Jun 3, 2020 | Change, Leadership
Have you seriously considered the implications of the apparent recognition that remote working can, and will, be a greater part of the employment mix in a post corona world?
There is a loud noise that ‘everything will change’ reverberating, an echo chamber of that view amplified by digital tools. It seems to me that human beings are simply insufficiently flexible to change ‘everything,’ although it seems the trend towards remote work has been accelerated a decade by the bug.
I have worked remotely and in offices, mixed about in a pretty random fashion for 25 years. The recent past has brought into focus some of the factors that I think are worth consideration.
‘Industrial’ management, the norm for the last 100 years, made in the image of Frederick Winslow Taylor assumes that in the absence of close supervision, little work of value will be done. At the extreme other end of the scale, you have enterprises like ‘Automattic’ the parent company of WordPress, that has remote workers around the world, and no head office of any type beyond the current location of Matt Mullenweg, the CEO and co-founder. It is a continuum on which we all fall somewhere, and it is evolving quickly.
The change in management style to remote will be for some, too much, as it adds several dimensions to the task that many managers are simply not up to doing.
Managing remotely adds a number of challenging dimensions:
Tools are needed that are not familiar or easily learnt by many, so simplicity is key. In addition there is a host of newer challenges to be addressed relating to the provision of the tools from software to the hardware, and the security questions hanging over everything digital.
Behavioural norms established in an office environment have been thrown out the window. Suddenly, we need to consider things like the interruptions of children, the family dog, and flexible working hours. In particular, the move to being available at all hours which was evolving as a result of the digital connectivity we had while still working from an office, has been supercharged. Suddenly, working 24/7 risks becoming the norm, unrestrained by reasonable office hours. All of these, and many others indicate that a very different way of measuring performance will be required.
‘Meetings’ from the casual gathering around the coffee machine in the morning, to the established and regular formal meetings deliver a rhythm to the day that is suddenly absent, and needs to be replaced somehow. The formal meetings can be done using one of the many tools, but the casual, unplanned meetings that happen in an office, that can be hugely valuable, present a different challenge.
Culture. The glue that holds the workplace together, will undergo radical surgery. Human beings evolved in small groups that looked after themselves by looking after each other. While this has eroded somewhat over the last 250 years, the need to be ‘together’ is nevertheless hardwired into our collective DNA. I suspect this will be the largest hurdle for management of the remote corporations to address.
Recognise the ‘God Syndrome’ and kill it. I cannot help but wonder if the challenge of leading remote teams is no more than a light being shone on existing failures of leadership that went largely unnoticed. Those in senior positions do not have all the answers, often they have very few of them. Unfortunately, those in leadership positions are often there partly as a result of being able to convince others they are right more than anyone else, and they play ‘the game’ more effectively. The reality is that they are usually as confused and uncertain as the rest of us, they just hide it better, and sometimes ask better questions. The tide has gone out, so the rocks are exposed, the failures of leadership are more obvious. Humility is the common characteristic of every really good leader I have seen.
Deliver Psychological Safety. Everything I see and read about the psychology of human beings is that we seek ‘psychological safety’. This is the place where we feel safe to do and say things that really reflect what we think, without fear of any sort of retribution. Achieving this in any workplace is really hard, and is the result only of truly great leadership. Achieving it when many of us are working remotely, away for the ‘safety’ of those few we know well and truly trust, will be a monumental task.
When you strip it all away, the reason workers are congregated in offices is to achieve the objective of making money for their employers. It is however an artifice forced on us by the industrial revolution, and is somewhat inconsistent with the way we humans evolved. The recent past has demonstrated that this congregation may not be necessary to achieve that commercial objective. Almost certainly it is not necessary in the form that it evolved, as a means to find a way to manage operational scale. Therefore, a rational management will set about reducing costs, and expensive CBD office space has suddenly become a soft target.
Cartoon header courtesy Scott Adams and Dilbert.
May 27, 2020 | Change, Leadership
Social capital
Like all new things, remote work was a small outlier in the world of corporations. It was something that a few dabbled with, mostly with specialist consultants and those for whom they had statutory responsibility, such as maternity leave.
That has now all changed, as the experiment at the edges has been forced to become mainstream in the face of the Corona crisis, and the world will not return to the previous status quo as the crisis dissolves.
Not only do many workers like remote work, as a relief from the daily commute, it has put a focus on the potential of substantial savings in expensive office space, and the opportunity to extend employment to areas where there exists a pool of available labour.
The change is a radical one, not one that would have happened inside a decade without the impetus of the Corona bug, but how do we make it work?
The critical ingredient will be Social Capital.
Are Social Capital and Trust synonyms?
Perhaps. However, to my mind, Trust is something that you give to individuals, and to the extent that those individuals are representatives of an institution, there is ‘rub-off’. Social Capital to me is an idea that encompasses the resilience of the culture in an organisation as well as personal trust given to individuals, and so is a much broader definition.
Pre-Corona, social capital was a function of the daily contact with co-workers of all levels in the corridor, around the water cooler, in meetings, all face to face. It was the glue that held everything together. It is the product of ‘culture’ forged by a combination of genuine leadership, and the instinctive behaviour of individuals, and groups of individuals.
Social capital is like any other form of capital. It needs to be built, strengthened, and renewed, or it dissipates as it is used. Face to face contact is the primary mechanism for this process, and in its absence, any store of social capital will be quickly used up unless alternatives are developed and leveraged.
Those who just manage by exerting the institutional power vested in their position in the pecking order will be emasculated. They never built any social capital, often did not see the need or have the ability. Others, the real leaders amongst a group, and they are not necessarily those with the slot in the pecking order, built social capital by their behaviour and attitude towards others.
