Dec 18, 2013 | Change, Collaboration, Leadership, Strategy
Years ago I worked in a small management group that was faced with the resurrection of a failed business. Problem was, the parent company was blissfully unaware, as the poor performance was hidden inside the operations and overhead recovery of the much larger parent entity.
When it was broken out as a separate division, I did the first P&L, in those days by hand on a 25 column ledger sheet, (any readers remember those?) and wondered what the hell I had done leaving my comfy corporate marketing job for this pile of smelly, baked-on crap.
Over a period of 6 years, this small group turned the business around. It was profitable, 5 times the size, and strategically well positioned. Then the MD of the parent woke up with a good idea in his hand and re-merged the division back into the larger business in an effort to capture some of the successful competitive DNA we had grown. You know what happened then.
Upon reflection, the core of our success was two things:
- Relentless focus on the things that mattered. We relentlessly identified problems and their root causes, and attacked them as a group, disregarding the superfluous, distracting, and often attractive alternative opportunities to spend our time.
- We worked together. The management group, a pretty standard functional arrangement argued, experimented, and engaged as many people as we could who may have something to contribute. People on the operational floor often had the solutions to problems before we had identified the problem adequately, no information was privileged, apart from salary levels, and every pair of eyeballs, and voice listened to, and encouraged. We just had to trust everyone, and it worked. By having many eyeballs on everything, we always had better outcomes.
I am reminded of all this, some 25 years later, with pride, some nostalgia, and sadness. One of that small group died last week, and many of those involved attended his funeral yesterday, it was a sad but joyful day.
Vale my friend and colleague George McDonald, St Peter better have a solid lock on the VB fridge.
Dec 16, 2013 | Branding, Governance, Management, Strategy
For perhaps the 1,000th time last week I heard the “strategy” question asked. It comes in many forms:
What is your customer strategy?
What is your google strategy?
What is your social media strategy? and so on.
All are valid questions, but the implication is that there is a different strategy for every bloody thing that is faced by a business, which to my mind is a degradation, perhaps commoditisation of the meaning of the word as it should (in my view) be practised. This type of usage is about the implementation of strategy, the manner in which you go about achieving the strategic outcomes desired, not about the formulation of the drivers of performance over the long term.
Equally, having an annual “strategic workshop” that sets strategy for the year is a nonsense, well, at best a budgeting session by another name.
“Strategy” is at once simpler, and more complicated than that, and comes down to five really challenging questions that must be lived, every day, by all in the enterprise. They are not the subject of some crappy off-site gab-fest in the slow sales period of the year if you are serious.
- What is the business we are in? (the old are we selling drills, or 20mm holes question, probably the most undervalued, and original marketing question)
- What does the enterprise do to add value?
- What are the behavioural drivers of the primary customers we are seeking to service
- What is our value proposition to these customers and potential customers?
- What capabilities are crucial, now and into the future, and how do we develop them to be differentiated?
When was the last time you seriously asked yourself any of these?
Nov 27, 2013 | Change, retail, Sales, Strategy
The verb that describes the process of retailers ignoring the shift to digital: payment, e-shopping, mobile selection of destination, on-line reviews, and so on.
The business model is rapidly evolving, whatever your current model may be, nothing is set in stone, or even rubber. To survive, business models need to be granular pieces of collaborative capability that capture the instantaneous, mobile, web-enabled future.
Currently, our esteemed political leaders are debating how to extract GST from net sales, bleating about the lost revenue that should go to hospitals, schools, and perhaps overseas study tours. It has happened for the last few Christmases; the retailers’ association generates some on-line sales numbers, then applies GST, hyping up the lost revenue to pollies who are too silly to recognise the flaws in the logic:
- Not all sales over the net are “lost” sales to bricks and mortar retail: the net is a demand generator, it does not simply suck sales away from retail.
- Not all net purchases are from international sellers: many are domestic, on which the GST is collected.
- On-line sales are growing strongly, but are still a modest 6.3%, according to the latest NAB survey. Optimising the other 93% would seem more productive than bleating about the little they lose.
- The compliance costs will be huge. Irrespective of how many economic models are generated, common sense would lead to the conclusion that a significant percentage of parcels would need to be opened, and heavy fines imposed, to put a brake on international purchases. If Customs cannot stop the flow of drugs, guns, and such by post, what makes them think they can be more effective slowing the flow of Barbie dolls and books at Christmas?
- Our retailers have the perfect right, if not the capability, to sell internationally, boosting their numbers. Obviously, boosting capability would seem sensible.
The world has moved on. Being “netf…ked” is optional – a choice in the hands of management. So, why not set out to be the netf..ker” rather than the” netf..kee”
Nov 21, 2013 | Governance, Management, Marketing, Strategy
The metaphor for business as war is widely used, and it does have considerable value when considering strategy, tactics, capability development and resource deployment.
