Aug 9, 2023 | Change, Operations, Strategy
Almost every SME I visit or work with needs to one degree or another to be moving down the path towards ‘digitisation’.
For some, this means considering how the sudden appearance of LLM trained AI will impact on their competitive position, for others, it is still how to write a simple excel macro, and move bookkeeping from Mavis in the corner to a cloud package.
Just what does ‘digitisation’ mean?
For most of my clients it means automating some or all of the existing processes driven by bits of unconnected software and spreadsheets, liberally connected by people handing things over.
It is usually a real mess, and the evidence of incomplete solutions, misinformation, and shattered hopes lie everywhere.
The world is digitising at an accelerating rate, so keeping up is not only a competitive imperative, it is a strategic challenge. To survive you must evolve at least the same rate, just to keep up.
On of my former clients is a printing business, an SME with deep capabilities in all things ‘printing’ that enabled the company to be very successful, in the past. Their capabilities are terrific, highly competitive, if we were still in 1999.
If I use them as a metaphor for most I work with, there is a consistent pattern.
They do not see digitisation as an investment in the future, rather it is seen as an expense. This means that the challenges are not considered to be strategic. There is no consideration of the application of digital to their product offerings, beyond the digital printing machines, services beyond those that made them successful 20 years ago, and their business models, beyond what is demanded by the two biggest customers, who between them deliver well over 35% of revenue.
They have not considered digitisation of operational processes, beyond a 20 year old ERP system, which has not been updated in any meaningful way for a decade, and they still only use a portion of the capability. The reason for this is simply a lack of internal capability and awareness, and the lack of cash to invest for the long term.
They have not modified their organisational and operational culture. No digitisation effort can succeed without the support of an operating culture that encourages ongoing change. Organisational processes can be modified by decree, but they will not stick. It takes everyone in the boat to be pulling in the same direction, in unison, to make the forward progress proposed by the digitisation nirvana. This takes leadership, and a willingness to be both vulnerable internally, and a strong ability to absorb the stuff from outside. You need to ‘get out of the building’ not to smell the roses, but to see the lie of the land, and understand where the opportunities and challenges are hiding.
The recognition of the critical necessity of change is where you get given one point out of a possible 10. The other 9 are reserved for taking action. A daunting prospect for most.
Following are the 5 steps necessary to become ‘match fit’.
- Map the existing operational processes so you know what you are changing. The starting point!
- Map and change the mindset of the people, so everyone understands the extent of the challenge to the business, and to them personally. This will prove very tough for some, so expect push-back.
- Take small and incremental steps along a path that all understand leads to a digital future, which means that a lot of collaborative planning has been done. Look for some low hanging fruit where early wins are likely.
- Ensure that there are the necessary opportunities for all stakeholders, but particularly employees to grow and change with you. Those that choose not to, also choose to work elsewhere. There are no free rides.
- Ensure the resources of time and money are allocated uncompromisingly to the long-term outcomes. It is just too easy to put aside something that is important but not urgent for something that may seem to be urgent, but is not important to the transformational effort.
Most need outside help to get this done. Usually that help in the early stages is not found amongst software vendors who have a dog in the fight. It is amongst those who have ‘been there, done that’. It will also be a resource hungry beast, but assuming you feed it, and you have the right mix of project management and technical capabilities, the investment will generate returns quickly, just not tomorrow.
Header cartoon credit: Tom Gauld
Aug 2, 2023 | Change, Leadership
We live in a world of change, and the pace of change is accelerating.
Just think about the what has occurred over the last 50 years.
We have gone to the moon, created skyscraper cities, moved from manual labour to sitting punching computers, driving everywhere instead of walking, extracting multiples of productivity from mechanised farming, and polluting the planet in very creative ways.
Computer chips have changed us. Gordon Moore noted in ‘Electronics’ magazine in 1965 that the number of transistors in a silicon chip was doubling roughly every two years. This has held true for 60 years, becoming known as Moore’s Law. The smart money now is saying that after that geometric growth, we are reaching the end of the physical capabilities of the current technologies and materials, and something new is needed.
