Jan 21, 2022 | Change, Leadership, Strategy
Momentum as we all learnt in high School physics is Mass X Velocity.
Decisions made have no mass, but they do seem to have the characteristic of building momentum.
Those businesses in my experience that have an overt bias for action make more decisions, get more done, succeed more often than those less willing to decide and act. They also make more mistakes, as they make choices with less than complete data, but are also willing to recognise mistakes earlier and back out, avoiding the ‘sunk cost’ syndrome.
Opportunity cost is hard, if not impossible to quantify, but it is clear to me that those who have the bias to action, make decisions and act on them, will suffer from opportunity cost less than those that wait for perfect, or just more information, by which time the opportunity had gone.
Dad joke:
Knock knock…..… Who’s there? ..….. Opportunity…………Opportunity who? ………….Silence………..
Opportunity does not knock twice!
There is a balance however.
Moving quickly in itself should not be the objective. The challenge is to quickly understand the balance of risk and reward that enables a decision and subsequent action that is important. It makes sense to spend more time considering a ‘bet the farm’ decision than one that is less likely to be catastrophic should it go pear-shaped. Some decisions can be reversed quickly in the event of new data emerging. The mistake is taken as a learning opportunity and embedded in the ‘wisdom’ of the enterprise, to ensure the same mistake is not repeated.
Amazon Prime has been the mother of all marketing tools, delivering Amazon a competitive advantage that has overwhelmed all comers. However, Prime was not born in its current form. It went through a number of iterations over an extended period as Amazon experimented, learnt and doubled down on what worked, while removing the pieces that did not.
Prime started as a ‘2 day shipping’ promotion in a narrow geography, under a promotional name. It evolved to 2 day shipping in the US as the standard, to expedited shipping for a fee, to free shipping with a Prime subscription membership. Over a decade, Amazon has progressively squeezed the time between order receipt and customer delivery at an astonishing rate, that competitors have failed to match. This progressive compression of their decision making and implementation cycle is a key to their competitive advantage.
This bias for action, transparent accountability and learning does build momentum, and once going, is very hard to stop, and almost impossible to compete with successfully.
Nobody ever claimed the prize from Colonel ’40 second’ John Boyd. He was never beaten in a dogfight simulation because he grabbed the initiative and held it, operating inside what he called the oppositions decision making cycle time.
This is decision making momentum, which he codified as the OODA loop.
To me it is one of the decisive competitive tools of the information age.
Jan 17, 2022 | Strategy
It is the beginning of an uncertain new year, following two chaotic ones. Many will have found that performance has been stunted, not just by the chaos of Covid, but by the lack of a capacity to co-ordinate and align activities across competing needs.
Often strategy is confused for a statement of a high-sounding mission or purpose, or the set of values under which they will operate. Sometimes, the strategy statement is as simple as the EBIT objective the MD set for the coming year.
All are necessary, none are strategy.
Your strategy statement should be your competitive game plan. It sets out in simple words three parameters:
- Your objective. This should never be a platitude, or something that can be applied to any business in your competitive sector. It must be the item against which all actions can be judged over an extended period. These are always best articulated using the SMART framework.
- The scope of activity. Your scope is a guide to which activities will be pursued, and more importantly, which will not. Defining what you will not do, removes much of the uncertainty about how objectives will be achieved.
- Competitive advantage. What is it that you do, or intent to do, that will deliver greater value to customers than they can find with your competitors. This is often the hardest of the three to articulate, and often becomes a statement of what you think you do well, or are setting out to do better. This is of no value in the absence of customers caring. A $50 watch tells the time as well as one that costs $50,000, so having a watch that tells accurate time is not a competitive advantage.
When your strategy statement achieves these three things, articulating the objective, scope, and your competitive advantage, in a short statement, you will have achieved more than most, and are off to a good start.
However, there remains the challenging task of implementation.
No matter how articulate, insightful, engaging and motivating your strategy statement, you will have achieved a score of 1 out of 10 on the strategic scorecard.
The other 9 points are reserved for implementation, the really, really, hard bit, the every- day work of leadership and management.
None of this is easy, is rarely done in a short time, and never without vigorous debate based on data, and the varying analyses of the implications from the data that can be made. It is also an iterative process, that improves with vigorous ‘pressure testing’ and ‘what if’ questions.
