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THATCHER; A LEARNING OPPORTUNITY MISSED?

Three years on from Margaret Thatcher’s passing I am left wondering whether one of the most important lessons from her time as Prime Minister has been missed. To those with right leaning tendencies she appears unable to have ever done wrong while those to the left insist she could do no right.

Right or left, those who do not learn the lessons of history are doomed to repeat them, something politicians of all hues have been doing since she left office and, no doubt will continue to do into the future.

Pic: The Guardian

Pic: The Guardian

Whichever space on the political spectrum your views occupy, there was one thing about Margaret Thatcher and her time as Prime Minister everyone appears to agree on; she polarised views. However the problem with such polarised views, such extremes of adoration and hatred, is that they get in the way of reasonable analysis.

That same thing; reasonable analysis of the available data, should be at the heart of the development of any kind of quality strategy and its absence from the politics of the Thatcher era (and, indeed, since) has seriously undermined the quality of strategy coming from government then and since. Then and now we are served a diet of initiative-led rather than strategy led policy delivery and that can only serve up problems for the future.

To explain what I mean, I will use two of Mrs Thatcher’s flagship policies as examples and explain how delivering them as single initiatives rather than integrating them into longer term strategy has led to some of the problems we face today. I should emphasise that this is a modern-day cross-party problem, not simply a ‘throw-back’ to a bygone era.

The first of those policies was that of allowing social housing tenants to buy their homes. Surely, not a bad thing and, at the time, a very popular initiative. Unfortunately, in implementing the initiative little consideration was given to cause and effect. The policy was not examined in terms of what else needed to happen for it to prove successful in the medium to long-term and hence no strategy integrating the servicing of all requirements was developed. Reasonable analysis was absent.

Cause and effect? Today we have a massive housing crisis in the UK. Social housing stock was sold off and never replaced. Those who purchased their homes in the 80s and 90s have seen the value increase enormously while those now looking for a home either cannot afford their own home or struggle to pay private rents and have little or no hope of ever finding social housing. More over 30s live at home with their parents than at any time in history.

The second policy which seemingly made sense at the time was the wholesale privatisation of energy and utility companies (denationalisation). The thinking was that the State was poor at running them properly and that private companies would do a far better job. The public liked the idea and hundreds of thousands of people bought shares in the newly privatised companies.

Cause and effect? One of the primary responsibilities of the Board of any private company is to their shareholders. Profit is king. Although few have joined the dots from privatisation to where we are today, the result is energy companies seeking profits and customers far from happy with ever-increasing bills. A very popular initiative/policy had failed to look to an inevitable future. Reasonable analysis was absent.

I am not suggesting that either policy was right or wrong. What I am suggesting is that a lack of good strategy, of analysis of cause and effect on future generations and national need meant that the policy/initiative of eighties contributed to the issues of today.

We cannot change the past but we can learn its lessons. Primary among those lessons is the importance of politicians thinking beyond the initiative of now and applying sound long-term strategy to their policies. Had that happened in the eighties the housing crisis might have been averted and household energy bills might be more manageable.

Unfortunately politicians of all parties have continued to put initiative led policy before policy led by sound strategy. They put aside or ignore that reasonable analysis of history’s lessons and of likely cause and effect to which I referred above.

Regardless of your personal political beliefs, perhaps we should agree that the most beneficial legacy left by the Iron Lady would be if our current day and future politicians learned a little more about cause and effect and the value of good strategy.

The lessons are there to be learned if any of them care to look.

 

© Jim Cowan, 2013, 2016

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CAUSING DISRUPTION – A VIABLE STRATEGY?

Not so long ago, I looked at the steel crisis here in the UK and questioned whether China was executing a dedicated ‘Disruption Strategy’ rather than simply ‘dumping’ cheap steel onto the world market?

With steel and, especially, Chinese steel in the news again with the threat it has created to the UK steel industry, I thought I would take a closer look at what exactly a ‘Disruption Strategy’ is and how such strategies, when well executed,  provide a proven, viable way of launching new products into already crowded markets.

disruption1For some, seeking to launch a new or replica version of an existing product into a crowded market might seem like lunacy yet, over the years many companies have managed to do just that by the intelligent application of Disruption Strategy. And how such disruption strategies work should be a lesson to those already occupying space in the crowded market for if they aren’t paying attention it is they who might end up getting squeezed out!

