What can our political clowns learn from Jeff Bezos

What can our political clowns learn from Jeff Bezos

Aug 24, 2018 | Governance

The current clown-party in Canberra brings tears of frustration one moment, scorn and anger the next, followed by an overwhelming sense of incredulity.

This was posted early Friday morning August 24th, and by the time you read it,  well, anything could have happened.

The one thing that I am sure will not have happened is that common sense will suddenly rain down on the Liberal party. Therefore,  they may have persuaded Fraser Anning to swap parties, again, with the promise of the Immigration portfolio in a reborn Abbott government.

Perhaps drawing a bit of a long bow, even for the clowns.

Arguably the most successful leader of the last 30 years on the planet is Jeff Bezos.

He has built Amazon from nothing to its current market valuation of $US1904 billion.

By contrast, Australia’s GDP was $US1323 billion in 2017.

In other words, Amazon, one company, is 44% bigger than the whole Australian economy. I know it is a bad case of comparing apples and oranges, but nevertheless, perhaps we can learn something from the leadership displayed by Bezos and apply it to the clowns.

Amazon is the creation of one man, so his views on what constitutes leadership should not be dismissed lightly.

Every new employee  is given the list of Amazon leadership principles as a part of their induction, principles that it seems Bezos is deadly serious about upholding.

I thought it might be amusing to apply them to the Federal parliamentarians generally, just to see how they stack up. I have given them a mark out of 10, with some commentary. Feel free to disagree as loudly as you wish.

Customer Obsession. We the voters are their customers, as well as their employers, and I see little evidence of real obsession on delivering value to us. In its place, I see a huge dose of flatulent cliché. 1/10.

Ownership. The essence of this is long term thinking, and not being prepared to sacrifice the long term outcomes for short term results. Long term to the clowns is what they are doing after lunch. 1/10

Invent and simplify. My sides are hurting from laughter. 2/10. (they got the extra point because at least I was amused)

Are right, a lot. They seem to be rarely right, although to be fair, there has been over time some level of good guessing. 3/10.

Learn and be curious. If ever there was evidence that the clowns cannot learn it is the current clown party. Only the clowns think that the electorate will look kindly on the after party mess. 0/10

Hire and develop the best. Some of those preselected by the various parties should not hold office in the local choir. Not because they cannot sing,  but because they are too stupid to realise that is what they are there for. Again, to be fair, quite a lot of them have demonstrated a modest IQ, sufficient to get them through a law degree. Enough said. 2/10.

Insist on the highest standards. I am conflicted with this one, as the standards of stupidity, narcissism, self-delusion, egotistical self-aggrandisement, and the ability to avoid answering any simple question with a simple answer have rarely been equalled. Clearly very high standards indeed, but not what Amazon looks for in leaders. 0/10

Think Big. They often seem to talk big, but the talking seems to be rarely matched by the thinking. However, again to be fair, there has been some evidence of thought, such as thinking the public would not notice their party. 2/10

Bias for action. If this lot were any slower, yesterday would catch up. 1/10

Frugality. They preach frugality, and are fairly successful in imposing it, on most of us who are not their mates, or able to demonstrate some important vested interest to be protected. It also seems they are able to become less frugal at the slightest whiff of electoral discomfort,  when they selectively bring out the porkers. 1/10 for effort.

Earn Trust. How do I give a negative mark in this silly poll? 0/10

Dive Deep. Bezos wants the leaders in Amazon to  be prepared to do anything, to get down in the weeds with their teams and stay connected. Perhaps the clowns just misunderstood and thought he meant our pockets. 5/10 for misdirected effort.

Have backbone; Disagree and Commit. I suspect Paul Keating said it best referring to (I think) John Hewson when he said   ‘he is simply a shiver looking for a spine to run up’. 1/10

Deliver results. It is hard to disagree with results, and Australia has had some truly good results over the last 20 years in comparison with most of the rest of the world. Some credit must be given, although the cynic in me wonders how much was sheer luck, and how good could it have been. 5/10.

Overall, the clowns should be proud, they have excelled at being clowns, although I suspect a few of them are really crying inside this morning.

Update 3.00 pm Aug. 24.

Can somebody please explain to me what just happened.

The Pratfall (the collective noun for a group of clowns, and very appropriate as well) in Canberra just rolled an elected PM, and we all know where that leads. To add to the burden of stupidity, they replaced him as PM with the architect of the now failed company tax changes, and as his deputy, the architect of the NEG, the stone upon which the former PM finally stumbled. While it may be a more likely outcome than Senator Anning becoming the Minister for Immigration, it is a close margin!

