The 8 most viewed StrategyAudit blog posts of 2018.

The 8 most viewed StrategyAudit blog posts of 2018.

Jan 5, 2019 | Leadership, Management, Marketing

 

Over 2018, the StrategyAudit blog attracted 19,948 page views from 10,568 individual visitors, about 65% of whom are repeat visitors. To me this repeat visitation is a vital number. I would rather have 1 person who demonstrates that the musings I publish are of value by returning, than  10 casual visitors who read and leave, never to return. Also important is the simple fact that on average, each visitor visited almost 2 posts. Averages are misleading, many visitors leave quickly, others engage with 2,3,sometimes 4 posts, and sign up to the feed so they do not miss further posts. It is this engagement that delivers the value to them, and is the reason I persist.

To some, 20,000 page views across a year would constitute a disaster, they get that in a week, but to others, it is a significant number. I am just pleased that the number is well up on 2017, despite the increased ‘noise’ from so called content that now infests the web.  

These numbers are in addition to  the thousands of views that occur from second party platforms, most often LinkedIn. These are valuable, but long term digital marketing success is dependent on the quality of your own digital ‘homebase’ where you control the rules. For example, back in August, LinkedIn changed their algorithm, and the visitors from LinkedIn halved overnight, and the geography changed from 75% Australia, where there is some potential return for me from the effort of writing the posts, to 75% from the US, from where I will not be able to leverage any benefit. I do  not mind helping the Americans, they need all the help they can get, but it is nice to have some hope of receiving a benefit in return, which Linkedin, and their colleague ‘Social’ platforms are making increasingly difficult unless you pay for it.

Organic reach from third party platforms is almost a thing of the past, something  to think about as you plan for 2019.   

To the most viewed posts of the year.

The 4 dimensions of project planning. Published July 2016

It looks like this will become one of the most viewed posts over an extended period, as the numbers keep climbing every month, 2018 being 40% higher than 2017. It is only a short post, 300 words, but summarises the challenges faced by every team planning a project, from a tactical initiative to a major enterprise changing implementation.

7 tips on how not to be boring while presenting. Published March 2018.

This post garnered may views in the days after it was posted, but attracted little attention thereafter. This is  not an uncommon pattern amongst those posts that have a ‘long tail’. They start slowly after an initial  flurry, then build over time. I am hopeful this happens with this post, as several readers have let me know that the tips have helped them enormously.

3 essential pieces of the supermarket business model. Published November 2014

This post would be on this list for every year since 2014, clearly it struck a chord.  Although 2018 was below 2017, it delivers readers to the blog every day. Along with Loose/Tight management further down this list, it is the most viewed post I have written. On several occasions, this post has been the basis of a successful keynote to various gatherings.

11 trends that will influence success in 2018. Published January 2018

January and  February were big months, presumably as people planned for the year, with little since. However, the trends noted for 2018 are all still present as we face 2019, so I would expect (hope for)a revival.

How do you measure culture?. Published May 2018

May and June were heavy, with modest numbers subsequently, but this post is building momentum slowly, as we come to realise the vital role enterprise culture plays in success, and failure. Perhaps I should send it to some of the senior executives in the financial services industry, as they contemplate their navels and bonuses in the wake of the royal commission.

Loose/tight management. Published October 2010

This is the most surprising post, delivering pretty consistent numbers month in month out since posting, in the early days of this blog. it is short, and specific, must be the headline that catches ‘googlers’. However, I note a recurring flurry of readers in April/May every year, so assume that somewhere an academic has cited the post in course material.

What is the number 1 job of the CEO? Published July 2018.

Published at the end of July this post was seen mostly in August, with few views since then. A short post that concludes that the number one job of the CEO is to create the environment in which employees can flourish, thereby delivering the strategic and financial outcomes required for sustainable economic success. In a word, the number 1 job of the CEO is ‘Culture’

10 considerations to make better pricing decisions. Published July 2018.

Significant readership in the days around posting, then almost nothing. Perhaps it is a lousy headline, a good one is vital to attracting readers. This is unfortunate, as I consider it to be one of the posts that can deliver  immediate and meaningful outcomes to readers after consideration of the issues noted. It has also been the basis of several seemingly well recieved keynotes.

These top 8 posts are only 15% of the total post views over the year, a strong indication of the longevity of posts that add value to someone, somewhere.

Now, on to 2019. Thanks for reading, your feedback and good wishes during 2018.

 

The where, why and how of enterprise value creation.

The where, why and how of enterprise value creation.

Dec 17, 2018 | Governance, Management, Strategy

 

The balance sheet of an enterprise is a snapshot in time of the financial value of an enterprise. The comparison of balance sheets over time delivers a picture of the value creation, or destruction, of the enterprise over time.
The ‘Financial trio’ Balance sheet, Profit & Loss, and cash flow, together generate a picture of the performance of an enterprise, and are the foundations of performance management.
However, these are not enough for a thoughtful management.
To build a clear picture of the intrinsic value of a business, we need to look beyond the financial accounts, to the ability of the business to create sustainable value for customers. In other words, provide solutions to problems that cost less than the amount customers are prepared to pay for those solutions.
Therefore a closer look at the parameters of value may be useful.