I keep hearing about quantum computing and neuromorphic chips. I have no real idea what these are, but it seems the experts are saying there are huge advances to be made, and the door is only just opening.
The impact ChatGPT has had since its public release in November 2022 is a case in point, proving Hemmingway’s notion that ‘the future comes slowly, then all at once’.
Genetic engineering has gone from a multi-billion multi-year effort to map the human genome, completed in 2003, to getting your own genome mapped in a week for a few dollars. The interaction of the genome, our biology and genetic engineering via another new technology, CRISPR, will change again not just us, but the manner in which we interact with the natural world around us. Early applications of this technology are fuels coming from algae, genomic vaccines for cancer and all sorts of human afflictions. Again, we are just at the door.
Material science is an emerging field compounding almost weekly. We have all sorts of carbon fibre composites in many applications, a range of durable, biocompatible materials for human parts replacement from joints to teeth and heart stents, and almost daily hear about advances in honeycombed graphene, ‘flow’ batteries, and flexible display materials.
I guess you just have to look at the drop in price of solar panels and the impact that has had on the generation of power to see the power of this branch of science. It takes a while to get started, to generate early economies of scale, then compounding really kicks in.
Wrights law at work.
While this is happening around us, the lesson is that it will change the world. Being prepared to accommodate the changes is way better than trying to adapt after the environment has changed, when you are chasing the ball, instead of being in front of it. The fact that change is uncomfortable for most is both a barrier and an opportunity.
Jul 28, 2023 | Change, Innovation, Strategy
So, Elon Musk surprised everyone, again, by killing Twitter and launching X.
Whatever X is.
Everyone in the marketing, strategic and management world generally seems to have had a go, except me, so here goes.
He must be effing crazy!
(Psst.. He is, but is it crazy smart or just crazy?)
Twitter had a range of problems, magnified since Elon sent the previous owners an offer to buy the joint for an absurdly large chunk of change. It was so large that the then board almost killed themselves racing to sign before he changed his mind and halved the offer. This might have been closer to the value, albeit still overly generous.
Having failed to wriggle out of the offer to buy, he then cut staff numbers 80% from the staff of 7500. Meanwhile ad revenue continued to tank, the rate just increased, dramatically.
Surprisingly, twitter still worked.
Estimates of the value of the twitter brand pre-execution vary a lot, but commonly vary between 5 and $6 billion. That is a lot to just flush down the dunney for no apparent reason.
Competitors must be rejoicing, particularly Meta that just launched ‘Threads’ as a twitter competitor, only to find the gorilla in the garden has been turned into a gnome.
Musk, and everyone else in this space has watched what WeChat has achieved in China, and into the Chinese diaspora, and wanted to emulate it. Given the original source of Musk’s wealth was PayPal, he would be in as good a space as anyone to make that happen. That makes sense, but why sacrifice twitter in preference to starting a separate company?
It simply does not make sense.
There are a few other things that do not make sense, until they did.
Re-useable rockets were not possible, until he did it.
Tesla electric cars at volume did not make sense until he did it.
Tesla as a public company would never make it, until it did. (Tesla now has a market value more than all other US manufacturers and Toyota combined, and continues to climb)
Gigabattery factories did not make sense until he did it.
Distributed recharging infrastructure did not make sense until Tesla reached scale and persuaded Detroit to sign up, a fortnight ago.
Based on his history, betting against Musk is a mugs game, no matter how little sense it makes to the rest of us.
Jul 26, 2023 | Change, Innovation
Differentiation has regularly been trotted out as the core of success. In the absence of some sort of differentiation to a target market, all you have is price. It is an argument that I have used for 50 years.
Problem is, it is only half the story.
Differentiation must come from somewhere.
Usually, we tend to stop at some sort of mechanical or electronic additional feature, seeing those as desirable for the customer. If we are to follow Clayton Christianson’s theories, the absence of those same features that just clutter up the product from a different but unrecognised market might be the key.
In either case, there is a missing element in the usual articulation surrounding the development of a differentiator that in some way adds value to a customer.
Insight.
What is it that makes us realise that the current product configuration, business or distribution model, pricing and feature matrix is inadequate?
