Jul 1, 2012 | Management, Personal Rant
If Australia was a company, it would be a case study for the need for a coherent strategy as the basis for commercial sustainability. As it is, the place is a shambles, the Directors are held in contempt, clearly they are not listening to management, and have no ideas themselves beyond short term self preservation, and are simply wasting the proceeds of our collective good fortune.
Lets consider some of the characteristics of an enterprise that is successfully meeting the needs of its stakeholders, while building the foundations of long term prosperity.
- The board has articulated a clear, simple purpose for the business to exist, and a strategy that is well understood throughout the business, and by outside stakeholders. Where individuals, or groups have a divergent view, they see that there has been a transparent “due process” undertaken, so they do not feel, as if their voice is irrelevant, or unheard. Contrast that to Australia’s current “board” in Canberra. There is no coherent articulation of the values we hold dear, but when it suits, hypocrisy and expediency with the truth are paraded out as virtues.
- In a corporation, available resources are allocated across a portfolio of needs, from overheads necessary to keep the place running to projects that will build the foundations for continuing prosperity, and those that are needed to address more short term challenges. Contrast that to the poll driven expediency of our current board, and total lack of any management skill, project or otherwise.
- In a corporation, once priorities have been agreed, resultant activities are driven by the desire for simplicity and consistency in the manner in which the contributions to the outcomes are measured and equated. Consider the inconsistency of the introduction today of the carbon tax. The objective is to, supposedly, make a start to a carbon neutral future, give a fillip to carbon reduction technology, and so on, but at the same time subsidies are being given to the Aluminum smelter in Geelong to keep 600 jobs, while the smelter continues to take 15% of the electricity consumed in Victoria, generated from brown coal. Inconsistent??? If the logic holds, Fairfax and News Corp should be in line for massive assistance. After all, they are semi redundant industries laying off 2,000 workers, so they must warrant assistance, right? Hell might freeze over.
- In a corporation we would get the best people we could to head the functional responsibilities, and they would faced the discipline of the bottom line, and delivery of objectives. Here we get, with a few notable exceptions on both sides, political hacks, deal-doers, and “operators” who have served their time in parties whose membership is small enough to fit in a phone box, and who will do and say anything with impunity, if their skin is thick enough. As a result, Australians have lost faith in their integrity, and ability to deliver anything of value.
- Oh, and by the way, we can put directors who lie to shareholders in gaol, although they usually just get a whopping fine, and are banned from being a director again. This is not just a shot at the current prime Ministers whopper about carbon imposition of a tax, but at the whole body politic who seem to be impervious to the truth, use data in highly selective and misleading ways, and squirm at any notion of transparency and accountability. The same lot however, will legislate to outlaw their behavior when others copy them. Is it any wonder that we have lost all respect for them
Jun 15, 2012 | Management, Operations, Small business, Strategy
This is a term coined by Peter Drucker when talking about contract management, particularly in relation to older contractors who bring a wealth of experience and hard won wisdom to the table.
Using contractors, particularly high level ones brings a number of huge benefits:
- Turns a fixed cost of an employee into a variable, project specific cost.
- Easier to impose specific performance measures, as the responsibility of the contractor is to the task, and less to the cultural environment.
- They bring immediate resources to projects otherwise difficult to staff
- Offers the flexibility for enterprises to bring in specific skills from time to time, that they do not need all the time.
- Generalists, and those with a wide experience, are better at seeing how logically unrelated pieces may fit together, they are less concerned with ambiguity, than specialists, and less likely to “anchor” an analysis in their specialty, and narrow perspective.
Our economy is undergoing structural change, management productivity is under scrutiny, so it makes sense for businesses, from start-ups to huge multinationals, to take advantage of the big pool of highly experienced, mobile, and motivated older contractors.
Jun 13, 2012 | Change, Customers, Management, Marketing, retail
Data mining as it is evolving in retail is a fascinating exercise in identifying behavior characteristics that apply to very small percentages of the shopper population, and doing something with them. Progressively retailers are getting better at leveraging the data, and as the penetration of cards increases past a critical mass, so will the effectiveness of the marketing and promotional programs. Of course, consumers are well aware of this, and have well developed “relevance meters” built in.
Consider the category management of potatoes. Pretty dull stuff? no, fascinating stuff. I am making these numbers up to illustrate the point, but consider, of 100 customers using their cards at the checkout, perhaps 10% have potatoes in their trolleys, and 10% of that 10% have a particular variety, and of that 10% (now down to 0.1%), they also have sour cream and chives in their trolley. Pretty reasonable guess that the potatoes will be cooked in their jackets, with sour cream and chives garnish, particularly if the shopper is single, no kids, and also buys steak. An opportunity to offer the consumer a deal on a bottle of red wine on her way out of the shop, or in the associated retailer across the way? Multiply that by 5 or 6 million cards, and you have a pile of data to mine.
The gold standard of retailer card data mining is Dunhumby, now owned by UK retailer Tesco. They did such a great job in the development stages of the Tesco loyalty card, that the retailer bought them to keep their competitors away from them. In a move that recognises the future, Dunhumby is now crowdsourcing ideas via Kaggle, a fascinating startup that turns data mining into a competition for data nerds.