The next election will be an absolute rout. Mr. Shorten must be on his knees either thanking whoever he prays to, or splitting his sides laughing, perhaps both! Come May next year he will be leading in the next Pratfall.

 

Convergence of Governance and Marketing in Financial Services

Convergence of Governance and Marketing in Financial Services

Aug 22, 2018 | Governance, Marketing

The shocking revelations from the Royal Commission continue to flow.

Last week it was NAB’s turn in the hot seat, and they did not fail to add to the building dismay and absolute disgust being felt.

The Governance Institute defines governance as:

Governance encompasses the system by which an organisation is controlled and operates, and the mechanisms by which it, and its people, are held to account. Ethics, risk management, compliance and administration are all elements of governance.

This seems to be an OK definition to me, with the obvious omission of any reference to the customer, the ones who put the money on the table in the first place. I had a quick look on the AICD site, and could not find any sort of definition, which seemed a bit odd.  A google search for ‘marketing governance’ turned up a lot of self-serving fluff and cliché, but not much of value I could see in a quick scan.

Being simplistic, the revelations from the Royal Commission all seem to point to some very poor governance of the marketing function. Perhaps not surprising, as so few seem to have thought constructively about it. (myself included beyond the implications on strategy and resource allocation)

Besides the apparent breaches of the law, certainly breaches of ethical behaviour, and absolute failure of a culture to reflect in any way the promises made by the organisations to their customers, there is clearly no governance of marketing in the Financial Services industry.

If there was, we would not be paying commissions on sales, continuing to extract trailing fees, charging for services not delivered, lying, and even charging dead people for advice.

Effective marketing over the long term relies on ensuring that customers remain customers, that the lifetime value of a customer is not just respected, but revered.

The barriers to exit in Financial services are high, largely because of the low level of financial literacy and the sheer complication in this area. This is made worst by the blizzard of regulatory changes, industry jargon, sheer disinformation, and malevolence  that abounds around a trough the size of the compulsory superannuation money pot.

It may be fine to put barriers to exit in place, customers hate them, but understand the reason, but then to screw customers behind the barriers to exit amidst the fog of disinformation and jargon, is a gross failure of marketing governance.

The responsibility of marketing lies with the representation of the customer inside the business. We talk about customer journeys, then stop at the first sales transaction. Has nobody in Financial Services thought of lifetime customer value, and acted as if they cared?

Here endith the rant!

Header credit: Once again, to Hugh McLeod at gapingvoid.com, who must have seen the Australian Royal Commission coming when he penned this cartoon years ago.  This seemed like the perfect opportunity to use it!

How to develop some of that vital  ‘fingerspitzengefuhl’

How to develop some of that vital  ‘fingerspitzengefuhl’

Aug 20, 2018 | Change, Leadership

 

Fingerspitzengefuhl is a German word that translates poorly (I am told, my German is marginal at best) meaning literally ‘finger tip feel’. The real meaning is the intuitive sense that develops in some people with deep domain knowledge, experience and expertise. Somehow, they just know when something ‘feels right’.

In this day of the metrics tsunami, this sense of deep understanding should be easy to find, or at least much easier than it was, but I find in my travels that it actually seems harder to find. Very few seem to have developed it, and those that have seem to effortlessly outplay their competition.

It occurred to  me that this is because the metrics we are trying to untangle only give us half the information.

Why, not what.

They all tell us what happened, that is what algorithms do, they record the events. Very rarely do I see people digging around to find out why they happened. In the ‘old days’ pre-digital, there were few metrics that were easy to come by, so we spent much more time understanding the why something had happened.

Outcomes, not Activities

Our metrics report on all sorts of activities, but do a less effective job of telling us the outcomes of a specific activity, in identifying the real cause and effect chains in place. There are now simply so many options that the causal chains are more obscured than they ever were. However, digging them out is gold, as it enables huge productivity gains in your marketing investments.

Yours and theirs.

Most metrics concentrate on measuring the success, or otherwise, of your own investments, with scant regard paid to understanding the returns your competition is generating from theirs. Commerce is a competitive sometimes Darwinian game, and knowing your opposition better than  they know themselves offers huge competitive rewards. Understanding how they will react to something you do enables you to wrong foot them, catch them off guard, sneak in their back door, and generally knock them around.

None of this comes without effort, it requires deep commitment to understanding, and often breaking with the status quo, but  the rewards are there for the bold. You will develop ‘fiingerspitzengefuhl’ and everyone else will marvel at your insight, and ability to out think and out manoeuvre  your competitors.

For SME’s, ‘fingerspitengefuhl’ is both the source of their competitive advantage and competitive disadvantage. On one hand, they are by their nature much closer to the customers than a larger business, unencumbered by the friction of a bureaucracy, and  therefore have the potential to be more agile and responsive. On the other, they are so busy working to keep the bills paid, without the support mechanisms of a larger business, that they never lift their heads to see what is going on around them.

