although I am writing this blog post to note down my precise thoughts just for a handful of people, it might be useful for a whole lot of other people too. That is why I am making it public.
This post is written in response to a frequently asked question that I face – and having no FAQ section in our website, this will have to act as a substitute.
Somehow people have no qualms paying nearly double of my rate (including support staff) for a large branded consultancy service – but resent a much lower rate when it comes from a much more competent consultant without a famous multi-century brand.
However, the conversation always starts as a justification for the hourly rate without any comparison points.
I recall several l years ago a similar conversation where I was challenged to justify the rates by a highly (extremely) competent senior executive. He, rightly, pointed out that he could do almost everything that I could do, so why would he need me.
But then, I pointed out that today’s executives are working at a pace which is akin to driving at 150 km/h (90 mph) on an extremely busy and rowdy highway. There are vehicles large and small rushing at breakneck speed from all possible directions. people are barely keeping to their lanes and easily cutting each other off. Risks of accident are extremely high. Those who meet with an accident are left on wayside. Those who make it to the destination, barely have time to recuperate before they start on another project.
No one has time to look in the blind spots. If you slow down you are overtaken and left behind – never to catch up again. Others are ready to jump into your seat at a moment’s notice. And, if they are not as competent as you – it does not matter.
What you need is an early warning radar system that assists you to plot your way through the maze around you – taking all the relevant data points into consideration.
You pay the price for collision avoidance, for arriving safely at your destination with your sanity intact, and for enjoying the journey to a large extent.
After some thought, my friend on the other side added his keen wisdom to the conversation.
He said (and I paraphrase) “for a moment I was disturbed by the thought that if they are not as competent as me, it does not matter. But then I realised it is true, because branded mega-consultancies act a airbags, or other bags, of some sort. So my main decision now is whether I want preventive care, or palliative care!”
And, that size or brand image had only a small impact on the style of consulting practiced by a person.
In the end, it all came down to personal ethos. And, that should be the most important consideration when you hire a management consultant.
Boards always ask the hardest questions. That is why these gentlemen (and ladies) get to be on the boards. They know just the right questions to ask at the right moment. Towards the end of this blog I will relate my recent experience with one such question. They may not know the answer, but they know that they are facing fundamental disruption.
And, they take their roles very seriously. Sometimes, more so than the management.
On one hand, they can massage the quarterly (or monthly, or annual) numbers and pretend that the results are much better than the actual results. A temporary high can be achieved month after month, quarter after quarter, year after year till the fiction can be no longer upheld.
Then you end up losing a tremendous part of your market value in a short period of time. While this story is all too common, the most usual alternative is not pretty either – read the story I recount in this blog post.
So why do many companies resort to massaging numbers? Are they not aware of the consequences? Or, are they just hoping to kick the can down the road till the next market explosion?
One of the reasons is clearly hard nature of the other side of the road.
But clearly thinking is not enough. There are already enough strategists who have done nothing else but thinking (and writing what they think).
If you are wondering why so many of strategists’ reports just gather dust on office shelves – the real answer is simple. Lack of confidence.
Confidence in the findings, as well as, in the ability to implement the recommendations. After all, by now we have a generation of advisers who have made nothing but slides all their lives. Most practitioners have serious issues with that.
Most strategies fail to foster confidence because they are based on industrial age thinking. You cannot fault the managers. Even the best business schools continue to teach outdated industrial age thinking today. And, in the rough and tumble of the real world, very few managers have time to think and work out that they have been taught an outdated business thinking process.
I have written many blogs on the difference between the industrial age thinking and the information age thinking, so I will not repeat entire blog posts here. But I will put in one simple slide to highlight the difference:
So while leaders talk about disruption, there actions remain embedded in traditional thinking. Fresh thinking is even harder than traditional thinking.
Not just that, there is a new kind of leader that is required for disruption. For strategists data is everything – it allows them to focus on the select few things that matter.
Supply Chain CEOs think differently. They are able to focus on the entire B2B network simultaneously – both on the demand side, and the supply side. And they know which levers to pull when to make them match in real time. My book THE 5-STAR BUSINESS NETWORK covers the nitty gritty in a great deal of detail. But here are the five key levers in a nutshell.
My next book THE SUPPLY CHAIN CEO will cover scores of case studies and practical examples of the difference, and how you can apply these techniques in your company.
Before, I stop penning this blog, let me highlight the question that the board asked. The question was – Why can’t we do both the things together?
It is a great question, and I am still thinking of the answer.
