General Motors has announced its withdrawal from NUMMI, its joint venture with Toyota.  NUMMI was an incredibly generous initiative by Toyota to educate its global rival about modern management and production techniques, while giving Toyota insight into operating in the US.   Although the NUMMI plant was generally seen as a (qualified) success, and GM learnt about efficient plant layout and just-in-time inventory, it (GM) never really absorbed the “lean business” mindset that infuses every aspect of Toyota.

The NUMMI plant is now 25 years old, and probably long overdue for a major overhaul/replacement.  Toyota doesn’t need it, with low demand and its own plants elsewhere in North America making similar models. Politically, Toyota might wait a while to close the only unionised shop in its portfolio, but GM’s reputation is so low, now is probably the least reputation-damaging time for Toyota to do so.

Karl du Fresne writes “I have in front of me a large newspaper advertisement for a firm called Hudson“.  Du Fresne then proceeds to take apart the language Hudson (a recruitment agency) uses to describe itself and the advertised role - its own public sector service director. It’s not an attack on Hudson per se, but rather on the prevailing fashion for over-blown, pompous and jargon-ridden language.

The ad said: “Hudson Wellington has reviewed how we can best partner with our public sector clients and assist them to achieve key outcomes. We have done this by integrating our three proven service lines to provide full employment life cycle solutions …”

“Key outcomes” is a glib, empty phrase that’s routine in ads for public sector policy analysts, but can anyone outside the jargon-laden HR business hazard a guess as to what “full employment life cycle solutions” are? Or are these terms merely intended to create an impression of a company that has taken the banal process of executive recruitment to some esoteric, previously unimagined new level?

I also dislike the hyperbolic use of “partner” (verb or noun), implying some kind of special, stronger-than-normal arrangement between buyer and seller. Many customer/supplier relationships are indeed very strong, long-lasting and mutually-beneficial, but whenever I see the term used explicitly, my cynical reaction is that the vendor hopes to imply some exclusive service (rarely true) or insider advantage (rarely given or received), and the customer wants to squeeze some extra concessions out of over-keen vendors.

Anyway, back to Du Fresne, who picks up on “solutions” (for products and services) and other in-phrases:

It wasn’t until the last paragraph that I came across the word I’d been waiting for… Ah! There it was: “strategic”. I knew no self-respecting HR firm could get through an ad without mentioning the word at least once. I see it in executive recruitment ads almost every day and have only the vaguest idea of what it’s supposed to mean. But it sounds impressive.

… Does any of this matter? No, not in the way famine in Africa matters, or peace in the Middle East, or global recession, or violent crime. But in a small way it matters.

It matters if you value and respect the English language and don’t like to see it misused and degraded. It matters if you value honest, straightforward words over flim-flam. And it matters if you’re concerned that in both the public sector and in business, too much energy is expended creating smoke and mirrors; constructing flashy facades behind which business is conducted a lot more expensively but no more efficiently than it used to be before people thought of words like “strategic” and “solutions”.

Du Fresne’s invective is a welcome reminder to use clear, plain language. Say what you mean and mean what you say.

I’ve lost count of how many times I’ve had to say this.  A great idea, strategy, mission statement is useless unless you actually do something.  You won’t change your business, brand, culture, quality, conversion rate, whatever, unless you do something. Intentions are worthless, unless you do something (to achieve them). Do things that will achieve your aims.  Do what you said you’d do. Stop doing what you said you’d stop.

… gardens are not made
By singing: “Oh, how beautiful!” and sitting in the shade.

- Rudyard Kipling

Earlier this week, I was interviewed by Craig Dewe, aka. The Marketing Outlaw. You can read the interview by clicking on this link.

Update: Text of interview from last week:

Interview with Jim Donovan of En Avant fame

Craig: Hi Jim. Thanks for taking the time to answer a few questions for us. It really is appreciated to hear from someone with your business experience. Let’s start out with a little bit of background about that experience. Can you tell us why you first got into business and a summary of what you’ve achieved so far?

Jim: I studied IT at university. It was learning how IT could transform business processes that started me off. I then received superb training in a wide set of business skills from my first real employer ICL in the UK and NZ. That eventually led to a role in marketing strategy. Then as marketing manager for BOC NZ, I got involved in a lot of strategic business change, and I was hooked. It was my ability to see the big picture, figure out a strategy and then implement it which has pretty much defined my career since then.

