Electric Vehicle manufacturing: The prospects for Australia.

Electric Vehicle manufacturing: The prospects for Australia.

Apr 29, 2019 | Change, Innovation, Leadership

One of the more fanciful of a grab bag of fanciful bullshit surrounding the ‘debate’ on electric cars a fortnight ago was the assertion that South Australia could become a world centre of electric vehicle manufacturing.

It seems superficially logical, all those car assembly and supplier plants sitting idle, and all those manufacturing skills being wasted as the former  employees become unemployed baristas. However the entry barriers to successful manufacturing and export, and infrastructure requirements for domestic market penetration beyond central suburban areas, are significant.

GM in the US is quietly packing its bags on EV development and manufacturing to shore up profits, particularly in the light of the halving of federal Green House Gas ( GHG ) subsidies. The Californian ZEV credits scheme to encourage electric vehicles, which contributed greatly to the initial research momentum may not be enough by itself to maintain the momentum.  Tesla, the poster boy of electric vehicles is walking a financial tightrope, despite its undoubted success in the market.

Labor appears to have done a bit of homework, if reports are correct, so perhaps there is hope. However, it seems to me the core of electric vehicles, where Australia has some level of competitive ability that can be protected and leveraged is the R&D solving the storage problems, subsequent battery production, and lithium mining and processing.

Lithium, the base of current battery technology is not easily available. However, Australia has considerable Lithium resources, well behind Chile and China, but carrying more sovereign certainty despite the regulatory and political hurdles.

Let’s hope the flights of oratorical fancy yet to come in this election campaign are founded on fact and solid strategic thinking, rather than what sounds good in front of a populist audience.

Anyone for a debate on Adani? (some facts and consistency of argument would be nice)

 

 

Managing the Jenga tower of marketing

Managing the Jenga tower of marketing

Apr 3, 2019 | Change, Marketing

Have you ever set up and played with a Jenga tower?

As the game progresses, some blocks can be removed easily, with no impact, others are really sensitive to any movement and can bring the tower down with a crash.

Problem is, the difference is really hard to tell.

This is a  bit like marketing.

There are a lot of variables, all with differing impact on the outcome, and all differing again, depending on the circumstances of what has gone before, and the manner in which the remaining blocks, or variables, are arranged..

What is important for one customer, in one situation, may be irrelevant to another, or even to the same customer in different circumstances.

Experience with Jenga, and careful testing of the ‘stickiness’ of different blocks before you pull them out can deliver you a win. Similarly, in marketing, the more analytical tools you can bring to bear that account for the minor variations, and differing configurations of the variables, the more likely you will be to get a favourable outcome. Increasingly, this task will be done by machine learning and pattern recognition, that accommodates the specific circumstances of the ‘marketing tower’, in this case,  the customer.

However, AI will never completely replace the wisdom of experience, creativity, and domain knowledge, which the truly successful will continue to observe, gather, and ultimately, rely.

 

Photo credit: Wikipedia

Get stronger, then get bigger

Get stronger, then get bigger

Mar 6, 2019 | Change, Customers, Management, Strategy

Most businesses find themselves on the ‘get bigger or get out’ merry go round. Unfortunately, one of the characteristics of merry go rounds is that unless you hold on, centrifugal force  will throw you off.

Also, the faster you go, the more likely you are to be thrown off, and as you slip towards the edge, the momentum grows making it that much harder to reverse the trend.

The alternative choice is to get stronger, rather than just bigger.

This usually means you say ‘No’ to a lot of tempting, but short term ‘opportunities’ that will arise, as most will dilute the focussed and differentiated value you can deliver to your ideal customers.

The dual question therefore is: How do you get ‘stronger,’ and what does stronger actually mean?

To me, strong means a number of things.

  • You are commercially resilient,
  • Customers, employees, and suppliers are all aligned to your values and strategy,
  • You have a strong brand amongst your customer base who want what you have because you are the only one who has it, and
  • Your competitors employees wish they worked for you

In short, you have a ‘moat’ around your business that repels all boarders and pretenders, and resists the siren song that suggests the grass is always greener somewhere else .

When you have all that, you can get bigger, it will happen almost without you driving size, as the strength will attract suppliers, customers, and those great employees with energy and ideas. 

 

10 tips on how to build a ‘learning organisation’

10 tips on how to build a ‘learning organisation’

Feb 18, 2019 | Change, Leadership

 

‘Learning organisation’ is a cliché mouthed too often by those who have no experience with such a rare beast. 

