The strategic alternative to Sales and Marketing

The strategic alternative to Sales and Marketing

May 8, 2019 | Marketing, Sales

I rarely disagree with the musings of Peter Drucker, genius that he was.

However,  I need to take issue with one of his more quoted musings: ‘The aim of marketing is to make selling superfluous’

The objective of both Sales and marketing is to generate a transaction, and to do so in such a way that the customer never goes anywhere else for subsequent transactions.

Transactions generate revenue, so both Sales and Marketing are a part of the one continuous process:

Revenue Generation.

Everything in an enterprise is aimed at providing the means to generate revenue, without which, there is no future.

Stop considering Sales and Marketing as separate functions, they are not, they are both components of the wider task of generating revenue.

Why does ‘Hindsight Planning’ really work?

Why does ‘Hindsight Planning’ really work?

May 6, 2019 | Communication, Small business, Strategy

For years I have used a process I call ‘Hindsight planning’ with clients to conceive then execute  a strategy that delivers sustainable prosperity. 

Put simply, rather than planning forward, as it usually occurs, from an  analysis of the current situation towards a goal,  I seek to have them articulate the goal in great depth, and from a range of perspectives so that they ‘internalise’ the goal as if it has been achieved. They have absorbed an  emotional attachment to the goal as if it was the current reality, rather than a goal.

I always thought it was a bit of a semantic trick, but it turns out I was wrong.

Hindsight planning is rooted in psychology.

Daniel Kahneman in his book ‘Thinking, Fast & Slow’ said it best: ‘Once you adopt a new view of the world, or a part of it, you immediately lose much of your ability to recall what you used to believe before your mind changed’

In other words, hindsight planning is more than a semantic trick, it is a process of replacing the current reality with a new one, that just happens to be the goal you set out to achieve. Once you believe the new reality, it is easier to look backwards and articulate the things you did right, and those you did poorly, the resources you needed, the timing, capabilities, and all the other things that require assembly for the achievement of a stretch goal.

When you need help with this challenging idea, call me, and challenge me to do for you what I have done for others.

Header Photo: the last known photo of the Titanic as it left Queenstown Ireland, on April 12th 1912. A little but of hindsight would have gone a long way!!

11 ways to uncover the lies in data

11 ways to uncover the lies in data

May 3, 2019 | Communication, Governance

Data does not have an agenda, it does not lie, but it rarely shows the whole story.

Think of the data that would be gathered and analysed after the announcement of a chunk of native forest was opened up for logging. The botanists would have one set of data and analysis of the impact, the accountants another, the entomologists another, those concerned with native animal habitat another, and so on. None are wrong, but all are incomplete without the input of  the others.

Corporate use of data does have an agenda, performance, and unfortunately often personal advancement. Similarly, data delivered as fact by a politician has an agenda: getting elected.

The data does not have an agenda, those who use it often do.

Bias in data can be conscious, as well as unconscious. Someone has to decide what data is collected,  what hypotheses to test, and how it is to be used. All can be shaped to meet a predetermined outcome.

When making a major decision we all look for the data that will give us confidence in our choice.

However, we are all also familiar with the nagging feeling that the data we are looking at is nothing short of bullshit.

So how can you tell?

Here are 11 simple tests to apply.

  • Where did the data come from? Organisations, geographies, people, all make a difference.
  • Was the collection method designed by someone with a vested interest in the outcome?
  • What are the gaps in the data? These can easily be created by the manner in which questions are asked, or often, not asked.
  • What assumptions were made in assembling and analysing the data? No data survives the filtering imposed by the assumptions in the assembly and analysis processes.
  • What statistical measures have been applied? The number of initial data points, upper and lower control limits, confidence levels, all the statistical tools available, but too often dismissed by non statisticians and those running an agenda.
  • Be wary of creative articulation. Percentages are regularly thrown about as ‘proof’ of something. A 50% increase in accidents in your suburb in the past year may mean there were 3 compared to 2 last year. Similarly, averages are often misleading. We expect the mean to be close to the median (middle point in a range) but often it is not.
  • Who gains or loses from the outcome? Just look at the current political ‘debate’ in this country for ample evidence of this. There are no laws about truth in advertising for political ads, therefore the numbers quoted are heavily edited, or it would seem, often just made up.
  • Is the data describing just correlation or is it truly causation. This is often used to make a case. For example this compelling case put forward by the economist a while ago ‘proving’ that intelligence increased with consumption of ice cream.
  • What are the alternative explanations of the conclusions articulated, and what are we not being told?.
  • Is the data giving you the answer to the question being asked, or to some other question? And, how well is the question reflected in the answer?
  • Has anyone with an established perspective opposite to the outcome of the data had a critical look at it? This is often a good way of finding the holes in the collection and analysis.

While statistics can be made to lie, they will also deliver transparency when you understand the basic measures. People will often tell you what they think you want or need to hear, and when it is backed by data, it becomes more credible, particularly if it confirms an already established point of view.

Finally, if it seems too good to be true, there is a fair chance that it is, our instincts are usually pretty good, so follow them until proved otherwise. 

I am  by no means a data nerd, but I do believe that good data can make our collective lives better by improving decision making, and removing just a little of the bullshit sprayed at us so regularly and methodically by everyone with a cause.

Data does not lie, people using data can, and do.

The header cartoon is from David Somerville’s Random Blather blog, an extension of Hugh McLeod’s original.

