Competition for attention creates Opportunity

Competition for attention creates Opportunity

Apr 12, 2017 | Customers, Demand chains, Marketing

The nature of competition has changed dramatically in the last decade.

We no longer live in a world where information is limited and controlled, where the old truism that information is power  gave the few power over the rest of us applies.

It is no longer a competition amongst a few cashed up suppliers to use the power of advertising in a few tightly controlled communication channels to stuff the supply chain to limit our choices.

It is no longer a supply chain controlled by a very few of those who are able to supply, it is a demand chain, under the personal control of those who have a need.

It is now a competition for our attention.

Those with the money in their pockets, or at least access to it, have all the power, as there are literally millions of channels by which we can be reached.

I love the work of Hugh McLeod, have been following him for a long time, as those regular readers of StrategyAudit will know from the numerous times I have used his images as headers. It is because he is able to do with a few squiggles, what Albert Einstein recommended when he said ‘everything should be made as simple as possible, no simpler‘.

This post, and the borrowed header,  I felt really reduced the marketing task down to its simplest form. Gain the attention of people who care, those to whom your value proposition is relevant, and you have a chance to make a difference.

 

Will your O-ring kill you?

Will your O-ring kill you?

Apr 10, 2017 | Governance, Leadership

We are all familiar with the notion that a chain is only as strong as its weakest link, it makes absolute sense.

However, not a lot of us have ever considered the idea that our weakest link could kill us, and yet, it can.

On January 28, 1986, the spaceshuttle ‘Challenger‘ exploded 73 seconds into its flight, killing the 7 aboard.

Challenger exploded due to a known fault, something that engineers had been warning about for some time, a faulty O-ring design. What is in effect a cheap rubber piece, a simple part of a hugely complex design proved to be the weakest link, and caused the catastrophic failure.

Everything else in the launch worked absolutely as per expectations and specifications.

The simple known problem, a cheap part, was the weakest link and  brought it all undone.

As you remove potential sources of variation from a process, the average level of reliability and repeatability of increases, and the tension in the system increases as a result. Therefore, when one link fails, the failure becomes more painful, obvious, and sometimes hard to fix. The management task is to identify the potential problem before it becomes one, and remove it.

That is why, at the core of the Toyota Production System, you have an ‘Andon‘ system, which enables anyone to bring a halt to a production process to fix a potential problem before it becomes a failure.

The Rogers commission set up to investigate the Challenger disaster, amongst a raft of findings was highly critical of the NASA culture that prevented the well known and documented concerns with the performance of the O-rings being addressed. Of particular concern was the performance of the O-rings in the cold weather that occurred during the night before the launch. The temperatures experienced on the night of January 27 were way below specifications, and there had been no testing done to gather data on what might happen under those conditions, and serious concerns had been formally expressed.

Had there been a simple Andon system in place, rather than a Byzantine hierarchical culture, the launch would not have proceeded, and the disaster been averted.

Your production processes may not be as life defining as those  in the NASA space program, but the principals remain the same.

Identify the weak points in the chain, and ensure there is explicit go/no go, or Andon points, that enable the inevitable process failures to be caught before they do any real damage. It may cost you some time in the short term, but will pay huge dividends in your ability to reliably and cost effectively deliver to your stakeholders.

The tragedy of ‘doing a Fairfax’

The tragedy of ‘doing a Fairfax’

Apr 7, 2017 | Leadership, rant, Strategy

The once great Fairfax media empire, once a fearless protector of our democracy, on Wednesday announced a further rationalisation in an effort to save $30 million.

This is another in a long list of ‘Adjustments’ and programs which have  become code for making editorial staff redundant.

The Fairfax announcement of 30 million in cost savings, promises to turn the Fairfax publications into  ‘genuine digital businesses with the capabilities and cost base to best operate in the current media environment’.

This is code for no more news that we should be hearing, and more mindless nonsense about footballers hammies, bar brawls, and steamy affairs with soapie stars.

