Aug 5, 2020 | Change, Strategy
Everyone and his dog is making predictions about the shape of the economy, post corona, a state that is seemingly moving out of our grasp currently with the resurgence of the bug. The reality is that the cards have all been thrown in the air, never has the immediate future looked so uncertain. Therefore, why should I miss out on pontificating?
Friedrich Nietzsche seems to have got it right when he wrote: ‘What does not kill me makes me stronger’. I suspect he will be again proven correct, just bad luck for the dead.
The tone of the predictions made is usually reflective of the mouth from which it came, and the interest they have. However, the almost unanimous view is that we are in for a really tough time. Whether the recovery is ‘V’ shaped, ‘U’ shaped, or more like an ongoing ‘L’ only time will tell.
However, my money is on the ‘L’, with a few upticks in specific areas.
- Demand will be constrained, which will filter through the economy, resulting in sustained unemployment and underemployment, cycling back to lower demand.
- Supply will be constrained, as businesses disappear, their supply chains are disrupted, and manufacturing sovereignty takes front and centre, but is unable to fill the void. Therefore the gap between the rhetoric and the reality might be wider than we think at this point.
- Government policy changes will occur, but will they be the right ones and be sufficiently effective to make a real difference more than the immediate triage. Policies are fairly flexible, subject to quick change; entrenched modes of behaviour and belief are not so flexible. Therefore it may be that the short term measures do not stick after the initial pressure is removed, and policy drifts back to the pre-existing status quo. This would be an opportunity lost.
- The systemic shock to the financial system will be substantial. I am not an economist, but the butchers bill from this response to the virus will have to be paid. That payment will come through a reorientation of financial markets and tax regimes. With very low interest rates, there will be money looking for a home, but the system might be in some sort of semi catatonic state driven by uncertainty, and the chances of further rounds of infections that lead to subsequent close-downs. Household balance sheets will have been severely impacted as people have reached into reserves of all kinds to pay living expenses. The Australian house is the super fund of many older Australians, it is likely that the values will drop substantially in the face of low demand. This is concurrent, with their super balances from super fund investments, which have tanked. Older Australians will simply have to work longer to be able to retire, but there are no jobs for older workers.
- Tax relief except in specific cases such as the usurious payroll tax, will probably not be forthcoming, but fundamental changes in the tax system to reorient it towards greater equity and to plug the gaping holes is essential. The decade old Henry tax review should be dusted off and rethought for a start. Some real political backbone is required, but I suspect will remain missing.
- For a considerable time, it seems likely that the stock market will undervalue performance, reversing the trend of the last 20 years, where markets have overvalued stocks. This feeds into the social problems of how we look after in increasingly large and unhealthy cohort of ageing baby boomers and their parents, as their investment incomes are reduced.
- Business models will be transformed. Working remotely will become far more accepted as we simply do not revert to the commute mentality of pre-corona. This has all sorts of implications for CBD property, infrastructure development, and the way communities are run.
- Supply chains will become more transparent and collaborative, even amongst competitors, as it becomes obvious that agility above all else is necessary to maintain the flow through the whole system.
- Technology will get a shot in the arm, as innovation and tech always does in times of crisis. However, it will be technology emerging from the current pool of scientific knowledge, some of which may have been hiding on the shelf for some time. Original science that will deliver solutions to problems we may not yet have seen, will have to wait longer for the necessary funding. Meanwhile, our stocks of really smart, trained and funded scientists, capable of creating the science that will deliver the future will continue to diminish to close to extinction levels. This is despite government rhetoric, and some current reallocation of funds from humanities to STEM. It is a systemic challenge ignored for at least the last 30 years because it extends well beyond any election cycle.
What have I missed?
Aug 3, 2020 | Leadership, Operations
I love smart goals, they provide a road map, discipline, and a definition of what success looks like. Over the years they have proved to be very useful.
However, as I get wiser, I realise there is one vital element missing from Smart goals:
Compounding.
Compounding is, as Einstein noted, the most powerful force in the universe. To compound, you do little things that build on each other over time, becoming increasingly more powerful at a geometric rate.
The benefit of compounding is that you learn as you go, it is learning oriented, whereas SMART is by definition, goal oriented, it has an end point.
The obvious solution to this dilemma is to make every project a series of goal oriented components, that together and compounding, deliver the continuously improving outcomes. This sort of view forces to you to be ambidextrous in the way you look at performance.
On one hand, you are down in the weeds working with the detail, while on the other hand, there is the really important helicopter view that is able to make the compounding impact of all those tiny improvement obvious over time.
At its core, this is what lean thinking is all about, continuous improvement that delivers over time.
Jul 29, 2020 | Customers, Marketing
It seems almost every business owner I meet claims to be customer centric, yet, ask their customers, and you get a different response.
Human nature is that we put priority on what is important to us, rather than looking at something from the other side of the equation. It is simply easier for us to compute, and in the short term, more satisfying, to think how well we are doing.
Go out to some customers, potential customers, and importantly, former customers, and ask them some simple questions:
- What is the most painful situation we might be able to help you with?
- How did we do last time solving it?
- How could we make it easier to do business with us?
- What would make us so compelling that price no longer mattered?
