Jun 8, 2022 | Leadership, Management, Strategy
Much of the volume of paper dedicated to pontificating about strategy these days seems to focus on ‘Purpose’. Sadly, we do not have a workable and agreed definition. What we do have is confusion about the meaning, particularly when you consider the other strategic pontification generators ‘Mission’ ‘Vision’ and ‘Values’
What are the differences, and how do they improve enterprise performance?
In my view, spending time worrying about the differences, and similarities is time wasted. All are words that should lead to four outcomes that will improve performance.
Strategy.
They all provide a framework against which strategic decision can be measured. ‘Does this decision enhance our performance in a way that assists to deliver whichever of the labels you choose to use.
Differentiation.
A well articulated statement of strategic intent, called by whatever labels you choose, supported by overt action can, and does offer the opportunity for a differentiated product offering that will be hard for competitors to copy. This generates incremental revenue, at enhanced margins when done well.
Human resources.
Most people would prefer to work for a company that makes a positive contribution to their community as well as offering competitive pay and opportunity. I have an acquaintance who used to recruit for a tobacco company. His experience was that they had to pay well over the odds, and accept a modest performer in order to keep bums in the seats to get the job done. BTW, I dislike the term ‘human resources’ but have yet to come up with a better one that does not sound confected.
Culture.
This often misused word gives a sense of direction, focus, behavioural norms, common ideals and risk management that enables the building of momentum. ‘Culture’ is the essential glue that holds enterprises together.
You do not need a strong purpose, or either of the other two to have a successful enterprise. Most have survived and prospered to date without one, but there is no doubt in my mind that it helps enormously, however you define it.
Header cartoon credit: Courtesy Scott Adams and Dilbert.
May 23, 2022 | Governance, Management
Bureaucracy evolved to enable operations to be scaled as mechanisation started to slowly take over from individual effort in the 1800’s.
It enabled tasks to be allocated, completed, and managed where the expertise resided, rather than one person doing everything. That role remains vitally important to the productivity of the resource investments we all make.
It does not matter if the bureaucracy is a private one, or a public one, they are equally potent at working in their own best interests.
The challenge faced by the bureaucracies that dominate our lives, both private and public, is the advance of digital, and the ability for data to make routine roles redundant. However, the people who lead bureaucracies have not evolved at the same rate. They use the technology as a means of control, and expansion, not as a means to reshape the operations of the bureaucracy and risk doing themselves out of a job.
Not unreasonable, but they miss the essential truth that technology is just a tool, and like all tools requires smart trained people to use them well.
The problem they need to solve is that the disruption that is occurring is making these hierarchies cost heavy, inflexible, and unable to change. As a result, they are being ‘cleaned up’ by the organisations that are evolving without the overhang.
Don’t let yourself be a part of the ‘overhang”
Header cartoon credit: Gapingvoid.com
May 11, 2022 | Leadership, Management, Marketing
There is an enormous difference between knowing the name of something, and truly understanding it.
Most move through school, university, and life by skimming, remembering bits about which questions are asked, and judiciously using jargon to get away with it.
Few take the time, and make the effort to truly understand.
The test is to explain that complex idea to a 12-year-old in such a way that they understand it. When you cannot do that, it is not the 12-year old’s fault, it is yours. You do not understand it fully enough to be able in simple words, metaphors, and similes to communicate the essential nature of the thing.
This is what I see from most calling themselves marketers.
Many marketers, particularly the younger ones, come up against a problem, and before doing any reasonable analysis, jump straight to some sort of digital conclusion that is often grossly sub-optimal.
Marketing is part science, part art.
It is a difficult balance, made more difficult by the simple fact that the art part of the equation only comes with experience, built upon the foundation of the science.
‘Anyone can make a subject complicated, but only someone who truly understands it can make it simple’. Richard Feynman
Apr 27, 2022 | Leadership, Management, Marketing, Small business
The inflation figures released this morning put the annualised inflation rate at 5.1%, up from 3.5% at the end of the December quarter last year. While it may bounce around given the volatility of fuel and food prices, the trend is very clear, and the current election driven lucky dip of spending promises will not help. This increase in a single quarter is the largest I can remember since the mid eighties.
