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?
May 5, 2023 | Leadership, Management
Amongst all the blather about remote work, there is an aspect that has received little attention, but in a couple of my clients is beginning to make itself known.
The ‘remote work’ idea is not applicable to everyone.
Office workers of all types are able to some extent, work remotely. They are saving commute time and money, childcare is more flexible, ‘family friendly’ and potentially delivering savings to their employers and to themselves.
However, those in factories, on building sites, driving trucks, are not able to work remotely, and find these benefits.
This is starting to cause friction. Those still punching a time clock, and subjected to the disciplines of shifts are starting to resent the freedom accorded to white collar workers.
During the covid lockdowns, it was OK, they understood. However, now the lockdowns are over, and the whiteys are still workingfrom home, or are they really working at all, or just logging in from the local café or pub?.
Why are they the lucky lot?
The benefit they are getting, dropping the kids to school, lunch with friends, and all the rest being denied to the blue collars.
They are getting pissed, and management needs to start considering the impact and implications of a differing set of expectations across the breadth of their workforce.
Mar 20, 2023 | Governance, Leadership
The dream of every entrepreneur is to have a monopoly, a place where they can set prices without any of those nasty competitive forces impacting on profits.
Monopolies are the poison of public policy, it is why we have the many agencies that seek to ensure transparency, competition and good behaviour by corporations with some level of pricing power.
The management of these two extremes by public institutions has created some really ugly children.
Public assets that have been developed by public money to provide a service and the infrastructure upon which to build businesses has been sold off to the highest bidder. Surprise, surprise, the price goes up.
Natural monopolies and public assets flogged off for the same reason, with the same result. Power, communications, education, roads, rail, land, the list just goes on, and on.
The seeming disconnect in the current election campaigns, both state and federal is instructive. People are sick and tired of the political narrative that all will be well. Just trust us, we will be better than the other lot who are the devil in a shiny suit!!
At our core, we all seem to know that the problems are being swept under the carpet, where they are mouldering and compounding, and at some time will bite us on the arse. This post on the Guardian website looking at the changes in Australia’s tax base over time is instructive. It is now quite old, but the trends shown are not just still evident, but thriving. We all are demanding more, and the pollies are dishing it out to get elected, but increasingly we will not have it. The disinterest and dissatisfaction with our institutions is just magnified by this sort of misinformation, but in the absence of any genuine leadership, we vote for self-interest, with our wallets.
On Saturday, I have no idea who will get my vote in the state election. Neither of the major parties appear capable of anticipating and responding to the tsunami of change coming at us. Both ‘leaders’ are spraying Monopoly money around, making hollow promises to fix current problems that cannot possibly be met, without any reference to the challenges of the future.
I have emailed both the major parties seeking to understand the capabilities and experience the candidates in my electorate brings to the table. The incumbent Labour candidates office sent me an automated generic response that told me nothing beyond the fact that he is a good bloke, with some academic and work credibility, and loves his family. The Libs excelled, by not even sending an auto response. This is probably because they did not have a candidate, a now remedied situation by the nomination of an unknown young party hack last week. If they cannot organise something as simple as that, how can they run the state?
Are the current opposition any more capable? I suspect not.
We will just end up with more ugly children that need to be understood and funded. Somehow. .
Header cartoon credit: Tom Gauld, whose acerbic take on life is refreshing after writing a post on politics.
Mar 8, 2023 | Collaboration, Leadership
We are all familiar with Darwin’s theory of natural selection. The forces that drove our evolution drive much of what we do, personally, socially, and professionally.
If you apply the idea to the marketing process, where we are dealing with qualitative factors that are really difficult to turn into numbers, you by necessity implement what is accepted as the ‘scientific method’. Form a hypothesis, test it, and revise the hypothesis to retest in a cyclic process, trying to disprove the hypothesis. In the absence of evidence that the hypothesis is wrong, accept it, at least for the moment.
It is the same process as Natural Selection, with some wrinkles.
In marketing you are entering a world where you have a fair idea of where you want to go, but no concrete roadmap. Therefore, you experiment with different approaches, ideas, treatments, whatever you choose to call them, using a combination of data, instinct, domain knowledge and A/B testing to progressively select the best options and improve on them.
