Aug 17, 2009 | Governance, Management, OE, Strategy
Return on Asset calculations as a realistic basis of performance measurement for many firms is rapidly going out the window.
On one hand we do the financial calculations, based on the accounting notion of tangible assets in the business, whilst on the other, saying that the primary assets of the business walk out the gate every night and go home.
This paradox should radically change the ways we measure the return on assets, it creates the need to find ways to consistently measure Intellectual Capital, not an easy challenge, but one that Directors and management need to start grappling with.
Consider, physical assets depreciate with use, but intellectual assets appreciate with use, so perhaps there is a measurement matrix in there somewhere, but probably fashioned by psychologists and anthropologists, rather than accountants.
Aug 12, 2009 | Marketing, Sales, Strategy
Brands take years, often decades of work, investment, and insight to develop, but they can be destroyed in the blink of an eye.
In channels where there is an imbalance of power between links in the supply chain, such as FMCG retail, the retailers short term best interests are often maximised by attracting consumers to their stores with deep discounts (funded at least partly by the manufacturer) of well branded products. Often they are able to persuade the marketers that their best interests are also served by the promotional activity, and if they fail to persuade, their power to delete and manage shelf placement is usually sufficient to swing a deal.
The advent of scan data has lifted the veil on some of the decision making that occurs at point of sale, and it has become clear that long term sales of solid proprietary brands are not maximised by short term price promotional activity, it simply diverts resources from the long term to the short term, reducing average purchase price by the retailer, and enabling pantry stocking by the consumer, eating away over time at the brand equity so challenging to build.
What we need is more marketers, people who understand the psychology and dynamics of the relationship a consumer has with a brand, and we need those people to be sufficiently supported by their organisations to be able to tell retailers where to stick their short term price promotions, and continue to invest in the brand, in order to be able to continue to harvest it over the long term.
Aug 11, 2009 | Demand chains, Management, Strategy
Technology has multiplied the potential for information flows through a value chain, but often human behavior hampers it as individuals use the available information to enhance their own position. This happens internally, but is even more prevalent in the interactions between firms, as individuals seek to enhance not only their own position, but the perceived negotiating position of their firm.
A key metric to look at when assessing the health of a value chain is the exchange of information between firms. The actual measurement will usually be a combination of hard & soft data such as joint strategic planning, shared KPI’s, availability of data when needed and in a useable form. A technique I have sometimes found useful is an adaptation of an HR practice, do a “360 degree” performance assessment on the available information amongst those who come into contact with it, and have a use for it.
Another of those paradoxes that exist in human relations, elicited by the information exchange in supply value chains:
Why is it that the passionate exchange of information that occurs on social networking sites is rarely replicated in a value chain?
It seems odd to me that people who are willing to share sometimes pretty personal stuff on a networking site are unwilling to share information of a non- personal nature in a commercial situation, even where the commercial case for the exchange is clearly made.
Such information exchange is a pre-requisite of creating a demand chain from a bog standard supply chain.
Aug 8, 2009 | Management, Marketing, Strategy
That ability to make quick decisions that more often than not, turn out to the right choice is an envied and rare talent. How much is just pure talent, and how much is training, instinct, and experience?
After 35 years of engagement with management, it appears to me that the talent, without the training and experience is as good as a great cricketer with his favorite bat in hand, approaching the first tee in a golf tournament.
Aug 5, 2009 | Innovation, Management, Strategy
The usual interpretation of the function of the hemispheres of the brain is that left brain types become actuaries, and right brain types become artists. How then do you accommodate Albert Einstein, a great mathematician, and a great creative brain in one, Leonardo is another, we all know some, perhaps a bit less well known than those two.
Could it be that our accepted model is wrong? Perhaps left brain types are comfortable with the status quo, the way things are, whereas the right brain types are more likely to seek a different way of looking at things, are comfortable with ambiguity, and see things in ways others do not.
Innovation has at its core a restlessness with the status quo, and it is well accepted that “dissidents” in organizations are the ones who are the catalysts to change, they also suffer a higher than average corporate mortality rate, but without dissidents, nothing new gets done, so don’t just tolerate them, attract, encourage, and reward them.
Aug 3, 2009 | Innovation, Sales, Strategy
Application of public technology in the past has been often seen as a means by which the state can exercise control, and as such has come under severe criticism from civil libertarians. Remember the howl that emerged with the “Australia Card” debate in the eighties.
However, any reasonable view of the currently available technology would see that it has enormously added to the power of the individual to control their circumstances.
Anyone now can become a published author or photographer, a band need not contract to a record company to get its music heard, and the individual has access to vast amounts of information of all types.
The fact that some do not manage this new power has nothing to do with the technology, just about how people use it. Tim O’Reilly argues convincingly that an artists greatest problem now is not piracy, but obscurity, little has really changed, it is just the means to the end that has changed.