The question ‘How does this activity add to the achievement of the strategic objective‘ should always be asked during the course of normal activity. In the absence of a good answer that reflects the objectives of the strategy, the activity should not proceed.
Let me know when I can help you sort out this Gordian knot.
Jan 13, 2022 | Customers, Marketing, Strategy
Google has been a revelation, all the answers you need at your fingertips, or so it would seem.
What is the consequence of this instant question gratification?
Do we ask better questions, or just more superficial ones?
Does the volume of questions we ask, to which there are instant answers, substitute for the value of the fewer but deeper questions we used to ask?
My clients and those in my networks hear me rambling on about what I regard as the key to success. That single characteristic I have seen in all successful people I have known, and watched from a distance. Yes, they are all smart, and yes, they are all motivated to success, but underlaying those two factors is a third characteristic:
Curiosity.
I have never seen someone who is smart, and successful, who is not also curious. I have also seen many who have both of those characteristics, but are not successful. Generally, they strike me as not being also curious.
I use Google and Wikipedia every day to answer questions that emerge as I service clients and write this blog, but neither offers the catalyst to a post. That catalyst is curiosity, sated by the deep but selective ‘backgrounding’ I do of books, podcasts, blogs, journals, and absorbing informed commentary.
They are where the catalysts are hidden, uncovered by curiosity.
Social media, Google and Wikipedia specifically have sated our curiosity at a superficial level. No longer do we have to search for answers to questions, they are dished out for us, making life easy, but reflecting the superficiality of the answers to the superficial questions we ask.
Are our lives better because of this ability to get immediate answers to questions?
Undoubtedly yes, but are the questions as useful, offering the deep insights found as we used to dig around for answers, often finding that the initial question was inadequate, superficial, or simply the wrong question.
I like books, my car is a mobile library from which I can consume from a menu of offers in the idle moments between the busy times out of my home office. The one I pick at any time is most likely the one that relates to a question on my mind at that time, or that throws light on a topic of current interest.
Thanks Google and Wikipedia, you have made my life easier, both because I can find the answers to superficial questions, and because most of my competitors stop there, at the superficial.
You need books to go deep.
Jan 10, 2022 | Lean, Operations, Small business
While contracting as GM of a Federal body some time ago, I used to travel from Canberra to Sydney’s western suburbs on a regular basis.
I had the choice of driving which took a predictable three hours door to door, or catch a cab to Canberra airport, wait, catch the plane to Mascot, then a cab to my Sydney destination. That method took an unpredictable 2 and a half hours to 4 hours depending on all sorts of variables over which I had no control.
My car would happily sit on the speed limit all the way, a far slower speed than the alternative aeroplane.
Clearly, the top speed of one component of a journey will not determine the time for the whole journey, which is what really matters.
This applies to everything in life and business.
Find a way to remove the bottlenecks and the speed of your journey, whatever that is, will increase.
Jan 5, 2022 | Analytics, Strategy
Question: What has enabled the geometric growth rates of Facebook, Google, Amazon, Atlassian, and other digital unicorns?
Answer: Wide and deep feedback from the market enabling them to aggressively focus resources on areas that deliver the best returns.
Technology is only the tool that has enabled this unprecedented level of feedback, in real time. It is the feedback itself that has been the driver of growth.
It has always been so.
Finding ways to build an understanding of the drivers of superior performance has been the goal of intelligent marketers, and management more generally, forever. The experts in the pre-digital age were the direct response advertisers, who were able to determine quickly which version of a magazine or TV ad caused the phones to ring and the coupons to be redeemed. Post digital, it is those who are able to collate and analyse the response in just the same way, except it can be done in real time.
They have become the masters of absorbing market and customer feedback, then being able to evolve rapidly and continuously by leveraging that knowledge on an ongoing basis.
Amazon started off as a bookseller, the plan was never to become the master of retail. This evolved with them as they quickly noted what worked, and doubled down on it, continuously. Meanwhile, they were prepared to invest in the adjacencies that emerged, several of which, such as AWS, have become monster businesses.
That process continues, even as Jeff Bezos invests in blue sky projects like satellite internet, drone delivery, electric cars, and space vehicles.
The hardest part is building the initial momentum. Once you have it, that momentum will drive other ‘flywheels’ becoming a virtuous cycle that is almost self-perpetuating.
Header credit: Scribbled ‘Flywheel’ diagram by Jeff Bezos on a restaurant napkin in 2001. It is driven by input metrics, specifically market feedback.
