The getting of wisdom

The getting of wisdom

Oct 16, 2017 | Governance, Leadership, Management, Strategy

As I get older, the world seems smaller, more complicated, but smaller. This is not just the technology we all now have that has shrunk all the boundaries of our world over the last 20 years, putting the all the  information anyone has ever had at our fingertips, that is different.

It is one thing to have all  the information, it is quite another to be able to make sense of it.

There has been a progression from data to information, to knowledge that has been recognised and widely leveraged, but now there is another level to the cake, wisdom.

We all have access to the same information, can find those who have the knowledge to use it, but it is wisdom, born of experience and breadth of thinking that delivers the wisdom now so rare, but so sorely needed.

I like very much the philosophy of Charlie Munger who talks about mental models, ways of assembling knowledge and sifting through it, reorganising it to be seen from different perspectives that offer a different view. The more mental models you can bring to bear on a topic and body of knowledge, the greater the chance that there will be some insight that emerges unexpected from the model.

Charlie speaks of his mental models, and their source often, a man of few words, leaving most of them to his mate of 50 years Warren Buffet. However, in 1994 he wrote what has become a staple of business thinking , his ‘Worldly wisdom’ speech.

As a kid, we learnt stuff by experience, and using mnemonics,  devices to assist us to remember things. Rhymes, associations, colours can all play a role. Wisdom seems to me to be the opposite end of the mnemonic, the ability to see connections between seemingly unconnected pieces of information, and it is our mental models that enable these connections to be made.

By contrast what we have often these days are unrelated facts presented as a cause and effect, or a set of actions that worked in one place being expected to work in another, which may seem similar, but at a deeper level are not sufficiency similar to enable the actions to deliver the same outcomes.

We tend to be a society that believes, or wants to believe  in miracles, perhaps cargo cults, because it is easier than doing the hard thinking yards.

As someone who gives advice for a living, it is incumbent on me to have a clear framework from which to distil the information to have into advice that is tailored to the needs of those being advised. As often as not, the advice is not heeded, or taken in parts which sometimes hurts, as it reflects poorly on the end result, but it is the reality of making real change.

To be able to deliver the unwelcome news with confidence that it will hold, I need to have a range of mental models, models that come from the work done over 45 years in marketing, sales, operations, leadership, logistics and accounting, and be able to filter the information in front of me through the range of models in a routine and organised manner. Each model gives a slightly different interpretation of the facts, a different slant that requires consideration, so that each outcome is slightly different to the past, but best fitted to the situation to hand.

When you need a bit of wisdom, give me a call, perhaps I can help.

For context, vital in the consideration of Wisdom, the blurry photo is of a group of islanders in the Pacific at the end of the war. People on remote islands had become used to planes going overhead and dropping supplies to the troops. When the war ended, so did the dropping of supplies, an outcome not anticipated or understood by islanders. Physicist Richard Feynman gave it the name we all know: ‘Cargo Cult ‘in a speech in 1948. 

 

Finding the sweet spot of organisational cadence.

Finding the sweet spot of organisational cadence.

Oct 13, 2017 | Collaboration, Customers, Sales

Last week I watched for the first time in many years Stanley Kubrick’s masterpiece, ‘Full Metal Jacket’.

Amongst the many parts of the movie that struck me, were the scenes in the first half where Gunnery Sargent Hartman is calling cadence as the platoon marches and runs.

These scenes sparked a complex series of thoughts about the nature of co-operation, collaboration and authority as it drives performance in our enterprises.

I often talk about ‘Rhythm and Flow’ as being an essential ingredient of any successful organisation, it is one of the three foundations of a successful enterprise I look for when conducting a StrategyAudit.  There has to be a rhythm to the operations in anything bigger than the corner shop, a series of rhythms that together make up the flow that drives the strategic development at the top, down to the daily tactical implementation with customers. In addition every process has a flow, it begins, moves through a set of stages to completion. The less interruption to  the natural flow  the better the process will work, the more efficient it will be.

All manner of things get in the way, and even when working really well, at 100% efficiency, some processes will not be optimised. You can get a flawed process working as well as it can work, peak efficiency,  that does not make it a good or optimised process.

