Aug 4, 2021 | Change, Management
Time is the most important, and only non-renewable resource we have.
We all have exactly the same amount every day, week, and month. It is how we use it that counts.
It seems common that almost none of us have enough of it, yet we all know we waste a lot.
If you are like me, you have tried all sorts of things, lists in many forms, blocking out time for specific tasks, all the way to leaving it to someone else to manage your calendar.
None have been wholly successful, which I put down to my own lack of discipline and routine.
However, there are several techniques to make it easier.
The ‘top 3’ technique.
I use this a lot in workshops, where the challenge is a lack of common focus amongst a group of executives. It works equally well on a personal level.
- List all the priorities on a whiteboard that those in the group are working on.
- Combine those that are common. This usually brings what can be a large number down to 15 or so.
- Weight them all, by putting them in order of importance, one to however many you have.
- Draw a line under number 3 and declare that these are the only three things we are working on, the rest are in a parking lot, to be brought out when one of the three top priorities is completed.
It works, mostly, and then usually only for a while so it gets repeated.
The 6 questions technique.
Six very simple questions, all of which require an answer.
- What will you stop doing?
- What will you start doing?
- What will you continue doing?
- What should you do more of?
- What should you do less of?
- What are you building?
That last question is the only strategic question, the other five are all tactical.
I would suggest you use Warren Buffett’s technique, which obviously works for him. He leaves a lot of time uncommitted to accommodate the opportunities that emerge, think creatively, and deal with the unexpected.
There are many other methods, find the one that works for you, and make it a habit.
You will be far more productive as a result.
Jul 30, 2021 | Governance, Innovation, Strategy
The old saying that ‘he who pays the piper calls the tune‘ is almost always true.
The piper in this case has been the orthodoxy prevailing over the past 40 years in Australian manufacturing.
I have been actively observing the trend towards outsourcing for a long time, deeply concerned that as a country we were collectively making a huge mistake, by focussing on lowering costs by outsourcing. By slicing off the things that are not deemed to be ‘core’ in some way to your profitability, you can reduce costs while maintaining revenue.
I guess it is much easier than being truly creative, taking risks, betting on a future different to the present.
As a result, manufacturing businesses in this country have progressively outsourced manufacture of sub-components, then whole components, then manufacture and assembly of finished products, and finally, because the manufacturers in China, Vietnam, or Thailand are closer to the technology, the design.
All Australian manufacturers, those few that have survived so far, are left with is a brand, with nothing to support it.
A brand without the supporting ‘brand infrastructure’ is a bit like a heavily inflated balloon. At some point a bugger with a pin will come along and, ‘bang’, you have nothing left.
The bugger with the pin proved to be a virus.
Supply chains have been ‘kneecapped’ and there is suddenly a recognition of the need for ‘sovereign manufacturing’.
Being driven by short term profit at the expense of long-term commercial sustainability has been a dumb choice.
I understand how it has happened.
Along with outsourcing manufacturing, we outsourced good old common sense to the educated but inexperienced crowd who applied IRR (Internal rate of return) and RONA (return on net assets) models shoved down their throats in MBA classes. These led to incremental investments in little, short term things at the expense of longer term and less certain but potentially bigger returns, to satisfy IRR hurdles. Reductions in the denominator in ROI calculations by flogging off productive assets made them look good by increasing RONA numbers.
They forgot that cash, and intellectual capital are not ratios, you either have them or you do not. Without cash you will be dead tomorrow, without the intellectual capital underpinning operations, you will be dead by a slower route, but just as dead.
Covid has awakened us to the effects of those decisions made over an extended period. Question is, do we have the resources and resolve left to start playing a different tune, one that common sense rather than capital ratios dictates?
I truly hope so for the sake of my grandchildren.
Header cartoon courtesy www.Gapingvoid.com
Jul 28, 2021 | Analytics, Management
Many if not most marketers, approach metrics that seek to increase their accountability with about the same enthusiasm they would approach a snake of unknown species in their backyard.
Warily.
The default has become a range of numbers that might look useful, are ‘saleable’ in the corner office, but usually do little to hold marketers genuinely accountable for the outcomes of the decisions they make.
The most common I have seen are:
- Vanity metrics. Typified by ‘likes’ or number of ‘friends’ on Facebook.
- Measuring what is easy to measure instead of measuring what is important, the drivers of outcomes.
- Measuring activity rather than results. This is endemic in publicly funded organisations.
- Measuring for efficiency rather than effectiveness. You can be highly efficient at doing exactly the wrong thing.