Value cycles.
When the return on capital exceeds the cost of that capital in a given period, value has been created. Looking at the cycles in isolation can give a distorted picture, driven by seasonal sales mix, competitive activity, operational changes, product launches, and many other factors. These cycles always have in them a mixture of the short term challenges faced, and the longer term factors almost always driven by trends external to the business, such as technology adoption, regulatory changes, and the emergence of new competitive business models. Understanding the cycles of value creation and consumption can assist not only in smoothing them out, but doubling down on the good times, hunkering down in the bad, and ensuring that your strategic thinking is tuned to the evolution of the external environment.

Where is value created or consumed.
This can be pretty granular to geographies, product lines, market segments, brands, and so on. Understanding the variations, and applying pressure to them can dramatically increase the average value creation by isolating areas where it is routinely being destroyed, and fixing them. In many instances, the value destruction in the short term is deliberate in an effort to build value for the future. However, often the destruction is unseen in the mix of activities in every business. Innovation is in the short term generally a value destroying activity, but essential to the long term value creation, and this is a delicate balance that requires a strategic framework to be consistently applied to the allocation of resources.

Why is value created.
Linking the creation or destruction of value to specific assets and capabilities, again delivers the opportunity to optimise the investments you make. What makes you sufficiently different that you can create value? Is it short term or is it longer term, and how do you maintain the momentum, as superior value creation always attracts competitive capital in time.

How is value created.
Very simple to say, but hard to do. Value creation always comes down to solving a problem, or creating an advantage, for an individual, group, or enterprise.

Market position and long term decision-making obviously play a key role in value creation, and none of this happens by accident or over a short term. It is tangled up in your relative market position, the evolution of the market you are in over the lifespan of the market, and your competitive position in that market.
This sort of analysis enables a complete picture to be put together. If you have enough information to make judgement about your major competitors, those that might emerge from the pack, and those from the sidelines which are usually missed, this will inform the decisions you make that will impact on future value creation.

The root of all this is strategy.

The golden rule of marketing in regulated markets.

The golden rule of marketing in regulated markets.

Dec 13, 2018 | Governance, Management, Strategy

‘He who has the gold makes the rules’

I had to go to Sydney airport last week, and needed to park for a while, the plane was late.
It almost required an extension of the limit on my credit card.

It was just another brush with the cost of doing business with someone who has the inside running in a regulated market that I have had the misfortune to tangle with over the last few months. In this case, the airport is a monopoly, that was privatised. Governments seem to think that when they sell off a public asset to the private sector, the buyer will continue to price it at ‘social’ levels. They then act all surprised when the new owner with the regulated monopoly suddenly starts pricing at monopoly levels.

Consider what has happened to your power bills since the ‘privatisation’ process kicked in. Pretty obvious that the sale process included some sort of ring-fencing of competition to beef up the price so the press release looked better, as in the case of the sale of Port Botany and Port Kembla now being brought to court by the ACCC.

Pretty much all markets are regulated to some degree, from a very little to a whole lot, on top of the basics of incorporation, and paying taxes (which seems to be increasingly optional for MNC’s). Adding to the complication, there are three levels of government in this country all regulating different things in different ways creating an alphabet soup of bodies that have to be navigated before you can trade.

In highly regulated markets, it is reasonable to assume that most if not all incumbents will move aggressively and creatively to protect what they have. Claims of public interest, safety, loss of employment, are common, and are generally the reason the monopolies are there in the first place. However, what they have is a position that enables them to charge rent, rather than achieve success through a superior value proposition.

Understanding the structure of the rent seekers business model will help to see ways to invigorate or disrupt it.
The taxi industry is a classic. Around the world it was a regulated market that delivered regulated profits to the few who owned the licences, which therefore accrued a capital value, until Uber came along. Similarly, the milk industry in NSW was regulated until it became unmanageable to continue, and then there was a decade long 10 cents/litre levy to pay down the capital value of the regulated milk runs.

Having an understanding of who has the power in any market, the basis of that power, and the means by which it can be wielded, is vital to the construction of a viable business model and value proposition.

Header Photo credit: courtesy Jason Heller.

Focus delivers productivity

Focus delivers productivity

Dec 10, 2018 | Governance, Management, Uncategorized

When you fail to focus, you are scattering your capital.

Most importantly,  you scatter the vital Intellectual Capital it takes to succeed, as well as the financial capital that is a vital enabler of success.

Limited resources need to be focused on the point where they will do the most good, generate the most leverage.

The familiar investment advice to spread your investments, ‘do not put all your eggs in one basket’ holds when you are a passive financial investor.

