan 8, 2014 | Change, Management, Marketing
It may be a bit later in January than most blog posts prognosticating about the coming year, but at least they are different from the pack, so here goes..
- Simple is the new complicated. All the conversations about social media, analytics, fragmentation of just about everything, we are bombarded with messages, options, and imperatives. Amid all this, marketing is at work, and the stuff that works is simple, cut through ideas. David Ogilvy had a bunch of “Olgivyisms”, one of which was , “big ideas are usually simple ideas”. This still holds true, it is just the big ideas have to cut through more fluff and interference than in Ogilvy’s day, and there is more confusing analytics and alternatives to be considered.
- Simplicity facilitated by new tools. Tools to leverage the capabilities of the web have been getting simpler by the month. It will reach the point where those with absolutely no computer kills at all can participate. WordPress has made building a web presence pretty easy, but now the new generation of similar tools like Weebly, take that a further step. The 40% of SME’s who have no web presence beyond a facebook page set up by their children, has passed, they no longer have an excuse.
- Reach and frequency is dead. This was the mantra of paid advertising for most of my long career, you paid for both in a matrix that focused on a demographic, “women 25-40 with children” or “working women earning over 50k” and so on. Before behavior based analytics with any more accuracy than a big U&A study, it was the best we could do, but it was pretty crap. Now with every man, his friends, and parents on facebook LinkedIn, Pinterest, et al, reach and frequency have a different sound. The enormous penetration of social media and the opportunity for behavioral analytics have changed the dynamics of advertising, and advertisers have raced to the new platforms, without recognising that the existence of the platform, free, and ubiquitous, has changed the rules entirely.
- Banner advertising on the web is also dead. Web banners simply do not work in the way a banner on the corner of your street did. They do not grab attention, and convey a message, they are simply in the way. Look no further than the huge drop in rates from a decade ago when they were touted to be the next advertising El Dorado. I am not surprised, simple supply and demand economics would indicate that when supply is infinite, the price at which demand can be met is close to zero. However, there is a caveat. The IPO of facebook in 2012, and Twitter in November 13, based on revenue projections that demand banner ads remain revenue generators is forcing some pretty smart people to consider how to make them sufficiently relevant to continue to attract revenue, and they may just crack the code.
- Values matter, more than ever. The temptation is to “pimp” your products and services at every opportunity. LinkedIn forums are full of new “discussions”, which are just pimping a product, very few get opened, they certainly rarely create an discussion, and are one step away from Spam. If you are gong to spend your resources, money, time, talent, on marketing, make it count, tell people “why”. Steve Jobs articulated this very well when launching the now famous “Think Different” ad to Apple employees.
- Content is serious business. Content is not just a word, it is a consumer of considerable marketing resources, and the capability of creative content creation to build a brand is evolving at a rapid rate. In the past, I have wondered at the capacity of the web as a brand building device, giving it top marks as a medium of delivery, but I could not think of a brand that had been built by the net. Now it seems, that Red Bull will get a guernsey. Their web presence is exceptional, huge resources are put into creating the positioning as extreme sports in all sorts of amazing ways. This best of 2013 post on Digiday has some great marketing, including Red Bull, and this terrific story of an old Nissan Maxima . The new year will see great strides in video brand building, the pace of creative change, and the socialization of the change, as demonstrated by the Maxima example, will continue to accelerate. In 2014, the “Social” component, promising businesses interacting with their markets for free, will be overtaken by the “media” part of the social media equations, as to be noticed bucks will have to be spent. There will be the off the wall hits, but the average cost of being seen will go up substantially. Content creation without any content marketing and compelling reason why a consumer should even look at it let alone give it any consideration will rapidly become almost useless. Your content is competing in a highly competitive and fragmented market for a share of consumers limited attention, and the old rules of marketing apply.
- “Environmental” research. This is not tree-hugging, it is my term for standing back and forming a view of the context in which your customers and markets live, what is changing that will alter their lives, and how can you leverage those changes by innovating in the manner in which you serve them. Now more than ever, this is a skill required, as there is simply so much data and information around, it is easier than ever to drown in the detail without understanding the context. For example, in my view, 3-D printing is an emerging disruption, not just to manufacturing but across industries that are in any way engaged with selling “things” rather than services. Forming some views on how this may impact on you, and your value chains, and taking steps to build the capabilities that will become necessary to survive and prosper is as important as breathing.
- Data accumulation and “personal leveraging” Word of mouth has always been the best marketing tool available, now the continuing development of social media platforms and marketing automation, the opportunity to be “personal” is increasing with every day that passes. In conjunction with this is the building of lists, contacts with whom you have the opportunity to build a relationship.
