Apr 25, 2022 | Leadership, Strategy
It is Anzac Day 2022, a day we remember those who fought to give us the choices we now have to shape the lives we lead.
In homage to the sacrifices they made, we need to be thinking seriously about the choices we are making that will impact on those who follow us.
Significant in those thoughts should be to think differently about the term ‘climate change’.
It is too narrow a term, implying we just need to be concerned about the immediate impact of CO2 on weather, and the human and capital impacts of those changes.
Instead, we need to be thinking about the challenges more holistically.
The planet we live on is an ecosystem, of which we humans are just a small but enormously influential part. For millennia, the impact we had on the eco system was inconsequential, but that changed with the industrial revolution, and have continued to change at a geometric rate. We suddenly are taking more out of the ecosystem than previously, impacting on the ability of the system to replace what we have taken, to the point where currently we are taking more than can be replaced.
An ecosystem is a bit like an investment portfolio. It benefits from diversity. When the diversity of any portfolio reduces, it makes that portfolio less resilient to outside shocks.
The planets ecosystem is being stripped of diversity, and as it is with an investment portfolio, it has become less resilient, less able to sustain itself. As a result, we are seeing those radical changes in weather patterns, and the consequential changes in climate.
There is nothing we do that does not come from nature. The oxygen we breathe, the water we drink, the foods we eat, the materials we use, all come from nature. We are part of the planets ecosystem, whether we like it or not, and we are consuming the resources of the ecosystem at an unsustainable rate.
Think of it as you would a balance sheet. On one side you have assets, on the other liabilities and equity. When your assets grow faster than your liabilities, you add to the store of equity. When it is the reverse, you deplete equity. The tipping point is when your equity is gone, and you can no longer sustain the difference between the rate in increase of liabilities over the production of assets. At that point you are bankrupt.
We humans have been depleting the assets of the planet unsustainably since the beginning of the industrial revolution, and the rate at which the depletion is happening is increasing. At some point, the music will stop, and subsequent generations will face the sort of dystopian future we see in sci-fi movies.
I think we have reached, or almost reached that point.
On this Anzac Day, as we have a BBQ in the back yard with friends, sink a few beers and stand in circles and throw a few pennies in the air, we should also be considering the legacy of our time in this place, and what we should collectively be doing about it.
It also happens to be my beautiful, educated and talented daughters birthday. Perhaps it is the thoughts of her children, yet to make an entry, that have made me consider the sort of world that my generation is leaving to them.
Apr 20, 2022 | Governance, Leadership
People want to do what they are good at, and it makes sense to let them do that. However, doing well on an individual basis is not enough to succeed. You need to do well at the micro, as well as ensuring that your bit is making a positive contribution to the macro, the efforts of others.
Alignment in the jargon, but it is more than that.
Success in business requires that everyone understands the impact on the business of the decisions they take every day, like taking a ‘sickie. Taking a ‘sickie’ impacts on those around who are relying on the output you would normally deliver. To cover the shortfall entails the added cost of standby capacity, or ‘shorting’ a customer. Therefore, the more everyone understands about the numbers that reflect the performance of the business, the better.
This is not to make everyone accountants, which is the conclusion many jump to, it is just about understanding.
We often use sporting analogies in business, they are easy to see.
This is because business shares four common characteristics with sport.
- There is a goal, in its simplest terms, to win.
- There are rules.
- There is a scoreboard, which in business is normally kept hidden, sometimes deliberately, but most often by default,
- There are rewards for winning.
In our sporting team, every member of the team ‘owns’ part of the result. If we extend the analogy, for a business to be successful, we need the stakeholders to think and act like owners, they have a stake in the overall success of the business.
This goes way past picking up the pay check on a Friday. The things an employee typically wants from an employer, in addition to the pay check to keep the kids fed and housed, are job security, time off, promotion prospects, the opportunity to learn, to be appreciated, and to be able to see the job as way more than a daily grind. They worry about these things.
By contrast, owners and senior management while having all those same worries, are also concerned with all the things that deliver to all stakeholders: satisfied customers, revenue growth, cash, cost control, growth, ROI, which are all necessary if the employees are to be rewarded.
Their goals are the same, it is the language and context that are different.
However, we do have a common language, easy to learn to a sufficient level of understanding to be useful.
That language is the income statement, balance sheet and cash flow statement.
I hear groans: understandable.
