Dec 16, 2011 | Customers, Management, Small business, Strategy
Being a supplier to FMCG retailers is really, really hard. The two gorillas are demanding, unreasonable, and often just plain stupid, at least that is a suppliers assessment. If you asked the retailers, they would just be doing their jobs, maximising the revenue and margin returns from their shelf-space, minimising their costs, and competing aggressively for access to the consumers wallets.
It is just a matter of perspective, but whilst the customer is not always right, they remain the customer, and if you want to serve them, it is you, the supplier who must adapt or die.
The current pressures on SME food industry manufacturers, a high $A, the retailers push into housebrands, difficulties in funding working capital, skills shortages particularly in regional areas where many of them are situated, and promotional costs, are pushing many to the wall. The long term impact of these changes appear to be all bad for the economy, as food security, balance of payments, regional jobs and skills, and having a manufacturing base from which to innovate, are all compromised. However, there is not much joy in complaining, clearly the various governments do not care, or are more engaged in important debates like gay marriage, and spending our money on sectional interests who seem to have a few votes, so we have to address the problems ourselves.
Manufacturing, let alone food industry manufacturing no longer even warrants a seat around the cabinet table, clearly we are on our own, so we adapt or die, and many will die, the few who successfully adapt will be very good indeed.
Dec 12, 2011 | Innovation, Marketing, Strategy
From bricks and mortar, to the web, and now to mobile apps. What is next for retailing?
There was a blue last week between the current and previous MD of David Jones, about who wore the blame for DJ’s being slow into e-selling, billionaire Gerry Harvey is often bitching about the unfair competition from e-tailers, and Australian post is gearing up to deliver parcels, as their snail-mail service is on its deathbed, certainly unable to support the infrastructure built for another age. Now the just released Productivity Commission report on retailing has recommended that the threshold for the application of GST on imported parcels drop from the current $1000, as soon as it is cost effective to do so.
It seems to me that there is a resurgence of alternative retail, new business models that leverage the changing environment, Harris Farm, Aussie Farmers direct, Kogan, and many others. By looking backwards to set the regulatory framework, we run the risk of compromising the emerging foundations of the future, and stamping on the wrong hat.
Dec 9, 2011 | Strategy
A variation on the classic Boston Consulting model of product portfolio management the classic 2 X 2 matrix, dogs, cows, stars, and, and, and, everybody forgets the fourth category. Usually it is depicted with a “?” in the matrix, and records those projects that are attractive, but where there is little competitive skill you can bring to bear.
Make it easy, just cows, dogs, and kids!
You milk your cows,
Lose your dogs, and
Invest in your kids.
Easy.
Dec 2, 2011 | Customers, Marketing, Social Media, Strategy
How do you calculate the value of an investment in social media?
Any investment attracts the need to try to quantify the returns, both to measure the success of the investment when it is too late to do much about it apart from ensuring the same mistake is not made again, and to prioritise competing investment options against a limited pool of funds available.
Accountants love the discounted cash flow, and real options type analyses that prevail, but how do you do these on an investment in media, social or otherwise?
It makes sense to start to consider “data chains”.
Cause and effect;
Influence and action;
Believable and buy;
These are all examples of the chains of connections that are on the surface largely subjective, but lead to an outcome that can be measured. The task of measuring the return on the exposure that can accrue from a presence in Social Media, and even conventional media, is fraught with challenges, but with systemisation of the pools of data generated from your sales, customer retention, prospect identification, web analytics, and all the other data collection options now available, you can start to see the patterns emerging that can be used to calculate a return, even if there is a “fudge factor” present.
At some point you simply have to acknowledge that behavioral patterns are not easy to quantify, and even harder to predict, but by explicitly acknowledging the chains of cause and effect that exist, you can start to anticipate, if not predict, the returns
Nov 30, 2011 | Management, Strategy
The detail of Strategy development is different for every situation. There is no template that is able to account for the nuances that exist, despite the claims to the contrary.
There are however quite a few sensible and easy to say but usually hard to do things that should feature in your considerations.
1. Go to where the work is done. Too many businesses treat strategy development as an exercise to be completed in isolation, assembling lots of data and PowerPoint slides. There is no substitute for going to where the work is done and realistically examining the issues. In lean parlance, “go to the gemba“, talk to a few customers, some who you would like to be customers, and a few outside the boundaries of your current market aspirations.
2. Identify the assumptions that do not get questioned, those that often make up the foundation of a strategic exercise, and then question them, to ensure they make sense. The “what business are we in” question and “every customer buying a 2mm drill really wants a 2mm hole” observations are a key to strategy development, use the opportunity to make sure you are focusing on the right customer, and what it is they are really looking for.
3. Use stories and analogies to make your points. People relate to stories, they understand analogies, and they are way more fun that moving data around a spreadsheet.
4. Do some scenario “what if” thinking, and make them relevant, but a bit far out there to get the juices going. Several years ago doing a strategic exercise with a client whose business was significantly impacted by the $A, for both the import of raw materials, finished product, and competitive offerings in their market, we did just this exercise. At the time, the $A was around $US.70, and we spent some time discussing what would happen at all exchange points up to $1.20, almost inconceivable at the time, but facing them a few short years later.
5. Make the strategy “porous” in the sense that as new information, situations, and opportunities emerge, that can be absorbed into the strategy, facilitating adjustments in resource allocations and priorities, without compromising the purpose and values of the business.
In the end, strategy is about choice. It is as important to articulate what you will not do as it is to articulate what you will. Making intelligent and robust choices only comes as a result of gathering and understanding data and combining that with the insights and wisdom that are often found out in left field.
Nov 25, 2011 | Strategy
Assumptions are the backbone of all strategic initiatives, indeed, most day to day activity. Often these assumptions are implicit, they make sense, we do not even question the assumption, by default they become as good as a fact.
Really good strategic and design initiatives turn assumptions into facts by finding supporting data, and in the absence of the data to make an assumption a fact, it remains an assumption, subject to continual scrutiny.
A really useful first step in any planning process is simply to ensure that any assumptions are exposed for what they are, assumptions, subject to change in the face of new information .
