2010 in review, 10 trends to consider in 2011.

Dec 21, 2010 | Change, Leadership, Management, Marketing, Operations, Social Media, Strategy

It is that time of year, when we look back and try and understand the forces that have driven our decisions and behavior in the past year, and that will continue to have a potentially disruptive influence in the coming year.

In the spirit of the time, following is my list of the emergent forces that are shaping our world, in no particular order.

    1. Touchy-feely. Suddenly, the electronic devices we became used to using with keyboards became touchy! The iphone started it, followed by everything “I” and all its imitators. I cannot but wonder if this is an electronic  substitute for the human contact, the physicality of it, that we have lost. The fact that it makes all this stuff easier is a side benefit.
    2. Global retailing becomes more than a cliché. For years we have been talking about the retail revolution driven by the globalisation of retailers, and the “e-retail” phenomenon stated by Amazon, and pushed by E-bay and now thousands of others. Suddenly in this Christmas retail season, the box retailers have woken up to the impact of e-retailing in categories other than music and books, as consumers buy clothing and footwear, electronic devices, furniture, white goods, and huge ranges of knick-knacks over the net, overseas, avoiding the distribution margins and tax collection function of the box  retailers.  This has all been facilitated by the advances in supply chain management driven by product codes and GPS powered by the net, and increasing confidence in net security and integrity of e-tailers.
    3. Net advertising rules. Advertising on the net will have overtaken TV as the biggest type of advertising by the middle of 2011. Broadcast advertising replaced by tightly targeted, 2 way communication with the capacity to evolve based on the immediacy of the interaction response and potential to engage on a personal level will continue to profoundly change the way we interact with brands and their marketers.
    4. Social media comes of age. No longer is social media the province of the under 20’s, it has become mainstream as grandparents connect to face book to see their scattered grandchildren, professionals connect via linked-in, twitter takes over as the first source of news of interest, then goes on to follow where the news leads rather than becoming chip wrapper the following day. Whilst this phenomenon appears to continue to grow exponentially, it does bother me a bit that it appears to be a substitute for the humanity of individual contact for many, and what we surrender in privacy and the richness of relationships with the few in favor of being “friends” with the many we will only know with the benefit of hindsight.
    5. The cloud rolled in. Over the course of 2010, the newest iteration of web 2.0 in the shape of cloud computing appears to have rolled in. Enterprise computing has suddenly evolved from servers inside a business with all the attendant costs and investment requirements, to having the potential to put all that stuff on the web have somebody else manage the IT whilst you just pay for the service, and improve productivity of those using the applications. I think we are just at the beginning of the revolutions that the cloud will bring.
    6. Data mining. The huge pools of data that are being accumulated by businesses, organisations and institutions offer the opportunity to be mined for all sorts of information about us, our behavior, frustrations, successes, and locations in ways not previously considered possible. This mining is starting, our ability to understand and predict outcomes across a wide range of situations and simulations of behavior and outcomes are becoming more accurate, based on the huge amounts of data being collected and analysed using emerging applications and technology capabilities.
    7.  Crowdsourcing. Again, web 2.0 has enabled a revolution in the way we go about accumulating and leveraging information to serve an objective. In the past, R&D occurred in the confines of the labs and commercial departments of businesses, but R&D is rapidly being replaced by “E&S “, Experiment and Scale. If you have an idea, a problem, a hypothesis, it can be put to the crowd for comment, ideas and unconsidered alternatives. Linux started the trend, but in the last short period, it has been picked up by many who are seeking to push the boundaries quickly, and worry less about the IP involved, simply because IP is really pretty “sticky” in the sense that it does not necessarily work outside its environment.
    8. Two speed Australia. It really bothers me that around the traps I see all the symptoms of a recession in the trading activity, whilst the official numbers tell us that not only is all well, but it is booming. The non economist in me says that the cash in the joint is a result of digging up stuff and selling it to China, reaping short term rewards as demand has outstripped supply, surely the economic equivalent of a one trick pony!. Supply of mined commodities will increase dramatically over the next few years from Africa and South America, and then the prices we get will come back to the historical trend line, and meanwhile, we will  have pissed away the benefits from mining, and when the crunch comes, when the super-cash injections of mining prosperity are over, it will become nasty indeed, before the official figures suggest to the superannuated pollies and bureaucrats that something in their beloved economic models is stuffed.
    9. Climate change is a reality, prepare to deal with it. Typically, the political responses will be way behind the commercial ones, so there is both opportunity and risk for all, and the only certainty is increased costs. What is unknown is how much costs will increase, how will that compare to our international competitors, how will they react to the changes, and when .
    10. All of the above urging re-regulation. Certainty in our lives has been removed by all this new stuff, then along comes the disturbing visions of long term food and water security around the world, followed by the GFC, and suddenly we want some certainty back, so there is a groundswell in favor of re-regulation of the things that delivered us prosperity after their de-regulation in the 70’s and 80’s. When you consider at the same time the economic and social  impact of the rise of China and India, the picture gets cloudier. China is not about to de-regulate any time soon, keeping its ability to direct resources without the political concerns of re-election,  the huge bureaucracy of India fighting a rear guard action to maintain its power, and we have the elements of some considerable disruption and conflict emerging as the “developed economies” struggle with the debt incurred supporting recurrent expenditure .