- Concentrating on cost rather than the return that the investment generates. This measure, as does the following one, infests organisations of all types.
- Measuring budget compliance.
Charles Goodhart, a professor at the London School of economics proposed what has become known as Goodhart’s law: ‘When a measure becomes a target, it ceases to be a good measure’
The implication is that you need two opposing measures that drive the outcome you are looking for to use as KPI’s.
For example: We all know that the best lead is one we get from a satisfied customer, a referral. Therefore, it is easy to set as an objective the number of referrals given. Unfortunately, this is very easy to ‘game’.
Sales people are able to just extract any old name from customers, to reach the number. Therefore, it follows that the KPI should be referrals that are converted into a sale. Better, that ensures that the referrals given are genuine. However, it is also flawed, by the simple fact that a conversion can happen for a number of reasons, including a below cost deal.
Therefore, the related KPI should be around the margin, or perhaps customer cash flow, something that reflects the profitability of converted referrals. This will ensure that the referrals are in fact worth having.
Developing KPI’s that are held across functions will improve the flow of information and resulting functional performance.
I refer to these as Tandem and Opposing KPI’s. For example:
- Sales people responsible for revenue should also be responsible for margin, but not for setting the prices beyond a proscribed band. Those who set the prices should also have margin as a KPI.
- Operations people responsible for efficient manufacturing should also be responsible for inventory levels and stock turn. This should connect manufacturing to market demand, and ensure some level of collaboration with sales to ensure stock availability.
- Those responsible for management accounting reporting and implementation, should also be responsible for reducing operational transaction costs.
Marketing is often accused of using garbage maths, fancy but meaningless clichés, and often they do. For credibility this must change.
It is not only marketing that overuses garbage metrics. It is just that marketing is an easier target than the accountants and engineers who have some numerical street cred and get away with it more often.
Having a simple set of cross functional metrics that go to the drivers of performance at any level, that are openly displayed, will be a huge step towards performance improvement.
Header cartoon credit: xkcd. https://xkcd.com/2295/
Jul 26, 2021 | Communication, Customers
Contrary to much advice, sales is not just a pure numbers game, the quality of the numbers make more difference than the numbers themselves.
Throw the net widely to attract prospects, the more the better, is the common mantra. It implies anyone who shows the slightest interest is automatically in the net, and so becomes a consumer of resources as efforts are made to lead them down the ‘funnel’ to a transaction.
Sound about right?
What nonsense.
If you had 1,000 people and a 1% conversion rate, you would make 10 sales. if you had 100 good prospects and converted 10%, you would make 10 sales. The transaction numbers are the same, but the latter would be far superior, as rather than spend resources chasing the 990 that would not convert, you have cut down to 90, leaving a lot of sales resource to be off doing something useful.
You do need to fish where the fish are, but it helps to make sure that the species around is what you are looking for, and that the bait is right, otherwise, you will just catch a cold.
The lesson is to focus your efforts on your ideal customer, where you will get the most leverage for your resources. This means you do some work up front to identify the characteristics of your ideal customer, then qualify early and hard to husband sales resources and direct them to the point of greatest impact.
Yes, sales is a numbers game, but the quality of the numbers makes the difference between productive and broke.
It reminds me of the legendary copywriter Gary Halbert’s advice when he’d ask an audience for the best way to sell a hamburger.
At seminars, Gary would throw out that question and people would respond:
… Make the juiciest burger…
… Have the best location…
… Provide the quickest service…
… Create a killer sauce…
And so on.
Gary would then give the correct answer, which was…
Find a starving crowd!
When you need a sounding board to find your starving crowd, give me a call, I’ve been finding them for 40 years..
Jul 21, 2021 | Leadership
There is a huge hole in every ‘top 10 characteristics of a great leader’ list I have seen.
They all list approximately the same things, by different names, and in different order.
Honesty, integrity, transparency, vulnerability, vision, creativity, dependability, empathy, and so on.
In none of them have I seen the one characteristic that to me just sticks out like a beacon.
Compounding.
Compounding is as Einstein pointed out, ‘The most potent force in the universe‘
Leaders who actually lead, do so not because they demand to be leaders, but because they invest, tiny bits, over a long period. in the individuals around them. Each investment (read interaction) may be small, but it compounds on the last one, and the one before, where they counselled, advised, observed, offered praise, stepped back when praise was offered from elsewhere, and provided cover by taking responsibility when there was a cock up.
Compounding good leadership practices breeds great leaders.