From somewhere comes an insight: ‘a clear, deep, and sometimes sudden understanding of a complicated problem or situation, or the ability to have such an understanding’.
Fortunately for the few who are thought leaders rather than the followers of the newest model, idea or shiny thing, insight will not come from any of these. It may come from observing the behaviour of the real outliers, and an understanding of the unusual things that drive their behaviour, or it might come from a diverse set of brains coming at a difficult problem from a range of differing perspectives. It may come from connecting a few practises that exist in other places with an unmet need, or opportunity in an unrelated field. The point is, it will not come from an effort to collect and analyse historical data that is presented to a 3-day offsite strategy session as the basis for their strategic discussions, the objective of which is to produce a glossy strategic plan.
Insight. The question remains how do you mould the culture of your enterprise such that it is able to produce this usually hidden key to success?
Header cartoon credit: Dilbert and Scott Adams.
Jul 20, 2023 | Change, Customers, Innovation
Contrary to the myth, the customer is not always right.
However, the customer should always be heard.
You learn a lot from customers, particularly the ones who leave, are dissatisfied and complain, or who exist at the fringes of your market, or even in a market you had not considered.
As a marketer I have always advocated the notion that the good stuff happens on the fringes. As the saying goes, ‘every good idea starts as a heresy’, so hearing the heresy is a core part of being able to respond to new stuff.
There are a lot of tools the hear what is being said on the fringes, tools to track every interaction with your brands, good and bad, and everyone should be heard.
Years ago, I tried to persuade the people in the pork industry’s peak body that they should be spending some time and marketing resources engaging with those growing organic, and heritage breeds of pigs, and got laughed out of the place. They noted that 99.9% of the pork grown was the result of intensive farming, where cost was the absolute driver.
The real competition to the domestic industry was located in those well-known cheap labour countries of Denmark and Canada, and these fringe Australian organic and heritage growers were irrelevant. Besides, the existing major Australian producers were contributing most of the industry marketing funding via matched levy.
Those few loonies with different ideas out on the fringes with tiny volumes only contributed a dribble to the kitty funding advertising and a nice lifestyle for employees in Canberra. This is close to the sources of part of their funding, and political power, but totally removed from growers and the markets they served, but very comfortable.
As a result, an opportunity for growth and profitability has been missed.
Or has it?
Jul 17, 2023 | Change, Governance, Leadership
Executing a culture change in an organisation is the first port of call in most improvement projects. Sometimes it is a minor task, often it is the major one.
There have been libraries written on the challenges of culture change, from ‘The 10 best ways to’ blog posts to great books that point us to new ways of thinking and dealing with the challenges.
I have contributed my share.
The common feature of all these is that it is very easy to talk about, very hard to do.
However, having done this continually over many years as part of almost every project, changing culture is a task that can be broken down into its component parts, and done bit by bit.
Culture is the word we use to describe the collective ‘The way things are done around here’. The clue is in the word ‘Done’.
Getting things done requires a process.
That process can be as organised and repeatable as a written process that is always followed, to the seemingly random, chaotic scrambling to get the necessary activities completed that I see most often.
Either way, there is a set of activities that must be completed, one way or another, in a sequence that can deliver a product to a customer, for what they are prepared to pay.
Individual activities can be isolated and subjected to improvement techniques. Improving the processes, as a focus of activity of all people involved in them, with the support and engagement of management will over time improve performance, and ultimately culture.
Culture is an outcome of the performance of processes, and how those performing them feel about themselves, and their place on the hamster wheel.
Digitisation makes this a bit easier, as we can track process performance in real time, rather than as in the past, collecting data, doing some analysis and cause and effect thinking, then make another change to test the outcome. This used to take weeks, perhaps months, but in some cases can now be done almost on the fly.
Like almost everything, our view of the time frame necessary for effective culture change has been shortened in most peoples’ minds. However, it seems to me that the time necessary for a robust culture change is one of the few things that has not accelerated in this digitised world.
I wish the incoming Governor of the reserve bank good luck in her culture change challenge, the body politic will be watching with a gimlet eye for early and rapid signs.
Cartoon credit: My thanks to Scott Adams’s avatar Dilbert