Accountants have made these three simple ideas incomprehensible to most people. In unwitting collaboration with the regulators, they have complicated the simple ideas to suit their own purposes.
Broken down to the simplest form, these three reports provide the rules of the game, and the critical numbers that enable everyone to understand the score, while they provide the means to ensure everyone in the game understands their role and stake in the outcome.
To answer the question in the header: to build a successful culture you need to ensure everyone in the game understands the rules, and the way they apply in a volatile environment.
Header cartoon: Courtesy Hugh MacLeod at Gapingvoid.com
Apr 18, 2022 | Governance, Leadership
Words are important, crucial to the effective communication and intent of an idea being articulated. Without the right words, well delivered, the idea will not have any oxygen, so be still-born.
This notion is applicable to every type of situation, from the casual conversation at a social gathering, to the articulation of major strategic choices.
There is a sequence that seems to be successful when making everything from a cold call to a full-blown strategic proposal. I have observed this sequence being successful over many years in many situations.
- Identify the big change that creates the opportunity you are intending to address.
- Demonstrate how the change will create winners and losers. Nobody wants to be on the losing side
- Envision the promised outcome post the project implementation
- Introduce the positive features of the idea as the catalyst to overcome the obstacles and deliver on the promise
- Present the hypothesis/evidence that delivery on the promise will follow naturally from effective implementation.
In addition, there are two ‘secrets’ to the delivery that while obvious, most seem to miss.
The first is in the manner of the delivery.
A flat, wooden delivery and the words will carry limited weight, will not elicit any emotion in the listener. By contrast, words delivered with passion, and obvious commitment to the outcome will be met with a more emotional response, which will either engage or turn off the listener.
The second is in the choice of words.
There are always many ways to articulate a message. Therefore, choosing the right words, the ones that build the attention and emotional response in the audience is fundamental.
Read the words of the great speeches, without conjuring up the mental image of the original speaker, and some of the power is lost. Churchill’s ‘we will never surrender’ speech, Martin Luther kings ‘I have a dream’ speech are great examples. Now read them again with the image in your mind, and the power returns.
One further thing that can make magic, is the power of the moment.
Churchill, newly installed as Britain’s PM as France surrendered, facing a catastrophic defeat, and King in front of 250,000 people on the steps of the Lincoln memorial in 1963. In the moment, King changed the text he had written adding the immortal words: “I have a dream’ to the list of changes he wished to see for his fellow Americans. Both used the moment to conjure emotional magic from the ether with words and passion.
Compare those to Albo’s 5-point plans, and Scomo’s blizzard of pithy sound bites, and know why we are so desperate for some genuine leadership.
Header credit: Courtesy ‘First dog on the moon’ cartoon frame.
Apr 13, 2022 | Leadership, Management
Asking questions is the best way to build empathy, while collecting information and helping others reach a conclusion. This assumes that you are listening closely and reacting appropriately to the answers.
It follows that being disciplined and planned in the manner in which you ask questions, all of which are context sensitive, is essential.
It makes little difference if you are engaging in a sales process, or seeking information from the factory floor, planning your questions, and using the right form at the right time drives the outcome.
There are six types of question, they overlap, intersect, and build on one another, and each has a situation where they deliver the best results. Whichever question types you use in any situation, always remember that asking with a genuine interest in the answer will deliver better results than if those being questioned see it as a proforma. Asking such pro forma questions demonstrates you are not interested in the answers, or alternatively, are laying some sort of trap for them to fall into.
Closed questions. These do not invite discussion or opinion, just a ‘Yes’ or ‘No’ answer. They can often feel like an interrogation, particularly if there are several in a row.
Open ended questions. These encourage discussion, opinion, and maximise the opportunity for new or unexpected information to enter the conversation.
Limiting questions. These fall between the open and closed questions. You want more than a simple Yes or No, but also want to limit the discussion to a specific area. For example, you might ask: How often…. Or: What were the operating conditions when……..
Leading questions. A leading question is designed to give you the predetermined answer you are seeking. Generally, they are used to confirm a fact or situation, which may have been surfaced with an open or limiting question. Lawyers use leading questions as a core tactic often seeking inconsistencies in a narrative. For example. You might ask: How overdue was the maintenance when the machine crashed? In this case, you are assuming the maintenance was in fact overdue, and that oversight caused the machine to crash.
Questions seeking examples. Discussing an example is a good way of clarifying a situation, while collecting information. It also is a handy tool if you do not understand something, asking for an example will usually clarify it.
