How will Australia regulate for ‘Culture’

How will Australia regulate for ‘Culture’

Sep 28, 2016 | Governance, Leadership

As a Fellow of the Australian Institute of Company Directors, I look forward to the events put on by the institute, and attend when I can, when the topic of discussion is of particular interest.

Annually there is a general ‘Director Update’, the 2016 version is currently rolling out, and I attended in Sydney last week.

Amongst the items of interest, one particularly took my attention. The emerging focus on ‘Culture‘, has belatedly come onto the radar because the legislators are beginning to use the word.

This begs the question of how you define ‘Culture’, certainly those in Canberra writing the rules have no idea, despite setting out to legislate for it. It is a bit like legislating for ‘Motherhood’. Everyone agrees it would be great to have it, successful people have benefited from it, but definition is a bit tricky.

“Culture eats strategy for breakfast” is now a commonly used phrase, shortened from the original by Peter Drucker who wrote: ‘Culture eats strategy for breakfast, technology for lunch, and products for dinner, and soon thereafter, everything else too’

Lou Gerstners view expressed in his terrific insiders view of the turnaround of IBM  “I came to see in my time at IBM that culture isn’t just one aspect of the game – it is the game. In the end an organization is nothing more than the collective capacity of its people to create value.”

Building a positive culture depends on leadership, not regulation. Absolutely not regulation.

This remarkable TED talk by Simon Sinek is talking about leadership and the culture good leadership builds. I think anyone in authority should watch it and absorb the message, and set about trying to articulate what it means in their context.

ASIC (Australian Securities & Investments Commission) Chairman Greg Medcraft in his speech opening the 2016 ASIC Annual forum failed to give any hint about the definitional questions around Culture, simply pointing out that it led to good commercial and social outcomes. He did add that “We are incorporating culture into our risk based surveillance reviews’ which is terrific but it would be nice to know how one of the key regulators is going to measure it. Back to the politicians?

On occasion I have been critical of the AICD for its focus on the compliance issues of listed companies and their directors, often seen as the ‘big end’ of town. This focus is not unreasonable given that every organisation has to focus on what is seen as the main game in one way or another. However, it does tend to marginalise the unlisted and family company block which constitutes the vast majority of enterprises, and the overwhelming majority of those in the role of ‘Director’ often without knowing anything about the fiduciary responsibility that goes with it.

However, in this case, starting to talk about Culture, the Institute has kicked over a rock that requires a lot of consideration and debate, so well done.

I look forward  to that conversation.

Credit: Thanks once again to Hugh McLeod for the inspired cartoon.

4 easy questions to help get stuff done

4 easy questions to help get stuff done

Sep 15, 2016 | Governance, Leadership

Taking action is the hard part of getting stuff done, the talk is easy, but when the rubber has to hit the road, then you see who is really adding any value.

The 4 simple questions I ask are:

Who is responsible?

Who is accountable?

Who is to be consulted?

Who is to be informed?

Lack of an answer on any of them is a sure indicator of a hole that will swallow some of your efforts.

Last night I was at a forum hosted by the local council for sporting organisations in the region.

The forum had no real objective beyond some institutional need to ‘consult’ , a useful process, but the organisers seemed to have no idea about the framework on which they were seeking input.

As the answer to each of these 4 questions was “nobody’ or ‘not sure’ I do not expect to smell the rubber any time soon.

Environmental research: A commercial necessity.

Environmental research: A commercial necessity.

Aug 29, 2016 | Change, Leadership, Strategy

Last week I was fortunate enough to be invited to a session that outlined the latest Roy Morgan research focussing on Mortgage stress and superannuation.

The data presented by Morgans CEO Michele Levine  was both informative and disturbing in a number of ways. I recommend you have a look at  the slides, and the report, and give some thought to the problems that will evolve over the next few  years that this country will have to address, somehow.

As I considered the data and the implications, it got me thinking more broadly  about one of my long term hobby horses.

Environmental research.

Not the tree hugging type, although there are significant commercial questions and opportunities there, but the sort of research that informs thinking about the long term trends and behavioural changes that will impact the competitive environment in which we all have to live.  Understanding the direction of change has proved time and again to be more important in successful commercial development than the more common stuff that just tests the reactions to a specific proposition. It provides the context for  the varying value propositions reflected in commercial and social offerings, and creates the framework from which you can learn.

environmental research 1

 

A sensible framework includes an ongoing process to scan the trends, focus on those that will have a long term impact on the community, generate alternative responses, execute responses in a trial format, test , measure and iterate.

