Drowning in complexity - how to simplify without being simplistic...

An independent survey of 1,293 HR leaders worldwide has revealed how complexity in today’s business environment affects key business indicators and the degree to which managers lack confidence in their ability to handle that complexity (Hat-tip goes to Jeremy Blain for the link).

Results show 60% of survey respondents indicated that they did not have full confidence in their organizations’ ability to manage complexity. As a result, complexity has a very significant impact on key business indicators such as sales revenue, employee productivity and motivation, customer loyalty, organizational profitability, and sustainable long-term competitive advantage.

As part-time fire-fighters (if the job has become full-time fixing, it becomes a whole new ball-park, another time) NAMs need to be able to absorb and factor in new trading issues – and since 2008, most issues are new – and bring in results, despite the distractions such as tech-induced data-overload and increasing layers of complexity…

This means being able to simplify, without making an issue simplistic.

For instance, your customer has just received a take-over bid, ‘out-of-the-blue’... First of all, nothing, especially a takeover, happens unexpectedly to those who are constantly on the watch for signals, and NAMs are particularly well placed pick up and place key signals affecting their major customer in context, better than anyone in either organisation.  However, such signals, as with other key issues, come buried in a mass of data and complexity.. The benefits of being able to anticipate and act  while others are awaiting the next press announcement, hopefully go without saying?

Essentially, a NAM can manage most complexity by searching for answers to the following questions, fast!

- What is this about?
- Where is it headed?
- How does it affect me?
- What should I do about it?
- How?

What is this about? i.e. takeover bid
Read wide and fast, a mix of mainstream media and blogs, combined with the views of key people in your network. Despite the appeal of various lines of investigation, resist and merely dig out facts relevant to your question, remembering that you are aiming at producing an ‘elevator pitch’ i.e. an explanation that can be put across between floors on a lift-ride (apologies for culture-mix, but lift-pitch does not quite express it)....     As the in-house expert on the customer you are going to be asked for a detailed strategic reaction minutes after the CEO has read the news…If you are not her first choice for a view, mmmmm….

Where is this headed?
Given this morning’s bid is already history, the only sensible place to play is in the future, while others indulge in ‘analysis paralysis’ and other clichéd approaches to making sense of something that requires immediate action…(your fire-fighter mode).

Think future in several time-frames to generate deeper insight. In other words, thinking laterally, what are the immediate consequence of the bid, 1 month later, 6 months on and finally a year later, and pencil in appropriate actions for each time-frame. Think through the various parties affected by the bid, say consumers, the customer and suppliers. Explore positive, minus and interesting aspects of the bid from the point-of-view of each party, all well established lateral thinking process...

How does this affect me?
You now have a pretty comprehensive grasp of the issue and its consequences, along with the anticipated views of those concerned. This should be sufficient to take a stance on the bid’s impact on you,  your company and your brands.

Converting everything into financial impact will then lend the exercise a little immediacy and urgency, if per chance the pace has slowed….

What to do about it?
Again many of the required actions will be obvious, again requiring financial fleshing-out and factoring into amended trade strategies (you simply need to have been at the receiving end of a single takeover bid to know exactly what happens, and what to do about it…)

A key element should be a risk/opportunity analysis assessing what could go wrong/right, and exploring impact on the business and chance of occurrence…fast.

How to do it?
Can take a little longer but outside experience, objectivity and contacts can save time, and lend some fire-power to your recommended actions…

So, five questions later, you have an outline trade strategy, and judging from the average 5 minutes that NAMs devote to KamBlog postings, it is still less than ten minutes since you heard about the bid…..

TV goes to the dogs with first channel for canines - a breakthrough in discerning viewing?

Lonely, bored dogs left at home all day while their owners are at work could soon be getting some digital company - a TV channel with programming just for pooches. DOGTV, a 24/7 channel designed specifically for man's best friend, will air nationally next month on the U.S. satellite operator DirecTV, with hopes of attracting dogs in some of the 46 million U.S. households that have at least one.

Given the quality of alternative viewing choices it has to be presumed that significant numbers of suppliers’ regular advert-targets might choose to watch DOGTV with their pets…

This raise a number of issues:

• Who is the real target here?
• How will doggie viewing patterns compare with humans’ passive behaviour i.e. a real challenge to content and advert appeal?
• If the TV station upgrades its output for increased engagement, how will human couch-potatoes cope with the resulting excitement?
• If the dog barks in response to a specific advert, does this indicate approval or the opposite?
• As the sounds include a range of frequencies tailored to a dog’s sense of hearing, how can owners monitor the messages reaching their pets?
• Presumably someone put a proposal on a table somewhere and raised adequate start-up capital i.e. there has to be a potential revenue stream here, or a hidden agenda, the final nail in the traditional TV- coffin?

