Jul 17, 2020 | Change, Strategy
‘Pivot’ has been the word of the year so far.
Cafes have ‘pivoted’ to takeaway, fitness centres ‘pivoted’ to on line classes, supermarkets ‘pivoted’ to home delivery, entertainers ‘pivoted’ to all sorts of variations of on line delivery, and so on.
Huge changes to the business models of many businesses amidst the chaos.
Now things are starting to go back to some sort of normal activity, although the signs of a re-emergence of the Bug are alarming.
The entrepreneurs amongst us are thinking about the bits of the emerged business models to keep, adjust, or throw away.
It seems that while there is a new normal emerging, for many the challenge is not to slip back into the old ways, but to see the coming months as the second start-up for their business.
It may have been forced on them, but there is silver in the cloud.
New business models, new relationships and types of relationship, a wider recognition that communication is the core of success, and that customers are looking for value from all sorts of new sources.
This coming period for most will be much more than just a re-opening, it will have many of the elements of a start-up. For others, it will be the sad walk to the under-taker. It is unlikely there will be too many businesses remaining unchanged.
Header photo credit: Peter Orr photography
Jul 15, 2020 | Change, Strategy
Crises always drive rapid change, and this Corona crisis will prove to be no different. Many enterprises will flounder and disappear, but others will emerge, not just to take the place of the dead, but to build value in different ways.
The law of diminishing returns that had held true for most of the 19th and 20th centuries turned around, beginning in the 1990’s with the flattening of productivity increases. Slowly, scale had become its own worst enemy, as it outgrew the ability of the corporate bureaucracies that evolved to operate productively.
Manufacturing became organisationally top heavy, and productivity improvement became very hard to extract in anything more than small steps.
Even harder to find is relative productivity improvement. When everyone is increasing productivity at around the same rate, along a predictable curve, there is no net competitive improvement.
We had the early stages of the digital revolution in the mid 1990’s, culminating in the enormous profits of the so called ‘unicorns’ that emerged in the early 2000’s. These defied the rules of diminishing returns, and grew on the back of network effects and negligible marginal costs. In the process, they made their owners multi billionaires and rock stars.
Perhaps we have reached a tipping point, where the dollars flowing from the digitisation of our lives is starting to reach its limits?
Despite the enormous wealth and power delivered by the digital platforms, they still supply only a small part of what we need, and do not supply any of the basics, food, shelter, or clothing. They just make these things easier to get, and sometimes cheaper.
However, the application of digital capability to the manufacturing processes that deliver the things we need to live, may be in the nascent stages of reversing some of those limitations of scale.
Over the last decade, most of the unicorn wannabee’s have floundered, with a few notable exceptions. Their market valuation tanked, and in the recent case of WeWork, blowing up in spectacular fashion. Meanwhile, the market value of manufacturing businesses, those that produce the things we need to live, have not been as affected. However, when compared to the valuations of the digital platforms, their performance looks tepid at best. This comparison has sucked the life out of manufacturing investment, as investors seek quick wins.
Productivity increases, soaring in the latter quarter of the 20th century have flattened out, despite the ubiquity of software.
It was not supposed to happen like this.
Partly this flattening is because the barriers to entry have been radically reduced, and in many cases, removed. Meanwhile the benefits have moved very slowly from the owners of the software to those that use it.
Our productivity will rise again, as digital tools are developed and deployed into the production of the physical things we need and want to live comfortable lives.
The future is digital, but the emphasis will be in different places.
The evidence is all around if we look.
Tesla is just a car, re-imagined with a digital heart, Apple became the most valuable company in the world by adding a physical retail arm to their digital portfolio, and Amazon purchased the physical supply chain of Whole foods for US$16.5 billion, and got their money back overnight with the increase in their stock value.
Locally, the response to the Corona bug in manufacturing forums has been all about the deploying of digital capability to the production of physical things. This is together with the recognition of the importance of a sovereign manufacturing capability.