Theme based questions. These would usually be used to influence or reinforce a theme. For example, the best way to ensure that everyone in a business understands the overall objective is to consistently communicate that objective. You then might ask of a stakeholder how their job contributes to the achievement of the overall objective, and then an open and productive conversation that leads to greater understanding and productivity.
There is an old saying: ‘We have two ears and one mouth for a reason’. Remember it.
Apr 11, 2022 | Governance, Personal Rant, rant
On Sunday as the 2022 election was being called, I was sitting in a café in one of those affluent strips observing life, and gathering my thoughts.
It occurred to me that the blather we are all now about to face will avoid any reference to the key question that should be addressed: the growing distance between the ‘haves’ and ‘have-nots’, and how to redress the balance.
This is not about the cost of living, price of petrol, or availability of some subsidised form of income. It is about the national income, and the way governments of both persuasions over the last 50 years have let the money required for schools, hospitals, aged care facilities and all the rest slip through their fingers, while ensuring some sticks to selected fingers on the way through.
A brief economic history lesson, recognising I am neither an economist nor historian.
Towards the end of WW11, recognising the coming challenges of post war reconstruction, the allies set about removing the danger of the wild ride that had been the relative value of currencies up to that time. The result was an agreement amongst the allies in the little New Hampshire town of Bretton Woods. That agreement laid out the mechanism by which post war currencies would be tied to the price of gold, pegged at $US35 an ounce. The US dollar became the ‘reserve currency’, a guarantee to exchange an ounce of gold for $US35. At the time, the US was about the only solvent nation, and held most the world’s gold in Fort Knox (Remember ‘Goldfinger’). The International Monetary Fund was created as a part of the agreement as a release valve to address short term fluctuations.
The laws of supply and demand being what they are, the value of gold outside the official control of central governments soared, leading to an active unofficial gold market where it was traded for multiples of $35. Trouble is, you had to move the stuff, and it is heavy. (Goldfinger again)
Over time the core problem of a fixed currency regime became obvious. Money is international, it can be moved and exchanged globally, while the regulatory control of any one country ends at their borders. The obvious example of this disconnect is the so called ‘pirate’ radio stations positioned in the North Sea just outside the international boundary of the UK. These popped up because the BBC which controlled all the UK radio stations refused to play the emerging ‘Pop’ music of the 60’s and early 70’s. Being outside the border, the BBC could not close them down, but those who wanted the music could listen as easily as they could to any other radio station, just move the dial a bit.
Analogous to the pirate radio stations, the gnomes in Switzerland who were sitting on huge and very private sums of hidden wealth that could not be easily used by the owners created their own pirate system: bearer bonds. These enabled those hidden fortunes to be put to work, not only earning interest on the loans, but increasing the capital value of the investments, previously impossible.
By the late 1960’s the Bretton Woods system was clearly broken, and the US terminated the convertibility of US dollars to gold at the fixed $35 in 1971, followed closely by the pound sterling, and other major currencies. In effect we then had floating exchange rates, in an environment where countries still had regulations that stop at their borders, while money is globally mobile. It did not take long for countries to recognise the value of attracting this previously inaccessible capital by a range of means around low tax rates, banking secrecy, and personal anonymity. The lawyers and accountants since then have made this disjoint between the mobility of money and the static nature of sovereign borders a financial bonanza for those individuals and organisations with the money and will to hide their assets and ensure they do not pay tax. Hundreds of billions have been looted from the system by these ‘legal’ means, leaving those with insufficient income to fund the legal complexities to hide their income to pay for the schools, hospitals, and aged care facilities we are all demanding.
This is, to my mind, the core challenge of this election that will not be spoken about.
Labor policy is to collect tax from multinationals by denying deductions for royalties to related parties. This makes sense, but will be hard to enforce, and does not address the inequities in other huge areas of tax minimisation and avoidance. Besides, when sovereign rules change, the tax arrangements of corporations and individuals change as well, moving to a more accommodating regulatory environment. On top of that, those who make the rules are also the ones who benefit, so while there might be some ineffective fiddling at the edges for a press release, real change which requires global collaboration and endorsement currently is just a pipe dream.
However, the first step in solving any problem is to recognise that we have a problem.
Unfortunately, this conversation will not be started by either party in this coming election. For the long-term health of Australia, and Australians, as well as every other person on the planet, apart from the tiny minority of looters, it is a conversation that needs to be started, and followed through.
I need another coffee after all that.
