Feb 5, 2014 | Branding, Leadership, Marketing, Strategy
SPC factory circa 1925
If ever you needed convincing that investing for the long haul in a brand was worth the time, energy, risk, and money, there is evidence aplenty in the remnants of the Australian food industry.
It has been reported that the Peters Ice Cream brand is on the market, again, and being scrutinised by the losers in the WCB takeover by Canadian Saputo, Bega Cheese and Murray Goulbourn.
This makes absolute sense as ice cream is a great product in which to store the value of that highly perishable raw material, Milk, almost irrespective of its consumer profit margins. Way, way better than cheese and milk powder, those other value stores currently favoured by Bega and MG
Peters was clearly going to be for sale at some point, having been bought and sold many times over the last 25 years. It is currently owned by a Private equity group, who bought it from Nestle, who bought it from National Foods, (themselves later flogged off to Japanese brewer Kirin) who bought it from Pacific Dunlop, who bought it from Adsteam, and so on. A venerable Australian company started in 1907 by Fred Peters, but passed around like a like a turd in a game of corporate pass-the-parcel.
Through all that ownership turmoil, restructures, factory rationalisation, re-engineering, asset stripping, and a whole bunch of other cliches, the brand still holds a very significant place in the billion dollar Australian ice cream/ice confection market.
Similarly, while SPC the company goes to the undertaker, SPC the brand now owned by Coke in Europe has a significant place in European food markets based on the heritage of canned fruit from the Shepparton region. From almost the formation of the company in 1917 to 1973 when Britains entry into the EU locked out agricultural imports, SPC built a brand that 35 years later is still worth a marketer the calibre of Coke resurrecting. Now of course, SPC branded product in Europe is grown and packed in Spain and North Africa.
If Australia is to be a serious player in the provision of sustainable long term food supplies for ourselves and export, we desperately need to recognise the role of branded value adding. We need the vision and commitment, emotional, technical, managerial and financial to stop just flogging the tradeable commodity, as we will never be the least cost producer, the only ones who survive in a commodity race to the bottom of the price scale.
Feb 4, 2014 | Change, Governance, Leadership, Marketing, Operations
Charman Stone Member for Murray
The decision by the federal Government not to support SPC last week has opened a can of worms. This time, the worms have some grunt, as the head worm, Charman Stone has shone a light into the corners of the decision, and in the process, dumped on her party.
Thank heavens!!.
For the first time as another important business in the Australian food processing industry seemingly disappears, there is some debate about the facts, and analysis of the implications, rather than just having emotion and ideology spewed at us. Anything other than facts, and dispassionate analysis based on those facts, is meaningless if we are to come to grips with the real commercial issues, rather than those of political self preservation.
All this has been sparked by Stones vigorous defense of SPC in her electorate, culminating this morning in an interview in which she as much as called the PM a liar.
Pretty strong, even from one noted to be a bit outspoken
Over a long period, the Australian food processing industry has been gutted by a range of factors, from the globalisation of supply chains, the power of the retail duopoly, years of drought (drought is really the new normal) short sighted, risk averse, and spineless management, union intractability, subsidies of various sorts recieved by international competitors, and the high $A. Some we can address, some we can’t, but allocating blame is not a helpful strategy.
Hopefully, some further intelligent debate will evolve, but the inconsistencies in policy, highlighted by the Cadbury decision before the election, and announcement today of support for Huon Aquaculture will do nothing for the confidence of investors.
Charman Stone is aggressively putting her case, lets see some other pollies grow some backbone.
Jan 31, 2014 | Change, Governance, Leadership, Strategy
Once the dust has settled, political mud-slinging completed, recriminations done, and blame been allocated over yesterdays decision by the Government not to support SPC Ardmona to the tune of $25 million, which would have triggered another $25 mill from the Victorian government, perhaps we can learn something.
Little of this will be of much value to those workers who will have their lives badly disrupted, but the rest of us had better learn, or it will just be repeated, again and again. SPC has little to do with car making, oil refining, mineral or wool processing, but the seeds of destruction of all these industries stem from similar beginnings.
That seed is the productivity of the capital employed in these activities. Australia over a long period has ensured that returns on capital employed in manufacturing in this country are insufficient to be competitive with alternative locations for that investment. This has been starkly highlighted over the last 20 years as supply chains for just about everything have globalised, and investment in everything except mining where we had (note the past tense) genuine competitive advantages has dried up.
It is not the level of wages, power of unions, concentration of retail, high $A, or any other of the myriad of contributing factors on their own. It is the combination of all these factors over the long haul, and our collective failure to see the long term writing on the wall, and respond to it sensibly, in a measured manner that survives political and economic cycles that is to blame.
Were I given that mystical magic wand, able to shape things to come, unfortunately unable to change the past, here is the list I would have, in no particular order:
- Remove the duplication, ambiguity, and situational insensitivity from our public decision making processes. Big ask here, as it involves substantial reform to our the three levels of government, and all their supplicants and rent seekers.
- Inculcate in both management and managed in the private sector a recognition that the short term lasts, well, only a short time, but poor decisions taken to ease the short term discomfort factor will haunt you for the long term. The longer poor, short term accommodations exist, the harder and more painful they are to unwind, as eventually they will need to be. Lets all grow some backbone!
- Have our political leaders recognise that despite many differences in detail, in the end, we are all in the same boat, and we sink or swim together. It seems that the job of oppositions is to oppose, as articulated by the current PM when opposition leader, and to hell with recognising that not all the best ideas come from your own side of the house. By contrast to the opposition, it seems the job of government is to stay in government, by any means, for its own sake, not for what can be achieved for all of us.
