Nov 19, 2012 | Sales, Strategy
Sales revenue is probably the most common senior management KPI, and is virtually always present for sales people.
It is a very misleading measure.
A friend, one of the best sales people I know, is in an industry struggling to reform itself in the face of direct sales over the net. Her sales are down 10% year on year, so the blasts from irrational budget enrobed donkeys keeps coming, but her industry is down 30% YOY. In that context, her performance is fantastic.
The basic question therefore when planning sales should be: “What are the demand drivers” Understanding the answer to that should offer a realistic view of the customers motivation to buy, not just from you, but to buy.
Too many ask “What sales can we do” which implies looking internally, ignoring the drivers of demand. They take the easy way, click a few keys to give an extrapolation of the past, which rarely has anything to do with the future.
Nov 14, 2012 | Change, Innovation, Leadership, Strategy
The interesting and fun bits of our world are driven by the vision, imagination, and execution capabilities of people. Much of the capital and technical capabilities required to enable these great things to happen are tied up in our corporations, governed by the legislative, and community demands for absolute compliance to an established norm.
Almost by definition, the norm is boring, ordinary, “so yesterday” as my beautiful daughter would say. How is it then that the boards of those same companies, the people with the ultimate responsibility to determine the long term priorities of the business, and allocate the resources to deliver them for stakeholders make the necessary choices. They have to make choices between the creative, the risky, and the new stuff that will cannabilise their existing position, whilst being tied down to processes that demand short term, conservative, risk averse, and ultimately boring behaviours.
The Corporations Act and various accounting standards, domestic and International, require many things of directors, almost all are quantitative, take great time and energy, and deplete resources, when the real value is added by the qualitative.
As a community, we demand probity from directors, and largely we get it, but the few who play fast and loose, who feed self interest at the expense of the interests of those who are footing the bill, ensures that there are rules crafted to catch the 1%, but that hamstring the 99% in the process.
The few truly great leaders around in charge of our large corporations that manage to make those choices are the exception. Jack Welch at GE made six sigma the manufacturing standard of the west by driving GE along a path invisible to most, and his successor, Jeffrey Immelt followed by a pivot of GE into green power, and has created an 18 $billion manufacturing division in just a few years that promises to be hugely profitable whilst delivering enormous value to the planet. There are a few others, the oft cited Apple, FedEx, Disney, add your own, but it is a short list.
Perhaps it is happening again as the suppliers of the milling and moulding equipment used in manufacturing, are about to be made at least partially redundant by a few outliers who are putting manufacturing equipment on desktops.
Just a pity there appears to be so few in Australia.
Nov 7, 2012 | Branding, Change, Communication, Marketing, Social Media, Strategy
“Change behavior, before you try and change attitudes”.
These were the wise words delivered to me by Hugh McKay, 30 years ago, and I have never forgotten them, and am constantly reminded as I see people justify something they have done that is different, unexpected, or inconsistent.
Behavior is easier to change than attitudes, so get to the behavior first, then again, and slowly, attitudes will alter to accommodate the altered behavior.
Therefore if you want to have effective advertising, focus on which behaviors you want to change, and worry about attitude later, but generally, you need not worry, it will take care of itself.
People are the same as they were 50 years ago, 500 years ago, the things they own and want have changed absolutely, but what motivates people has not. Just look at the behavior that Shakespeare wrote about, greed, jealousy, love, ambition and regret, they are still all with us.
The net is just like an electronic yellow pages. When you know you want something, you go to it to find the best buy, what meets your specs, etc, but you do not create demand in the yellow pages, similarly, you do not create demand on the net, the best you can do is generate awareness of your offer.
Make sure that the two fundamental purposes of advertising are not mixed.
The first is to create awareness,
The second is to create demand.
These two things are not the same, and the communication strategy used must be consistent with the potential of the medium and the manner of the message to achieve it.
Oct 15, 2012 | Leadership, Management, Strategy
To stay in business we all need to make money today, and we also need to understand where the money will be tomorrow, invest in these future cash generating activities, and sometimes make adjustments to the business model.
These adjustments are not just another re-organisation, but evolution in the way the enterprise interacts with and responds to changes in their competitive, technological and regulatory environment.
To a degree this is crystal-balling, predicting the intersection of your capabilities and customer needs, but it is more about being sufficiently agile to enable experimentation to occur in the manner in which you do business.
If you encourage and support such experimentation with the business model and customer offer in a framework that responds to the question “where will the money be in 5 years?” you will be in pretty good shape.
The old quote from ice hockey great Wayne Gretsky when asked what made him great, “I do not skate to where the puck is, but where it will be” is just as valid in business as it is in hockey.
Sep 19, 2012 | Leadership, Marketing, Strategy
Strategy is about choice, which market, customer, technology, and so on.
Never has this black and white choice been so stark a challenge as in publishing, as the established operators struggle to find profitability in the electronic age.
Fairfax in Australia recently announced a record loss of 2.7 billion dollars, a continuance of their recent performance, on top of a series restructuring announcements and a precipitous drop in the share price over the last couple of years. They are not alone in the world of print media.
However, all is not lost. A few weeks ago I heard the editor of the “New Yorker” Henry Finder being interviewed on Sydney radio, a whimsical interview, but the astonishing difference is that the New Yorker is thriving in the new digital environment.
Instead of chasing the commodity, fluffy stories available anywhere, the magazine is going deeper into stories, rewarding readers with superior journalism and a range of views not available elsewhere.
They made a choice, not just to be different to everyone else, but to do it in a way that is consistent with the history and culture of the magazine.
My revered old mentor, Jim Hagler, scion of Harvard Square said to me almost 40 years ago “son, create a niche and then OWN it”. Jim had never heard of the internet, or the disruption it would bring publishing, but his wisdom still holds, and the New Yorker has listened. Wisdom has a context, but it remains wise.
Sep 14, 2012 | Branding, Innovation, Marketing, Strategy
The shape of Apple after Steve Jobs has been a source of much scribbling, and the launch on Friday of the newest version of its golden goose, the iPhone 5 has given us a peek.
The razzamatazz has been huge, Apple all over, but they delivered what the pundits view as a pretty limp offering. Nothing new, apart from a different case, and behind current offerings from Samsung and HTC on a number of parameters.
However, what Apple does deliver that nobody can get close to is profits. On $150 billion forecast revenues this year, Apple is delivering an astounding 28% EBIT, double a year ago, and considerably more on phones according to Creative Strategies Tim Bajarin. All this as their sales in a market growing at 42% are increasing at only 27%.
Apple has its own ecosystem, so to some extent is protected from commodity type comparisons that erode price, but how much of a premium can they sustain, and for how long? Googles Android operating system now has around four times the share of Apple, from “even-stevens” just a year ago, and Google spends 14% of revenue on R&D, to Apples 2%. In dollar terms, they are about the same, and Apple has less of a product portfolio to manage, but the tide of initiative is now with Google, and the momentum is really hard to break.
It seems to me that Apple is mortgaging their future, putting the dough in the bank, much as Microsoft did in its halcyon days, and not continuing the drive that got them where they are today. In a sharp reminder of priorities, Apple is spending big on protecting its current position by suing everyone standing in the tech space, which must be a huge distraction from the disruptive innovations created almost yesterday that put them where they are now.
