Posted in Research, Risk Management, Strategy

Life and Death

Right now most retailers are worried about the emergence of new channels and the associated raise of social media as an additional / alternative marketing platform.

In truth, this is nothing to worry about – it is the cycle of life (and death) as we have known it for aeons. Whether it is a football team, a tree or a country – the cycle of life applies to everything and retail is no different.

This process can be illustrated by the typical lifecycle curve as per figure 1.

 

The emergence of the abovementioned trends has no doubt shortened a few lifecycles.

Strategy textbooks teach us that the traditional and ideal response would be for a business to use the strong cashflows from the mature stage to invest into growth categories/products or markets.

In this case, the business ‘jumps’ the curve. Figure 2 illustrates the process. The truth is that few businesses actually repeat this process repeatedly. (How many businesses can you think of that have reinvented themselves over many decades – compared to the number that have gone bust?

 

There is a third and scarier curve that we face: the cycle of death.(Figure 3.)

I indicate that there is a disruption that destroys the curve (and it can happen at any stage of the life cycle – not only at the end of the curve.)

And a changing climate is such a (potential) disruption.

We were doing some work in Caloundra on the Sunshine Coast recently (nice work if you can get it, I know) and upon arrival at the airport we were informed of the “Ash Cloud.”

We ended up driving back to our hometown some 1200km and 14 hours away. And besides the inconvenience of having to arrange emergency accommodation for our 13yo, the effect was minimal.

You would argue that the economic effect was possibly even a net gain as people suddenly paid extra for accommodation, travel, cabs, meals etc.

But if you consider that cloud to be just one example of the adverse economic effect  of climate change and let’s imagine if that cloud hung around – permanently.

Let’s play a little what-if game here and maybe you can help me identify all the business that would go broke of Qantas stopped flying:

E.g. What would happen…

–        at Qantas?

–        The little coffee shop?

–        the cabbie?

–        The owner of the surrounding convention centres and hotels?

–        The suppliers to all of the above.

 

Earthquakes and ash-clouds and dying oceans will not respect the country borders.

Globalisation created an interconnected world in an attempt to lower the costs – and now it seems it was a zero sum game because all those costs we saved are now coming back to haunt us.

 

Here are a few thoughts from Paul Gildings (researcher and author): “The Earth is full”. Think about that for a moment.

It is easy to quote many scary statistics, but the truth is that it is almost as easy to quote the opposite. Most people cannot predict what they will have for breakfast, never mind the state of the ecology in 30 years’ time.

But let’s consider just a few facts that are relatively clear”

Based on current trajectories all fisheries in the world will collapse in 2048 – (30% already have.). You may be able to imagine a world without fish, but about 1Bn primarily live of fish. I don’t know whether you have thought about how these people, mostly from under-developed countries, but also including countries like Japan, are going to react when the disaster becomes obvious and imminent?

 

We are facing a Mad Max kinda future. A recent study has identified 9 planetary boundaries (climate, biodiversity, nitrogen levels etc.) which are critical to our long-term survival. The study found that 3 of those boundaries are already past the tipping point – i.e. beyond the point of no return.

You cannot separate the Ecology from the Economy. The US Senator Gaylord Nelson remarked that: “The Economy is a wholly-owned subsidiary of the Environment, not the other way around.”

Here is a picture to that will clear your sinuses:

Imagine the Earth is a pool of Capital. It is finite of course. We cannot make more ‘planet’ even if we wanted to and no matter what you smoke, that won’t change.

Human beings live off the interest that this source of capital generates: that is our sole source of income.

We are currently living at 140% of our capacity. If we take 2008 as our base year, that means that come 25 September 2009, we have spent all our money.

We then proceed to draw from our capital until the end of the year – when the next batch of interest becomes available.

  • What happens in 2010?
  • And what happens to the total amount of interest we had available?
  • What happens in 2011?

Change is sudden and non-linear. Until the day before you run out of money – everything will still seem OK. That is why it is so hard for people to see what is happening.

With Population Growth at 0.8% and GDP Growth at 2.5% and Efficiency Improvements at 1.2 % (all current numbers) – it takes us to a Planet at 500% of capacity by 2050 (and 2x capacity in 2030.)

Does that scare you?

Don’t worry; it won’t happen because it can’t physically happen.

A dam can be 100% full or even 120% full, but it can’t be 200% full because then there is no dam. As Australians we should, tragically, be able to relate to that.

