93% of businesses abandon their original plan

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I wrote in 2009 that: I DON’T BELIEVE IN BUSINESS PLANNING. That got quite a few comments, some in agreement and some not.

I was told by one commentator: If you plan and never do then fail is assured.

And another said: To succeed long term though, (…) require planning, unless the plan is to react in a status-quo knee-jerk manner.

To prove my point, I followed that post up by taking a dig at the inability of all the ‘business planners’ to see the GFC coming.

Well, it seems as if a Harvard Professor agrees.

Amar Bhidé researched and wrote The Origin and Evolution of New Businesses (Oxford University Press,) and found that 93 percent of all successful companies had to abandon their original business plan — because the original plan proved not to be viable

Roy Williams (Wizard of Ads) writes on Bide’s work and concludes:

Successful companies have an ability to improvise. Unsuccessful companies blindly "stick to the plan.

The principal difference between hope and a plan is presumption about the future.

The intended plan is deliberate.
The improvised plan is emergent.

Eric Barker describes the difference between ‘deliberate’ and ‘emergent’ as follows: 

"Deliberate is what’s in the business plan, the PowerPoint deck, the list of goals. And that’s what ends up changing 93% of the time. Emergent is what you find along the way. It’s when your baby nephew ignores the gift you bought him… but LOVES the shiny wrapping paper. The heart medication research… that ends up becoming Viagra."

I called the ‘emergent plan’ the business model – that is the FRAMEWORK that describes how you intend to produce money in your business. I have written many times that our ability to change is the core capability we must acquire.

And now the professor agrees. Read that opening line again: 93% of successful businesses abandon the original plan.

Despite the poor track record and low probability of success of a business plan, WHY do organisations, banks, consultants and the like STILL insist on business planning as some sort of panacea?

I think the world is catching on and moving on. In the current internet start-up culture we even have a word for it – you ‘PIVOT’ the business.

  • GROUPON started as ThePoint.com, a site launched in November 2007 that lets you start a campaign asking people to give money or do something as a group 
  • INSTAGRAM founders started a location-based service called Burbn, most comparable to Foursquare.
  • FLCKR started a ‘Game Neverending’, a massively multiplayer online roleplaying game
  • And FACEBOOK once was Facemash, a site comparable to HotOrNot.com, putting two pictures of people next to each other and asking the user to identify which one was 'hotter.'

There is a very long list, Google the topic if you are interested.

The first flaw of every plan is that it fails to appreciate that the future is not more of the past. And even if the planners can see that future clearly, it suffers from the second flaw of all business plans; that it reflects the prejudices, the fears and the internal politics of the people writing the plan.

The solution is to develop and/or understand your business model very clearly. Then construct a business system that will help you become antifragile (not merely resilient) so that you constantly adapt (and pivot) towards success.

12 trends and ONE thing you can do about it

The following changes will materially affect your retail future:

1.      Manufacturers in retail

2.      Wearable technology

3.      Mobile phone usage

4.      Ageing workforce, ageing market

5.      Ethnic diversification

6.      Multi-channel delivery and engagement

7.      Social media communications strategies

8.      Diminishing career loyalty

9.      Price convergence online/offline

10.   Drone technology in the supply chain

11.   3D Printing

12.   Peer2Peer Transactions

 

Of course there are more – but you get the idea: change is relentless, overwhelming and unpredictable. You have two options to deal with this future:

A.     You can develop strategies for each one, assign resources and monitor progress in order to respond. You anticipate, you react. You constantly fight. You win some and you lose some – but you can never stop worrying.

B.     Or can you build your organisational culture to be an adaptive system. A system that is self-governing that thrives on complexity and is anti-fragile.

Which one is the hardest? Which is the most effective?

Most importantly, what do you choose?

What I said to a client before we parted company

Some months ago I submitted a proposal to a client to address four specific issues I anticipated on a project they were implementing. They never took up any of those options. This month they decided to evaluate the viability that particular project, raising four areas of concern and, you guessed it, these were exactly the concerns I raised six months ago.

The project is definitely needed and of crucial strategic importance, but as a large organisation they are struggling to be nimble and flexible and really lack the political will to persist. I was asked for some input and suggestions in preparation of that review meeting.

The following is directly redacted from the slides as the talking points of the conversation. I don’t reveal the client or the actual strategic solution because that is not relevant to anyone but the organisation. Of more universal relevance are the message and the context and the need to change.


#1: QUO VADIS?

The bad news things are not going as well as hoped for.

The good news is that all of this was perfectly predictable.

The best news is that it is easily fixed.

#2: WE CAN PLAY THIS TWO WAYS

Be nice, hint at some issues and allude to potential fixes and leave here feeling warm & fuzzy.

OR

Be brutally honest, cut to the chase and fix the problem, and leave here feeling pissed off.

#3: WHAT YOU ARE GOING THROUGH WAS DOCUMENTED IN 1972

#4: BUT, MAKING THE STRATEGIC SHIFT HAPPEN…

… is hard because we are pulled back toward the status quo by our ‘baggage’ and every time we get sucked in because we think it is our ‘experience’.

#5: A SUCCESSFUL STRATEGIC SHIFT REQUIRES…

Two things to happen – and whilst we are drawn to the second because it feels like we are taking action, it really is first things first...

#6: MUST WE REALLY CHANGE?

Quite possibly the stupidest question of all time

Like the frog at the bottom of the well we can look at the world and see a slice of blue pie above us. The reality outside the well is radically different and obvious to all except to the frog at the bottom of the well!

 

#7: IT IS OBVIOUS WHAT NEEDS TO BE DONE

The problem was solved in 1968

by BCG when the framed all the options in a simple matrix…

#8: THEY ALSO ANTICIPATED WHAT WOULD HAPPEN…

…because the same thing happens all the time.