Marketing is a base component of this mix. It requires you to see the world, product offer, through the eyes and behavior of others, your customers, and potential customers, and in so doing, observe and understand the value proposition of alternative offerings.
So, if there is a metaphor for the competitive aspects of marketing, it is act like your enemy, do to yourself what your enemy would if they had the information, resources and capabilities you have, with the intent of defeating you.
With apologies to the original, “do unto others before they do unto you.”
Nov 12, 2013 | Category, Change, Governance, Leadership, Strategy
Years ago there was a line in the film “Breaker Morant” where the breaker, played by Bryan Brown said of a young ladies virtue “another slice off a cut loaf will not be missed” .
I never forgot the line, and have used it often, usually to make the point that a collection of small, and in themselves insignificant changes all added up eventually make a big difference. Just like a loaf, one slice may not be missed, but lose some more, and soon enough you have no loaf left.
The treasurer approved the takeover of Warnambool Cheese and Butter (WCB) earlier today by the Canadian group Saputo, should the current take-over squabble turn out in their favour
The original Saputo offer of $7.00/share has now been upped to a current $8.00 with current share price well north, there is anticipation of further action by Bega Murray Golbourn, or Fonterra.
It is now inevitable that WCB will cease to be an independent dairy processor, it just remains to be determined if it will be owned domestically or by an international entity.
The WCB directors have done a pretty good job by their shareholders, their shares are now trading at 8.50, after being stuck around $4 for a considerable period up till July, after some pretty crap results. This is despite being a strategic supplier in an industry with demand growing strongly, particularly in Asia.
There is a bit to go, but WCB is as good as no more. Now to the offer of ADM for Graincorp, a decision slated for December 17, and feted as the more important of the two decisions due to the competitive stranglehold Graincorp has on grain handling infrastructure in the eastern states. If nothing else, the pathetic blustering of Warren Truss , and acerbic one-liners from Barnaby Joyce will be worth waiting for.
The real concern however, is the long term impact of having major food producing industries controlled overseas. Without being in the least bit xenophobic, and recognising that Australia simply does not generate enough capital to fund all the demand for capital in the economy, it cannot be healthy for the prospects of our grandchildren to be so beholden to the overseas boardrooms who control the food supply chains.
Stop the presses:
Murray Goulburn has made a further offer for WCB on Thursday 14th of $9/share, a substantial premium over the current Saputo $8/share offer, and over the closing price of $8.50 on the exchange. This is pretty heady stuff for a business that has consistently failed to deliver adequate returns to shareholders for some years, and it is hard to see how Saputo can go much further without the rationalisation benefits that MG would have.
Stop the presses, again!
It is Sunday 17th, not a day of rest in the dairy industry. Murray Goulburn has indicated that they will beat the latest Saputo offer, price to be announced, but they have the hurdle of competition policy to jump, stupid as that is in these circumstances. So, the deliriously happy WCB shareholders have the choice of taking the unconditional Saputo offer now, or waiting a bit to see what MG has in store. Meanwhile, Bega have upped their bid, but it is below the Saputo bid, so is essentially irrelevant. However, what is not irrelevant is the Bega shareholding in WCB, which along with that of MG and Fonterra add up to around 40% of WCB.
Whatever happens to WCB this coming week, Bega will come into play as soon as the dust has settled, perhaps sooner, as it is one of the very few Australian dairy assets left bigger than a paddock with a few cows and a bathtub.
Oct 30, 2013 | Change, Innovation, Marketing, Strategy
Engaged in an innovation portfolio management assignment a while ago, we struggled to define why one project should continue to suck up resources in preference to many other seemingly worthy opportunities.
We tried all sorts of models, financial and strategic, and really faced the dilemma that all were driven by assumptions, the accuracy of which was only clear with hindsight.
Not much help there.
We set about distilling all the data, assumptions, models, and diagrams we had collected into something simple, something that reflected more than the assumed commercial and strategic value of the initiatives, something we could engage with. We came up with one word, and three questions.
Value.
Who would benefit from this initiative?
Why was it better than anything else?
Why should anyone care?
Suddenly the task became clearer.
The discounted cash flows, competitive positioning, portfolio diagrams, and potential for stock exchange announcements became less important, and what become far more important was the simple notion, which of the projects we were considering was doing something important, solving a problem, adding value to someone unavailable elsewhere.
We developed a set of metrics covering these three questions we called the “Value Gap”
The value gap analysis between options to invest in new stuff became the benchmark for prioritizing projects, and we found there were only a very few from what had previously been a significant portfolio that were worth our effort.
