Jun 5, 2024 | Governance, Leadership, Management
The word ‘argument’ has many meanings, depending on the context. It can mean a friendly difference of opinion, a negotiation point, a statement of reasoning a lawyer might use, to an expression in a mathematical formula.
A quarrel is far more specific, requiring a disagreement, the cause of which is often lost in the chaos of emotion a quarrel elicits. The only other meanings of the word I can think of is as a collective noun for a group of energetic and opinionated mammals noisily exchanging insults, such as monkeys, squirrels, cooks, and lawyers. It also refers to the tip of a crossbow bolt.
There is a standard three step formula for making an argument stick in the minds of the receiver. It is evident in every news cast you ever heard, the ‘newsreaders secret formula.’
- Tell them what you’re going to tell them. This is always called ‘the headline’.
- Tell them. The story, or series of stories.
- Tell them what you told them. Restate the headline, and any conclusion or resulting actions that emerged.
To win an argument, as you would a negotiation, debate, or in court, you need to modify the news readers trick by adding a step.
That step is analysis of a guiding fact, or set of facts.
This enables you to analyse those facts in a way that leads you to the conclusion you are arguing for.
For the sake of ease of use you can break this into a pneumonic ‘CRAC’
- Conclusion. State your conclusion.
- Rule. Identify the fact or facts upon which your conclusion is based.
- Analysis. Provide an analysis of how that rule makes any conclusion other the one you’ve reached invalid.
- Conclusion. Restate the conclusion.
This CRAC process was used very effectively recently by an acquaintance chairing a community group that was protesting a pending building approval decision of their local council.
She stated that the approval, if it was to proceed, was in defiance of the councils own regulations.
She then cited the specific regulations.
She then pointed out the specific parts of the pending approval that was in breach of the regulations, and why they breached them.
For good measure she also pointed out 2 other proposals similar to the one that appeared to be about to be approved, that had been rejected on the basis of the specific parts of the regulations stated previously.
She then repeated the conclusion that the project was in defiance of the council’s own regulations, and therefore should not proceed.
It was an impressive performance, well planned, well executed, and ultimately successful after some embarrassing back downs by several councillors.
With a bit of practise, it is easy to use, and always better than resorting to a quarrel.
Header cartoon credit: Scott Adams and his mate Dilbert.
Jun 3, 2024 | AI, Change, Leadership
My time is spent assisting SME’s to improve their performance. This covers their strategic, marketing, and operational performance. Deliberately, I initially try and downplay focus on financial performance as the primary measures, as they are outcomes of a host of other choices made throughout every business.
It is those choices around focus, and resource allocation that need to be examined.
Unfortunately, the financial outcomes are the easiest to measure, so dominate in every business I have ever seen.
When a business is profitable, even if that profit is less that the cost of capital, management is usually locked into current ways of thinking. Even when a business is marginal or even unprofitable, it is hard to drive change in the absence of a real catalyst, such as a creditor threatening to call in the receivers, or a keystone customer going elsewhere.
People are subject to their own experience and biases, and those they see and read about in others.
Convention in a wider context, status quo in their own environment.
Availability bias drives them to put undue weight in the familiar, while dismissing other and especially contrary information.
Confirmation bias makes us unconsciously seek information that confirms what we already believe, while obscuring the contrary.
Between them, these two forces of human psychology cements in the status quo, irrespective of how poor that may be.
Distinguishing between convention and principle is tough, as you need to dismiss these natural biases that exist in all of us. We must reduce everything back to first principles, incredibly hard, as we are not ‘wired’ that way.
The late Daniel Kahneman articulated these problems in his book ‘Thinking fast and Slow’ based on the data he gathered with colleague Amos Tversky in the seventies. This data interrogated the way we make decisions by experimentation, which enables others to quantitively test the conclusions, rather than relying on opinion.
That work opened a whole new field of research we now call ‘Behavioural Economics’ and won Kahneman the Nobel prize. Sadly however, while many have read and understand at a macro level these biases we all feel, it remains challenging to make that key distinction between convention, the way we do it, the way it has always been done, and the underlying principles that should drive the choices we make.
