How do you make change when nobody really wants it?

How do you make change when nobody really wants it?

Nov 21, 2017 | Change, Leadership

Making change is about the hardest thing any leader has to do. I specify leader, as in my experience, managers cannot effect change, the best they can do is optimise the status quo.

Regularly, I am faced with situations where change simply has to be made, where there is recognition that the status quo is no longer viable, where there is verbal acknowledgement that it is necessary, but insufficient commitment to the hard stuff that needs to be done, so it does not happen, in any meaningful and lasting way. There is no situation I have seen where at least some of those involved would rather not change, and when they are in a ‘blocking’ position, it can get messy very quickly.

There is only two ways:

  1. Fast and bloody, the ‘Chainsaw Al’ approach which can deliver short term results but long term usually destroys value.
  2. Bit by bit, building on what has gone before, adjusting the small things that may not have worked so well.

Behaviour is about the most elastic thing I have seen, you can change it, like stretching an elastic band, but take the pressure off, and the elastic goes back to the original shape. The challenge is to make the adjusted shape the default, so that when the pressure is taken off, the shape does not change.

Mostly that is all about how you design and manage behaviour.

When I have seen change work, behaviour has been overtly managed in a number of ways:

  • Progressive. While people are clear about the need for change, and the end point, the actual changes to behaviour are progressive, in small doses, and the easier ones are done first. This enables you to bed in the foundations of the change, and build the habit that change is actually not as painful as could be expected, and the benefits make the pain worthwhile.

 

  • Track progress. While changes happen progressively, tracking progress overtly builds in the confidence that the next step will not be the end of the world, and look how far we have come! As I watch my kids play video games, I am surprised at the compulsion that emerges from the overt tracking of progress through the stages of a game, how it becomes almost addictive. I speculate that this behavioural characteristic is not isolated to video games.

 

  • Offer rewards. This can be tricky and backfire, as the reward must be associated with the changed behaviour and the human outcomes of that behaviour. Offering rewards, that are not connected do not result in further motivation, and I have seen them counter-productive as they alter behaviour to chase the rewards, rather than the outcome. The best example is the difference between offering public acknowledgement of great work done (almost irrespective of the outcome) Vs offering money for a change. People may chase the money, but it will rarely result in the changed behaviour becoming a part of the status quo.

The take-out is that, as in selling where most people like to buy, but hate to be sold to, most people will resist being controlled, but are happy to be guided, mentored, to be led.

When you need an experienced hand to help, give me a call.

 

Photo credit: Brad Rose.

 

Too many slices and the loaf disappears: Is this the end of Australian FMCG?

Too many slices and the loaf disappears: Is this the end of Australian FMCG?

Nov 16, 2017 | Change, Governance, Leadership, rant, Strategy

What the hell have we been thinking?

Some time ago I mused that the slow death of the Australian FMCG manufacturing base was akin to nicking a slice off a cut loaf, one at a time. At any specific time you do not really notice the difference, but looked at over a period, the loss is obvious.

Well, it seems that someone nicked the Food industry loaf, and all we have left are the crumbs.

A report released last week by Food Navigator reveals Australia’s top 10 FMCG suppliers.

Not one of them is  owned by Australians.

Let me say that again: Not one is owned by Australians!

Over time I have worked for two businesses on the list, and at the time, both were aggressively and proudly Australian, wearing the national flag on their shoulders, and in their advertising, and both were in their way successful despite themselves.  However, dismay at some of the nonsense that went on is a primary reason I have been self-employed for the last 22 years.

I struggle to think of many substantial companies still domestically owned, Bega, Patties Pies and San Remo come to mind, but we are then down to the minnows.

All these multinationals will rightly say that they pay lots of taxes, employ lots of Australians, both directly, and indirectly, and that they have Australian best interests at heart.

Bullshit.

It is true they employ many people, and it is true that they pay unavoidable taxes, like GST, local government rates, and collect from their employees PAYE, but do they carry the full weight of their ‘moral obligations’ to the communities they live in via income taxes?  The reality is that have their own best interests at heart, or at least, most of them do. Transfer pricing, creative funding, corporate domicile on low tax environments, and all the rest of the shenanigans revealed again, by the Paradise Papers in the past weeks or so are widespread. It should not come as a surprise to anybody when these large companies make decisions in their interests, not in those of Australians and Australia.

This is like renting a house. You are allowed to live in it, under certain conditions,  but you have no control over the property, someone else makes all the key decisions. The renters best interests are not a factor in the determination of the owners best interests.

We tell ourselves we are a food bowl, and we are, but without any access to the markets at all. We no longer even have any brands for direct contact with consumers (Vegemite is a rare example, purchased back from Kraft last year by Bega, hooray). We are therefore nothing other than commodity suppliers in a price driven world. Not being a low cost producer, without the umbrella of brands and control of the operational infrastructure that can deliver genuine value to consumers, we are inevitably going to be screwed, with the benefits of ownership exported.

