Nov 29, 2023 | Governance, Innovation, Leadership
Of the many objections to the inequity and shortcomings of the tax system I harbour, the most egregious is the seduction by the fossil fuel industry of governments of all persuasions over the last 30 years.
I have two profound objections.
The first: They have known of the impact of CO2 on the climate for at least that long, and have not only not addressed it, but have aggressively sought to ensure that regulators and the general public do not get the facts, just bilious dystopian stories of what they are preventing from happening to us in the absence of their visionary management. The public are therefore unwilling to demand of regulators and lawmakers that the hard choices need to be made.
Scientists have been telling us for 30 years that the longer we wait, the harder and more costly the necessary changes will become, but what would they know?
On top of that, the fuel companies pay no tax on the billions of revenue generated in this country as a result of quite legal, but in my view absolutely immoral structuring of their tax affairs.
This avoidance is well known, they hold an honoured place in the top 40 tax avoiders list, collated by Michael West media. Along with property developers and various lobby groups, the political donations add up to 6 or 7 million dollars.
The second: Clearly, the fossil fuel industry has bought their favoured place in the political arena, but I am astonished that the price has been so low. A few million dollars in donations, and I would be pretty sure an equal amount in various tactical ‘softening’ of politicians and their advisors, and the threat of adverse advertising, in return for billions in tax free revenue.
What a great wicket they are on, paying for a cheap scooter and being rewarded with a Ferrari!
Another way of looking at it is that if you are going to be a whore, you may as well be an expensive one so you can be properly comforted for the loss of dignity. Clearly, there is very profitable leverage being wasted.
Obviously, the pollies and hangers-on need a bit of marketing and image building in order to properly leverage the key position they hold in the generation of tax free cash flow of fossil fuel companies.
The 20213 Budget delivered 9/5/23 amended marginally the PRRT and promised to impose the 15% minimum tax rate on MNC revenues in line with the OECD recommendation, a good start. Sadly, it does seem that the 15% minimum will not be imposed for some time, if ever. The power of the large multinationals with tax bases scattered around idyllic islands across the globe, does not reside just in Canberra. It hides in plain sight in London, Brussels, Dover (capital of Delaware), Reno, and many others.
Meanwhile we struggle with investment in the future productivity of the economy we are leaving to our children due to lack of public funds.
Nov 27, 2023 | Branding, Customers
Every time I go through a supermarket checkout, I find myself surprised at the total of the bill. Should be used to it by now, but no, I’m not!
The two supermarket gorillas, Coles and Woolworths have both released their annual results in the last month, and shareholders, which via superannuation is most of us, should be very happy.
Woolworths pocketed $1.6 billion on significantly increased margins, and Coles managed $1.1 billion on similarly better margins. The percentages are way above those generated by peers in developed countries, for the simple reason that they are an oligopoly and leverage that power to generate profit. Aldi has made an impact and continues to do a good job of ‘keeping the bastards honest’ but the fact remains, profit comes from market power. It is also fair to acknowledge that both have done a pretty good job of optimising their current operations, which also contributes to those juicy profit numbers.
Supermarket retailers, and other retailers in a position to exercise market power, are in two businesses that together make a powerful business model:
The first is renting retail real estate to their suppliers.
The second is selling products to consumers.
Both are transactional, with constant negotiation between the retailers and their suppliers. Sadly, there is an unequal distribution of power between the retailer and the supplier, so the use of price on both sides of the equation by retailers has become ubiquitous.
They extract maximum ‘rental’ for the shelf space, while being relatively unconstrained at the checkout by competitive pressure.
As a result, suppliers are screwed down so hard that even the very best of them have trouble returning the cost of capital, and price competition that benefits the consumer is a myth.
The price-based promotion programs deeply embedded in the psyche of both retailers and their ever-decreasing pool of suppliers destroys brands. Over the time I have been watching, the supplier margins from which springs the innovation that keeps categories fresh and interesting to consumers, has disappeared.
Retailers are lousy marketers. Ask one to explain the drivers of purchase and they have only one answer: price. Anyone who has ever bought anything knows that is rubbish.
For long term commercial sustainability of both retailers and their pool of suppliers, there must be a balance between tactical promotion and the innovation investment that generates category and brand growth, and there must be serious competition.
That no longer exists. Marketing and behavioural research over many years is unequivocal. Healthy markets need both.
Retailers have used price as their only tool because they can. In the process they have killed off almost all proprietary brands, replacing them with house brands, which are no more than carbon copies. There is no longer category or product innovation, and no suppliers willing to invest in brands, just a conga line of copycats.
The cost-of-living crisis facing many consumers today will become a strategic crisis for the retail gorillas as they fail to evolve their business model.
Nov 22, 2023 | Change, Communication
Last week I was copied on an email one of my clients sent to a now former supplier.
It was polite, respectful, thanking them for their service, and wishing them well. What struck me immediately was that it was not in the ‘voice’ of my client. A moment later, I realised it had been generated by AI. There is nothing wrong with that, AI is a tool, like any tool, that enables leverage to be applied to your time and effort. There are many situations where that leverage is enormously valuable. Not using it to free up cognitive capacity to do something more valuable with your time would be dumb, even irresponsible.
However, writing has a crucial and increasingly unacknowledged role. The generation of wisdom and understanding.
I write a lot. There are almost 2,500 published blog posts on StrategyAudit, a bank of thoughts, ideas, opinions, responses, and a few rants about things I believe in. It is the product of 14 years of reflection, thinking, and understanding.