As Richard Feynman put it: “The first principle is that you must not fool yourself—and you are the easiest person to fool. So, you have to be very careful about that.”
May 16, 2024 | Change, Governance, Innovation, Leadership, retail, Strategy
The recent declaration of “A Future Made in Australia” by the Prime Minister has put the future shape of the nation’s manufacturing sector back on the agenda.
There was however, nothing specific on the importance of agricultural innovation and value adding through the manufacturing sector, or the strategic value of food security.
The decline in Australian owned manufacturing in the food industry has been close to total. The FMCG manufacturing industry has seen input prices increase by 49% over the decade to 2020, while the wholesale prices received have increased by only 24% over the same period (Source: AFGC Sustaining Australia Food and Grocery manufacturing 2030 report) This downturn, and the 20 years prior which display similar trends has seen locally owned businesses either go bankrupt, or become subsidiaries of foreign conglomerates, relegating them to mere outposts.
From an era where medium-sized businesses thrived across various product categories, employing significant numbers in quality, engineering, the trades, and R&D, today these businesses have largely disappeared. This transition has been marked by a shift towards centralisation of product development and scientific research abroad, leaving Australian operations with minimal operational and decision-making authority.
This trend raises critical questions of how we feed ourselves, and make a useful contribution to the global food supply.
Notwithstanding the international ownership of most of food and beverage manufacturing, it contributes 6.5% of GDP, 32% of total manufacturing output, and employs 240,000 people, 40% of which are in regional areas. (source AFGC)
By any measure, the food manufacturing sector is profoundly important to Australians. Its future resilience and growth of sovereign capability should be paramount.
The lack of sovereign control of the resources and capital needs to generate growth is disturbing.
Central to an innovative and resilient manufacturing industry is the capacity to generate intellectual capital that translates into manufactured product. The progressive ‘internationalisation’ of company R&D noted above, has been matched by a progressive emasculation of the sovereign capability to generate the Intellectual capital necessary for long term growth. There is a significant number of SME’s in the sector, but collectively they contribute very little to the total of manufactured product. They are typically mixing often imported ingredients in low tech environments with a few employees and casuals. Distribution is largely through secondary channels like farmers markets, and local retailers and food service. They do not have the resources to compete with the R&D capability of multinationals, and the previously available intellectual assistance from federal and state institutions has been removed.
Take for example the CSIRO that in the past worked closely with business. Often this was in an informal and personal collaboration between individuals that enabled a thriving environment for problem solving and innovation. CSIRO’s sites in North Ryde, Werribee, and Canon Hill have either been downsized or sold off, and skilled, experienced employees made redundant. Contributing to this erosion of the collaboration that in the past generated much of the ‘ideation’ that sets the stage for innovation, has been the demands of successive governments for a ‘productivity dividend’. This was typically 2% annually which compounds quickly to a killer blow to capability. It is code for removing those informal but fundamental creative collaborations with domestic companies, and encouraging the multinationals to centralise R&D elsewhere.
The power of the supermarket chains, currently under scrutiny has also played a key role in this process. SME’s simply do not have the deep pockets required to generate and maintain traction through the retail FMCG oligopoly.
To be successful, SME’s need to be able to absorb the reality of this gross power imbalance with retailers. Financial capital is necessary to enable the generation of the Intellectual Capital that underpins genuine innovation. Further investment is required to design, build and install the equipment to produce the innovative product. Deep pockets are then required to meet the retail trading term and promotional demands, as well as investment in the advertising necessary to attract consumers to a new product. As the power of the retailers has overwhelmed the diminishing group of domestic suppliers, we have been left with multinational suppliers and retailer house-brands, themselves often manufactured offshore.