Creative selection.
Every project I have been involved in, of any type, has risks.
On most occasions, the only risk that is really considered in any depth is the business risk. Can we make a bob? The answer to this relies absolutely on the forecasts of cash flow, which are usually on the optimistic side. More often than not, I have seen the other key risks we always face in marketing underweighted or completely ignored. Risk factors such as competitive reaction, failure to closely define the real customer problem you are solving, which product will customers stop buying to buy yours, and many others. Failure to consider these sorts of externalities constitutes a significant and often underrated risk to any project.
Without this sort of rigorous analysis and its countermeasures, you are often just left with a cheaper price as the attraction to a customer, and that is not good for anyone in the long run.
Thinking about our marketing as a risk management tool is a useful way of thinking.
Risk for us is reduced when we reduce the risks facing our potential customers, we can guarantee the outcome of using our products.
Creative selection shares another characteristic with natural selection.
It requires sex.
Not physical sex, but intellectual sex, the type that happens when a range of engaged and creative people collaborate deeply to solve a problem, to map an alternative course. Collaboration, real collaboration, not the organised type where a boss throws together a ‘team’ and instructs for a solution. That is never a real team, it is people working in close proximity. A team is one where minds meet to address what all members see as a truly worthwhile challenge that may deliver something great.
When you have that creative ferment, the focus on outcomes for customers, that is where you find great marketing.
Again, a bit like great sex.
Easier to talk about than to find and participate.
Header cartoon credit Scott Adams and the Dilbert crew.
Feb 5, 2023 | Change, Leadership
Every individual and group on the planet has in their heads a set of parameters built by the personal experiences they have had, and those that are passed on by the parents, grandparents, all antecedents, and their social circles.
The formulation of strategy intersects with these stories, beliefs, and biases, which greatly influences our behaviour in the future.
Throughout our history, great advances have been made by those few brave enough to call out the metaphorical emperors clothes when they (don’t) see them.
Like many, I am of the view that we face an existential crisis caused by the human emission of carbon dioxide into the atmosphere. Demonstrably, the planets climate has changed many times over geological history, remaking itself at the expense of what has gone before, but never at anything like the pace that is happening currently. For perspective, the origin of homo sapiens is around 300,000 years, or .007% of geological time. If the geological life of the planet was a 24-hour clock, we have been around for only tiny fractions of a second of the available 24 hours.
As we seek answers, nuclear power is, at least in this country, off the table. The fact that it is not off the table in other countries makes Australia’s position somewhat ridiculous, as we are all part of the same planet.
However, it is off the table here due to the political problems of waste, and risks of disaster exemplified by 3 Mile Island, Chernobyl, and Fukushima. Somewhat irrationally, we are nevertheless prepared to sell the raw material to power these plants to ‘approved’ buyers, recognising the commercial reality that if we do not, someone else will.
I know absolutely nothing about nuclear technology beyond the stuff I had shoved down my throat 50 years ago at school. However, I do know that like every other branch of technology, nuclear has undergone incredible and compounding advances since the first demonstration of its power in the New Mexican desert in 1945. As the father of the theoretical science that led to that explosion, Albert Einstein noted, ‘Compounding is the most powerful force in the universe’. Our knowledge of atomic science has grown at a compounding rate since that first explosion, and the subsequent opening of the first power plant in Obninsk, 100 k’s from Moscow in 1954, and should not be discarded.
If we are to stop the self-induced implosion of our world, we should not rule out any potential solution by kow-towing to our collective prejudices and emotional response to technology 70 years old. Rather, we should seek out the truth, understand the developments in nuclear technology that have evolved, are likely to evolve, do reality checks, and ramp up investment in rapidly evolving understanding of the physics surrounding ‘science fiction’ ideas like Fusion. We must know if the general perception of the risks of nuclear are still valid, or if they are just the projection of our fears of a 70 year old technology.
Are our collective heads stuck in the sand, or can we have a rational debate that recognises the sceintific developments over the last 70 years?
