The answers to the Retail IQ quiz

Here are the answers to THIS QUIZ.

1.     AVERAGE INVENTORY AT RETAIL

2.      FIRST/PRIME MARGIN

3.      OPEN TO BUY

4.      UNIVERSAL PRODUCT CODE

5.      FAST MOVING CONSUMER GOODS

6.      DIRECT PRODUCT PROFITABILITY

7.      ASSETS

8.      NEWSAGENT

9.      # of TRANSACTIONS

10.   MERCHANDISE (COST OF GOODS)

11.   The cycle of 4 week, 5 week, 4 week months of a typical retail calendar

12.   MARKDOWNS

13.   SALES PER SQUARE METRE

14.    (GP$/Sales$) x (GP$/Ave Inventory at Cost)

15.   (Current Assets/ Current Liabilities)

16.   1.5 (Nothing happens when it is less, it is just unhealthy)

17.   1.2 – 2-2

18.   12% - 18% (for some it could be double that, but 15% is somewhat of a sweet spot)

19.   FIRST

20.   COLOUR BLOCKING

21.   FOCAL POINT

22.   DEPARTMENT STORE (although some supermarkets are not selling e.g. clothes)

23.   Product, Price, Place, Promotion, Presentation, People

24.   Trade Area Analysis (of a retail precinct)

25.   OPPOSITE (each other)

 

Be ruthless and honest with your scoring and multiply by 4 to get your percentage. Let me know how you went…

Do you know your Retail IQ?

I thought it may be fun to do a quiz. It does not really test IQ, and it is not a predictor of success. It simply shows how familiar you are with some of the mechanics and jargon of retailing.

  1. Stockturn is defined by dividing Net Sales by _____
  2. Buying Margin is the equivalent term for ______
  3. Complete the following Acronyms: OTB
  4. Complete the following Acronyms: UPC
  5. Complete the following Acronyms: FMCG
  6. Complete the following Acronyms: DPP
  7. Would you categorise Lay Byes as Assets or Liabilities?
  8. Does Pharmacy, Newsagency or DDS typically have the lowest GP%?
  9. The Average Sale is calculated by dividing Sales by ________
  10. What is the single biggest expense for most retailers (not service/hospitality?)
  11. What does the 4-5-4 calendar refer to?
  12. Which line item would be the single biggest impact between the first margin and final margin?
  13. What is the formula (or definition) of ‘Trading Density’.
  14. What is the formula for GMROI?
  15. What is the formula for ‘Current Ratio’?
  16. What is the bottom end of a healthy Current Ratio?
  17. What is the stockturn for a typical, independent jewellery store?
  18. What is the average/typical Occupancy Cost for a specialty stores in regional shopping centres? (you have to know what Occupancy Cost is…)
  19. On a multi-level store, which of the following floors is most productive; first floor (one above Ground) or basement (one below Ground)?
  20. What is that called (in VM) when you group/sort merchandise together by colour? (You have to know what VM is…)
  21. In VM, merchandise is often arranged in a pyramid or other shapes with lines that lead the eye to a specific point in the display. What is this ‘point’ called?
  22. Will an ensemble display be more likely found in a Department Store or a Supermarket?
  23. List the six elements of the Retail Mix?
  24. What does the Huff Model measure?
  25. On a ‘Colour Wheel’, where would you find the (perfect) complementary colour for any colour?

 

After completing the quiz you can get the answers IN THE NEXT POST.  Do come back and let us know how you went…

Have fun!

 

Dennis

GANADOR: Skills. Strategies. Solutions.

 

There is a Silver Bullet after all

This post is inspired by a podcast I listened to where the person had a stroke that affected his brain and the process he went through the re-train his brain. During that process he learned to meditate with a female Buddhist monk, who passed this insight on to him

Our stroke victim wanted to grow in his compassion for other people and he said he thought he had a lot of compassion. The Monk gave him some advice: She said he had empathy, but not compassion. He indicated that he thought it was very similar.

And this is the insight that followed:

No, she said: ‘Compassion is Empathy with a View.’

By that she meant that empathy had to be accompanied by ‘perspective’ or a view of the world and how it works.

The perspective or view of the world IS THE SILVER BULLET that puts the things you desire in context and makes you understand how to ‘view’ that outcome and to ‘appreciate’ it for what it is.

Having a clear view/ sense of purpose or a life plan helps explain what happens and helps direct your choices towards something in a cohesive manner.

On a personal lever your ‘view’ matters: The Christian sees God’s plan, the Hedonist sees pursuit of pleasure; and both of those views will inform how you experience everything. In the one instance pain must be endured and in another it must be avoided.

The Monk understood that empathy was something the individual experienced (internally) but that compassion was something that someone else experienced (externally). Empathy is a warm and fuzzy feeling, but compassion is something that reaches out and touches people.

If you want to be able to make sense of the world or have the ability to be resilient in the face of adversity or to be focussed on a specific outcome, the silver bullet is finding your sense of purpose.

Now for the part that most people miss.

Everybody HAS a view of life. And it DOES shape how you experience life. Only, most people don’t realise what it is nor how it works. Their view of life was formed by accident instead of by disciplined reflection.

Now for the sad part of all of this.

The DEFAULT view of life for most people is their own personal survival. And under the term ‘survival’ I include psychological survival, social survival and the like. We default to do that what is in our own best interests. Or more specifically, we default to what we THINK is the best for us.

The world is a much better place for all those people who purposefully choose to serve their Country, devote time to their Community or serve God – for instance – than for all the people who simply pursue their own personal happiness.

Not only is the world a better place, those people who choose an external focus for their lives are much better equipped to deal with the trials and tribulations of life, and consequently are happier.

There are many stories of people who won Lotto who, within a few years, end up exactly where they were before. (You of course believe you will be different.) The best view of these things was summed up in a Forbes article:

Achieving major life goals, including winning the lottery, or the more basic goal of getting married, doesn’t wind up making us as happy as we expect. (A) big positive event like a lottery win can impact happiness, but its effects diminish over time Why? Because while a lottery win can make a difference, it won’t affect the other conditions of your life, like who your siblings or parents are or your basic disposition.

There are many stories of people who suffered serious setbacks – for example by becoming disable – yet went on to live full and meaningful lives. Nick Vujicic is possibly the best example of what I am trying to say here.

On a corporate/ business lever your ‘view’ matters: A company with a clear sense of purpose – with a strong ‘view’ in the Buddhist’s terms - is one that can direct itself purposefully.

Let’s say you are struggling to be a successful entrepreneur. Your ‘view’ will determine what you do and how you cope and what eventually happens.

If you see business as a game, you will adopt different tactics, maybe hire a coach or even try and bend the rules.  Or of course you may simply practice harder.

The MISSION you have for your business is the director/founder’s attempt to articulate the VIEW of the business. It is the answer to the question: “What is this (business) all about?’

To have a clear sense of mission (a ‘view’) makes the present problems and opportunities so much clearer. In fact, unless you have the lens afforded by a clear and powerful vision, you won’t SEE the opportunities when they present themselves. And you will see insurmountable obstacles instead of challenges.

I have written elsewhere about systems thinking in the post ‘Why you can’t have what you want’. In that post I explain how the pursuit of outcomes is misguided, and why we should measure and focus on the Inputs and the Processes.

Your takeaway is to contemplate the inputs and the processes that will produce the outcomes you want – and to focus on that.

Have you heard the one about Bumblebees not supposed to be able to fly?

The myth loves on...

The myth loves on...