The focus of government policies remains short-term, driven by electoral cycles rather than the decades required to bridge the gap between science and commercial success. Differing jurisdictions follow their own nose, resulting in a siloed and fragmented effort across the country, rather than a coherent and coordinated effort. The outcome is a mix of differing priorities, investment plans and initiatives around the country, sometimes used as incentives for business location. The commercial equivalent would be if a conglomerate allowed divisions and locations to compete for resources with declining levels of investment in the total absence of a coherent strategy. No sensible commercial board of directors would put up with such a self-defeating arrangement.
Grant programs send the wrong message and encourage behaviour that rarely delivers the outcomes touted in the press releases.
Culturally and politically risk is toxic to the body politic. However, the acknowledgement and management of risk is a fundamental element in successful innovation.
Successful risk management becomes a function of the extent to which a whole range of data, combined with qualitative assessment of what the future will look like is considered. Removing the capacity to make those assessments severely compromises the value of any conclusion reached.
The only potential solution to those institutional blockages to innovation in manufacturing industries generally is a confronting one.
Government needs to ‘upskill’ itself to be in a position to substitute early equity funding for grant funding.
Such a change requires a cohort of skills and experience not currently available within government and bureaucracies, but selectively available in industry. The early equity would be recoverable by those that are successful at a pre-agreed point, at a pre-agreed rate. This removes the inertia and rent seeking evident in grant funding, replacing it with a modified form of Venture Capital.
In addition, FIRB needs to adjust the guidelines that currently rely on an intense focus on the economics of ‘Comparative advantage’. These rely on projections of current and past quantitative models of industries that usually bear little resemblance to what ultimately evolves. They never reflect the strategic value of sovereign manufacturing.
In the absence of meaningful strategic change, what remains of the domestically owned food manufacturing industry of any scale will disappear, and current and new SME’s will have no hope of replacing them.
Notes.
- The budget delivered on Tuesday night included a number of measures that should serve to give manufacturers some confidence that the government has recognised there is a problem, and that action was long overdue.
- A slightly edited (and improved) version of this post was published on Wednesday morning on the AuManufacturing website and Linkedin group.
May 14, 2024 | Collaboration, Leadership
Special purpose teams are generally formed to solve a problem.
However, it seems that ‘collaboration’ has become so integral to many corporate cultures, that every problem becomes an opportunity to ‘collaborate’. Teams are often formed without sufficient reference to the experience and capabilities required to define and address the problem.
When you want a problem assessed, and a resulting action to remove it, you must hold somebody accountable for the outcome.
A process or task that is not attached to a person’s name will rarely be optimised.
Often when an ad hoc team is formed in response to a perceived problem, the performance of that team becomes marginal, simply because it is always somebody else’s job to be accountable for all or part of the solution.
The task of a team is to:
- Define a problem by looking at the blockage from many perspectives provided by the individuals in the team. This is why the choice of personnel is critical. Do not make the common mistake of allocating personnel who seem to have the time to a team. Allocate personnel by expertise and leadership styles.
- Generate possible solutions, and then:
- Pick one possible solution, perhaps after some initial experimentation, and then:
- Allocate an individual to be accountable for the execution of the chosen course of action.
- Rinse and repeat.
Do that, and the team will deliver results when members have been selected by the capabilities necessary, assuming you also give them the resources needed to do the job being asked of them.
Failure to assemble a team carefully, which requires leadership, will ensure little more than a gabfest.
Header cartoon credit: Tom Fishburne at www.Marketoonist.com.
May 11, 2024 | Governance, Leadership
Our current politics is an intensely adversarial, short-term, zero-sum game.
Is this what is best for the country?
The federal budget is due in a few days.
Based on the selective leaking and conversations happening, the budget will be focused, or at least the political narrative will be focused, on cost of living, housing, male violence against females, and the build-up of national security assets, military and technology.
All worthy topics, demanding attention, understanding, and investment.
However, if anybody in Canberra chose to take a helicopter view of the strategy of Australia Inc, as it would be in a business, there are only two questions that should be the framework that drives the tactical choices that are made every year in the budget.
- What are we building that will deliver long term capacity, resilience, and innovation to the economy?
