Dec 5, 2022 | Leadership, Management, Strategy
The current ‘argy-bargy’ around wages policy makes the mistake of assuming it is a binary equation. Pay a dollar more/hour for labour and profit is reduced by the equivalent amount.
This assumes that people working for you are only doing so for the money, and money is directly proportional to output.
We all know this is crap.
While it is clear that many, mostly female dominated jobs, are underpaid compared to the costs of living, and simple value equivalence with other jobs. It is also true that people are not rational, they make decisions on many dimensions, of which price is only one.
Price. Key word.
Why don’t we consider the cost of labour as just the price of it, and consider our labour strategies in the same way we apply pricing strategy for our products to the marketplace?
When we do this properly, which too few do, price is only one factor in the equation. Depending on the context, it can often play only a minor part in the strategies we deploy.
Price is rarely a binary choice, just take it or leave it with no other options. It is also rarely considered how unfair it is to pay people whose performance is unequal, the same amount. We usually address this with piecework pay, which often has a detrimental impact on value delivery to customers. Just look at what is happening to Qantas currently in the handling of baggage for the evidence. It is a fine line between paying for customer value delivered, and piecework payment.
What would you rather have?
Better paid people who care about quality, DIFOT performance, productive time, and all the other things that lead to superior value delivery to a customer, leading to financial performance, or more lower paid people who do not care about any of those things?
Thinking in a binary manner will deliver the latter, never the former.
In these unusual times of inflation coupled with a flat economy, you need to find the most productive people you have, and model their behaviour to others, and compensate them appropriately. You may end up with less, but better paid and more productive people.
Trends in labour cost equations can be an extremely sensitive lead indicator of performance. Labour cost/dollar of revenue or gross margin can tell you a lot about future performance. By contrast, labour cost as an absolute can tell you nothing beyond how much you spend.
The question management needs to ask itself, is not how much labour costs, but how can we make labour a driver of performance.
Header cartoon credit: My thanks again to Hugh McLeod at gapingvoid.com for putting it so accurately
Dec 2, 2022 | Collaboration, Strategy
There are a lot of misconceptions about workshops, and having run many, they are hard work, although participants rarely see that work. ‘Blue sky’ thinking is sometimes necessary, but in the absence of strategic discipline, can become completely disconnected from the real world where implementation occurs.
Here are some things workshop are not:
Workshops are not a democracy.
Someone must lead, show the way, and the bigger the group, the greater the call on the workshop convenor to be a real leader if there is to be any useful outcomes
Workshops are not an unplanned free for all.
Planning is a core part of a successful workshop. Planning the content and the flow of the discussions, having the appropriate breaks and discussions to elicit the creative insights being sought, and in the makeup of the group is essential. As a convenor, you sometimes do not have much control over the participants, and in this case, it is vital to assign ‘roles’ very quickly to participants based on the behaviour in the very early stages, then manage those individuals appropriately.
Workshops are not the same for all participants.
Everyone’s role is different, based on what is assigned to them and what their individual personalities, position in the external hierarchy, domain knowledge, and many other factors. Recognising as a convenor that the participants are all seeing the proceedings through their own eyes is important as a key to gaining collaboration, and developing a set of useable actionable outcomes that are aligned with the objectives sought.
Workshops are not stand-alone activities. Workshops that work are not a day (or three) out of the normal management processes, they should be an integral and rich part of the flow of planning, review and adjustment processes that optimise performance. If not, you just wasted your time, and a lot of money.
Facilitating workshops is not easy, but in the best of them, it just seems so.
Over an extended period of both facilitating and being the ‘facilitated’, it seems there are a small number of characteristics of the best of them.
- The best facilitators are listeners. They do not impose their views on the group, they use what they know to steer from the back
- They have no skin in the game beyond creating an environment for the workshop to generate the best outcomes. When a facilitator has skin in the game, the expectation is that there will be a vested interest that is being pushed.
- There must be a well-rounded knowledge of the context of the questions being examined.
- The ability to put together disconnected ideas and together make them stronger. They see connections that are not obvious to others.