The real opportunity?
For those of you now seriously considering the potential of this new medium, it may help to know that the real competition may be the proposed content … The channel won't be showing the canine equivalent of "Modern Family," "Mad Men" or "Downton Abbey" but will feature programs with music, visuals, animation and the occasional human that are designed to relax, stimulate and ease the loneliness of home-alone pets. This means that the advertising has to be sufficiently compelling that dogs will time their ‘natural-breaks’ to coincide with the content rather than while the ad-breaks are airing, perhaps the ultimate Kanine-Pee-Indicator…?.

NB. Caution ref high-pitched sound:
A pet-food marketing pal of mine Ray Wilsmer tried this idea many years ago using a Great Dane lying asleep on a couch in front of the TV. Ray crouched behind the TV with a high-pitched dog-whistle which he blew several times during screening of his commercial, without managing to awaken the dog… Eventually Ray crept behind the couch, leaned over, positioned the whistle on the dog’s ear and blew with such vigour that the dog committed a massive social indiscretion all over the couch…

Finally, before you ask, the station is already planning a TV channel for cats…

Your annual report – what it tells the buyer, if you allow it...

Last night we downloaded the latest annual report (2013) of a medium-sized UK food supplier from Companies House, and extracted the following:

                            2012          2011                  Buyer’s reaction:
                            £’000         £’000
Sales                   65,000       55,000  +18%     “We helped, how about a discount?”

Net margin          8.5%          9.1%                  “Double our 4.3%, we need more…”

Stockturn             21 times     19.6 times         “...helped by our forecasting/efficiency, gimmee”
(i.e. days stock     17 days      18.5 days)   (potential lapses in availability = deductions opportunity?)

Trade debtors       56 days      56 days           “...we pay you in 46 days, we want 10 extra days”

Trade creditors     39 days      26 days          “this shows you are now taking 13 days extra to pay
                                                                       for ingredients, to cover cost increases!”

Incremental sales for each
£1k trade spend = £11,7k                       “Your large net margin means you can afford to invest more”

Return On Capital Employed
                                22%          25%       "Compared with our struggle to hit 11.5%, you guys have it easy"


*****NB. In-use demo here will connect you to a scenario treatment of the buyer-seller dialogue in practice!


This is just for starters!
If you feel that your team might benefit from a live run-through of your open domain figures at Companies House, and their application in negotiation, why not email me on bmoore@namnews.com, or give me a call on 07977 273409?

Amazon - end of the free lunches?

Today’s news that Amazon has scrapped free delivery for orders of less than £10 will come of no surprise to regular users. Indeed many will have progressed  to Prime level, where for £49 per annum, all orders have free delivery. Prime members don’t only contribute a £49 fee, they’re also Amazon’s most loyal, high-spending customers, with some analysts claiming subscribers spend $1,224 every year compared to the casual user’s $505.

Today’s free-delivery restriction will no doubt cause many of the regular, non-Prime users to sign up for the free-delivery service..

That leaves current small-time users and new users.

• New users will ‘never’ know that free delivery existed, and may be attracted by the Amazon convenience, anyway
• Current small time users may be a casualty of the new restrictions, but they should expect a couple of retrieval/trade-up moves from Mr Bezos...

Finally, Amazon takes a step towards meeting City needs for profitability in line with sales.

A win-win-win for all…without missing a beat…
Competitors beware… 

Coca-Cola fine-tunes demand-supply, by outlet...

Coca-Cola GB is revamping how it gathers data from retailers to pinpoint which areas of the country hold the greatest potential for marketing and selling its brands to shoppers.

The customer insight initiative will see the business create a network of outlets over the next three years that either currently sell or have the potential sell its brands. The platform, developed in partnership with customer insight agency Serendipity2 Marketing Group, garners sales and volume data which Coke will combine with its own before mapping it against external consumer, workplace, competitor and retail geo-demographics.

In effect, Coca-Cola is making each shop a major customer…and treating them appropriately.

Think about it!

Substituting ‘major customer’ for ‘outlet’ in the above description of their customer insight initiative produces a strategy that hopefully describes the level of tailor-making many suppliers can just about afford to give their major customers, as follows:

The customer insight initiative will see the business create a network of major customers over the next three years that either currently sell or have the potential sell its brands. The platform, developed in partnership with customer insight agency Serendipity2 Marketing Group, garners sales and volume data which Coke will combine with its own before mapping it against external consumer, workplace, competitor and retail geo-demographics

Scale obviously helps, but if successful, the Coca-Cola initiative will not only set new standards in optimising store-based assortment, but will also produce reductions in ‘over-lap’ wastage and buffering. In addition, any current sales losses arising from low availability will be minimised.

However, the real issue for all other suppliers will be the extent to which Coke are raising the game in major customer management, and the risk one runs in not anticipating the move…

Meeting 'me-tailing' expectations, always....