Processes evolved to enable us to scale operations, to do the things that needed doing repeatedly, the same way every time, reducing errors, time taken, and  effectively ‘dumbing down’ the process. While the evolution started the first time someone made any sort of automated tool, it took off when Frederick Winslow Taylor  started developing and testing  his ideas while running the Midvale Steel works in Pennsylvania, first published as a paper called ‘A piece rate system‘  in 1896.

Organizations have almost by definition, a set of procedures, and varying levels of authority, that when bundled together become labelled as a ‘Bureaucracy’. The evolution of bureaucratic processes is what has enabled the scaling of businesses over the last 100 years. Things get organized into silos where there are specialists who can solve problems from the routine to the strategic, and pass the knowledge on in a consistent manner. As a result even the most efficient process had a cycle time as it moved from one level of an organisation up for decision, then back down for execution. That works until the time required to respond to the challenge/problem/opportunity is less than the bureaucratic cycle time, or something out of the ordinary happens, something that has not been prepared for. Then you get the process equivalent of waste, as the opportunities pass by, and problems overwhelm.

This is a reflection of the speed of operation required by the operating environment, in most cases, driven by customers. In Lean thinking terms, is called ‘Takt Time’ which is effectively the cycle time of demand in the market.

Cycle time and Takt time are two ideas from manufacturing whose time has come in organizational development.

The environment in which we operate has been disrupted absolutely by the march of technology. Speed is increasingly the difference between success and failure, so enterprises must find ways to adjust their operating cycle time to less than the decreasing Takt time demanded by the market place.

Optimising a bureaucratic process will not be enough in the future, as it still requires deference to the levels of authority, rather than enabling those at the coal face to use their initiative and intimate knowledge of the situation to be able to play what is in front of them.

At the core you have this paradox of organisation structures being vertical, organised into functional silos for efficiency, while the processes that serve the customer being horizontal and cross functional. As the requirement  for speed increases, the time a vertical structure takes to respond becomes increasingly less satisfactory to customers, they move onto those who meet their time requirements, as they do not give a fig about your  approval processes, they add no value at all to them, but they do suck value away.

The successful  organisations of the future will be more ‘biological’ in nature, with the power to respond in Takt time devolved to the fringes where the intersection with the competitive environment occurs on a daily basis. The challenges of this change to the current management orthodoxy will make most very uncomfortable indeed, and therein lies opportunity for those who can reverse the location of tactical decision making, and put it at the ‘front lines’, where it should  be.

 

 

 

 

Peer pressure destroys the power of Advertising

Peer pressure destroys the power of Advertising

Oct 11, 2017 | Change, Marketing, Operations, retail

The major consequence to marketers of the transfer of power from themselves to their customers is that the effectiveness of their marketing efforts has been deflated, irrespective of their mix of legacy and digital channels, by the power of peer pressure.

As a kid, yo-yos came and went several times, usually with the backing of Coke, as did hula hoops and several others, but the story of fidget spinners appears different.

They came from nowhere, a craze amongst teenagers fuelled by YouTube, that left behind all the usual corporate toymakers who have had to scramble to get their hands on stock, probably arriving about the time the craze will end, leaving them on the beach with warehouses of product the kids see as yesterday’s news.

The toy business, like many, has a rhythm that has evolved over many years. There are a couple of peak sales periods, and the promotion of new toys is aimed at these periods, with lead times of 12-18  months or more. These hierarchical toy marketers NPD cycle times bear no resemblance to the cycle times of the newest crazy thing that catches on.

Finger spinners appeared in the US in early 2017, and sales appeared to have peaked in May or June, and are now in decline, a decline as rapid as the rise. How do businesses geared around an 18 month product development and promotion cycle time compete in this new marketplace  powered by their consumers, not even their customers, who are often the kids parents. Kids went on line to buy these thing before the bricks and mortar retailers had heard of them. Perhaps this is the virus at the core of the recent move to Chapter 11 of Toys R Us, weighed down by a mountain of debt, just before the peak selling period.

This severely condensed cycle time is the new reality of consumer markets, and our legacy  hierarchical organisation structures are unable to accommodate the change. Instead, organisations need to find more ‘organic’ ways of responding to the stuff that goes on in their markets, to see the odd things at the fringe that might become the next big thing, and respond to them with an appropriately condensed supply chain cycle time.