This myth was debunked very nicely by Dr Karl; and the story goes something like this:

According to John McMasters, who back in the 'good old days' was principal engineer on the aerodynamics staff at Boeing Commercial Aeroplanes, it seems the aerodynamicist of the myth was probably an unnamed Swiss professor famous in the 1930s and 1940s for his work in supersonic gas dynamics. The aerodynamicist was having dinner with a biologist. In the idle chit-chat, the biologist noted that bees and wasps had very flimsy wings — but heavy bodies. So how could they possibly fly?

With absolutely no hard data, but a willingness to help that overcame good dinner party etiquette, the aerodynamicist made two assumptions in his back-of-envelope calculations.

The first assumption was that the bees' wings were flat plates that were mostly smooth (like aeroplane wings). The second assumption was that as air flows over an insect's wings, it would separate easily from the wing. Both of these assumptions turned out to be totally incorrect — and the origin of our myth.

The aerodynamicist's initial rough calculations 'proved' that insects could not fly. But that was not the end of the story.

Of course, being a good scientist, his sense of curiosity got him interested in this problem. Clearly, insects can fly. He then examined insect wings under a microscope and found that they had a ragged and rough surface. In other words, one of his assumptions was way off.

But by then, overzealous journalists had spread the myth he had inadvertently created. The story had flown free, even though the bumblebee supposedly couldn't.

There is a lesson in that for all of us. In fact several lessons if we really want to be honest. For instance that much of what we ‘know’ isn’t really knowledge at all. But I want to focus on one particular epistemic principle that we will be well served remembering:

Things that we know today are always overturned in the face of advancing knowledge. As time goes by, we learn things that allow us to create better explanations. But no matter how good the explanation today, there is always a better one tomorrow.

This force of advancing knowledge has a profound implication for our everyday lives and specifically for business strategy:

Everything you believe and take as fact today is changed tomorrow in the light of new evidence.

Just like we once thought the earth was flat and that the start revolved around us, we now know better. Just as Newton’s explanations were eclipsed by Einstein’s theories, everything we know today is at best found to be only partially correct tomorrow.

So how can the Truth change? Well the answer is that it hasn't. The Universe is still the same as it ever was. When a theory is said to be ``true'' it means that it agrees with all known experimental evidence. 

SIDEBAR: This is a point where both THEISTS and ATHEISTS argue their own position. Theists claim that ABSOLUTE truth exists. This is a philosophical assertion based on the notion that ‘it is just so’ – it is something we simply intuit universally. The ATHEIST must argue necessarily that everything is relative. That is, that ‘truth’ is simply that which agrees with all current experimental evidence.
Every person (consciously or not) must take a position in one of these two exclusive camps; one where TRUTH is an absolute and one where it is relative. I find it absolutely hilarious how some people can’t argue against the notion of an absolute truth, but equally firmly adopts an atheistic worldview.

But science has taught us nothing if not that there is always a better explanation around the corner. Some take great comfort from science’s commitment to constantly disprove itself as if this of itself guarantees that we are getting closer to some grand unifying theory of everything. Of course it could just as easily be just a gigantic rabbit hole down which we chase that absolute truth denied by scientists in the first place.

Whatever way you choose, when it comes to human affairs like business strategy, marketing and management and the like, clearly there are no absolutes.

What is right today is wrong tomorrow.

Whoever is best at the strategic arbitrage opportunities and can identify the shifts and changes best and soonest stands to profit most.

But more immediately and possibly more relevant to most of us mere mortals, this shifting foundation of knowledge means that we should recognise this universal truth. The more convicted you are of your opinion, the more compelling the consultant’s exposition the more certain you can be that it, whilst it may seem right now, it is bound to be proven wrong tomorrow.

If you research and study the evolution of the ‘marketing concept’ and/or the ‘evolution of retailing’ then you will notice that ‘the right way’ is always the current way of doing it – the prevailing paradigm so to speak.

Current best practice is always superseded by something better. So a healthy dose of cynicism is a prerequisite in our modern world; for the lack of it will result in us chasing down the ephemeral promises of every fad that comes along.

The bumble bee that is not supposed to fly and the frog that gets slowly cooked in the pot of boiling water are great motivating stories – but nothing more than that. The absolute truth is a bit more elusive and it takes a lifetime to pursue and, who knows, may only be discovered once we pass away.

In the meantime, question everything.

How to build a business from $2m to $5m in five steps

That is a pretty rich title because I have not done it myself. In my defense, I have looked at the price to be paid and I have decided that I don’t want to pay that price. Or at worst I have convinced myself that I don’t want to pay the price when I am really afraid to try; but I am sticking to the former.

Then again, every great coach wasn’t necessarily the greatest player – and all that is required is that you must be a great student of the ‘game’ and it helps if you’ve coached and consulted to a fair few who have done so.

This post is triggered because I recently read an article, proffering the following platitudes that were disguised as advice:

  1. Build your brand with Social Media
  2. Focus on your goals
  3. Sales and Marketing has to happen daily
  4. Build your company foundation on process
  5. Employ performing staff

(I don’t want to link to it and give any more oxygen, because I really don’t think those platitudes are helpful at all.)

I equate that type of advice to telling fat people to lose weight or telling introverts to get out there and have more fun. Of course there is an element of truth to all those statements – as attested by over hundred affirming comments.

But if you want to know the REAL truth, here goes:

Irrespective of anything you DO about your business to take it to the next level, several other things must go right over which you have no control:

  • It must be a kind of business that is capable of generating $5m. That is there must be a market for whatever it is you are selling.
  • Hope that the government does not move the goal posts
  • Pray that a competitor with deeper pockets does not decide to muscle in
  • And so forth.

That is: you need some luck. Your timing and your environment must work for you and not against you. Luck is often the loser’s excuse, but that does not mean it doesn’t play a role in the eventual outcome of a business venture.

Assuming you have some luck, you will ALSO be making a million decisions a month to take your business in the right direction. You must be very skilled or very lucky that none of the decisions you take serve to derail your business. You could easily choose one wrong supplier, choose a wrong web-host, adopt a flawed pricing strategy or implement a promotion that drains cash and delivers no return. This does not mean you are not an entrepreneur or that someone else was smarter or better than you. They simply lucked out by not making the same mistakes. These mistakes are always easily identifiable in hindsight, rarely with foresight.

Now, if you are a bit lucky and you are reasonably competent decision maker then you are in with a chance. If you are already running a $2m business, chances are that you are doing something right; so the things you must do next are the key steps that will take you to the next level:

ONE: Formulate a clear vision of the NEW business model. Let me be very clear: your $5m business is NOT more of the same, it is different in almost every imaginable way. Understanding your new business model is a prerequisite because the decisions that follow are about implementing that vision with processes and resources that align everything towards that vision. (Note: a business model is not a business plan.)

TWO: Actively articulate the new mindset that is required to take you ahead. Almost everything that you did up until this point must be thrown out the window and you need to re-think how you do everything. What needs to be done is quite specific and quite radical. You must understand yourself, your default position and actively identify what needs to change and keep that in mind as you proceed. (I wrote about ‘defaults’ here.) You must really build a new mental model in your mind. (Everything that follows presumes this has happened.)

THREE: Assuming you have the right mindset, you must:

restructure your business so that you are made redundant

reassign responsibilities and accountabilities amongst different staff members

redesign the processes that govern all business activities in such a way that it can scale to the new level – this is what we mean by saying that you work ‘on’ the business and not ‘in’ the business 

FOUR: Do the basics well. This should be easy part, but sadly it isn’t always. Sales. Marketing. Branding. Visual Merchandising. Service. All these are basic processes in the retail environment and the nature of ‘success’ is clearly understood.