We are, maybe, approaching a huge inflection point.
A few weeks ago, I watched the Prime Minister speak at the National Press Club. If even a modest part of the rhetoric converts into action, we will be better off. When talking about the technical education system, he used the same phrase several times: ‘Why pour more money into a dud system?’ This is an overt acknowledgement that the current system is absolutely broken, and needs to be fixed if manufacturing jobs, with the social stability they generate, are to re-emerge.
What do you think?
Jul 13, 2020 | Communication, Customers, Strategy
Writing an email sequence is not as easy, or effective, as the videoed on-line courses (special deal $695, ends at midnight) would have you believe.
The templates and advice is all pretty vanilla although useful, but does not get to the heart of why people buy from you, and how, amidst the tsunami of stuff coming at them, they pick out yours.
Many seem to think digital is different from the old fashioned advertising I grew up with, and it is, tactically, but strategically, it is the same.
A potential customer goes through some sort of journey that differs in every case, but generally follows a process:
- recognition that there is something of interest out there for them
- Awareness that the stuff out there has relevance to them as a solution to some sort of a problem they have, or have recognised as a result of the discovery process.
- The problem now seen becomes something that has a value in its solution
- There is activity seeking that solution
- Choosing a supplier, and installation of the solution
- The after sales process, where they can be persuaded, assuming you did a good job, to be an advocate for the problem you solved for them, and more specifically for you as the solution provider.
The process by which this all happens is not a nice logical ‘Sales funnel’ where progress is made in an orderly manner. In reality is looks more like a huge ball of tangled fishing line, a real mess. Seeking to put order to the mess makes sense so long as you do not lose sight of the simple fact that the whole thing will resist the orderly, sequential nature of software, and revert to the mess at any and every opportunity.
The targets of your ‘content’ at each stage also has wrinkles.
You have current customers, the easiest to reach, potential customers, those you really want to reach who may have the problem unrecognised, some who may have recognised their problem, and you have advocates, those who might amplify your content.
The further audience is the wider community, out of whom all the other three groups emerge in one way or another.
Therefore, you need to mix and match between the mediums and the message to maximise the outcomes of the investment in content. You do this by the combination of focus on specific market personas. This includes personalised messaging of current and past customers, as well as more general communication of the problem/value proposition equation to gain reach into the varying audiences, to generate marketing leverage.
How deeply have your considered your mix of content and medium to reach your preferred audience?
Header credit: Maksym Kopylov via Flikr
Jul 10, 2020 | Governance, Leadership
Both sides of politics are claiming victory in last Saturday’s by-election.
Labor because they won, and Liberal because they did not lose by much, and anyway they did not expect to overturn a century of precedent in by-elections, despite the PM having high personal approval ratings for the handling of the corona crisis. Largely forgotten is the pathetic floundering that went on over the bushfire season, except by those still waiting on the promised assistance, and living in tents.
What lies underneath is a range of gaps, often chasms, between opposing views and outcomes.
It is not unusual to have substantial socio economic gaps in an electorate, it just seems those in Eden Monaro are more starkly drawn.
Gaps between the coast and inland regions, gaps in the nature of business in the varying regions, lifestyle, wealth, access to public services, and more.
The electoral result is an average, and as with all averages, they can be very misleading.
There are also substantial gaps in the apparent ‘values’ held by differing parts of the electorate, and a huge gap between the promises of politicians seeking a vote, and their performance on the ground.
As a group, we are increasingly cynical and distrustful of those in politics who espouse values, then appear to be acting in a contradictory manner.
These differences produce internal conflict that when combined with a poor economy, starts fights over how the pie is to be divided. There will be pressure on the current Covid induced income support regime, and longer term, to change corporate and individual tax rates, not just to fix the unholy mess they are in currently, but to set out to address the inequities.
However, when you have the gaps in wealth distribution, personal and corporate values, political ideologies, and powerful vested interests, you have a volatile environment, not well suited to making fundamental changes. Therefore we will get more and more Band-Aids stretched over a broken system.