The key is not to try and help the organisation learn, it is to help the people in it learn by doing, spread the good outcomes, and nip the causes of bad practises before they become established as a norm.

‘Learning’ is a key part of an organisational culture that is able to evolve in response to the external pressures it faces, to best leverage the resources available.

To achieve ‘learning organisation’ as an outcome, you must change the natural order of most enterprises, by applying a huge dose of leadership.

That is what makes it so hard, so to succeed, follow these 10 tips!

Remove the fear of failure.

Fear of failure is perhaps  the greatest impediment to learning, as nothing new is tried.  Employees need to be given the confidence that following an idea that does not deliver will not result in retribution.  Experimenting and learning in collaboration with suppliers and customers offers rich rewards.

Employment policy.

Employ those who are prepared to try new things, be a bit different, seek challenges and opportunities to test themselves. Too often we employ people who ‘look like us,’ and as a result we get more of the same. Be aggressive about the sort of employees you want. Being selective at the beginning pays off in spades, as there is little as challenging as undoing a poor employment choice, for  the person let go, the person doing the firing, and for the survivors. That does not take into account the costs of recruiting, training, and the opportunity costs of a poorly performing employee.

Future focused metrics.

Use metrics that are based on leading indicators of performance, not extrapolations of past performance. These metrics are challenging to identify and track, but the effort will be worth it.

Cause and effect, not correlation.

Ensure the links between cause and effect are real. Too often I see outcomes attributed to something other than the real causes, mostly because it is convenient and easy, and there appears to be a causal relationship. True cause and effect can be challenging to identify and quantify,  but is essential to understanding how the future will shape itself.

Use data but be careful of data seduction

Data can be used well or poorly, but data has in itself a character of precision and certainty that can be misleading. Clean and objective data that removes assumptions,  the power of the status quo, and really digs into the reasons something worked, or did not work, is required. Data also has two faces. What has happened, and what will happen. The former, when interrogated effectively can tell you a lot about ‘what’ happened, but often the ‘why it happened’ is elusive, requiring testing. Data presented as a definitive picture of the future should be taken with a huge degree of scepticism, as the only thing for sure we know about the future, is that it will not be the same as the past.

Take action.

Nice words do not move anything. Nothing happens until you take action, then learn from the outcomes and improve next time, by ensuring that the action is taken against a framework that has in it a core assumption being tested. When you do this methodically, you get to understand if the assumption was right or wrong, and why.

Build in time to think.

Those who are always busy, pushed by external schedules, do not reflect on things, do not give themselves the opportunity and time to just think about what has happened and why, the opportunity for the  flashes of insight, questions that need to be  answered  to emerge must be present.

Diversity.

Change the status quo from one where you have to fit in, to one where differences are valued, celebrated, and actively sought. This is not about gender, it is about thinking styles and differentiated skill bases.

Accountability. 

When no one is accountable, few will be prepared to take the initiative. Being transparently accountable, creates a bias towards action, which leads to learning. 

Process stability. 

This is a prerequisite for improvement. Unless you know which variable moved, and caused the outcome being examined, you have no chance of improving. Process stability is an essential ingredient of any improvement exercise, and improvement is all about learning.

These 10 tips have significant areas of overlap, and have in themselves cause and effect relationships. When you need someone to help untangling the mess, give me a call.

 

Header cartoon credit: another by the great Hugh McLeod of gapingvoid.com

What will happen after the Hayne report goes off the front pages?

What will happen after the Hayne report goes off the front pages?

Feb 15, 2019 | Change, Governance

 

Following the rather cynical post last Wednesday asking where the blame would be placed when the Royal Commission dust has settled, it seems only fair that I be prepared to stick my neck out to make some observations and suggestions, rather than just chucking stones.

•   The root cause of the malfeasance is the huge pot of money accumulated via Australia’s superannuation and various tax policies. Such juicy pots are always going to attract the sharks, therefore the oversight has to be that much more rigorous and transparent. APRA and ASIC have clearly failed in this arena, perhaps predictably as their resources have been progressively ‘trimmed’ by both sides of politics and the capability and motivation gap between them, and those setting out to get their noses in the trough, is significant.
However, we should not throw them too the wolves, rather we should give them the tools and leadership to do the job they were set up to do, and by world standards, have done pretty well to date. I am not so sure of the commissioners recommendation to establish an oversight body, as it seems that another bureaucratic level will just add to weight of bureaucracy for little value.

