Jan 31, 2014 | Change, Governance, Leadership, Strategy
Once the dust has settled, political mud-slinging completed, recriminations done, and blame been allocated over yesterdays decision by the Government not to support SPC Ardmona to the tune of $25 million, which would have triggered another $25 mill from the Victorian government, perhaps we can learn something.
Little of this will be of much value to those workers who will have their lives badly disrupted, but the rest of us had better learn, or it will just be repeated, again and again. SPC has little to do with car making, oil refining, mineral or wool processing, but the seeds of destruction of all these industries stem from similar beginnings.
That seed is the productivity of the capital employed in these activities. Australia over a long period has ensured that returns on capital employed in manufacturing in this country are insufficient to be competitive with alternative locations for that investment. This has been starkly highlighted over the last 20 years as supply chains for just about everything have globalised, and investment in everything except mining where we had (note the past tense) genuine competitive advantages has dried up.
It is not the level of wages, power of unions, concentration of retail, high $A, or any other of the myriad of contributing factors on their own. It is the combination of all these factors over the long haul, and our collective failure to see the long term writing on the wall, and respond to it sensibly, in a measured manner that survives political and economic cycles that is to blame.
Were I given that mystical magic wand, able to shape things to come, unfortunately unable to change the past, here is the list I would have, in no particular order:
- Remove the duplication, ambiguity, and situational insensitivity from our public decision making processes. Big ask here, as it involves substantial reform to our the three levels of government, and all their supplicants and rent seekers.
- Inculcate in both management and managed in the private sector a recognition that the short term lasts, well, only a short time, but poor decisions taken to ease the short term discomfort factor will haunt you for the long term. The longer poor, short term accommodations exist, the harder and more painful they are to unwind, as eventually they will need to be. Lets all grow some backbone!
- Have our political leaders recognise that despite many differences in detail, in the end, we are all in the same boat, and we sink or swim together. It seems that the job of oppositions is to oppose, as articulated by the current PM when opposition leader, and to hell with recognising that not all the best ideas come from your own side of the house. By contrast to the opposition, it seems the job of government is to stay in government, by any means, for its own sake, not for what can be achieved for all of us.
- Add some intellectual depth to the public debate. Currently economic and political debate in this country is conducted on the basis of 2 minute, scripted sound bites, superficial and confected “interviews” that skirt difficult questions, which are in any event, unanswered should the interviewer stray, and with a focus on trivial and emotional, albeit attention grabbing events.
- Develop a sense of what the country stands for, just what that means in terms of the allocation of available resources, and how success is measured. If Australia was a company, it just may resemble a strategic plan supported by the programs, priorities, performance measurement and learning feedback loops that manage the implementation.
A short list with some pretty big “asks” but I remain an optimist, although resigned to being both poor, and a voice in the wilderness.
PS. This article by Robert Gottliebsen subsequent to this post is a very worthwhile addition. If SPC can be saved, and it should be by means other than subsidising the continuance of bad practices if possible, then this is a very useful roadmap and precedent for the necessary changes.
Jan 30, 2014 | Change, Governance, Strategy
Carl von Clausewitz first said, “no strategy ever survived the first contact with the enemy”
It was true in war, and is equally true in business, the only real difference is in the human cost.
That said, not having a strategy is akin to setting off on a holiday, not knowing where you are going, not having any maps, and not knowing if you need to be on a train, in a car, a plane, or if indeed the unknown destination is just around the corner, close enough to walk.
Added to this uncertainty is the observation I have made over many years that having a logical, well developed and resourced strategy, that accommodates the commercial and competitive environment is the easy part, the hard part, the one for which 9/10 points is reserved, is implementation, adjustment and renewal of the strategy.
So, to road test a strategy, I have a list of 8 questions I typically pose to my clients:
- What are the opportunities you see that are not apparently seen by your current and potential competitors?. Often this is not only a function of the innovation capability as it relates to really new stuff, but, as articulated by Marcel Proust, “the real act of discovery is not in finding new lands, but in seeing with new eyes.” Apple did not discover the MP3 player, but they certainly saw the potential of the technology through new eyes.
- What are you the “best” at? No longer is being as good as everyone else good enough, you need to be distinctive, differentiated in some way that is meaningful to customers.
- Where do you look for ideas? If you only look for ideas in your current domain, you are severely limiting yourself to incremental change. Post-it-notes came from a failed glue experiment in 3M labs. The failed “semi sticky” stuff finding its way onto paper tabs used by the pastor in a local St Paul church to highlight his place during sermons. The rest is history.
- If you went out of business tomorrow, who would miss you, and why? I first saw this question posed by Jim Collins in his seminal “Good to Great” book. Answering it focuses the attention on how you add value, and to whom. In the event that the answer to the question is “nobody”, you have a problem. Similarly, if the answer is “company X” but only for a short time till they can secure an alternative, you still have a problem.
- What is it about your past that shapes your future? Our history shapes us all, so understanding the historical “why” things are done the way they are, is a key to changing them when necessary.