How does the Disruption Strategy work?

Let’s take as our example the Japanese car industry. When firms such as Toyota, Datsun (the original name of today’s Nissan) and Honda wanted to enter US and European markets in the sixties they were faced with a number of challenges. Primary among these challenges were that they were perceived to be already overcrowded markets and that Japanese build quality was thought to be inferior.

In a nutshell, the Japanese manufacturers’ strategy was to attack the ‘discount’ end of the market with lower priced cars that had higher spec as standard than the western competition. This disrupted the accepted ‘norm’ and car buyers, liking the added, higher spec option, slowly started buying the new products. Some of those buyers were from the traditional discount end of the market but some were also people seeing a like for like product with the more expensive, higher specification models they had been purchasing. Gradually, this gained the Japanese a foothold, the big US and European manufacturers happy to concede a little ground at that end of the market to a ‘discount’ brand.

But having conceded that ground they opened the whole market to their new competitor. The market was disrupted and the western ‘big boys’ struggled to recognise what was happening. The Japanese companies slowly started competing higher up the quality/price chain, the western manufacturers conceded more ground although now it was not quite so voluntary but the initial damage had been done.

In the UK, it was British Leyland’s build quality that started to be questioned; “not as good as the Japanese” according the buying public. They couldn’t respond and a slow death began.

Meanwhile the Japanese continued to gradually disrupt the previously accepted way of doing things until they reached a point where market share and their own size allowed them to compete not just as equals but in many cases as superior products. The battle for a significant share of the market had been won.

Today, the Japanese are the world’s largest manufacturer of cars. The British automobile industry has been decimated; the US is still struggling to come to terms with the new reality and European companies like Saab have disappeared. The German auto industry reacted both the fastest and the best and now has a reputation for extremely high build quality which has allowed it to survive and thrive in a market redefined by the Japanese.

Elsewhere, the Korean manufacturers have studied, learned and then employed an almost carbon disruption strategy to that of their Asian neighbours 40+ years ago.

In the last decade or so we have witnessed the ultimate triumph of the disruption strategy which enters at the discount end of a market with its arrival as a luxury brand. Back in the sixties and seventies they would never have believed you had you told them how prestigious Toyota (as Lexus) and Datsun/Nissan (as Infiniti) would be in the 21st century.

 

© Jim Cowan, Cowan Global, 2011, 2016

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HAVE WE MISSED CHINA’S STEEL DISRUPTION STRATEGY?

Recent news has made bleak reading for the UK’s once proud steel industry but, despite political announcements of support, is the real issue being overlooked?

Pic: The Independent

Pic: The Independent

Over recent days and weeks, the UK media has reported on what may prove to be the beginning of the end for the steel industry in this country.

Much of that media commentary has focused on the need for government to do more without reflecting accurately on what more government can do. For despite grand talk from politicians in Westminster and devolved parliaments alike, the fact is that for the three key problems identified by the UK Steel Summit, their hands are tied.

The UK Steel Summit identified high energy costs, restrictions on state aid, and the Chinese dumping steel on the export market below the cost of production as the three key problems. The first two tie the hands of UK politicians due to EU restrictions and policies while the third, although actionable by the World Trade Organisation (WTO) again ties our politicians’ hands because they need Brussels’ consent before they are permitted to act and take the matter to the WTO.

But, has anyone considered that China is not simply dumping cheap, surplus steel on foreign markets but flooding them to a more defined strategic purpose?

Doesn’t it seem strange that a country recognised for its careful planning of industrial growth should make such an apparent ‘school-boy error’ in this sector?

Our politicians appear to have overlooked the possibility that this is a carefully crafted disruption strategy aimed at securing a huge slice of the world steel market. It certainly shows all the hallmark signs of the classic disruption strategy:

  • Come in at the cheaper, lower quality end of the market
  • Flood the market place of your competitors
  • When your competitors vacate the discount end of the market, increase quality but keep prices artificially low
  • And so on until you dominate the market having squeezed your competitors out or restricted them to lower volume niche markets

Unfortunately, as I have pointed out on numerous occasions in the past, the UK’s politicians are woefully inadequate when it comes to strategy, as are the nation’s media judging by the lack of recognition of this inadequacy.

