Sep 4, 2011 | Change, Innovation
Gordon Moore first promulgated his now well know law in an “Electronics” magazine in 1965, that the number of transistors that could be packed onto a standard chip would double every year for at least 10 years. Moore updated his forecasts in a 1975 presentation but the general direction has held true now for over 50 years.
In 1955 when the transistor was first commercialised, they cost $5 each, now they cost billionths of a cent each, an astonishing change.
If this development trajectory were to be repeated, even 100th of it, the dreams of politicians trying to sell the notion that a carbon tax will lead to an explosion of technical development in renewable energy, will be realized. Perhaps this is not as far fetched as the notion in 1965 that the number of transistors on a chip on would double every year?
Aug 26, 2011 | Change, Management, Marketing, Small business, Strategy
The decision yesterday by the federal Court to allow Metcash to purchase Franklins from Pick n Pay, then onsell, presumably with tied supply agreements is another nail in the coffin of competition in the retail trade, despite the interpretation of the law by the courts.
Now you have Coles, Woolworths and Metcash with a share above 90% of the supermarket trade, limited choice for consumers, a nightmare for suppliers, particularly the decimated local suppliers who have struggled against the increasing power of the retailers for 30 years, and have largely failed.
Several things will emerge that will accelerate change in the supply landscape.
- Scale should dominate the strategic thinking of suppliers. You need to be a gorilla to play with gorillas, so get big or get out. The only alternative is to back off and be a small specialty producer, concentrating on the small share of retail trade not controlled by the 3 gorillas.
- It will be increasingly difficult at the smaller end of the size scale. The businesses left that turn over between a couple of million, and 50 million, many of them regional, with extreme pressure on their finances at a time when banks are not being helpful despite their advertising, will struggle. There are only a few left, and many of those will go to the wall.
- Competition between supply chains, from growers through to retailers will increase. Soon, if you supply Coles, you will not be able to supply Woolies, without risking your position with Coles. Suppliers will need to make choices, and gear up to integrate themselves into a supply chain system, losing their independence, and closing off options. This may not be a bad thing, but it is a substantial change from the current practice and way of thinking, and it limits the scope of customer base available through which to reach consumers with your product.
- The move to housebrands will accelerate, further enabling global sourcing by retailers, squeezing local suppliers. The $A has punched this process along over the last couple of years, adding more pressure to local suppliers who, having lost shelf space for their brands, were relying on contract packing to stay afloat
- Retailers are lousy marketers, good at sales, but lousy marketers. With housebrands coming to dominate categories on price, attractive to consumers in tough times, where will the innovation come from? Where is the incentive for local suppliers to risk their limited capital in doing something different?.
The ACCC, governments at all levels and the courts implicitly decided years ago that the SME end of the food industry was fair game, the survival of the fittest, and all that, and from an economic perspective, it may be the right thing to have done, but at what cost in human terms. The old question I have used in many seminars to make the point about retailer power:
Question. “Where does the 400kg gorilla sleep?”
Answer. “Anywhere he bloody likes”
Aug 10, 2011 | Change, Innovation
The cult of failure, the belief that by failing we succeed, has some very real and adverse consequences if taken literally. It gives excuses to those who would choose to be sloppy in their consideration and preparation of an experiment, behaviour that would get you thrown out of Edisons labs, but in management can now get you accolades.
Giving permission to fail without allocating any consequences sounds fine, but can lead to sloppy thinking. This guest post by Steven Parker on the Businessgrow blog republished on Stevens untimely death says it all.
My Dad used to say “every-one makes mistakes, but only a fool makes the same one twice”. This has implicit in it the value of the learning, but now so often see the “learning” part dismissed as too hard, ego driven dills seem to think they now have a licence to stuff up repeatedly, and avoid doing the hard post stuff-up analysis to understand why something went wrong, did not deliver the expected results, had “unexpected consequences”.
Often those consequences are because no sensible forward thinking was done, no basic risk assessment was in place, because “to experiment” has become a cliche, not a discipline.
Aug 4, 2011 | Change, Strategy
Last time I bang on about the anomalies surrounding the carbon tax, promise.
I find it ironic that the party of so called free enterprise is calling for taxpayers to fund all the pain of the necessary adjustments, whilst the party representing the left of politics, Socialists in the old language, are imposing a tax to put a price on something in the reasonable assumption that if the price goes up, usage will go down. Basic Keynesian economics at work. Perhaps it is the work of the National Party whose unspoken wish has always been to capitalise profits, and socialise losses.
The bust of Bob Menzies, sitting outside the Liberal Party headquarters in the leafy Canberra suburb of Barton has probably grown bronze tears since the last time I looked.
Aug 1, 2011 | Change, Communication, Innovation, Marketing, Social Media
There is a powerful new analytical tool on the block, “social network cartography” for lack of a better term. The masses of data now becoming available are able to be analysed with respect to the networks that exist amongst people. If your friends are obese, the your chances of being obese are greater, if your friends smoke, there is a greater chance you will. This can all be mapped.
Much of the pioneering work has been done by Nicholas Christakis and colleagues from Harvard Medical school over a 30 year period, starting with data generated by the Framington Heart Study, which is being reported increasingly widely, such as this piece on smoking in the Boston area, reported in Kelso’s Corner blog, as a tool for change.
Christakis presents his ideas in this TED presentation, along with more examples. This data cartography is a tool that is evolving rapidly, but appears to me to have an amazing capacity to create graphics that will demonstrate all sorts of complex arguments, and as you know, a picture tells a thousand words.
Jul 27, 2011 | Change, Leadership, Management
Large organisations tend to have what is usually called their own “culture” but when you look deeper, there is a more basic form of “sameness” amongst organisations in a field, particularly those in a public field, Government departments, churches, non profits and industry bodies.
I speculate that this is because they are stable, relatively long term entities, often protected from the discipline of the market to some degree, so they tend to select new employees, promote and measure performance against the criteria of those already there. This will tend to perpetuate the DNA of the organisation, and as people leave, they will often find themselves in similar organisations, thus spreading the DNA laterally.
In the Australian Public Service there is a set of guidelines driving the employment, promotion, performance assessment and cross departmental transfer processes, the “Integrated Leadership System“. It is a complex set of procedures designed to ensure even handed and consistent selection decisions, but which must result in the perpetuation of the genetic code of the APS.
This genetic coding is what makes change in large organisations so difficult, it takes a real gutsy, and very rare leader to alter the rules by which he/she rose to the point at which they can change the rules.