- Do you believe all customers are equal, and they are always right? If you do, and it is not uncommon, you are most certainly not allocating your limited available resources to where there is the potential to generate the best return. Years ago as marketing manager in an FMCG business I found pockets of customers who were serial complainers, consuming inordinate amounts of resource. Pretty quickly it became obvious that they were complaining for a combination of the attention and “freebies” that a complaint brought. Politely, I suggested that our competitor may be more willing to accommodate them, I was no longer of that mind, and the problem went away, to my competitor, who never worked it out.
- Are you effectively building and leveraging the varied capabilities of all your employees?. Businesses without people are just shells, people make them work. A former manufacturing client of mine discovered by accident that one of his shop floor operators made the most intricate abstract metal fabrications as a hobby and source of some cash at the local market. From eastern Europe, his English was very limited, but it turned out he had been trained as a toolmaker and welder in an armaments plant in the 80’s before the wall fell. Recognising the potential, his job was completely changed, and the company paid for English tutoring for him on company time. Suffice to say the ROI was enormous.
- Are you learning and changing quicker than those around you?. Change, along with death and taxes, are the only certainties in life. If you are not changing faster than the competitive environment in which you operate, then you are being left behind by someone.
Each of these questions can lead to detailed and useful discussions that can contribute substantially not just to the articulation of strategy, but to the means by which it will be implemented, measured, and altered in response to the reality of the marketplace.
Jan 21, 2014 | Branding, Change, Governance, Management, Strategy
It has been pretty certain that control of Warrnambool Cheese and Butter (WCB) would change since the opening bid by Bega Cheese in September last year. It rapidly became an auction as rival bidders emerged, and WCB shareholders struck the short term jackpot.
The only real question left was whether control remained in Australia, or it went overseas. Seems that question is now answered, as Canadian Saputo becomes the beneficiary of Bega’s 18.8% holding lifting their stake to nearly 50%, with a rush of acceptances expected in the last few days of the offer period.
Progressively, the Australian dairy industry in particular, and Australian food manufacturing in general has been sold off, slice by slice, overseas to the point where there is not much left. Now that the $A has retreated,so that on paper it looks like local suppliers should be more competitive with the global supply chains of the major retailers, there is buggar all locally owned manufacturing left.
It may be seen by some to be a bit jingoistic to want to have control over the supply chain that feeds us, but I see it as common sense. Australia is an efficient, technically advanced supplier of commodities, from grains to meat, wool, and minerals, but the further processing and value adding is very limited.
Realistically, there is little the Government can do beyond developing robust industry policy, then applying that policy with apolitical consistency, something neither side of politics seems able to do. Policy consistency seems to be trumped by short term political expediency every time, and in the long term, we are all the poorer for it.
It is up to Australian management to see the opportunities and invest for the long term, and they have largely failed to measure up. In addition, it seems persuading the suppliers of capital that returns sometimes take longer than the next quarterly period to emerge is a large barrier. The pool of genuine risk and venture capital in this country is very shallow indeed.
Jan 7, 2014 | Change, Governance, Personal Rant, Strategy
courtesy Owen Wilson
I am up around Armidale in the North of the state, yakking to a few contacts, a few people I have worked with over the years, and some potential clients.
Nice area, good, although demanding agricultural land, long history of agricultural productivity and initiative, great potential as a tourist destination with the variety of environments, products and enterprises, and with the advantage of the university, which always adds diversity and intellectual depth to the life of a town.
Problem is, the place seems to be dying.
Perhaps it is just the superficial view of an occasional visitor, informed only by his eyes, and the anecdotes and woes of the small group of people he interacts with, but nevertheless, a compelling picture.
The summer has been unusually hot, records have been set and broken, there was little winter rain last year, a short dump in early spring that moved things along, but nothing since. Stock is now being moved out or dumped onto the market because there is no feed on the ground, harvests have been marginal, and the farmers are not looking forward to the next conversation with their banks.
Meanwhile, the public sector fiddling goes on, clogging the arteries of enterprise in the pursuit of saving us from ourselves. One semi retired farmer up here wanted to put a BnB and farm stay facilities on his property, a lovely spot 30k’s out of town. It took 6 months to get a DA from the council, which was meanwhile commissioning reports on what was needed to develop tourism.
Duh!
This is just a microcosm of what is happening all around us.
Unless we start actually doing something about the causes of the problems facing us, instead of always focussing on mitigating and treating the symptoms, we will be truly stuffed, perhaps not in my lifetime, but certainly in that of my children.
We need to stop talking, blaming ,deferring and avoiding, and start doing useful, productive stuff.
Jan 3, 2014 | Change, Management, Strategy
In a post in January last year, I made 10 predictions for 2013. In the interests of accountability, it is reasonable to see how I went.
So, here goes:
- Marketing is digital and personal, mass marketing is dead! As with Mark Twain’s quip that reports of his death appear to be premature, so to are the reports of the death of mass marketing. However, the trend is clear, and the grim reaper is ‘a comin’. 3/5.
- Social media will overtake traditional news dissemination channels. Few of us wait these days for the evening news to hear about the events of the day. Even if we have not seen it in out twitter feeds, somebody we know has, and has told us. The role of traditional media as a disseminator of news, rather than a source of analysis of the, is clearly over. Arguably the analysis role is also kaput, as traditional media appears to have been highly politicised to reflect the views of the owners, that real analysis hardly occurs. Anyway, who goes to the 7.30 “analysis” shows on TV for anything beyond the foot in the door, inane, and emotive “journalism”. 4/5.
