Jul 26, 2023 | Change, Innovation
Differentiation has regularly been trotted out as the core of success. In the absence of some sort of differentiation to a target market, all you have is price. It is an argument that I have used for 50 years.
Problem is, it is only half the story.
Differentiation must come from somewhere.
Usually, we tend to stop at some sort of mechanical or electronic additional feature, seeing those as desirable for the customer. If we are to follow Clayton Christianson’s theories, the absence of those same features that just clutter up the product from a different but unrecognised market might be the key.
In either case, there is a missing element in the usual articulation surrounding the development of a differentiator that in some way adds value to a customer.
Insight.
What is it that makes us realise that the current product configuration, business or distribution model, pricing and feature matrix is inadequate?
From somewhere comes an insight: ‘a clear, deep, and sometimes sudden understanding of a complicated problem or situation, or the ability to have such an understanding’.
Fortunately for the few who are thought leaders rather than the followers of the newest model, idea or shiny thing, insight will not come from any of these. It may come from observing the behaviour of the real outliers, and an understanding of the unusual things that drive their behaviour, or it might come from a diverse set of brains coming at a difficult problem from a range of differing perspectives. It may come from connecting a few practises that exist in other places with an unmet need, or opportunity in an unrelated field. The point is, it will not come from an effort to collect and analyse historical data that is presented to a 3-day offsite strategy session as the basis for their strategic discussions, the objective of which is to produce a glossy strategic plan.
Insight. The question remains how do you mould the culture of your enterprise such that it is able to produce this usually hidden key to success?
Header cartoon credit: Dilbert and Scott Adams.
Jul 24, 2023 | Innovation, Strategy
Innovation sessions typically involve an expensive consultant who has some sort of manicured track record exhorting the group to ‘Be creative, let your mind wander, nothing is silly, think outside the box’ sorts of session.
That does not work very well, except of course for the consultant.
What is usually missing from these sessions is diversity. Not of gender, but of expertise, training, experience, and knowledge gained in seemingly unrelated areas.
Pose a difficult problem to an accountant, and you will usually get a numerical answer. Pose the same question to an environmentalist, and you will get a different, but entirely valid answer. People see problems and their potential solutions through the perspective of their training, domain knowledge and experience.
Imagine you are running an innovation session for Australia’s new space agency. Chances are you will have 25 rocket scientists in the room. All will be applying their skills and knowledge to the problem to be solved. Would you rather add another rocket scientist to that group, which may not add much to the 25 already there, or a biologist, musician, or surgeon, any of whom may not know anything about rocket science, but just may have a solution to your problem that comes from an entirely different field.
The best solutions to really difficult problems are more likely to come from asking better questions of different people, than from just asking more of the same ones directed to the same people.
Header cartoon credit: the great Gary Larson with thanks.
Jul 14, 2023 | Communication, Leadership
Our corporate culture demands that we forecast outcomes in the early stages of almost any project.
Accountants feed on the IRR numbers, and these outcomes find themselves incorporated into all sorts of budgets for which people are held accountable. They change from being a forecast, an assessment of what might happen given a set of assumptions, to become a set of predictions, upon which people careers have become dependent.
Not a good outcome for building a culture that is supportive of innovation, which by its very nature is risky.
Prediction and forecast are often wrongly used as similes.
A prediction is a statement of what will happen.
The sun will rise tomorrow.
A forecast is a statement of what the forecaster believes will happen. It will be subject to all sorts of variables and new information, but it is the best guess given the circumstances.
I have written many business plans that included forecasts, my best guess at what the future would look like. Those best guess forecasts then tend to become the targets, against which performance was measured. This has usually resulted in a balancing act between the IRR numbers, and the forecasts being as low as possible to get a guernsey. Neither is a healthy way to make resource allocation choices.
If you want a prediction about the future, go to the local fair and pay somebody with a crystal ball to tell you. If you want a forecast, find someone who has records, and a routine that updates those records on a fixed timetable, adjusting as they go.
I strongly encourage all my clients to do a weekly 13 week rolling cash forecast. What always happens is that over time, the forecast of the weekly cash balances become increasingly accurate as the many variables become better defined and understood.
Often it is a matter of the choice of words.
Current governor of the Reserve Bank, Philip Lowe chose to set a specific time frame around his forecasts relating to interest rate rises when he said in March 2021 that ‘the cash rate is very likely to remain at its current level until at least 2024‘. This forecast became a prediction upon which people based their decision to buy a house. After all he is the Reserve bank governor so should know.
Had he just altered his words a little to be more specific about the caveat contained in the term ‘very likely’ to something like: ‘the odds are that interest rates will hold steady for some time‘ it would have remained a forecast, and he might have retained his job when it come to the end of his current contract in September.
