Feb 27, 2014 | Leadership, Management, Strategy
Some things we can predict with great accuracy, simply because we can quantify almost all the variables that come into play. The path a bullet will follow when fired, how long it will take a brick to hit the ground when dropped, and how much fuel it will take to do 10 laps of Mount Panorama racetrack flat out.
It is when you start to introduce unquantified variables, as distinct from unquantifiable variables, that things get exciting. A strong gust of wind will change the trajectory of a bullet, and a prang on Skyline and subsequent braking and weaving will alter fuel consumption, but the impact of both can be reasonably accurately forecast if they are included in the variables considered.
It is the random events that really cause trouble, the kangaroo that jumps out half way down Conrod, the quick-handed apprentice that reacts to the brick heading for your toes and does a diving catch, these things cannot be reasonably forecast, are random events, but have a profound impact on the outcome.
The point of the story is to again confirm the old adage that strategy rarely survives the first contact with the enemy, so the more agile you can make your reaction to the unpredicted and just plain random, the more likely you are to come out on top.
Feb 20, 2014 | Governance, Leadership, Management
“If this was your money, would you invest it this way”.
This question worked well for many years as a corporate executive, asking the question of those who reported to me about the projects for which they were seeking support.
Usually, indeed, almost always, the answer was “Yes”. Clearly my last question had been accommodated before they got to the point of asking, and they knew it was coming, so made sure they could answer Yes before asking.
The added effect of this question was to ensure that there was a personal commitment from the managers involved, they had to look me in the eye and convince me that they had invested their credibility in the project.
This did not guarantee the proposal worked, that was not the deal, just that it was worth doing, and if it went pear shaped, there was accountability, and the opportunity to learn from the miscalculations would not be lost.
As a consultant for 20 years, I still ask myself the same question when recommending actions to my clients, “would I spend my money on this”
It still works.
Feb 12, 2014 | Change, Management, Operations
Courtesy Cartoonstock
As a little kid, the milkman used to deliver from a horse drawn cart. Even then, in the mid fifties it was outmoded, almost rustic, but endlessly engaging for a 5 year old boy.
Much later, I was the marketing director of a NSW dairy co-operative as it wrestled with the inevitability of deregulation. I was continually reminded by those with vested interests that there should be no change, that the regulation was a good thing, that home delivery of milk was what had made us great, even though customers had voted with their feet. It sometimes sounded like that old milkman of my childhood explaining why he still had a horse when everyone else had trucks.
Yesterday listening to the various political blame allocations for the closure of Toyota, on the heels of the announcements by Ford and Holden, it was groundhog day, again.
Facts, and a dispassionate view of the whole picture played no part. Just like the farmer Directors of that dairy company, everyone else was wrong, they alone had the insights necessary to keep the boat from sinking, disaster from arriving, and the black forces from Hades consuming us.
Toyota has joined Ford and Holden in folding their tents, along with much of the Australian food processing industry.
Lets have a look at some of the underlying factors obscured by the smoke and mirrors of self interest:
- If we are so committed to an Australian car making industry, why do only 20% of us drive one made here? Some more heresy: A significant proportion of those 20% are company supplied cars, where the driver has no choice, and if they did, would that 20% be 10%? Death of an industry!! Who cares, obviously not enough of us. It is just like the food processing industry, which I would argue is just a touch more important, killed off by lack of scale, high $A, global supply chains, the move to low cost manufacturing locations, a history of self important and short sighted management, and political and bureaucratic hubris.
- 35,000 jobs will disappear!! Woe is me, the sky is falling! That number, not to make light of the distress of those who find themselves unemployed, and perhaps unemployable, is less than 0 .3% of employment. Anyway, why is 35,000 the number? Toyota has 600 people in their Sydney offices, none of them are going.
- 25 years ago manufacturing was 14% of jobs, now it is 8%, it was 12% of GDP, and now is 6.5%. The vast majority of people displaced by these changes have found new jobs in industries that barely existed 25 years ago, why not again? Anyway, 350,000 people change jobs every month, every month! Another 35,000 over 4 years is a drop in the bucket, again not to be unfeeling towards those who struggle.