- A few smart SME’s will do very well, but the rest will at best struggle, and many will fail. Still true. 5/5.
- The new “cool” for our kids is to train as a “tradie” as there are insufficient fulfilling jobs left for those with modest, non vocational degrees, to fill demand from the aforementioned graduates. Still true, and getting truer. 4/5
- The shortage of willing and able workers will continue, as we no longer train people to work, we train them to “expect”. As above. A client of mine has a number of farm worker under 457 visas, several of them very qualified (pharmacy, teacher) working happily for wages unemployed Australians turn their noses up at. 5/5
- The 40% of SME’s who do not have web sites, or have sites that act only as an electronic brochure rather than as a magnet to their target customers need to realise they are missing the opportunity to grab the lifeline. Still true. Several services have evolved in the last 12 months that make it even easier. WordPress still rules the roost, but services like Weebly make it even easier again, there is no longer any excuse. This site, Yarralong.com run by a friend of my sisters was done in a few hours on Weebly by someone with few computer skills at all, just a bit of common sense and patience. 3/5
- “Big Data” the combination of traditional data bases and the behavioural and attitudinal data scavenged from social media will become the next big thing during 2013. I still believe this, but the change is slower than I expected. 2/5
- Mobile will take over from fixed line, comprehensively, and across all communication channels. Almost done. 4/5
- The economy will continue to slow, consumers are cautious and risk averse. No change there, the economy is slowing rapidly, in my anecdotal view, slower than the public figures would lead commentators relying on the numbers to see. 2014 will be a crappy year, notwithstanding the drop in the $A. Manufacturing is down the toilet, investment is slowing rapidly, retailers are struggling, large areas of rural Australia are again in the grip of drought, and more will tip into drought as winter approaches. The long paddock will be well used. 4/5
- Around July/August, the economy will stumble into a really nasty hole as we approach a Federal election. The hole was not as deep as I anticipated, but the numbers emerging in the post election period are pretty grim, and we wait to see if the new government has any real strategy, or if they will continue just to dump on the previous government, and focus on getting elected again by spending our children’s legacy. 4/5
Marking yourself can be self serving, so let me know what you think.
Dec 30, 2013 | Customers, Governance, Leadership, Strategy
Just before Christmas, in an unusually hot and humid period, I was attacked by “mossies” while sleeping. The blighters feasted on my left shoulder, leaving a very itchy area.
So what you ask, and fair enough to wonder at the relevance.
It occurred to me that it was a nice metaphor for the “strategic itch” that seems to occur in many enterprises around this time of year. Someone, usually the CEO, gets a mossie in his ear about strategy, which results in everyone putting in an effort to redo the stuff that was probably done last year, a few updated numbers, some new graphs, and a reaffirmation of some vision and mission statements. All this of course culminating in an off-site 2 day meeting that involves a bad head-ache on the second morning.
The itch is scratched for another year, there are some “decisions” that are incorporated into the budget process, but little of real value has been achieved.
Just as scratching the mossie bites on my shoulder offered short term relief, but had little impact on the time it took for the itch to go away, and indeed ran the risk of causing some longer term problems if infection set in, so does the yearly strategic meeting do little, but potentially causes problems.So, here are a few “do’s and don’ts” that may remove the causes of the itch.
Do:
• Identify and consider the drivers of performance and change in your industry
• Consider how your current capabilities are lined up against these drivers, identify gaps, and agree how to address them.
• Review and consider your responses to the value propositions of your competitors, and consider what you would do to you, if you were them.
• Re-acquaint yourself with your customers, ensure you know why they buy from you and not others, and consider the manner in which you build relationships with them.
• Spend time identifying the “cause and effect” chains in your business, and how you can make them more visible, efficient, manageable, and accountable.
• Do a bit of “what if” scenario planning, the more out of the box the better
• Have some different people, from both inside and outside the enterprise in the process and at the meeting to avoid just continuing status quo thinking.
• Remember that innovation capability is about the only sustainable competitive advantage left to us, so consider how best to build the capability to innovate, without worrying too much about that new product in the pipeline.
• Agree a small set of KPI’s that reflect the most important things you considered, and ensure the processes are in place, or at least agreed to measure and communicate performance against them.
• Make sure everyone in the enterprise understands the priorities, and the underlying logic of the priorities, in other words, achieve alignment throughout the business.
Do not:
• Concentrate on the numbers, these days they are too easily generated and tend to remove the motivation to think.
• Allow status to be a determining factor in the importance given to every individuals contribution to the conversation
• Shy away from difficult, or confronting people or conversations.
• Think that all the answers to tough questions can be arrived at in the meeting.
• Think the job is done when the conversation ends. You get 1/10 for talking, the other 9 for doing.
• Think that this is a one-off, annual event. Strategy planning and review processes should be at the heart of enterprise governance, and are an ongoing challenge, particularly for boards.
Have a good strategy meeting.