Achievements? Well I’ve been very fortunate to have worked with great people, eg. making dramatic improvements at Telecom (as a consultant) and introducing a major shift in customer focus at Fronde. I’m proud of the transformation of the Horowhenua Electric Power Board into the highly efficient and well-respected Electra (my first group CEO role). But my biggest achievement (so far anyway) was taking hi-tech manufacturer Deltec through a turnaround to become the world leader in its niche (adjustable-beam base station antenna systems for mobile phone networks). We won several awards, we were rated as one of the best places to work in NZ, we had fantastic business processes, our sales trebled, we made a lot of money, and we successfully sold the business despite the international tech wreck. Boastful? Guilty but, on behalf of the team, unrepentant.

Craig: Since this blog is all about great marketing I’m going to drill down in this particular area of business. First, when you’re looking to promote a business, what are you thinking about when you create its marketing strategy?

Jim: What’s the market offer? Not a tagline or a slogan, but a strategic statement of what it is that you offer the world, who to, how that offer is made and fulfilled, and why the world would want to buy it. You also need to understand what isn’t in your offer, and why not,.

Craig: If there were a few key areas in marketing that you think every business has to get right, what would they be?

Jim: I’m a scratched record. Assuming you’ve got your market offer well-defined, then it’s those things that support the offer. Clarity, focus and appropriateness of message, channels, products, terms of sale, business processes, skills, modus operandi, organisational ethos. You have to get the hygiene factors right, but concentrate on what lies at the heart of your offer.

Craig: Personally, I think many entrepreneurs don’t like the sales and marketing aspects of growing their business. Do you agree? And if so, what do you suggest for entrepreneurs that feel this way?

Jim: 1: Get some training and coaching on how to sell, present, communicate, negotiate. Every successful entrepreneur has to learn how to front up to customers, investors and business partners. I’m a reluctant salesman myself, but I’m ok once I’m in front of the prospect. 2: Get good sales and marketing offsiders - ones who also understand commercial matters so they do good business for you as well as the customer.

Craig: Finally, as someone who has been successful, what advice would you give to entrepreneurs that want to succeed in business?

Jim: Clearly define your market offer, surround yourself with good people, have a clear simple plan to build the business, do what you said you do (and stop doing the stuff you said you’d stop). If big change is required, dedicate your best people to make it happen. Big change doesn’t happen if people are busy with their day jobs.

Craig: Well thanks again for your time Jim. Most will know about your popular business blog En Avant but are there any other resources you recommend or places to follow you?

Jim: The Economist, local and international news sites, various business and economics blogs, as well as the ones relevant to the industries I’m interested in. I read widely to keep informed - some 50 sources online via feedreeder. (Set aside a short time each evening to skim over stuff quickly to pick out what’s worth detailed reading, and regularly prune out the sources that don’t deliver enough brain stimulation!) Read some basic books on marketing, business and economics. Join some business and industry networks. A business sits in a wider context. A business leader needs a broad grasp of what’s going on in the world.

Economist Willem Buiter was an early proponent of the good bank/bad bank solution to take all those toxic assets out of the finance system without crippling the taxpayer and the ordinary depositor.  Unfortunately, despite the support of many economists, that proposal was largely ignored by most governments, who instead lumbered the taxpayer with huge borrowing, printing money and other future-hocking solutions.  Undeterred, Buiter has now turned his attention to a related major policy issue - banks that are “too big to fail” because they would bring down national and global economies.  On his Financial Times blog, Buiter covers a broad range of options and concludes that “there is quite a list of effective instruments for cutting leveraged finance down to size“.

• Legally and institutionally, unbundle narrow [high street] banking and investment banking (Glass Steagall-on-steroids).
• Legally and institutionally prevent all banks (narrow banks and investment banks) from engaging in activities that present manifest potential conflicts of interest. This means no more universal banks and similar financial supermarkets.
• Limit the size of all banks by making regulatory capital ratios an increasing function of bank size.
• Enforce competition policy aggressively in the banking sector, by breaking up banks if necessary.
• Require any remaining systemically important banks to produce a detailed annual bankruptcy contingency plan.
• Only permit limited liability for narrow banks/public utility banks.
• Create a highly efficient special resolution regime [SSR] for all systemically important financial institutions. This SRR will permit an omnipotent Conservator/Administrator to financially restructure the failing institutions (by writing down the claims of the unsecured creditors or mandatorily converting them into equity), without interfering materially with new lending, investment and funding operations.