#9: SO WE KNOW THIS…

  • That we have to change
  • Why we have to change
  • How it will painful and it will be different
  • What needs to be done

 

#10: STRATEGIC PATH TO IMPLEMENT XXX

There are two requirements to implement ANY strategy successfully

#11: THE FIRST REQUIREMENT

1 >> A NEW MINDSET

  • To SEE a different future
  •  To BELIEVE that future
  • To DISCARD the old
  • To be BRAVE when facing uncertainty
  • And to COMMIT TOTALLY to it…

SUCCESS WITHOUT COMMITMENT IS IMPOSSIBLE

If XXX has X likes and X updates (on the Facebook page) in a 6 month period, the natural question is whether we are committed to making a success of the digital future?

WARNING SIGN…

There is always an argument to stop. There is always a reason to go back. If this happens, it is because there never really was a new mindset in the first place.

#12: THE SECOND REQUIREMENT

2 >> A NEW PLAN

  • Consider all the OPTIONS
  • Make smart DECISIONS
  • Work like HELL

And the first step of developing a plan for the future is to understand a very simple and basic OVERLOOKED question:

#13: WHAT BUSINESS ARE WE IN?

You can’t articulate a credible new future if you don’t really understand what business you are in in the first instance.


The rest of the discussion is specific and confidential to that company. In the last few slides we covered:

WHAT BUSINESS ARE WE REALLY IN?

THIS RAISES STRATEGIC QUESTIONS ABOUT THE BUSINESS MODEL FOR YOU

Example 1

Example2

ONCE RESOLVED, THESE ARE THE CRITICAL IMPLEMENTATION DECISIONS

THEN TO THE SOLUTION

EXPLORING THE IDEA OF XXX

THE RATIONALE IS PRETTY SIMPLE…

ACTION RECOMMENDATIONS

SUMMARY




Cutting Edge Retail - Using Philosophy to create Strategy

Don’t run away – but I am going to talk philosophy and how that will help you make money. Specifically I want to describe to you the dialectic process or cycle and how you might use that to your advantage.

The dictionary defines the dialectic’ (process) in many ways, including as:

The Hegelian process of change in which a concept or its realization passes over into and is preserved and fulfilled by its opposite. 

The dialectic process is pattern of thinking that can work to your advantage or disadvantage.

Consider for instance this observation:

The Hegelian dialectic is the framework for guiding our thoughts and actions into conflicts that lead us to a predetermined solution. If we do not understand how the Hegelian dialectic shapes our perceptions of the world, then we do not know how we are helping to implement the vision. When we remain locked into dialectical thinking, we cannot see out of the box.

The other way of looking at it is to use the fact that things are happening ‘in the box’ to your advantage - by predicting how things will play out.

In general terms

The dialectic process is characterised by the presence of three phases:

  1. The status quo is the stage labelled the THESIS. (It is ‘THE’ ‘IS’ – that what ‘is’.)
  2. Gradually, the opposite of the thesis – the ANTITHESIS develops. The anti-thesis is the opposite of thesis and emerges because it presents the natural opportunity – the GAP in the market so to speak.
  3. The thesis and the antithesis SYNTHESISE into a new reality – which is the new status quo or the new THESIS.

In retail business terms

The textbooks (the best one is Levy & Weitz available on Amazon) typically use this graphic to explain it. I think they all copy each other because none of them ever come up with a different example, but I will do that for you.

A few weeks ago, Brian Walker wrote about the rise of fusion retailing. This has been happening for awhile; for example Deus ex Machina on Parramatta Road in Sydney created a Harley Davidson ‘lifestyle’ store probably a decade ago and added a café subsequently; but it is true that there is an increase in the number of concepts. (Some great, some desperate.)

But this trend is entirely predictable if you follow the ‘dialectical process’.

The dialectic process explains the evolution of retail concepts. (It is not the only explanation, but if you read Levy & Weitz or google the bold words, you will see a few more.)



If you have a mechanism that helps you anticipate the next big thing in retail, then you can plan to be part of that future – or even better get one step ahead of the future. You can participate in the natural evolution or you can be creating the next stage of the evolution knowing that you are on the right track.

In the examples mentioned above, you can choose to go ‘fusion’ or you can start figuring out what is the opposite of fusion. More interestingly, you can either go multi-channel or figuring out what it the opposite of multi-channel – and there are already some really interesting concept emerging.



I call this ‘artisanal’ retail.

As sure as I am alive, the opposite of today’s buzzword will become the new ‘thesis’ one day. As with all things strategy and future – the challenge is rarely the ‘what’, but when it will happen. It is a fine line between being on the cutting edge and being on the bleeding edge.

Three street fighting rules that will help you win at business

school-yard-fight.jpg

The part of Africa I grew up in was a tough place to be a boy, and surviving the schoolyard daily required cunning and courage and the willingness to fight. Much like retail nowadays. One of my more memorable schoolyard fights lasted both breaks (i.e. the whole day) with neither of us being able to land the knock-out blow.  My claim to fame is I went to school the next day (one-eyed, but I went) my opponent didn’t.

Street fight rule #1

Never grab hold of the person/ their clothing etc. When you do that you only have one hand left to fight.

Lesson for business: In business the natural tendency is reach out and grab a-hold of your competitor. In business parlance we talk about ‘competitor analysis’ – and it is the biggest waste of time. I realise that vast majority of readers will dismiss this observation as a crackpot statement and dismiss it as the ravings of someone who has lost touch with reality.

‘Competitor Analysis’ is part of consulting methodologies that sounds good, looks good and produces nice little pie charts.

The only thing that matters is what YOU do. You can’t control what they do, and if you try, you are fighting with one hand only. When you are implementing strategies ‘relative’ to what your competitor is doing, you are NOT focussed on the customer and your capabilities.

 

Like any good football coach, focus your game plan on your play – not their play. Unlike the football analogy you are NOT playing against your competitors – you are playing FOR your customers.

If you focus on the competition, you ultimately end up copying each other. The only strategic and competitive difference between Coles and Woolworths is the colour schemes and some legacy feelings. Instead, follow the lead of say Apple who did not try to out-Microsoft, Microsoft.