How do such stories give us the intellectual depth and investigative rigour needed to keep the forces of greed, self indulgence, neglect, corruption, and sheer criminality  at bay?

From a commercial perspective, it is reasonable that a private organisation follow the market that it needs to service in order to survive, but that survival, assuming it happens in this case, comes at a long term cost to the community it serves.

Lord Beaverbrook, amongst many colourful quotes is credited with something like ‘my papers give the public what they want, which is not necessarily what they need’.  At this time, never has a truer word been said.

In 2016 Fairfax saved $15 million by cutting 120 editorial jobs, on top of the 1200 saved in 2012, which included the closure of a number of its printing operations. Saving another $30 million will see the cleaner writing the editorials.

If this was just another business going broke, and struggling for its identity and survival in a disrupted industry, it would be one thing, but this is Fairfax, a group that for 180 years has kept those who seek to govern us honest, or as honest as they can be, and has exposed the corrupt and venal amongst us to fearless scrutiny.

It has been clear for decades that people bought newspapers for the classified advertising, the cars, jobs and houses being sold turned into a ‘river of gold’ for the newspaper proprietors, who invested a bit of the river back into the public good.

Now the rivers have dried up, the public good is being left to fend for itself.

Therein lies the tragedy, it can’t without help.

In the absence of an accountable and fearless press, we are all in trouble.

Without Fairfax, and the determination and commitment of Kate McClymont and others like her, we would not have the current  Royal Commission into the Institutional abuse of our kids, and Eddie Obeid and his cronies, like Sir Lunchalot would still be running the state for their personal benefit, to our collective cost.

The lesson for the rest of us is that you ignore the tsunami of change that is coming at you at your peril, and collectively unless we find ways to replace that which is lost in some way, our children will pay a very big price indeed.

 

Communication: Making it personal multiplies effectiveness.

Communication: Making it personal multiplies effectiveness.

Apr 5, 2017 | Governance, Marketing

Two weeks ago I received a piece of junk mail.

Not unusual, my letterbox seems to be the local junk repository despite a polite sign saying go away. However, as it was addressed specifically to me, with no mistakes in the spelling of my name, the  address was complete, and it was not a windowed envelope but one that was obviously not just a standard cheapie from Officeworks, so I opened it.

Open rates on old fashioned snail mail are very high, not the junk ‘To the Householder’ stuff,  the letters addressed to individuals.

By contrast, email open rates, the second best alternative for unsolicited mail vary from miniscule to around 10%, and  higher, depending on a host of factors with the common theme that the  better you know the recipient, and can direct the email to an individual, the higher the open rate.

Back to my story.

The note inside was short, printed on high quality paper,  and focussed laser-like on a specific pain point currently on my plate. The result is that they now have what their marketing person would probably call a marketing qualified hot prospect for the sales people to convert.

So what is the point of the story?

The process of building a brand, the conversion of awareness and of the value proposition of the brand takes a long time. It is a 10,000 piece jigsaw of individual actions by the marketers and reactions from those both in the target market and in the supply chain that delivers the product. At the end of it is an individual, in every case.

When selling a small value consumer item, you do so to an individual who makes a selection where there is little risk so some level of ‘autopilot’ decision making takes place.  Selling a power station is entirely different.  The transaction is at the end of a long process of selling to a series of individuals and probably committees of some sort , but at the end, there will always be someone with the right of veto.

A key part of the process is the impact the marketer has on the neural systems of the intended buyer, how the branding and selling efforts impact on their senses.

Human beings evolved over millions of years depending for survival on our 5 physical senses, and the 6th one, the ‘gut’ feel that comes from the experience of the individual, and of the ‘tribes’ in which the individual lives and works.

Logically, the more of the senses you can engage in a positive way when marketing to a prospect, the better your chances.

Back again to the direct mail piece.

All my senses had been successfully engaged by this piece of direct, unsolicited mail.