It is not very often organisations will be faced with something as radically short term as fidget spinners, but the lesson is appropriate in all markets, as the disruption to one extent or another, is everywhere.  This condensation of the demand cycle, way out of the control of marketers, is a tectonic shift on the nature of markets and marketing in the 21st century to which adaptation is the key success metric.

 

 

 

Is the supermarket business model developing terminal cracks?

Is the supermarket business model developing terminal cracks?

Oct 9, 2017 | Governance, Marketing, retail

Are the tiny cracks evident in the current supermarket business model just the beginning of what will become crevasses that will swallow supermarkets, or just annoyances that can be managed?

My view is the former, although we are currently a long way from Coles and Woollies being irrelevant to our lives, and as the dominating incumbents, they do have the option of anticipating and leveraging the changes as they evolve.

The current supermarket business model was built to leverage scale. That is its strength, the ability to centralise decision making and scale those decisions back through supply chains, and out into the consumers’ pockets. Scale has been the dominating characteristic of successful businesses since Alfred Sloan turned General Motors from a failing minnow into a monolithic hierarchical organisation in the 1920’s and 30’s.

The world however has changed.

Hierarchical organisations no matter how well optimised, cannot match the agility of local competition that is more organic in nature, adaptable in close to real time, and able to take advantage of the little cracks that result from the siloed management of the legacy organisation. They are simply able to adapt quicker to the changes in the competitive context in which they operate.

We see evidence of this all around us, from the turnaround in the US military capability under General Stanley McCrystal, to the organic growth of technology companies like Amazon and Google that are organised more as networks than they are as hierarchies, to the growth of local farmers markets, and pop up stores in the increasing number of empty retail spaces in suburban malls.

The siloed, hierarchical organisations of the 20th century have seen their best and are crumbling in the face of the changes in our ability to gather, curate and share information, and then act on it to create and deliver value.

While supermarket buyers optimise their net net prices with suppliers in return for mass distribution and shelf placement, local store managers are excluded from assembling a range optimised to their local buyers. By contrast, a local operator can optimise the range, but lacks the power to optimise the cost prices by virtue of their lack of scale, but that is changing slowly.

Then you have the innovations created by technology, the Amazon Go stores, exploding options to order and schedule delivery on line, the emergence of the ‘Internet of things‘ and artificial intelligence,  coupled with the social movements that are increasingly seeking product provenance as a purchase discriminator.

All this indicates to me that the capital intensive, centralised  supermarket is becoming a legacy model, just as the Department store is proving to be, demonstrated by the tsunami of bankruptcies in the US, and Myer in Australia announcing even more closures last week.

Photo credit: Gerard via Flikr

The real reason your marketing still sucks.

The real reason your marketing still sucks.

Oct 5, 2017 | Marketing

As  a young marketer, then later in my corporate career, there was only one way to get close to your “market”.

You went there.

In my case, it was into supermarkets, talking to consumers as they considered what they would buy, which of the choices they had they would select that day, and why, and try to interpret their answers into some actionable consumer intelligence.

When all clichés are removed, the only reason someone would buy something was because at that time, for a range of reasons, it filled a need.

What that meant for the marketing and advertising programs was that we had to be emotionally relevant.

Without relevance to the lives of consumers, you are nowhere, unnoticed, and unwanted, no matter how great you thought the marketing material you have might be.

These days, we have mountains of data, information, feeds, and opinions coming at us, so we sit behind desks and try and sift through it all to find the nuggets that will work for us,

We have the ability to define our ideal customer to the Wahoo, we know when they shop, what they buy, how price sensitive they are,  but it all comes from reports of some sort, not straight from the mouth of those we are trying to engage. We know so much we are either paralysed by the volume, or we tell them what they need, rather than as in the old days where we knew buggar-all, (technical market research term)  so we listened.

You cannot get close to customers from behind your desk.

You have to get back into the supermarket, or whatever your equivalent is, so you can talk to them, see the emotions, observe the body language, truly understand their motivations joys and challenges, and if you do that well, you have a chance to be truly relevant to them.

Then, and only then, will your marketing cease to suck.