Street fight rule #2

If there is a crowd, get your back to the wall. That way they can’t surround you and you can fight what is in front of you.

Lesson for business: It sounds counter-intuitive because ‘back to the wall’ is a phrase the self-help gurus employ to indicate that you have no options left. The other way to look at that is that back to the wall means your options are clear and in front of you.

Having a ‘wall’ means there is one part of your business that you don’t have to worry about - that aspect of your business that you can trust is and will remain a core capability that is attractive to your customers.

If you don’t have a ‘wall’ at your back, build one.

Street fight rule #3

Never go down – under any circumstances. You will get kicked in the head and you will never be able to get up again.

Lesson for business: This is one of the toughest decisions a business person/ entrepreneur must make? When, if ever, is it better to throw in the proverbial towel? Seth Godin tried to answer this with his book – The Dip – and this is his response in summary during an interview:

Question: Other than hindsight, how does someone know when it’s time to quit?

Answer: It’s time to quit when you secretly realize you’ve been settling for mediocrity all along. It’s time to quit when the things you’re measuring aren’t improving, and you can’t find anything better to measure.

Seth is one of the smartest current thinkers about entrepreneurship and marketing, but in this case I still don’t get his response. And I don’t have the answer, so my response to a challenge is different.

In essence, my response is to show up every day and to put in. You may not succeed, but you haven’t failed until you have quit – so I just keep going. If a better opportunity comes along, I am happy to ‘pivot’ (a principle of in LEAN start-up culture) and jump to something else. But failing a better idea or a new opportunity – I don’t quit.

I learned that on the school ground.

One bonus dirty trick

In addition to the rules, here is my number #1 trick that my oldest brother taught me as I learned to fight on the playground:

Grab a small rock (size of a golf ball) and clench that in your fist. It turns a soft, squishy hand into a weapon that hurt a lot more than a normal fist.

Lesson for business: Harden up. Innovate. Turn a weakness into a weapon. Getting hooked on subsidies, government protection and the like is the easy and is comfortable option – but in the long run it makes you weak.

 

PS: Here is a short eBook on the lessons I learned – and other weekly tips and techniques provided here)

 

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.

 

I don't see chaos

I wondered about what the title of this post should be  

  • Do you know what is under the hood?
  • The Ant and the System?

I cannot sing. It has been thirty years since I have sung one line even in a church where the singing isn’t even often judged and the standards mediocre. But when I open my mouth, people turn their heads for the wrong reasons.

But there is something else I can do that I value infinitely more.

Visitors to our website may be a little flummoxed when confronted by images of fractals. (The dandelions in our website header and others.)

This images reflect some of the unifying theories that constitute our worldview. These theories are amongst other things Chaos Theory – and recently one of the authors I follow (Roy Williams) publishes a weekly newsletter that I rarely fail to read. Recently, he wrote this:

Does your business have unifying principles?

Viewed in high speed at the macro level, ant behavior seems to be guided by chaos theory as their movements create a pattern too vast for the unaided mind to comprehend. But when mapped on a computer, what at first appeared to be randomness becomes a beautiful fractal image built upon the unifying principles of self-similarity.

Fractal images are maps of highly organized chaotic systems and their patterns seem to mirror the behavior of the stock exchange and population fluctuations and chemical reactions. Using chaotic math, computers today are producing images that look exactly like the beauty found in nature... ferns and clouds and snowflakes and bacteria. These maps can also resemble mountains and the human brain and the frost that forms on a windowpane.

Ant behavior goes from intoxicatingly impossible to seductively predictable when the principles that bring an ant colony into unity are reverse-engineered. Here are the ingredients of ant-magic:

1. If you find food, take some home and leave a scented trail.
2. If you find a trail, follow it and add to the scent. If that trail leads you back to the hive, turn around and follow it the other direction.
3. If you don't know where food is and you don't know where a trail is, wander.

That's what the miracle of the ant-line looks like when you reduce it down to its unifying principles.

 

 

Roy states it better than I can, and I can merely add: “What he said…”

The reason I raise this is because it lifts the hood of the Ganador engine, and you can take a peak underneath. The reason why we can make a difference through (for instance) business coaching, is because we are adept at finding those patterns: the ones that work for you as much as the ones that work against you.

And in the spirit of honesty; I must admit that I am not so great at seeing myself in the same way. I suppose the perspective and the motivation is different.

Yes we have frameworks supplemented by experience, but if truth be told; it is a bit like creativity. People have the knack or they don’t. Some skills and some experience can make ‘the knack’ more useful, but if you don’t have it, you simply don’t have it.

I cannot sing, we have established that.

But I have the knack for picking up patterns where others see chaos. And I wouldn’t trade it for the world.

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.

Y2K All Over: Will we ever learn?

Sometimes the wise all heads respond to the crisis of the day by referencing to the ‘last time this happened; or ‘been there done that’. That frustrates the generation because it is point of reference they don’t understand and argue that is not or cannot be ‘the same’ as before.

As usual, both generations are right.

But there is no denying that many events follow patterns and we’d be silly not to learn from those unless we are determined to let ego get in the way. An event that will be in the experience framework of the majority of managers over 30 will be that of the Y2K bug.

Just in case you don’t know or remember: traditional programming practice in early computer programming languages was to code dates with as few digits as possible, which led the practice of expressing your year as last two digits, so 1985 would be simply 85 – with a one line of code turning all date references into the proper date.

In 1999 most businesses of any substance devoted a large amount of time and resources to ensuring they survive the year 2000 calamity. (Personally I had to forfeit New Year’s Eve celebrations with my family to see Bankstown Square (as it was then) into the new millennium because we feared all the systems might shut down.

For example we worried that boom gates wouldn’t open and allow customers to enter the centre the following day because the Building Management System was somewhat archaic. I had visions of bank safes popping open and ATMs spitting money into the mall and was going to be accountable for finding and returning it all.

As you know now, nothing of any consequence happened. The airplanes did not fall from the sky.

Most anticipated crises never happen and the things we worry about most are often things that no amount of worrying would fix anyway.