This presents the twin problem of (1) China’s steel market disruption strategy not being recognised until it is too late and, (2) even if it is recognised in time, those tasked with addressing the issue lacking the competence to come up with a credible counter-strategy.

This is a bold, global strategy from the Chinese, a master stroke worthy of admiration from anyone with an appreciation of things strategic. However it must be countered, and countered soon, if we are not going to hand global dominance of this vital market to a single power.

The clock is ticking, and ticking fast.

 

© Jim Cowan, Cowan Global, 2016

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THIS NEW YEAR MAKE THOSE RESOLUTIONS ACTUALLY HAPPEN

Pic: Huffington Post

Pic: Huffington Post

Every year is the same; depending on which survey you read somewhere over 70%, 80% or even 95% of all New Year’s resolutions are doomed to fail. Where will yours stack up in that statistical pile?

Here are a few tips to ensure this year your resolution becomes reality.

Here at Cowan Global we spend our time helping businesses, charities  and other organisations become more successful by helping them be better at strategy. This means not only better at delivering strategy but also, importantly, in establishing challenging but achievable targets to pursue in the first place

And every year, where so many businesses fall short of their potential (and even fail), most of the population follow. Every year people set targets (aka New Year’s resolutions) they have absolutely no chance of achieving.

Key to your being successful in whatever you resolve to do in 2016 is to be smarter when you set your target now. By smarter, I mean SMARTER because it is an acronym you can test your resolution against:

S stands for specific. If you aren’t specific about what you want to achieve how can you honestly know when you have succeeded? “I want to lose weight,” simply won’t cut the mustard; “I want to lose half a stone” will. It is specific so that you know what it is you are setting out to achieve.

M stands for measurable. You need to be able to measure progress or you risk losing motivation. “I want to get fitter,” is a laudable aim but is hard to measure. “I want to be fit enough to run 5km without stopping” puts a measure on it and you can tick off 1, 2, 3 and 4 km as landmarks along the way to help keep you motivated.

A stands for agreed. If you are involving other people, they must all agree or you will fail. Beyond that people have a penchant for setting resolutions they think others will be impressed by instead of setting targets for themselves. Put another way, your resolution must be something that, deep inside, you agree you can and will pursue, you must agree your resolution with yourself! Half-hearted = half-arsed = doomed to fail.

R stands for realistic. You will know people (you might be one of them) who have big, often alcohol driven dreams every December 31st and who wake on 1st January to realise there is no way on God’s earth they will achieve their resolution and it bites the dust before it sees its first sunset. Unrealistic can mean plain crazy (eg I’m going to swim the Atlantic using butterfly) or ill-conceived such as committing to hit the gym for two hours every day when you know that work and family commitments will make one hour every other day far more realistic.

T stands for time-phased. In short; give yourself a deadline and, if it is a large undertaking, give yourself some time-phased check points along the way. So, if you are going to run to the top of Mount Kilimanjaro for charity it might be wise to have some progressive targets along the way as you prepare.

E stands for exciting. Does achieving your resolution excite you? If yes, great; if no, bin it and get another because if you aren’t excited by it now the further we get into 2016 the less you will be motivated to achieve it and that will lead to only one thing – failure.

R stands for recorded. Not just a record for yourself but a public record to which you agree to be accountable. This might be as simple telling your friends you are going to raise over £1000 for your favourite charity or it might be sharing your progress towards fitness, weight loss, giving up smoking or whatever else on a public blog. By recording what your resolution is you make yourself accountable for its success or its failure.

Whatever your resolution, good luck in achieving it. Have a great time on New Year’s Eve; see you the other side!

© Jim Cowan, December 2015

If you are looking for a challenge to make your aim for 2016, one which will test you, help get you fitter and help others, why not join me in doing the Rio 3 Peaks Challenge in November?

There’s plenty of time to get fit, raise funds and in doing so you will be helping Street Child United continue their fight against child homelessness.