Need some help? Give me a call.

Header credit: Michelangelo on the ceiling of the Sistine Chapel.

 

11 parameters to choose those who will be tomorrows leaders

11 parameters to choose those who will be tomorrows leaders

Aug 17, 2018 | Governance, Leadership

 

The rate of change is accelerating at a massive rate. A common challenge for all enterprises irrespective of size that have professional management, is how to pick those who will be able to deliver commercial longevity to the shareholders, whether they be spread across the globe, or members of a family.

The gap between those who have been successful, and those who will be successful is widening.

From time to time, I work with clients to plug capability and leadership gaps in their management ranks, and seek future leaders. I am certainly not a recruiter, my objective is not to fill a hole in order to gain a commission, it is to ensure that my clients can optimise their commercial and strategic outcomes.

The first step is to build a profile of the role, how it will contribute to the outcomes being sought. This requires a solid strategy that acknowledges the geometric rates of change happening around us. Without that strategic framework, the task of picking the right leader could just as well be done with a pin down the pub.

When we are all clear, we build a profile of the ideal candidate.

However, the order is clear. The organisation is first, we have to be certain about who will be doing what, how the objectives being sought will be achieved within the context of  the strategy, and finally, why we are doing what we are setting out to achieve, what value will it bring, and to who.

Having that work done, and it should be done as a matter of course, not just because there is a gap in capabilities, we consider the perfect candidate profile.

I have a template that has been used for 25 years with considerable success, consisting of 11 characteristics. Each position and situation is different, and there will never be a an absolutely perfect candidate, so compromises will inevitably be made, the trick is to make them in non- critical areas. Therefore considering the priorities of the requirements, and their relative weight gives a tool against which to measure the merits of candidates, and ensure some level of consistency as you progressively interview.

Competence.

There will always be things that are an absolute requirement of the job, deal breakers no matter how well all the other factors fit.

Trustworthiness.

Leading is tough, and increasingly trust is hard to win and easy to compromise. The candidates need to be the type who will be  absolutely straight, transparent, and follow through on commitments. In a senior management role, it always comes from doing what you say you will do, but also taking in potentially divergent and contrary views in the decision-making process, and  allowing due process, so everyone has a stake in the outcome.

Focus.

Leading even a modest sized business is full of distractions and red herrings. A leader needs to be able to focus on the few things that are really important that will deliver the outcomes, and not  be distracted by the urgent but not necessarily important items that always come up.

Curiosity.

I have  written before that I think curiosity is a defining feature of successful leaders into the future, and nothing  I have seen changes that view. A curious person, prepared to nurture and  enable their own curiosity, and inspire it in others,  will infect an organisation in a positive manner. Curious people are less likely to accept a status quo, believe what others believe simply because of the weight of numbers, they are inherently seekers of the facts, and uncomfortable with inconsistency and hearsay.

People skills.

This is a pretty generic description, but people skills are what makes the leader, as others are prepared to follow them irrespective of the trappings of power and position. Increasingly people make the difference, so having the right people in the right places in the organisation is crucial.

Passion.

Passion is the original communicable ‘disease’. While ‘Passion’  has become a cliché of recruiters ads, that does not diminish the power of passion to inspire, motivate, and engage.

Agility.

Being agile demands that you are able to change position quickly and efficiently in the face of new information, an emerging situation, competitive pressure, whatever it is that demands a response different to the last one. Agility is very different from inconsistency, it is also different from flexibility, which sees you bend in the face of change, but then move back to the former positon when the pressure eases off.

Self awareness

The ability to see yourself as others see you is crucial to effective leadership. Self awareness enables empathy, without which the best you can be is a good manager, not a leader.

Judgement.

You want someone who demonstrates good judgment in  stressful situations, does not let the emotion or heat of the moment overcome rational analysis. This is a really difficult one to measure, or even get a good handle on, as our unconscious reaction to   those we agree with is to warm to them, and vice versa.  The best way is to examine in some detail the performance and behavior of individuals when stress has been imposed in the past.

Fit.

The only person who can really change the culture is the person at the top. If the recruit is other than the top dog, to some degree they will have to be able to fit into a culture that exists with little power to make significant alterations beyond their own span of control. While it is good to have people who question the status quo, and offer alternatives, you also need a balance that ensures that any disruption leads to a positive outcome.

A bias to action.

Even when all the above is present, it does little good by osmosis, there has to be action. As the world gets faster and more complicated, those who take action will win, despite the setbacks that will occur. We all acknowledge that we learn from our mistakes, which presupposes we take action often enough to make some.