Success for retailers has always depended upon understanding the individual customer, offering them personalised products and interactions – now known as 'me-tailing' – merely an electronic step-up from a corner-shop’s stocking of products that shoppers ‘kept asking for’……

The difference is that today’s consumer is always connected - allowing them to research products and purchase them anywhere, a challenge now faced by those retailers that have not fully embraced connected retail technology, linking consumers, devices and data for smarter shopping experiences, from the high street to online, in-store to mobile applications.

Seldom voiced by consumers-in-a-hurry, there is now a need for retailers to improve service delivery through linking consumer data and research to purchase phases, deliver a personalised experience by tailoring products to consumers' personal requirements to support sales, and thereby enhance the brand experience by creating meaningful experiences that move the consumer from transacting to conversing with brands.

A job too important to be left to retailers?
Ultimately, it is only the brand owner that wants to ensure that the brand meets the consumer's need - retailers retail categories, and are simply concerned that the consumer has no cause for complaint with individual brands or own label products, and returns to the store - whilst the brand owner loses money if the consumer fails to make a repeat-purchase...

The technology is creating new levels of expectation and brand owners therefore need to find ways of entering and optimising the retail marketing mix in order to ensure that there is more than adequate fulfillment of consumer needs and post-consumption satisfaction in order to guarantee repeat purchases by a consumer that has no need to go elsewhere.

In other words, me-tailing is simply a facilitation of the need-brand-need process, by connected savvy consumers that have the ability to measure each aspect of the 4P mix, and its record in  meeting and even exceeding expectation, as they converse with brands, and if necessary about brands, to reflect the degree of personal expectation-match…in all ways… 

Sainsbury's expand hospital pharmacy network - NHS missing a trick?

News that the UK’s No. 2 retailer plans to open four new outpatient hospital pharmacies each year, helping it to meet its ambitious target of doubling its pharmacy revenues over the next three years, indicates that the principle of applying state-of-art retailing expertise to the management hospital pharmacies works sufficiently well to encourage roll-out of the process...

Sainsbury’s opened its first outpatient pharmacy, at James Cook University Hospital, in February 2012 and this was followed by the outpatient pharmacies at Guy’s and St Thomas’ in December.

Mike Coupe, Sainsbury’s Group Commercial Director, said: "As we grow our network of outpatient pharmacies the feedback we receive from patients and the NHS trusts we work with has been overwhelmingly positive. The experience we have gained from these, combined with that of running over 270 in-store pharmacies, gives us confidence that by expanding our network of outpatient pharmacies we will be able to offer a greater level of service to the NHS and wider community."

The NHS missing a trick?
Whilst the Sainsbury's initiative is a major step forward of great benefit to all stakeholders, are the NHS missing a trick by not tapping into one of Sainsbury's key areas of expertise – procurement?

Why not second a few of Sainsbury's best buyers to help manage the procurement process on behalf of the NHS?

Whilst public sector contracts might be more complicated and difficult to terminate, surely Sainsbury's could bring considerable clarity and focus to the process of selection, and negotiation.

With an emphasis on output rather than input, an instinct for patient need-satisfaction but especially the incorporation of realistic KPIs and a drive for effectiveness, a grocer’s input might make a real difference…

Pepsi-Cadbury - a must-check combination?

News that activist investor Nelson Peltz says he wants soft drinks giant PepsiCo to buy Cadbury owner Mondelez and spin off its own underperforming beverage unit should be a  cause of some fundamental ‘what-ifs’ by the key stakeholders, fast.

In case you feel this idea is legless, during an interview on CNBC, Mr Peltz said he had talked about the proposal he called "Plan A" with PepsiCo chief executive Indra Nooyi - See more on NamNews.  

Mondelez International shares rose 64 cents, or 2.1pc, to $30.50 on Wednesday and added another 8 cents in after-hours trading. PepsiCo shares rose $1.22, or 1.5pc, to finish at $85.24.

Mr Peltz is known for building stakes in companies then forcing change. In 2008, for example, he led a group of investors in pressuring Cadbury Schweppes to split its candy and its weaker beverage business, which later became Dr Pepper Snapple Group. He was also an active investor in Kraft Foods before its split from Mondelez.

What now?
Apart from the inevitable year of uncertainty as the competition authorities explore the implications, retailers and the supplier-players revert to the short term and generally miss some obvious strategic opportunities, the proposals will open up the competitive landscape for the opposition. However, pro-active NAMs will remember that, even if the full deal does not go ahead, the management of each company may be forced to make some disposals to appease the activist shareholders…

A final check?
Having conducted your what-ifs by the book, why not try an old lateral thinking trick as a final step in your analysis: assume it has already happened, look back and try to identify the possible pathways that lead to this conclusion.

This may not only reveal some additional options - possibly including Mr Peltz’s ultimate motivations - but may also yield some hitherto unanticipated career-plan clarification….