Australia is in for a rocky ride, and it will not matter who wins on May 21, the impact will be felt in every corner of the economy, and by every Australian.
For SME’s who have weathered the challenges of covid and are now experiencing the added burdens of broken supply chains, and lack of labour, while trying to re-establish some level of certainty in their businesses in an environment where demand has ramped up, the prospects are daunting.
Irrespective of the decision made by the Reserve next Tuesday, to raise the cash rate from the current 0.1% to 0.4% or 0.5% which seem to be the prediction of the majority of economists, the squeeze is on. Raising the rate during an election campaign will test the independence of the reserve bank. I bet there are some phone calls being made!
How will this impact your business?
Those impacts will vary enormously depending on the industry circumstances. The rate that gets all the attention is a weighted average, with the actual sector numbers varying from a slight reduction in communication costs, to a 13.7% increase for transport costs.
- Labour costs will soar, as the demand for labour continues to grow, while immigration is still constricted, and the cost of living blows out.
- Transport costs, which most just see in the petrol prices at the local station, which impact everything that moves in the economy will quickly feed into cost of goods sold in every product category.
- Businesses will see a sudden increase in their accounts receivable days, their cash conversion cycles will become longer.
- There will be pressure on margins from multiple fronts. Volumes will be constrained as supply chain failures impact, and competitors scrambling for volume will be more likely to reduce prices to grab that extra sale. At the same time, costs are increasing, and price increases will be harder to get, as buyers exercise their buying power and shop around.
- You will be pressured by your suppliers for quick payments, as they are being squeezed for margin, just as you are.
- General overheads will increase. We have seen significant increases in lease costs for small factory spaces, insurance costs will be turbo-charged after the floods, fires, and pestilence of the last 2 years, down to the little things like costs of coffee for the lunchroom. All these individually manageable cost increases cumulatively add up to substantial and hard to control increases.
So, what should the SME’s that wish to remain successful be doing?
- Customers shopping around for a deal in greater numbers can present an opportunity for those who understand the drivers of Value for customers in their specific market.
- Resist the temptation to cut marketing and selling expenses. History demonstrates with absolute certainty that those that keep marketing when their competitors shut down in tough times not only do better during the tough times but retain their positions after the worm has turned. Optimising your marketing expenditure is not the same as cutting it.
- Actively engage employees and stakeholders in ways to maintain profitability. This should always be a priority, but is more pressing and visible in tough times.
- Focus on the 10 tactics outlined in the Inflation Busting Roadmap published previously
- Consider from the perspective of necessity the five types of cost in your business, with particular attention being given to the last three, as that is usually where the opportunities hide.
Many have not experienced a spurt of inflation before, the last serious spurt was in the mid-eighties while Paul Keating was treasurer. In management terms, this was over a generation ago. If the experience of those times would be of benefit, give me a call.
The header graph is from the ABS website updated as the announcement of the scary 5.1% heqadline inflation rate was announced.
Apr 13, 2022 | Leadership, Management
Asking questions is the best way to build empathy, while collecting information and helping others reach a conclusion. This assumes that you are listening closely and reacting appropriately to the answers.
It follows that being disciplined and planned in the manner in which you ask questions, all of which are context sensitive, is essential.
It makes little difference if you are engaging in a sales process, or seeking information from the factory floor, planning your questions, and using the right form at the right time drives the outcome.
There are six types of question, they overlap, intersect, and build on one another, and each has a situation where they deliver the best results. Whichever question types you use in any situation, always remember that asking with a genuine interest in the answer will deliver better results than if those being questioned see it as a proforma. Asking such pro forma questions demonstrates you are not interested in the answers, or alternatively, are laying some sort of trap for them to fall into.