If you are in Australia, it is more than likely that you already know this saga. If you are not in Australia, or do not follow the news cycle, take a look at the video below:
Several years ago it was this:
Some band-aid solutions are rolled out – mostly to restore public confidence and get the demand up again. However, a comprehensive supply chain security regime is never put in place.
Having done large scale supply chain transformation projects for companies as sensitive as explosives, chemicals, fertilizers, food stuff, soft commodities, bakeries, meat, dairy, livestocks, and many others, we have seen both – the vulnerabilities and some really cutting edge supply chain security in practice.
Unfortunately, supply chain security, in conceptualisation and training, has not kept paced. There is no university course that covers this topic sufficiently. Conferences skirt this topic. Books cover it sketchily. Regulatory framework is patchy and officious.
And after complying with the regulatory burden most people relax in the belief that they have done enough.
Yet, dozens of incidents have demonstrated that regulatory framework is never enough. Each company has to develop its own supply chain security framework, based on its own particular circumstances. Even compliance with insurance requirements is not enough. Reputation damage to your business is a non-insurable loss in most cases.
Complying with regulatory and insurance requirements is a good start. You also need a more robust, holistic and comprehensive supply chain security framework that provides the guidelines for your own company’s supply chain security model.
Our report titled SUPPLY CHAIN SECURITY – A COMPREHENSIVE, HOLISTIC FRAMEWORK provides the information to get you started.
Better still – run a one day workshop based on the content of the report. It will be the best 20K your company ever spent.
First let me start with a story. I have some personal experience in 1990 with this ancient mariners’ rhyme:
Day after day, day after day,
We stuck, nor breath nor motion;
As idle as a painted ship
Upon a painted ocean.
This was on a ship with a very intransigent bunch of crew from an aggressive Marxist union. What I did not know at this point was that all the crew ratings received a hardship allowance for every day they spent on the ship under water rationing conditions.
The ship embarked on a several weeks voyage across a vast ocean with sufficient stock of water, and then some surplus. This was one of my responsibilities.
I was also closely monitoring the daily usage. I had the cadet and chippy (carpenter) take sounding morning and evening – and write the daily water consumption on a blackboard in the crew mess, as well as the officers ward rooms.
I took daily rounds in the accommodation to monitor the dripping taps to stop wastage of water. Any jump in water consumption was promptly investigated – all for a good reason. I wanted the ships company to arrive with sufficient water stock.
Perhaps it was just an accident – but somehow sea water gained entry into every fresh water tank on the ship (but that is a long story about unions and compensations which is best told at some other time).
The captain (and I) was left with a dilemma, whether to rely on the fresh water generator on board for a long sea voyage, or not. There was no shortage of water – it just was too salty for most purposes.
I will tell you how this voyage panned out at the end of this blog post.
to the real purpose of the post – the over-abundance of un-usable data, and the opportunities that it presents for start-ups.
In my last blog post I recounted a real life story of a business transformation project where information technology fell woefully short. This is not the only such situation I encountered. In fact I recount more than 20 similar examples in my book ‘UNCHAIN YOUR CORPORATION’.
Look at the growth in global data storage capacity below:
Obviously it is not just the capacity – but also the data that is growing. There are many graphics showing growth of data – a few of them are Every Day Big Data Statistics, Data Generated On Social Media Every Minute and 4 V’s of Big Data and all over the cyberspace. The key story they all are telling is just one –
Just like the ancient mariner had no dearth of water, we have no dearth of data. And, just as minute quantities of salt (3.5%) that is present in all that seawater, is enough to make raw seawater unusable for most practical purposes, minute quantities of data error is enough to make most of the raw data unusable for practical purposes.
On the ships (and in many locations on land) we deploy fresh water desalination plants such as Sydney Desalination Plant. The sole purpose of these massive plants is to parse seawater, take it into a pressure chamber, evaporate it at high temperature (because that requires less energy) and then condensate it into distilled water. Further processing is required to remove other contaminants such as bio-hazards. Check here for infrastructure of the full process in some more detail.
In information technology the most bang for the buck is not in generating or collecting more data, but in making the data more usable.
I was asked a question at a recent speech why I was not as bullish as everyone else on big data. I likened the current big data set-ups to an ocean full of seawater. It still takes a huge expense to desalinate the seawater, and to make the data usable.
Any start-ups that figure out a better way to collate, parse, access, and make usable the data to create insights would be a tremendous success. If you know of any, please let me know in the comments below.
In the voyage above, we had to put into an emergency port to get fresh water rations. Without doing this none of our sailors would have survived.
In the emergency port, we had to fight with a bunch of sea pirates, which is a whole new story .
