May 8, 2012 | Change, Leadership, Management
With apologies to my economist friends, the notion of demand elasticity can be applied to the status quo in an organisation.
Embedding change in an organisation is remarkably hard, the status quo is capable of absorbing lots of punishment, and when the belting is over, it re-asserts its dominance, simply be being the “way things are done around here”.
It seems that when all the mumbo jumbo is culled, there are only two tools available that ensure you can make changes stick.
- Change processes such that there is no going back. This can mean all sorts of things, but essentially, the option of reverting to the old way must be removed. Weather you do it in an afternoon, or incrementally is just a question of management tactics, so long as doing it incrementally is not a cop-out.
- Change the people. Pretty nasty this, and has all sorts of implications, legal, moral, and the impact on survivors, but it remains that people make organisations work, and if it is not working, some stern action is required.
May 7, 2012 | Branding, Marketing, retail
30 years ago when housebrands were making their first inroads into Australian supermarkets, I took over management of Fountain tomato sauce. At the time it was a runaway market leader in NSW, but was being badly hurt by emerging cheap housebrands, priced a few cents less, 0.69 cents Vs 0.73 cents. Clearly to consumers there was not much difference in the products, they may as well take the few cents for themselves.
We lifted the price of Fountain significantly, the shelf price difference was then sufficient to suggest to consumers that Fountain was substantially better than any cheap housebrand, which was in fact, the case. Lo and behold, not only did our margins improve, so did our volumes.
The perception of the value delivered by Fountain overcame the rational response that sauce is sauce. Test yourself on this next time you walk into a liquor store, and consider a purchase of wine. Obviously, the greater the price, the better the wine?
In this great TED talk, Rory Sutherland, a big cheese in British advertising makes the point beautifully that decision making has three components.
- The technical considerations
- The cost/benefit considerations
- The psychological considerations.
The first two have a range of widely used and well understood models, whilst the third is often the province of the mavericks, creatives, and other assorted ratbags, and is therefore often dismissed as having a valid role in decision making. However, the best decisions are made at the intersection of these three perspectives.
May 4, 2012 | Sales
Your high potential new customer, the one you thought you had brought into the fold, was about to sign up, the one you had assured the boss would place their first order next week, suddenly, at the 11th hour, inexplicably, they go elsewhere.
Are they mad? Did they not understand the benefits? Why did they lead you up the garden path?
Truth is, they may have been confronted by your sales approach, and did not trust you, did not believe what you were telling them. Too pushy, sliding over their objections, not listening to their real needs, concentrating on your price rather than value to them, or one of the many other common failings of sales people leads to this sales killing response.
When confronted, many people avoid the conflict, they simply agree with you, and walk away, leaving you with the misleading understanding that the sale is done.
The task therefore is to conduct the sales engagement in such a manner that the potential customer is the one exercising the power, they are not given the opportunity to conclude they do not believe you. The best way to do that is to conduct the selling process by asking questions. All you have to do then is just respond to the answers with simple observations, and another question that addresses their evolving understanding of their problems, or opportunities for improvement, and therefore your opportunity for a sale.
When a prospect believes you, and in you, selling is easy.
May 3, 2012 | Personal Rant
When this Parliament came to us “hung”, as it were, I hoped that its nature would engender a vigorous debate, the merits of policy would take centre stage as the various sides argued their point of view.
Naively, I believed it would be an improvement on the staged party centric discipline that had dominated politics, and led to dumb, sterile, disassociated debate and sound bites that bore no relation to the question.
How wrong can you be?
The “performance” by Bill Shorten a few nights ago, someone who is held up an accomplished media performer, and a potential Prime Minister, defending a view he had not heard, almost made me lose my dinner. My only savior was I was unsure if it was laughter or sickness that was causing the problem.
Meanwhile, some of us get about trying to make a bob amongst the chaos and red tape created by our dithering, self important, disconnected from reality institutions, and it is just getting harder, and harder by the day.
At least the budget will be brought down in a few days, and that should solve everything. And, if you believe that, you will also believe leadership, integrity, vision, openness to ideas, and all the other stuff that is really valuable to a vibrant community, is no longer relevent.
May 2, 2012 | Category, Demand chains, Operations, retail
The word sustainable holds connotations of farming practices, and environmental sensitivity, all true, but only half the story.
A sustainable chain must also be commercially sustainable, and one without the other is by definition, unsustainable.
The characteristic that drive both are similar, transparency, and connections through the chain, both facilitated by the collaboration tools of the web. The outcome is increased productivity of the whole value chain.
The price deflation being experienced in the value chains supplying Australian retailers are testing the limits of Australian suppliers, and those that are surviving are dedicated to the implementation of chains that are commercially sustainable, and increasingly environmentally sustainable as consumers interest in product provenance increases.
Quietly, out of a home office, GFAP, a small chain consultancy that supplies a customised web based tool that manages value chains, to this point largely around horticulture, is flourishing. Very few pieces of produce arrive at Woolworths or Coles without being touched in some way by this system, but few have ever heard of it.
