How do you solve a critical problem?

How do you solve a critical problem?

Define the problem first!

Dealing with problems effectively requires that  you first define the problem. This sounds pretty obvious, so obvious in fact that many do not think about it, they just persist with workarounds that address the symptoms, without getting to the core of the problem to solve it.

Not all problems are the same, so logically, they will not all have the same solution.

Classifying them in some way is a good first step, so here are four suggestions.

The ‘Cock-up’ Box.

Something or someone has acted in a way that is inconsistent with normal. There has been a cock-up. It could be a machine broke down unexpectedly, a customer delivery does not arrive, or a key component of a marketing program is missing, and many others. Point is, it is abnormal, so go looking for the root cause of the abnormality. ‘5 Why’ normally works very well in these circumstances.

The ‘Poor Process’ box.

The outcomes of a process done regularly seems to vary each time it is done, there is no reliable standard. The level of reliability is such that someone has to check or rework what has been done. I had a client whose MD routinely checked the detail of quotes done by his staff, looking for the errors he knew they were making, which he corrected, without taking any further action. Unless the process that enables errors of this type to be made is addressed, the problems will persist. Mapping what happens always helps to identify the ‘holes’. In this case, I ‘attached’ myself to a couple of quotes from the point they were initially received, mapping  the action taken, by whom, when, and what was the trigger, and created a ‘map’ of the process. It was then obvious to all where the causes of the variations occurred, and steps were taken to remove them. The result was a much greater level of confidence in the accuracy of the quotation process, which freed up a significant chunk of the MD’s  time to do more useful things.

The ‘Get Better’ box.

This often looks like the one above, but the motivation is different, it is often the result of an external pressure, resulting in a previously acceptable level of performance no  longer being acceptable. The typical examples are cycle times of all sorts of things being shortened, from order to delivery time, design time, response time, to improving the quality, however that is defined. In Australia, the example on everyone’s mind is the management of power. Costs have gone through the roof, and suddenly shaving a percent off the power bills here and there becomes an item of considerable priority, so effort is going into tracking and addressing all points of power consumption that can be modified to cost less, or be eliminated.

The ‘Out of the Box’ box.

As the name implies, this is where the ideas to address the emerging challenges are addressed. These are  innovations that you can either implement yourself, or responses to the trends observed that require big change. Having an established process to deal with and leverage innovation, significant improvements, unexpected situations, and opportunities that become apparent, is challenging. What it requires is a continuous focus on strategy and the long term vision, mission, purpose, whatever terms you use in your business. These things are way too easy to stick in the ‘too hard basket’ or the ‘will do it tomorrow’ basket, in the knowledge that tomorrow never comes without another short term crisis to address.

When you need assistance defining, then categorising the problems you face before developing solutions, give me a call.

 

 

 

Customer value conforms to the laws of Thermodynamics

Customer value conforms to the laws of Thermodynamics

Theoretical Physicists disagree on a lot, but one thing they do agree on is that matter is constant, it does not disappear, it can undergo changes of form, and become something different, but is not destroyed.

Value is like matter, it does not disappear, it just undergoes change, and moves somewhere else.

Customers used to look for value in places where they no longer get the best return, so they look elsewhere to find it.

Technology may destroy some jobs, as it has in retail, and factories, but the jobs are not destroyed, they change form and move elsewhere.

For the last 20 years I have heard the ‘technology destroys jobs’ story, usually told by those with a direct interest in the industries being disrupted, in parallel to the number of jobs being created, usually touted by politicians with an agenda.

This is  not to denigrate the pain of those whose jobs are replaced by an automated process, but it does demonstrate the movement from one form to another.

Apple may have been a destroyer of jobs in some sectors, but they created many more in different locations, and in newly imagined retail as they re-created lost retail jobs in their Apple stores, now the most successful retailer in the world on a GM/Square foot metric.

If you take this perspective when thinking about the pressures on your business, and how it must respond to those pressures to survive, you just might be one of the fortunate ones who sees a picture of what the future might look like, and move there in front of the wave.

My favourite marketing strategist, Albert Einstein, once again, got it right!!

