Happy New Year.
As a follow on from my review of 2011, posted on 26th December let’s take a peek at 2012. (The second year of the second extraordinary decade of the 21st century). Let me first restate the disclaimers. I am not, fortunately, an economist or financial guru. I don’t have a crystal ball, and I am not on the world stage. I am just an ordinary person with bucket loads of positivity and an upbeat outlook. All this qualifies me to give a commentary that has as much credibility as the experts who have failed miserably over the past four years to predict the near or longer term future. The future can’t be foretold, despite some “Gurus” claiming to be right in hindsight.

The world economy will stabilise if the politicians finally accept that their egos are less important than the welfare of the people that elected them. The Irish situation is a great example of how protagonists and idealists can change their views for the good of their people. In 2007 after a long, bloody and protracted civil war in Ireland, the Shin Fein leader, Gerry Adams, and the DUP leader, Ian Paisley agreed to a power sharing arrangement and the war was over.

To quote Michael Pascoe in the Sunday Age of 1st January 2012 – “Predictions of global doom ignore our ability to react to trouble”. I believe that Europe and the USA will stabilise, although they will still be without real growth for a while. This is still a big step in the right direction. China will still grow at between 7 and 8% real GDP by channelling their output towards their domestic market, and the rest of Asia, to counter the slow-down in demand from Europe and the USA. The rest of Asia will continue to grow at between 3 and 7 %, giving Asia a rapidly increasing say in world economics. The BRICK sector (Brazil, Russia, India, China and Korea) will increase their economic power in the world, and Europe, Japan the USA and Australia will need to become increasingly smart in developing innovative and leading technologies just to stay relevant. The development of these countries will continue to drive our exports of minerals and keep us afloat.
The Australian dollar will continue to punch above its weight due to our relatively stable and steady performing economy. Australian house prices will be stable due to the strong level of demand and reducing interest rates.

We live in an age where change is the only constant. Technological advances are accelerating exponentially. I understand that, if you take the rate of technology change during the decade of the 90’s as a benchmark, then the 10 years since 2000 have seen a tenfold increase in technology, and the 10 years from 2010 is predicted to increase 100 times! This will bring changes in 2012 that will accelerate the reshaping of the way we live. The International news media will be hard pressed to keep up with “live” audio visual smart phone transmissions from every corner of the world, and “instant person to person” communication will mean that we can’t do anything too risky as we will be found out!

The retail sector will have to provide on-line shopping to its customers or their business will fail in increasing numbers. Manufacturing must find value adds that secure the future of their domestic business, and find international customers in an increasingly global world economy.

The federal and Queensland governments will change during the year which has the prospect of stemming the traditional overspending and poor fiscal management of the current and past Labour governments.

There will be an increasing recognition by Australians that we have a standard of living that we don’t earn/deserve and this will start to change our living habits towards a more sustainable future.

The importance of oil, which has driven many of the world’s conflicts over the past three decades, will decline as we embrace more renewable energy sources.

This is why I have a positive outlook for 2012, with exceptional opportunities available to those of us who look for them and act courageously in an atmosphere of gloom that is a common everyday theme. To quote Chris Berg in his Opinion piece in today’s Sunday Age (worth reading) – “Yes, the Euro is stuffed and China might sneeze. Both would be bad. But there is still every reason to be optimistic”.

I wish everyone a Happy New Year and a safe and satisfying 2012.

I have decided to depart from my usual themes and take the opportunity to review 2011 – a most unusual and special year.

First the disclaimers. I am not, fortunately, an economist or financial guru. I don’t have a crystal ball, and I am not on the world stage. I am just an ordinary person with bucket loads of positivity and an upbeat outlook. All this qualifies me to give a commentary that has as much credibility as the experts who have failed miserably over the past four years to predict the near or longer term future. They have found that the past is increasingly unreliable as a predictor of the future.

2011 in brief review.  The world entered a period of financial and economic turmoil that most of us hoped would never occur again after the GFC (Great Frock Crisis) of 2007/2008. The European Market went into a tailspin, with Greece leading the race to the economic bottom, followed by Italy and Spain. Germany and France have tried, so far unsuccessfully, to hold the Euro Block together.  The world stock markets gyrate on a daily basis reacting to rumours, hope, despair and every other factual and fanciful whim of the day or even the hour. At the same time the USA has failed to recover from its GFC nose dive and is being stifled by a broadly unpopular and increasingly dysfunctional congress. All this brought about, supposedly, by greed and egos!