FIVE: Implement like hell. Commitment. Drive. Persistence. All these words come to mind for what comes next. It is not easy. Be prepared to fail. But get up, fix it and move on. There is a price to pay: you will be pushed out of your comfort zone and be pushed out of your bed earlier and more often than you would like, but trust me, if success comes easily then it is just luck. Real success is a harsh taskmaster that demands a steep price of its seekers.

These five steps are arbitrary because you could make it more or you could make it less. The aim is that they are not platitudes, but rather spells out concrete steps that can be taken. You may need help to get there, but with a solid game plan and a bit of coaching its amazing what can be accomplished.

Just ask the Waratahs.

Dennis

Ganador – architects of high performance business

Get a fortnightly dose of #thinkdifferent advice by subscribing here




How to live an inspired and inspiring life

The truth is you can't be anything you want to be and you can't do anything you want to do.

History proves that sometimes circumstance or destiny will force us down a path that is not of our choosing .

And common sense will tell you that if you are fixated on one goal, you are likely to miss every opportunity that comes your way

Preparing for your future and achieving the things you would like to achieve must be balanced with a certain joie d'vie and living in the moment. That, dear friend is the ART of living: finding balance between the things you have to do and the things you want to do and the balance between common sense and adventure.

This is ultimately the balance between being alive and living.

This inspiring talk by Andrew Solomon is well worth 15 minutes of your time as you contemplate why you are here.

Long-time readers will know that I have never been a great fan of that whole 'set a goal - believe and achieve' glibness that permeates self-help books and new age literature. Daniel Pink wrote a book called The Adventures of Johnny Bunko: The Last Career Guide You’ll Ever Need to help young (and old) people understand the world of work. The 160-page graphic novel about a hapless office clerk, a tart-tongued sprite, and some magic chopsticks takes a whopping half-hour to read. The book’s 6 key career lessons:

1. There is no plan.

Make decisions for fundamental, not instrumental, reasons.

2. Think strengths, not weaknesses.

Do the things you do well — that give you energy rather than drain it.

3. It’s not about you.

The most successful people improve their own lives by improving others’ lives.

4. Persistence trumps talent.

There are massive returns to doggedness.

5. Make excellent mistakes.

Commit errors from which the benefits of what you’ve learned exceed the costs of what you’ve screwed up.

6. Leave an imprint.

Recognize that your life isn’t infinite and that you should use your limited time here to do something that matters.

The topic of this post may at first seem strange, but there is much to take from the underlying approach to life.

Read those six steps again and apply that to your business – and think about how your business would be different if you followed this approach to life and business instead.

Dennis

PS: This post is adapted from a previous post in my fortnightly newsletter which you can get here. (And a free eBook on Visual Merchandising emailed to all who subscribe.)

Are you a leader who makes decisions like a turkey?

People crave certainty like they crave food and water – and will go to almost any lengths to create certainty where none exists.

Harvard Business Review writes as follows:

“Of all the headwinds we face as decision-makers, the power of one overshadows all others: our need for certainty. It is typically more important for us to feel right, than to be right — a difference that didn’t matter much in the lives of our ancestors, but now matters a lot.”

And it explains it as follows:

“The lockdown of our minds serves an important purpose: Generations of our ancestors wouldn’t have survived had they constantly second-guessed their conclusions. In a harsh environment characterized by straightforward challenges that demanded quick responses, an indecisive caveman was a dead one.”

And then comes to this conclusion:

“Complex decision-making requires we defer the feeling of being right, by tolerating the tension of not knowing.”

I have warned repeatedly about embracing ‘research’ as the panacea. I have warned about fads and jumping on bandwagons such as many people with ‘Neuromarketing’ after reading one popular book.

I am not alone in thinking that people who claim to know the answer (and few are more certain than scientists) really don’t know anything:

  • NN Taleb points out that turkey will have growing confidence in his master’s desire to care well for it; until the master comes visiting with a big knife on until Christmas Eve. The point being that risk is not a linear process. (Just because spreadsheets make it easy to extend rows of numbers don’t mean they have any value.)
  • Shane Parrish wrote an interesting few observations about The Dangers of Certainty.
  • Andy Grove (ex-Intel Chairman) published his take on corporate management and strategy, putting constant paranoia on the pedestal, and that means he weaves uncertainty into the fabric of the organisational culture because ‘fear’ is nothing but uncertainty.

If you are perfectly confident in your answer, you won’t listen and you won’t hear the warning signs that you are wrong.

The HBR academics don’t address HOW we can go about fighting this basic physiological response, but this is a little mental checklist that I have learned to apply in decision making:

  • Is (what I think) true fact or disguised opinion?
  • What is the opposite of what I think and why is that not true?
  • If this is so self-evident, why isn’t everyone doing it?
  • I am simply extrapolating like a turkey?

Naturally no one will actually have mental checklist; but these types of responses in any decision situation becomes a ‘mindset’ and ‘a way of looking’ at things. Initially it may be acquired by being more conscious about the process until we become adept at distinguishing between what we know for certain and what we want to know.

I am not advocating analysis-paralysis; on the contrary, I am promoting that executives become prone to action by recognising the fuzzy comfort of perceived certainty for what it is. That is exactly why ‘movements’ like ‘lean thinking’ and ‘agile development’ came to prominence.

It is really all about fine-tuning your bullsh*t detector, and being honest enough to know that it must be aimed at our own conceptions and perceptions as much as other people’s.

You will be a better decision-maker if you do this: reject the pursuit of certainty as a noxious weed growing in your garden of innovation.

And few organisations can afford to be lead by leaders who lead as if they are completely certain about everything, because certainty is a lens through which we view a world that does not exist.

PS: This LinkedIn post elaborates a bit more chaos theory.

 

The real art of retail is this:

Are you any good at retailing?

Ask an Orthopaedic Surgeon what ‘ortho’ means and they will know. Ask a COBOL programmer what COBOL means and they will know.

And by ‘know’ I mean know the actual definition and the roots of the word and exactly how that relates to their job.

Ask most retailers what the word retail means, and you get a blank stare or at best they might mumble something generic about ‘buying and selling’ or ‘selling to customers’ or the like.

The word retail is derived from the Old French ‘tailler’ (pronounced tai –yeah) and means ‘to cut’. It is the same origins of the word ‘tailor’.

It refers to what we today call ‘bulk-breaking’ – which means that a retailer is a ‘breaker of bulk’: we buy a pallet or crate full, break the bulk, and sell individual (tailored) units to the customer.

The theory lesson is over. What does that mean in practice?

If you want to know if you are any good as a retailer, you need to understand how well you do at breaking bulk. That stands to reason, right?

My question to you is then how do you measure this? What is the key metric of a ‘breaker of bulk’?

It is widespread practice to use the word stockturn to refer to the turnover rate of merchandise.  That it is, how many times (per year) a store turns over its stock.

There are two ways of doing this calculation.  The distinction is between using retail prices or cost prices. The norm is to use annual data, as monthly data would result in fractions, which are hard to work with and benchmarks have been recorded based on annual numbers anyway.

Either of the following two formulae can be used:

                                                                             Total Sales             

                                                            Average Inventory at Retail Prices


                                                                      Total Cost of Sales        

                                                            Average Inventory at Cost Prices


If you want to know if you are a good retailer, you should know how good your stockturn is. But there is a twist in the tale: faster is not always better.

A good retailer is not the one with the fastest turn, but the one with the optimum turn. Too high stockturns are usually indicative of being under-capitalised and results in high distribution costs, double handling and administrative inefficiencies and loss of buying buyer which all ultimately means that excessive stockturn is less profitable.

