May 22, 2023 | Change, Governance, Leadership
The most valuable resource in every business is the time, talent, and energy of employees. However, as these are hard to manage, and do not appear on any balance sheet, they are often grossly under-managed or completely ignored.
By contrast, Capital is readily available, cheap, and readily returnable, and as it is recorded and easily managed, it consumes our whole management focus.
Dollars are really the only easy measure of compliance and outcomes. However, they are a poor measure of much else that actually makes a business successful.
Time, strategic and tactical focus, and employee engagement are our most valuable resources, but are universally managed poorly.
There is lots of advice from the digital ‘cheap seats,’ all of it obvious with thought, but equally challenging to implement.
Wasted time in meetings, unnecessary email, excessive double handling, unnecessary process delays, broken processes, cultural norms, and many others. All add complexity, ambiguity, and time, while obscuring accountability.
Employees start covering their arses by copying everyone, shifting responsibility, hedging on project delivery times, duplicating unnecessarily, and focussing on the trivial while ignoring the risky.
You have all seen it, and from a distance shook your heads and asked yourself:
“Why not a bit of common sense?”
These transaction costs consume huge unrecorded amounts of time and energy, which translates into commercial obesity.
Think about all this as the ‘organizational load’ that is being put on people.
This load is similar to being overweight. As complexity increases, we allow practices to creep in that adds obesity to processes. It is a bit like letting your belt out an extra notch.
As of November 2022, we have the most potent anti-obesity drug ever conceived in our midst.
Artificial Intelligence, trained on large Language Models arrived with ChatGPT3 leading the charge. The performance improvement between Chat 3 and Chat 4 launched in March 2023 is astonishing. Forecasting what Chat 5, 6, and 7, just around the corner will be able to deliver makes my head hurt.
Are you thinking about your obesity problem now??
Your competitor surely is!
May 1, 2023 | Change, Governance, Strategy
Strategy is all about choice: what we will not do is at least as important as what we will do.
When you dig a level deeper into the generic ‘will I or won’t I’, you come to the question of how do you make what are almost always difficult choices between options in the absence of full information.
At a top level, that choice is driven by two factors:
Cost structure.
There is always a cost to delivering product. Understanding the cost drivers associated with your product and business model is essential. You will then be able to make informed choices about how best to minimise those costs without compromising the value you deliver to customers.
Value creation.
Selling a product of any type depends on a buyer seeing the value created by their purchase as being greater than the cost of the purchase. ‘Value’ is a very personal term. The value of an expensive watch is not in the ability of that watch to tell the time, it resides in a range of psychological drivers that drive individual behaviour and choice.
Until recently, most of the costs involved were of a physical nature, now they are increasingly behavioural. Similarly with value creation, in the past it was the utility you got out of a physical purchase, but physical utility has been usurped by digital and emotional utility.
Understanding both is critical to success.
Apr 29, 2023 | Change, Innovation
30 years ago tomorrow, April 30, 1993, the public internet was born with the announcement by the European Organisation for Nuclear Research that they would publicly release the HTTP protocols that would change the world. These protocols had been created by Tim (now Sir Tim) Berners-Lee for use by academic and defence facilities and had been very tightly held. On April 30, 1993 they were posted on what would become the world’s first website and were to be freely available to all.
10 years ago, I posted a happy 20th message.
Leading up to that momentous release of the HTTP protocols, providing the initial foundation for today’s internet, the US department of defence had created the ARPANET (Advanced Research projects Agency Network) in 1969. The first email message being sent by Ray Tomlinson who first used the @ symbol to separate the recipient’s name from the network address to himself in 1971. By 1983 there was general agreement on the standards for communication on the internet, the TCP/IP (Transmission Control Protocol/Internet protocol), and in 1985 the first domain, Symbolics.com was registered, which remains live today.
Once publicly released, the standardised protocols saw a mobilisation of innovative resources from around the world, resulting in rapid development of uses and tools.
Mosaic, the first popular web browser was launched in late 1993, and later was renamed Netscape navigator, and Yahoo launched in 1994. Microsoft launched their competitive search tool Explorer in 1995, later incorporating it free into Windows, leading to the move by the Clinton government to take action under the antitrust laws in 1998, resulting in an order to break up Microsoft. This order was later lost on appeal, significantly due to the evolving dominance of Google as the preferred search engine. Amazon launched in 1995, Google in 1998 and amongst the wave of tech IPO’s in 1999 was Napster, the first peer to peer file sharing service.
