Red Zebra Business Centre - Management Memos
July 2011 Making Measurably More For Your Business Since 1985! Page 1
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Debate Suggests the Need to Reinvent Your Business. Often!

Max Williams, Principal Consultant

So much is being said about the poor state of the economy - especially in retail - that you might think we were having a recession. Despite the 'two speed economy' mentality, sales are still being made. What's happening?  

There is considerable debate about many aspects of the current economic situation. Not that it's very surprising. It is always on for discussion. Things are changing!

The 'big thing' a few months ago was the effect of internet sales on retail. On the figures, it looks like the share of total retail going to overseas internet stores is not so great.

The 'next big thing' has been the so-called carbon tax. Again, on the face of it, the effects don't figure out to be all that great.

But these things represent change. And change is going on around us all the time. We need to look very carefully at what is changing, and develop a measured response to it.

Change or die!

Now, there is another set of changes on foot. On-line purchasing is increasing at a rate not previously seen in Australia and New Zealand.

The first outcry from big retail was to apply the GST to internet purchased imports using a much lower threshold. It was, quite simply, an attempt to thwart those consumers who prefer to buy on line. You don't win friends by trying to thwart consumers' desires! Do you?

The outcome of that campaign was a humiliating back-down by 'big retail'. All the players have now decided that joining in is the only way forward, and they are all heading on-line. 'People Power' in action!

Responding to this change, McNicol Williams is (during July) about to launch a new platform which enables smaller businesses to add the internet dimension to their retail mix.

The catch cry of the industry is "The New Age of Retailing" - sometimes put as "Retailing in the Internet Age".

All of these things are about re-inventing the business. That's tough, when you have put so much effort into making your business into what it is.

Nothing lasts forever, and continually reinventing your business is one of the costs of being in business.

As Tom Peters said, and this is referred in the main article:

"Cannibalize yourself as quickly as you can.  i.e.. Now!"




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Don't Improve

S

ometimes we say it's easier to improve a thousand things by 1%, than to improve one thing by 1,000%. That might be true. The real question we should ask is, "Should we spend time and resources on improving anything, when there might be a completely new, and better way?"


So, Why would you try to Improve?

In a very old article - way back in the year 2000 - Dr  Michael Milgate  (see more about him and his blogs at http://drmichaelonmarketing.blogspot.com) claimed:

"Improvement is overrated, because it can be a barrier to innovation.  Market success is more often the result of strategic innovation, which comes from conceptual thinking".

Tom Peters, (famous for "The Pursuit of Excellence"), in his later book "The Circle of Innovation" puts it very sharply: ... "Cannibalize yourself as quickly as you can.  i.e.. Now!" ...

In other words, while you are trying to improve what you do, every one else in your industry is trying to do the same thing.  And they won't succeed either, because someone outside your industry is trying to destroy all of you with something new.

The message is clear.  Doing better what you already do is  the way to lock yourself into the past, and so become irrelevant.  Not that there is anything wrong with continuous improvement.  It is essential of course.  But only to stay alive for now.  Don't spend too much effort on it, because the future depends on reinventing your business.  Being Different.

As Milgate continues, "there is much you can do to improve people's ability to re-conceive the business... You can get them to look and learn outside the boundaries of their industry.... the only time you learn is when you talk to people who have a different experience base than you do... You can also bring new voices into your strategy process."

In this article, Milgate cites an example where a hotel client sighed, shook his head, and said "Michael you just don't know the hotel business."  Milgate's response was "I know, and not being in the hotel industry gives me a competitive advantage".

[Having an interested third party who is not involved in your business is a very useful way to harness this kind of competitive advantage for you.  Especially when the interested party is McNicol Williams, with a program like the Red Zebra, that will help you reinvent the way you deal with your market place.]

Sign of the Times?

A couple of months ago, the Federal Treasurer Wayne Swan referred to Australia's economy as a "two speed" economy. Since the release of the May Budget, Mr Swan has replaced the "two-speed" terminology and now refers to Australia's "patchwork economy." An analogy that suggests that things are all over the place.

Sign of the Times? (more)

Certainly the retail sector is hurting with no signs for improvement any time soon.

Dun & Bradstreet CEO Christine Christian believes that consumer deleveraging is becoming an entrenched trend, primarily impacting retailers but also flowing through to the wholesale and manufacturing industries.

"Heavy discounting by retailers does not appear to be dissuading consumers from paying down their debt and increasing their savings", said Ms Christian.

An analysis of research presented by the Parliamentary Library in Canberra shows there were 528,669 small businesses employing one to four staff just before the 2007 election. Just before last year's election, the number of those businesses fell to 497,141.

That meant 31,528 of the smaller operators closed their doors, shutting down from 30,000 to 126,000 employment opportunities.

After the Budget, Ken Phillips, director of the Independent Contractors of Australia, which says it represents 1.1 million small business operators, accused the Government of "moving to destroy independent contractors".

Analysis of the Parliamentary Library research shows there was an increase in the number of micro enterprises in only 13 of the 150 House of Representatives seats, meaning there were falls in more than 90 per cent of electorates.

The federal seat of Brisbane lost 1040 small businesses employing one to four staff. Opposition Leader Tony Abbott's seat of Warringah lost 950. North Sydney, held by shadow treasurer Joe Hockey, lost 747 micro businesses.

With the Australian dollar at record highs we can expect consumers to continue the trend of purchasing goods online, with local tourism and hospitality industries continuing to suffer.

According to the Australian Chamber of Commerce and Industry (ACCI), director of economics and industry policy Greg Evans, the short-term prognosis for small businesses is not good.

Small business operators point to red tape that hampers their ability to employ people without risk of "being fined."

In order to "kick start" these struggling sectors, might we see a return to the topic that some dare not broach, industrial relations reform?



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