- How would you explain our value proposition to your neighbour?
- What would make you choose our competitor over us?
- How are we different to our competitors?
- What one thing would you change about the manner in which we service you?
- What words would you use to describe the relationship we have: supplier, partner, collaborator,
Rank yourself on these questions to gain a real picture of your customer centricity. If you are doing well, you are answering all the questions your customer may have, giving them the information they need to make decisions. The ultimate test is to be able to tell them that your product is not the ideal one for them, and recommend an alternative.
Do that, and they will trust you forever.
Jul 27, 2020 | Customers, Sales
Every business needs a flow of leads that can be turned into a transaction, and better still, a relationship that includes numerous transactions.
You have current customers, who are, hopefully, very happy with your service and products. What better source of more business could you ask for?
In his seminal book ‘Influence’ published 30 years ago, and updated several times since, Dr. Robert Cialdini noted one of the 6 principals of persuasion is ‘Reciprocity’. The sense of obligation created when you do something, even a really small thing, for someone else out of pure generosity.
You do something generous for them, and they will feel obligated to, at some time, do something in return.
When that something happens to be a referral to someone they know, who could use your services, and with whom they have a relationship with mutual trust as a foundation, and they refer you to them, it is like money in the bank.
I have a client who has made successful referrals a central KPI of his workforce. His service requires that his employees are in peoples homes, and so trust is a fundamental part of a successful project completion. When those happy customers refer him to someone else, the conversion rate dwarfs anything coming from other sources. It is not always immediate, people are not always ready to buy when you are ready to sell, but when that time comes around, he is always at the front of the line.
Ask yourself a very simple question, and implement the answer to double your sales at very low cost.
‘How can I engage a customer in a way that they offer to refer me to their networks’?
You will probably find there are some simple answers to the question, including doing a great job for your current clients. However, the most effective way is to do something nice for them, with no (obvious) agenda.
My client has a modest bunch of flowers delivered to the lady of the house with a personalised thank you note attached. The note includes the suggestion that they might know somebody who would benefit from his services, and he would appreciate a referral.
A simple gesture, with a profound impact.
Leads are great, genuine referrals emerging from trusting relationships are money.
Jul 24, 2020 | Collaboration, Lean
An application of Occam’s Razor to all the fluff and consulting clichés around lean thinking and implementation, brings lean back to its simplest form possible.
It has only 2 elements.
Learn to see waste.
Once you teach yourself to observe the waste in a process, you see it everywhere, from the big things in your work life, to the simple things. Ever lose your car keys at home? It takes some time and frustration as you try and remember where you left them? Waste. Put a hook, or bowl, or have specific place that you deliberately put your keys in every time you walk in the door, and you will not lose them again. After a short time, it becomes an automatic action. Fail to do it one day, and the frustration at the wasted time and effort in finding them comes home big time.
Eliminate waste by continuous improvement.
Once seen, take some action that reduces the waste. In the keys example above, it may be that you try the hook, but from time to time, you come into the house with armfuls of shopping. It is hard to reach a hook with an armful of shopping, so you adjust by putting a bowl on the hall table specifically for the keys, which is waist height, so more accessible. In time, it may be that one set of keys near the front door adds extra walking when you need to go out the back door, so you add a specific back door key to a bowl next to the back door.
Continuous improvement, to everything you do.
Incrementally improving a range of these small things, bit by bit, creates momentum and delivers compounding results.
Everyone knows about the race to the South Pole between Scott and Amundsen. They also know that Amundsen won the race, and lived to talk about it, while Scott and all his party perished. What few know is the manner in which the two parties attacked the challenge. There were significant differences in the logistic tactics used by each party, and many played a role in the eventual outcome, but one is not always quoted in the literature, which may have played a key, but little understood role. ‘Continuous compounding’
Amundsen broke camp each day early, and was travelling by dawn, and every day, he covered 15 nautical miles (28km) sleet, blizzard, or sunshine. At that point he made camp, even if it was still early in the day, preserving the stamina of his men and dogs. This created a rhythm that converted to momentum, every day getting closer to the goal, to win the race and return safely.
Scott did neither.
By contrast he made a choice each day, to hunker down in bad weather, or at the other extreme, travel 30 miles, or more, creating no cadence or momentum to the task of achieving the twin goals. There are many other ‘lean’ lessons in the race that are relevant. For example, Amundsen used dogs, which could eat the abundant penguin and seal meat collected on the way. Scott used ponies, which required much more looking after as they sweat with effort, and eat only the grain that had to be hauled.
Little things removed, add up very quickly to big things, and when combined with organisational cadence, create momentum.
How long would it take for you to change a tyre on your car? 20 minutes? an hour? 2 hours after waiting for the NRMA to turn up?
The F1 record for four tyres is 1.8 seconds. Over the course of a race, often won or lost by hundredths of seconds, a few tenths several times during the race can mean the difference between a podium, and a straggler. All the F1 titleholders have done is remove waste, and work as a team, with a few tools to automate the repetitive actions.
‘Lean thinking’ has been turned into a complex toolbox by many, requiring expensive services to implement. However, in its most basic form, it is really just critical thinking, common sense, and simplicity.
Header photo credit: Tim Chong