 

The 5 steps to optimise process development

The 5 steps to optimise process development

 

Processes are the means by which we get stuff done, and are therefore an integral part of our personal and professional lives.

Mostly we just  allow them to evolve, usually in a pretty unthinking manner without much critical analysis. However, this is a mistake, as it leads to duplication, mistakes, omissions, personal idiosyncratic behaviour, and waste.

When valuing a business, one of the tell-tale signs of good management is the presence of a simple set of process maps which guide the way things are done, from the most mundane to the really important. This ensures, or at least makes the effort to ensure, that the same jobs get done in the same way every time, irrespective of who is actually doing the job.

The cost savings that result from this simple idea are enormous.

Creating a ‘process map’ or running sheet for the simplest to the most complicated process is pretty much the same.

The point however, is not to create a set of rules that can never be broken, it is just the opposite. A process to be optimised and improved  needs to be subjected to critical analysis on an ongoing basis, the written process just gives a stable starting point.

My experience with process mapping has involved 5 steps, that usually happen in an overlapping manner

 

Learn by observation and questions: Observe what happens currently, how things actually get done, consider the range of cause and effect chains in place, ensuring you do not confuse cause and effect with simple correlation. Go out and ask questions, seek insight into the hidden ‘wrinkles’ that exist in every process.

Experiment: An effective experiment requires discipline, primarily to test one thing at a time so you can accurately measure the impact of any change. The scientific method works: develop a hypothesis, test if it is true or false by collecting data, adjust the hypothesis and test again, until you find a hypothesis that holds true. As  Sherlock Holmes’s mentor said: ‘When you have eliminated the impossible, whatever remains, however improbable, must be the truth’

Codify: a process that remains in one persons head is no more than an opinion. To be effective the thought must be codified in such a manner that it can be accessed by anyone, and given the status of the ‘right way’ of doing something. I like visual process maps, they are easier to understand, and absorb quickly.

Distribute: once codified, the process needs to be distributed, and made easily available. There are now many digital tools around that enable distribution and simple reference. In the ‘old days’ processes would be in a manual somewhere that nobody looked at, even if they knew it existed. Nowadays there is no excuse, the process can be available to everyone with digital access.

Optimisation and creativity.  The paradox of all this is that with a stable process, you can now be creative, seeing alternative ways of delivering an outcome.  For improvement to occur you first need a stable system so the impact of changes are visible in measureable outcomes. This is the opposite to the chaos that people often consider to be a part of the ‘creative process’

Header acknowledgement:  Hugh McLeod at Gapingvoid.com

 

 

21 Lessons from a manufacturing turnaround

21 Lessons from a manufacturing turnaround

 

I was asked the question ‘what did you learn from the turnaround of the GPD‘ a while ago, and was persuaded to present on it.

The GPD was the ‘General Products Division’ of the Dairy Farmers Co-Operative Ltd. It produced all the dairy products you manufacture with milk, which were at the time (mid 80’s) unregulated, while the stuff you put on your cereal in the mornings was regulated to the wahzoo. The GPD  was spun out of the much larger milk business so it could be run as a business, and not an outpost to absorb the milk not required in the regulated market.

Various aspects of that journey have been in these pages before, but I had never contemplated the question in depth and from a height, at the same time.

I started with the business just after it had been set up, then called the ‘By-Products Division’ and in the early stages of building a new ‘state of the art’ factory in Western Sydney.

The division was commercial road kill.  I know that as I did the first P&L by hand, (calculator, 18 column ledger sheets, pencil and rubber)  from scraps of information gathered and constructed from a variety of sources, and a lot of observation.

From that position, turning over $32 million, losing somewhere between $6 & $8 million, with the heavy commitment of the half finished high tech plant nobody knew how to run, 8 years later it was turning $162 million and making good money, with much improvement still to be done. It was a very substantial turnaround, not without its share of drama and missteps,  moments of joy and ‘what the hell just happened’. It was a journey that involved everybody in the business, at first reluctantly, then enthusiastically, had built astonishing momentum that was really only obvious to those on the inside.