From the launch of Wikipedia in 2001, we again had a wave of launches, most of which failed, but a few became the unicorns that changed our lives, Facebook 2004, YouTube 2005, iPhone 2007, Instagram 2010, and so it continues.
The most recent inflection is obviously the explosion of AI tools since the release of ChatGPT in November 2022.
If you extrapolated from this birthday out to the next milestone, the 40th, the only thing we can say for sure is that you would be wildly, massively wrong. That happens every time such an inflection point is reached. Extrapolation is useless, instead we need to experiment and innovate, a continuous process that will take us in completely unpredictable directions.
I hope I am around to see it.
Apr 27, 2023 | Change, Governance, Lean
While there is no silver bullet, there is a lot of tactical advice around that will increase the dependability and resilience of your supply chains.
Shortening lead times, removing steps in the chain, paying a premium for service to specification, creative logistic management, making information transparent, and many others.
All will deliver some benefit, and together can make a dramatic difference, but miss the essential nature of significantly improving supply chain performance.
When you ‘flip’ the chain, changing the drivers of the chain from supply to demand, the game changes.
Developing a clear view of demand, and responding only to the signals of demand, rather than the often functional signals coming from within the vertical management hierarchies of supply chain participants, alters the nature of the challenges being faced.
It becomes a demand chain, rather than a supply chain, or even a value chain.
In lean parlance, there is the concept of ‘Takt time’. This is a measure of the ‘pull’ put on a supply organisation by the demand from customers. It is the production time required to meet customer demand.
The so called ‘bullwhip effect’, the magnification of fluctuations in orders back through the supply chain will be at least mitigated by application of a metric that reflects real demand from the market.
Remember the panic buying of toilet paper, amongst other things, at the beginning of the pandemic? The underlying demand had not changed, we still all went to the loo at about the same rate. However, the sudden shortage on supermarket shelves created by panic buying resulted in supermarkets increasing their orders on suppliers, who in turn increased orders on their suppliers. At each point in the supply chain because of the uncertainty, everybody was increasing their orders, building inventory, magnifying the boom/bust cycle of supply, creating a ‘bullwhip’ effect. This is where the trajectory at the tip of the whip is progressively magnified by movement back through the length of the whip. Swung hard enough, it will ‘crack’ just like your supply chain.
The challenge is to match the whole supply chain to the real level of demand coming from the marketplace, demand uninfluenced by short term hiccups in the chain. If there is a silver bullet, that is it.
Apr 19, 2023 | Change, Strategy
Many times, I have expressed the view that we train dogs, but we must educate people.
The critical difference is the ability to solve problems from the mundane to gordian complexity, and to plan, turning reactive into proactive. These both require critical thinking and creative skills.
Neither of these are available, yet, and perhaps never will be in an AI chatbot.
Rather than banning the emerging wave of AI tools, we should embrace them.
The challenge is twofold.
Teachers who spend their days in front of students are overworked and underpaid for the long-term value they are being asked to deliver, at least in this country. Asking them to rethink the way they are organising their lesson plans and manage the intellectual development of students is a big ask. Many will not willingly take on the task without help and appropriate training, as they have lives outside their roles as teachers.
Asking the education bureaucracy and academia to change their spots is at least as challenging. Most have built their careers on the perpetuation of the status quo in one way or another.
However, the case for change is compelling.
Rather than focussing outrage on the sudden availability of answers to questions, we should be rethinking the process of asking the questions. Anyway, what is different here to when Google first hit the streets? The easy availability of answers to questions, and essays on everything from an easy recipe to string theory, should force us to consider the ways this technology makes the classroom more interactive. It delivers the opportunity for personalised plans that match each kids abilities, and removes the burden of admin that seems to have built up inexorably.
Many good teachers leave the profession after a few years seeking to make their living in less demanding but more financially rewarding ways. Perhaps this AI revolution is a part solution to that problem?
As a final rock into the pond, if an AI tool makes the production of an answer too easy, requiring little or no student understanding, should we throw out the tool, or revise the question?
What if the assignment was to generate an AI response to the assignment, to which the students annotated their commentary on the relevance, effectiveness, accuracy and utility of the points in the AI generated answer? Teachers would also give marks on the prompts used by the students, another marker to understanding.
That would be education.
AI will, or should be, a boon to educators. They need to think creatively about how it will be used, rather than throwing their hands in the air and banning them.
