Jan 31, 2014 | Change, Governance, Leadership, Strategy
Once the dust has settled, political mud-slinging completed, recriminations done, and blame been allocated over yesterdays decision by the Government not to support SPC Ardmona to the tune of $25 million, which would have triggered another $25 mill from the Victorian government, perhaps we can learn something.
Little of this will be of much value to those workers who will have their lives badly disrupted, but the rest of us had better learn, or it will just be repeated, again and again. SPC has little to do with car making, oil refining, mineral or wool processing, but the seeds of destruction of all these industries stem from similar beginnings.
That seed is the productivity of the capital employed in these activities. Australia over a long period has ensured that returns on capital employed in manufacturing in this country are insufficient to be competitive with alternative locations for that investment. This has been starkly highlighted over the last 20 years as supply chains for just about everything have globalised, and investment in everything except mining where we had (note the past tense) genuine competitive advantages has dried up.
It is not the level of wages, power of unions, concentration of retail, high $A, or any other of the myriad of contributing factors on their own. It is the combination of all these factors over the long haul, and our collective failure to see the long term writing on the wall, and respond to it sensibly, in a measured manner that survives political and economic cycles that is to blame.
Were I given that mystical magic wand, able to shape things to come, unfortunately unable to change the past, here is the list I would have, in no particular order:
- Remove the duplication, ambiguity, and situational insensitivity from our public decision making processes. Big ask here, as it involves substantial reform to our the three levels of government, and all their supplicants and rent seekers.
- Inculcate in both management and managed in the private sector a recognition that the short term lasts, well, only a short time, but poor decisions taken to ease the short term discomfort factor will haunt you for the long term. The longer poor, short term accommodations exist, the harder and more painful they are to unwind, as eventually they will need to be. Lets all grow some backbone!
- Have our political leaders recognise that despite many differences in detail, in the end, we are all in the same boat, and we sink or swim together. It seems that the job of oppositions is to oppose, as articulated by the current PM when opposition leader, and to hell with recognising that not all the best ideas come from your own side of the house. By contrast to the opposition, it seems the job of government is to stay in government, by any means, for its own sake, not for what can be achieved for all of us.
- Add some intellectual depth to the public debate. Currently economic and political debate in this country is conducted on the basis of 2 minute, scripted sound bites, superficial and confected “interviews” that skirt difficult questions, which are in any event, unanswered should the interviewer stray, and with a focus on trivial and emotional, albeit attention grabbing events.
- Develop a sense of what the country stands for, just what that means in terms of the allocation of available resources, and how success is measured. If Australia was a company, it just may resemble a strategic plan supported by the programs, priorities, performance measurement and learning feedback loops that manage the implementation.
A short list with some pretty big “asks” but I remain an optimist, although resigned to being both poor, and a voice in the wilderness.
PS. This article by Robert Gottliebsen subsequent to this post is a very worthwhile addition. If SPC can be saved, and it should be by means other than subsidising the continuance of bad practices if possible, then this is a very useful roadmap and precedent for the necessary changes.
Jan 30, 2014 | Change, Governance, Strategy
Carl von Clausewitz first said, “no strategy ever survived the first contact with the enemy”
It was true in war, and is equally true in business, the only real difference is in the human cost.
That said, not having a strategy is akin to setting off on a holiday, not knowing where you are going, not having any maps, and not knowing if you need to be on a train, in a car, a plane, or if indeed the unknown destination is just around the corner, close enough to walk.
Added to this uncertainty is the observation I have made over many years that having a logical, well developed and resourced strategy, that accommodates the commercial and competitive environment is the easy part, the hard part, the one for which 9/10 points is reserved, is implementation, adjustment and renewal of the strategy.
So, to road test a strategy, I have a list of 8 questions I typically pose to my clients:
- What are the opportunities you see that are not apparently seen by your current and potential competitors?. Often this is not only a function of the innovation capability as it relates to really new stuff, but, as articulated by Marcel Proust, “the real act of discovery is not in finding new lands, but in seeing with new eyes.” Apple did not discover the MP3 player, but they certainly saw the potential of the technology through new eyes.
- What are you the “best” at? No longer is being as good as everyone else good enough, you need to be distinctive, differentiated in some way that is meaningful to customers.
- Where do you look for ideas? If you only look for ideas in your current domain, you are severely limiting yourself to incremental change. Post-it-notes came from a failed glue experiment in 3M labs. The failed “semi sticky” stuff finding its way onto paper tabs used by the pastor in a local St Paul church to highlight his place during sermons. The rest is history.