On the positive side China overtook Japan as the world’s second largest economy, and still powered forward at 8% plus real GDP growth off an increasingly large base. The rest of Asia continues to grow strongly and will lead the world in the next decade.

Australia has weathered the storm thanks in part to the strong demand for our mineral wealth. The politicians of course claim that they have saved the day! What rubbish. The labour government has not only spent the $20 Billion plus surplus they inherited from the previous government, but have racked up a record debt level for the country having spent recklessly over the past four years. The growth in employment has been mostly in the government sector. My understanding is that over 50% of the Australian workforce is employed by Government or quasi Government. I would love to get the facts on this one!  Manufacturing was again the sacrificial lamb due partly to the parity plus Australian dollar, government policy, the minority supported and overly powerful unions, and the world of free trade zones and burgeoning Asian countries – take your pick on the order of impact. Agriculture took a beating through nature’s fury – floods and extreme weather events. Our dollar will continue to be close to parity as a result of continuing higher that rest ofthe world interest rates and our relatively strong economy.

All a bit depressing.

We have further embraced social media as a way of communicating – Twitter, Facebook, Linked-In and others. Some are predicting the
demise of e-mail. The smart phone has experienced a surge in popularity and the I-pad and many other touch pads are becoming pervasive. Survival without technology is no longer an option!

Despite this Melbourne was again voted the most liveable city in the world, our citizens saved more, but retail and housing suffered, and we continue to enjoy a standard of living that we don’t deserve. On balance I can’t think of anywhere else in the world I would rather live.

4. The fourth on the top ten blockers list of reasons why implementation fails.

Let’s start the new financial year with one of the most important and simple ways that you can get more done, more effectively, and at a controlled pace.

Number 4.

The five most important items we need to do first at any point in time

It is human nature for us to do the things that we like and enjoy first, even if they are not the most important, or even in our prioity list.

I believe it is important to for us to work out the five most important things we should do with our time on a daily basis. This way, we should be able to start moving towards the important but not urgent category and away from the unimportant and not urgent - the things that we like doing. This means that we are not using our time most effectively. Once we complete the important things, then we will have time to complete the less important, not urgent items on our list. This will give us a fighting chance of using our time wisely - what we don’t use we lose!

H. G. Wells created a time machine in his book, “The Time Machine”. First published in 1895.  The book is a parody of English class division and a satirical warning that human progress is not inevitable. Nobody seems to have been able to discover where he hid the plans for his magnificent machine, so we are not yet able to move at will within this dimension!

If we decide on the five most important things that we have to do every day that will lead us to the five most important outcomes that we wish to achieve in any defined time frame, then we will achieve much more with less stress. I will make this the subject of my next blog as a break from the top ten.

Why do Strategic Plans fail to be implemented?

I need to put my current blog series on Blockers into context and to update my post of March 2010. To do this I need to share with you in more detail what I believe are some of the key reasons why the best laid plans are never implemented.

The ten most common “Blockers” that I come across are listed below. There are of course more that are often specific to a particular business, and I welcome any input from my readers that will broaden this issue.

1.    The “Hat Trick” — wearing the wrong or inappropriate organisational “hat” for the current occasion(eg. getting your way by inappropriately using your power base)
2.   SOFT (Music) Strategic, Operational, Financial, and Timely — the three-legged stool;   (direction and desired outcomes not known to all people who need to know them to do their jobs well)
3.   Opportunity Cost of Time —( lack of effective prioritising - doing what is least important first)
4.   No Hi-Fives -( lack of focus on the five most important things to do each day, week, month and year)
5.    Focus on the (financial) past -(Looking in the rear view miror too much of the time as we move forward)
6.    Wrong products and services -(Trying to sell what the market doesn’t need or want)
7.    No team ownership - (Keeping information to ourselves and not involving others)
8.   W2W2 — the Wrong people, in the Wrong place, at the Wrong time, doing the Wrong thing;- (we need the Right people, in the Right place, at the Right time, doing the Right thing (R2R2))
9.    Poor Communication — one of the greatest performance killers in any organisation
10.   Lack of CASH - (Cash is the whole royal family, not just the King!)
·-     Others specific to the organisation - Your input is encouraged

I will number the Blocker in my posts so that they relate to this list. Please post your comments either as challenges or as additional input.

