Nov 21, 2013 | Governance, Management, Marketing, Strategy
The metaphor for business as war is widely used, and it does have considerable value when considering strategy, tactics, capability development and resource deployment.
Marketing is a base component of this mix. It requires you to see the world, product offer, through the eyes and behavior of others, your customers, and potential customers, and in so doing, observe and understand the value proposition of alternative offerings.
So, if there is a metaphor for the competitive aspects of marketing, it is act like your enemy, do to yourself what your enemy would if they had the information, resources and capabilities you have, with the intent of defeating you.
With apologies to the original, “do unto others before they do unto you.”
Nov 18, 2013 | Change, Governance, Leadership, Management, Operations
Perhaps unfortunately I was on the receiving end of a rant about design thinking last week. It was a passionate, articulate, and informed rant, but a rant nevertheless.
There is no doubt in my mind that design thinking is a competitively crucial capability. In this homogeneous and connected world, recognising the value that design can deliver, that it is an integral part of not just the physical products, but of enterprise culture and processes, is essential to commercial longevity.
However, design thinking has a fundamental flaw, a flaw clearly demonstrated by the “rantor” last week. As my old Dad used to say, “Son, you get 1/10 for thinking about it, the other 9 are for doing it”
My rantor was a thinker, but do not ask him to do anything creative. It is hard, dangerous (to a career) work to be contentious, advocate stuff outside the status quo, to be the questioner who backs up the questions with action, and most shy away.
We do need more design thinking, but we also need way, way more design doing, so stop hyping, and start doing.
Nov 12, 2013 | Category, Change, Governance, Leadership, Strategy
Years ago there was a line in the film “Breaker Morant” where the breaker, played by Bryan Brown said of a young ladies virtue “another slice off a cut loaf will not be missed” .
I never forgot the line, and have used it often, usually to make the point that a collection of small, and in themselves insignificant changes all added up eventually make a big difference. Just like a loaf, one slice may not be missed, but lose some more, and soon enough you have no loaf left.
The treasurer approved the takeover of Warnambool Cheese and Butter (WCB) earlier today by the Canadian group Saputo, should the current take-over squabble turn out in their favour
The original Saputo offer of $7.00/share has now been upped to a current $8.00 with current share price well north, there is anticipation of further action by Bega Murray Golbourn, or Fonterra.
It is now inevitable that WCB will cease to be an independent dairy processor, it just remains to be determined if it will be owned domestically or by an international entity.
The WCB directors have done a pretty good job by their shareholders, their shares are now trading at 8.50, after being stuck around $4 for a considerable period up till July, after some pretty crap results. This is despite being a strategic supplier in an industry with demand growing strongly, particularly in Asia.
There is a bit to go, but WCB is as good as no more. Now to the offer of ADM for Graincorp, a decision slated for December 17, and feted as the more important of the two decisions due to the competitive stranglehold Graincorp has on grain handling infrastructure in the eastern states. If nothing else, the pathetic blustering of Warren Truss , and acerbic one-liners from Barnaby Joyce will be worth waiting for.
The real concern however, is the long term impact of having major food producing industries controlled overseas. Without being in the least bit xenophobic, and recognising that Australia simply does not generate enough capital to fund all the demand for capital in the economy, it cannot be healthy for the prospects of our grandchildren to be so beholden to the overseas boardrooms who control the food supply chains.
Stop the presses:
Murray Goulburn has made a further offer for WCB on Thursday 14th of $9/share, a substantial premium over the current Saputo $8/share offer, and over the closing price of $8.50 on the exchange. This is pretty heady stuff for a business that has consistently failed to deliver adequate returns to shareholders for some years, and it is hard to see how Saputo can go much further without the rationalisation benefits that MG would have.
Stop the presses, again!
It is Sunday 17th, not a day of rest in the dairy industry. Murray Goulburn has indicated that they will beat the latest Saputo offer, price to be announced, but they have the hurdle of competition policy to jump, stupid as that is in these circumstances. So, the deliriously happy WCB shareholders have the choice of taking the unconditional Saputo offer now, or waiting a bit to see what MG has in store. Meanwhile, Bega have upped their bid, but it is below the Saputo bid, so is essentially irrelevant. However, what is not irrelevant is the Bega shareholding in WCB, which along with that of MG and Fonterra add up to around 40% of WCB.
Whatever happens to WCB this coming week, Bega will come into play as soon as the dust has settled, perhaps sooner, as it is one of the very few Australian dairy assets left bigger than a paddock with a few cows and a bathtub.
Oct 21, 2013 | Communication, Governance, Lean, Operations
I had a post prepared for this morning, relating to the evolution of “local” agriculture, specifically around Sydney.