However, Professor Buiter reckons that governments aren’t facing up to this problem, either. Instead, it looks like the surviving big banks will get even bigger.

I thought the debate about open-plan offices was long over (if you’re going open-plan, you’d have done it by now), but apparently not. Thanks to Bernard Hickey, I read that the CEO of National Australia Bank is advocating it, and suggesting that other banks which have yet to move to open-plan are probably hide-bound in other ways.

I’m a big fan of open-plan, with executives in amongst everyone else.  Obviously you have to get the house rules right, and provide private space for private conversations and thinking, but the increase in information flow, collegiality, unity of purpose and general buzz is very palpable.  When we were planning the radical transformation of Electra from stuffy, hierarchical power board to dynamic, lean, efficient and empowered customer service organisation, we discussed what changes we needed in culture and operating style.  I then went away to the beach for a holiday, only to return and find that the staff had literally torn down all the internal walls one weekend.  It was a spur-of-the-moment unauthorised initiative, and afterwards there was high trepidation concerning my reaction.  There was only one thing I could say when I walked into the building and saw all these worried faces looking at me: “Brilliant! Where do I sit?” Anything else would have destroyed the very changes I wanted to bring about. That wall demolition weekend was the start of a truly amazing transformation.

Getting product engineers to move into  an open plan environment at Deltec proved more tricky, with great protestations about dedicated personal offices for deep thought.  Moving buildings was the catalyst this time, with the engineers going into a new, high-vaulted, attractive and airy space.  There was still the odd gripe about needing personal offices from one or two designers, but inter-team interaction lifted noticeably, and led to some great cross-product innovation.

Conversely, in Fronde’s already existent open-plan environment, it eventually proved necessary for me to move into an office.  I was doing a lot of confidential business, but having an adjacent meeting room would have sufficed for that. However, and more importantly, I wanted to strengthen the position of the local leaders, to be seen to run their business units. That’s possibly more an argument for keeping head office out of a branch location.

Open-plan is a tool of organisational ethos and culture; it may not suit every situation. However, any reason to not go open-plan needs to be very profound to make up for the lost benefits.

“We live in a decaying age. Young people no longer respect their parents. They are rude and impatient. They frequently inhabit taverns and have no self control.”
Inscription, 6000 year-old Egyptian tomb

“When I was young, we were taught to be discreet and respectful of elders, but the present youth are exceedingly disrespectful and impatient of restraint”.
Hesiod, 8th century BCE

“What is happening to our young people? They disrespect their elders, they disobey their parents. They ignore the law. They riot in the streets inflamed with wild notions. Their morals are decaying. What is to become of them?”
Plato, 4th Century BCE

“The young people of today think of nothing but themselves. They have no reverence for parents or old age. They are impatient of all restraint… As for the girls, they are forward, immodest and unladylike in speech, behavior and dress.”
Peter the Hermit, CE 1274

Source

I said this three times today:

• Where are you going (what do you want to achieve and why)?
• What will it look like when you get there (your market, your offer, your organisation, etc. and why)?
• How will you get there (what will you do and why)?

Too many so-called strategic plans are full of warm fuzzies and empty of specifics.

The creators of the excellent Alex cartoon strip are always alert to the latest business neurosis. Sigh!

Struggling to get your head around current thinking on what governments are doing or should be doing to deal with the global economic crisis?  The New York Review of Books recently hosted a symposium with leading economics pundits Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros, and Robin Wells.  Reading the summarised text of their discussion will give you a reasonably straightforward understanding of the various camps’ viewpoints.  Although the participants do look at the bigger world picture, inevitably their discussion is somewhat US-centric.  However, the USA’s situation and policy responses will affect us all, and similar debates are happening in every country and in international forums. The NYRB article is well worth the time to read.  Just don’t expect a consensus conclusion: the debate still rages.

Thanks to SPD for the link.