Coles and Woollies have ‘conspired’ to destroy the domestic suppliers and their brands by limiting ranges, replacing proprietary brands with house brands, sourced from wherever is convenient and cheap, realising short term margin gains at the expense of long term prosperity, both theirs and that of the communities they serve.  They have also lost in the process the cover of brands at a time where there is a huge retail  disruption looming: Amazon, online ordering, AI, ‘Ubered’ home delivery, and all the rest.

It seems to me the two retail gorillas will now reap the poison crop they sowed as an outcome of their short term,  one dimensional and absolutely unimaginative strategies.  Taking on Amazon with that mind-set is suicide, as if we know anything about Amazon, it is that they do not play by the existing rules. They make up a new set, and  the incumbents are left to wonder in their wake.

Food manufacturing used to be our biggest manufacturing industry, and we have given it away, or at least the benefits of ownership of it, for next to nothing. It is not even as if for the most part the interlopers paid a premium for control, they just waited until the numbers were so crap that they could take it for a song. The most recent example, Murray Goulbourn is a classic case in point, as are two of my previous corporate employers, Dairy Farmers and Goodman Fielder. Both reasonably large, reasonably successful businesses stuffed by poor management decisions until they became unsuccessful smaller ones, that could be scooped up out of Multinational petty cash.

Our kids will pay a heavy price for the short sighted and incompetent management of their fathers and grandfathers. (Cannot help wondering if their grandmothers and mothers would  have done a better job)

Our so called leaders mumble abut populist causes, ignoring the difficult and challenging long term choices that need to be made, which are usually by definition, not populist. It took a crisis to get them to consider ‘power policy’ in their quiet, moments when not looking after their own jobs in the face of failing to check if they are technically Australians, but it is 25 years too late. ‘Manufacturing policy’ discussions are pretty thin on the ground, now the motor industry has folded their tents, and more specific ‘Food Industry Policy’ discussions are as rare as sightings of the  Tasmanian tiger. Rumoured but carrying very little real credibility.

There has been very little of much value about any policy setting that might help us control and leverage our own agricultural and manufacturing capabilities that would enable us to feel confident we can feed ourselves, and others in the region into the medium term. The horse has bolted, and we are left with a pile of shit in the stables.

Sadly, few in power seem to be too concerned with the demise of our ability to control our own food supply, value adding and distribution.

If nothing else, we may have discovered an innovative solution to the national obesity problem.

 

5 realities we Australians should  be thinking about.

5 realities we Australians should  be thinking about.

Nov 10, 2017 | Change, Governance, Leadership, rant

This is a personal rant motivated by the continuing  sight of politicians pontificating about stuff that does not matter and either ignoring much of the stuff that does, or presenting as facts, suppositions and bullshit that is supposed to make their case and cover their culpability for inaction  and stupidity.

Not a bad start.

However, much as it is good to blame someone else for the things frustrating the hell out of us, it is not entirely their fault.

We live, for those who have not noticed, well into the 21st century.  Our institutions were designed and evolved in the 19th and 20th centuries. Most would accept the notion that change has never been faster or more all-encompassing as in the last 20 years, so why are we surprised that  the institutions have failed to keep up?

So, let me just have a look at an area I am at least partially familiar with after 40 years of operating in it, the current state of small business, and the relationship they have to the economic well being of the communities they serve. Nothing about the stupid non binding vote on same sex marriage, nothing about the nonsense of setting out to build submarines of a hybrid and bodgied  design over which we have no control, and cannot crew anyway in the name of saving a few government seats, nothing about the hysteria and confusion about what is means to be an Australian citizen, …. Need I go on?

There is a general recognition that small business is the backbone of the economy, employing 5 million (the data is 2 years old, which tells you something about our institutions) people and contributing billions in tax, in other words, they carry the weight of the economy, but the statistics do not tell us all we need to understand, as they, like everything else, were designed to give information on the 20th century economy, not the 21st.

A few examples.

  • Micro entrepreneurs are everywhere. There are hundreds of thousands of Australians making a bit on the side via eBay, Etsy, and Amazon, buying and selling stuff that never gets counted. This is a new breed of entrepreneur, and they are operating almost under the radar. The tools that enable this sort of activity did not exist 20 years ago.

 

  • The net is ubiquitous. The enabler of the previous point, the net, has also enabled thousands to start new businesses, often on the side, simply because the cost of failure is now so low, as the cost of entry has shrunk to a fraction of what it was 20 years ago. Many of these businesses fail, perhaps even most,  but that no longer means penury for  the entrepreneur, he/she simply picks up and has another go. Few of my children’s friends and colleagues expect to work for a corporation all their lives, then retire, as my generation did, although many of us are radically rethinking that at  the moment. They expect to get some experience, at somebody else’s expense, then  leverage that into their own business.

