Feb 8, 2012 | Change, Management, Operations
It seems paradoxical to me that the most successful company on the face of the earth over the last decade, one that has been successful because of their astonishingly good product design, have not leveraged that innovative capacity into their operational design.
I refer of course to Apple, whose profit in the December 2011 quarter was $13.3 Billion, and they became, again, the most valuable company in the world.
The woes of Apple’s supply chain, particularly Foxconn have been extensively covered, and most, if not all of Apples customers would be familiar with at least a small part of the story.
Around the developed world, and increasingly elsewhere, it seems consumers are developing a conscience, they care about more than just product performance, and are evolving to make purchase decisions that includes some consideration of the “integrity” of the product concerned, from organic food, to sports shoes, to coffee, and now to electronics and gadgets.
Innovation is way more than just making the products better, it is also about making the supporting structures better, improving the whole operational chain, not just the consumer facing end.
Imagine the innovation Apple could bring to the manufacturing supply chains they employ if they took a small piece of their enormous and well deserved profits from their product design, and focused on operational design. Instead of observers using Toyota Production System as the benchmark, in 10 years it would be the APS, Apple Production System, and their profits would have soared again.
Oh, by the way, if Apple managed to create an APS, their improved profits would come not just from their superior design of the whole value chain, their APS, but because consumers do truly care about the integrity of what they buy. In that event, a few of the building blocks for a re-emergence of manufacturing as a economic driver in the US and Europe would be put into place.
Jan 24, 2012 | Management, Operations
Budgeting and storytelling are synonyms in many companies I have seen. The budgeting process usually is a source of much angst, optimism, gaming, heavy workload, and often intimidation.
We all bitch about the inflexibility and unreality of the budget setting process, as well as the disruption to operations when they are being negotiated, and for what? Usually a set of numbers based on how well individuals and functions believe they can game the system.
It seems sensible to find a way to make the performance management processes much more responsive to the environment, changing circumstances, competitive initiatives, and innovation opportunities that emerge.
Given budgets are about costs, the costs of doing business, of investing, of risk taking, of offensive Vs defensive action, and resource allocation, it seems a simple set of questions before a cost is incurred would be useful.
Instead of just asking “do we have the budget”?
Ask:
- Why is this action necessary”?
- Will the action achieve the necessary result?
- How is the expenditure adding value?
- Can we effectively execute on time?
Questions like these can drive a continuous priority review process, always a good thing.
Jan 23, 2012 | Change, Management, Operations
Most of us know that if we set out to lose weight, a crash diet usually just works in the short term, what we really need is a change in lifestyle, or at least, some aspects of our lifestyle.
Obvious.
Why then is it that in corporate life we usually take the crash diet course?
There have been lots of headlines over the last few weeks about the probability of job losses in the banking sector, a response to the looming financial difficulties. The financial services sector has been doing very well, record profits despite the problems of a couple of years ago, and have been adding jobs, close to 40,000 over the last decade, and now they need to diet, so “crash” find 10,000 to cut.
Surely the problem is one of an ageing business model, in personal terms, too much junk food, not enough veggies and exercise, so now the management reaction is a commercial crash diet. History suggests there will be a lot of pain, and long term, little or no gain.
Those customers whose business is down the shallow end of the banks customer Pareto, the SME’s who are really the engine of sustainable growth in the economy will now find it harder to borrow. The banks are tightening the screws because of their crash diet, so there will be no-one to understand their SME customers business and consider their funding needs, and requests will be reduced to decision by an algorithm. Both the banks and the SME borrowers will lose under these conditions.
Pretty soon, hopefully, someone will realise the problem cannot be solved with a crash diet, it needs a lifestyle change, and only when that happens will sustainable recovery of commercial fitness be possible.
Jan 20, 2012 | Change, Management, Personal Rant
The Federal Government is regularly blackmailed into providing assistance for the Australian car making industry, hundreds of millions on the basis that the industry is strategically important. The real reason is the political poison that closure of a plant causes, as suddenly lots of voters are unemployed, and the support and component suppliers (and their voting employees) are in trouble.
Kim Carr is just the latest in a long line (a conga line?) of Industry Ministers to go to Detroit, only to find that the captains of the car industry do not really care about a modest market and manufacturing outpost that has no real strategic place in the global supply chain, and therefore is expendable. If Australians want to keep them open, here is the price!
What a difference to the processed food industry.
It employs just as many, probably more, and does have a genuine strategic role, feeding ourselves seems pretty strategic to me, but is more fragmented and therefore unable to point to individual electorates and predict disaster, so we just let it rot.
Hypocrisy, perhaps blind stupidity, of the first order.
Jan 18, 2012 | Leadership, Management, Marketing
In the good old days of mass marketing, you could survive in a marketing role, even a senior one, with a pretty generic set of analytical, project management and people management skills.
That is no more, just as mass marketing is no more.
Markets have globalised and fragmented at the same time, consumer and customer behavior is no longer reasonably predictable across demographics, channels are evolving daily, communication options are now in the thousands, and information on product performance, price, features, availability, and so on, is everywhere.
The key marketing KPI is now curiosity.
Marketing people need to be prepared to go and see, to experiment, be brave, spend time at the coalface with consumers, and generally know far more than they had to in the past.
If I was recruiting to-day, Curiosity would be at the very top of my “must have” list.
Dec 21, 2011 | Leadership, Management, Operations
The best management tool available is amongst the cheapest, a pair of shoes.
Hierarchies are vertical, they filter and modify information as it goes up and down an organisation, but real things, those that customers pay for, get done in an organisation horizontally, and generally at lower levels, at the “coalface.” So, for someone at the top to really understand what is going on below, they must be where the action is, not in the boardroom.
In Lean parlance, a “Gemba walk”.
Get yourself a pair of shoes for Christmas.