The former group will hate this remote working thing, as their ability to direct is significantly diminished. They will fight the implementation. Meanwhile, the leaders amongst us will be less impacted, and will welcome the change as it makes the life of their co-workers, to differing degrees easier, while making theirs very different, and probably harder.
You will see the leaders amongst us very quickly, they will be the ones figuring out how best to replace the drivers of social capital pre-corona with new drivers in a post-corona world, and they will be shouting from the rooftops. The others will be in the long line of those swept aside by this tsunami of change.
May 25, 2020 | Customers, Marketing
Settling on a pricing mechanism for your products and services is a profoundly important element in a successful enterprise, but is often the last thing done.
Ask a few people internally, go and see what others are doing, or just add a margin to your costs and out you go, all of which will result in a less than optimal revenue/margin mix.
Settling on a strategically driven price is really fundamental to financial success.
When should I tell them the price?
My general advice is an old saying mumbled to me by my key mentor as a young bloke: ‘He who mentions price first, loses‘. ‘Anchoring‘ is a key concept in a sales conversation, reflected in this adage. In consumer products, this is cannot always be the case, walk into any supermarket, and the price is there for all to see, so our options are limited, as we have lost control of the conversation. That conversation happens in the buyers office, where there is usually an imbalance of power in any event. However, in B2B, we generally have control over price, so we can manage the conversation, in which case, the old saying holds. Psychologically, it feeds into another old, and often repeated saying, this time from Warren Buffett: ‘Price is what they pay, Value is what they remember’. Therefore, it makes sense that you allow the buyer to reflect on the value they will get by a purchase, and then price accordingly. On line, this is now being controlled by algorithms that look at your history, the history of those like you, product availability, and a host of other individually tiny, but cumulatively significant factors, and set the price quoted accordingly.
Should I have standard prices?
Are all your customers prepared to pay the same price? No, so consideration of differential price packaging should be a core part of your strategy. The challenge is how to apply differential pricing while retaining control of your price list. The most common categories of differences are demographics, geography and volume. Your local wine shop has trouble competing with the big chains, because they buy a few cases, delivered into their back dock, while the chains buy a few truckloads delivered into a central location for redistribution on retail demand. This increases their stock turn, by minimising pockets of slow moving stock, reducing average cost.
How many price options should I have?
Do not give each customer any more than three price options. Our minds tend to get overwhelmed by too many choices, three is the optimum. Those three options should be clearly articulated with the differences in value that is delivered by each. This strategy is almost universally used for on line sales of software services. They all use the three columns, with varying added services for an increased price.
In which order should I show price options?
Show the highest price first. Often this is counter intuitive, as the instinct of many sellers is to go low in order to ensure they secure the sale, which almost always leaves money on the table. It is way easier to go high, as you then have room to come down while perhaps removing pieces of the value offering that do not add value to the buyer, or that cost you nothing to remove, but seems to be a concession. By contrast, by going in low, you have nowhere left to go if the buyer is looking for ‘more’.
Should I show shipping costs?
No. Instead, shout ‘Free shipping’ which is a powerful motivator. ‘Free’ is one of the most psychologically strong motivating words, so use it by including shipping costs in your price. Amazon has used this strategy to devastating effectiveness by offering an annual subscription that enables free shipping via Amazon Prime, now in over 50% of US households. It also adds a distribution channel for other services, such as video streaming
How can I manage competitor pricing?
You cannot, you do not live in a vacuum, competition is a reality of commercial life. However, concentrating on the value of your offer rather than just the price will deliver the best results. Every purchase decision made has a context, winning just because you are the cheapest is a good way to go broke.
How do I manage price increases?
Carefully, but offering notice of a price increase is both proactive as a means of simply being courteous to your customers, and as a deadline by which they must purchase in order to get the current price. This can act as a powerful call to action.
Another of Warren Buffett’s quips is: If you have to have a prayer meeting before you put your prices up 10%, you have a lousy business’
The final word is that not every deal, not even those that seem to be ‘in the bag’, will come to fruition. The reason stated will often be ‘price,’ but that is rarely the whole story. Politely probing for the real reasons and learning from them for the next time, is a core part of the task of a quality sales process.
May 22, 2020 | Governance, Leadership
Leadership lessons from the greatest marketers in history
I do not go to church, do not believe in the god of the Bible, Koran, or any other narrative that offers a solution to the failures of our humanity.
I have however, been in awe of their collective and individual capacity for marketing.
Let’s just take the three Abrahamic religions, Christianity, Islam, and Jew. They are old, old, have persisted, evolved, and successfully transitioned through the ages to remain a major point of faith for hundreds of millions of loyalists.
Great marketing, tapping into the emotional drivers of our behaviour.
In all three, the 10 commandments are central.
The Islamic form is a little different to the Christian and Jewish, but the sentiments about what constitutes a ‘good’ life line up almost exactly.
If god was all powerful, all consuming, why would he/she (to be politically correct) restrict the delivery of rules to just those 10? Why not go further, and ensure we did not stuff up the environment, or congregate in dirty cities, or give us the rules for building a house, and a million other things?
Instead, we got a framework within which to make our own decisions, a set of guidelines about what constituted acceptable behaviour in a civilised community. Within the boundaries of the guidelines, we could behave as we wished to deliver the outcome of a ‘good life’, one that contributed to those around us, as well as to ourselves.
Sounds a bit like a successful strategic framework, does it not?
Less is more.
Lead.
May 20, 2020 | Change, Leadership