For what it is worth, in my view, he should retain his job. He is a talented, experienced and highly qualified economist, not a political wordsmith.
Addendum. Within an hour of publishing this post, it was annpounced that Philip Lowe was to be gone. No extension, pick up your money and go. Nice words all round about how great he was, but piss off, here is the gold watch, go away.
The irony, at least it is to me, is that the current deputy has been appointed in his place. Irrespective of the qualities of the deputy, the job description calls for a culture change in the reserve. Appointing someone to lead that change who is now top cocky because they were able to leverage the existing culture to their benefit is an utter nonsence. A failure of any understanding of the basics of leadership and culture change.
For me, it evokes visions of deck-chairs and icebergs.
Jul 10, 2023 | Change, Strategy
As a kid in the sixties, some of my friends had extensive record collections, mostly albums, but also singles of the ‘hits’ from albums. The Beatles dominated, Sgt Pepper’s Lonely Hearts Club Band selling millions of copies when released in 1967, and was still selling millions into the 70’s.
In 1963 Phillips introduced the compact cassette, portable, and it offered the choices of fast forward and replay. I can remember carefully taping favourite songs from the radio to make personalised ‘playlists’. Sales built rapidly, then took off when the Sony Walkman was introduced in the early 80’s.
Meanwhile, Philips had been developing the CD, born in their labs in 1974, and by 2000, held 96% of all sales of recorded music.
Again, parallel development was happening, and the digital audio format called MP3 was born in the late 90’s. This format enabled the conversion of music into a digital file that could be shared. Up popped Napster and similar sites, from which you could download music for free, in breach of copyright, but free.
Meanwhile Apple had made MP3 players sexy by putting ‘A thousand songs in your pocket’ with the iPod. The music industry, tightly held by a small number of large corporations sued, and won, but it was a pyrrhic victory, as Pandoras music box had been opened. As a side note, the sight of an industry body suing to ensure that their product was not distributed is a touch unusual.
Then along came Apple, again, with iTunes and its multifunctional devices we still call phones, followed by more streaming devices and services. Spotify changed the face of the industry, again, and the fight became the more traditional marketing fight for your attention, and money
You can follow a similar path with the development of the movie industry, motor cars, aeroplanes, computers, electricity, and many others.
The point is, the seeds of destruction are planted well before the visible disruption occurs. The timelines we typically think about when considering disruptive innovations are much longer when you step back and look at the lead-up changes that prepared the ground for the disruption.
What is happening in your industry that could bite you on the arse?
Jun 26, 2023 | Communication, Marketing, Social Media
On first glance, the only purpose of a blog post, or indeed any sort of content that comes into your inbox, is to provide some impetus to encourage you towards a transaction.
That remains the case, but if that is the only reason, we have arrived at the point where AI can spit out posts by the dozen that purport to serve that purpose.
Not a good place to spend your time if you are on the receiving end, and it serves to degrade the expected standard of all posts.
By contrast, a post that evolves from an idea, problem, or situation faced by a real business, which is intended to offer some level of insight into the way forward can be of immense value, when the right people find it.
Therein lies the attention challenge of those writing posts intended for the latter reason. How do you get the attention the effort reasonably deserves?
If, like me, you do not care much for the attention, or the lead generation potential of posts, you can then produce them with an entirely different objective.
That objective is to clarify your own thinking sufficiently to be able to articulate it to others. That clarification and articulation is what makes the research, thinking and writing of a post valuable. Whether others see it, think about it, and take some sort of action as a result, is an entirely different challenge.
Posts on StrategyAudit are all of the latter type.
Ideas come from anywhere, and have been the fodder for posts on StrategyAudit for 15 years. There are ideas everywhere. The most useful are those that come from the challenges being faced by those I interact with in some way. These always force creative thinking, the application of one of many ‘mental models’ I have accumulated over 50 years. They often stimulate a creative perspective on what are often mundane and common problems faced in varying ways by all businesses, so are ‘grounded’ by those real situations.
It seems to come back to the thought expressed by Kevin Kelly in an essay in 2008 thinking of the same challenge, as yet not powered by AI, that all you need is 1000 true fans.
Social platforms set out to prevent you doing that by favouring ‘on platform’ communication, while penalising posts that take a reader away. LinkedIn is very explicit about this. Put in a link to an outside site, and you get stuck in ‘LinkedIn Gaol’, just an algorithmic means of severely limiting the number of feeds your posts are fed to. I have been in LinkedIn gaol for years, the only way to see all I write about is to subscribe on the website.
The only way to grab attention is to deserve it, and have those few who find you to refer to others who might benefit. It is a long game, built one by one.
No AI here, guaranteed organic!!