To the few dedicated readers of my blog, I wish you a great Christmas, and a prosperous 2011. I hope that my ravings have given you some food for thought, a contrarian view, and an occasional smirk amongst the urge to have me certified. Thanks for your support, feedback, and honesty.

Allen Roberts.

Commercial sustainability needs people.

Dec 20, 2010 | Demand chains, Leadership, Lean, OE, Operations, Strategy

 

The next time you hear an argument that justifies moving Australian manufacturing to a low  cost country in order to compete, refer to this post on the Evolving Excellence blog describing the work practices in a Toyota’s Kyushu plant.

Labor is much more than a pair of hands doing a repetitive job, it is an opportunity to improve processes and identify and solve problems before they can impact on the customer, or even the next bay in the production line.

It may be hard to get to this point in Australia, but you will have no chance of making the changes necessary  in a contract manufacturers plant in a “low cost” country. The accountants will generate their numbers, which can be pretty persuasive until you recognise that they do  not account for the things that make a difference in the market, or count the wasted time, emotion and energy in their “productivity” calculations.

When an abundant  country like Australia becomes  a net importer of food, we have a real structural and strategic challenges in our demand chains that urgently need to be met, and the sooner we recognise the scale of it, and do a bit more than just mouth platitudes, the better.

 

Enterprise productivity

Dec 14, 2010 | Leadership, Lean, Management, Operations

Measuring productivity involves a combination of hard and soft measures, the soft ones being both the critical ones and the ones that have most impact.

In 15 years of consulting across a range of businesses and industries, I have come to the conclusion that there are three factors that at a macro level positively influence the capacity of an enterprise to build productivity in a continuous manner.

  1. They are cross functional
  2. They are decentralised, with a loose/tight management culture
  3. They are connected to customers in a range of ways not associated with the immediacy of the next sale.

None of these are easy to achieve individually, but they seem to be mutually supporting, so setting out to support the evolution of all three over time pays dividends. To do so takes confident and inclusive leadership, and a long term view of the purpose of the organisation. 

Parliamentary performance measured.

Nov 29, 2010 | Leadership

On the “Insiders” show on Sunday, there was a review of the current Parliament, and how it had responded to the challenges of being ‘hung”.

Notable was the interview of the Labor leader of the house, Anthony Albanese, and the clips of his review speech on the last sitting day. He listed the achievements of the Government by reading out a list of the bills passed, 53 from memory, but who cares?

The purpose of Parliament is to make our society and individual lives better, not to pass bills, but that appears to be the metric used, and he also used the phrase “Government  53, Opposition Nil”. What in heavens name did he expect? for the opposition to be passing bills? That would really raise some comment!

How long would a MD of a commercial organisation last if he measured his performance by the number of memos written, but that is the sort of meaningless metric that the our elected representatives use to measure their performance, at least when questioned about their performance.

Irrelevent, meaningless, theatrical crap, and an absolute lack of leadership!

 

Measuring adjacencies

Nov 25, 2010 | Customers, Innovation, Leadership, Management

 Innovation programs always throw up the word “adjacency” and it has lots of interpretations, depending on who is doing the talking. So here is my two bobs worth.

Measure each of the following parameters on a 1-5 scale, (or 1-10 for a more nuanced outcome) 1 being the same as current, 5 being completely different, requiring new processes and infrastructure. Have a debate about the scores, collect more data, seek council of those with a different perspective, as it is generally a qualitative score rather than one that can be easily quantified.

  1. Channels to market
  2. Current sales force knowledge and relationships in the adjacent market
  3. Behavior of potential customers, the factors that drive their business model
  4. Existing potential customer relationships and the barriers to entry/exit in the market
  5. The nature of the competitive environment. (A “Porter” type analysis often assists here)
  6. The strength of your value proposition

    7.  

Riding the skunk.

Nov 9, 2010 | Collaboration, Innovation, Leadership, Strategy

“Skunk works” is a term most are familiar with, indeed, so familiar that the pros and cons, and the do’s and don’ts are debated endlessly. Weather a Skunk team separated from the main operations of an enterprise “delivers”  or not is generally a function of the leadership, culture and resource allocation processes of the parent, not just of the excitement and freedom of the works.

Sometimes it is useful to go back to the original. The term “skunk works” emerged when the Allied  war effort needed a very quick response to the threat posed by the German development of jet fighters in the latter stages of the second war, and Lockheed Martin won a contract to do the work against what was considered an impossible timetable.

To meet the demands, LM created a separate development unit, rapidly taking on the now familiar nomenclature, originally an in-joke where members of the team considered themselves as popular as a skunk in the halls of the existing parent company.

Creating  skunk works is only one of many strategies that can be employed to rev up the innovation effort, and it is no more or less successful than others, it is all a matter of the context.