•   The complexity of the system has led to confusion and opacity of an advanced order. It is within the power of governments to set about reversing the trend. It will take a long time, and needs some level of bi partisan support (there I go again, dreaming) as any change will necessarily create losers. Those who have made decisions based on current rules must not be disadvantaged. The current proposal of the Opposition to change the dividend imputation rules is both stupid and immoral, and they should be whacked for it. However, if they must, make the changes but grandfather the current arrangements, as they are proposing to do with negative gearing.

•   We can spend all the money we like on so called ‘Education’ without much return. Increasing the average level of financial literacy during school years is sensible, but not an antidote to the cause of the problem, system complexity. Public broadcasting perhaps has a role in producing ‘infotainment’ similar perhaps to the ‘Checkout’ program on the ABC, but unfortunately, those in the most need of the information delivered are too busy watching some cooking or renovation show, and increasingly avoiding the ads by paying for bingeable streaming services.

•   The rorts have largely originated with the obsession with revenue, rather than the longer term outcomes. This is a function of our fixation with short term returns as measured by stock prices. While the pressure for short term performance will not go away, it is the responsibility of boards to ensure the longevity of the assets they are managing on behalf of shareholders, so it is therefore also their responsibility to manage them despite the inevitable short term fluctuations. The AICD should be taking a lead role in this, by both being very noisy which will be uncomfortable for them, and by providing quality longitudinal research that demonstrates the value of a longer term perspective upon which boards can build strategy with the strength to withstand the prevailing ‘short-termism’.

Last week the Wentworth Group of concerned scientists released their damming (forgive the pun) report on the progress of the Murray-Darling Basin plan. Like most such fact based research this will be lost in the welter of press releases, appearances by ‘deeply concerned’ politicians, and hubris, while nothing changes. Similarly, The Henry Review, the major report into Australia’s future tax system chaired by the then head of Treasury, Dr. Ken Henry, released in 2010, has been largely ignored or grossly mishandled. No wonder Dr Henry took the money and ran to the NAB, from which he will now exit in the near future. The list of examples goes on.
My point being that the bleating, hand-wringing and pontificating following the Royal Commission about doing better will make little progress in the face of political partisanship. The only exception I can recall that breaks this mould is the investigation into Institutional Child abuse, a damming report on the collective morality of our institutions, which has been met with bi-partisan support.

As a community we must not let the Hayne report be shelved, or used as a political football. Intelligent, fact based consideration needs to be given not just to the contents of the report but to the wider questions of the causes of the problems, and development of strategies that will deliver continuing prosperity to our children.

 

Header cartoon courtesy David Rowe and the Financial review.

How to find the ‘Zig’ when others are ‘Zagging’.

How to find the ‘Zig’ when others are ‘Zagging’.

Feb 11, 2019 | Change, Customers, Leadership

 

Being a part of the herd may be comfortable, but it is rarely sustainably profitable at levels greater than the cost of capital.

Finding points of differentiation, the means by which you can be distinctive preoccupies most thinking marketers, those factors that customers value that attract them to your offering rather than going up the street.

It also means, by extension, that you have made decisions about the nature of the market segments or niches that you wish to serve.

By definition, if you are setting out to be all things to all people in the hope that you will not alienate anyone, you cannot also differentiate, as it means that you are not distinctive in some meaningful way that adds value to specific types of customers.

Differentiation covers more than the value proposition and copy on your website, it follows through to the visual elements of your branding, and most importantly, the behaviour of your employees, channel partners and stakeholders. By reflecting the few factors that will make those ideal customers react to your differentiated offering in a niche they inhabit is a valuable building block. Everyone is familiar with the  cliché ‘a picture replaces a thousand words,’  which is never truer than when communicating a differentiated offer to specific group of users in a defined market niche. A graphic artist will call it a ‘Visual identity’ and it is worth the investment to refine it.

One of the best known ‘Ziggers’ is the recently deceased Herb Kelleher, co-founder and CEO of Southwest Airlines. Southwest retained an unbroken 43 year record of profitability in an industry that had wild fluctuations in profitability, and many of those airlines that set about killing Southwest in the early days are themselves now history, like Pan Am, or in and out of Chapter 11 like United.

Southwest focused on simplicity and their customers. When others employed spoke and wheel routing, they went point to point, as others added services like allocated seating and differing classes, Southwest did not, and they flew just one type of plane (Boeing 737) , making servicing easier, and while everyone else went to war with their employees, Southwest turned theirs into apostles for their employer.

Differentiation is more than being different, those differences must be of sufficient value to some customers, that they would  not go anywhere else.