Remember, a plan without effective implementation is just a plan.  Planning is a “living” process, not a static one.

Number 5. This is the fifth of the ten main reasons that I believe are the primary blockers to strategic implementation.

.

Many companies, possibly even the majority of companies today, still place financial results near the beginning of their meeting agendas, often at item number 1, 2 or 3. This then leads to detailed discussion about the past and leaves too little time for consideration for the future.We can’t do ANYTHING about the past - so why should we spend so much time analysing the past results?  I have been told that the lessons of the past will help us avoid making the same mistake in the future. This is valid when the same set of cicumstances present themselve. Unfortunately the accelerating rate of change means that it is less and less likely that exactly the same circumstances will be in play in the future. Figures only tell part of the story, and we have to remember that hindsight is 20/20 vision. It is vital that we learn the lessons of the past, but remember that the past is increasingly less relevant as a predictor of the future. We need to spend most of our valuable time in our meetings engaged in future think.

Meeting agendas have to be forward-looking.

Finances and financial analysis are an essential element of running a business. They are, however, only a method of recording activity. We now generally recognise that people are our greatest asset.  More and more owners and managing directors of companies have accepted this. The profit and loss accounts have one to two lines to register revenue, and 40 to 50 lines to register expenses. Our greatest asset, our people, only apprear as one or two lines in the expense section of the profit and loss as salaries, wages and related expenses - a negative!  People also only appear as a couple of lines in the liability section of the balance sheet, usually under provisions for leave!  The focus is, therefore, on reducing expenses rather than looking to the future to build the business and to better manage our greatest asset, our people.

Meeting agenda must be more forward-looking an need to include specific people management items. The future of our people is where we must focus our greatest skills and attention.

Number 3. This is the third of the ten greatest reasons why implementation fails.

(Updated 28th May)

The greatest value to us all is our time. Time is the single, most important leveler in life. We have a finite resource of 168 hours per week, 24 hours per day, 60 minutes per hour and 60 seconds per minute, and we have no control over this fourth and essential dimension. The other three dimensions are physical length, width and depth. The time we don’t use effectively, we lose. Unfortunately, we often complete the tasks that we like most first — the things that are often not as important as the things we dislike, or do not want.

We typically complete tasks that are important because somebody believes that they are urgent. It is time we started to think about doing the things that are important before they become urgent, so that “importance”, not “urgent”, becomes the focus. There will always be things that need to be done because they are urgent, but we should strive to keep them in the minority. Often, we complete the tasks that are not urgent and not important, and this is the lowest category into which we should put our very precious time — these are often the things we most like to do.

Too many people underestimate the opportunity cost of their time. It is the one continuum, the one dimension that we have yet to learn to control. We are given 86,400 seconds a day. If we do not use them wisely, we lose them — they do not carry forward in any way. This amounts to 604,800 seconds per week, or 31,536,000 seconds a year! If we put a dollar sign in front of the figures above, we will pay much more attention to the effective use of time issue!

What are you doing to better use this finite, unmanageable resource to get the best outcomes for you and your family?

SOFT (Music)

Strategic, Operational and Financial — the Three-Legged Stool

Number 2. The second in the series on blockers to effective implementation.

Strategic Business Planning is like an excellent song or a three-legged stool. The music, lyrics and vocalist harmonise to produce an effective outcome. Every leg of the three-legged stool is important. Have you ever seen a two-legged stool? Strategic initiatives, objectives and direction must be matched with operational implementation and financial measurement. This is essential from an historic and a future forecasting perspective. These are provided by the integrated One Page Business Plan (1PBP^®) process. What we must do is avoid being caught in a focus on past financial or other history. We must act in the “now” and focus on the future.

Miss one leg of the stool and the strategic initiatives won’t be implemented.

Let me have your thoughts on this.

Merry Christmas everyone and a Happy , Safe and Prosperous New Year.

Brian Birley

Hi there,
I am told that one of the cardinal sins of blogging is to lapse. I am guilty of that sin as I have been offline since mid April - not good!

A lot has happened in the last six months, and we are now living our dream that started with a plan 15 years ago when we decided that one day we would like to spend significant amounts of time on a boat. We have been a boating family for many years and in the past 8 years have been into larger power boats - quite a change for sailors from way back!