OK guys; it’s officially the end of civilisation as we know it, and time to retreat to the survivalist bunkers. The Times reports that upmarket women’s retailer H&M is discounting Jimmy Choo shoes:

They cannot afford them and they cannot walk in them, yet many women yearn for a pair of £400 Jimmy Choos. Now Hennes & Mauritz, the world’s third-largest fashion retailer, is making the dream of owning the designer shoes a reality by selling them for only £30.

Expect major credit card hits from the other half of the population for air travel and “it’s a bargain” shopping trips. We are about to see who is the real aggressor in humanity. There will be blood!

I’ve had this conversation several times, including with myself. Most businesses go through a major crisis occasionally. You just don’t hear about most of them unless they prove fatal.  However, in this current environment, many business are financially stretched.  The banks are being very tough on anyone in breach of their bank covenants (key financial targets which have to be met or the bank can call in its loan).

Assuming your business is salvageable, the best way to keep the bank from sending in the receivers is to be tougher than they would be. By that I mean that you should think like a receiver - drastically chopping expenditure, cutting staff, closing branches, taking a large axe to management, killing off non-profitable products and services, and so on.  Not half-hearted measures, but really tough-minded ones. If you’ve got a plan that the bank can easily see is tougher than what they’d do, you’ve got a chance of staying in control - providing you actually do what you said you’d do.  And you’ve got a better chance of preserving some strategic capability for the future (like key designers or young trainees).  Once you do get the bank off your back, you can get on with the job of building your business, even if it is from a smaller base.

Of course, it’s even better if you get tough a lot sooner in the crisis, long before the bank gets heavy-handed. That way there’s a small chance that they’ll leave you alone and not impose all those reporting requirements, penalty interest rates  and outrageous investigation fees which make the job of recovery even harder.  A small chance.

Most infrastructure networks suffer from bottlenecks and capacity constraints, which hinder economic effectiveness and competitiveness:

• National broadband telecommunications in and between business centres (you’ll be out of the loop in web-based businesses, web-based resources, web-based business processes, and access to those services)
• International broadband communications (you’ll be out of the loop in new cloud-based businesses that serve international markets)
• Roads (try doing just-in-time fulfilment if the trucks can’t get through the local roads)
• Electricity (it’s hard to get competitively-priced electricity if the cables to deliver it to your region are already full, and there’s no spare capacity to cope with failure).

Obviously all are important, but which has greater economic downside - the power going off or you not bring able to surf the web? So how come most debate is focused on  lousy download speeds for watching videos online?

• How much will the end customer pay for it?
• How many will you sell each day/week/month/year?
• How much will it cost to sell and get paid?
• How much will it cost to make/deliver it?
• How much will it cost to run the business?
• How much money and time will you need to invest in design, systems, plant, skills, working capital, etc?
• So that translates into how much of a return on that investment?
• So why bother?

You’d be surprised how many wannabee entrepreneurs haven’t thought about these basic questions before betting the farm.

The report’s recommendations needed to be implemented, permanent senior management was needed to replace those in acting roles, the IT system needed an upgrade worth $117 million over four years and the entire process needed to be taken apart and looked at “from top to bottom”.

That snippet is from today’s Dominion Post, commenting on the need for a major overhaul of New Zealand’s Immigration Service. I’ve already heard much about the shambolic state of this government agency, so the need for a root and branch renewal is not surprising.  What caught my eye was the size of the proposed IT upgrade.

I know that government IT projects suffer from very bureaucratic (and often ineffective) environments: unengaged and unempowered users, long-winded decision-making, overly complex legislative and procedural requirements, etc, etc..  Even if that isn’t always so, government IT will still usually be more expensive than commercial IT.  Unique requirements (well, nationally idiosyncratic, anyway) tend to demand bespoke solutions, or at least customised implementations of standard case management and workflow systems.  Allowing for that, $117 million still seems way too much.  After all, this organisation only does a few core tasks:

• receive applications, process them, and issue visas for tourists, students, temporary workers, and permanent residents.
• weed out dodgy applicants (at least that’s the theory).
• provide information on the process to potential applicants and employers.

Let’s look at the IT investment per process worker (a useful metric for process/people-centric operations). Assuming that the NZIS still employs approximately 750 people (the last number I could find) and that 2 out of 3 staff are engaged in the process (as distinct from support functions and executive staff), that’s $234k per person.  That is ridiculously high. What complex business process does this organisation operate that requires such a high IT investment? If I was the Minister of Immigration or the Minister of Finance, I’d be demanding alternative proposals for the business process and supporting systems.