Then it was stuffed up by a stupid decision to re-incorporate the business back into the milk business in order to ‘spread the successful commercial DNA‘  in preparation for the inevitable deregulation of white milk.

Over the first 6 years I carried responsibility for the Logistics, and part of  the sales, in addition to the marketing role I was hired for, and for  the last 2 years that the GPD was a separate entity, I was the GM. My ideal job at that time in my life.

Over the eight years, the business and its processes was totally reorganised, the  culture completely turned around, and we launched a string of successful market leading products, all of which contributed to the success.

So what did I learn, in no particular order?

  • You have to engage all employees, at all levels in the journey. They must understand their role and importance in that journey and to each other.
  • When you make a blue, recognise it early, correct and move on. Chasing a sunk investment that is not working is a terrible mistake to make.
  • Never look back with nostalgia, just for the lessons as input for what is next.
  • Price is not a measure of customer value, it is simply a means to express it that is understood, and unfortunately, usually misunderstood. Price only really matters when all other things are equal.
  • No business can be all things to all people.
  • Look after your small customers, one day they might be your big ones.
  • Standards of performance and behaviour have to be both present, well understood, transparent, and meticulously followed by those who set the tone.
  • The greater the general level of transparency the better. Hiding bad news never works, and brushing over problems just lets them fester and get worse. ‘Nip it in the bud’ is always a good piece of advice.
  • A managers job is to support the efforts of their staff, not the other way around. Successful companies extend trust to all employees at all levels, and deals with those who breach that trust openly, and absolutely consistently.
  • Breaching trust is very different to making a mistake. ‘Good’ mistakes are the result of initiative, trial and error implemented with due diligence, and are essential for learning.
  • Continuous investment in product and brand development is necessary, and even more important when times are tough. A great mistake is to see this investment as an expense item in the P&L, available to be managed to deliver a short term result. A powerful brand does not happen overnight, is the outcome of many thousands of small actions and improvements, as well as the obvious external marketing activity,  and it is the greatest asset any business can have.
  • The culture of the place is very hard to describe to an outsider, but clear to an insider. It is a mix of rules, experiences, stories, relationships, habits, and is more complex than any family.
  • Have in place a robust and well understood strategic process which serves as a framework for all decision making at all levels. When an opportunity presents itself, no matter how attractive it may seem, if it is outside the framework, leave it alone.
  • Have in place a robust but simple set of KPI’s intimately connected to the strategy, cascaded through every level, and proactively managed.
  • Never compete with a stronger competitor on their ground.
  • As far as possible, fund growth from cash flow. Long term debt is sometimes necessary, but can turn toxic when the best interests of the lender and the business diverge.
  • Be prepared to kill your favourite children and sacred cows, just be careful to ensure they are not golden geese in disguise.
  • Look for diversity in the thinking styles of people, and encourage that diversity of thought to bubble through and influence the whole business.
  • Treat employees as you would a trusted associate, not a piece on a chess board to be moved around at will. That trust will pay huge dividends in morale, productivity and loyalty
  • Institutionalise regular interaction and conversations across functions and up and down the company, without the impediment of formal roles.
  • Continuous improvement in everything should be so ingrained that people feel its absence keenly.

My final two years in Dairy Farmers were as GM Marketing of the much larger entity that now included the former GPD. While the business continued to be successful, the pace of change and improvement stalled under the dead weight of the still regulated milk business. After  two years, the MD of the business reached the end of his tether with me, constantly being a thorn in his side demanding change, and I with him, so one morning we parted company. The irony is that during this time, I (and the marketing team) launched the single most successful product I ever launched, the last in a long list of successful product launches as an employee. However, the means by which I had to subvert the ‘rules’ to do so were the nail in my corporate coffin.

Another two years on after my exit, the business was flogged off, ultimately to a Japanese brewer, at what I regarded as a fraction of its long term value. A sad end indeed to an iconic Australian food manufacturing business, and perhaps a metaphor for the whole food industry.