Writing for me is way more than just putting words on paper, or out into the ether. It is the way I explore, clarify, focus, and reason. It is an essential tool in my thought processes that build understanding. It is also the way those ideas are shared, inviting response, in whatever form it comes, building greater understanding in the process.
Over a commercial life of almost 50 years, I have accumulated a wealth of knowledge and experience, the latter often gained at the expense of some pain. Writing about all this has made it much more real, visceral, and readily available to those few I work with.
The machinations at OpenAI, the sudden firing of CEO Sam Altman, and conflagration that is still unfolding will be a tiny ripple in the exponential process of AI development. It will do little more than create some headlines, and the opportunity for commentators who have no inside knowledge at all to express an unfounded opinion. It seems the fight is, as usual, about money. OpenAI was founded as a nonprofit with a mission to ensure responsible deployment of the emerging AI technology. Potentially a fragile mission in todays world.
I worry that the world we are leaving our grandchildren (my kids are all making their own way now) is one where superficially attractive output camouflages a lack of real understanding of the drivers of those outcomes. To overcome this, we should encourage them to read, and write, a lot. Put down the devices and read books, real ones, with highlighter and pen in hand to emphasise the points of new understanding, and those that need further thought and investigation.
You cannot achieve that by skating over the surface, outsourcing your thinking. Using tools that cannot think is no substitute to doing the work yourself.
Nov 20, 2023 | Collaboration, Innovation
‘Great minds think alike’ is a common saying. Sometimes it might be right but the greater value of having a few great minds in the one place exchanging views is the fact that they will bring different ideas, values, backgrounds, and depth of knowledge to any discussion.
Throughout history those we remember as great have always had around them a group that has helped form and test their views.
‘The Inklings’ was a group of eminent writers meeting regularly at a pub in Oxford. They called it the ‘Bird and Baby,’ when the actual name was the ‘Eagle and Child.’ CS Lewis, and JRR Tolkien were amongst this group who through debate and constructive criticism tested, improved, and refined the thinking and writing of their comrades.
President Theodore Roosevelt had what he called his tennis cabinet. This was a group of younger men with whom he would go hunting, fishing, shooting, and climbing. All are the ‘masculine’ pursuits for which the President was famous. In the course of these adventures the conversations were all about the problems challenges and potential solutions facing the nation at that time. It was not an official cabinet, but probably held as much or more power than Roosevelts official cabinet, made up of men older than him.
Henry Ford was part of a small group made up of himself, Thomas Edison, President Warren Harding, and Harvey Firestone. This group of men who held in their hands a big chunk of the future path of America, went camping together into the mountains with a tent, a bottle, a few cans of beans, matches to light a fire, and a readiness to discuss the pressing issues of the day.
Even the great Einstein had a peer group, made up of Michele Besso, who was a college friend he called ‘the best sounding board in Europe, Marcel Grossman another college friend and mathematician with who he shared long walks around lake Geneva, and his first wife Mileva Maric, herself a substantial mathematician.
These days business ‘Networking’ groups proliferate, as owners of SME’s in particular, budding entrepreneurs, and solopreneurs look around for advice, input, sales leads, and often somebody to talk to who understands their situation. I am a member of several, and all are different, and I attend each for different reasons.
Where is your mastermind group?
Do you have one? Do you have in your own mind that dinner party where the six people you would most like to invite are, in your imagination, with you? While eating and drinking, you will be imagining a discussion where your ‘private’ group is responding to the things on your mind, offering you their views, ideas, and their perspective, on the issues you face and actions you are contemplating? Clearly in order to have such a powerful imaginary cabinet, you do need to have developed a clear understanding of each of your imaginary dinner guests in order to be able to reflect on your problems from their perspective.
Header photo is the Eagle and Child pub in Oxford, UK. Home of ‘The Inklings’ during the enlightenment.
Nov 17, 2023 | Customers, Innovation
Ideas are usually great because they do one of two things, sometimes both:
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- They focus on a deep and genuine need, obvious or not, to the casual observer.
- They remove a problem that causes irritation.
Great ideas have a common characteristic: they are focussed.
They do one thing exceptionally well. When you spread the impact, so they do more things less well, the utility of the original idea is diluted.
The ‘Penknife’ is a classic example. It evolved when writing was done with a gooses quill and ink. The quill required constant sharpening, so the small ‘penknife’ evolved. It folded, was small enough to be safely carried in a small pocket and did an admirable job of sharpening the quill.
As a kid, I had a penknife, it had a blade, corkscrew, a bottle opener, and something my dad told me was a tool for removing the stones from a horseshoe. Not all that useful for a kid living in Sydney in the 1960’s. One of my friends had a Swiss army knife that had a cutlery store contained in a body that was several times the size of my modest penknife. As a 10-year-old, I was envious of his Swiss army knife, and lusted after one until I recognised it did nothing well. It was also bulky, and the most used tool, the knife, was difficult to open.
So it is with many products, an innovative idea is ruined by added features that may be ‘sort of’ useful to a few, but just get in the way of the single function for which the tool was developed.
Ask yourself what is it that people are willing to pay for?
We needed that penknife; we do not need the horseshoe cleaner. There is a cost to adding it, which must be recovered in the price, but suddenly the knife is less useful for its primary purpose.
Sometimes, the feature laden penknife can hide the feature that if separated into a specific product might be extremely useful. My penknife had that corkscrew. It was not much value to me as a 10-year-old and did not work very well. My father had much better corkscrews that were designed for the job he wanted done and did it well.
Beware of feature-creep it might destroy your great idea.
