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.
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.