 

In the fortunate circumstances that we had a political climate that encouraged and enabled the sort of decision making that a society needs if it is to optimise the mix of economic and social policy outcomes over the long term, this sort of ‘environmental research’ would act as a valuable input to the debate.

Pity we do not have that sort of political environment, our children will pay a high price for our failure in that regard.  The best I think that we can hope for is to rely on the collective common sense of the electorate, but I sense that cynicism and the resulting self interest are dominating.

Not much of long term community value seems to be coming from the current politics, although the participants all claim to represent the mood and values of the community. They should be publicly considering the implications of research such as that done by Morgan, and we would all be better off in the long run for the informed debate founded on facts rather than supposition, suspicion and hyperbole.

There is however considerable meat in the data useful for the development and informing of commercial strategies and priorities. This ‘meat’ should assist you to optimise your returns while our so-called leaders fiddle.

 

10 steps to world class excellence

10 steps to world class excellence

Aug 25, 2016 | Change, Leadership, Strategy

Watching Michael Phelps  weave his magic in the pool at Rio has been more than a sporting feast, it was a lesson in superior performance that has required solid foundations and enormous hard work over a very long period.

Where does that drive, determination, and ability to maintain a focus for so long come from?

Clearly Phelps is a hugely talented individual, but we all know those people who do not make the best of what they have naturally by doing the work. A colleague directed me to a recently published book, ‘Golden rules: Steps to world class excellence‘ by Phelps’s coach, Bob Bowman.

The ‘Golden rules set out apply to virtually everything we do, certainly everything I set out to do as someone who helps business owners get the most out of their emotional and financial investment in their businesses.

Following are Bowmans rules, with a few anecdotes from the businesses  I have been involved with, and life.

A champion sets a ‘Dream Big’ vision.

About 16 years ago I worked with David and Dooley Bellamy to map out a plan for their organic produce business,  that envisioned the launch of organic baby foods. At that time Bellamy’s was a modest organic farm at Longford, just outside Launceston in Tasmania. David & Dooley had a dream to produce organic babyfood they would be happy to feed their kids, that would sit on supermarket shelves, opening up what was then a non existent new category in the market. While there has been many changes since that time, and I can claim little credit for the success that has been realised, Bellamy’s is now a public company that has become a significant exporter of organic baby food, after being the first on shelf in Australian supermarkets.

Adopt an ‘All in’ attitude, not a ‘Get out’  one.

Several of my kids achieved great athletic success, while falling just short of the Olympics, to continue the sporting theme. My now 30 year old daughter was one of the top 4 or 5 gymnasts in the country as a girl, lined up by the AIS as a ‘likely’ for the Sydney games. At the ‘nationals’ in Sydney she missed her footing on the beam, falling and badly damaging her breastbone, making it excruciatingly painful to do anything that stretched her chest, difficult to avoid in gymnastics. She did not pull out of the competition, but climbed back up on the beam, finished her routine, then completed the remainder of  the disciplines despite the excruciating pain and knowing she could not do some of  the skills she had trained so hard to perfect, and as a result could not score well. Today she practises Physiotherapy, and makes me proud every day.

Take risks then enjoy the rewards

An acquaintance of mine is a professional in nuclear medicine, a really smart guy who is also a serial entrepreneur. Over 20 years or so, he and his wife have ‘bet the farm’ on several occasions and are now in a position to enjoy the rewards, while still scratching their entrepreneurial itch on a wider scale. The rewards for them are not counted in the bank, but in the freedom and lifestyle delivered by their successes.

Short term goals lead to long term success.

Long term success is made up of many small steps, and the cliché that every journey starts with the first step is a cliché because it is  correct. Way back in march 2009, I wrote my first blog post, and had no idea where the second one was coming from, or what it would be about. However, I had come to the conclusion that committing to a post every couple of days was a good way to both articulate and record my thoughts, and be a marketing tool for my consulting practice.  My goal at first was just to impose on myself the discipline to write a couple of posts a week, and lo and behold, close to 1500 posts later, it is way more than a marketing tool, it is a repository of ideas, processes and a few rants about the things I care deeply  about, that together have great value, at least to me. It does also seem that some of those in those market segments where I choose to concentrate my efforts, weather they become clients or not, also see the value

Live the vision every day

As an Aussie, I love the success story of Atalssian, the local tech startup that has become a world standard in technical project management.  One of the founding visions was and remains, “Don’t f*** the customer”. A bit brash, perhaps not the usual polished wording of a corporate value statement, but nevertheless absolutely clear, memorable, and I bet nobody in the business has any doubt about the focus of their activity. That is what a vision, or purpose, or Mission, whichever of the management clichés you choose to apply, are all about: giving a clear objective to everyone. Any journey over a long period has its ups and downs, stuff that does not work. Having a guiding principal that dictates behaviour on a day to day basis, even one as unconventional as Atlassians, enables the short term reverses to be turned into improvement opportunities, rather than being destructive.