- Add some intellectual depth to the public debate. Currently economic and political debate in this country is conducted on the basis of 2 minute, scripted sound bites, superficial and confected “interviews” that skirt difficult questions, which are in any event, unanswered should the interviewer stray, and with a focus on trivial and emotional, albeit attention grabbing events.
- Develop a sense of what the country stands for, just what that means in terms of the allocation of available resources, and how success is measured. If Australia was a company, it just may resemble a strategic plan supported by the programs, priorities, performance measurement and learning feedback loops that manage the implementation.
A short list with some pretty big “asks” but I remain an optimist, although resigned to being both poor, and a voice in the wilderness.
PS. This article by Robert Gottliebsen subsequent to this post is a very worthwhile addition. If SPC can be saved, and it should be by means other than subsidising the continuance of bad practices if possible, then this is a very useful roadmap and precedent for the necessary changes.
Jan 29, 2014 | Governance, Leadership
leadership. Innovatribe.com
This post emerged from the monthly company meeting of a small , but successful Australian manufacturing business for whom I do occasional work. One of their great practices, in my view, is the monthly “progress” meeting, where the results of the previous month are shared, there is a look forward, and a conversation about anything of interest to the employees. Nothing relating to performance is off the agenda.
At two points in a recent meeting, the MD demonstrated why the business was successful, and why he was a successful leader.
- Early on, he was asked an insightful and quite confronting question. His response: “I don’t know”, followed by an undertaking to find out, and report back, which everyone knows he will.
- Late in the meeting, there was a reference to a modest incident where an operator had used some initiative, gone beyond the expected boundaries, and had slightly mitigated an unexpected situation. This was highlighted, and whilst the outcome had not made a huge difference, the MD looked the operator in the eye, and said, in front of the whole workforce, “well done”
Five words that had a profound impact: “I don’t know” and “well done”.
Jan 16, 2014 | Change, Governance, Leadership, Personal Rant
Most business leaders are familiar with the notion of return on capital, funds invested, etc, and those same leaders often say something along the lines of “our people are our most important asset” weather they believe it of r not, behave like it is the truth or not.
However, here is the rub of 2014.
Our machines are becoming rapidly more capable. Apple launched the iphone in 2007, and the App store a year later, creating a revolution that is evolving and spreading at huge speed, disrupting everything in its path.
Forget Angry Birds, the nonsense hit game of 2011, and its ilk, but look at the way Apps are being used in medical science, geo location, and a thousand other places, disrupting as they go.
As this all progresses, the machines take over from people, the gap between the smart, innovative, educated and creative people and the rest is widening.
On average we are degrading the value of the people around us, an increasingly small number are hugely valuable, the rest are being replaced, the return on capital is increasing, the return on people is decreasing.
I do not think it is 1984 yet, but leaders should be adding the calculation of return on humans into their strategic matrices as they plan the next 3-5 years capability building initiatives.
Of greater concern should be the social consequences of this trend, and the steps our communities should be taking to address the problems that will become generational, way, way beyond an election cycle.
Wake up Canberra, and the rest of our closeted, self interested pollies.
Dec 30, 2013 | Customers, Governance, Leadership, Strategy
Just before Christmas, in an unusually hot and humid period, I was attacked by “mossies” while sleeping. The blighters feasted on my left shoulder, leaving a very itchy area.
So what you ask, and fair enough to wonder at the relevance.
It occurred to me that it was a nice metaphor for the “strategic itch” that seems to occur in many enterprises around this time of year. Someone, usually the CEO, gets a mossie in his ear about strategy, which results in everyone putting in an effort to redo the stuff that was probably done last year, a few updated numbers, some new graphs, and a reaffirmation of some vision and mission statements. All this of course culminating in an off-site 2 day meeting that involves a bad head-ache on the second morning.
The itch is scratched for another year, there are some “decisions” that are incorporated into the budget process, but little of real value has been achieved.
Just as scratching the mossie bites on my shoulder offered short term relief, but had little impact on the time it took for the itch to go away, and indeed ran the risk of causing some longer term problems if infection set in, so does the yearly strategic meeting do little, but potentially causes problems.So, here are a few “do’s and don’ts” that may remove the causes of the itch.
Do:
• Identify and consider the drivers of performance and change in your industry
• Consider how your current capabilities are lined up against these drivers, identify gaps, and agree how to address them.
• Review and consider your responses to the value propositions of your competitors, and consider what you would do to you, if you were them.
• Re-acquaint yourself with your customers, ensure you know why they buy from you and not others, and consider the manner in which you build relationships with them.
• Spend time identifying the “cause and effect” chains in your business, and how you can make them more visible, efficient, manageable, and accountable.
• Do a bit of “what if” scenario planning, the more out of the box the better
• Have some different people, from both inside and outside the enterprise in the process and at the meeting to avoid just continuing status quo thinking.
• Remember that innovation capability is about the only sustainable competitive advantage left to us, so consider how best to build the capability to innovate, without worrying too much about that new product in the pipeline.
• Agree a small set of KPI’s that reflect the most important things you considered, and ensure the processes are in place, or at least agreed to measure and communicate performance against them.
• Make sure everyone in the enterprise understands the priorities, and the underlying logic of the priorities, in other words, achieve alignment throughout the business.
Do not:
• Concentrate on the numbers, these days they are too easily generated and tend to remove the motivation to think.
• Allow status to be a determining factor in the importance given to every individuals contribution to the conversation
• Shy away from difficult, or confronting people or conversations.
• Think that all the answers to tough questions can be arrived at in the meeting.
• Think the job is done when the conversation ends. You get 1/10 for talking, the other 9 for doing.
• Think that this is a one-off, annual event. Strategy planning and review processes should be at the heart of enterprise governance, and are an ongoing challenge, particularly for boards.
Have a good strategy meeting.