This is Australia, so you won’t be offended if I talk about our BIG CONSUMPTION HANGOVER – the cause of which is pretty evident, particularly in the developed countries:

  • In the US the Average CEO wage is 500x the minimum wage.
  • A Hummer is bigger than 2 shacks in Soweto that would house maybe a dozen people.

I am not a climate change advocate. In fact, I probably lean more towards the sceptical side if you want to know. But as you will see shortly, it does not actually matter which way you lean, there is a massive disruption on the way.

Human beings are very good at filtering out information that does not fit neatly into our vision of the world. “We can’t cope otherwise,” says James Glieck, author of books about chaos theory.

I try to resist that. I understand, and so should you that: everything is just probability. There is no certainty. I cannot predict the future. Scientists cannot predict how much it will rain while it is raining, never mind the likelihood or impact of Climate Change.

What scares me most is that if it is not climate change that will cause the big disruption, then it is us trying to deal with it. I don’t purport to know all there is to know, but I am willing to lay very large bets that Carbon Tax is just the beginning.

Now, let’s talk some more about Facebook and Twitter.

Or we could talk about whether your business is built to deal with real disruption.

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Posted in Future, Management, Risk Management, Strategy

The golden rule of success: do sh$t

Most people think they ‘get evolution’.

Survival of the fittest. That is what Darwin said. So it means the fittest survives and prospers. That is an argument for getting stronger and fitter.

The truth of the matter is different. And the evolutionary imperative is not a message about strength of fitness. It is about the exact opposite.

Let me explain Darwin’s theory by using an example. Imagine a flock of birds on an island.

  • Due to random genetic mutations a few birds are born with slightly longer beak.
  • This, fortuitously, makes them more suitable to access the berries of a particular plant that had previously not been an option.
  • Because of this abundance of new food, they thrive – and their mutation is rewarded with an increasing flock.
  • The birds with the longest beaks get the most berries and are the strongest and get to mate more often, creating little birds that look like them.
  • And so the cycle continues.

What happened here is not about being rewarded for your superior beak.

The key message is that the superior beak was created because of a random mutation in the first place.

If you want your company to be fit to survive, then it is not about strength or fitness – it is about mutation.

The birds, of course lucked into it.

Companies and people could luck into it as well, but there is a difference in that we can choose to mutate. Or let’s call it innovation.

Your worst enemy is getting better at what you do. Entrenching the status quo will dis-incentivise the crucial need to evolve. (This is why there are only a handful of companies in the history of the capitalist world that have survived for more than 100 years. They usually grow old and fat and lazy and they die.)

Colorado Group is the most recent example. It is a good company and a stable of decent brands. Whilst I never did any work for them, I am pretty sure their management team tried to get better at what they were doing. And I am sure they were as experienced and dedicated as any other retail team.

The point is that it is not sufficient to get better at what you do.

A key facet in this is that evolution relies on random mutations. In the real world we can try to be more pragmatic (analytical?) about it, but my guess is that randomness still plays a major part.

If we can’t predict the next evolutionary twist in the road with any certainty, we can make up for it by increasing the quantity of our efforts; the number of innovations we attempt.

Try a lot of stuff. All the time. Sooner or later something will work.

It’s like buying lotto. The odds of winning are very small. But if you buy every possible ticket combination you will win – guaranteed. You will go broke doing it that way, but the answer lies somewhere in between. (As Gary Player famously said; ‘the harder I practise, the luckier I get.’)

 

Where a little bit of luck intersects with a lot of effort is the sweet spot of success.

 

This is how the world works, whether you believe it or not.

Posted in Customer Service, Research, Risk Management

Retail media monitor

Readers of this blog are waaaay to sophisticated to need this, but I thouhg I would post it here – just in case 🙂

Here is a tip that you can use that will save you a lot of money.

  • Go to twitter.com – register for free

(Stop – don’t run away, trust me on this one :-))

  • Go to hootsuite.com – register for free

(Hootsuite is a software application that does a better job than Twitter of managing your tweeting.)
You don’ have to tweet and you don’t have to have followers and you don’t have to follow anyone – just register.

  • In the search box of Hootsuite, type the name of your company.  
  • When prompted, click on ‘save search as a column’.
  • In the search box, type the name of your company as well this hash tag:  #fail
  • When prompted, click on ‘save search as a column’.

Make sure you try all variations of your company or even key products so that you cover all basis.
(You can do this for ANY topic, say Ecommerce, and that column will track every mention of the word ecommerce.)

