Nov 1, 2011 | Change, Leadership, Management, Strategy
Gary Hamel is one of the leading management thinkers around. Every time he speaks, he is worth listening to, and whilst you may not always agree, there is always depth to his views.
In this post he proposes that management as we know it will be destroyed by three forces of the 21st century . To quote, “Over the coming decades, these forces will mostly destroy management as we know it”
The forces he refers to are the rapid changes in the competitive environment that just keep accelerating, the development of web based collaboration tools, and the impact of the generation just growing up to whom the net is just there, a thing that is not even considered, to repeat his metaphor, it is as transparent as water is to a fish.
As one who talks about this stuff continually, I wish I could articulate is as simply, and clearly as he does.
Oct 31, 2011 | Management, Marketing
The Fair Work Australia decision overnight to order the termination of industrial disputation immediately, rejecting the unions request for a 120 day moratorium on action, is a win for managements right to manage for the long term health of a business at the expense of short term and sectional interests of a group of employees.
The implications go wider than just Qantas, although the catalyst to the decision by FWA was the generation of political pressure brought about by the lockout. If you cannot generate the political pressure, the result would have been different, this is hardly fair to the vast bulk of businesses, and it has reintroduced the spectre of compulsory arbitration by a legislated body of political appointees.
It will be interesting to watch the way this plays out across the political landscape over the next couple of years before the next election. The unions will be outraged, and we will see posturing worthy of an academy nomination, but the threat of an Abbott government coming in with an agenda that includes a further winding back of union power will give them nightmares.
I guess the lesson is that if you have the power, use it, but if you don’t, get ready to duck because the industrial landscape just got ugly, and unpredictable.
Oct 27, 2011 | Lean, Management, Operations
What a great phrase to start a debate around the board table, often heated, as most still see the two as a trade-off, the better the quality, the higher the cost.
How much better to beat the bean counters at their own game by quantifying it:
Quality cost = the number produced outside specification X the total cost of rework & disposal.
Simple. The cost of quality calculated, and how often will you find any added short term cost during production will be dwarfed by the costs of managing the out of spec production.
Oct 24, 2011 | Management, Personal Rant, Small business
It seems to me that the geniuses making economy wide financial decisions around the world, but particularly in the US and Europe are making the same mistake many of my SME clients make. They are failing to distinguish between the short term, tactical decision making that can reshape a P&L in any given month, whilst ignoring the long term strategic decisions that shape the balance sheet.
What is the difference between giving Woolworths a big discount to enable a deep price cut on your product, then promptly turning around and borrowing to produce more, and the so called “Quantitative Easing” being practiced by the EU & US? Giving Woolies the discount may make the P&L look better for the month, but when the discount is borrowed, all you are doing is loading the balance sheet up with more debt that needs to be repaid at some point, or you go bankrupt.
You do not have to be a brain surgeon to understand that when the credit card is full, and the debt is bigger than the income, some radical spending surgery is required, partnered with an increase in the value extracted from every dollar that is still spent. Most consumers understand this, and manage it, those who do not, have their credit card taken away.
Why is it so hard?
Oct 18, 2011 | Change, Customers, Management
One of my clients is in a pretty difficult spot.
Having lost a major contract, simply on price from an offshore based competitive supplier to his supermarket customer, he finds himself in the position where his overheads will eat him alive quickly without very painful commercial surgery.
Over a period of time we have been discussing the Quality of his sales Vs the Quantity of sales, but assembling and allocating the resources to execute a change in the customer base has proven easy to say, very hard to do.
It is fine to obsess about the sales revenue line, but rather than just consider the quantity of sales, the quality is just as, if not more important. Had the volume he did with the supermarket been spread around 3 customers who were less likely to go offshore looking for a better price, even accepting the higher transaction costs, he would today be far better off.
Many businesses, particularly service businesses like insurance and Telcos factor in customer churn, and spend lots of marketing dollars to replace the customers they will lose through poor service, pricing, competitive deals and so on. Directing a small percentage of those dollars to better engaging with and servicing existing customers to reduce churn would be far better.
It is the quality of sales that should be measured, not just the quantity.
Oct 17, 2011 | Management, Marketing, Small business
If imitation is the best form of flattery, domestic FMCG suppliers, the few left, should be very flattered indeed.
Any lingering doubts about the pressure being applied to them by the two retail gorillas should be blown away by this video from ad agency Mumbrella, which demonstrates the fine line between flattery and IP stealing.
This has happened in front of our eyes to one of our core manufacturing industries, and when the piper calls to be paid, it will prove to be very expensive indeed. There is so little packaged food manufacturing now being done in Australia that the industry is in real strife, I suspect scale is rapidly falling past the point of viability, and those left are under great pressure.
Perhaps the new ACCC chairman Rod Simms will follow up on his words that seem to indicate a different attitude to the retail duopoly than his predecessors.