A team approach can bring individual success

Some time in the nineties I read Ricardo Semmlers book “Maverick“. At the time I thought it was the exception that made the rule, the business that became more successful with less, and bottom up management. However, as time passes, the importance of teams, not just to commercial management success, but to success in every arena is becoming more and more obvious, and libraries have now been written that recognise the role of teams in individual success. It is no coincidence that the emergence of digital tools that enable the co-ordination and collaboration of teams has led to an explosion of success in every facet of life, and the inverse also applies. The Australian swimming team was very successful in Beijing, failed comprehensively in London, and from the Rio results, is on the way back, while still experiencing growing pains.

Stay motivated over the long haul

One of my school mates is a musician, at least on the side, as he had to make a living being more conventional. However, over the 40 years I have watched him practise, play and perform, he stuck  to the dream of making a living albeit modest, out of music. He never gave up, and over the last few years has suddenly become successful, making a very good living after a long apprenticeship. Not quite an overnight sensation after 20 years of obscurity, more like a moderate financial but hugely rewarding personally success after 35 years of sticking to the job.

Adversity will make you stronger.

I have told the story of the early days of the General Products division of Dairy Farmers as I found it when I joined as it was spun out of the then regulated milk business to compete unfettered by the past. It was nothing short of a financial and operational disaster, which if not difficult enough was beset with industrial turmoil inherited from  the decades of operating in a regulated and highly unionised  ‘cost-plus’ environment.  During a strike, a deliberately lit fire destroyed much of the warehouse capacity, which could have led to the gates just being closed for good.  Instead, the fire was a catalyst for change, the final straw after which everyone recognised that we had hit rock bottom, and the choice was stark; change attitudes, work hard and together, or go home for good. Within a relatively short space of time, after some herculean effort, you would not have recognised the place.

When the time comes perform with confidence.

Most people feel some level of apprehension at the prospect of speaking in front of a crowd, for some it is  overwhelming. Jerry Seinfeld’s observation that many would rather be in the box than delivering the eulogy resonates deeply with many. Around 1985 I was asked to present at the ‘Foodweek’ conference, a then annual food industry gabfest that was the ‘must-attend’ event of the year for everyone in the industry.  To prepare I spent a lot of time writing and perfecting the presentation, hired some  professional AV assistance, and had some presentation coaching, but to call what I felt nervous would be like calling Everest a ‘hill’. On the day, I figured I could  have done no more, so went out there in front of still the biggest crowd I have ever presented to, relaxed and did a pretty good job, I am told.

Celebrate your achievements, then decide what is next

Success, no matter what it is in should be celebrated as an acknowledgement of the effort, as well as the achievement. The celebration when managed well becomes hugely motivating to everyone concerned. A client of mine has in their main office an old ships bell, been there for as long as anyone can remember. At any time, any person who believes something of value has been achieved that everyone should know about has the right to ring the bell, at which time everything stops, and the ringer is able to tell the story. It started, I am told in the 50’s as a device to let everyone know when a big order was secured, but has since evolved to enable achievements of any kind to be celebrated, and a part of  the celebration is that the ringer has to commit to the next objective, what ever that may be. It sometimes still records a big order, but these days more often records the success of a factory  improvement team, or  the successful trialling of a new piece of equipment, and occasionally a personal achievement like the passing of an exam. The bell has become a symbol of the culture of celebration and commitment that drives the performance of the whole business.

A great framework for us all.

 

 

Census night melt-down was expected

Census night melt-down was expected

Aug 11, 2016 | Governance, Leadership

Human beings are pre-disposed to trust, is it a part of our evolutionary DNA, we need each other to survive. We all know we are stronger in a group, relate to those similar to us, who share similar histories and beliefs, and who are held to us by shared relationships.

We need to feel that someone we know and trust ‘has our back’

British anthropologist Robin Dunbar proposed in the 1990’s that there was a cognitive limit to the number of relationships an individual could hold at any one time,  of 150, now known as Dunbar’s number.