You have now set up an effective media monitoring account and all you have to do is watch it. Each column will pick any mention of the words you selected and you will immediately know if anyone mentioned anything that concerns you. There are more sophisticated ways of doing it, but this is about as effective as you can get.)

If you rate no mentions (the search columns are blank) then you can consider yourself lucky or unlucky, depending on your perspective.

If you want to see how it works, pick a larger, well-known brand (e.g. DELL #fail) and see what happens. I guarantee you DELL is watching. Shouldn’t you be?

Posted in Customer Service, Research, Risk Management

Retail media monitor

Readers of this blog are waaaay to sophisticated to need this, but I thouhg I would post it here – just in case 🙂

Here is a tip that you can use that will save you a lot of money.

  • Go to twitter.com – register for free

(Stop – don’t run away, trust me on this one :-))

  • Go to hootsuite.com – register for free

(Hootsuite is a software application that does a better job than Twitter of managing your tweeting.)
You don’ have to tweet and you don’t have to have followers and you don’t have to follow anyone – just register.

  • In the search box of Hootsuite, type the name of your company.  
  • When prompted, click on ‘save search as a column’.
  • In the search box, type the name of your company as well this hash tag:  #fail
  • When prompted, click on ‘save search as a column’.

Make sure you try all variations of your company or even key products so that you cover all basis.
(You can do this for ANY topic, say Ecommerce, and that column will track every mention of the word ecommerce.)

You have now set up an effective media monitoring account and all you have to do is watch it. Each column will pick any mention of the words you selected and you will immediately know if anyone mentioned anything that concerns you. There are more sophisticated ways of doing it, but this is about as effective as you can get.)

If you rate no mentions (the search columns are blank) then you can consider yourself lucky or unlucky, depending on your perspective.

If you want to see how it works, pick a larger, well-known brand (e.g. DELL #fail) and see what happens. I guarantee you DELL is watching. Shouldn’t you be?

Posted in Customer Service, General, Management, Risk Management, Words of Wisdom

8 lessons learned from owning a dead horse

Some years ago Chris in Dural bought a horse from a farmer for $100.

The farmer agreed to deliver the horse the next day.  The next day the farmer drove up and said, “Sorry, son, but I have some bad news…the horse died.”

Chris replied, “Well, then just give me my money back.”

The farmer said, “Can’t do that.  I went and spent it already.”

Chris said, “OK, then, just bring me the dead horse.”

The farmer asked, “What ya gonna do with him?”

Chris said, “I’m going to raffle him off.”

The farmer said, “You can’t raffle off a dead horse!”

Chris said, “Sure I can; watch me. I just won’t tell anybody he’s dead.”

A month later, the farmer met up with Chris and asked, “What ever happened with that dead horse?”

Chris said, “I raffled him off.  I sold 500 tickets at two dollars apiece and made a profit of $998.”

The farmer said, “Didn’t anyone complain?”

Chris said, “Just the guy who won.  So I gave him his two bucks back.”

Chris grew up and now works for the federal government. He’s the one who figured out how this “bail-out” is going to work.

Lessons to be learned.

  1. Do your math.
  2. Be creative.
  3. Be pragmatic.
  4. Not telling isn’t the same as lying.
  5. Know your punters
  6. Treat your complainants fairly.
  7. Even the worst situation can have a profitable outcome.
  8. You can find a laugh anywhere – even in death.

Any to add?

Posted in Customer Service, General, Management, Risk Management, Words of Wisdom

8 lessons learned from owning a dead horse

Some years ago Chris in Dural bought a horse from a farmer for $100.

The farmer agreed to deliver the horse the next day.  The next day the farmer drove up and said, “Sorry, son, but I have some bad news…the horse died.”

Chris replied, “Well, then just give me my money back.”

The farmer said, “Can’t do that.  I went and spent it already.”

Chris said, “OK, then, just bring me the dead horse.”

The farmer asked, “What ya gonna do with him?”

Chris said, “I’m going to raffle him off.”

The farmer said, “You can’t raffle off a dead horse!”

Chris said, “Sure I can; watch me. I just won’t tell anybody he’s dead.”

A month later, the farmer met up with Chris and asked, “What ever happened with that dead horse?”

Chris said, “I raffled him off.  I sold 500 tickets at two dollars apiece and made a profit of $998.”

The farmer said, “Didn’t anyone complain?”