Then you have the external environment to consider. There is geopolitical strife of many colours, the war for trade, technology, talent, capital, and over the systems of government that apply.
Einstein’s first law, that energy is not created or destroyed, it just moves from one form to another, seems to apply to the manner in which the pie is cut. In that process there are always winners and losers, and nobody wants to be a loser, while the winners are usually pre-ordained.
That is the situation we find ourselves in currently, wealth and power are based on increasingly fragile foundations. The implications of those foundations crumbling are challenging to envisage and articulate, and so remain undiscussed in open forums.
As I said, elections are averages, and averages always hide the essential truth.
Jul 8, 2020 | Governance, Leadership, Strategy
I am not in the habit of quoting V. I. Lenin, but he did get some big things right.
‘There are decades where nothing happens, and there are weeks where decades happen’
We are in one of those ‘weeks,’ the inflection point of a lifetime for most of us.
Almost every trend we look at, and forecast by, is somewhat linear. There will be bumps and jumps, but overall, looked at over time, they are linear.
Most business models are built on the automatic assumption of those linear trends holding true. Our institutions utterly depend on that being the truth. As a result, when the inflection point comes, it is traumatic; the response slow and often inappropriate, assuming all will return to a ‘new normal’, that it is just another bump in the road. Perhaps a nasty one, but a bump nevertheless.
I suspect that is not the case currently, this is not a bump in the road; this is a U-turn down a bush track into the unknown.
Forces build for a while in the background, looking linear, and then some sort of catalyst creates a confluence that totally changes the forces that drive the industry. The resulting chaos creates opportunity as much as it creates uncertainty, disharmony and dislocation of the pre-existing status quo.
Today, we are watching as several trends come together, which will create a new normal, looking little like the old one.
The digitisation of everything, has taken a dose of steroids since January, changing the way we shop, communicate, and work. To me it looks a bit like I imagine the confluence of the internal combustion engine and electricity looked in 1920. They had been around for a while, but suddenly converged to become transformative powerhouses that led to a 50 year burst of productivity increases.
Similarly with education. We have been wandering down a road of increasing commercialisation of education, marketing a tertiary qualification to Australians as the road to a good life and to international students as the ticket to wealth and a visa, while gutting the development of trade skills. Suddenly we have closed borders, the major source of international university students actively discouraging coming to Australia, and a massive shortage of depth of trade skills we cannot fill with 457 visas.
The education sector is in deep financial and philosophical trouble.
What about energy? For years we have clung to coal as not only our primary energy source, but as a huge magnet for international investment and export commodity sales, to the active exclusion of alternatives. Now we have wind and solar producing energy more cheaply than coal, and technology rapidly solving the storage problem. At the same time, the distribution of power is changing rapidly from a centralised system to a localised one. That confluence must be producing a bad case of reflux in Canberra. Political donations, existing political institutions, and relationships will not be enough to stem the tide, and the outcome is likely to be bloody, inevitable, and very soon.
Coming at us are revolutions in biology, driven by gene therapy and CRISPR. The human genome was first mapped in 2003, at the cost of billions. Now you can send a sample along and get your own map for a couple of hundred dollars. CRISPR, discovered in 2012, has accelerated our gene editing capability faster than Henry Ford’s production line accelerated the manufacture of cars, and look what happened then. Massive investment in roads, the 2 day weekend, and people travelled daily further than they had in a lifetime just a generation before.
That is before we consider the coming tsunami of AI, Quantum computing, additive manufacturing, and the new materials being developed with properties that seem to be out of the mind of Jules Verne.
As the old Chinese proverb goes: ‘May you live in interesting times’. We are, and to some measure that will be due to the changes driven by the Chinese journey out of poverty into world dominance in just over 30 years. This is trend reaching a tipping point without a lot of notice, or thought about the consequences.
Are you ready?