- They are smart enough, and sufficiently well grounded in the key business attributes necessary to the workshop topic to add value to the thinking of those in the group.
- They can clearly articulate different perspectives from the status quo, different ways of seeing the questions and options being examined, and the context in which they will be answered.
- They are willing to serve all interests represented at the tabl. In the case of a business’s workshop, the facilitator needs to be able to assist the individuals, and have the credibility and trust to be able to do so.
- Preparing for a workshop is time consuming when done well, as is the reporting process. A skilled facilitator will spend a lot of time considering the discussion and output that occurred to pull together the fabric of the discussions into a form that can be leveraged.
A successful workshop can be the circuit-breaker so often required when any sort of change is necessary to future success. It is just unfortunate and poor management that most are little more than a pleasant interlude before you get back to the office, and business as usual.
Nov 28, 2022 | Innovation, Strategy
‘The task is not to come up with better results, but to ask better questions.’
This is so true it has become a cliché.
The challenge is to find and ask those better questions.
Following are 12 ideas that may assist the thought processes you undertake to produce superior strategic outcomes required for sustained success.
Life is not binary. Just because there seems to be a right solution to a problem, does not mean there is not another equally as good, just different solution. The opposite to good is not always bad, in life, and in business, it is just ‘another’.
Average is not representative. Take a whole bunch of data points and average them, and you have, what? Something that will not appeal to anyone. If I have one foot in the fire and the other in a bucket of ice water, on average, my feet are the right temperature. Look at the outliers, find the things that appeal to the few on the fringes, and sooner or later, many of them will become mainstream.
Logic leads to predictable. If all you do is rely on logic, black and white, removing the creativity and that ‘other solution’ you will be just like everyone else who is logical. It is good for those who do not want to undertake any risk, but not a road to success. Differentiate by not being predictable and logical. Competitively, you can often figure out your competitors next move by looking at the same logic they will be using, then do something different, guaranteed to stuff up their meek and mild, risk-free plans.
Expectations set the agenda. When something exceeds your expectations, you see it as a great experience. Therefore, if you keep your expectations low, you will end up having a great time, all the time. In negotiation, this is called ‘Anchoring’, and anchoring ‘high’ is always a good starting point, so long as it is not obviously an ambit claim.
Efficient and effective are not the same thing. You can be very efficient at doing something entirely ineffective. To be effective, the solution you deploy must have some sort of value not conveyed by alternative means.
Context is everything. We see things and situations within a context. Change the context and you change the perceptions of the ‘thing’. For example, there is a much repeated psychology experiment using beer. Respondents are asked ‘how much would a cold beer cost from the 5-star hotel a kilometre down the beach’? The question is repeated, but the beer is bought from a shack. The expected price for the beer from the 5-star hotel is double the expected price of the same cold beer bought from a beachfront shack. This is entirely the result of context, our subjective expectations based not on logic, which would say the beer should cost the same, but on the context in which it is purchased.
The scientific method is not the only way, or even the best way to create. The scientific method is the best way to continuously improve an existing process, but it is less effective at dreaming up a disruptive new process.
Accidents, the random events must be induced somehow, or no non-linear progress will occur. Fleming discovered penicillin by a random accident that he did not even fully recognise at the time. The light bulb was not the result of continuous improvement of the candle.
Encourage ‘bonkers’. We need permission to be bonkers. When you do something bonkers that does not work, your job is on the line, do something that is entirely rational that does not work, and you will be fine. Therefore, you must have a small part of your business that encourages bonkers to test the weird and wonderful which are the things out on the fringes that might one day become mainstream.
Consider the irrational. Creativity is not rational, and rarely obvious. Whenever you allow a model that is entirely rational to dictate what will happen, or what you should do, that model will leave out many things, that may on the surface be mathematically irrational, but which might fit better the behaviour patterns of irrational people than the elaborate mathematical models. Next time you see a model coming out of the finance department in Canberra that predicts an outcome, all you know about that the outcome for sure is that it will be wrong. We are not rational beings, but are motivated by all sorts of things, not just the fining or bribing that is usually the only incentives being considered in most economic situations.