Chris said, “Just the guy who won.  So I gave him his two bucks back.”

Chris grew up and now works for the federal government. He’s the one who figured out how this “bail-out” is going to work.

Lessons to be learned.

  1. Do your math.
  2. Be creative.
  3. Be pragmatic.
  4. Not telling isn’t the same as lying.
  5. Know your punters
  6. Treat your complainants fairly.
  7. Even the worst situation can have a profitable outcome.
  8. You can find a laugh anywhere – even in death.

Any to add?

Posted in Future, Risk Management, Strategy

Are you addicted to success?

Encyclopædia Britannica
Image via Wikipedia

In the beginning there was:

  • Encyclopaedia Britannica –>Wikipedia
  • AOL –> Facebook
  • Alta Vista –>Google
  • Ford –>Toyota
  • Kodak –> Flickr

See what I am getting at?

Once upon a time, there was a behemoth at the top of the rankings in every category. It may have take 5 years or 50 – but eventually they were dethroned by an upstart. Andy Grove (ex-Intel Chairman) was right – be paranoid. What can we learn from this?

Success is a drug and addiction is all but guaranteed.

Are you successful? Are you addicted? Are you like the frog that is thrown in a pot of water, and as the water gets warmer, simply adapts instead of making the jump – until it’s too late and you go pop when the water reaches boiling point?

Which companies are currently in ‘hot’ water because they have been successful for so long?

Here are my predictions (of the non-obvious ones) for the next decade:

  • Yahoo
  • Mitsubishi
  • Microsoft
  • Dell
  • Apple
  • Google

Can you add to the list?

Reblog this post [with Zemanta]
Posted in Future, Risk Management, Strategy

Are you addicted to success?

Encyclopædia Britannica
Image via Wikipedia

In the beginning there was:

  • Encyclopaedia Britannica –>Wikipedia
  • AOL –> Facebook
  • Alta Vista –>Google
  • Ford –>Toyota
  • Kodak –> Flickr

See what I am getting at?

Once upon a time, there was a behemoth at the top of the rankings in every category. It may have take 5 years or 50 – but eventually they were dethroned by an upstart. Andy Grove (ex-Intel Chairman) was right – be paranoid. What can we learn from this?

Success is a drug and addiction is all but guaranteed.

Are you successful? Are you addicted? Are you like the frog that is thrown in a pot of water, and as the water gets warmer, simply adapts instead of making the jump – until it’s too late and you go pop when the water reaches boiling point?

Which companies are currently in ‘hot’ water because they have been successful for so long?

Here are my predictions (of the non-obvious ones) for the next decade:

  • Yahoo
  • Mitsubishi
  • Microsoft
  • Dell
  • Apple
  • Google

Can you add to the list?

Reblog this post [with Zemanta]
Posted in Finance, Future, Risk Management, Strategy

Law of unintended consequences #364

We will live to regret this stimulus payment KRUDD handed out so easily.

Just after 9/11 George Bush had an approval rating of 84% and right now Barack Obama has an amazing 83% rating.

And these two scenarios have much in common: Bush AND Obama are responding to a situation within the context of the available information and the prevailing mood of the public.

The trigger is different (Global war on Terror vs Global Financial Crisis) but the constraints are the same: limited knowledge and a desire to be populist.

The GFC is not a sign that the capitalist system is broken; it is a sign that it is working.

  • · Business was greedy & took unacceptable risks = GFC
  • · Home buyers were stupid = GFC
  • · Consumers with unrealistic expectations = GFC

It’s harsh if you know (or are) the person losing their house or job. We want to lash out at the ‘system’ – anybody but us – or our friends. That is human nature.

The unpalatable truth is that the financial system imploded for good reason: it was abused. Just like any system (our bodies for instance) the financial system had to buckle. Instead of letting it break and then heal itself, we are putting band-aids on the puss.

All governments, Australia included, are guilty. With delusions of godliness, the politicians are responding in their own short-sighted way, driven by popular opinion to:

  • · (effectively) take over banks
  • · limit executive incentives
  • · guarantee loans, etc.

If smart, well-paid people could NOT do all of that right (run global corporations), what hope do the bureaucrats have? (Wait, I forgot, they can just print more money.) What they are actually doing is perpetuating a bad system with their stimulus payment band aids and ‘disincentivising’ the ingenuous entrepreneurs who could solve the conundrum.