Stockturns that are too low are more commonly experienced – usually as a result of buying poorly or marketing poorly.

The good retailer is the one that can achieve the Goldilocks standard – getting it ‘just right’.

I understand that some people reading this may think that metrics are theoretical - even possibly unnecessary except of Sales and Profits. Not everyone appreciates why a consultant would want do that analysis in the first place.

Hopefully now you can appreciate that (using and understanding) metrics can go to the essence of the craft of retail – and will reveal how good we are at being a ree –tai-yeah.

Or at the very least, now you know what you really are…


Why you never win

… is because you try to win.

A few salient points to consider from the talk"

  1. When an argument starts, persuasion stops.
  2. As soon as people are confronted with information being in conflict with their worldview, the parts of the brain that handle reason and logic went dormant.
  3. When trying to win over someone whose natural allegiances are not with you, getting into an argument is a sure way to fail.
  4. “Winning” comes from, is a metaphoric struggle for life and death now and nobody wants to die.
  5. Losing an argument means you learn something.

Note: this 'post' was use as an intro to my weekly newsletter. I thought it was worth posting here since not all newsletter readers are blog readers and vice versa. If you DON'T get the weekly #thinkdifferent update, you should think about it.

 

 

Crack the whip on that retail fetish of yours

Apple has been the poster-child for every best-practice story for many consultants who don’t even know anyone who works for Apple, so I don’t want to add to that pile of verbiage.

But last week I wrote here on Inside Retailing that creating the right culture is the way to create success. But later in the week an interview with Mark Kawano, a former designer at Apple surfaced and he made a few salient comments.

Asked why Apple seemed to be able to be so successful at designing products people really wanted, he revealed that it wasn’t because they had great designers or better tools, he said:

“It's actually the engineering culture, and the way the organization is structured to appreciate and support design. Everybody there is thinking about UX and design, not just the designers. And that’s what makes everything about the product so much better . . . much more than any individual designer or design team.”

Asked about how Apple could constantly come up with those brilliant touches that defined the organisation, he said:

“There wasn’t a formalized library, because most of the time there wasn't that much that was formalized of anything that could be stolen,” Kawano says. “It was more having a small team and knowing what people had worked on, and the culture of being comfortable sharing.”

Which supports my contention that training is rarely the solution.

Many organisations have a fetish for training. It is the ‘go to’ strategy for every intractable problem and even our Governments fall back on training whenever they encounter a social issue. Domestic violence? Solve with more training. Speeding drivers? More driver education. And in business, if the customer service is poor, roll out some customer service training.

This does not mean that having smart people or great resources is not important. It does not mean that the right training is not important.

What it means is that, whatever your particular fetish is - communication, customer service, risk management, visual merchandising or whatever - that it is never that ONE thing.

There are no silver bullets. There is no single thing that you can change, for instance, to solve the problem of harmonising online and in-store prices.

It may be a cliché, but everything really is connected and the art of management relies on your ability to tweak many things in small ways to tune the business perfectly. And the way you know you are doing it right, is if your culture is healthy.

The starting point of making changes, therefore, is that you should consider the type of culture you have and the one you want to create – and to do whatever is necessary to make that happen.

Recently I was talking to a client about his desire to make the staff more accountable. Which of the following options do you think I suggested?

  1. Look at the KPIs and to evaluate how we report on those in the weekly or monthly meeting.
  2. Map out different reporting structures or we could change some policies.
  3. Incentivising the staff when they show accountable behaviour.
  4.  Re-write the job descriptions.
  5. Training

That’s a trick question because the answer is: none of the above.

My suggestion was that one message be repeated often and at every opportunity. Every time a person shows lack of accountability, repeat the message. When a person shows accountable behaviour, repeat the message. When a person comes up with an excuse repeat the message.

And the message is this:

If that attitude can be embedded in the culture, you won’t need more policies and more systems because everyone will know what is acceptable and what is expected. It is not easy to do (that is why CEOs are paid so much money) and the temptation is to take a short-cut and just tell people what to do. (Usually that short-cut will reflect your personal retail fetish.)

If you take the time to build a healthy culture, you will have a healthy business. And that is true for Apple and it is true for independent retailer on the main street of a country town.

 

More training is RARELY the solution

It is often said that training is the key to running a successful business. Let's take franchising as an example:

On the surface it seems logical: franchisor knows how to do X and the franchisee does not know how to do X and what they buy is the ‘know-how’. And know-how is transferred through training. Right?

At least you think this way if you are a training company. If you are a marketing company you will say it is marketing and if you are a technology company you will claim the key to success is a new system.

It is the old: ‘if the only tool you have is a hammer, every problem looks like a nail’ principle at play. So as someone who does training for a living, let me be perfectly clear about this: training is not the solution to anything.

More training is the ‘go to’ strategy for every intractable problem and even our Governments fall back on training whenever they encounter a social issue. Domestic violence? Solve with more training. Speeding drivers? More driver education. And in business, if the customer service is poor, roll out some customer service training.

Every time the going gets tough, the tough go training. What a phenomenal waste of money.

Let us consider resolving the speeding issue in society. Do you honestly believe that more driver education will fix that?

The answer is that it will help fix the problem. There are other issues to be addressed too, so let’s name a few:

  •   Authorities have to understand that motoring technology has improved and what once was a safe speeding limit is now just ridiculously slow and must be changed.
  • The quality of road surfaces and the infrastructure like lights, barriers and signage may need to be changed or adapted.
  • The incentive/punishments for driver errors (in speeding) play a role in bringing speeding down.
  • Opportunities to drive fast can be created in appropriate places that are not public roads.

I could go on but it should be clear that there is a whole eco-system of inter-connected things that must be considered if you want to address the problem of speeding.

In a past life I was a Shopping Centre Manager – and the first thing I did when I moved into a centre was to fix the Administration system. Some may consider that weird since it would surely be a higher priority to get more customers to the centre?

I did this because (a) I had to talk to many retailers and be credible, and (b) a very important metric was rental arrears (as you can imagine) and if the Administration system is dysfunctional, the monthly statement/invoice is incorrect. This gives the retailer the opportunity – indeed, the right – to query the invoice and whilst we are trawling through the rent roll, they withhold payment. And if I as a Centre Manager can not even get the rent roll right, they can rightly question how I could talk credibly about what they should be doing in their business?

However, having a solid Admin system is not the answer either. It merely illustrates the point that there are many moving parts to having an entire organisation tuned to perform well.

The same goes for the quality and viability of your franchise system.

This is even more difficult to achieve in a franchising system where relationships are influenced by competing objectives and/or constrained by legal frameworks of what can and can’t be done; not to mention the history and baggage that comes with any relationship.

Just because it is complex, does not mean that it cannot be done. The following diagram is also known as the 7-S Framework or the McKinsey Framework. It was developed in the early 80s by someone who many readers will know – Tom Peters (and Bob Waterman).

The model was used at the time to summarise their findings for the best selling book ‘In Search of Excellence’ – I have used it very effectively to think in an organised manner about all the key elements that must be in place for ANY organisation (including the not-so-excellent ones) to function.

I am happy to give away the ‘secret sauce’ of our approach to solving problems because if there is anything that I have learned in the last 30 years, it is that knowing what to do and actually doing are worlds apart.

This is not the place to get all academic on the reader, but suffice to say that the underlying research is reasonably robust and that having used it for over two decades, it goes down as a classic that cannot be improved upon. Much like the 4Ps of Marketing introduced by Kotler in the 60s, some ideas simply stand the test of time and this is one of them.