However, when you are an active investor, not just of your financial resources, but of your limited time and energy, it is better to follow Andrew Carnegie’s advice to ‘Put all your eggs in the one basket, then do not take your eyes off the basket’

This advice holds equally as you consider your long term plans, what outcome do you truly want, to planning your day today. Ask yourself ‘What is the one thing I really need to get done today that will take me one step closer to the goal’

As Confucius is reported to have said somewhere around 500 BC, ‘Every journey starts with a single step’. That advice is as valid in today’s world as it was then, so make sure you take that step every day, and that it is one step closer to the goal.

 

 

Your three most valuable assets are not on your balance sheet.

Your three most valuable assets are not on your balance sheet.

Dec 5, 2018 | Customers, Management, Strategy

 

The first is the value of your brands, the second is your customer list, the third is the ‘culture’ that exists, a fragile qualitative asset which is a vital part of commercial sustainability.

A balance sheet is a snapshot in time of the financial value of your business. It is based on standard accounting practice which fails to recognise the non financial assets that may be present.  Some may include an element of ‘goodwill’ but that is usually just an accounting treatment of the difference paid for a business compared to its tangible asset backing.

The value of a business is the future cash flow that will come from providing goods and services to customers. While that cash flow does come from the tangible assets of the business, in these days of ‘knowledge work’ most of it comes from the three sources noted above, not included on the balance sheet.

A professional services firm has very few tangible assets. A few desks and computers, they probably lease their premises, and their most valuable assets walk out of the office every afternoon.

In the case of a B2C business, your customers are generally different from your consumers, which just serves to increase the relative value of your brand. Consumers make the vital choice of which product to purchase, the intermediaries, wholesalers and retailers are just anticipating what choices they might make, and profiting from the arbitrage.

An acquaintance sold his business some months ago for a tidy sum. The business had been established for a considerable time, was successful, and he had kept up  the level of investment, particularly in his employees, so that it had every prospect of continuing to be successful.

The new owner closed it down.

They took on a few key employees, but locked the gates, broke the operating leases, and sold off the remaining assets.

All they wanted were the customer lists, along with what was in the heads of those few employees who had the direct relationships with the key customers, and the potential scale that was on offer with the elimination of a competitor.  The whole value of the business was tied up in the Intellectual Capital of those in the business, and the manner in which it delivered value to customers, not in the hard assets recorded in the balance sheet. However, in failing to recognise the value of the culture in the business which they destroyed, they ensured that the transaction would be a financial failure over the medium term.

Be sure you understand the full value of those assets not on your balance sheet, and invest in them, as ultimately, they will be the core of the value of the business.

 

Is AI going to take our jobs?

Is AI going to take our jobs?

Nov 21, 2018 | Change, Management

Some of them yes.

Those repetitive jobs where we do the same thing over and over, will be gone.

Let’s be clear about AI. It is artificial, it is not intelligent.

AI is very good at some things  we humans are bad at, but it is no good at what made we humans so successful.  The imagination, and emotion, the capacity to empathise,  and understand complexity we are born with is not artificial, and cannot be replicated by machines, at least not in the foreseeable future.

Machines can do things  faster and more reliably than us, and they do not go on smoko, no holidays, hangovers or emotional attachments to fellow workers.

Machines are fast and reliable, and fast and reliable is a huge benefit.

Machines are also very accurate, tell them what to do, they do it. Again, something we humans are not so good at, we tend to vary things around, sometimes just to relieve the boredom.

Machines do the routine, mind numbing tasks that we put aside, or do poorly. They do not have a mind, so they do not mind being bored.

Al is maths, not magic. All AI is statistics and maths that can be broken down into algorithms so they are repeatable. Machine learning is the next step on the ladder, where the algorithms learn to recognise patterns. This takes trial and error, so that eventually, the machine can isolate common characteristics in a pile of data.

This is becoming more common every day, as we see uses for pattern recognition.

Both Google and Amazon have products you can download and use that deliver astonishing accuracy in pattern recognition. An occasional client has introduced this feature on his remote cameras, so they can now distinguish between a kangaroo and a truck, triggering a response from alarm connected to the camera, so the truck, potentially an intruder sets the alarm, the kangaroo which is more likely just hungry, is ignored.

The next step is usually called ‘Deep learning,’ and we are just at the beginning of this. It is in effect layers of machine learning interacting to identify from a broader and deeper pool of input data the item of interest. We will progress down this track, and at the end, in another 50 years, perhaps machines may be able to ‘sort of’, think.

This stuff all has the potential to make us seem smarter, but we are not, we are just using machines to do what they are good at, while we still do the stuff we are good at, empathy, judgement, relationships.

Over history, technology has created more jobs than it has destroyed. While it will be painful for some, there is no reason to believe the pattern will not continue. Irrespective of the size and type of organisation you belong to, AI is knocking on the door. Open it, realise the productivity benefits, and figure out how to best use it to serve others, and make a buck along the way.

Addendum April 2023. This post was over 4 years old when ChatGPT burst onto the scene, taking the world on a wild ride. In a post in December 2022 I asked essentially the same question, ‘Will HAL’ take our jobs? https://wp.me/p5fjXq-31n and arrived at the same answer. However, the gap of only 4 years has seen the development of the technology referred to above evolve at warp speed, culminating in ChatGPT3.