There are many current calamitous claims about retail. Ironically, many of these claims are made by retailers.

The ‘INTERNET’ is the current bogeyman – the new Y2K Bug.

As we learned from the Y2K bug offer some relevant insights:

1.      Sure, we should prepare and plan.

2.      Certainly, we should change what we can.

3.      Of course we must monitor what is happening.

But the internet will change the way we do business in ways we don’t really foresee. A very short time ago it was the ‘mobile revolution’; right now it is ‘wearables’ and the ‘internet of things’.

Tomorrow – something else.

Change will happen – that we can bet on. But exactly how it will pan out, NOBODY knows. And those who claim to be the surest about it will be the most surprised by what eventually transpires.

Why we can’t KISS…

Image by after-the-party - Deviantart

Image by after-the-party - Deviantart

I write elsewhere about Y2K problem referring to traditional programming practice in early computer programming languages to code dates with as few digits as possible, which led the practice of expressing your year as last two digits, so 1985 would be simply 85 – with a one line of code turning all date references into the proper date. It is nerdish, I admit, but the code back then was so elegant – when computer disk space was at a premium – that it has become a lost art.

There is no accurate statistic on this but it is estimated that we use only 10% of the features of software, say MS Word. Because it has become easier to code programs – particularly since the introduction of Object-Orientated Programming and now with code repositories where functions can be accessed freely and literally be copied and pasted, software design has deteriorated to the extent that there it has its own Wikipedia entry.

From simple things like our houses to complex things like social structures, road networks and software – the tendency seems to be towards greater complexity.

I am fascinated by complexity.

For instance I wrote about this to share some personal experiences in a particular knack that I have. I am not sure if it is innate or whether I acquired the skill by accident; but there are always underlying patterns and I seem to see them when others don’t.

Fractal Geometry illustrates visually how a very simple mathematical equation produces very complex shapes. (Chaos Theory is really about explaining the underlying order of things and is not really about chaos and there is nothing random about it.)

We want to add features. Whether it is software (compare Windows 8 to Basic) or whether it is cars (remember when Hyundai Excel was bottom of the range, death-trap?) we keep on drifting towards the complex.

We do things that have never been done; like climb a mountain.

We do this because we can – it is part of makes us human. So we keep adding and keep making things more complex.

If ever there was an argument against evolution, then this is it because evolutionary forces would seem to demand that lean and mean and simply effective is the more desired condition. Instead we design and develop to make us lazier and more ineffective.

But with that freedom to choose between simple and complex, that ability to innovate and that desire to go on a quest for constant improvement we ignore the corollary effect – and we end up complicating things.

  • ·        In the process of making our food preserve better – we end up poisoning ourselves.
  • ·        In the process of writing computer programs, we end up with bloatware.
  • ·        In the process of building better homes, we end up with McMansions where everyone is in their own room.

The list is endless; and the obvious observation is that there is a fine line between progress and poison. Our tendency to seek comfort and make things easy has the unintended consequences of making things complex and counter-productive.

Doing simple is really hard and requires smarts.

This is illustrated no better than this quotation:

I have made this letter longer than usual, because I lack the time to make it short (Je n'ai fait celle-ci plus longue parceque je n'ai pas eu le loisir de la faire plus courte)~Blaise Pascal.

 

Businesses fail because they want to have their cake and eat it

#thinkdifferent.

I never thought I would ever write this, but business can actually learn something from Government.

It does not matter if you agree with Joe Hockey that the culture of entitlement should be replaced with a culture of opportunity. What is clear is that the Government understands (and is executing accordingly) that revenue and expenditure are functions of the prevailing CULTURE.

The government believes (rightly) that the way to fix your budget is to change the culture.

It does not matter what your views are about the processes and priorities the Government is setting, and you may even believe the budget does not need fixing. That is not important, but we should understand the implications of this approach to governance because there are important lessons for businesses to learn from this.

Organisations are just groups of people – and people always seem to want to have things both ways.

  • You can’t have a lean staff compliment and great customer service.
  • You can’t screw your supplier down and expect a great relationship with lots of support and trade marketing dollars.
  • You can’t spend no money on training and expect no mistakes.
  • You can’t not manage your risks and complain about the increased premiums.
  • You can’t complain about government red tape and ask for protection against cheap imports.
  • The community wants to experience the pride in a national carrier (Qantas) but prefer to fly the cheaper alternative.
  • You can’t ask more from your people and give less to your people.
  • You can’t want to be an innovator and avoid all risks.

From these examples the culture of entitlement seems very prevalent in the business community. Idiomatically it’s called having your cake and eating it – and every business should interrogate itself honestly about the extent to which that is part of its organisational culture.

Just like the Government is attempting to do, the task of every business is to also create the culture that is conducive to performance. Every entrepreneurial manager will and should be focussed on creating a culture of opportunity in their organisation.

The job of every real business leader is to create a culture that will serve as the vehicle to deliver on the business model.

Most leaders would express the view that they are striving to create an organisational culture of ‘opportunity’. They would say they are flexible and have equal opportunities for all; that employees are empowered and generally have the ‘opportunity’ to contribute and that all that matters is that they ‘deliver’. But are you really?

Compare your organisation against something called ROWE (results only work environment) that has been created in a few companies:

People could work from home absolutely anytime they felt like it, without needing a reason or excuse. There would be no such thing as a sick day or a vacation allotment—employees could take off as much time as they wanted, whenever they saw fit. Perhaps most provocative: All meetings would be optional. Even if your boss had invited you. Don’t think you need to be there? Don’t come.

In return for this absolute freedom, workers would need to produce. Bosses would set macro expectations (e.g., increase sales by 10 percent) and then assess the results without micromanaging (e.g., keeping tabs on who arrived at the office earliest in the morning or left latest at night). If the goal was met, there were no complaints from your boss about that Tuesday afternoon you spent at your kid’s soccer game. If the goal wasn’t met, no amount of face time around the office would substitute for the lack of results. Of course, if your job description involved opening up the store at 9 a.m., fulfilment of that goal was a must. But for knowledge workers, measuring output became entirely divorced from hours logged in the office.