 

 

 

How to assess the value of information

How to assess the value of information

May 1, 2019 | Governance, Strategy

The term ‘monetisation’  is thrown around like confetti at a wedding. It almost always refers in one way or another to the process of squeezing money out of information of some sort. The real key to monetisation success is to identify who may have value created for them by  the access to, and use of, the information and the outcomes it can bring.

Think about the differences between an X-ray and a CT scan.

An X-ray is a one dimensional ‘picture’, and you only see the bones with any clarity. It is the ‘first port of call’ in a diagnosis, offering a limited view of the location and orientation of a skeletal injury. By contrast, a CT (computed tomography ) scan is multidimensional. You see not just the bones, but the soft tissue as well, and you can see it from a variety of perspectives. it is a far more complete picture.

This is a fine analogy for the value of information.

Financial information is just like an x-ray. It cannot tell you much beyond a one dimensional analysis of a current situation, and it is incomplete. A strategic analysis of information is more like a CT scan, you can see a dramatically increased information set, and examine it from a range of perspectives. This depth of information can deliver understanding and insight about the connections and interrelationships that exist. 

An x-ray capability is relatively simple and cheap, whereas a CT scan is more complex and requires a far greater commitment of resources to deliver that far more detailed picture.  CT scanning equipment costs in the region of 3 times as much as an X-ray set up, and in use, delivers perhaps 100 times the radiation of an x-ray. Not something to  be undertaken without due consideration. A CT scan also requires a far better trained staff than an x-ray, generating greater operational and fixed costs. 

So it is with the information you gather and analyse in your business.

Information is the currency of success these days. Various studies identify in excess of  80% of the market valuation of listed companies coming from intangible assets. Considering this fact,  it makes sense to have an information strategy.

Leaving the IT department to develop such a strategy fails to recognise the importance of information as an essential foundation of success.

Our standard accounting processes include an asset register, on which all assets are recorded, often down to the pens and pencils in the stationary cupboard, but I have yet to see one that puts a rationally articulated value on the information held in the data files of an enterprise. Is it just because it is hard to do, or is it because there is  no place for it on our balance sheets and in our statutory accounts?

There appears to me to be 4 parameters for considering the value of your data.

  • Leading indicator: a source of information about what may happen
  • Lagging indicator: a record of what has happened
  • Focus is improvement of management discipline
  • Focus is creating new value for stakeholders

Creating metrics for each of these is challenging.

Metrics are usually financial, and then usually only one dimensional, based entirely on the costs incurred as recorded. This data is available in some form in every business, but only tells a part of the story. There are opportunities to record and measure costs in other ways.

Elsewhere I have considered the 5 types of cost in every business, direct, indirect, opportunity, transaction, and short cut costs, and noted the challenges of putting numbers to some of them.

Financial data can also be ‘fattened up’ by consideration of  several other parameters:

  • The value of the information by understanding the costs that would be incurred if it was suddenly unavailable.
  • What someone else might pay for it, particularly a competitor
  • The extent to which this information contributes to the bottom line.

For example, these metrics could be considered in the context of the value of the customer and lead information in your CRM, how much does that information deliver to margins? These days that is often a readily available metric.

The additional valuation parameter is strategic:

  • How complete is the information in delivering a picture of how the competitive environment in which you compete is evolving?
  • How does that information inform your strategic decision-making, and what would be the costs of not having it measured considering the 5 costs?
  • How does the information articulate the key drivers of performance?
  • How well does the information contribute to the strategic outcomes being sought?

Tackling this challenge of quantifying intangibles, recognising the truth of Peter Drucker’s throwaway that ‘what gets measured gets done‘ is not easy, and not cheap, but like the difference between an X-ray and a CT scan, the results are worth the effort when done well.

Header photo from: https://www.oceantomo.com/2015/03/04/2015-intangible-asset-market-value-study/. This is the second time I have used this graphic to make a crucial point about the value of intangibles in your business.

Electric Vehicle manufacturing: The prospects for Australia.

Electric Vehicle manufacturing: The prospects for Australia.

Apr 29, 2019 | Change, Innovation, Leadership

One of the more fanciful of a grab bag of fanciful bullshit surrounding the ‘debate’ on electric cars a fortnight ago was the assertion that South Australia could become a world centre of electric vehicle manufacturing.

It seems superficially logical, all those car assembly and supplier plants sitting idle, and all those manufacturing skills being wasted as the former  employees become unemployed baristas. However the entry barriers to successful manufacturing and export, and infrastructure requirements for domestic market penetration beyond central suburban areas, are significant.

GM in the US is quietly packing its bags on EV development and manufacturing to shore up profits, particularly in the light of the halving of federal Green House Gas ( GHG ) subsidies. The Californian ZEV credits scheme to encourage electric vehicles, which contributed greatly to the initial research momentum may not be enough by itself to maintain the momentum.  Tesla, the poster boy of electric vehicles is walking a financial tightrope, despite its undoubted success in the market.

Labor appears to have done a bit of homework, if reports are correct, so perhaps there is hope. However, it seems to me the core of electric vehicles, where Australia has some level of competitive ability that can be protected and leveraged is the R&D solving the storage problems, subsequent battery production, and lithium mining and processing.

Lithium, the base of current battery technology is not easily available. However, Australia has considerable Lithium resources, well behind Chile and China, but carrying more sovereign certainty despite the regulatory and political hurdles.

Let’s hope the flights of oratorical fancy yet to come in this election campaign are founded on fact and solid strategic thinking, rather than what sounds good in front of a populist audience.

Anyone for a debate on Adani? (some facts and consistency of argument would be nice)