Jan 21, 2013 | Change, Governance, Lean, Operations
The maths are simple, do more with less, and you have more left over at the end.
Productivity is not just something you aim for in the factory, the opportunities to do more with less are everywhere, in every activity undertaken.
The catch in all this is, when you identify the opportunities, free up the capacity by doing more with less, and figure out how to make the necessary changes “stick”, you have a choice to make:
- You remove the now redundant resources, and pocket the difference, or,
- You sell the added capacity that is already “paid for”, so you get the added revenue at an enhanced margin.
Sounds seductively easy, but in fact it is a tough road, littered with challenges, and nasty potholes for the unprepared.
Dec 18, 2012 | Change, Governance, Management, Social Media, Strategy
Like most newspaper groups, Fairfax has failed to evolve to accommodate the depredations of the digital revolution. Their business model is broken, and the way forward is unclear.
The one spot of light in a gloomy future was the NZ auction site “Trade Me” which Fairfax bought for $700 million in 2006, then floated 34% onto the ASX, and a further 15% last year, raising $422 million, leaving them with a 51%, share which they are now selling for $616 million. The proceeds of the sale, are being used to pay down the debt accumulated to keep a redundant business model alive, offering an opportunity for it to change before being terminal.
Trade me was delivering profitability, superior return on funds, and an important toe in the digital water, but is being sacrificed to keep the legacy business afloat while it tries to adjust. In addition, Trade Me, along with Fairfax’s other less prominent digital assets offer the opportunity to experiment, test, to learn how to survive and compete in the digital environment.
The lesson in all this is that if you do not cannibalise yourself, somebody else will accommodate, and the pain of chewing your fingers will pale into insignificance against the pain of being chomped around the waist by a white pointer. The irony however is that the only digitally sustainable asset in the house has to be sold to buy some time, but leaves the business without any significant cash generator in the digital space. At least Fairfax shares rose yesterday, so directors are probably happy this morning.
Dec 7, 2012 | Governance, Sales
We are all pretty familiar with the typical sales funnel, wide at the beginning, narrowing progressively as you get closer to the “business end”. It is a simple, descriptive metaphor for other than an impulse or regular consumer purchase, but like most models, rarely reflects reality.
Prospects come into, and leave the sales process at all points, and then often come back, for all sorts of reasons that have nothing to do with the efforts of a sales/marketing program.
Given that is the reality, it follows then that the relationships that evolve are far more valuable than the position of any prospect in the sales funnel, as it is the relationships that evolve that enable lead nurturing and recycling through the irregular, stuttering, and often unpredictable sales cycle.
A much better metaphor in many cases may be a game of snakes and ladders, but that is nowhere near as neat and tidy in a board paper.
May 26, 2011 | Governance, Leadership
Culture is most often defined by repeating Michael Porters assertion that “culture is the way we do things round here”. However, this leaves the question of what drives the way things are done. From my observations over many years, there are a number of elements:
- The way the boss acts, what he/she does, and the way it is done. People watch and listen, take their cues from the boss, and any inconsistency will be noted. When a boss says that employees are our most important asset, then fires a bunch of people simply because the numbers are down, that will have an impact on how much weight those left put in the “people are….” statement.
- What are the prevalent behaviour patterns in the place? Is it “blokey”, is being at the desk 9-5 important or is it the work done that counts, what are the accepted norms of dress, and so on.
- How is performance measured? Is it formal, 2 way, do performance reviews drive improvement strategies or result in condemnation, is it individual performance, group performance, or both, and so on. The old saying, “you get what you measure” is most often right.
- What “actions” (for lack of a better term) are encouraged? Is initiative rewarded for its own sake, or is conformity demanded, how does the place react to news, (good or bad), does it welcome change, and so on.
These four drivers of culture are an expression of the “values” of the enterprise. They describe the sorts of things that define the character of the enterprise, and create the foundations for getting things done in a commercially sustainable manner that is consistent with the expectations all stakeholders.
Aug 17, 2009 | Governance, Management, OE, Strategy
Return on Asset calculations as a realistic basis of performance measurement for many firms is rapidly going out the window.
On one hand we do the financial calculations, based on the accounting notion of tangible assets in the business, whilst on the other, saying that the primary assets of the business walk out the gate every night and go home.
This paradox should radically change the ways we measure the return on assets, it creates the need to find ways to consistently measure Intellectual Capital, not an easy challenge, but one that Directors and management need to start grappling with.
Consider, physical assets depreciate with use, but intellectual assets appreciate with use, so perhaps there is a measurement matrix in there somewhere, but probably fashioned by psychologists and anthropologists, rather than accountants.