How do you really compare? Is your company really about empowering people, or is mere lip service because as the leader you want to empower the people but you also want to retain control? Freedom is a scary thing.

I am not suggesting that the culture I described above is the ‘right’ culture, because every company has its own ‘right’ culture. And I not suggesting ‘work from home’ is even a relevant cultural attribute to strive for.

What I am suggesting is that:

  1. What we think our culture is, is not always what it really is.
  2. Not all leaders get the importance of culture as the primary driver of business outcomes.
  3. And those who do, don’t appreciate the extent to which the culture is undermined by conflicting messages caused by not honouring the trade-offs that are required to really build a robust culture.

The Libs are banking that the benefits of their approach will appeal to more people and that once they get the taste of it they would like it more than the alternative offered by Labor.

I am reliably informed politicians are human too, so you can bet your bottom dollar the Libs will open up the purse strings again in the budget before the next election. Just in case. (And in the process undo much of what they set out to do, but at least they get to keep their jobs and so the cycle goes – two steps forward and one back.)

Government is the ultimate monopoly, so they can take that route; but can you afford to undermine the desired outcomes in your business by failing to understand the power of culture?

The good, the bad and the 'oops' of Australian Retail

Thought I might have some fun and share my list of best-dressed/worst dressed of Australian Retail scene. Just like the Hollywood equivalent, it is completely subjective and not based in any way on any rational analysis and without any insights into actual company operations. I also excluded any of my past/current clients from any of these categories, so this is restricted to those whom I have not done any work with.

THE GOOD

JB-HI-FI                              >>> Best All-Rounder

NO QUALIFIERS               >>> Best Customer Service

SPORTSGIRL                     >>> Best Marketing

COTTON-ON                     >>> Best Aussie International Retailer

McDONALDS                    >>> Most Successful Business Model Transformation

LOWES                               >>> Most-Underrated

NEWSLINK                         >>> Most Robust Business Model

 

THE BAD

AUSTRALIA POST            >>> Most to learn

HARVEY NORMAN           >>> Worst Customer Service (I have experienced)

CHEMISTS                        >>> Most in need of Transformation (draw with Newsagents)

APPLE                               >>>  Most Overrated


AND THE OOPS

SMIGGLE                            >>> Never thought they would make it (just to confirm I am fallible)

Which brings me to the MAIN POINTS of this post.

  • It doesn't really matter what one person thinks. (Smiggle)
  • You can succeed despite your (customer service) flaws if you have the product people want (Harvey Norman)
  • Everybody has an opinion and it different and it is irrelevant. (all of the above.)
  • Knowing that you need to change is not the same as changing. (Chemists, Newsagents.)
  • It helps if the Government is your main shareholder.

A 5x5x5 Digital Strategy for Retailers

This article was originally written for and published in National Newsagent Magazine.

Whilst it was written for newsagents, it applies equally to most indie retailers seeking to embrace a digital future.

(Click through on the image for a PDF version if you want to download/ distribute it to other interested party.)


Morgan Stanley estimates that eCommerce sales will double to more than one TRILLION dollars by 2016. And it won’t stop growing either.

You can choose to be part of it, as long as you are realistic and smart about how you go about tackling the opportunity.

It really important to understand that 4500 newsagents won’t start and won’t succeed at simply creating a digital mirror-image of their existing business.

In order to tackle the opportunity we have developed a 5x5x5 strategy that covers the short- and medium term.

5 Things Newsagents should NOT do or believe

1.     Myth #1: An online business is cheap to run.

2.     Myth #2: All you need is a website and off you go.

3.     Myth #3:  My key to success is to replicate my offline business into an online version

4.     Myth #4: An online business is easy money – you make money while you sleep.

5.     Myth #5: I won’t be affected by online retail.

5 Things Newsagents can do immediately

1.     It is a constant learning process, because the technology is changing. Attend seminars, subscribe to blogs, subscribe to newsletters, engage consultants, ask your coach and buy books. However it is you learn, target these topics even if you feel uncomfortable about it now. (eReady Partners is scheduling quarterly updates that many will find useful.)

2.     Start your Twitter account. You don’t have to say anything, just listen and learn.

3.     Stake your claim on the social media sites and platforms to ensure you own your brand/ domain name as soon as possible. This includes at the very least: Facebook, Instagram, Pinterest, Vine, Tumblr, your blogging CMS and Youtube. (Here is Wikipedia’s list of top social media sites.) You can use NameChk, to see if your username/ brand name is available on most sites in a single glance. You may not use all these sites immediately, but at least you own your real estate.

4.     Get your Google house in order, including claiming ‘authorship’ on Google for your blog, your Google Analytics account and so forth. (Having a free GMAIL account is very useful around the net and I use one to subscribe to newsletters instead of my business email. Google is SUPERB at keeping spam at bay, and it is much safer to use that email for (what could be) dodgy website subscriptions.

5.     Make sure you have a simple, static website at the very least. Put your ‘SHOP’ button on it too even if you don’t have an online shop. Give customers a ‘coming soon, give me your email to be advised when we launch’, message and TRACK the number of clicks. (That is a basic way of testing interest in your offer.)

5 Things you can do in the medium term

1.     Make sure your existing business (your platform) is operating efficiently and effectively. This means that you should continue to promote your existing business, support exiting products and control your expenses.

2.     Pick the product you want to promote online. You could for instance use the GNS platform (www.yourlocalstationer.com.au) to set up in that space with a ready-made solution.

3.     Evaluate the appropriate partners and suppliers that could supply your desired product. Not all suppliers are created equal.

4.     Think about your retail mix: E.g: Pricing: What will be the effect of offering online products below the RSP in your agency? How will these prices be harmonised? E.g: Promotion: How will you do this? What expertise will you need? Address all elements of your retail mix (the 6 Ps) in your plan.

