Jun 9, 2011 | Change, Innovation, Lean, Strategy
Is there a win win here, does being sustainable environmentally mean a compromise to commercial sustainability, or is environmental sustainability a foundation of commercial sustainability?
Increasingly the latter is becoming the more obvious answer.
As the green debate widens, and business takes a view, the pro’s and cons will get aired, practices will change as best practice evolves and is copied, and our consumption of inputs/unit of output will reduce.
Recently in the UK I saw business and environmental sustainability work hand in hand in the produce supply chain to supermarkets. Barfoots of Botley, a producer of corn, and other vegetables to the supermarkets in the UK has commissioned an anaerobic digester that consumes all their organic waste, turning it into gas to run the processing and packaging plant, with the excess being sold back to the grid. The sludge from the digesters is a great fertiliser for their farms and for sale, and increasingly other local growers are sending their waste to Barfoots for processing, creating an added income stream. As a by product, their major customers love them for it, as it assists their “green credentials” with M&S recently being a star in the Tech magazine Fast Company’s top 50 innovative companies list
Around the web there are lots of stories of businesses that have set out to reduce waste, and the benefits flow. Subaru in the US has spent years reducing waste, and is now the creating no waste at all to go to landfill, but that effort is a part of the effort to ensure that their customers are paying only for what adds value to their experience
Michael Porters January 2011 contribution to the question in the HBR, his notion of “Shared Value” makes a strong case of mutual benefit, and as you look around, it is there to be seen.
My conclusion is that there is a strong correlation, however, when one of our politicians asks us to trust that their policies will lead to this sort of productive investment, just because it suits their political agenda, without any rigorous understanding of the difficulties involved, I get the jitters.
May 30, 2011 | Strategy
Strategy is all about making choices about where available resources will be allocated, considering both the benefits and risks of alternatives in the context of opportunity cost.
In this country we have reserves of natural gas tied up in seams below some of our richest agricultural land, the Hunter Valley and Darling Downs being just two.
To liberate this gas, which has the potential to offer us an alternative to coal fired power for many years, we run the huge risk of destroying the agricultural land above it.
At some point, the community needs to acknowledge this choice, and make it recognising the consequences, and there are severe consequences whichever path we tread.
My concerns is that we make the choice unwittingly, by stealth as state governments and power utilities and exporters nibble away at the deposits, bit by bit, until we wake up one day the deed is done.
In this link to Business Spectator is a link to a documentary “Gasland” which documents what is happening in the US. OK, it presents one side of an argument, but that one side is truly scary. We need the debate in this country to be wider than just the local communities that will be affected, it needs to be the whole Australian community.
This strategic choice is perhaps the major one we face in the environmental debate, but is one that appears to me to have little in the way of oxygen in the community.
May 25, 2011 | Change, Customers, Marketing, Social Media, Strategy
Retailers have spent 50 years offering a wide range of options to scratch any shopping itch. They have trained consumers to expect, indeed demand, a wide range, but given their walls are not elastic, is it any wonder that that when the elastic walls of the e-tailer comes along, we do what they have trained us to do, check out all the options and buy the one that best meets our needs.
Another perspective is that retailers to date have had all the power, what got stocked had a chance of sale, so retailers charged suppliers to have their product on shelf, and charged more for the best sales positions, in effect mixing the picking of winners with extraction of cash from suppliers. Now, suppliers have another option, one where the usurious practices of bricks and mortar retailers is mitigated, and a product has the opportunity for sale on its merits, not just on the pocket size of the supplier.
Is it any wonder the shift to net shopping is gaining momentum, the retailers have only themselves to blame that they did not see the shift happening, or just wished it would go away, and failed to use their capital and position to carve out a position for themselves.
May 19, 2011 | Communication, Customers, Marketing, Social Media, Strategy
It will be worth watching the way Microsoft goes about leveraging their $8.5 Billion (should have paid Aussie dollars?) purchase of Skype, there will be a swarm of lessons to be learnt:
- Integration of a “free” service into a product/profit business model. This challenge will create sufficient tensions and cultural speed bumps to keep the academics busy for a long time. History is against Microsoft, most purchases like this that seek to integrate differing cultures fail to add value in the long term.
- Skype has a huge customer base, but is only marginally profitable, turning that around without risking the loss of the existing customer base who want a free service will be problematical
- To what extent is this the foundation of a marketing effort by Microsoft to protect their hugely profitable Office franchise from cloud based competitors like Google Docs, and how will this all pan out?
- Will the existing Skype customers continue to support the service now it is part of the “evil empire”
- How will Apple and Google react, both appeared to have been beaten in an auction for Skype. They both have communication products that compete with Skype, but few users.
- Can Microsoft assemble the capabilities to build new, risky, communication products that undergo a process of continuous improvement in the market with the input from users.
As a user of Skype’s free service, I am not sure how I would react to being charged, probably just “suck it up” but the commercial opportunities for conferencing calls using video must be immense, and the free service is a great entry point with a huge existing user base. Hopefully Microsoft sees it that way
May 18, 2011 | Lean, Operations, Strategy
We humans like to do things in a consistent manner, each time we do something, it is comfortable to do it the way we did it before.
This is great if the way we have done it delivers the optimal outcome, but presents difficulties when the outcome is sub-optimal, and that is probably 99.99% of the time.
The management challenge therefore is not just to see a better way of doing things, but to institutionalise the process of identifying problems, and improving outcomes as a part of the way things have been done in the past, make continuous improvement so automatic that nobody notices.
May 10, 2011 | Customers, Marketing, Social Media, Strategy
Pretty big aspiration, to outcompete the two businesses that have consistently demonstrated the power of innovation as the core competitive tool over the past 10 years, and have reaped the rewards by creating and redefining markets and then taking all the gravy. The story of Skype since the company was initially bought by Ebay is enlightening, and shows how it has been done.
Ben Horowitz, a tech entrepreneur and angel investor got into the act by being part of a consortium that bought Skype for just over 2 Billion $18 months ago. They withstood full frontal assaults from both Google and Apple, who both have a habit of winning, and have just announced the on-sale of Skype to Microsoft for 8.5 Billion. Reasonable return.
In Bens blog entry, where he announces the sale, and articulates the short history that netted$ 6.5 billion in the time it takes my local council to consider an application to build a fence, the key to this stunning outcome is in the first sentence in the second last paragraph, where Ben referrs to the quality of the people, and the network effect of existing Skype users as being the key to the success.
The power of an idea whose time has come, coupled with the best of the collaborative and networking tools of the net 2.0, and great customer service.