A key job of every leader is to replace themselves, and to develop a ‘bench’ that can fill capability gaps as they emerge. The really good leaders I have seen in large enterprises spend more time on this single task than any other, apart from developing and managing the culture, which is inextricably tied up with the personnel choices. It is also the responsibility of a governing board to ensure that emerging leadership is encouraged and nourished, as their primary responsibility is the long term commercial and social viability of  the enterprise.

 

Header credit: Hugh McLod at Gapingvoid.com

Unpacking the characteristics of a demand chain

Unpacking the characteristics of a demand chain

Aug 15, 2018 | Demand chains, Operations

Recently I found myself in a group conversation about marketing ‘channels’, and almost had to scream.

Like most conversations of this nature, they were just about logistics. Pity the poor old customer, barely got a mention apart from being noted as being on the end of a supply chain.

The whole conversation sounded like the ones I had in the 70’s, prior to any of the development that has gone into the thinking about the nature of the chains delivering product to customers, or the systems that drive them that has occurred in the interim.

A chain does not kick into operation until someone decides to buy something, it is activated by demand, not supply. Therefore, we would be better served to think about it as a demand chain. This is more than a semantic difference, it acknowledges that the chain is a ‘Pull’ model, activated by demand, not a ‘Push’ model, activated by supply with no reference to how that available supply will be sold.

Everything that comes after the decision to buy something is just seeking ways to split up the revenue from that sale.

Looking at it from the customers view, the only things that are important are those that add value for them, the details of the shipping from A to B, and manufacturing processes are supremely irrelevant.

Everyone in the chain is competing for a slice of that dollar.

A chain is a complex system, or it can be. The simple definition of a complex system is that the whole is greater than the sum of its parts. You can view a chain as a number of sequential but essentially separate activities, or as a number of interdependent activities.

In the first, we are fighting for a slice of the pie, in the second, we are collaborating to make the pie bigger before slicing it up and sharing it around.

They are profoundly different.

The latter is way harder to build and maintain, but delivers significantly better financial and strategic outcomes in the long term, as the price on the day of a product becomes almost irrelevant.

Following are the descriptions I use to make the key distinctions.

Supply chain.

Supply chain arrangements are basically, grow/make it and chuck it over the fence and hope somebody buys it, and eventually pays you, something, which is most often not reflecting what the producer thinks it is worth. Most of agriculture works on this model, and it has failed us.

Characteristics: Short term price, adversarial negotiations, multiple supplier competition of undifferentiated product, buyers who hold the negotiation power deriving from scale, or the anonymity via auction.

Value Chains.

A value chain seeks to control at least some of the value-add that occurs between the production and customer, and thereby capture some of the added value by margin. Mostly however, the value add is calculated as the ‘cost add’ as the consumers view of value plays no role in the calculation. The classic case is bread, where millers have become bakers to capture the value added margin that results from bread being baked from their milled grain. You often see this type of vertical integration evolving as one link seeks to control what happens on either side. However, it is still an essentially sequential and disconnected process, of grower, miller, baker, and distributor.

Characteristics: price is important but not the only factor, specifications and specification maintenance become important, the amount and type of value added is taken into account, very aggressive negotiation occurs, but it is no longer ‘take it or leave it’ as it is in a supply chain. Calculation of the value add is usually the marginal cost of the manufactured goods sold, minus the input commodity price. As in a supply chain, this is usually just a calculation based on competitive pressures. Often in recent times, marketing has got hold of the end product, (as in bread) differentiated it a bit, added some advertising and benefit claims, and tried to sell the product for a premium.

Demand chains.

These are rare beasts indeed, and do not usually carry the name ‘demand chain’. It is activated by pressure applied to the chain from the end buyer, the opposite direction of both supply and value chain arrangements. It is pressure delivered to the chain by real demand, and has proven to be the key to success. For example, Toyota apply demand chain disciplines on their suppliers, by having the parts procurement process activated by a ‘Kanban’ card on the production line. This is the genesis of the TPS which has revolutionised modern manufacturing.

Characteristics:  Driven by demand, collaborative relationships for mutual benefit drives activity, specifications and DIFOT performance are crucial, prices are negotiated on the basis of best outcome for the whole chain, as well as the individual, and there is information transparency throughout the chain which these days requires IT integration.

 

The spread of digital technology has given us the tools to make the transformation to demand chains easier, but they require power to be devolved, and the status quo in most cases to be altered, so rarely do they evolve to their full potential. Increasingly we will see an evolution towards demand chains as enterprises seek sources of differentiation, enhanced customer service, and cost reduction, all at the same time.