5.     Allocate resources: ensure it is properly financed and the key players know what must happen.

We stated clearly that creating a digital copy of your existing business is not the way to go for the vast majority of newsagents. Running an online business is quite different from traditional retail and new skills and new systems and new strategies must be learned if you choose to follow this path.

All that remains now, of course is to just do it.


Dennis Price

Ganador supports newsagents via News Limited’s NewsPartners program to embrace the future. (Newsagent Entrepreneurs Winning Sales – Partners.) Dennis can be reached on 0411 030 436 or dennis (at) ganador.com.au.

Forces affecting shopping centres in growth markets (presentation)

I thought I'd share the presentation I did for Property Council in WA last year (2013).

The ideas was to explore how marketing would be changing in the growth market conditions that characterised WA at the time.

Let me know what you think.



The downside of the upside and the upside of the downside

#thinkdifferent.

The biggest killer of success is success.

(The fear of failure grows in direct proportion to what you have got to lose.)

This Contrarian principle has a number of corollaries:

  •  Bigger is always worse (ultimately).
  • Innovation leads to less innovation.
  • Growth leads to death.

So the message is this: Embrace change.

The pressure on the business to survive is good way to clear the decks and make the necessary changes.

Just like a back-burn is a dangerous time, but it has huge benefits in making your territory more defensible. The good times made us lazy, now is the time to scramble and get fit again.

Daily Telegraph

Daily Telegraph


  • Review category performance and cull.
  • Review staff performance and cull.
  •  Review expenses and cull.
  • Review promotional activities and kill those that are just habitual

… and so forth. These are ways in which we take charge of change and make it work for us instead of it being something that happens to us.

Everyone embraces failure - this is why

(Cross-posted from LinkedIn. Please connect there to get more like this.)

In recent times wannabe contrarians have embraced their love of failure – often pointing to entrepreneurs who have failed spectacularly, learned their lessons and then went on to great success. JK Rowling may have started it all with her TED talk in 2008, and even the psychologists agree.

It is not so much that failure is a ‘good’ thing.

The simple truth of the matter is that it often does not matter what we do as much as it matters that we do something. Maybe a better title to this piece would have been “The benefit of doing something”.

The sub text is that anything is better than nothing – even if it leads to failure.

There are a few arguments to support this contention:

1.      Law of Unintended Consequences.

2.      Complexity of Achieving Behaviour Change (statement of the bleeding obvious).

3.      Predictable Irrationality of human decision-making.

Summarising all of the above leads to the inevitable conclusion that, for practical intents and purposes, it is near impossible design and deliver a human intervention that involves many people in order to achieve a predetermined outcome.

This is illustrated very clearly with the ‘Hawthorn Effect’:

The experiments took place at Western Electric's factory at Hawthorne, a suburb of Chicago, in the late 1920s and early 1930s. They were conducted for the most part under the supervision of Elton Mayo, an Australian-born sociologist who eventually became a professor of industrial research at Harvard.

The original purpose of the experiments was to study the effects of physical conditions on productivity. Two groups of workers in the Hawthorne factory were used as guinea pigs. One day the lighting in the work area for one group was improved dramatically while the other group's lighting remained unchanged. The researchers were surprised to find that the productivity of the more highly illuminated workers increased much more than that of the control group.

The employees' working conditions were changed in other ways too (their working hours, rest breaks and so on), and in all cases their productivity improved when a change was made. Indeed, their productivity even improved when the lights were dimmed again. By the time everything had been returned to the way it was before the changes had begun, productivity at the factory was at its highest level. Absenteeism had plummeted.

The experimenters concluded that it was not the changes in physical conditions that were affecting the workers' productivity. Rather, it was the fact that someone was actually concerned about their workplace, and the opportunities this gave them to discuss changes before they took place. (Extracted from The Economist – my emphasis)

 

For example, consider the following ‘failures’:

  • You may want to run an awareness campaign in your company to increase safety awareness – but it results in a rise in complaints about unsafe working conditions.
  • You have a serious talk with your team about discipline and putting in the hours, attending meetings and being on time. Instead of them being negative and feel reprimanded as you feared, they get to clear the air - resulting in positive climate change in the office.
  • Giving people performance bonuses but instead of it being motivating, it raises the sense of entitlement.
  • During an office relocation when everybody had to spend a fair amount of time on ‘housekeeping’ matters and services were disrupted, sales actually increased.

There simply is no accounting for human behaviour. When put under stress some people rise to the occasion and others wilt. When lavished with attention, some avoid the scrutiny and others feel more engaged.

The same logic can be extended to initiatives like:

  • A re-branding exercise
  • A corporate re-structure
  • A merger
  • Decentralising the procurement function

Most readers will be well aware of how corporate warriors will jump through hoops creating business cases, project maps, task forces and the like to develop and implement these solutions.

And then if you are lucky enough to survive the round of retrenchments, a few years on you will find that the re-structure must be undone, and that the acquisition must be sold and the procurement is better off being centralised again.

It may seem like the epitome of bureaucratic waste to do and then undo the same initiatives in a never-ending oscillation.

The simple answer is that there is no right answer to any one of those business/ operations/ management conundrums. Whether a certain function is centralised or decentralised does not matter. Whether the company is going through a ‘specialisation’ stage or a ‘diversification’ stage is just the strategy cycle.

What matters is this: the company is doing something; anything really, as the workers in the Hawthorne factories taught us. Any project will do. Any initiative will energise. Any strategy will do the job of making us feel we are working towards something.

Along the way the project will be more or less successful, but that matters nought, since there was no way to predict the outcome of a complex system anyway. All that matters that we are doing something, constantly engaging with our work and the people we work with.

A little bit of luck will determine whether there are more little wins or little losses adding up to success or failure in the long run.

But that we will not admit to each other. Just delude ourselves that we are in charge and prepare the business case accordingly.