We will end up with is a hyper-regulated system that will stifle growth that affords more power to politicians, and with less chance of delivering good, healthy growth in the future. In principle they are taking innocent tax payers’ money to prop up poor corporate investments; i.e. taking money from the people who did everything right and giving it to the people who did everything wrong under the guise of it being for the greater good.

(Caveat: I am not talking about criminals and Ponzi scheme artists like Madoff who willfully deceive people.)

This government intervention means a shorter period of intense pain. But we achieve that by doing exactly what every responsible parent teaches their children NOT TO DO; using your mortgage to fund a trip to Fiji.

The banking system in Australia is now suddenly seen to be some sort of model for the rest of the world because it hasn’t produced a failure. Here is a newsflash: they haven’t failed because they have been ripping us off for so long that they have plenty of fat.

That does not make them SMART it just makes them FAT.

This raises questions for us the public and as business owners:

  • · Is this really good, responsible leadership?
  • · How much difference will once-off stimulus payment make to your business… next month or the month after?
  • · Are we sacrificing short term gain for long-term gain?

A politician with an 83% rating can do whatever they like but soon we’ll realise that the unintended consequence is that we have lost our freedom to try and fail.

And t my friends, is what true freedom is all about: the YIN of our freedom to fail is counterbalanced by the YANG of ability to CREATE something awe-inspiring.

And now we shall live with MEDIOCRITY for a generation.

I weep for this death by a thousand cuts that will stall the engine of our children’s futures…

Posted in Finance, Future, Risk Management, Strategy

Law of unintended consequences #364

We will live to regret this stimulus payment KRUDD handed out so easily.

Just after 9/11 George Bush had an approval rating of 84% and right now Barack Obama has an amazing 83% rating.

And these two scenarios have much in common: Bush AND Obama are responding to a situation within the context of the available information and the prevailing mood of the public.

The trigger is different (Global war on Terror vs Global Financial Crisis) but the constraints are the same: limited knowledge and a desire to be populist.

The GFC is not a sign that the capitalist system is broken; it is a sign that it is working.

  • · Business was greedy & took unacceptable risks = GFC
  • · Home buyers were stupid = GFC
  • · Consumers with unrealistic expectations = GFC

It’s harsh if you know (or are) the person losing their house or job. We want to lash out at the ‘system’ – anybody but us – or our friends. That is human nature.

The unpalatable truth is that the financial system imploded for good reason: it was abused. Just like any system (our bodies for instance) the financial system had to buckle. Instead of letting it break and then heal itself, we are putting band-aids on the puss.

All governments, Australia included, are guilty. With delusions of godliness, the politicians are responding in their own short-sighted way, driven by popular opinion to:

  • · (effectively) take over banks
  • · limit executive incentives
  • · guarantee loans, etc.

If smart, well-paid people could NOT do all of that right (run global corporations), what hope do the bureaucrats have? (Wait, I forgot, they can just print more money.) What they are actually doing is perpetuating a bad system with their stimulus payment band aids and ‘disincentivising’ the ingenuous entrepreneurs who could solve the conundrum.

We will end up with is a hyper-regulated system that will stifle growth that affords more power to politicians, and with less chance of delivering good, healthy growth in the future. In principle they are taking innocent tax payers’ money to prop up poor corporate investments; i.e. taking money from the people who did everything right and giving it to the people who did everything wrong under the guise of it being for the greater good.

(Caveat: I am not talking about criminals and Ponzi scheme artists like Madoff who willfully deceive people.)

This government intervention means a shorter period of intense pain. But we achieve that by doing exactly what every responsible parent teaches their children NOT TO DO; using your mortgage to fund a trip to Fiji.

The banking system in Australia is now suddenly seen to be some sort of model for the rest of the world because it hasn’t produced a failure. Here is a newsflash: they haven’t failed because they have been ripping us off for so long that they have plenty of fat.

That does not make them SMART it just makes them FAT.

This raises questions for us the public and as business owners:

  • · Is this really good, responsible leadership?
  • · How much difference will once-off stimulus payment make to your business… next month or the month after?
  • · Are we sacrificing short term gain for long-term gain?

A politician with an 83% rating can do whatever they like but soon we’ll realise that the unintended consequence is that we have lost our freedom to try and fail.

And t my friends, is what true freedom is all about: the YIN of our freedom to fail is counterbalanced by the YANG of ability to CREATE something awe-inspiring.

And now we shall live with MEDIOCRITY for a generation.

I weep for this death by a thousand cuts that will stall the engine of our children’s futures…