Sep 20, 2009 | Management, Marketing, Strategy
Modeling scenarios has become a pretty big business, but notice that you often get only the numbers out of the end of the model, rarely the assumptions that drive the outcomes, and rarely a range of options.
This has been brought home again as I read the “strategic plan” completed at great expense on behalf of an industry body that covers a wide range of individual sub industries, each with their own characteristics and issues, albeit with some common drivers such as water availability, labour availability and capital generation.
Consultants at great expense produced a model that churned out numbers supposed to show the way forward, but which common sense says has a lot of dodgy assumptions going in, because what is coming out is unusable by any of the individual enterprises in the industries, or the industry bodies supposed to assist them.
Most commercial models I see set out to prove a point of view, and that point of view usually aligns with some preconceived notion of what the outcome should be. In this above case, the outcome was driven by the consultants need to tell the industry body what they wanted, not necessarily what they needed to know.
Scientific method by contrast works in the opposite way, it sets out to disprove a hypothesis, and by that means, advance our knowledge a bit, as you reconsider the hypotheses on the basis on one more thing you know does not work.
Bit more time consuming, but outcomes that are untainted by an existing perspective.
Numbers are only as good as the assumptions that drive them, so next time you are given an argument backed by numbers, don’t look at the numbers, have someone explain and debate the assumptions that have driven them.
Sep 15, 2009 | Leadership, Management
Two meetings in two days that demonstrated to me one of the key attributes of a leader.
The first, the group shut up until the leader said his piece, making sure everyone in the room knew he had a strongly held view. Everyone rushed to agree with him, despite the fairly obvious contradiction contained in his diatribe.
The following day, another meeting, another client. The boss made sure that everyone had spoken before he did, and he acknowledged where there were differences, and went out of his way to ensure that just because a view was different to his, did not make it any less valid. After a time, a consensus emerged through dialogue, and it was clear that the group would work its tail off individually and collectively to ensure implementation, in contrast the previous day, when any implementation would only have been achieved as a result of aggressive follow up by the CEO.
Real leaders often lead from the rear, the best are usually not the ones who provide what they see as the solution, but those who facilitate arrival at a solution.
Sep 10, 2009 | Change, Management, Uncategorized
Intel co-founder Gordon Moore, used a graph 40 years ago to predict the rate of growth in IT capacity by stating his belief that the number of transistors that could be put onto a chip would double every two years.
He was talking about computing power, a long way from the environmental debates raging around us currently.
On the radio a day or two ago, I heard a credible source observe that he was astonished to note the rate of carbon being released to the atmosphere was roughly double estimations made just a couple of years ago.
This comment brought to mind Moore’s law, and started me wondering if it perhaps applied to the climate change debate. A recent Newsweek article also observed the rates of carbon emissions were well up on estimates, and that the rates were increasing, significantly because the rate of change was feeding on itself, creating a sort of multiplier effect, Moore’s law at work.
The unedifying sight of Australia’s two political parties taking opposite sides of the debate, simply because that was their allocated role, and apparently refusing to allow the facts to get in the way of a good argument smacks of Monty Python, not the serious debate that is required to start to address the scientific, commercial and social issues surrounding reality, or otherwise, of human induced climate change.
If Moore’s law holds true in the rate of release of carbon into the atmosphere, and the release of carbon is indeed a cause of global warming, we will need to move very quickly indeed to prevent, or perhaps at best mitigate, a catastrophe.
Sep 9, 2009 | Demand chains, Management
Power has shifted dramatically to consumers from the firms that inhabit the supply chains that serve them.
Scale used to give market power that could be leveraged, but IT development has radically changed the location of the power towards the customer.
Scale now just gives the opportunity through scope and access to resources, but that is no longer enough without the one to one engagement with customers enabled by technology.
You do not have to be big to be intimate with a customer, you just have to understand them and react to their needs, thereby turning the old notion of a supply chain on its head, creating a “demand chain”.
Sep 3, 2009 | Leadership, Management, Sales
Negotiation is a daily activity of most managers, almost irrespective of the size of the organisation, and the industry it sits in. On many occasions, a conversation may not be seen as negotiation, as it lacks the adversarial background that highlights a negotiation in progress, but if the conversation has an objective, it has in its nature some elements of a negotiation.
This was highlighted recently in a conversation with a client preparing for a friendly merger, where the outcome had been agreed in principal, all that was left was the “how to” bits, so below is a list I developed for that conversation, in no particular order.
- Any conversation that seeks an arrangement where both parties believe they have done better than their “walk away” point is a negotiation, recognise it when it happens.
- Failure to neglect or understand the other sides priorities and what drives them to participate in a conversation that is really a negotiation is a fundamental one.
- Do not let price hide the other factors that contribute to a successful outcome, particularly the emotional and psychological ingredients. A negotiation is a “climax” moment in a relationship, if there has been no work on the relationship, it follows that the climax will be sub-optimal.
- Allowing established positions to get in the way of sensible and creative compromise that serves the best interests of both parties is a common mistake.
- Early in the process of determining the nature of the negotiation, establish your BATNA (best alternative to a negotiated agreement)
- Processing information that emerges during a negotiation purely from the perspective of your inherent bias can prove to be fatal to achieving any outcome.
Sep 2, 2009 | Leadership, Management, Marketing
If it looks like a duck, walks like a duck, and sounds like a duck, it is probably a duck.
How easily some of us can be led to believe that what we are looking at is something other than what we see.
The old saying about the duck has never been truer than in the recent collapse of Bernie Madoff’s empire. Billions were invested by many otherwise sensible people in the mistaken belief that one investment business could consistently outperform the market under all circumstances.
Madoff conned people over an extended period, creating a “Ponzi” (to Australians, pyramid selling )scheme that became so big, and so successful at attracting new funds that most refused to believe it could be a Ponzi scheme
If it too good to be true, it usually is, irrespective of the hyperbole that may accompany it.