Looking for success in the wrong place

Did you know …

  • Coca-Cola began as a pharmaceutical product.
  • Tiffany & Co., the fancy jewellery store company, started life as a stationery store.
  • Raytheon, which made the first missile guidance system, was a refrigerator maker.
  • Nokia, who used to be the top mobile phone maker, began as a paper mill.
  • DuPont, now famous for Teflon non-stick cooking pans, Corian countertops and Kevlar started out as an explosives company.
  • Avon, the cosmetics company, started out in door-to-door book sales.

There must be some lesson in that.

FOR THE SME: If things don’t work out as planned, there is always a plan B.

FOR THE ENTREPRENEUR: Launch quickly, iterate rapidly and pivot to a more viable business model.

FOR THE CONSULTANT: With good strategic planning, a company can be steered in the right direction.

FOR THE MANAGER: Even with the best resources at their disposal (including research) anyone can screw it up.

Maybe I am wired different, but when I look at these cases, I learn completely different lessons:

For each example listed here, there are tens of thousands of companies who stuck to their knitting and failed, and just as many examples of companies who stuck to their core and succeeded.

I post these thoughts to share with you dear reader ONE very important truism:

It is extremely dangerous to rely on one example of someone who ‘has done it’, one example of a company that did things ‘a certain way’ – or any ONE explanation of why something succeeded.

Go into your nearest Dymocks and look at the shelves full of books by authors on the topic of success. Everyone has a recipe.

One guy will tell you to ‘Be a Maverick’ (ex Pepsi), one guy will tell you to ‘Be Paranoid’ (ex Intel) and one guy will tell you to follow ‘these 7 habits’; not to mention a book a year by Richard Branson telling you to ‘standout from the crowd’.

I could go on, but you catch my drift.

The same goes for (and especially so) for business people who have made a success of something and then offer advice about that.

BUT:

  • They can tell you what they THINK has made it work for them – and they may be wrong.
  • They can only tell you what they think has made it work for THEM – and it won’t work for anyone else.

The internet is rife with examples of entrepreneurs who made it big, who sold out and then write the books and goes on the speaking circuit. I challenge you to name the number of entrepreneurs who have made a similar success twice, and I am confident that in the world there will only be handful. How many CEOs have backed up their successful tenure at one company with an equally successful tenure at another? Just a handful in the world.

This may be the most pervasive success myth ever: if you want to be successful, learn from the successful.

  • Other people’s success is not your success – copying their ‘approach’ at best a starting point.
  • There is no ‘secret’ – the recipe for a successful business is well-known.

This seems counter-intuitive, right? It SHOULD work.

But it does not. So let’s turn to that trusty terrain of the sporting analogy.

http://rlcoaching.co.uk/

http://rlcoaching.co.uk/

The most successful coaches are (extremely) rarely the star players of yesteryear. I have looked at a range of sports, but for this example I will use the Australian sport called Rugby League. The only very successful coach that was also a bona fide star of their era is Mal Meninga of the Queensland State of Origin team. (I am sure you can argue about the star power and coaching success of say Ricky Stuart, but the fact that it is subject to argument already disqualifies him.) Meninga on the other hand has won 7 series in a row – at the highest level and in his playing career he was the National Captain and had the most caps of any player and made the Australian team of the century.  (A US equivalent might Yogi Berra of Baseball fame.)

Of the 100s of coaches, there is one that qualifies clearly. Even then his coaching credentials can be questioned because it just so happens that his tenure coincided with having the best group of players of this generation playing for his team at the same time. But let’s not get petty.

Despite this dismal track record of star players to perform as coaches, clubs continue to offer them first dibs on plum coaching gigs.

By the same token, the coaches who have impressive track records may have played the game, may even have been good players, but often weren’t stars of their teams.

(Of course, being an average player, does not mean you will be a great coach either!)

To stretch the analogy even further.

When a coach is successful, other coaches adopt their strategies, which eventually nullifies that particular strategy because everyone uses the same strategy and they learn how to play against it week in and week out.

The really successful coach never copies another successful coach, they work on building a game plan that is unique and gives his team a competitive advantage.

From this analogy, I want to emphasise two things.

  1. What made you successful as player, does not make you successful as coach.
  2. What makes one coach successful is not worth copying, because in the long run a successful coach needs to carve his own strategy that suits your personal preferences and your resources.

Every successful outcome is the product of a unique set of circumstances, a range of complex processes and countless, dynamic human interactions.

To attempt to seek success by copying someone else a poor strategy, and it is even worse investment of time to read about it.

Success comes from doing your own shit. Maybe.

Retail Shift - A double dose

This presentation by Ross Dawson (Futurist) captures a number of trends. There is some good stuff in there, including case studies to be explored. 

I am of the opinion that 'drone delivery' is much hyped, but completely nonviable, principally for safety & security reasons.

And here is a copy of a presentation I gave (a few years ago in 2011) just to compare and see how I stakced up...

 

LET ME KNOW YOUR THOUGHTS

The recipe for failing industries threatened by online

... is not what you think

I have had an A-HA moment…

http://kevinmartineau.ca/

http://kevinmartineau.ca/

The reason why so many industries/ professions are in trouble is not because of changing technology. The industries/professions that are struggling to reinvent themselves are the ones that were structured to achieve profit and prominence AGAINST human nature.

All that has happened now is that technology has ENABLED consumers/users to wrestle back the power and force the change in that industry/profession to REVERT to the natural state.

In practice what happened is that industries built business models where the source of revenue was separated from the actual value sought by the consumer.

Let’s consider three examples:

1. Journalism/ Newspapers: everything free online

People want to know what they want to know. People don’t like to be bullshitted. People don’t want to be used and treated as eyeballs.

Newspapers have traditionally used journalism (relevant, true) to attract, but made their money by exposing the reader to other things where they (the industry) can make money.

The revenue source has no relationship with the consumer value.

People still want all those things like truth, information etc. And now they can get it mostly directly from each other. Technology allows them to curate and filter based on what they have always wanted.

The original opportunity for this sector remains in real journalism that is worth paying for. (The economics may be different, but that is the only sustainable response to the fundamental human need.)