Curiously, that $117 million is a very specific precise number, given that “the entire process needed to be taken apart and looked at ‘from top to bottom’.”   I’m smelling the pungent scent of of desperation - let’s throw lots of money at a big IT project to give the appearance of decisive action.   More cynically, it buys 4 years of plausible excuses while the project is underway, and in 4 years time, everyone senior will have moved onto pastures new.   Sadly, you’ll find similar stories in every government in every country.

Microsoft has announced that, after 17 years, it will stop selling its Money personal finance software at the end of June.  I’ve always quite liked MS Money.  It has its flaws, but it did the job reasonably well for our home accounts and investments, and I never saw anything else worth changing to (unlike small-business accounting, where I strongly recommend Xero).

When I opened my first proper bank account on starting university, the bank manager himself sat down with me to talk about managing my money. I don’t think that happens these days! The bank manager gave me a book in which I could record my income, expenses and bank balance, so I wouldn’t lose track of how much money I had and what I spent it on.  It was a habit I never lost, and I still have all those accounts books.  In 1996, MS Money came bundled with a home PC package and so I went electronic.  Should someone ask what we spent at the supermarket in June 1998, or our expenditure in bars and restaurants last year, or the return on my investment in Telecom, I have the data!

Some day, someone will find these records and earn a PhD by analysing the minutiae of  our family’s lifestyle as evidenced by what we earned, saved and spent. So now I need Rod Drury to bring out the personal finance edition of Xero, with investment functionality, please. Posterity demands it!

Disclosure: Isambard Investments owns Xero shares.  My family trust owns Microsoft shares.

So your marketing people have told you that you should be blogging or twittering.  But you’ve heard that most blogs have an audience of one, and most twitterers have only ever posted one tweet. Why bother?

Blogs per se aren’t a cure-all, but they are very cheap and immediate communications channels to reach large and small audiences.  Technorati - a blog tracking and ranking service - reports that out of 133 million blogs it tracks, only 7.4 million have posted anything in the previous 4 months (<6%), and only 1.5 million in the previous week (~1%).  Hardly a huge activity rate, one might suppose.  But that probably represents a shift in who’s writing blogs and why.  When blogs first started, they were typically personal online diaries, often with a technical or hobbyist bent.  The top public blogs today look more like news feeds, or rather commentary on the news, usually with a particular focus such as politics, economics, technology, sport, hobbies or entertainment. 1.5 million very active blogs is still a very big number. And businesses are increasingly using blogs to inform and connect with target audiences, such as customers or staff (perhaps behind a security screen, and so hidden from Technorati).

Micro-blogging service Twitter is still evolving (not least, it has yet to find a way to pay for itself), but it clearly has several business applications, especially “creating a buzz” around an event, product launch or special promotion. No doubt other business system applications for Twitter will emerge, but I’d hesitate to build Twitter into mainstream business processes until I was certain the Twitter business model is sustainable.

The numbers for Twitter can be deceptive.  The BBC reports that a Harvard study of Twitter users found:

• There are an estimated 10 million Twitter users.
• 10% of Twitter users generate more than 90% of the content.
• More than half of all people using Twitter updated their page less than once every 74 days.
• Most people only ever “tweet” once during their lifetime.

However, you need to bear in mind that to receive Twitter feeds, you sign up to Twitter, whereas most blogs are followed directly using your browser or a generic feed service.  That 10% active user rate is actually quite high, compared to blogs where the readership may be several thousands or tens of thousands every month (or even millions for the big-hitters).

So is blogging or twittering appropriate for your business?  They are only means to an end.  Like any communications, you have to define your audience, what objectives you’re trying to achieve, and for what duration, which may be long or short (for a specific project or event).  Blogs and Twitter are just some of the tools you might use.  On the question of duration, be aware that to be effective over an extended period requires organisational stamina.  Like all those personal blogs, many corporate blogs have withered away after an initial flush of enthusiasm, because the business really had very little new to say over time. Even so, it’s worth experimenting to explore what they can do for you.

Which renowned retailer once had the following mission statement?