 

  • The tax base is hiding. The goldmine of PAYE tax is rapidly disappearing, as individuals go into business for themselves, rather than working for corporations, and often, as well as working for corporations. This gives access to all sorts of reasonable deductions of expenses not available to a PAYE employee. While we have a spending problem in this country, pollies spending to get themselves re-elected, or massively overspending to correct the failures of the past (look at the Sydney road and rail systems for any evidence you need of this) we also have a revenue problem. The GST was a sensible step, compromised as it was, and is, by politics, but the whole tax and welfare system needs a radical rethink, which simply will not happen until we are faced with a true crisis. On top of all that is the simple reality that paying tax has become optional for the large multinationals around the globe who have the reach and resources to structure their affairs towards minimisation. it may not be illegal, but it sure as hell is immoral, and the price we ‘ordinary taxpayers’ are all paying, and will continue to pay unless we, and other international tax institutions figure out that we need to collaborate to stop it. Perhaps we should summon the ghost of Kerry Packer to deliver another broadside.

 

  • Baby Boomers are not ‘retiring’. The so called baby boomers, of which I am one, are not retiring, they may be cutting back, but often they are starting businesses, setting out to use their experience and lifetime wisdom in some useful way. The retirement age is a function of a world where we worked physically much harder than we do now, and the body gave out just before we kicked the bucket. Now the body is not giving out, and when it does we go in for renovations to keep on going. The  only bucket we are interested in  is the list of stuff we still want to do.

 

  • Manufacturing is not dead, it has just changed shape. The 20th century manufacturing model is dead, but is being replaced by a highly technical, globally connected combination of technologies from electronics to additive and 3D manufacturing, which employs just a few highly qualified and motivated people. Yet, our industrial institutions still believe we have big factories full of people doing repetitive tasks. Worse still, our education systems are still geared to mass production of kids who can recite rather than think, and this is despite the disastrous rebalancing of education towards university at the expense of trade skills. While we need less people digging holes, we need more who can design, fabricate, and operate a complex piece of machinery or electronics, and we are not training them in sufficient numbers, or giving them the self belief that valuable and rewarding work does not necessarily equate to sitting in an air conditioned office driving a mouse.

 

All of this simply means that opportunity multiplies, as the institutions that supposedly govern us sit idly by at best, but get in the way most of the time, more often than not by accident. The status quo for which they were designed has been chucked out, trashed, and is significantly irrelevant now, rapidly becoming utterly irrelevant  and a wet blanket on progress without real and immediate change.

 

Will regulators ever catch up with innovators?

Will regulators ever catch up with innovators?

Nov 3, 2017 | Change, Governance, Leadership

 

Following on from the rant about the dominance of Gooface a short while ago, comes this ‘explanatory‘ note from Facebook about a test being carried out in several countries that smacks of changes being made to the newsfeed that will remove completely organic posts from a company you might follow.

In other words, if a company wants to communicate with you, the current squeeze that applies is insufficient, there is a revenue opportunity available to Facebook by removing completely the currently thin chance their posts will get into your feed.

Josh Bernoff explains it clearly, in this post  along with his usual dose of cynical amusement at the arrogance of Facebook.

If there was ever evidence needed that marketers have no option than to build, over time, their own digital presence, based on digital properties they own,  it is this move to eliminate the organic reach that gave the social platforms their start, in the chase for revenue.

In this country (Australia) we have been beset by an ongoing debate about the rules governing the ownership of media. Back in the 80’s, rules were imposed and adjusted over time, that prevented ownership in one regional (in Australia) market summarised as ‘no more than 2 out of three and  75% reach’.   They were designed to ensure the diversity of ownership and therefore points of view being expressed by the few who had the wherewithal to own a media outlet. It finally dawned on the geniuses in Canberra that by stealth, while they were not watching, Gooface and their ilk had changed the face of media, and the rules were the equivalent of banning the shooting of dinosaurs.

Righteous,  but a little redundant.

Now everybody can own a media outlet, everyone can be a publisher, for a few dollars.

I suspect the answer to the question in the headline of this post is a definitive ‘No’ and we all know the problems that emerge when you are doing nothing but playing catch-up in an environment where your domain knowledge is limited to non-existent. You get the  sort of reactionary decision making and half-baked ideas that make you look stupid.

It strikes me that this is the core of the lack of confidence slowly eroding the respect and confidence we have in our institutions, and the only true antidote to that sickness is a solid dose of leadership.

I am not holding my breath.

 

Message to the new CEO.

Message to the new CEO.

