tJP

In the current turbulent global environment - having one forecast is just not enough. There are way too many variables and possible combinations of events to be reflected in a single set of numbers.

I have just been reading Chaoticsby Kotler and Caslione. Basic premise of Chaotics is that the traditional view of strategic planning is that companies tend to lock themselves into a forecast. This forecast will have come from a range of inputs based on internal and external factors. A company will have one or two future scenarios planned out - such as high growth and low growth.

But in the current climate of business this may is not be enough. Consider that you are an Australian mining company, today in May 2010:

* Will the federal Government apply the new 40% resources tax? Or will it be reduced? Or will the next election be  won by the conservatives and no tax applies?
* Will China continue to grow and import resources, or will they reduce imports as they have stockpiles in place?
* Will Europe/Eurozone fix their issues, split into two zones or create another financial crisis?

There are seven or so possibilities in these three questions, before considering carbon taxes! So as an Australian miner there are a number of ways that this can play out be you BHP Billiton, Rio Tinto, Fortescue or a junior.

Similar factors can apply to any business and the sound idea behind this book is that there are multiple possible futures. A company should put in place a strategic framework to map out these scenarios and then create ‘early warning systems’ that identify the changes and allow the company to rapidly respond. As the scenarios have been mapped out and a response defined, it allows a company to implement quickly their response. This provides a company improved robustness and resilience to an ever changing landscape.

So the question is, how many forecasts and plans does your business have? This book recommends a number of scenarios so that a company can manage their business in the ups and the downs.

What has happened since you developed your plan and ask a simple question:

“What sacred cow are holding your business back?”

Every buiness has some history or long held belief. Some are important and key for the culture of the company whilst others really should be jettisoned - which does your business have?

What has happened since you developed your plan and ask a simple question:

 ”What assumptions have you made that are NO LONGER VALID?”

Each plan is made up of assumptions, be they growth or economic climate or response rates to direct mail.

Don’t keep on going if you know that your assumptions are wrong - just re-frame and reset for for Plan B. In your new plan, create some scenarios and action plans for the future where an assumption might change. Consider it early and have a pre-prepared response ready to go - you’ll impress the boss too!

 If at first you don’t succeed try, try again. Then quit. No use being a damn fool about it

WC Fields

This is one of my favourite quotes. It application for a business is so important as it challenges us to ask questions:

• Are we being successful in meeting goals

• What are we doing well

• What are we doing badly

• Are we growing( revenue, profits, customers)

And finally, how long have you been working on these projects/activities - too long? As Seth Godin noted in his book “the dip” - to understand when to quit and when to stick with it are critical capabilities.

So in this business planning time, review your  projects and start working on Plan B that can be rapidly deployed.

Take a look at your business processes - those that run 24/7/365. They will be those processes to do with how you spend money, build products, distribute products. A great deal of focus on the cost side.

Compare them with the other side of the ledger - the revenue side. The side that brings in the money is not 24/7/365 - even if the website is. The revenue generating processes can be disjointed, irregular, poorly measured and monitored. They may be managed well but it requires high levels of management attention.

So how good could it be if we had a 24/7/365 end to end revenue generating process?

It seems that the Australian Federal Government will enact a ‘do not call register for business’ after the Senate Committee recommended that the new law be passed.

I fully understand the reason why the law is needed - I once spent a month in an out-bound cold calling call centre. One of those who’s role is to sell you a loyalty card for a hotel chain, or something similar. They are absolutely a pain as they are trained to close the sale there and then. The centre was broken down to those who had spent years there and the newbies that had just been trained - who might last a week or two at most. A business does not want to receive these calls! Hence the drive for a register.

However, in its current form the register will damage business. One client already washes the residential do not call register against the calls to be made - to ensure that they comply - as many small businesses work out of a home office. This has already reduced their capabilities to make customer calls. In my opinion they have over reacted to the privacy laws and the current do not call register - as they(think) they would be hammered in the press if they did not.

Things are likely to get very grey in this area. For example,  imagine Company A has a product that will reduce the cost of building a widget by 50%.

Company A knows that Company B builds widgets and would get benefit from it. But company A cannot contact company B as they are on the DNCR. If the Production manager at Company B hears about the product and wants to know more - but leaves a switchboard number and not his mobile number - his call may not be returned as they are on the DNCR.

Consequences - Company B goes out of business? Or does Company A risk the law and push ahead and make contact?

Industries that may struggle with this include phone, banks, insurance, IT - and not the Optus, Westpac, QBE’s but the thousands of brokers/resellers who distribute their products to other small businesses.

We would all like to get off the call list of hotel loyalty cards, but we don’t want to lose our business because of it!

As the old marketing theory goes its always harder and more expensive to switch a customer from a competitor than it is to keep a customer. Here is a diagram from the Harvard Business Review on why.

Why your solution must be 9 times better for a product switch to occur. So the seller over rates their widget by a factor of three and the buyers(happy in their own little world) think that what they have is three times better than it is.

The following diagram shows that if you can minimise behaviour change, from a significant product change( switch) then you might well have a great product. If you are looking to switch, make the barriers really low to change, less ‘retraining’ the better eg MS Excel had exact same keystrokes as Lotus 123.

 Hence my decision on buying a new Notebook.

“Twitter is dying” prompted me to look at what the issues for Twitter. They are typical of a fast growing company in technology. In particular Twitter is a disruptive technology and it can learn from the success of Facebook on what to do next.