 

 

How to develop some of that vital  ‘fingerspitzengefuhl’

How to develop some of that vital  ‘fingerspitzengefuhl’

 

Fingerspitzengefuhl is a German word that translates poorly (I am told, my German is marginal at best) meaning literally ‘finger tip feel’. The real meaning is the intuitive sense that develops in some people with deep domain knowledge, experience and expertise. Somehow, they just know when something ‘feels right’.

In this day of the metrics tsunami, this sense of deep understanding should be easy to find, or at least much easier than it was, but I find in my travels that it actually seems harder to find. Very few seem to have developed it, and those that have seem to effortlessly outplay their competition.

It occurred to  me that this is because the metrics we are trying to untangle only give us half the information.

Why, not what.

They all tell us what happened, that is what algorithms do, they record the events. Very rarely do I see people digging around to find out why they happened. In the ‘old days’ pre-digital, there were few metrics that were easy to come by, so we spent much more time understanding the why something had happened.

Outcomes, not Activities

Our metrics report on all sorts of activities, but do a less effective job of telling us the outcomes of a specific activity, in identifying the real cause and effect chains in place. There are now simply so many options that the causal chains are more obscured than they ever were. However, digging them out is gold, as it enables huge productivity gains in your marketing investments.

Yours and theirs.

Most metrics concentrate on measuring the success, or otherwise, of your own investments, with scant regard paid to understanding the returns your competition is generating from theirs. Commerce is a competitive sometimes Darwinian game, and knowing your opposition better than  they know themselves offers huge competitive rewards. Understanding how they will react to something you do enables you to wrong foot them, catch them off guard, sneak in their back door, and generally knock them around.

None of this comes without effort, it requires deep commitment to understanding, and often breaking with the status quo, but  the rewards are there for the bold. You will develop ‘fiingerspitzengefuhl’ and everyone else will marvel at your insight, and ability to out think and out manoeuvre  your competitors.

For SME’s, ‘fingerspitengefuhl’ is both the source of their competitive advantage and competitive disadvantage. On one hand, they are by their nature much closer to the customers than a larger business, unencumbered by the friction of a bureaucracy, and  therefore have the potential to be more agile and responsive. On the other, they are so busy working to keep the bills paid, without the support mechanisms of a larger business, that they never lift their heads to see what is going on around them.

Need some help? Give me a call.

Header credit: Michelangelo on the ceiling of the Sistine Chapel.

 

The ‘Change Quadrant’

The ‘Change Quadrant’

‘Death and taxes are the only certainties in life’. Perhaps this used to be true, but no longer, there is now a third certainty:

Change.

Like it or not, it is happening around you right now.

Those charged with the responsibility of running enterprises, managers and Directors, have to be able to lead change, taking all stakeholders with them.

Clearly not all are capable of changing themselves, let alone leading anyone else.

It seems to me that people react to the prospect and fact of change in one of 4 differing ways.

Change avoiders.

There are those who are rooted in the past. Whatever the status quo may be,  it is not as good as it has been in the past, so they are positively motivated to ensure that you do not move further away from this past nirvana they see

Only when there is no choice. These people will not welcome change, they want nothing to be different, and will only change at the end of a pointed stick, and often then only when it is too late, the train has left the station, then they complain about missing it.

Change followers.

There are those who want to be led, they are open to change , as long as somebody else does it for them, and ensures their life is easy. Generally they are happy to tag along and take the benefits of change, and make the contributions to the change so long as they are assisted to it.

Change troublemakers.

This is what they are seen as, but these are often the ones who actually make it happen, the ones who treat the risks and challenges of change as a personal opportunity to make a mark.

Change embracers.

This group seeks change all the time as some sort of stimulant, sometimes as an antidote to everything else that is annoying them in their lives. They are often counter productive as they forget that change does need to be allowed to evolve, and bed itself down, or it fails to take hold.

 

These four groups fall neatly into a quadrant, and you do need elements of all four in a change project,  as when well managed, all have something to offer. In assembling a team to develop and implement change, a careful selection of the ‘change profile’ of all potential members should be considered in order to get the blend that best matches the sorts of outcomes you anticipate, and the nature of  the task. Knowing yourself, which group you fall into is a pretty important first step.

Cartoon credit: Hugh McLeod at gapingvoid.com