May 24, 2021 | Change, Strategy
The product lifecycle is a well understood concept. Introduction, growth, maturity, decline, illustrated usually with a nice even normal curve, which almost never reflects what happens in the real world.
Despite its distance from the real world, it remains a central core of many strategic planning exercises.
However, it is not the only cycle to impact on the commercial sustainability of enterprises.
The life cycle of enterprises is shortening radically. Many of the dominating companies in the Dow Jones top 100 were not there 20 years ago. A number had not even been born. The emergence of tech companies into the top of share market valuation has been astonishingly quick, as has the demise of many of those that were the standard bearers 20 years ago.
The hand-over has been driven by the emergence of a host of new business models. No matter how great your product, loyal your customers, deep your IP and brand protection, how actively marketed, when the business model erodes, everything else goes with it.
Amazon killed off bookstores in quick time. The bookstore business model became obsolete as they watched. Air BnB is an entirely new business model to that successfully leveraged by hotels for 50 years, themselves a business model that killed off the local tavern as a place a traveller could get a meal, a drink, and a bed. Perhaps the most telling is the end of encyclopaedias, which seemed to happen in the blink of an eye. Microsoft first launched their Encarta digital encyclopaedia on CD in 1993. Encarta was itself disrupted and destroyed by Wikipedia in 2001.
The leadership challenge is how to manage the portfolio of eroding and potentially emerging business models that will support growth in the future, while also managing the contracting and often conflicting lifecycles of their product and product development portfolios.
The leadership of enterprises spends the bulk of its time in one way or another searching to maximise the leverage it can build from finite resources. So, what happens when someone comes along and suggests that they take some of those resources, and allocate them to some new thing, that is inefficient, scrappy, and will deliver lower returns, if any at all, than the existing business? It gets canned, few managers will proceed, it is against the existing ethos of maximising efficiency.
The net result is that the incumbent enterprise tend to ‘pass’ on taking up the very things that will replace them.
I have a client, an emerging SME in a market that is in its early stages, growing rapidly, with very few ‘rules’ beyond the expectations set by the incumbent industry players, backed by regulation. At some point the pressure to revise the regulations will become irresistible, and the dominant existing business and manufacturing model will become compromised almost overnight.
I was in the dairy industry in the leadup to deregulation in NSW. I clearly remember the resistance to change, and the resulting organisational and financial chaos when it did arrive. The chickens did not just come home to roost, they crapped all over the pre-deregulation incumbents, and none of the major businesses survived in any form that resembled the pre-deregulation organisation.
The evolution of often competing business and product models happening in real time, creating a raft of organisational, cultural, and financial conflicts is unprecedented. It will also open up opportunities galore for the agile, and crevasses for those less nimble to stumble into.
The demand for strategic creativity and an action-oriented culture have never been greater.
May 17, 2021 | Leadership, Strategy
‘The smartest people are constantly revising their understanding, reconsidering a problem they thought they’d already solved. They’re open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking.” Jeff Bezos
Strategy development is an inherently creative pursuit, you are seeking to visualise and articulate something that does not currently exist. Like any creative pursuit there are barriers to thinking in this manner, barriers that must be addressed if you are to build a robust strategic response to opportunities that may be very hard to see.
6 ways to achieve this elusive outcome:
- Forget finding the right answer. The ‘right’ answer probably does not exist, what does exist is the best answer today, that delivers another step on the road to the strategic objective. Looking for the ‘right’ answer is a way to ensure nothing gets done and that you drown in data.
- Don’t follow the rules. Every industry and market has ‘rules’. These are the assumptions that this is the way things always work. If you follow them, you will never come up with any combination of factors that delivers anything new. The best you can do is optimise, and while optimising is a very sensible and competitively necessary thing to be doing, it is not strategy.
- Allow yourself to ‘play’ with ideas. Try applying metaphors and similes to the situations you outline and see what happens. This is hard work, but it frees the mind. Just like little kids do not play by any rules, they make them up as they go, you should do the same. Throw logic out the window and enable the ‘inner child’ to come out, you may be surprised at what emerges. Like children, everybody is creative in their own way, it has just been beaten out of us by the education systems and life. Encourage the creativity by play, it is in these unrestricted and non-confrontational situations where tacit knowledge flourishes and is shared, and can be turned into original ideas.