It engaged my eyes, as somebody had put a lot of thought into the visual appearance of the piece. It engaged my brain, as the headline and copy were clearly directed specifically a me, and to engaged me physically, as the stock on which it was printed was, like the envelope, clearly not a standard low cost stock, it was a premium quality  parchment type stock.

In the 30 seconds it took me to open, read, and understand this piece of unsolicited direct mail, the only option for me was to believe that somebody who knew me very well had specifically sent it to me in order to ensure I did not miss this opportunity to address the current pain point.

Depth of marketing to an individual prospect, building on years of building a brand with claims to quality and integrity, which is breadth, works.

The only point left to consider before I sign up is how  the hell they got so much detail in advance of sending the mailer.

 

 

 

The 4 levels of a successful business improvement project 

The 4 levels of a successful business improvement project 

Apr 3, 2017 | Governance, Leadership, Management, Strategy

My clients are mostly small and medium sized manufacturing businesses. They usually come to me when they are in a spot of bother, as word does get around.

Over a period of over 20 years of working with these businesses, a process has evolved. It is repeatable scalable, and can be applied to any business of any size. This is not because it is a complex set of algorithms that account for every contingency, just the opposite. It is a simple way of approaching a performance improvement project, that recognises the beauty of Einstein’s quote that “everything should be made as simple as possible, no simpler’

It is not rocket science, it is common sense, first principals.

My entry point is usually strategy, marketing & sales, or as I prefer to call it, ‘Revenue Generation’. The functional distinction these days between marketing and sales is utterly redundant. It never was relevant to customers, it just made the organisation chart easier to understand.

When someone is in trouble, and that is where I usually come in, the standard call is ’get more sales’. However, 9/10 times I see other things that need fixing, so in order to do that, I go back to the foundations, to the first principals of business.

In the end, Business is pretty simple, make and sell something for more than it costs you, and ensure the value to the purchaser is greater to them than the cost, and all will be well.

An improvement project can be treated as being in four parts, or levels, and each will contain numerous sub projects and elements that need to be addressed.

However, they need to be addressed in some sort of logical order, starting with the most urgent, as well as those that will deliver some quick returns. The quick wins are not just for commercial and financial reasons, it is because any change will inevitably be disturbing and potentially disruptive, so having a few quick wins makes the pain of change go away, or at least be more palatable.

Foundation.

These are the things that no matter what else you do, absolutely need to be done.

A lot of it is ‘underground’ as most foundations are, largely unseen, nevertheless, without a solid foundation, whatever else you build will  not last.

It is also true that the foundations wear out, become depreciated, and without renewal, which is a continuous process, you will still fail.

  • Basic financials. Cash management is essential, as cash is the oxygen of business. No business should be without weekly cash flow forecasting. The Profit and Loss statement measures your trading outcomes. It is less immediate than cash management, and gives a better picture of the items that are consuming and generating cash, so they can be managed appropriately. The P&L should be done monthly, along with the relevant performance measures against expectations in whatever form they have been articulated, usually a budget. The balance sheet is a picture at a moment in time of the performance of the business in creating or consuming wealth for its owners. These three basic financial measures are a part of the statutory accounts of any registered business, but a fourth that is not, is a simple measure of the break-even point in a business. At what point in trading do you go from loss in a period to profit. Knowing your break-even point is a bit like knowing when swimming if your nose and mouth are in the water, or out of it.
  • ‘Why’. Being able to articulate the purpose of your business is a huge competitive and cultural benefit that shapes the evolution it will go through. For those who have not stumbled across the various writings of Simon Sinek, it is time to start.
  • Business model. This is the means by which you turn your product into money. The foundations of a wholesaler will be different to those of a retailer, or on line supplier of products. The way you build the foundations will similarly be different. Different business models do not easily mix in the one business. Barnes and Noble should have invented Amazon, not been put out of business by them. Similarly, Blockbuster was in the prime position to invent Netfliks, not become their victim.
  • Regulatory requirements. These are a do it or be prosecuted choice, which for most is no choice at all, but you would be surprised how many businesses I walk into that are (mostly) unknowingly breaking the law. If you are running a child care centre, better get the regulatory stuff sorted!
  • Operational capability. Setting out to run a business, you need to be able to deliver a product of reliable quality, on time, and in budget, that delivers value to the customer. Pretty simple, but I have seen many business plans that seem to think that a product will come about like manna from heaven, just because it is ordered.