2. Education: access to information and knowledge universal and free

Dropping out of college has become a badge of honour amongst entrepreneurs.

Academic institutions are considered out of date and most curricula are both irrelevant to the context of the current market, and irrelevant to the learner’s specific needs.

People can now find online all information they need to do anything and even better, someone who will help them and train them often for free or for a fraction of university costs. People will learn what they need to and may be motivated by an intrinsic desire or by force of circumstance and don’t typically see the value of being taught within an institution.

People want to learn what they are interested in learning when they want to do so, AND the test of relevance and competence is the real world, not a classroom quiz or exam.

Most people will recognise that familiar refrain: I went to university to get a piece of paper. What they wanted was the ‘accreditation’ or certification of their ability, not lecture hours.

The revenue source has no relationship with the consumer value.

Universities are losing their monopoly gradually at present, but in 10 or so years they will start approaching a tipping point towards complete oblivion – unless they can pivot.

Some professions (law/medicine etc.) are artificially maintaining a closed shop with the assistance of governments, as are the governments themselves by mandating secondary education within their system. Not for long.

The original opportunity for this sector remains in objective assessment of knowledge and skills.

Marketing/ Retail: unlimited choice, instant determination of true value

This profession has thrived in the past because it controlled so many elements of the offer that it dictated all terms in the relationship with the consumer. This has led to a sales orientation. Even Theodore Levitt’s seminal insight in 1963 did not change that because the so-called marketing orientation was simply a re-phrasing of the activities that existed in order to sell more stuff.

Consumers don’t want to be sold to.

They don’t want you to sell them by ‘serving’ them. They don’t want you to sell them with a USP.

ANYTHING you do that will help you sell stuff has always been resented, but now technology has provided them with an alternative that is easy, cheap and powerful.

The remaining opportunity for this sector remains in finding ways to help the consumer to buy.

What consumers/users want is to buy stuff that,,.

Your challenge is to complete that sentence with YOUR product/service.

It is a completely different mindset to selling stuff. You must become a meaningful part of the customers’ lives without ending up like the annoying uncle at the family BBQ who wants to sell insurance to everyone.

The recipe for any industry being challenged by the transformative effects of online/ e-commerce and the connected world is pretty simple.

Find out what it is that consumers really want (and wanted all along) and attach value to that and charge for that value fairly.

Oh, wait. That isn't a recipe. It is just marketing.

Dennis @ Ganador

Customer Acquisition, Retention & Engagement by turning your Organisational IP into Marketing IQ.


5 steps to be eReady by Friday

I was interested to know from retailers on the frontline where they were at with their eCommerce integration. My personal experience was that it was generally woeful, but I wanted to ask a broader group of people. Recently we conducted a survey in conjunction with eReady Partners and the findings were quite interesting.

We found that whilst e-Commerce is already having a measurable impact on 91% of Australian SMEs, only 54% have developed their own online business to the point where they can process an online transaction; with 46% of this group acknowledging that they still lagged behind their more e-Savvy competitors.

Already almost all (91% of respondents) reported that e-Commerce is already having an impact on their traditional business.

Of the respondents who were already generating online sales, almost half believe their online business lagged behind their competitors.

The vast majority (73% of those who are active) are spending less than $2,000 per month promoting their online business. (We believe that, despite the common misconception that it is ‘cheaper’ to run an online store, the reality is that there are many types of expenses that traditional retailers would not have considered before embarking on the journey.)

To summarise the findings:

Almost every retailer is affected, only half have started to do something about it an almost all of those are not doing enough.

(Participants will receive a copy of the findings via email if they opted in to do so. Others who are interested can get a copy from eReady Partners.)

The implications are profound:

1.      You are behind: Traditional retail is allowing pure-play eCommerce retailers to stake their claim on these new gold fields, which they are doing at rapid pace. Of course, those pure-plays then integrate backwards and start opening in physical locations to create the omni-channel experience.

2.      eCommerce is not a trend (as I said last week) here on Inside Retailing.

This raises the question about what to do and here is a simple action plan to get you started:

It is a constant learning process, because the technology is changing. Attend seminars, subscribe to blogs, subscribe to newsletters, engage consultants, ask your coach and buy books. However it is you learn, target these topics even if you feel uncomfortable about it now. (eReady Partners is scheduling quarterly updates that many will find useful.)

Start taking small steps – and here are the first 5 for you.

1.      It is a constant learning process, because the technology is changing. Attend seminars, subscribe to blogs, subscribe to newsletters, engage consultants, ask your coach and buy books. However it is you learn, target these topics even if you feel uncomfortable about it now. (eReady Partners is scheduling quarterly updates that many will find useful.)

2.      Start your Twitter account. You don’t have to say anything, just listen and learn.

3.      Stake your claim on the social media sites and platforms to ensure you own your brand/ domain name as soon as possible. This includes at the very least: Facebook, Instagram, Pinterest, Vine, Tumblr, your blogging CMS and Youtube. (Here is Wikipedia’s list of top social media sites.) You can use NameChk, to see if your username/ brand name is available on most sites in a single glance. You may not use all these sites immediately, but at least you own your real estate.

4.      Get your Google house in order, including claiming ‘authorship’ on Google for your blog, your Google Analytics account and so forth. (Having a free GMAIL account is very useful around the net and I use one to subscribe to newsletters instead of my business email. Google is SUPERB at keeping spam at bay, and it is much safer to use that email for (what could be) dodgy website subscriptions.

5.      Make sure you have a simple, static website at the very least. Put your ‘SHOP’ button on it too even if you don’t have an online shop. Give customers a ‘coming soon, give me your email to be advised when we launch’, message and TRACK the number of clicks. (That is a basic way of testing interest in your offer.)

All of this should be done by Friday (except #1 which is ongoing). If not, I will come to haunt you…

GANADOR: Don’t out-sell your competitors, out-teach them & you r clients will love you for it.

 

© 2014 Ganador Management Solutions (Pty) Ltd PO Box 243 Kiama, NSW, 2533 Australia Tel: (+61)2-4237 7168