Readers can think about ANY challenge they currently face, and I guarantee that the solution (and the problem) will be a combination of one (or more) of those 7 S’s.

Just because an idea is new, does not mean it is important and just because the idea has been around for awhile, does not mean that it does not work any more.

Of course the simplicity of the framework belies the challenges of synchronising all those moving parts. And each of those elements represent an ever-changing domain.

One area I am very familiar with, is cloud-based platforms. This technology (system) can be used for something as simple as taking the Operations Manual online at low cost or to something more challenging like creating collaborative communities of practice.

Let us consider those examples briefly.

Example 1: Having a ‘living’ operations manual in the cloud has several benefits. It is relatively easy, is dynamic, track-able, and instantaneous - and at a few dollars per month per person it is more cost-effective than sending one letter/brochure a month. Yet few people are doing it, which begs the question why everyone is not doing it.

The answer is that it is because most Franchisors are smart enough to know (intuitively) that it is NOT simply about uploading a few PDFs onto some online directory or even just on Google Drive. If you do it right, you will think about who needs to use it, how they use it and how best to disaggregate the information and how it will be monitored. Then it becomes clear that all the moving parts must be in good working order to tackle a project like this.

Example 2: Having an active, collaborative franchisee community-of-practice is (in my humble opinion) the holy grail of franchisor-franchisee relationships. This is a state where the franchisees truly own the objectives, are committed to the culture and have created an environment where they freely share the wins and solve the problems collaboratively.

We can roll out the platform/technology easily, make it look pretty according to your brand but the initiative is doomed to failure. This is not a sales pitch: I am telling you NOT to do it. Unless you have all the other elements in play and properly aligned, the take-up will be at best limited and soon you have a white elephant on your hands that requires someone to allocate time and resources to ‘creating content’, when what you really need is a form of social learning that is driven from the bottom up to happen.

In order to make it work your culture must be robust, your internal communications must be honest and transparent, your people must have certain skills and your policies must be fair and so forth. Not to mention that your business model and strategy must be solid.

I could go on, but you get the idea – I am simply referencing the 7-S framework.

All of these things are doable. The benefits are amazing – from clear financial ROIs to substantial ROR (return on relationships) – but they can and should only be tackled by taking a holistic perspective of the whole franchise system.

The answer is not to roll out more training. Especially not training that has some sort of a buzzword associated with it. (Total Quality Management anyone?)

As part of the whole management mix, training has a role to play, and the right training at the right time is vital to success. But it must be part of the big picture of the total business. That is why training must be part of that big picture, driven by the founder/CEO, for delegating to an over-worked employee will turn training into a series of time-wasting events that have zero impact.

 

You may know WHAT you think, but do you know HOW you think?

I FORGOT EVERYTHING I LEARNED AT MY MBA, EXCEPT THIS

I spent 4 years doing my MBA. (And that was the minimum – 17 full year subjects plus a thesis; none of these ‘semester’ baby subjects. Those were the days.)

But truth be told, even though I think it was a pretty tough, demanding course, I can count on the one hand the things that I have learned and have kept using to this day. But these few lessons were so powerful that I consider my time and money well-spent…

One of those life-long insights was the discovery of the idea of General Systems Theory – or commonly referred to as Systems Thinking. (The topic of my thesis in the end.)

Anyway, the nomenclature is misleading in some ways because people’s notion of a ‘system’ has bureaucratic undertones, when in fact it is closer to a philosophy.

I am not going to try and educate you about systems thinking. That will take a lifetime because it is a broad church. I only want you, dear friend, follower and colleague, to have the opportunity to become aware of it, and if you so please, to start the journey to discover more about systems thinking.

If you explore my blog posts and other writings, you will see there is a constant reference to the power of little things, the laws of unintended consequences and the misunderstanding of the nature of outcomes.

You can get a collection of writings ON SUCCESS here, if you want to read some of it in a handy eBook format. (Or simply use the search function on the blog or explore the archives by topics.)

In any event, the notion of systems thinking is firmly entrenched as mental model, and it has governed how I think for a long time. Being a self-critical AND cynical old bastard, I am prone to question the things I believe constantly, and I can honestly say that every period of introspection is followed be DEEPER commitment to the validity and power of this particular worldview.

The following image does not explain what systems thinking is at all, but it lists some 17 steps or practical applications that illustrate how a systems thinker approaches problems.

 

 

What a self-made man told his son in 1900 still true today

Letters from a self-made Merchant to his son

Below are a few extracts from the letters, written by John Graham, Head of the House of Graham & Company, to his son Pierrepont, a freshman at Harvard University. (Find it on in my Amazon Library.)

Have a read – and please make your contribution at the end.

$$$

Education is about the only thing lying around loose in this world, and that it’s about the only thing a fellow can have as much of as he’s willing to haul away. Everything else is screwed down tight and the screw-driver lost.

$$$

Some men learn the value of money by not having any and starting out to pry a few dollars loose from the odd millions that are lying around; and some learn it by having fifty thousand or so left to them and starting out to spend it as if it were fifty thousand a year.

$$$

The first thing that any education ought to give a man is character, and the second thing is education.

$$$

It isn’t so much knowing a whole lot, as knowing a little and how to use it that counts.

$$$

When Pierrepont—still at Harvard—submits his expense account to his father, he receives some more fatherly advice.

$$$

The sooner you adjust your spending to what your earning capacity will be, the easier they will find it to live together.

$$$

The only sure way that a man can get rich quick is to have it given to him or to inherit it. You are not going to get rich that way—at least, not until after you have proved your ability to hold a pretty important position with the firm; and, of course, there is just one place from which a man can start for that position with Graham & Co. It doesn’t make any difference whether he is the son of the old man or of the cellar boss—that place is the bottom. And the bottom in the office end of this business is a seat at the mailing-desk, with eight dollars every Saturday night.

$$$

I can’t hand out any ready-made success to you. It would do you no good, and it would do the house harm.

$$$

You know how I began—I was started off with a kick, but that proved a kick up, and in the end every one since has lifted me a little bit higher. I got two dollars a week, and slept under the counter, and you can bet I knew just how many pennies there were in each of those dollars, and how hard the floor was. That is what you have got to learn.

$$$

But I always lay it down as a safe proposition that the fellow who has to break open the baby’s bank toward the last of the week for car-fare isn’t going to be any Russell Sage when it comes to trading with the old man’s money. He’d punch my bank account as full of holes as a carload of wild Texans would a fool stockman that they’d got in a corner.

$$$

Now I know you’ll say that I don’t understand how it is; that you’ve got to do as the other fellows do; and that things have changed since I was a boy. There’s nothing in it. Adam invented all the different ways in which a young man can make a fool of himself, and the college yell at the end of them is just a frill that doesn’t change essentials. The boy who does anything just because the other fellows do it is apt to scratch a poor man’s back all his life.

$$$

There are times when it’s safest to be lonesome. Use a little common-sense, caution and conscience. You can stock a store with those three commodities, when you get enough of them. But you’ve got to begin getting them young. They ain’t catching after you toughen up a bit.

$$$

You needn’t write me if you feel yourself getting them. The symptoms will show in your expense account. Good-by; life’s too short to write letters and New York’s calling me on the wire.

$$$

 

Dear reader, I wonder if you can indulge me by sharing YOUR words of wisdom. If you had to give your child, who is planning to follow you into business, ONE piece of advice what will it be?

I will kick it off with my own piece of advice – which, believe me, my kids are sick and tired of hearing:

“The way you do anything, is the way you do everything.”

 

What is yours? Please comment or shoot me an email – who knows, we might even turn into a poster or something.