The advent of digital has changed forever the manner in which you approach a number of these elements and I would contend, is continuing to change them, almost weekly. I was tempted to put digital capability as one of the Foundation elements, but digital is a bit like breathing, you do it or you are history.

 

Revenue generation.

Commonly called Marketing & Sales, but as noted the distinction is redundant.

No business survives without revenue, and it is my view that all  the processes aimed at generating that revenue, directly or indirectly, should be seen through the one lens.

Marketing is a huge topic, way too much for a single blog post, but there are some basics that should be clear.

What is the profile of your ideal customer, How do you find and engage them?

What is the value proposition, how will the customer make the choice between your product and the alternatives, How will you go about building a brand, what are your best distribution channel options, which communication channels and platforms do you use,  which customer profiling methodology, lead generation and conversion, NPD & C, customer service, Strategic key Account Management, value proposition, advertising, market research,  and so on and on and on.

I ‘bounce’ between revenue generation and the foundation activities. While you have to have the foundations in place, you also have to be generating revenue to pay for the investment, one without the other is still a ‘fail’. Therefore there is a continuous and parallel improvement in both, it is not sequential, it is a parallel journey.

One of the traps of all the digitisation that has taken place in the revenue generation space is the sudden availability of new shiny toys to play with. Each in its own way promises to deliver at least some part of the silver bullet you are seeking. The temptation to chase the newest shiny tool is overwhelming for many, but also equally daunting for many others. The right mix is somewhere in the middle, as usual.

Identify the tools that solve your problems in the manner that best suits your strategic and financial objectives and limitations,  without losing sight of the foundations of your business, and you will be OK. Being seduced by the tools is as bad as ignoring them.

 

Leverage & Scalability

This is where the fun really starts.

We all understand the concept of leverage, of doing more with less. The tools available in the revenue generation space give you leverage in your current markets. They also provide the opportunity to leverage capabilities outside your immediate markets and customers. This sort of leverage can be applied geographically, to adjacent markets and customers, in new value propositions, new technologies, and to gain a decisive advantage over competitors.

Having built a stable and profitable business by solid achievement in the foundations and revenue generation stages, you will free up the time to enable the leveraging and scaling of your processes, assets,  capabilities, collaborative demand chains, and importantly spread your process improvement successes wider.

 

Sustainability.

Commercial sustainability is the rarely stated, but often considered objective of all this commitment. The best metaphor for this stage is nature. As the environment changes, the organism evolves to accommodate and leverage the changes to its benefit, and this happens without added effort. It is commercial evolution at work.

This is the vision painted by so many of those trying to get into your pockets, of the 4 hour work week, taken remotely while on an island paradise collecting magically recurrent income. It never happens, at least I have never seen it. Even those who claim to be making millions via the web selling all sorts of dreams, are doing more than they tell you. It is true that web based products, a new  commercial option still only a decade old have made a huge impact, and there are a few who have made it big, but they are as rare as those who made it big in manufacturing in the last century were. Nevertheless, having a goal of sustainability in your sights, and working towards it will see your business prosper, and you will be able to enjoy the fruits of that prosperity.

So what now?

You can only do a very small number of things at once.

Therefore where I start is with a ‘StrategyAudit’ where I go looking for the holes then prioritise them into an action plan, and gain some sort of agreement  that the plans will be followed. A realistic assessment of the current situation is an absolutely crucial first point of any improvement project that offers the genuine chance of enhanced performance.