- Get everyone involved. this is a cultural thing, and enables the seeds of creativity to grow. One of the greatest impediments to creativity is when someone thinks ‘this is not my job’. Strategy is everyone’s job. Being close to customers is typically the job of the salespeople, but look at what happens when your engineers and logistics people get close to them, all sorts of opportunities emerge because they are looking at things from a different perspective. It is challenging to create and nurture the processes and cultural drivers that encourage this sort of general engagement, but it pays great dividends.
- Ambiguity is your friend. It enables different thinking to be applied when the rules are unclear, so redefining the situation is easier.
- Be prepared, even happy to be wrong. So long as you recognise being wrong as a learning opportunity rather than one to apportion blame, this is a powerful practice. Recognising a mistake means you have tried something, learnt something, and moved forward. One of the realities that risks becoming a cliché is ‘Psychological safety’. This is when people are relaxed about being wrong, it is safe to call out mistakes while knowing it is about the process and conclusion, not the person. There is however a flip side to this ‘happy to be wrong’ choir. It is not an excuse for sloppy due diligence, or shallow consideration. This is a cultural tightrope that requires confident leadership to flourish
None of this is easy, if it was, everybody would be doing it. When you need the necessary outside assistance, let me know, I can help. Alternatively, Call Jeff, he has some time now, and has exemplified strategic creativity for the last 25 years.
Apr 13, 2021 | Change, Governance, Strategy
When should you let go of the sunk cost that is not performing?
How do you decide when to quit, walk away from an investment? It is as important a decision as the one you made when planning where to allocate your resources in the first place.
Strategic quitting is the flip side of strategic planning.
Realistically, you have only a limited amount of resource to be allocated. Determining the priority for those allocations includes being able to stop proceeding with some, and redirect. This acknowledges the opportunity costs often swept under the corporate carpet.
It is not being a quitter, it is sensible strategic leadership
The good thing about being at the point of strategic quitting is that you have actually done things, and hopefully learned from them. Therefore the next action you take should be better informed.
I am sick and tired of the fluff around strategic planning, what we need is less of it, and more strategic doing!!
Strategic quitting is a fundamental part of strategic success, embrace it.
Apr 6, 2021 | Change, Strategy
If a problem can be solved with money, then arguably, it is not really a problem!!
Most companies, especially big ones try money before they try creativity and thinking from first principals.
To my mind, this is one of the reasons that smaller companies are inherently more creative, they must be. They simply do not have the money to throw at a problem. They have to be scrappy, to hustle, experiment, and invent a way to address the problem without a pile of money.
One of the several strategies big companies deploy to manage their Innovation programs, is to be very sensitive to the activities of start-ups, even invest in a few. When one of the small bets looks like a winner, buy them out.
Solves the innovation problem for them, short term. It offers a big payday for founders, so may be good for them as well. Problem is that many such innovative start-ups that have been purchased are suffocated by the culture that prevented the big acquiring company innovate out of its own optimised way of thinking.
Being innovative requires being sub optimal, scrappy, unsure, and often wrong. Which executive in a big company is going to go to their boss and ask to be put in charge of something that might not work, will disrupt the existing status quo, require investment and time, and probably fail? On top of that, these volunteer intrapreneurs in large companies want to be paid as they would be on the optimised and secure world of the corporate behemoth.
Counter intuitively, it turns out that the lack of money can be a competitive advantage small companies have over big ones. The challenge is to keep the effort going in the face of the never-ending bills that arrive to be paid immediately.
Header cartoon credit: Scott Adams and Dilbert on Innovation. Right again!
Feb 26, 2021 | Marketing, Strategy
If we ever needed more evidence that you need to have a piece of the digital landscape that is yours, where you make the rules, the response of Facebook to the then proposed ‘News Media and Digital Platforms mandatory Bargaining Code’ is it.
This piece of nonsensical legislation, now passed into law, sought to even the bargaining power of legacy media with the two giants in the space, Google and Facebook.
On the surface, a useful idea, but legislating behaviour has never worked in the past, and this attempt will be a dog.
The central claim that Google and Facebook steal content for which they have not paid, while an easy lie to tell, is nonsense. Media chooses to put their content onto Facebook, their choice. The platforms then determine where the posting goes, and who sees it via their constantly evolving algorithms.
No stealing going on there.
On the other hand, legacy media post their stuff because of the reach on offer from the platforms. Hundreds of millions, if not billions of potential views is a tasty lure.
The role played by the platforms is as middleman, a wholesaler of eyeballs, playing both sides of the equation for their own benefit.
On one side, they attract viewers by using the algorithms to deliver content that users like to see, based on their viewing history. That data is a humongous pile of personal information, freely given by us to the eyeball wholesalers to sell to advertisers who want their messages to reach those most likely to transact.