- Every person is a potential media channel. Just consider the capability to connect to facebook, LinkedIn, and the rest, and send information, ideas, links, referrals, to everyone in their networks. Media channels used to be a few radio, TV, newspaper and magazine channels, they were all one way, the “stuff” got pushed out and the opportunity to respond was limited to letters to the editor. No longer!
- Personal Kaizen. Kaizen is Japanese word for “continuous improvement” extensively used in lean literature. Lean is more than just an operational strategy, it is one for every facet of your life and business. Every time you do something, strive to do it better, by being smarter, than the time before. Being serious about personal kaizen makes you curious, interested, and interesting, qualities that attract opportunity.
- Craftsmanship. In a world of increasing homogeneity delivered by specification driven design and manufacturing, where differences are often just cosmetic and qualitative, genuine craftsmanship, bespoke design, and catering to the individuality of people is increasingly important. The extent to which craftsmanship and “manufacturing” beyond the C20 concepts of mass manufacturing for operational efficiency can become integrated is just starting to evolve. There are many examples, one I am personally familiar with is Ian berry who is Ironsides leather. Ian crafts leather, belts, harness, bags, using just the old tools of the trade, experience, true skill, and passion. It is true craftsmanship, and buying a belt from him is receiving a gift of that experience and craftsmanship. Ian is also a great advertisement for the point above about simplicity. He produced his website using a Weebly template, a few photos, and a bit of time, no cost. No HTML, no complex menus, no computer skills beyond a one finger familiarity with a keyboard.
- Marketing and technology will continue to collide. The days of marketing being unaccountable are over, there is no excuse for not calculating the ROI of your marketing investments these days.Scott Brinkers blog on the intersection of technology and marketing is a terrific resource, his thinking on this is in front of the pack, and allied with Avinash Kaushik’s wonderful Occam’s Razor blog, there is enough brain food to keep most of us fed on the topic.
- Collaborative marketplaces will continue to rise and rise. The web 2.0 enabled one way markets to thrive, Amazon, Ebay, electronic banking, and many others. More recently, collaborative marketplaces have emerged, where both sides of the transaction put something in, rather than just buying a product. Airbnb, Uber, and many others, will continue to explode, mainstream companies in areas threatened will need to consider how they respond. Car hire companies need to have a service, to disrupt themselves, hotel chains need an equivalent to Airbnb, and so on, the disruption is profound, and just beginning. The best thinking around in this is being done by Jeremiah Owyang, whose body of work on the topic is extraordinary
- Mobile first. Use of mobile devices to access websites and social media platforms continues to increase, reaching numbers in late 2013 upward of 65%, and reaching the eighties for some specific sites, numbers that astonish even the bullish predictions of a year ago. In developing countries, where the economies are booming, and fixed line infrastructure is limited, mobile and wireless have simply jumped ahead, and the infrastructure of the developed world will simply not be installed. It is these ocuntries that are driving mobile innovation.
Tell me what you think, please, and have a great 2014.
Jan 3, 2014 | Change, Management, Strategy
In a post in January last year, I made 10 predictions for 2013. In the interests of accountability, it is reasonable to see how I went.
So, here goes:
- Marketing is digital and personal, mass marketing is dead! As with Mark Twain’s quip that reports of his death appear to be premature, so to are the reports of the death of mass marketing. However, the trend is clear, and the grim reaper is ‘a comin’. 3/5.
- Social media will overtake traditional news dissemination channels. Few of us wait these days for the evening news to hear about the events of the day. Even if we have not seen it in out twitter feeds, somebody we know has, and has told us. The role of traditional media as a disseminator of news, rather than a source of analysis of the, is clearly over. Arguably the analysis role is also kaput, as traditional media appears to have been highly politicised to reflect the views of the owners, that real analysis hardly occurs. Anyway, who goes to the 7.30 “analysis” shows on TV for anything beyond the foot in the door, inane, and emotive “journalism”. 4/5.
- A few smart SME’s will do very well, but the rest will at best struggle, and many will fail. Still true. 5/5.