Dennis

Ganador: Trainers to the stars

HT: Shane Parrish (Based on the collection of American Journalist George Horace Lorimer in the early 1900s.)

Do you have any idea how crooked our thinking really is?

The silver bullet you are searching for…

... does not exist.

legalfutures.co.uk

legalfutures.co.uk

When you are a client you demand an answer, if you are a manager you demand solutions, not problems. When you are a consultant, you feel compelled to come up with an answer. When you are a ‘guru’, you want to be first to the summit of Crap Mountain – like content marketing at the moment.

Strangely enough, few people understand what they demand, nor how one is supposed to arrive at those ‘answers’.

The best thinker about risk – bar none – is NN Taleb. One of his major insights about decision-making was triggered by this observation by Daniel Kahneman, the grandfather of Behavioural Economics.

Kahneman and Miller wrote in 1986:

A spectator at a weight lifting event, for example, will find it easier to imagine the same athlete lifting a different weight than to keep the achievement constant and vary the athlete's physique.

This observation basically states that bias is introduced into our thinking because the variable of choice is not random. In this example we can imagine the athlete lifting a different weight, but we don’t easily imagine a different physique; whereas both of those variable could materially influence the final outcome of the weight being lifted or not.

This triggered him to think about this in the context of risk (being Distinguished Professor of Risk Engineering, New York University School of Engineering) and came to the conclusion that, in REALITY (not in laboratories) there are many random variables and they are all subject to variation.

It seems very obvious to say this, but Taleb realised that; increasing the number of random variables compounds the number of counterfactuals and causes more extremes.

And of course we all know that reality is comprised of multiple variables, so PREDICTING an outcome in reality is really just a lottery.

The practical outcome of this phenomenon are:

  • We really don’t THINK straight as we think we do. (Because of an inherent bias in our thinking process, we vastly under-estimate the variability of multiple variables, with catastrophic consequences. Taleb.)
  • We foolishly cling to the notion that we can influence the universe and things happens because of us. (Price: stating the bleeding obvious.)
  • We feel compelled to find the answers by applying rigorous rational thinking and research.

If we can’t understand our own biases, RESEARCH would be a good way to overcome the problem, right? Not so much.

Taleb remarked that ‘scientists use statistical methods blindly and mechanistically, like cooking recipes (and) tend to make the mistake when consciously comparing two variables.

This is very common in research and in fact so much so that I can safely say that most research is not worth the paper it is written on. I wrote that Neuroscience is not all it is cracked up to be (and promptly got attacked by converted zealots.) Nieuwenhuis et al. in 2011 found that 50% of neuroscience papers (peer-reviewed in "prestigious journals") that compared variables got it wrong.  (I have warned about being seduced by statistics too.)

We can’t rely on research to save us from sloppy thinking.

The question is then what we CAN do about this because we have a life to love and a business to run?

A good start would be to study and understand probability theory properly so that you can truly appreciate (for example) properties of the joint distribution of tails.

But the REALITY is that most of us won’t be doing that, so here are some simple alternatives instead:

  1. Consciously avoid the lure of simple extrapolation. (Especially when it is so easy to do with spreadsheets.)
  2. Consciously stop and anticipate worst case scenarios. (They are more likely than you want to think.)
  3. Encourage a culture of robust questioning. (Particularly those corporate mavericks who go against the grain and sometimes seem difficult.)
  4. Actively guard against people using ‘research’ as a reason to do or not do stuff. (Apple did OK without ever relying on research.)

You must appreciate that ANY of the above could easily be abused and become a reason for never doing anything and we should be vigilant about that.

But more than anything, stop being seduced by the promise of a silver bullet.

Ganador: Acquire and Retain Clients in the retail supply chain.


WE PUBLISHED A #THINKDIFFERENT PIECE ON CONTENT MARKETING - GET IT FREE HERE

Marketing is education is marketing

#thinkdifferent


Marketing to customers is the same as educating them

Marketing is LIKE education:

1.      At its heart it is a form of gentle leading.

2.      It’s people-centric: about the recipient, not the ‘sender’.

3.      You remember the great experiences.

4.      It is sustained. (It is a life-long journey)

5.      It is sustainable.

6.      It is sustaining.

7.      Technology is an enabler, not a substitute.

8.      It is rewarding (everybody benefits).

9.      It is authentic.

10.   It is a form of conversation.

11.   The fundamentals never change (and it will survive the buzzwords).

12.   The best system creates a virtuous circle of beneficiaries.

13.   The benefits last forever.

14.   You can share, expose, challenge, inform, teach – but you cannot MAKE anyone love it.

15.   You can’t fake it (the ‘kids’ will catch you out in a blink)

Given these similarities, this raises the question: might it be that Marketing IS Education?

At Ganador we believe it is. When education is at the heart of your marketing philosophy, then you truly have the customers’ interests at heart.

The revealing power of knowledge and truth will reveal the heart of the brand.

If you genuinely believe your brand is the right solution then you will seek and embrace this exposure. Instead of ‘influencing’ the customer to buy, they become driven to buy because they know the product/brand is the best fit for them.

That is the most powerful outcome for any brand AND the most ideal result for the consumer.

Marketing as education requires a mind-set change as well as a new set of tools and strategies. Some activities may appear superficially the same as those previously executed – but just like a philosophy lecture and class-room show and tell may ‘look the same’ and appear in the same setting and involve one-to-many communication exercise, they are in effect very different.

A marketing activity may LOOK like a training workshop, but it is not.

It may look like a consulting gig, but it may be an engagement exercise.

It really just depends on intent – and the philosophy behind the execution; but good marketing is education is marketing.


Customer Education is the new marketing

#thinkdifferent

I like to think we are innovative and our offer is slightly ahead of the curve. That causes difficulties sometimes, because instead of simply having to explain the benefits of what we do, we also have to explain what it we do.

One of the latest iterations of marketing is ‘content marketing’.  I am not a big fan – and I have already said that.

Marketing as a professional discipline struggles because its practitioners are constantly jumping on the next band wagon, proclaiming “this is the big thing”. Social media – and a specific range of platforms come to mind and of course then there is the other buzz word – Big Data.

(I read somewhere that Big Data is like Teenage Sex – everyone thinks everyone else is doing it and therefore claim they are doing it, but the reality is there is much groping in the dark and not much else.)

By labelling what we do as “Customer Education” and claiming that it is the new marketing, I run the risk that the same fate will befall it; a slow, agonising death until all that remains are a few abandoned websites in the Google graveyard.

The current crop of young marketers who are ‘discovering’ social mistakenly believe that they have discovered something amazingly unique about consumers. People are social. It doesn’t take more than a moment’s reflection to realise that humans have ALWAYS been social.

The only thing that has changed is that (1) it is easier for people to use technology to express their social nature and (b) the social dimension of decision-making has shifted power to the consumer because brands are no longer custodians of the information needed to make decisions.

By the same token, marketing has always been about customer education.

Text book purpose of advertising is for instance to:

  • Inform
  • Persuade
  • Remind

You could simply re-read those aims and easily categorise them as ‘educational’ could you not?

When a parent ‘reminds’ a recalcitrant teenager to clean their room, that is surely a form of education?

When a manufacturer includes a user manual in their packaging, they are attempting to educate the customer.

The reason I believe content marketing is a dead end (in addition to those already enumerated) is that content marketing (as it is practised today) is biased towards entertainment – as can be seen from the unrealistic and counter-productive focus on creating something viral.

Content can be entertaining and it can be educational. It can even be both at the same time. But pure entertainment is not – in our experience - a viable, effective and sustainable marketing strategy unless your product/service is an entertainment product (like XBOX).