Back ‘in the day’ there was a ‘code’ of editorial independence, and factual reporting, funded by the advertising that flowed to the media owners. That source of revenue dried up as the platforms gained power, and as a result, so did the independence and fact checking dry up, replaced by ‘bait’ tailored for the individual, to chase for news, information, and entertainment. Any pretence of fact went out the window. The more extreme, salacious, and outrageous the better to attract the wandering eyeball.
The ‘bait’ was spread around by the platforms, leading back to the media that choose to ‘publish’ it using primarily Facebook to do so. The media benefited from that trail of crumbs, they got the reach, but still did not have the ability to attract the advertising dollars, that all went to the collectors of the crumbs. As a result, the media, which in this country means the Murdoch and Nine empires, stuck out their hand for help from those to whom they have given lots and lots of support. A quid quo pro for that support, the cost of which will be more junk, salacious nonsense, and sheer fabrication passing as news. Real news, the stuff that effects our lives, is unlikely to get much of a look-in: not enough views.
What of those who have availed themselves of the platforms to engage in some sort of community benefit activity, from local interest groups to really useful things like emergency warnings, information and local news. Do they get any financial assistance? No. Nada. They will now however be able to contribute their data to the algorithms that enables the ad targeting that will exclude them.
Google announced they had set up ‘News Showcase’ that would be curated out of Singapore, and for which they would charge a fee for inclusion. It is unlikely Facebook will not follow such a worthy way to skim a few more advertising dollars. So much for ‘news’. It is perhaps just coincidental that the corporate tax rate in Singapore is considerably less than this country, although that consideration has not been an obstacle in the past, as Australian tax has evolved as almost voluntary to these characters.
I could go on, but risk bursting a valve somewhere.
Suffice to observe that the Government has demonstrated again how firmly they are attached to the teat of Murdoch et al, and buggar common sense, integrity, principle, factual analysis, and the rest of us.
To state the obvious again, you must own your own piece of digital real estate.
Header credit: Huffpost Australia. A confused and surprised treasurer being eyed off by a humanoid
Feb 17, 2021 | Governance, Strategy
The key difference between a successful strategy, and an unsuccessful one, is that the former is implemented.
That simplistic statement does little to acknowledge the challenges in the implementation process.
The purpose of this post is to offer a few observations and recommendations that come from extensive experience, and the mistakes that go with that experience for you to consider.
Two essentials for a successful implementation.
- What and Why. What you are doing and why, should be clear to everyone at every level in the organisation. When the bottom of the organisational pyramid has no idea of the role they play, and how that role fits in and complements others, the strategy is doomed.
- Performance management. Performance feedback loops at all levels and importantly across functions are essential. This requires both good communication, and the processes by which the people in the organisation can learn from mistakes, and adjust processes to avoid repeating the same ones.
In addition, following are 4 observations that may be useful, in no particular order.
- Sunk cost avoidance. Being prepared to recognise early when something is not working, being willing and able to acknowledge the misstep, and back away is a key component to the process of improving the productivity of the resources deployed. This is equally applicable to the detailed operational levels as it is to the executive suite, and requires that ego be left at the door. I have seen this called a ‘batwing’ mentality, like the batwing doors in a western saloon. When you walk through and it is welcoming, keep walking, but when it seems to be filled with gun fighters, back out quickly. Such a culture enables experimentation, and the devolution of decision making to those on the ‘front line’ of any decision, enabling a positive and productive work environment.
- Matryoshka doll. Implementing strategy successfully always reminds me of those Russian dolls that fit inside each other, smallest to the largest. Successful strategy implementation similarly has smaller pieces fitting progressively inside the larger, next level up. While it does not cover the cross functional requirement for strategic success, it has proven to be a useful metaphor.
- Rolling performance management. It is getting harder and harder to forecast anything, the longer the time frame, the more suspect any forecast becomes. The answer is to be focused on the strategic objective, while managing progress towards that objective on a rolling basis, making tactical adjustments based on the context and learning that happens on a continuous basis. This runs counter to the prevailing practise of managing to annual budgets, so creates the need for leadership in the place of management.
- People. Finally, while we are running businesses, the real game is all about people. The way to engage with people is with stories, so ensure that your story is clear, engaging, and known by all employees so they can repeat it, with commitment, at every opportunity.
How can I bring the experience of the years to your challenges? Just give me a call.
Header credit: Tom Fishburne at Marketoonist.com. Again.