Closed questions. These do not invite discussion or opinion, just a ‘Yes’ or ‘No’ answer. They can often feel like an interrogation, particularly if there are several in a row.
Open ended questions. These encourage discussion, opinion, and maximise the opportunity for new or unexpected information to enter the conversation.
Limiting questions. These fall between the open and closed questions. You want more than a simple Yes or No, but also want to limit the discussion to a specific area. For example, you might ask: How often…. Or: What were the operating conditions when……..
Leading questions. A leading question is designed to give you the predetermined answer you are seeking. Generally, they are used to confirm a fact or situation, which may have been surfaced with an open or limiting question. Lawyers use leading questions as a core tactic often seeking inconsistencies in a narrative. For example. You might ask: How overdue was the maintenance when the machine crashed? In this case, you are assuming the maintenance was in fact overdue, and that oversight caused the machine to crash.
Questions seeking examples. Discussing an example is a good way of clarifying a situation, while collecting information. It also is a handy tool if you do not understand something, asking for an example will usually clarify it.
Theme based questions. These would usually be used to influence or reinforce a theme. For example, the best way to ensure that everyone in a business understands the overall objective is to consistently communicate that objective. You then might ask of a stakeholder how their job contributes to the achievement of the overall objective, and then an open and productive conversation that leads to greater understanding and productivity.
There is an old saying: ‘We have two ears and one mouth for a reason’. Remember it.
Apr 8, 2022 | Leadership, Management
Culture as defined by Michael Porter is ‘The way we do things around here.’ Those words imply ‘Local.’ Immediate. In the vicinity.
I have seen differing cultures exist in the one business in separate locations. When most commentators refer to ‘Corporate culture’ it implies that it is across the whole enterprise, and often it is. However, local leadership, established practices and the history of that particular unit can also result in a culture that bears no relationship to the corporate version beyond the fine words on the foyer wall.
So, what are the building blocks of a successful culture?
It seems to me that you have four headline characteristics, many with behaviours that grouped together make up the headline.
Respectful.
Respect is a very general word, open to different definitions in differing contexts. In this context, to me it means that every stakeholder has the right to be given, and be expected to give, respect to others. To be given consideration, have common courtesy extended, and be treated with dignity, irrespective of the role in the organisation they occupy. The part time casual cleaner has as much right to be respected for the job they do as does the CEO.
Inclusive.
Enterprises are similar to natural eco-systems. They thrive on diversity, and conversely, underperform as a monoculture.
This means that all sorts of diversity is welcomed and absorbed into the enterprise, each playing a role in building a robust and resilient system. It has little to do with the current blathering about gender equality, although that is a part of it. Diversity is encouraged by the presence of ideas that emerge from diverse backgrounds, life experiences, education in its broadest sense, acceptance of difference. These differences may be racial, sexual, physical, and every other ‘difference’ you will find in a population. Including them in an enterprise provides the opportunity for superior outcomes.
Ethical.
Ethical behaviour implies honesty, integrity, and accountability coupled with regulatory compliance, as well as the acknowledgement of the place ‘common sense’ should have. I considered using the word ‘Integrity’ to describe the characteristics of successful cultures I have seen, and it still holds that personal integrity must be present, but that is the point, integrity is a more personal word than ‘ethical.’
Safe.
By ‘safe’ I do not mean just physically safe, as in not being assaulted at work. ‘Safety’ is a much wider concept than that when applied to an enterprise. It means an individual is psychologically safe to be themselves, to express an opinion, and not be one of the crowd. This requires an expectation of transparency, accountability, up, down, and across an enterprise.
To be safe, you are also safe from bullying, the political ‘backstabbing’ that often occurs, and ruthless competition that has flexible boundaries not always equally evident to all.
The size of the organisation does not matter. Whenever you have more than one person present on a continuing basis, there will be modes of behaviour that can be called ‘Culture’.
Should you be inclined, you could take the converse of these points, and when you see them, they represent the symptoms of a failing culture.