According to comScore the Australian audience of Internet users was 12.3m in June 09. Looking at the use of Social media with these audiences, you find that Facebook is used by 49% of this audience, Twitter by 6.4% and Digg 3.5%.

This is important data when considering what type of people are currently using these tools. Using the diffusion of innovation curve below and looking at the penetration rates - then its clear that Facebook is now entering the Late Majority stage of its adoption curve - where the overwhelming pressure from peers is influencing usage.

Both Digg and Twitter are in the Early Adopter phase. This is usually characterised by opinion formers and ‘role models’ driving adoption. The next phase for both of these companies is to grow into the Early Majority phase - this is one where the pace slackens, users are more deliberate and users are willing to adopt only after peers have adopted. Unfortunately the opinion leaders in the early phases have no influence on this next phase.

This original work by Everett Rogers was then extended by Geoffrey Moore to look specifically at high technology products from start-up. Commonly known as “Crossing the Chasm” , Moore’s book looks at the different stages and how there is a chasm between the Early Adopters and the Early Majority. The key lessons for Twitter and for Digg is that they need to focus on changing their strategies to be successful.

Currently Twitter is targeting the rare breed of people who have the insight to match an emerging technology to a strategic opportunity - prepared to take on a high-visibility, high risk project.

Their successors in Early Majority detest risk, waste of money and time. The quality of the product is key and will tend to communicate more with others from within their own social group of industry - rather than look outside. The way to success in this segment and ultimately for the whole market is to focus on a niche, to dominate that niche and to build a reference base in the pragmatists within that niche. Then to grow the niche and then develop another niche and grow from there.

 Web 2 Summit - Mary Meeker of Morgan Stanley, mobile is the big trend. Slides.

1) Mobile Internet Usage Is and Will Be Bigger than Most Think.
2) Apple Mobile Share Should Surprise on Upside Near-Term.
3) Next Generation Platforms (Social Networking + Mobile) Driving Unprecedented Change in Communications + Commerce.
4) Mobile in Japan + Desktop Internet Provide Roadmaps for Mobile Growth + Monetization.
5) #G Adoption / Trends Vary By Geography.
6) Carriers in USA / W. Europe Face Surging Network Demand But Uncertain Economics.
7) Regulators Can Help Advance / Slow Mobile Internet Evolution.

Mobile-Related Share Shifts Will Create / Destroy Material Shareholder Wealth.

Just punch in your favourite(unfavourite) brands into TweetDeck and follow them for a few days. I did and found quite a few issues, and they are issues that won’t be fixed by a tool like Twitter.

I chose at random @Telstra, @Optus, @Woolworths, @cityrail, @bunnings

Some interesting learning’s - most open Monday to Friday between 9 and 6/6.30. The poor guys at Optus are copping a huge bashing at the moment due to their big push into iPhone acquisition without the infrastructure to handle all the new customers that came on board. The Woolworth’s people are OK but they are very focused on the ‘everyday rewards’ program. CityRail were also getting a bashing as their new timetable rolled out and the quirks of a system designed for the Victorian era came out - but whether the state government or CityRail itself is listening…..

Why Twitter is not the Solution

In today’s Wall Street Journal(WSJ) the article “Why Email no longer rules” with the subheading  “And what that means for the way we communicate” Jessica Vascellaro writes that Twitter, Facebook and Google deliver constant streams of communication.

Big companies are not setup to answer these constant streams, in many ways they are not even setup to handle email very well.  In my opinion - I would expect an email ( or web-form)might be to be answered in hours, and a day or longer is unacceptable. In the world of Twitter I would expect feedback in minutes and not hours. In both cases big companies fail us.

So why do big companies fail?

Big companies are big and complicated so that no single person can ever get their head around everything. So management disciplines and structures are created with KPI’s etc to measure performance. So at the end of the day you get silos in most likelihood a product structured business - for example although your local bank is a retail hub nearly all the communications is product focused, and when you call in to a call centre you get asked to nominate your product stream.

This example gives a simple example of why big companies struggle with Twitter - to fix a problem they need to understand:

• Product
• Channel
• Problem

Product Problems - pretty obvious except when you start to bundle services - so it helps if they they have an expert in your problem on staff

Channel problem - Banks are setup for people to walk into branches to fix their problems. They have call centres and web sites but huge retail networks are their key distribution platform. In Telecommunications they usually have a mix of outbound call centres, web and retail stores. In one company I calculated for a sales enquiry at least 20 inbound channels and five outbound channels. Each of these is essentially its own little silo within the business.

The ‘Real’ Problem - taking a mobile phone example, you will find that the phone dealer will try and fix any issues you have, but are bounded by the telco. For example they will sell you a phone, provide education, tell you about features and new products and get the phone provisioned/connected to the network. But they cannot help you with bills - and depending upon the type of dealer they may not even have access to see what you spent.

The crossing over of responsibilities over these three areas, result in it being difficult for a few Twitter users to quickly and rapidly fix your problems. Even after a decade of putting in CRM systems that run in to hundreds of millions of dollars, do they do it well over the phone, let alone email and certainly not Twitter.

Twitter - “lipstick on a pig”?

Today, most big companies with a Twitter presence are trying to address the needs of a small hi-tech, vocal community who expect response times on a stopwatch from a company that delivers to a calendar (Mon-Fri 9am to 6pm).

Twitter today is addressing ‘quick-fix’ issues with rapid customer responses. But it is limited to painting over cracks and silos within a large business.