Remember the butterfly effect. Tiny things can be compounded to make huge impacts. Look for the tiny, trivial things that may impact in unintended ways that have the potential to compound.
Be open minded. If there was a logical answer to the questions in front of you, somebody would already be doing it. If a problem is persistent, the chances are that the solutions that have been considered are the rational ones, the ones dreamt up in the halls of logical thinking. Instead, look widely at the problem, seeking to see the alternatives that do not come up in a rational, logical conversation about the solutions to the problem.
Ask dumb questions. There should be accolades for those asking questions that might seem stupid, often when someone asks that question, others in the room sigh in relief as they were thinking the same thing.
If you can bring yourself to do some, or all of these things, it will often feel as if you are out of your depth, like suddenly stepping off a sandbank out in the surf. When that happens, and you are suddenly uncomfortable, you may just be in the right spot to see things others will not.
Header: The header is a still of Pablo Picasso taken from the great ‘Think Different’ Apple ads.
Nov 23, 2022 | Analytics, Strategy
Strategy is a bit like economics, go to 5 so called strategists, and you will get 6 opinions.
This is terminally annoying to our accounting and engineering friends who thrive on certainty. However, it is perfectly OK, as we are dealing with the future, and that rarely turns out to be what we think it should be.
The challenge is a Bayesian one.
Over time becoming incrementally less wrong.
Good strategy enables the pace of that Bayesian improvement to be accelerated, sometimes by a geometric proportion.
Strategy generation is a process, it is about creating the future. It has not happened yet, so cannot be ‘proved’ in any definitive manner, until you have the outcomes to count. By that time, it is too late to do anything but adjust and learn for the next time. This does not imply wholesale change, which only emerges from poor strategy in the first place. By contrast, good strategy enables subtle adjustments to be made over time while the direction holds firm.
This makes strategy generation a series of choices powered by an assessment of the relative odds of varying outcomes emerging.
Over the years I have whinged about the mediocre quality of many marketing people I have come across, intellectual dwarfs that fall into ‘marketing’ because they failed to make the grade at something useful.
It is ironic then that almost without exception, the best marketers I have worked with, and for, have found themselves in marketing after becoming tired of the restrictions placed on more externally disciplined professions: accountants (which is where I originated) lawyers, scientists, and medicine.
The combination of the automatic discipline of the scientific method with the creative thinking based on quality data required in marketing and strategy is a potent combination indeed.
Header cartoon: courtesy, again, of Dilbert and his mate Scott Adams.
Nov 21, 2022 | Communication, Governance, Strategy
The purpose of a brief is not to be brief.
A brief, for whatever purpose it is written should be a catalyst for creative thinking, examination of options, and father of a robust solution. This applies equally to an engineering brief as it does to an advertising brief, research brief, or brief given to a head-hunter searching for a new CEO.
Failure to write a good brief will lead to a sub-optimal outcome, or at best, considerable delay and false starts that consumes resources unnecessarily.
A comprehensive, well thought out brief is not a guarantee of success, but it certainly shortens the odds.
Following is a framework for the next time you have to write a brief, for whatever purpose.
Let strategy drive the brief.
Strategy should be the primary driver of every decision taken in an enterprise, down to the daily tactical decisions. It provides the framework for the choices that need to be made. Most briefs I have seen are disconnected from strategy. Sometimes this is just poor leadership, in others it reflects the lack of any strategy, which is evidence of poor management. In the absence of a clear strategy, the choices made as an outcome of a brief of any sort may as well have been taken in a vacuum.
Define the need.
A brief will be in response to some need to be addressed. It may be a competitive challenge, it may be seeking a solution for an internal problem, or it may be seeking information, or be focussed on an opportunity of some sort.
Ensuring the need the brief is seeking to address is clearly articulated is vital to the construction of an actionable brief to experts that will enable them to bring appropriate expertise to bear to deliver the planned outcome.
Define the objectives.
As noted above, the generation of a brief presupposes there is an investment of some sort being contemplated. No investment should be made in the absence of explicitly stated outcomes the investment is expected to deliver. These are usually stated as objectives.