Just one day after Microsoft announced its phone-based voice assistant Cortana, Apple made known its plan to dramatically improve Siri. With 15 acquisitions under its belt in the last fiscal year, Apple’s latest purchase is of Novauris Technologies.
The UK-based speech-recognition software company has a team of former Dragon Systems R&D employees. Some of its clients in the past include Panasonic, Verizon Wireless, BMW and Samsung for speech recognition system integration.
Apple’s acquisition, of undisclosed amount, is said to actually have happened last year. Analysts have pointed out that the tech giant seems to be working on Siri’s offline capabilities. One of the shortcomings of Apple’s signature voice command system is its reliance on an Internet connection to function.
“Given Apple’s recent CarPlay initiative, the importance of having stable voice command functionality while on the road is increasingly apparent.
“Meanwhile, we can expect to see intense competition from rival Microsoft’s Cortana, which is set to become smarter. Apple is quietly swallowing a number of smaller companies, giving it the advantage of fast integration and turnaround,” says Vivek Sood – CEO of Global Supply Chain Group.
Unlike its rivals such as Google and Facebook who routinely spend billions of dollars on high-profile purchases, Apple tends to acquire smaller tech companies along with their technology before launching new products or features.
In fact, Siri came to life after Apple’s purchase of a company of the same name in 2010.
Kristin Huguet, a spokeswoman for Apple, says: “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.”
Also recently, Apple is looking to improve product displays and battery life through a potential purchase of a Japan-based company. Renesas SP Drivers, a unit of Renesas Electronics, develops LCD chips for mobile devices and owns about one-third of the global market share.
Investors are expecting a lot of product launches from Apple, who have just rebounded from the worst monthly loss in a year. Among the anticipated products are Apple’s iTV and iWatch.
Not only developing new products, Apple is also trying to protect its patents. The most recent, yet familiar lawsuit against Samsung, has evolved to include Google.
At the same time, Amazon is taking on both Apple and Google on the TV device’s front. The world’s biggest online retailer unveiled Fire TV priced at US$99 on April 3rd.
“One of the biggest challenges in this TV gadget market is setting up a network of partners that lets you fully showcase your product’s functionality.
“Google’s Chromecast has had recent issues persuading British media companies, Apple is negotiating with Time Warner, while Amazon’s Fire TV already includes Netflix and Hulu applications. The winner will be the one with the most extensive reach within its business network,” said Sood, author of the book “The 5-Star Business Network“. “Gone are the days when companies used to create products on their own and market them on a standalone basis. In today’s networked business world, both product creation as well as marketing required strong ties with an A-class business network.”
On the face of it, the two companies could not be more widely apart. One is the paragon the new paradigm, while other is an old dying breed! I am, of course, talking about Facebook and NewsCorp. That is what all the pundits will tell you. They will also explain the logic of why News Corp bought MySpace in those terms.
Admittedly, NewsCorp business model was broken in 2005 and it had hoped that MySpace would provide the much needed fillip. That never happened, as it could not have happened. NewsCorp let MySpace go after 6 years for $35 million, a fraction of the $580 million it had originally paid. People have their own opinions on what MySpace has become by now, and I have nothing to add to that discussion.
However, Facebook is a company of intense interest at the moment. If you have studied the business networks for as long as I have (in fact I wrote the book ‘The 5-STAR Business Networks) you will also start thinking of it as a company more akin to NewsCorp than to MySpace.
Most people think that Facebook has a minor problem that teens are losing interest in the platform. I think the problem runs deeper – its business model is not sustainable. As explained by 2veritasium in this 7-minute video
(great Australian content – original, thought provoking and myth-shattering) which has already had more than 1.3 million views in nearly 6 weeks, the problem with Facebook is that it is already starting to resemble the old-age companies – almost like “The Curious Case of Benjamin Button“.
As the video hints, companies do resort to desperate measures in desperate times. That is the reason why Facebook’s purchase of WhatsApp reminds me of the deal between News Corp and MySpace. Only time will tell whether Facebook’s decision to start a new chapter with WhatsApp will lead to a bitter “divorce” or not.
Nobody sets out thinking, I have no purpose for bringing this technology into our company, but I will do this anyway (well a few rare twisted souls might do it – totally driven by a side deal that meets their self-interest). Yet, post-hoc analysis reveals so many IT projects fail due to a variety a reason that one has to ask – what happened to the original purpose. Where did not lose track of that? I have written in detail earlier about why IT projects fail. For example in my book THE 5-STAR BUSINESS NETWORK, I wrote the following:
Many large scale information technology deployments derail!