In order to achieve our dream we had many steps to take.  The first was to import a suitable boat from Califorian, where we had been visiting twice a year since early 2007. We achieved this by bringing in a twenty year old 55 foot “flush deck” Sea Ranger, now named Sea Gypsy, on a container ship. She is a volume boat with plenty of space. What a project, and one where I could have stopped the project because of seemingly impossible barriers on at least four occasions.  Persistance paid and she is in Williamstown on a jetty - a big change from Canterbury.  We sold our house in Canterbury, Melbourne, settling in June and moved after 26 years there.  Talk about a sea change! 

We have renovated our holiday home near Paynesville at the Gippsland Lakes, moving our good furniture there. This is now our land base where we spend about a third of our time.

Marianne and I took a five week round the world trip mid July to third week of August to mark the major changes to our lifestyle.  We are working on getting our work/life integration balance right and are getting there.

My company, P.A.C.E Corporation Pty Ltd, now in its 24th year - 13 in the current format, is still very much alive and well.  My key staff members are now part of a “virtual” team who run my business, and I have moved most of our communications and systems into “the cloud”.  I am still busy with my three TEC groups and my private strategic planning practice, as well as enjoying my role as Chairman of The Anthony Group of Companies.

 I am back on line and comitted to sending a blog every 3 to 4 weeks.  The series I started in March on the Blockers to successful implementation started with the Hat Trick - right hat on at the right time to get the appropriate result.  This will continue through the remaining blockers. 

I trust that you will find this series interesting and useful and I welcome comments and input.

I look forward to your feedback.

Regards

Brian

Number 1. The first of the ten blockers to implementation.

The “Hat Trick”

As a follow on from my last blog, I will deal with each one of the Blockers in future blogs.

The first blocker, and often the most difficult to control, is the Hat Trick.

One of the greatest difficulties that entrepreneurs, owners or managing directors of companies have is to separate their roles and responsibilities; they wear many hats. These hats include:
• Shareholder (owner)
• Non-Executive Director (superannuation or trust fund)
• Executive Director (of the company)
• Chief Executive Officer/Managing Director (CEO/MD)
• Key executive team member
• Leadership team member
• Workforce (task performance)

Let’s discuss these roles.

Shareholder (owner)
Shareholders are the owners of the companies. They can often misuse their influential and powerful position and assume authority to get their own way. They may also not have clarity in their own objectives. This is a particular problem when the shareholder is also an executive in his or her own organisation. They may have built the company from the ground up and are the entrepreneur or main driving force in the organisation. However, misuse of their ownership status, often to get their own way, can be a complete shut-off for team member engagement. It can also lead to company stagnation when the owner reaches the limit of their capability.

Non-Executive Director
Owners are often non-Executive Directors of one or more companies in a sometimes-complex structure. These non-Executive Directors may have arisen through a recommendation by their external accountant or solicitor. Such entities include superannuation and trust funds. The main drivers for these structures are often tax minimisation and protection of personal assets. Continuous review, reform and change in the tax and company laws can lead to ineffective and costly structures, with the owner of the business being a non-Executive Director in one or more companies in the structure. The role of a non-Executive Director is very different to that of an Executive Director, and lack of understanding can lead to inappropriate behaviour or unrecognised risks.

Executive Director
Any Director of a company has statutory obligations and a duty of care and responsibility to ensure that the company is effectively delivering the shareholders’ expectations. Directors often become involved in management issues, and this can be most confusing for everyone within the organisation.

Key Executive
Key executives are members of the executive team, and are charged with the responsibility of taking the company in the direction of, and towards the achievement of, the goals that have been set in conjunction with the Directors, who act on behalf of the shareholders’ requirements.

Leadership Team
Members of the leadership team may not necessarily be key executives in authority terms, but are vitally important in ensuring that communication is effective within the organisation, and that the workforce is able to move in the right direction. All research and recognised surveys show that the people in the organisation relate most to their immediate team leader; the person to whom they report.

Workforce
The workforce is the people who deliver the products and services to the customer, or manufacture the products and create the services. Essentially, they are the “horse power” of the organisation. Many times I have seen owners being workers and actually doing the jobs that they have employed people to do for them. This is a natural tendency because people are operationally focused. When you become a Key Executive or a Director, you should be spending substantial amounts of time in Strategic Planning and thinking about the future of the organisation, not in looking after yesterday’s problems or doing the work. Easier said than done!

In my next blog I will discuss the next blocker – Strategic, Operational and Financial – the Three Legged Stool.