However, and it is a huge ‘however’, trust has to be earned over time, it is never just given without thought and an emotional commitment. It is this emotional component of trust that leads to the  depth of emotion when we are let down by someone we trusted, because it is not just a let down, it is a betrayal.

Tuesday’s census was a debacle. It makes absolute sense (no pun intended) to collect the data electronically, unless of course the arrangements made to receive the information are inadequate. Predictably as soon as the servers crashed, the inevitability of which was widely assumed outside the cocoon of Canberra, nobody was prepared to recognise the stuff-up for what it was. The Canberra two-step blame game was in immediate view.

‘Of course it was  not a stuff up, it was the hackers’ is not a defence that allays any of the cynicism of the population, sick to death of the self serving bullshit fed to us in the expectation that we will just keep on believing.

Our so called leaders wonder aloud at the drastic decline of public trust in our institutions over the last 25 years, and I wonder why they are so publicly naive, as few of them are completely stupid.

Trust comes with consistent over-delivery on undertakings. We listen to the words, but it is the actions that really count. It is no different in small groups to the whole community, business and elsewhere, we trust those who do as they say, and say as they do.

Our political institutions in all their manifestations have consistently and significantly over-promised and under-delivered over the last 25 years, and that is the sole reason we do  not trust them, and the census night debacle has been met with a collective sigh of resignation to the inevitable.

Credit to Larry Pickering for  the header cartoon

PS. Two further thoughts that occurred during the day.

  1. How reliable will the data really be? I can hear the blathering now, assuring us that all is well, but where have we heard similar assurances before?
  2. Will those who failed to fill in the forms on Tuesday be fined, or perhaps they will the sue the Bureau of Stats for making false promises? Make false promises in advertisements and public utterings in the private sector and you have the the consumer protection grizzley’s after you.

 

 

Has Woolworths done enough?

Has Woolworths done enough?

Jul 29, 2016 | Governance, Leadership, Management

I have been around long enough to see Coles and Woolworths swap places a couple of times. It seems that just like most blood sports, there is room only for one at a time at the top. This is understandable given that between them they have 70% plus of grocery sales, depending on whose numbers you use.

While Woolworths are still on top by most measures, Coles are rising like a phoenix from the ashes, and Woolies are desperately trying to halt the slide they embarked on several years ago.

Mondays announcement of job cuts, store closures, and a $967 million write-down has been a while coming, and must be a bitter pill following on the heels of the decision to exit the Masters hardware business after  incurring significant losses.

They have been progressively winding down the Thomas Dux, business, which in my view will prove to be a short sighted decision, symptomatic of the strategic malaise that has haunted Woolies after a decade of stellar performance.

The announcement also indicated 4 of the ‘Metro’ branded stores will close, presumably because they do not deliver the required return. While those stores, like Thomas Dux, might not be performing to expectations, they should both be seen as experiments at the edge, in anticipation of the acknowledged trends slowly transforming our lifestyle. In the case of Dux, a desire by a small but growing number of consumers for the unusual, products of superior quality, with clear provenance, and for Metro, the convenience for commuters, and CBD dwellers.   The potential strategic research value of both, assuming they were well managed (which Dux was not towards the end) would be well worth the slightly less than benchmark returns, as in reality the absolute numbers would be tiny.

Nipping on everyone’s heels is Aldi, whose success over the last 15 years or so has been substantial. There are now 423 stores, and Aldi is currently opening 4 or 5 new ones a month. The Aldi business model is hard for Woolies and Coles to beat with their current set-up, so they probably should stop trying, and find another way. 1000 Aldi Sku’s vs 12-20,000 in Woolies and Coles keeps Aldi  transaction costs low, as does the uncomplicated trading terms with suppliers. In store, Aldi pay far fewer staff very well by comparison, and by observation lead and motivate them very well, benefiting from the resultant productivity. Meanwhile they generate store traffic with the low prices, and quirky weekly specials that promise to be sold out quickly, creating a sense of shopper urgency. In addition, their fixed overheads on stores would be much lower than the two gorillas due to the smaller floor space, and less expensive locations.

After all the financial engineering is done, I trust that Woolworths management and more importantly the front line staff will remember that it is the little things in the stores  that really counts to their customers as they spend their money. They could  not care less about the head office  shenanigans, they can always go down the road when they see better value for their ‘hard-earned’.