Data, anecdotes and case histories abound on the misapplication of information technologies for supply networks. Not too many years ago, a very large corporation operating worldwide, made news with the downgrading of their earnings expectations due to supply chain system’s implementation setbacks. The expectation was that the new system would reduce the new production cycle from 1 month to 1 week. Furthermore, it would better match the demand and supply of its products to place the correct products in the right locations and quantities, all at the right time – a very lofty goal. The company spent an enormous amount of money, exceeding US $400 million in order to achieve its aim. However, the software system ‘never worked right’. It caused the factories to crack out too many unpopular products and not enough of the trendier ones in high demand. While making the earning downgrade, the CEO asked the rhetorical question, ‘is this what we get for $400 million?’
The market analysts were not surprised. One respected market analyst [AMR] commented, ‘ fiascos like this occur all the time but are usually kept quiet unless they seriously hurt the bottom line.’ Another respected market analyst commented that while the CEO made it sound like it was a surprise for him, if he did not have checkpoints for the projects, he does not have control over his company. A third analyst commented that companies are confused by escalating market hype and too often underestimate the complexity and risks. Another [Forrester Research] commented ‘when the software projects go bad companies are more likely going to scurry up and cover it up because they fear that they are the only ones having trouble. But far from it; our conversation and research reveals this company was not unique or the only one having this kind of trouble‘.
Despite their lofty goals, many of the large information technology deployment projects derail. It takes time for the word to filter out because, in most cases, the executives involved in the process are far too embarrassed to talk about what happened. They do mutter among themselves; after several similar instances the mutterings become more vocal and a trend emerges where a number of people start talking about the shortcomings of the system itself or the implementation process or of the time taken for implementation. Because the cost of this failure is so high – greater than $400 Million in the above case – it is instructive to understand the real root causes of this failure. I am not looking to apportion the fault or apportion the blame in this chapter.
30 years of accumulated wisdom is now available
However, it will be a fallacy not to learn from all the accumulated wisdom of the past. After all, those who do not learn from history are condemned to repeat the same mistakes again and again. This will enable us to understand the steps we can take from the very beginning to increase your probability of success. This will also allow you to confidently move forward with Business Network Information Technology system selection, integration and use in order to achieve the results that you set out to achieve.
The supply networks information technology projects have become bigger and bigger over the last 15 years. It is quite customary now to start with an expectation of spending around $ 50 million but end up spending in excess of $200 million on systems renewal projects.
Rough estimates indicate that, even today, about one third of these projects are cancelled without delivering any benefits, after spending more than $100 million. Another third of the projects are not cancelled, but fail to deliver significant parts of what they set out to achieve. Only one third of the projects achieve most of their strategic goals, but many still incur several budget upgrades and time overruns.
Why is this pattern of failure repeated over and over again?
In general, the original purpose is lost somewhere between the scope creep #2 and #3, and thereafter technology becomes an end in itself, and not a means to achieve a business outcome. There is an admirable drive to digitization underway – but does it suit the purpose of all businesses in all locations? You can find comments on Technology Without Purpose is Like a Missile Without a Guidance System on LinkedIn.
This is the part 2 of my earlier post What I Learnt Fighting Pirates (Not in the Caribbean)! (that post was getting too long, so I had to break it into two parts). I asked bosun to send a repelling party to cut the ladder and the scrambling rope, while I sent two other reconnaissance parties to the stern and starboard side of the ship to make sure there were no other boarding parties in the dark. Continue reading
A switched on team of senior management makes all the difference. No matter which part of the world, and how unfamiliar the concepts are – an interactive team will always find how to use ideas for their business. I recently had the pleasure of interacting with the chairman and top management team of one of the most strategic companies in Asia. The healthy discussion and the response proved the power of ideas to me once again. Was also pleased to be presented the Chairman’s award. Thank you. You can see a gist of ideas I presented on my book “The 5 Star Business Network”.
CFOs are not the only ones who underestimate the impact of Supply Chains on modern corporations. CMOs, COOS and even CEOs are not fully aware of the full potential of supply chain management. When the potential is not fully known, expectations are too low and results are even lower. This speech and will show you the impact of Supply Chain Management in Modern Corporations. Here is the video of a keynote speech on Impact of Supply Chain Management in Modern Corporations. To know more about Vivek Sood, make sure to visit the website viveksood.com or Global Supply Chain Group. For any questions or comments, feel free to contact us at firstname.lastname@example.org. You can find comments on Why Executives Underestimate the Impact of Supply Chains? article on LinkedIn.