Nov 23, 2012 | Customers, Management, Marketing, Operations
Sales forecasting is a common activity, you need to know how much revenue is going to be generated in the coming months. Usually it is done by sales, usually by a straight extrapolation with a few adjustments, and the only thing you know for sure is that it will be wrong.
How cool would it be if your marketing people were able to forecast revenue with some accuracy?
Marketing is an investment in revenue generation, which is an outcome of demand, so it would seem sensible to focus attention on demand in the market, not what sales you did last month. Mindset is important. When you treat something as an expense, it is easy to chop and change based on short term conditions, but when it is an investment, it has longer term implications, and what could be more important than an investment in revenue generation???
To truly be treated as an investment, there must be a reliable ROI calculation that can be made, which means the collection of data, and the agreement on a set of metrics to be applied.
There are lots of tools emerging that claim to automate the marketing process, and generally they do it well, using the traditional sales tunnel metaphor connected to the marketing tools of the net. Whilst it is creating another source of operational complication necessary to get the data, it should be seen as a part of the investment strategy.
However, the mindset change is simple. Recognize that the role of marketing is to create demand, and the cost of using all the tools of branding, innovation, channel selections, and all the rest, are the costs implementing those investment decisions.
Nov 20, 2012 | Lean, Management, Operations
Have you ever calculated yours?
It is a pretty simple performance measure that carries a lot of weight, and contains the seeds of success, and destruction. In addition, if you know your industry well, it is pretty easily calculated for competitors, so acts as a useful competitive benchmark.
Break your P&L up into a few categories:
Ingredients
Direct labour
Administrative Overheads,
Divide the results by sales, and you have the value adding ratio. Just ask your customers what parts of your cost base they are happy to pay for to get the product they buy, unlikely many will answer with a positive to the fancy headquarters building, the boss’s new car, or the off-site strategy meeting at the Casino in Hobart.
To be fair, there are many costs that are necessary, but do not necessarily add the value that consumers are happy to pay for at the supermarket. Things like R&D spending, market research, IT expenditure, freight costs, and many others fall into these categories, but a debate about how they can be reduced, and how the productivity of the expenditure can be increased, is extremely valuable to have.
Pretty basic management stuff, but so easy to ignore. It is also very easy to produce an infographic that everyone can buy into, by simply breaking up a picture of the end product into its percentage categories. This has an enormous visual engagement value for anyone embarking on a Lean initiative.
Nov 12, 2012 | Leadership, Management
Making decisions is like any other process, you gather relevant information, consider options, look for the optimum outcomes, and decide accordingly. Right?
Often wrong.
Decisions are often made based on the HiPPO (Highest Paid Persons Opinion) what was done last time, how it would be viewed by others, what the “rules” say should be done, and a host of other drivers that really add little value to the quality of the decision making.
Decision making is like any process, the better that information, and the more objectively it can be analysed, the better the decision is likely to be. As importantly, the process is optimised by being sufficiently robust such that if the decision were to be made again, with the same information, but a different , but equally capable group of people, the outcome would be the same.
There are a few questions to be asked of any decision making group:
- Where did the data come from?
- What analysis has been done?
- What is the level of confidence in the outcomes?
Pablo Picasso is reported to have said ” computers are useless, they can only give you answers” which goes to the issue at the heart of decision making, the quality of the questions that are asked and the manner in which that are answered.
How disciplined are your decision making processes?
Oct 29, 2012 | Change, Management, Marketing, Social Media
One of the many paradoxes of our on-line social life is that to engage, we give up a part of our personal life, we become available to anyone else who cares to look for us, within the boundaries of increasingly better privacy hurdles in social media tools.
In the past, our personal lives were almost all we had, simply because of the inconvenience, inefficiency, indeed, impossibility, of telling everybody, anything much about ourselves.
The earlier incarnations of social media removed those barriers, and suddenly we realised that we had created a monster, a perfect environment for stalkers. All sorts of unsavory and undesirable people, and those we had no desire to know suddenly had access to our details, and so we started designing out the access, but it is a binary process, a filter is “on”, or it is “off”, no “maybe”.
So, how do we design it out? We design back in some of the elements of the inefficiency we had until a decade ago, put in hurdles that need to be crossed before you get to the personal stuff. Clay Shirky, one of the great minds thinking about this stuff does it again in this Zeitgeist presentation from 2008. I only just found it, but the message is as relevant now as 4 years ago, perhaps more so.
Oct 24, 2012 | Leadership, Management, Operations
Culture is elastic, it is the hardest thing to change in any organization, the ‘way people do things around here” to quote Michael Porter, is a powerful organiser of behavior.
Changing culture by decree from the corner office simply does not work, all it does is depreciate the credibility of the person issuing the decree.
Often the decree is associated with some mandated behavior changes, they can be imposed, but once the pressure comes off, and in the absence of the changed behavior being well bedded in, it reverts to the old models as soon as the mandate is not aggressively enforced, just like taking away the stretching device in a length of elastic.
The only way to eliminate the ‘elastic effect” is to cut it, by encouraging employees to change their behavior because they see the sense in it, and the change is consistent with their own best interests.
Four ways to make it a bit easier:
- Don’t try and change everything at once by decree. Instead, pick a few critical behaviors, and demonstrate a determination to change them, and articulate the reasons why they must change.
- Recognise that not all the behaviors of an existing system will be bad, there will be good elements that warrant retention, even prominence, so highlight them.
- Ensure that the behaviors you are seeking are consistent with the behavior demonstrated by the senior management
- Ensure that the behaviors required are consistent with the strategy, business model selected to deliver it, and the metrics by with performance of the business and individuals is measured.
If this seems simple, don’t be fooled. Changing culture is the hardest task any leader has, Rosabeth Moss Kanter’s list of the 10 reasons people resist change is a great one. Most “leaders” are not up to the task, and then they are called Managers.
Oct 22, 2012 | Change, Management
Problems need a better PR agency, everybody hates them. The bigger the problem, the greater the angst, the higher up the enterprise the problem has currency, the more important it seems to become.
However, when you think about it, problems are the catalyst for creative thinking, questioning of the status quo, seeking alternatives, considering the unconsiderable, and looking into the dark “corners” of behavior.
All good stuff, all potentially leading to new and better practice, evolved business models, and new products, so why do problems get such bad press when they stimulate all this good stuff?
Clearly, they just need better PR.