This is Category Management on steroids, and represents a monumental change in the skills needed by FMCG suppliers deal with dominant retailers. In the Australian context, very few FMCG suppliers have any idea of the power of the data tsunami coming at them, and how this will impact on their brand marketing strategies. It is also the realisation of the vision of category management the few of us who were playing with this stuff 30 years ago had when the data was warehouse withdrawals, we had a bit of U&A consumer research, and managed it all with calculators.
Jun 11, 2012 | Branding, Change, Communication, Management, Marketing
Today in Sydney has been about as miserable as it gets. Rainy, cold, grey, just plain shitty, and not fair for a public holiday.
What a relief it was to find a distracting way to spend the afternoon.
After watching the replay of the unfinished French Open final, assiduously avoiding any media when I “rose” so I did not know the score, I started to clean up the hard drive of my laptop, removing some of the stuff that had accumulated to clog it up.
Amongst the “random savings”, were quite a number of advertisements I had accumulated from various sites, all of which had the common element of having struck me at some time as being enormously creative, funny, engaging, delivering a serious message, or just sufficiently different to really cut through, when flogging stuff from cars and fashion to condoms and computers. They all, in one way or another, rang my creative bell.
It also struck me that we are in the middle of a huge confluence of two enormously powerful forces, technical development, and creativity, that is changing everything. Hardly an original insight.
The technical advances of the last 15 years have reduced the costs of technology, and the distribution of content to relatively miniscule proportions, which has opened up huge new opportunities for creativity to be seen. However, the digital media has become so clogged with content, from the great to the absolutely inane, that being seen is still the greatest challenge, so creativity remains an essential element of all successful communication. It has also offered up the opportunity to focus laser-like on a very small group of individuals, delivering a compelling message that they would have been unlikely to get in the old mass communication days.
I cannot finish without offering my pick as the best ad of all time, at least the best I have seen. Perhaps surprisingly, it comes from my childhood, so is a very old ad, but is a very simple execution delivering a powerful message in unequivocal terms. Pity the companies management was not up to same standard as their communications people.
Jun 7, 2012 | Management, Marketing, Small business, Strategy
Anyone who can read can read a Keats sonnet, but not everyone can “see” the lyrical quality, and feel the passionate introspection most have at their core. Those who can are truly literate in English poetry.
Data Literacy, a term I like, similarly implies not just an analytical capability, but also an intuitive capacity to understand the nuances and hidden gems in data, rather than just the capability to be informed by apparent outcomes.
Have you ever seen people making stupid decisions while pointing out that the data justified them?
I see it all the time. It seems to me that there should be a knowledge building chain here, rather than just a data analytical one:
- Gather data,
- Analyse data,
- Apply healthy skepticism to the outcomes,
- Gather more, preferably counter intuitive data,
- Pursue the trends, outliers, inconsistent data, apply informed analytics rather than statistics,
- Synthesis of the complex, often paradoxical information,
- Informed intuition, and data literacy evolves.
Not all numbers are equal, some are more reliable and informative than others, simply because they are the result of tested assumptions, and more and better informed questioning. The development of literacy takes time, effort, and resources, but is worth it.
Jun 5, 2012 | Change, Lean, Management, OE, Operations
Robust, repeatable, and easily taught processes are the foundation of good outcomes. It therefore makes sense to consider the factors that separate good processes from poor ones, the effective from the ineffective.
The measure of the process has two parameters:
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- Repeatability. The outcome is repeatable, it has become the way things are done, so has an element of “automatic” about it.
- Agility. In apparent contradiction to the above, effective processes must also be sufficiently agile to accommodate the short term stuff that just happens, and flexible so that they can evolve to continue to deliver optimum results in response to the changes in the environment in which they operate.
Over 35 years of participating, observing and analysing processes, there appears to me to be a small number of enablers that drive effective processes. The weighting of these factors is different from situation to situation, but all are evident to some extent in every successful location.
- Deliberate Design. Successful processes are the outcome of a deliberate design. Sometimes the design comes after a process has evolved, and it is modified and optimised post birth, other times, the design is a deliberate response to a situation that requires a process.
- Infrastructure support. Processes do not survive in a vacuum, so the organisational and operational infrastructure, and the culture of the organisation play a significant role in their success. Without any of these three infrastructure foundations, a process will become sub-optimal.
- There is an “owner”. This is just another way of saying that someone in the organization takes specific responsibility for the effective management and support of the process. The more important the process, the more senior the process owner should be. In almost every situation, a process adds to other broader processes, and each component should have its own owner. Eg. An inventory management process has many sub-processes, from the documentation of deliveries to the appropriate allocation of purchase order numbers and general ledger postings. The “Inventory Management” process may be owned by the CFO, but the supporting components will be owned by others at the more operational levels.
- Process metrics are in place. The old saying, “you get what you measure” is accurate, without performance measurement against current criteria, as well as some that may reflect how the organisation expects the process to evolve, it will solidify at sub optimum performance levels.
- Process improvement. Continuous improvement of processes is a feature of successful businesses, the environment in which businesses operate is subject to ongoing change, and therefore the enabling processes need to evolve to best reflect the environment. In an apparent paradox, improvement is really only possible in a situation of stability. To improve a process you need to be able to identify the impact of a change in the process on the outcome, and you can only do that when the impact of all the existing variables are known.