- It could be a financial bonanza for the government. Instead of supporting a corpse, pumping in life support dollars, they can be just counting the revenues from tarriffs as imports increase 20%, they might even remove the “luxury” tax designed to “save” the local industry, now there is no local industry left to save. However, I doubt it, as the “luxury” tax raises$ 1.8 billion. When the previous government proposed changes to the regime to capture tax lost to corporate salary packaging of cars, the current government, then opposition, in a dose of real hypocrisy opposed it, but I sense a change of mind now.
It would be much better if the energy spent looking backwards and allocating blame was spent looking forwards, and building for the future.
Feb 7, 2014 | Change, Leadership, Management, Operations, Strategy
Scaleable.
My world is SME’s, helping them to be more profitable, more commercially sustainable, more accountable, by being focused on customers and their own processes and priorities. The outcome is that most successfully remain SME’s, avoiding the many death traps that lurk, and a few make the leap and become SLE’s, or sustainable larger enterprises.
Watching this evolution occur over many years, different in the detail every time, but following a few core principals, there is one principal, “StrategyAudit’s second law” (the first is “Look after the cash, and the cash will look after you”) that keeps coming up, time and time again.
The second law is “Solutions to problems are specific, and generally do not scale, but principals by which decisions are made can be successfully scaled”
Building scalability into the solutions of problems is about as fundamental lesson in growing a small business into a larger one that I have seen.
Principals scale, single solutions usually do not.
Jan 23, 2014 | Communication, Governance, Management
Peoples reaction to a question, choice, or situation is always coloured by their experience, education, background, and a myriad of other qualitative factors. Where there is a divergence of views, it can become heated, as people invest emotionally in an outcome consistent with their existing mental frameworks. This step from a simple divergence of views to an emotional disagreement can be very small, and quick to make.
Mediating many disagreements over the years ,I have found that arriving at a sensible conclusion rather than just a compromise, is usually achieved in a three stage process:
- Recognise and agree on what is data, supposition, and opinion.
- Understand what the data tells you, and what you can agree on
- Ask what would have to be true for the parties to the conversation to alter their position on an issue.
This simple device of separating what we think from what we know, identifying the gaps, then filling them with data that is agreed serves as a useful tool to both diffuse volatile discussions, and usefully identify information gaps needed to be filled for a sustainable decision to be made, rathe than a compromise reached that falls apart under pressure.
Try it, next time ask “what would have to be true” when faced by a decision, emotion, and a lack of objectivity.
Jan 21, 2014 | Branding, Change, Governance, Management, Strategy
It has been pretty certain that control of Warrnambool Cheese and Butter (WCB) would change since the opening bid by Bega Cheese in September last year. It rapidly became an auction as rival bidders emerged, and WCB shareholders struck the short term jackpot.
The only real question left was whether control remained in Australia, or it went overseas. Seems that question is now answered, as Canadian Saputo becomes the beneficiary of Bega’s 18.8% holding lifting their stake to nearly 50%, with a rush of acceptances expected in the last few days of the offer period.
Progressively, the Australian dairy industry in particular, and Australian food manufacturing in general has been sold off, slice by slice, overseas to the point where there is not much left. Now that the $A has retreated,so that on paper it looks like local suppliers should be more competitive with the global supply chains of the major retailers, there is buggar all locally owned manufacturing left.
It may be seen by some to be a bit jingoistic to want to have control over the supply chain that feeds us, but I see it as common sense. Australia is an efficient, technically advanced supplier of commodities, from grains to meat, wool, and minerals, but the further processing and value adding is very limited.
Realistically, there is little the Government can do beyond developing robust industry policy, then applying that policy with apolitical consistency, something neither side of politics seems able to do. Policy consistency seems to be trumped by short term political expediency every time, and in the long term, we are all the poorer for it.
It is up to Australian management to see the opportunities and invest for the long term, and they have largely failed to measure up. In addition, it seems persuading the suppliers of capital that returns sometimes take longer than the next quarterly period to emerge is a large barrier. The pool of genuine risk and venture capital in this country is very shallow indeed.