By definition someone who wants to be ‘entertained’ always wants to move on to the next thing… which goes against the grain of the organisational objective of creating loyal and repeat customers.

At best, content marketing is part of your digital marketing strategy which is part of your overall marketing strategy.

Customer education is a nobler endeavour.

Like any relationship, “getting to know each other” is a crucial part of the relationship. When you really know and understand each other, the relationship has the opportunity to attain longevity. 

The SKILL all successful people have

#thinkdifferent --

There are many people who write about the attributes of successful people. And they may even write about the actions of successful people. But what is the particular skill that a successful person has that may explain their success?

A: The ability to balance two opposing forces.

That is the ability to handle the tension between two opposite forces in such a way that he or she gets the benefit from both (opposing) forces.

To be a successful sales person:

You must be able to genuinely, empathetically listen to and be interested in the prospect’s problems and yet be motivated and focused on getting your solution adopted and your KPIs met.

To be a successful leader:

Leaders have warmth and natural empathy that makes people feel they are understood but they are also strong and resolute and unwavering in their beliefs.

To be a successful entrepreneur:

Be truly committed to something that is completely unproven. This requires balancing the Doubt that defines the opportunity (inherent in breaking new ground) with the Faith to execute diligently and repeatedly believing it will work.

Great parents find the sweet spot between unconditional love and strong guidance.

I could go on…

But the question that intrigues most is why some people can acquire that skill and others not.?

This particular skill is not a physical one, so there are no innate requirements like hand-eye coordination or fast-twitch fibers.

Yet some people acquire and some people don’t.

In my view it boils down to a certain way of thinking. And by this I definitely DO NOT mean ‘positive thinking’. (In fact relentless positive thinking is bound to be as problematic and ineffectual as continuous negative thinking.)

The mindset I am referring to is a strong intellectual commitment to avoid binary thinking. Some people seem to be more easily able to avoid either/or thinking and others struggle a bit more. It may relate to a need to make sense of the world in convenient little boxes, but the reality is invariably different.

And I really mean invariably.

If you are a Christian/ believer, then God is the only ultimate truth (by definition). If you are a materialist there are no absolute truths. For practical purposes – at the human level in our reality here on earth, one can therefore safely say that for every argument to act one way, there will be a powerful (if not equal) argument to act the exact opposite way.

The outcome of this particular reality is that humans make choices to pursue a particular course of action and then ‘battle’ with the implementation because there unintended consequences. But in fact those unintended consequences could easily have been foreseen if one simply had the inclination to objectively consider the opposite course of action.

The knack (skill) to do so is something that can be learned. It does not take any particular set of ‘smarts’.

In the next post we will apply this skill to a big social problem and explore how that may apply in business. (And even talk about Schapelle Corby.)

The emergent start-up culture has unintended consequences

#thinkdifferent

Over at SVBTLE they have now allowed the plebs in. And I signed up. This is my first post. I can't say I will be writing a LOT over there, but I really like the look and feel of the site.

CHECK ME OUT

This is cross-posted from there:


The new dogma for an entrepreneurial start-up is:

  • get it up quickly
  • close enough is good enough
  • test
  • feedback
  • iterate
  • pivot, or - prove the concept

(Even VC is going that way - ala 500 Startups)

Is this really how entrepreneurship should work? Just because it can?

Most writing about start-ups references the Valley and equivalent places where the focus is on tech- and web start-ups. Of course these are not the only types of start-up.

It seems as if the philosophy that underpins the 'do the quick and dirty and figure out as you go along' works well in the digital space - because it can be done without great time penalty.

There are two problems with this.

1. It does not work for all types of start-up. E.g. in the B2B space it could spell disaster. Or imagine if a hardware start-up, selling say smoke detectors, decided to suck-and-see?

2. The UNINTENDED consequences of this approach is not (the desired) creation of a culture of rapid innovation, but rather one where risk is not considered and thoughtful planning and great execution are sacrificed at the alter of expediency.

Just because it works - or has worked - for so many of the current crop of start-ups, does not mean it is the right thing. If that is the way they all do it then cause (suck-and-see) and effect (success) do not necessarily follow because there is nothing to compare it too.

Hunting start-up success with a shotgun is one approach. I am just not sure if it is the one I prefer.

Shotgun_in_training_US_military.jpg
CLICK ON THE GEARS to help us set something in ,motion. 

CLICK ON THE GEARS to help us set something in ,motion. 

Why you are screwed and don't even know it

#thinkdifferent

20131218_095326.jpg

We all went to school. Some of us may have learned more than others, some of us may have been in different types of schools, but essentially we all went through the same (or practically similar) educational system.

This system shaped what you do and believe today and your success today is influenced very much by those foundational years in school.

This image is taken of an actual public school in NSW. It is not necessary to be more specific, but images like that abound. Can you remember if words like these were used ‘as a charter’ at your school?

It would have been something an ambitious principle dreamt up and tried to shape the culture of the school accordingly.

If I as a parent saw this at a school where I may have had plans to take my kids, I would have worked very hard to get them into a different school.

If you look at those words what do you see?

Do you think I am nuts? What kind of parent would not want to have their kids adopt that charter as their value system?

I, for one, would not.

Read these insights from John Gatto, about the American educational system.

Schools intend “to make children as alike as possible. People who conform are predictable, and this is of great use to those who wish to harness and manipulate a large labor force.”

And he quotes H.L. Mencken on the aim of American education: “The aim… is simply to reduce as many individuals as possible to the same safe level, to breed and train a standardized citizenry, to put down dissent and originality.”

When I read those four words on the wall of that public school, I translate them to one idea: CONFORMITY.

Those words are not there to encourage kids to try things; they don’t exhort them to aim high or not to fear anything. There is no excitement, challenge or sense of purpose.

Those four words are there to make the school easier to govern: responsibility, respect, co-operation and safety.

Those four words are about the teachers, not about the kids.

Maybe you were taught by teachers at a school like that. Mr Chips exist in real life and some of you may have had one of those, but I guess that would the minority.

This post is not about the educational system in this country, though it is thoroughly stuffed, but is about you and your business.

  • These are the question you should ponder and answer for yourself because it is influencing how you do business the way you do:
  • What was the lasting impact of those ‘values’ you were taught to put above all else?
  • Do those beliefs you now hold as consequence empower you or limit you?
  • What is the charter of your existing business?
  • What is the value set by which you govern? Is it about you or is about the customers and employees?
  • Do you understand the impact of these seemingly innocuous decisions?

If you have been battling to understand why your employees are not more motivated, and why your customers are not more loyal, it usually comes back to the value system that is in place. We put it in place without knowing that we do, and if we do, we often don’t fully appreciate the consequences (intended and otherwise)

How are the values that you are trying to put place influenced by those values of compliance and conformity that were drilled into you as a child?

USP. Niche. Segment. Point of Difference. Cut-through. Innovation. ALL THESE IDEAS require you to be original and think differently.

This is the million dollar question: Can you?

Or more pertinently:

With an educational system that values conformity and obedience above all, have you been equipped with the attitude to embrace change and enjoy challenges, or do you look to the government (or some authority figure or institution to fix things and control the environment for you the way they did in school?

Confronting, I know; but well worth a few moments of your time to as you embark on a new year with new challenges.


Dear Reader - please CLICK ON THE IMAGE to provide me with some really helpful insights. I promise it will take 2 minutes but it will mean the world.


Fundamental flaws in government-sanctioned e-learning

#thinkdifferent

This post is somewhat off-topic to my regular audience, but some rants must be vented, so here goes...