- What are we doing now to optimise the way we invest resource is against those long-term priorities, and the shorter-term tactical investments necessary to achieve them?
The first is a drag on current expenditure that is designed to deliver a long-term outcome.
The second is an imposition on the long-term outcome to deliver in the short term.
At the best of times this is a delicate balance, and you never have all the right answers.
However, in the absence of asking the question, there will be no answers other than a knee jerk response to whatever happens to be in the headlines today.
Let’s not worry about our children and grandchildren, they will find a way to recover the can we have so solidly kicked down the road.
On that can are the words: we have a revenue problem.
This means tax, as that is the only way governments have the resources to deliver to the country.
Unfortunately, Tax is a noxious three letter word, and no politician who desires to remain one, (they almost all do) will touch, unless accompanied by the word ‘Cut’. Besides, no politician is short of a bob, superannuation entitlement, negatively geared investments, and the largess of party donors. They live comfortably on the teat, while often complaining about how hard the job is, which is no doubt true for those few who are trying, easy for those who are just seat warmers.
The header is courtesy of DALL-E, my artful helper.
Apr 25, 2024 | Culture, Leadership
‘Resilience’ is a word we are hearing a lot these days and will hear more today.
On this ANZAC day 2024, there will be a lot of words sprayed around that amount to acknowledgement of the resilience of ANZAC troops.
They clung to the cliffs on the Gallipoli peninsular, died in the mud of Passchendaele, slogged across the Owen Stanleys a couple of times, and lived under rocks in the seaside splendour of Tobruk.
It is used to describe both the personal characteristics required of the individual, and the culture of organisations.
The dictionary definition leaves a bit to be desired, referring to the ability of a person or organisation to return to a previous state. ‘Elasticity’ is a common simile.
How do we measure resilience? If we cannot measure it, as the saying goes, we cannot improve it.
What is the measure of resilience shown by the ANZACS in those meat grinders? Indeed, how do we measure the resilience of those at home, watching as the casualty lists were posted?
In a commercial context, resilience implies the degree to which an enterprise is able to absorb and adjust to the unexpected. Usually, it refers to the short term from the decisions made by others that drive an unexpected outcome that changes the status quo. Substantial competitive moves, new products that deliver new value, or the emergence of something that could be classed to some degree as ‘disruptive’.
Measuring by financial outcomes is misleading. Financial outcomes are the result of other decisions taken on the inputs to the business. Do that well, and you become financially secure, do it poorly and you go out of business.
The allied high command on the Western Front measured the outcomes of their initiatives by two things: the ground gained, and the casualties incurred. Of the two, the first was the more important to them. Field Marshall Haig never got close enough to the lines to understand the resilience required to ‘jump the bags’, again. The linkage and enormous gap between his orders, written in the splendour of the Château de Beaurepaire, and the squalor and death on the front lines that was the outcome, was never meaningfully acknowledged.
Measuring outcomes is always easier than measuring the inputs, then allocating cause and effect to the decisions but is rarely useful. Just as measuring your weight every morning will not assist you to lose weight in the absence of resulting reduction in calories, throwing yourself at a machine gun nest will not win ground.
It does however require resilience, courage, and dedication to both those beside you, the wider objective, and willingness to ‘do the work’.
In our modern world, despite the continuous marketing of the silver bullet products promising the contrary, there is no substitute for domain knowledge, planning, optimised resource allocation, and the sheer resilience to stick at it in the face of adversity.
It comes down to the culture at the micro level. How the individual behaves, and how that behaviour translates to the immediate group.
It has always be so.
It is a lovely autumn day in Sydney, as we reflect on those that gave us the opportunity to enjoy the freedoms we take for granted. It is also my beautiful daughters 38th birthday. Happy birthday Jenn!
How time flies.
The header is an arial photo of the gorge, hidden in the Wollemi State Forest, after the fires of 2019-20. The green spine is made up of the only stand left of Wollemi Pines. They have survived since the dinosaurs roamed the area. Resilience.