- The new “cool” for our kids is to train as a “tradie” as there are insufficient fulfilling jobs left for those with modest, non vocational degrees, to fill demand from the aforementioned graduates. Still true, and getting truer. 4/5
- The shortage of willing and able workers will continue, as we no longer train people to work, we train them to “expect”. As above. A client of mine has a number of farm worker under 457 visas, several of them very qualified (pharmacy, teacher) working happily for wages unemployed Australians turn their noses up at. 5/5
- The 40% of SME’s who do not have web sites, or have sites that act only as an electronic brochure rather than as a magnet to their target customers need to realise they are missing the opportunity to grab the lifeline. Still true. Several services have evolved in the last 12 months that make it even easier. WordPress still rules the roost, but services like Weebly make it even easier again, there is no longer any excuse. This site, Yarralong.com run by a friend of my sisters was done in a few hours on Weebly by someone with few computer skills at all, just a bit of common sense and patience. 3/5
- “Big Data” the combination of traditional data bases and the behavioural and attitudinal data scavenged from social media will become the next big thing during 2013. I still believe this, but the change is slower than I expected. 2/5
- Mobile will take over from fixed line, comprehensively, and across all communication channels. Almost done. 4/5
- The economy will continue to slow, consumers are cautious and risk averse. No change there, the economy is slowing rapidly, in my anecdotal view, slower than the public figures would lead commentators relying on the numbers to see. 2014 will be a crappy year, notwithstanding the drop in the $A. Manufacturing is down the toilet, investment is slowing rapidly, retailers are struggling, large areas of rural Australia are again in the grip of drought, and more will tip into drought as winter approaches. The long paddock will be well used. 4/5
- Around July/August, the economy will stumble into a really nasty hole as we approach a Federal election. The hole was not as deep as I anticipated, but the numbers emerging in the post election period are pretty grim, and we wait to see if the new government has any real strategy, or if they will continue just to dump on the previous government, and focus on getting elected again by spending our children’s legacy. 4/5
Marking yourself can be self serving, so let me know what you think.
Dec 23, 2013 | Change, Management, Operations, Strategy
Amongst all the emotional rhetoric and dubious numbers being visited upon us by various interest groups and pollies after the announcement by GM that they will be folding their tents, there seems to be very little sensible analysis of the whole picture. Comment has all been focussed on the current supply chain, the economic and social impact of its crumbling, and what others should have done in the past to prevent it, and now clammering for compensation.
Compensation for what?
Lets have a look at some of the more common blathering.
- Holden is a national icon. GM is a huge multinational company, with problems facing it appropriate to its scale. Australia is a pimple on its arse, no matter how much we blather about “Holden, the national icon”. Why should we continue to support its operations here? If they are not commercially sustainable on their own merits, experience suggests, it is just a matter of time, and the longer we administer the medicine, the more painful the withdrawal.
- The workers need compensation. Fair enough, there will be pain in many households supported by Holden, and Ford over Christmas. However, compensation for what, where are the lines drawn? These workers have had many years of news that their employers are in the edge, so the announcements should not be a surprise, and now they have 4 years notice, and generous redundancy. There are many thousands of worker that have been displaced over the past 20 years who would have killed for just a month of notice and modest redundancy, let alone the largess heading the way of displaced auto industry workers.
- The supplier businesses need compensation. Similarly, the manufacturers in the supply chain, now to be supplying only Toyota whilst they remain manufacturing here, are facing tough times. Should be no news in any of this for them, so failure to adapt over several strategic horizons should not be an excuse for handouts.
- Employees pay taxes. So, the argument goes, being employed, even by a subsidised industry, owned overseas, is better than having them unemployed and the industry closed. This is the sort of economic and social poop, ignoring the lessons of many past disruptions that even the far left should be embarrassed about.
- The industry is the engineering University of Australia. There is some real truth in this, the capabilities nurtured by the car industry have benefited many other industries. However, as the decline in manufacturing in this country is across the board, not just in the car industries, perhaps we should be considering engineering capabilities in the wider context than just one industry that is clearly at the end of its life as it has been run to date. Australia has several sources of potential international competitiveness, mining engineering and technical mining services, solar engineering are just two. The fist of these we squeezed mercilessly for current income, disregarding the long term opportunities to build sustainable engineering capabilities, the second of which we actively encouraged to go overseas to find financial and technical support. How stupid are we?
- Loss of sovereignty. Perhaps the most spurious of the lot. As it goes, without the car industry we have no ability to defend ourselves, no national pride, no capacity to be Australian. Given that only 20% of the cars sold over the last couple of years have been manufactured here, this argument holds little water.
The solutions for the car industry have been obvious for a while, and although not easy, or without risk are not inconsistent with the commercial choices faced by any firm in an industry facing disruption. A few companies have embraced them. Futuris, a former subsidiary of Elders, and a major suppliers of car seats went offshore several years ago, and are reaping the rewards, and there are others, although way too few, who have moved to accommodate the long term trends in the industry, and have prospered.
Here is where I have problems. We are focussed on the political cycle, short term returns, ideology lacking foundation in the real behaviour of real people, and an expectation that it will be all done for us, by the “government”, forgetting that the government is us, spending our money in ways that suit them, and their political priorities, that have little to do with the long term development of engineering capabilities in the country.
Bit like Canute up to his arse in waves bitching about the tide.