 

CONTEXT

The government has endorsed a new eLearning quality model.

Readers are urged to take a look and then return to the post.

To be fair, or brutal, depending on your point of view, this flaw is really expected because it is built on a flaw that exists in the entire vocational educational system which is competency based system here in Australia.

My company used to operate an RTO. Mainly because our clients asked about the money. We tried to do the right thing in giving them the training they needed whilst maintaining compliance with what the system demanded.

In the end we quit because we could not do justice to the commercial reality and continue the box ticking. It was uneconomical for us (as a small business) and tedious for the client. Now our training products must succeed or fail on their own merits and generate sufficient value to be judged against the plethora of free stuff on the internet and cowboy RTOs subsidised by the government.

This note is not written because we are disappointed in any way. (We stopped taking trainees more than 2 years before we ‘expired’ our registration, so it happened a long time ago.)

I mention this as context simply to make the point that we are intimately familiar with the system. We continue to operate in the Learning & Development space as a private entity but not as an RTO.

The whole formal educational system is under pressure from a rapidly evolving learning landscape – and I am not talking about MOOCs. Some of these issues raised and the final solutions suggested therefore is broader than just the VET system.

The reason why I raise it in response to the eLearning Quality Model is because it represents a major opportunity that is missed since it merely builds on what is already a flawed foundation.

The analogy of driving a car can be used to understand the flaws in competency based education. If this new ‘model’ was a car, it would work as follows.

There is a detailed manual of how the car functions, much like an owners’ manual. This one even includes some driving instructions. This is the new ‘quality model’ issued by FLAG.

If you were generous, you would say it even references a rule book. Except that this rule book is not generally available to all users, is not fully documented and even where it is, it is subject to interpretation. The rule book is enforced by the feared auditors who each have their own pet approach and much of the RTOs success in an audit is about whether your preparation aligned with the auditor’s pet hates.

But I digress.

The job of the owners’ manual (quality model) is to provide the drivers of the car with the knowledge and the structure to successfully navigate the car from point A to Point B.

And this is where the wheels fall off – pun intended.

Knowing where every safety switch is, knowing where the spare tyre is located, knowing which type of fuel to use and how to tune the radio may all be important parts of driving the car, but that clearly won’t make you a competent driver.

Even if the rules were clear (which they are not) then you still won’t be a competent driver. Does someone who is travelling at 80 km/h in an 80 km/h zone competent?

Clearly not.

Even if the rules were clear and the assessment of those rules was effective, it still would not work.

These standards (like speed limits) are necessary but compliance with standards does not indicate that you are good driver.

Testing against these standards achieves nothing.

Even taking a driver’s test supervised by an experienced instructor achieves nothing.

Firstly consider the accident rates that continue despite the driver’s test, which means the test is inadequate indicator of deriver competency or desired outcomes.

Secondly I would argue that the good drivers would make fewer accidents irrespective of whether they take the driver’s test or not.

Thirdly, the number of failed drivers is negligible. Even those that fail once or twice achieve their license within a few weeks of failure. Their driving skills could not possibly have improved, all that happened is that they successfully avoided the technicality that prevented them from achieving their license in the first instance. (All citizens of this country are familiar with the stories of how the supervisor found a silly transgression and failed you on it.)

And let’s be honest here, the whole system is geared towards finding these technical failures which in reality contribute nothing to raising the standard of education just as those technical failures do not make our roads any safer in a material way. (All RTOs will have stories of how they failed audits on those same technicalities that, in the scheme of things, make absolutely no difference to the standard of education.)

The conscientious will argue that it is all we have and even if it makes a small difference, it helps. And just like a car needs an owner’s manual, we need those technical standards.

They are wrong.

The problems with the system are strategic on one level and on another there are domain-specific issues.

DOMAIN SPECIFIC ISSUES

There is a difference between the issues apprentices face as opposed to those who are trainees.

Apprentices are engaged by employers because they are cheap labour. They know that they will learn the job on the job. What happens at TAFE…. well, whatever… As long as they are on time and do what they are told.

But by the nature of the fields of work where you can serve as an apprentice, there is some merit in a having a formal component of learning. These jobs are OLD jobs. Best practice is well known. These practises can be codified as standards relatively easily.

There if very little change in most of these types of jobs. Having the ‘school’ take care of some of the learning provides mechanisms that ensure that shortcuts and bad habits learned at one employer do not become standard practice.

But these jobs are dying, falling out of favour or being automated. Spending a lot of time and resources on fixing it will gain very little. The proposed quality model may be all that is required to allow an antiquated system to use some new tools. (For eLearning is a new tool and not much more.)

The traineeship system is different.

It is easy to codify in standards the job of an electrician. (Apprentice.)

It is extremely difficult to codify the standards of a manager or a marketer. (Trainee.)

The Trainees system (of white collar apprentices) is a gigantic wealth transfer system that produces very little in terms of tangible results. Employers go through the system to make money, or at least cover a big part of their training expense and absolve themselves of the responsibility for training.

As the diligent and responsible people in government know full well, the (private) RTOs do it purely for the money and the business model requires ticking the boxes and cashing cheques. This causes problems they are well aware of and these problems do not exist to the same extent in the TAFE system.

Everybody in the system knows it is flawed. And they feel they can’t do anything about it except create more boxes.

The eLearning quality model does not address this fundamental issue. FLAG has now simply added another owner’s manual to the car – this one for the electronics and al the fancy new systems – but the car is still (a) heading in the wrong direction and (b) driven by a driver who passed a test instead of one who is competent.

STRATEGIC ISSUES

Consider the quality model. It is a gigantic engine that will produce more tick-the-box requirements than will be humanly possible to manage.

The ladder of this learning is leaning against the wrong wall. It is there. It works. People are climbing. But when they arrive at the top rung and hoist themselves onto the roof, they are mighty surprised that they are in the wrong place.

Their teachers ticked every box and they have a piece of paper that is to all intents and purposes useless as they soon find out when they start wondering the streets.

What VET needs is not a quality model – that merely helps manage the output on the current production line.

We need a new vision – a whole new factory – which may not even be a conventional factory. It is beyond the scope of this note to explore an entirely new vision, suffice to say that the notion of social learning, performance enablement and behavioural analytics would provide the key planks of a new strategy. (Read that link, it is an eye-opener for most people.)

PAINTING A BIG PICTURE

Is the ladder of education leaning against the right wall? The nature of education and the delineation between education, training and learning should be completely re-thought.

Is a driving test the best way to determine readiness? Are we assessing the learner’s ability to be assessed or the real skill? The whole notion of competency should be revisited and considered in the light of changing needs and changing technologies.

Is a checklist-wielding instructor an effective and objective way to test the real skill required? Are we testing the teacher’s ability to comply or their real andragogical effectiveness? The role of teachers/trainers/assessors/auditors should be fundamentally reviewed.

Do we really need a bigger owner’s manual? The benefits of the current system should be questioned without fear or favour. (Nigh impossible in the equally antiquated unionised environment that is designed to maintain the status quo.)

CONCLUSION

There is nothing ‘wrong’ with the quality model as it tick all the boxes.

But it is a model of the wrong thing because that system of education it is supposed to function in has already changed.

I would argue that this is a pretty fundamental flaw.

Ganador Blog is about #thinkdifferent. We cover topic of business- and personal development aimed at entrepreneurial marketers. (c)Applies. Posts authored by Dr Dennis Price.
© 2014 Ganador Management Solutions (Pty) Ltd PO Box 243 Kiama, NSW, 2533 Australia Tel: (+61)2-4237 7168