King Canute found the hands in the air strategy did not work.
Header credit; King Canute fighting chatbots courtesy Dall-E, as envisaged by Sal Dali
Apr 17, 2023 | Change, Innovation, Strategy
Over the years I have helped a number of start-ups. Almost all have been single or a few people who have a drive to start something they own, where they can call the shots, and be away from the dead hand of corporate bureaucracy. Sometimes this has been a formal assignment, more often, the result of a series of casual conversation in cafes, networking meetings, and at BBQ’s.
Across these conversations, there have been some consistent themes,
They focus too much on the little things that do not matter much in the long run.
Logo, company name, design of the proposed website, details that do not make or break a new business. At the early stages, these things can be easily changed, modified, and often are dumped.
What this does is take the attention away from what really does matter. Clearly defining the product and/or service to be provided, who is the most likely ‘ideal’ customer, why they should buy from you rather than elsewhere, and how they communicate with them about the value they can deliver without wasting resources. These are the things that matter. Their common characteristic is that they are qualitative, hard to measure, and they evolve.
Evolution happens on auto pilot, make it positive.
Things change, often they change while you are not looking, and only become evident with the benefit of hindsight, by which time it is sometimes too late to do much. The other side of the coin is that evolution also applies to the good things. The task of a new company is to set the guiderails so that the good stuff outweighs the bad. Alignment of all personnel and outside stakeholders is vital in this process, as the pressures will be coming from all sides. And like a child learning to walk, you need to have some of those guiderails in place, or you will wander off in random directions. I call it having a robust, deeply considered strategy.
Imposter syndrome always plays a role.
Unless you are a sociopath, imposter syndrome will grab you from time to time, you will feel out of your depth, wondering why everyone is looking to you for direction and confirmation. It will feel like that first time on a big public stage, dread about what is to come. When you look back, assuming you have done the preparation, you will recognise it for what it really is, a test, and a great learning opportunity.
Spreadsheets are liars.
Most businesses start with some sort of plan, most often articulated via a business plan template and a few spreadsheets. If you are looking for outside finance, these will be mandatory. However, I have never seen a spreadsheet or written plan that accurately reflects what actually happens. Most are nice, comfortable extrapolations of continuous growth along a predictable path. The growth of every successful business looks like a game of snakes and ladders. 3 steps forward, and whoopsie, 2 backwards. The trick is to ensure the steps upward and forward outweigh the falls. Sometimes this simply does not happen, and the snake hole swallows those who fall into it. Spreadsheets never allow for the ‘snake-holes’
Internal Vs External.
Most start-up failure comes from two sources. Firstly, from the lack of cash management. To my mind, there is no greater sins that not being proactive with cash, a simple set of disciplines often ignored. The second is because they have neglected the management of their customers by looking inwards, managing the inevitable personal and process friction that occurs, rather than looking at how they can add value to their customers. Customers do not care about your internal challenges, they are paying you to release them from theirs.
People are your greatest asset, and liability.
A business without people is just a scrawl on a piece of paper. A ‘micro-business’ which is what almost every business is at birth, can be strangled by one poor choice. Equally, that one choice can be the making of you. In the early days, when everyone is acting in all sorts of roles, you need people who are self-reliant, resilient, and happy to ‘muck in’. They are very hard to find, and even harder to keep when you do find them. Equally, when you think you have found the one, only to realise they are not as advertised, which is what they were doing during the interview, remove them quickly. A wrong employee at an early stage can become toxic very quickly. Sometimes that person is great at what they do, are seen by others to be vital, but they are a pain in the arse for some reason. Experience tells me that the benefits of what they are good at are usually outweighed by the hidden costs of them not being aligned with the rest of the team, and its objectives.
Being seduced by opportunity.
That old cliché of working in the business instead of on the business is almost always true in the early days. You will be swamped from all sides by problems as well as opportunities, both of which will radically dilute, if you allow it to, that characteristic of successful start-ups: focus. Plan for what comes next, focus your very limited resources on the key drivers of that outcome, and eliminate everything else. This is never easy, but is absolutely necessary.
None of this is easy, if it was, everybody would be doing it.
The failure rate of start-ups from the corner coffee shop to high-tech gizmos is very high.
Finding the right sort of outside ‘reality check’ advice and input that delivers true value is perhaps the eighth challenge, which so many get wrong, but which can change the outcome dramatically.
Header credit: Arrived via my new AI mate Dall-E