- If you went out of business tomorrow, who would miss you, and why? I first saw this question posed by Jim Collins in his seminal “Good to Great” book. Answering it focuses the attention on how you add value, and to whom. In the event that the answer to the question is “nobody”, you have a problem. Similarly, if the answer is “company X” but only for a short time till they can secure an alternative, you still have a problem.
- What is it about your past that shapes your future? Our history shapes us all, so understanding the historical “why” things are done the way they are, is a key to changing them when necessary.
- Do you believe all customers are equal, and they are always right? If you do, and it is not uncommon, you are most certainly not allocating your limited available resources to where there is the potential to generate the best return. Years ago as marketing manager in an FMCG business I found pockets of customers who were serial complainers, consuming inordinate amounts of resource. Pretty quickly it became obvious that they were complaining for a combination of the attention and “freebies” that a complaint brought. Politely, I suggested that our competitor may be more willing to accommodate them, I was no longer of that mind, and the problem went away, to my competitor, who never worked it out.
- Are you effectively building and leveraging the varied capabilities of all your employees?. Businesses without people are just shells, people make them work. A former manufacturing client of mine discovered by accident that one of his shop floor operators made the most intricate abstract metal fabrications as a hobby and source of some cash at the local market. From eastern Europe, his English was very limited, but it turned out he had been trained as a toolmaker and welder in an armaments plant in the 80’s before the wall fell. Recognising the potential, his job was completely changed, and the company paid for English tutoring for him on company time. Suffice to say the ROI was enormous.
- Are you learning and changing quicker than those around you?. Change, along with death and taxes, are the only certainties in life. If you are not changing faster than the competitive environment in which you operate, then you are being left behind by someone.
Each of these questions can lead to detailed and useful discussions that can contribute substantially not just to the articulation of strategy, but to the means by which it will be implemented, measured, and altered in response to the reality of the marketplace.
Jan 29, 2014 | Governance, Leadership
leadership. Innovatribe.com
This post emerged from the monthly company meeting of a small , but successful Australian manufacturing business for whom I do occasional work. One of their great practices, in my view, is the monthly “progress” meeting, where the results of the previous month are shared, there is a look forward, and a conversation about anything of interest to the employees. Nothing relating to performance is off the agenda.
At two points in a recent meeting, the MD demonstrated why the business was successful, and why he was a successful leader.
- Early on, he was asked an insightful and quite confronting question. His response: “I don’t know”, followed by an undertaking to find out, and report back, which everyone knows he will.
- Late in the meeting, there was a reference to a modest incident where an operator had used some initiative, gone beyond the expected boundaries, and had slightly mitigated an unexpected situation. This was highlighted, and whilst the outcome had not made a huge difference, the MD looked the operator in the eye, and said, in front of the whole workforce, “well done”
Five words that had a profound impact: “I don’t know” and “well done”.
Jan 27, 2014 | Change, Governance, Marketing, Small business
In Australia today, January 26, it is “Australia Day”, the day we Aussies, or most of us, think the place was started, conveniently ignoring the thousands of years of habitation before Captain Philip turned up with a bunch of convicts in Botany Bay.
For most of us it is also the start of the working year, the end of any summer holiday, back to the grindstone.
For me, thinking about the coming year over everyone else’s break (we self employed do not get one) I came to the conclusion that 2014 was going to be the year of Analytics, Big Data if you prefer, the year when we finally recognised the now central place analytics hold in our commercial and private lives.
It does not have to be the geek version of analytics. Most of the businesses I work with are small, some tiny, but every one has potential assets hidden amongst the various databases they collect, usually without trying. Riverina Grove, a manufacturer of fine Italian food products in Griffith has 6 years of pretty simple data held on excel that can describe by line item every transaction over that time by a range of parameters. Not hard to collect, as it comes out of their standard accounting software, not hard to analyse, Pivot tables in excel do a great job, certainly not “big data” by most measures, but Gold to an SME, should they choose to use it.
At the other end of the scale, is Netflix, an institution in the US, disrupting totally the movie rental industry, and whilst it has not always got it all right, their use of analytics has driven their recovery from stumbles, and success with customers. This long piece in “The Atlantic” outlining Netflix’s data capability to turn data into useable marketing information is a “must read” for marketers.
Data is the secret weapon of organisations, the challenge is to use it, to approach the data with the view that somewhere in here are answers I need, but to get them out, not only do I need the data skills, but the creativity to find ways to extract and enhance them. Josh Wills has a definition of a data scientist, that new profession that has emerged in the last few years I like, “better at software than any statistician, and better at statistics than any software engineer” that comes from this terrific Slideshare presentation on data science.
As Warren Buffet so famously said, “In God we trust, all others bring data”.
It is up to us all to figure out how to use it, but while you are procrastinating, your competitor is probably ramping up his capability.
Happy Australia Day.
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.