Nov 1, 2017 | Change, Governance, Leadership

It is a scary place, no matter how much you have worked  and trained for it, suddenly you are the man (or woman) everyone is looking to for the cues they will use that drives behaviour and ultimately results.

No person can do everything, but every leader needs to tell those around them what is important, and in every business, there are always 5 things worth putting on the table as your priorities.

Cash flow.

Cash is the lifeblood of every business, without it, the business is dead. Too often I see little or no attention paid to the cash that flows into and out of  a business, the leader relying on the monthly P&L for the financial feedback. Cash flow and the P&L are different, they give a different picture of the health of the business. Both are essential, but neither gives a full picture of performance without the other. However, failing to actively manage your cash is akin to going swimming in the Alligator river.

Hire the best people you can find.

The mark of a great leader is to find engage and motivate people who are better than they are, even in their areas of strength. Delegate the things you do not like to do to someone who not only does it well, but who you can trust to give honest and considered feedback.

Focus.

Focus relentlessly on the manner in which the organisation delivers value to customers, and secondly on the development and deployment of the capabilities necessary to ensure that value is sustainable because it is able to evolve faster than the surrounding competitive environment.

Build a management rhythm.

Every business has a rhythm that dictates the order  and importance of jobs to be done. In my experience, starting with the macro, and working progressively to more detailed reporting and task allocation ensuring extensive feedback and adjustment loops along the way  is the most productive and efficient way.

Embody the culture you want to build.

The only person who can really change the shape of the culture in a business is the person at the top, so it pays to be very explicit about the culture you want to build. You need to talk the talk, while walking the walk, and be able to do  both without faltering, and with absolute consistency, in even the tiniest detail. We have all heard the quote  ‘Culture eats strategy for breakfast’ by Peter Drucker.  It remains absolutely true, and do not forget it.

Good luck, and have fun and build lasting personal relationships with those around you, after all, you only get one life.

 

The getting of wisdom

The getting of wisdom

Oct 16, 2017 | Governance, Leadership, Management, Strategy

As I get older, the world seems smaller, more complicated, but smaller. This is not just the technology we all now have that has shrunk all the boundaries of our world over the last 20 years, putting the all the  information anyone has ever had at our fingertips, that is different.

It is one thing to have all  the information, it is quite another to be able to make sense of it.

There has been a progression from data to information, to knowledge that has been recognised and widely leveraged, but now there is another level to the cake, wisdom.

We all have access to the same information, can find those who have the knowledge to use it, but it is wisdom, born of experience and breadth of thinking that delivers the wisdom now so rare, but so sorely needed.

I like very much the philosophy of Charlie Munger who talks about mental models, ways of assembling knowledge and sifting through it, reorganising it to be seen from different perspectives that offer a different view. The more mental models you can bring to bear on a topic and body of knowledge, the greater the chance that there will be some insight that emerges unexpected from the model.

Charlie speaks of his mental models, and their source often, a man of few words, leaving most of them to his mate of 50 years Warren Buffet. However, in 1994 he wrote what has become a staple of business thinking , his ‘Worldly wisdom’ speech.

As a kid, we learnt stuff by experience, and using mnemonics,  devices to assist us to remember things. Rhymes, associations, colours can all play a role. Wisdom seems to me to be the opposite end of the mnemonic, the ability to see connections between seemingly unconnected pieces of information, and it is our mental models that enable these connections to be made.

By contrast what we have often these days are unrelated facts presented as a cause and effect, or a set of actions that worked in one place being expected to work in another, which may seem similar, but at a deeper level are not sufficiency similar to enable the actions to deliver the same outcomes.

We tend to be a society that believes, or wants to believe  in miracles, perhaps cargo cults, because it is easier than doing the hard thinking yards.

As someone who gives advice for a living, it is incumbent on me to have a clear framework from which to distil the information to have into advice that is tailored to the needs of those being advised. As often as not, the advice is not heeded, or taken in parts which sometimes hurts, as it reflects poorly on the end result, but it is the reality of making real change.

To be able to deliver the unwelcome news with confidence that it will hold, I need to have a range of mental models, models that come from the work done over 45 years in marketing, sales, operations, leadership, logistics and accounting, and be able to filter the information in front of me through the range of models in a routine and organised manner. Each model gives a slightly different interpretation of the facts, a different slant that requires consideration, so that each outcome is slightly different to the past, but best fitted to the situation to hand.

When you need a bit of wisdom, give me a call, perhaps I can help.

For context, vital in the consideration of Wisdom, the blurry photo is of a group of islanders in the Pacific at the end of the war. People on remote islands had become used to planes going overhead and dropping supplies to the troops. When the war ended, so did the dropping of supplies, an outcome not anticipated or understood by islanders. Physicist Richard Feynman gave it the name we all know: ‘Cargo Cult ‘in a speech in 1948.