The best objectives are always those against which performance can be measured, SMART objectives. In some circumstances, such as an advertising brief, such clarity is challenging to achieve. It requires deep thought to indentify the drivers of the outcome, the lead indicators, that can be reliably measured. However, the effort will deliver returns, whatever the arena for the brief.
Assemble all relevant facts and informed analysis.
It should go without saying, but no brief is complete unless there is a comprehensive collection and analysis of all facts, and information relevant to the choices that will be made. Objectivity is a blessing. Sometimes it is hard to know where to draw the line, particularly when constructing a creative brief. Average will rarely deliver results, and continuation of the status quo while often ‘safe’ in a corporate environment, is bound to deliver ordinary results at best. There is a warning here for marketers, who will take this to be a licence to change advertising execution. Marketers are often way too close to their advertising and get tired of it before the average participant in the market has seen the message sufficiently to absorb and act on it.
Execute with experts.
A great brief in the hands of the summer intern will not usually deliver a useful result. No matter how great the brief, expertise in coming to grips with the nuances and options presented, requires wisdom that only comes from experience.
Simplicity.
While this post opened with the observation that the purpose of a brief was not to be brief, it is also the case that the simpler, more concise, more focused on the drivers of success the brief is, the better. Simplicity will increase the ability of those responding to make the choices they need to in order to deliver the outcomes being sought. Steve Jobs said it best when he said: ‘Simplicity is the ultimate sophistication’ about 50 years after Einstein said: ‘everything should be made as simple as possible, but not simpler’
Note to the unwary. When what should be a ‘Brief’ is called a ‘Tender’ it is a sure sign that price is the dominating consideration, and you are not the only one being invited to the party.
Header cartoon credit: Tom Gauld in ‘New Scientist’
Nov 16, 2022 | Innovation, Marketing, Strategy
One of the standard assumptions about strategy is that it evolves from the top. Those at the top of the organisation have access to all the information and resources necessary to craft the strategy that will then be deployed through the organisation. Then, crucially, they have the power to make those critical resource allocation decisions that drive activity. Sometimes that strategic development process is assisted by people from a range of functions and levels, all given the opportunity to have their say, and be a part of the process.
When you think hard about it, this top-down dynamic, however it is constructed and communicated is a load of old cobblers.
It should never work that way if what you want is an optimised outcome.
The objective of strategy is to figure out how to outcompete the competition, current, emerging and potential. That implies that strategy should be born at the point of competition. This point is not the supermarket shelf, the procurement office of customers, or in the boardroom, but in the definition of the source of the competitive advantage you are creating.
Building competitive advantage is a long-term task that requires choices to be made about the way available resources are to be deployed. If the competitive arena is based on the outcomes of R&D, as it is a digital product, then you had better allocate the resources to ensuring you are at least amongst the best in the field. Similarly, if it is in the excellence of customer service, you had better build the infrastructure to ensure no customer is left waiting and wondering.
This sort of analysis consumes time and intellectual energy from a wide range of stakeholders, not just the few sitting around the senior management table.
Clearly there can be an internal conflict when a business has more than one offering that have different points of competition.
That challenge can only be managed by ensuring that there is a source of common leverage that can be applied to all the product portfolios. Usually this will prove to be a brand that has built the credibility necessary to be compelling in both arenas.
A current client has two competitive arenas with entirely different business models and sets of capabilities necessary to support them. However, the physical products are very similar, emerging from the same technology ‘home base’. The strategies being deployed are different, although there is some commonality in the value proposition, but tactically, they are entirely different. Two years ago, there was a third product range that seemed to be an obvious extension, but proved to be a major distraction, as the competitive coalface was focussed elsewhere. As we lacked the resources to accommodate three, the product category was exited. That has proved to be a good decision, albeit very tough at the time.
The moral is to craft your strategy around the competitive arena where you must win to be commercially successful. If you cannot win in a definitive manner, the better choice is to exit and deploy the released resources where the return for winning is higher.
This is challenging stuff, so call me whan a bit of wisdom from experience might help.
