Jun 3, 2009 | Management, Strategy
The current debate in Australia about executive remuneration, kept alive recently by the departure of Sol Trujillo from Telstra, about who gets what, and how much is enough, is essentially a spurious debate about supply and demand for executive “talent” colored by individuals successfully marketing themselves as the new messiah.
However, it forgets that human beings are essentially herd animals, generally we want to belong to something that reflects our own values and views much more than we want another luxury car or boat, after the initial “need” is satisfied.
Belonging is a basic motivation that has largely been forgotten, and legislation will only serve to push it further into the background of peoples thinking, but it will not reduce the impact on peoples psychology.
Boards that set out to build an organisation to which people want to belong, will attract better talent at a much cheaper price than one that relies on just money.
Telstra paid Sol a pile, and got little back of the effort beyond a demoralized and “values free” enterprise.
Adios Sol, you took the dough, and added little, but whose fault is that?
Jun 2, 2009 | Management
The CEO of a significant business in an industry I know well was walked very recently after the collapse of profitability over the last 6 months.
From the outside, after looking at the public reports, a number of common misconceptions are evident:
- The expectation that the good times will continue to roll. This expectation affects the behavior of all stakeholders in all sorts of ways that are inconsistent with frugal management in tough times.
- They failed to plan for the “worst-case”, while taking all the benefits of the good times as they showed up.
- A scapegoat was necessary to demonstrate that those who were supposedly in charge, (in this case the board) really were in charge, and were prepared to take meaningful action.
- Forecasting has become an exercise in using spreadsheets to extrapolate the current trends at the expense of common sense.
Prudent management plans for the worst whilst hoping for the best.
Jun 2, 2009 | Management, Strategy
Did we ever need a better illustration of the hubris caused by a concreted in status quo than the sight of General Motors, the former pin up of American manufacturing might going into chapter 11 yesterday?
Ironically, over the past 25 years as GM struggled, it bought a number of other businesses, Hughes Aircraft for one, paying substantially more than the pundits believed they were worth, then turning them into cash bonanzas.
The question of why they could achieve this in their associated businesses, but not in their core should keep academics arguing for some time.
However, it will not stop the chain saw being applied over the next 6 months, and the probability that a new, improved GM, free of the hubris of the past, will emerge, but it will not be without pain.
Here’s hoping the now most influential shareholder, the US taxpayer, is being managed by someone with sufficient cahunas to inflict the pain now, so that the patient may live.
Jun 1, 2009 | Demand chains, Management, Sales
The churn of employees in large companies often creates difficulties in retaining a continuity of relationship with customers. This particularly happens in situations where a buyer has substantial market power, such as a large retailer.
How do you build a relationship in these circumstances where the buyers get rotated on a regular basis, and there is usually a very active competitive environment for the attention of the buyer currently in the chair ?
- Account management personnel need to ensure there is a focus on the value you bring to the customer, not just on the price of the deal on the table being negotiated, or the person currently filling the buying role.
- Do not allow the costs of doing business with a customer to overwhelm the investment needed in your consumers and the brand benefits you deliver to them. Retailers are not good marketers for you, they are interested in their brand, not yours.
- Maintain as many personal relationships and points of contact as possible by engaging as many people in your business as possible with their peers in the customers business. Particularly valuable are relationships around service provision and logistics, removed from the negotiating battlefield.
- Be proactive in all things, rather than reactive.
- Be prepared to say “no”, and be able to do so without damaging the ongoing relationship, rarely easy to do, just easy to say, but it must be done to maintain a sustainable negotiating position that leaves you with appropriate margin. Many businesses have gone broke being “successful” with customers with whom they have little leverage.
May 31, 2009 | Management, Marketing, Strategy
In planning sessions, much time is usually spent defining target markets, reviewing sales histories and projections, new product schedules, what customers were doing with competitors, and so on. Sometimes there is discussion about what truly differentiates you from your competitors, what makes you unique, but not often enough.
Why not take it a step even further, and ask who amongst your customers would be in trouble if you suddenly closed up shop, why, and how long it would take them to find an appropriate substitute.
If you manage to answer those questions, you may have succeeded in defining what makes you truly different in the way that you add value to your customers.
In the event that you cannot identify a customer who would miss you for longer than it took to pick up the phone and call a competitor, you need to consider how you can change this before you disappear.
May 31, 2009 | Management, Marketing, Strategy
Sometimes you come across a web site that intrigues, informs, and attracts you again and again. For me, TED is such a site, and within these sites, there are things to which you return for all sorts of often personal reasons.
On the TED site (amongst many fantastic presentations) is a presentation by Sir Ken Robinson, which is thought provoking, funny, relevant, and informing. I was prompted to watch it again this morning when considering the impact of the $ being spent by the Australian Government on the appearance of Australian schools, (gates, painting, new halls, etc) and the political debate surrounding the spending of this money, summarised as necessary short term stimulus to the economy, and doing something useful with the money. Hard to argue, but most of the money appears to be going to contractors who use it to buy units on the Gold Coast (this assertion came from a real conversation in a pub with such a person, but a sample of one in politics makes a truth, we all know that).
Long term we need to be thinking hard about the sort of education we want our kids to have, and how best to deliver that outcome. A painted class-room is useful, but it does not address evolution of the underlying philosophy of what we are delivering, just the delivery mechanism.
Sir Ken, if I may call him that, asks some questions I would like to see answered. In addition, when you have watched it, you will have seen a sublime example of how to use personal presentation skills at a public forum as a way of making an argument. Not a Powerpoint in sight!!
