Dec 18, 2013 | Change, Collaboration, Leadership, Strategy
Years ago I worked in a small management group that was faced with the resurrection of a failed business. Problem was, the parent company was blissfully unaware, as the poor performance was hidden inside the operations and overhead recovery of the much larger parent entity.
When it was broken out as a separate division, I did the first P&L, in those days by hand on a 25 column ledger sheet, (any readers remember those?) and wondered what the hell I had done leaving my comfy corporate marketing job for this pile of smelly, baked-on crap.
Over a period of 6 years, this small group turned the business around. It was profitable, 5 times the size, and strategically well positioned. Then the MD of the parent woke up with a good idea in his hand and re-merged the division back into the larger business in an effort to capture some of the successful competitive DNA we had grown. You know what happened then.
Upon reflection, the core of our success was two things:
- Relentless focus on the things that mattered. We relentlessly identified problems and their root causes, and attacked them as a group, disregarding the superfluous, distracting, and often attractive alternative opportunities to spend our time.
- We worked together. The management group, a pretty standard functional arrangement argued, experimented, and engaged as many people as we could who may have something to contribute. People on the operational floor often had the solutions to problems before we had identified the problem adequately, no information was privileged, apart from salary levels, and every pair of eyeballs, and voice listened to, and encouraged. We just had to trust everyone, and it worked. By having many eyeballs on everything, we always had better outcomes.
I am reminded of all this, some 25 years later, with pride, some nostalgia, and sadness. One of that small group died last week, and many of those involved attended his funeral yesterday, it was a sad but joyful day.
Vale my friend and colleague George McDonald, St Peter better have a solid lock on the VB fridge.
Dec 11, 2013 | Branding, Change, Collaboration, Leadership, Marketing
In some circumstances, “collective clarity” may be a synonym for alignment, but in others it is an entirely different beast.
Currently I am involved in a project that aims to bring together a small group of specialist growers and retailers into a collaborative framework that delivers fresh Sydney basin produce to consumers, and contributes to the building of a brand. “Sydney Harvest“, if successful in pilot, offers the opportunity for commercial sustainability to both Sydney basin farmers and specialist retailers. In the process of developing this project, which seeks to re-engineer the supply chain in response to the economy wide trends that are placing huge pressure on the viability of agriculture in urban proximity, the differences have become stark.
Alignment is typically sought inside a commercial entity, all employees, and stakeholders having a clear understanding of the enterprises direction, priorities, and resources availabilities so each can see the bigger picture, beyond just their area of operation, and act accordingly.
Collective clarity, by contrast, is a term I have started to use to describe the necessity of having a common view of the end point of a collaborative project amongst all collaborators, as well as of the key project collaborative points along the way. This is external to any of the individual enterprises.
By its nature, a collaboration is not subject to the same management thinking that prevails in commercial enterprises, as collaborators are all independent, and sometimes competitive businesses. It therefore requires that they all recognize that their individual best interests are best served by serving the best interests of the collaboration, a big ask.
This Collective clarity is required amongst collaborators for a successful collaboration, alignment as commonly articulated as being internal, is not.
Each individual business will still be managed independently, in their own way. The processes that impact on the collective operations will usually be only a small part of the overall, and so will often require a different perspective, and explicit management, and leadership to be effective.
I would welcome feedback on this idea, as I have not seen it articulated before.
Nov 18, 2013 | Change, Governance, Leadership, Management, Operations
Perhaps unfortunately I was on the receiving end of a rant about design thinking last week. It was a passionate, articulate, and informed rant, but a rant nevertheless.
There is no doubt in my mind that design thinking is a competitively crucial capability. In this homogeneous and connected world, recognising the value that design can deliver, that it is an integral part of not just the physical products, but of enterprise culture and processes, is essential to commercial longevity.
However, design thinking has a fundamental flaw, a flaw clearly demonstrated by the “rantor” last week. As my old Dad used to say, “Son, you get 1/10 for thinking about it, the other 9 are for doing it”
My rantor was a thinker, but do not ask him to do anything creative. It is hard, dangerous (to a career) work to be contentious, advocate stuff outside the status quo, to be the questioner who backs up the questions with action, and most shy away.
We do need more design thinking, but we also need way, way more design doing, so stop hyping, and start doing.
Nov 12, 2013 | Category, Change, Governance, Leadership, Strategy
Years ago there was a line in the film “Breaker Morant” where the breaker, played by Bryan Brown said of a young ladies virtue “another slice off a cut loaf will not be missed” .
I never forgot the line, and have used it often, usually to make the point that a collection of small, and in themselves insignificant changes all added up eventually make a big difference. Just like a loaf, one slice may not be missed, but lose some more, and soon enough you have no loaf left.
The treasurer approved the takeover of Warnambool Cheese and Butter (WCB) earlier today by the Canadian group Saputo, should the current take-over squabble turn out in their favour
The original Saputo offer of $7.00/share has now been upped to a current $8.00 with current share price well north, there is anticipation of further action by Bega Murray Golbourn, or Fonterra.
It is now inevitable that WCB will cease to be an independent dairy processor, it just remains to be determined if it will be owned domestically or by an international entity.
The WCB directors have done a pretty good job by their shareholders, their shares are now trading at 8.50, after being stuck around $4 for a considerable period up till July, after some pretty crap results. This is despite being a strategic supplier in an industry with demand growing strongly, particularly in Asia.