“The subversion of the class structure of … England by making available to the working and lower-middle classes, upper-class quality at prices the working and lower-middle classes could well afford.”

Mission statements can be the most dreary and uninspiring committee compromise. Some leaders (and not a few employees) think they are meaningless window-dressing, not worth the effort, insincere, hypocritical and sometimes downright lying.  Others think that their business is too lowly or mundane - a mission statement would be putting lipstick on a pig. However, we all know that people do respond to inspiring leadership rhetoric.

Sometimes mission statements talk about a result: “Achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.” (NASA, hence the term ‘mission statement’). Sometimes they talk of a way of doing things, like Johnson & Johnson’s Credo.  Sometimes they are unabashedly about making money; DuPont considered itself successful “only if we return to our shareholders a long-term financial reward comparable to the better performing large industrial companies”.  Some mission statements spell out what a field a company is in (and what it is not).  Deltec’s was “Helping people to communicate, by taking Teletilt to the world“. Societal good, industry, product field, and global ambition all expressed in ten words.  You’d be amazed at how we could apply them - business processes, design, quality, product range management, people development, culture, shareholder value - you name it, we could use our mission statement to lift our game.

A powerful mission statement  encapsulates the aims and modus operandi of an organisation, lived and breathed by its leaders and staff.  It can be short or long. It needs to avoid compromise, timidity and insincerity. Above all, it must be believable, not only in its aim, but also its execution.

The Economist has  a short web-only article on mission statements (from which I borrowed these ones) and suggestions for further reading. And the retailer? That epitome of the middle class establishment, Britain’s Marks & Spencer!

So you’ve got all your business and family records on computer, you store all your email online, all your business documents are in a wiki, and your family photos are on Flickr.  You’ll never lose anything again, right? Wrong.

As any archivist will tell you, the half life of information storage is shrinking all the time, and they despair at the increasing pace of information loss. Messages written in stone lasted for millenia, documents written in natural inks on linen papers lasted for many hundreds of years if stored well; synthetic inks and industrial papers last a century, celluloid films several decades. But it’s the move to electronic media that has really sped up the losses.  Not only do these media only last a few years, but also the technology to read them (both electronic and software) rapidly becomes obsolete, unobtainable and unmaintainable. Anyone got any files on floppy discs? Can you do any analysis of your survey records from 20 years ago? Can you even find them, let alone read them? Take optical discs (CDs, DVDs, etc) - the discs get scratched, the surface film (in which the digital pattern is etched) breaks down, the plastic substrate breaks down, and the recording standards change.

For the time being, there is only one working solution - keep your data moving.  If you transfer your data to a new medium from time to time, you keep it accessible. That’s easier to do now cloud computing storage is so cheap. Create a document archive for everything online, copy everything into it, and back it up on a second storage service elsewhere regularly (ideally automatically). And from time to time, move everything to the latest current medium. But if you aren’t there to keep your data moving, who will look after it after you’ve gone, in 10 years time, 100, or 1000? Make sure others know where your information is stored (you probably want to share much of it with them anyway) and how to get to it if you’re run over by a bus.

For the archivists, a long-term solution may be on the horizon.  Wired magazine reports on a nascent carbon nanotube technology with the potential for data to be stored accurately for a billion years “from now until long after the Earth has been overrun by superintelligent, fusion-powered cyborg ants“.

Carbon nanotubes are molecular-scale tubes usually made of a carbon allotrope. For data storage, a small electrical signal is applied across the nanotube causing the iron nanoparticle shuttle to move back and forth. The movement of the nanoparticles from one end to the other of the tube creates the binary ‘1′ or ‘0′ state.

The position of the shuttle can be read out directly, explain the researchers in a paper published in the current issue of the Nano Letters journal. …The technique has significant potential for archival storage, say the researchers, because the nanoparticle-based bits show significant persistence. It’s also possible to store a lot of data in a small space: With information density predicted to be as high as 10¹² bits per square inch, you could store data from nearly 25 DVDs in the space of a postage stamp.

After a bad day, when you’ve despaired of hearing some positive media coverage of businesspeople, and had to apologise for losing your temper unfairly, this little video might help (spotted by Dave Moskowitz).  A word of warning, though; watch it in private, or people might start offering you their copies of “Chicken Soup for the Soul“, and there’s only so much of this stuff your system can handle.