However, the events of the weekend, the burning of Sydney’s surrounding bushland, including several of the farms of those I have been talking to, seems to make everything else trivial by comparison. Getting your head around the scale of the fire disaster facing us is difficult, for most of us, most of the time, as it is no-one close to us who is affected, so can be pushed aside as we go about our business.
This morning is different.
Walk outside your comfy suburban home, and look at the sky, smell the smoke, observe the odd orange light, and you just know this is different, it is not just another Sydney summer bushfire. Hurts to wonder what may happen when summer actually gets here.
As we watch and listen to the news reports, there is a huge application of technology and human effort to managing the logistics of the fire-fighting effort, but one shot on a news report caught my attention. Behind all the activity of the control centre, the people on phones and computers, handling reports and updates, stood a big whiteboard, what appeared to be a visual record of the fires, their relative risk, resources deployed, resources expected and in reserve.
It always happens, people relate to visual material, when under pressure, a picture can immediately summarise a situation that words alone cannot, so they tend to gravitate to pictures, or a whiteboard in a large group situation, something that can be kept up to date in real time, that all people who need to see it, can see it as it evolves. The whiteboard is perhaps the best collaboration tool ever invented.
When the fires are out, the cleanup someone elses problem, and the inevitable wrangling with insurance is the news topic of the day, the lessons of visual should remain with all of us as we go about improving the way we go about achieving goals.
Our thoughts go to all those who have been impacted by the fires, ands will be over the next few days as the fires continue to ravage Sydney’s bush outskirts. Our grateful thanks for the courage, and committment of the “fireies”
Oct 10, 2013 | Change, Governance, Leadership, Marketing, Strategy
Canadian dairy processor Saputo looks set to take control of Warrnambool Cheese and Butter (WCB) with a $7 a share offer valuing the company at $370 million, which trumps an existing cash and shares offer from Bega Cheese which values WCB at 320 million.
$7 a share is a substantial premium over the Bega offer price for WCB, and appears to be a very full price on any conventional analysis. Trouble is however, that conventional analysis has some difficulty factoring in the strategic value of the business, one of only three substantial dairy businesses left in Australian hands.
WCB’s performance was woeful a few years ago, being on its knees in 2009 after a trading loss of $20 million on $441 million turnover, and having unsustainable gearing. Since then there has been improved but patchy performance, $8.8 million profit in 2010, peaking at $18.5 in 2011, down to $15.2 in 2012, and down again in 2013 to $7.5 million.
WCB has flown a bit under the radar as the dairy industry has been convulsed by take-overs and mergers in the last 25 years, and is now one of just three locally owned dairy businesses with any scale. The other two, Bega and Murray Goulburn have both tried to find a way to consolidate with WCB, and the Bega Chairman has been on the WCB board for several years, so should know the business inside out.
With 2 billion rapidly emerging middle class consumers on our doorstep in Asia, whose consumption of dairy products is rapidly increasing, the strategic value of WCB to the Australian economy is significant. However, the reality is that without a better offer, and subject to FIRB approval, (should not be a problem) WCB will be sold to Saputo.
Part of the challenge is the disconnect between the domestic market where the retail oligopoly is the price setter, and export markets where Australian dairy produce is a price taker. Inability to generate anything more than the cost of capital, at best, domestically, and subject to big fluctuations in international commodity prices and exchange rates, and not being a low cost producer, Australian returns in the industry have been very inconsistent. Now however, with the emergence of the Asian consumer, there is long term potential for value added margins. What is needed is patience, operational and business model innovation, and some really good leadership.
Pity we are no good at that
Also sitting on the desk of the new treasurer is the proposed takeover of Graincorp, by US company Archer Daniels Midland. Graincorp handles 90% of Eastern Australia’s grain exports, and roughly 75% of the crop, so is pretty central to the success of the Australian grains industry. A similarly strategic Australian asset that seems destined to be run for the benefit of others.
What do these North Americans see that we cannot?
Vale the Australian owned food processing industry.
Sep 6, 2013 | Governance, Management
How often have you been in a position of trying to get something done in the face of an illogical or bureaucratic impediment ?
It is enormously frustrating, Authority being exercised.
On the other hand when faced with complexity, ambiguity, or technology beyond our knowledge and understanding, sensible people seek advice from an authority, someone who knows more than us, and can clarify and explain.
This person often has no authority, but is an authority.
So often these two things get tangled up. Someone “in authority” exercises that authority as would “an authority”, and the outcome is usually rubbish.
As management of our institutions has become flatter, more collaborative and individually accountable, this distinction has become more important as those with the authority are less and less likely to also be an authority on any given topic.
Failure to recognise the distinction is a huge burden on productivity.