There is a bit to go, but WCB is as good as no more. Now to the offer of ADM for Graincorp, a decision slated for December 17, and feted as the more important of the two decisions due to the competitive stranglehold Graincorp has on grain handling infrastructure in the eastern states. If nothing else, the pathetic blustering of Warren Truss , and acerbic one-liners from Barnaby Joyce will be worth waiting for.
The real concern however, is the long term impact of having major food producing industries controlled overseas. Without being in the least bit xenophobic, and recognising that Australia simply does not generate enough capital to fund all the demand for capital in the economy, it cannot be healthy for the prospects of our grandchildren to be so beholden to the overseas boardrooms who control the food supply chains.
Stop the presses:
Murray Goulburn has made a further offer for WCB on Thursday 14th of $9/share, a substantial premium over the current Saputo $8/share offer, and over the closing price of $8.50 on the exchange. This is pretty heady stuff for a business that has consistently failed to deliver adequate returns to shareholders for some years, and it is hard to see how Saputo can go much further without the rationalisation benefits that MG would have.
Stop the presses, again!
It is Sunday 17th, not a day of rest in the dairy industry. Murray Goulburn has indicated that they will beat the latest Saputo offer, price to be announced, but they have the hurdle of competition policy to jump, stupid as that is in these circumstances. So, the deliriously happy WCB shareholders have the choice of taking the unconditional Saputo offer now, or waiting a bit to see what MG has in store. Meanwhile, Bega have upped their bid, but it is below the Saputo bid, so is essentially irrelevant. However, what is not irrelevant is the Bega shareholding in WCB, which along with that of MG and Fonterra add up to around 40% of WCB.
Whatever happens to WCB this coming week, Bega will come into play as soon as the dust has settled, perhaps sooner, as it is one of the very few Australian dairy assets left bigger than a paddock with a few cows and a bathtub.
Oct 10, 2013 | Change, Governance, Leadership, Marketing, Strategy
Canadian dairy processor Saputo looks set to take control of Warrnambool Cheese and Butter (WCB) with a $7 a share offer valuing the company at $370 million, which trumps an existing cash and shares offer from Bega Cheese which values WCB at 320 million.
$7 a share is a substantial premium over the Bega offer price for WCB, and appears to be a very full price on any conventional analysis. Trouble is however, that conventional analysis has some difficulty factoring in the strategic value of the business, one of only three substantial dairy businesses left in Australian hands.
WCB’s performance was woeful a few years ago, being on its knees in 2009 after a trading loss of $20 million on $441 million turnover, and having unsustainable gearing. Since then there has been improved but patchy performance, $8.8 million profit in 2010, peaking at $18.5 in 2011, down to $15.2 in 2012, and down again in 2013 to $7.5 million.
WCB has flown a bit under the radar as the dairy industry has been convulsed by take-overs and mergers in the last 25 years, and is now one of just three locally owned dairy businesses with any scale. The other two, Bega and Murray Goulburn have both tried to find a way to consolidate with WCB, and the Bega Chairman has been on the WCB board for several years, so should know the business inside out.
With 2 billion rapidly emerging middle class consumers on our doorstep in Asia, whose consumption of dairy products is rapidly increasing, the strategic value of WCB to the Australian economy is significant. However, the reality is that without a better offer, and subject to FIRB approval, (should not be a problem) WCB will be sold to Saputo.
Part of the challenge is the disconnect between the domestic market where the retail oligopoly is the price setter, and export markets where Australian dairy produce is a price taker. Inability to generate anything more than the cost of capital, at best, domestically, and subject to big fluctuations in international commodity prices and exchange rates, and not being a low cost producer, Australian returns in the industry have been very inconsistent. Now however, with the emergence of the Asian consumer, there is long term potential for value added margins. What is needed is patience, operational and business model innovation, and some really good leadership.
Pity we are no good at that
Also sitting on the desk of the new treasurer is the proposed takeover of Graincorp, by US company Archer Daniels Midland. Graincorp handles 90% of Eastern Australia’s grain exports, and roughly 75% of the crop, so is pretty central to the success of the Australian grains industry. A similarly strategic Australian asset that seems destined to be run for the benefit of others.
What do these North Americans see that we cannot?
Vale the Australian owned food processing industry.
Aug 29, 2013 | Collaboration, Governance, Leadership, Management, Strategy
Everyone knows herding cats is impossible, right?
Quite often this is a metaphor used to apply to NGO’s and voluntary organisations, bureaucracies, particularly local government, farmers, and children. Getting them to one place, at one time, in an organised and disciplined manner seems impossible.
I have used it plenty of times, not always kindly.
However, a recent experience has led me to a different conclusion, cats are actually pretty easy to herd, it just requires a bit of good management.
- Make sure they are hungry
- Show them a feed.
Done, herded.
It is the same with any of the metaphorical cats. Make sure they are hungry for what you have, can deliver, or represent, then demonstrate how to get to the prize.
Mostly people are motivated by things other than money and rules that dictate their behavior, offering responsibility and accountability for their actions, and a reason why things need to happen in a particular way goes a long way towards herding them. However, it is not really herding, as you need to be out in front persuading the “cats” by one means or another, to follow.
It is simply called “leadership”, and leaders are not always the ones at the top of the now almost redundant, formal, old fashioned management pyramid. Now they are those that care, put themselves out beyond their comfort zone, confront scared cows and take a photo of the elephant in the rooom and throw darts at it.
