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 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
Jul 14, 2023 | Communication, Leadership
Our corporate culture demands that we forecast outcomes in the early stages of almost any project.
Accountants feed on the IRR numbers, and these outcomes find themselves incorporated into all sorts of budgets for which people are held accountable. They change from being a forecast, an assessment of what might happen given a set of assumptions, to become a set of predictions, upon which people careers have become dependent.
Not a good outcome for building a culture that is supportive of innovation, which by its very nature is risky.
Prediction and forecast are often wrongly used as similes.
A prediction is a statement of what will happen.
The sun will rise tomorrow.
A forecast is a statement of what the forecaster believes will happen. It will be subject to all sorts of variables and new information, but it is the best guess given the circumstances.
I have written many business plans that included forecasts, my best guess at what the future would look like. Those best guess forecasts then tend to become the targets, against which performance was measured. This has usually resulted in a balancing act between the IRR numbers, and the forecasts being as low as possible to get a guernsey. Neither is a healthy way to make resource allocation choices.
If you want a prediction about the future, go to the local fair and pay somebody with a crystal ball to tell you. If you want a forecast, find someone who has records, and a routine that updates those records on a fixed timetable, adjusting as they go.
I strongly encourage all my clients to do a weekly 13 week rolling cash forecast. What always happens is that over time, the forecast of the weekly cash balances become increasingly accurate as the many variables become better defined and understood.
Often it is a matter of the choice of words.
Current governor of the Reserve Bank, Philip Lowe chose to set a specific time frame around his forecasts relating to interest rate rises when he said in March 2021 that ‘the cash rate is very likely to remain at its current level until at least 2024‘. This forecast became a prediction upon which people based their decision to buy a house. After all he is the Reserve bank governor so should know.
Had he just altered his words a little to be more specific about the caveat contained in the term ‘very likely’ to something like: ‘the odds are that interest rates will hold steady for some time‘ it would have remained a forecast, and he might have retained his job when it come to the end of his current contract in September.
For what it is worth, in my view, he should retain his job. He is a talented, experienced and highly qualified economist, not a political wordsmith.
Addendum. Within an hour of publishing this post, it was annpounced that Philip Lowe was to be gone. No extension, pick up your money and go. Nice words all round about how great he was, but piss off, here is the gold watch, go away.
The irony, at least it is to me, is that the current deputy has been appointed in his place. Irrespective of the qualities of the deputy, the job description calls for a culture change in the reserve. Appointing someone to lead that change who is now top cocky because they were able to leverage the existing culture to their benefit is an utter nonsence. A failure of any understanding of the basics of leadership and culture change.
For me, it evokes visions of deck-chairs and icebergs.
May 26, 2023 | Governance, Leadership
People will achieve all sorts of great outcomes when they know and buy into the reasons why the immediate actions should be taken.
‘Why?.
Imagine this scenario: Your boss comes to you to and tells you to drop what you are doing, and do this, just get it done, and moves on.
By contrast he/she comes to you are asks you to do that same thing, and explains why it needs to be done, why it is more important than the things you are currently engaged in, and how your contribution will make a difference to the outcome.
Which are you more likely to buy into?
Coincidently, it is the same question all our kids ask us as they are learning about the world. However, we seem willing to remove it from common conversation, or alternatively, answer the simple question that often has a complex answer with platitudes, evasion, or some other form of ‘non-answer’.
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 11, 2023 | Leadership, Small business
SME’s suffer in many ways from the lack of scale when competing against much larger enterprises. However, if you look hard enough, there are always benefits to be found that may outweigh the costs.
- Small budgets mean reliance on qualitative rather than quantitative research and market intelligence, which require deeper pockets. Go out and talk to a few customers, ex customers, and non-customers in your market, you will learn more in a couple of afternoons than the spreadsheet jockeys in the larger companies will learn in a year.
- Make niche choices early. Rather than scanning the horizons for opportunities, pick a niche and own it. Chances are it will be something that the larger companies have overlooked, or is too small for them to allocate resources, but for an SME, they can be a great stepping-stone to profitability and growth.
- Revel in being the underdog. Avis Vs Hertz.: ‘We try harder’ the line Hertz used is the standard bearer for this battle of the underdog. We humans love to support the underdog against the impersonal giants.
- Be very price sensitive. Pricing high is always a good strategy, as it is easier to come down than to go up, and avoid predictable and regular discounting like the plague. Your larger competitor is unlikely to be as sensitive to the difficult task of optimising price as you are, working off price lists that are updated in total, from time to time.
- Pareto the pareto. Focus, focus. Bring all your resource’s to bear on a point of value you can deliver, don’t dissipate them by being all things to all people. This applies to customers, service offerings, communications, everything, focus on the points that will deliver the most bang for the buck. Be the king of ‘No’. Warren Buffet noted that the one common feature of successful people is that they say no a lot. The larger your competitor is, the easier it is for them to be distracted, and gummed up by bureaucracy.
- This point will seem inconsistent with the point above, but watch for anomalies. While focus is essential the risk is that you are so focused that you do not see things that will make an impact when they are just small points on the horizon. These small anomalies are the things that generate change. Large businesses tend to ignore them, or they get lost in the bureaucracy, SME’s have the opportunity to move quickly and decisively.
- Balance the tactical and strategic. Small businesses tend to be seduced by the tactical stuff. Short term this is OK but not a good long-term recipe. Both are necessary, but you must resist the temptation to worry about the future when it comes, as it is already here in some form, so you have to build for it before it gets to you. Be specific about the breakup you deploy, knowing the big blokes are stuck deploying changes in either.
- Be flexible and agile. They are different, flexibility enables you to move with the changes in the market, agility is more short term, enabling you to make choices that are outside the ‘brand architecture’ as they emerge. Pivot in the jargon, your larger competitors will find it hard to get out of their own way.
What have I missed?
