Poor WW & Coles – Hard Frustrating Unsatisfying!

Spare a moment of sympathy for executives, senior management, C-suite leaders and directors of Woolworths and Coles.

Yes, they get paid well but at what cost?

For decades they have suffered in absence of the wisdom of the ages, best summarized by legendary strategist, Sun Tzu, who said…

“Tactics without strategy is the noise you make before defeat.”

Few people at either Coles or Woollies know what strategy is; many perceive tactics to be strategies.

A flotilla of strategy-qualified executives having spun through the revolving doors of Coles and Woolworths employment, and gone again; in frustration, meeting for coffee after retrenchment, echoing the words of those who have gone before, “It’s getting worse!”

You can only be sympathetic.

The conundrum is that everyone in-charge at both companies are operational A1 players. They know their business. They understand their operations intimately They sweat over very piece of data, every report. Every fact and figure they can gouge. They slave long hours. They grapple with silos, with politics, with hidden personal agenda, with bosses who don’t communicate well and suppress initiative.

Despite their best efforts, customer satisfaction is failing. KPI’s are increasingly hard to meet. Outperforming each other is hard enough, while Aldi continues to happily erode their market share… only slowed down by Metcash’s resistance to adopting blue ocean growth opportunities and FMCG suppliers’ willingness to surrender all their margin.

Where do you go when you’ve got nowhere to go?

Now Coles is abandoned by Westfarmers with Woolworths struggling in the wake of its Big W decay, Masters flop, and other lack-lustre performance outcomes.

Both are blinkered to the reality of their merchandising philosophies and combative relationship with suppliers, and the very stoppable (but not without strategy) flow of shoppers to Aldi.

Do what you always do… Get what you’ve always gotten

It seems incredible, doesn’t it, that the power of the two giants and the operational executive talent is unable to recognise their archaic approach to their problems.

Their resistance to change is formidable. Their unwillingness to accept they are tracing the 19th Century path of the American Rail corporation and the buggy whip industry, they are as resistant to change is News Corps and Fairfax were in the 90’s, they are determined they are doing everything right when they are doing a LOT of things wrong… just like Nokia, Blockbuster, Kodak and others…

When a past CEO of Woolworths warned them to beware of the ABC’s of Corporate Cancer, Arrogance, Bureaucracy and Complacency) their response was to evict him rather than heed his advice!

The Writing is on the wall

Lots of those that know, know! The wisest stakeholders abandon ship and the millennial naive are innocently walking into the web.

Tie will tell if I am right, but anyone reading this, who can observe a trend, may be shaking their head in acknowledgement of these observations.

Poor Woollies. Poor Coles. 😦

Why So Many Huge Companies are Floundering in the Digital Age.

I explain the detailed reasons “why” in my book, “The Four Faces of Marketing” which readers can download below… but summarily, Companies aren’t “good” or “bad” it’s their decision-making leaders that are the important variable!

In larger companies like P&G, Unilever & General Mills, those with operational skills are promoted to strategic positions where they simply don’t have the tools… they are smart, street wise and intuitive, convergent thinkers, but lacking in knowledge and missing the ability to think divergently… They’re like Nokia’s execs, believing, “We did everything right” when they are doing too much wrong… They’re performing “Nero fiddled while Rome burned” management routines… with extraordinary high salaries, and the major shareholders of similar ilk are blind to their shortcomings.

Until these Companies nurture balance in their “Hierarchies of Marketing” they’ll continue to flounder.

Old Warren Buffet really nailed the curse of Corporate Business when he coined the term, “Corporate Cancer” and identified his “ABC’s”… When companies exhibit Arrogance, Bureaucracy and Complacency, they’re either done for, or in for a LOT of pain!

If you’re keen to know more, get my book from http://j.mp/ALLmktg

confused business leaders

Many great executives lose sleep every night wondering “what am I doing wrong?”

CEO evaluation, identify a good CEO

Is your CEO a Time-bomb?

They say, “Cream Rises to the Top”, and generally it does… rancid or not!

How can you determine if the CEO, leading the Company you have your life savings invested in, or who is the employer controlling your professional and financial future, or is the head of the organisation you’re counting on for your security… is adequate for the job?

 

Here’s some symptoms to look out for that are sure give-aways your CEO is NOT up to the job.

 

1. CEO gives employees, investors and stakeholders no idea of the Company’s Mission and Vision statements.

Particularly staff, but everyone who contributes to the business, should understand their “reason for getting out of bed in the morning”. Without direction, how can people apply initiative, work as a team, and contribute top “the cause”? The answer is they can’t, and frustration, boredom, and complacency prosper, becoming the “norm”. For customers, if you say a “the lowest cost air-travel possible, their expectations come in ‘line’ and less customer dissatisfaction & complaints follow, with less costs, less staff pressure, … etc. (you get the picture.)

When CEO’s arrogantly boast profits inherited or experienced due to incidental or fragile circumstances (usually circumstantial) you want to watch out for short term profits that don’t dissipate faster than they came.

 

2. The CEO doesn’t understand the Hierarchies of Marketing.

My favourite quote for this year is borrowed from David Packard, of Hewlett-Packard fame, who said, “marketing is too important to be left to the marketing people”.  He was expressing an understanding of STRATEGIC MARKETING, in a world where OPERATIONAL marketing people are the functional folk who manage our daily marketing activities.

If your CEO doesn’t intimately understand the Hierarchies of Marketing, he’ll be loading his team with operational people delivering clever tactics, but in the absence of a single holistic strategy. Business will be reactive not active, budgets will be way out, production shortfalls and overruns, desperate discounting and high pressure sales drives… pressure, pressure, pressure, cost, cost, cost… while R&D will be minimised, market research will be nominal or “postponed till next financial period, and so on.

In the words so Sun Tzu, “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”

 

3. The CEO doesn’t Thoroughly Understand that Ethical Options are a Huge Business Opportunity and Not the Problem

Social media, the internet and globalisation, and all the communication ramifications have changed the game… It is often said, “Those that don’t observe the mistakes of history are bound to repeat them” and history has proven – so often – that when the “masses” discover contempt from the “elite”, heads role!

There is no reason a corporation can prosper and be immortal… companies don’t fail, its leaders who fail to run them properly who fail.

People want ethics and need satisfaction… it is up to C-level executives to deliver and they will secure customer loyalty. What’s incredible is that innovation using creates blue-ocean opportunities, and companies that deliver always prosper even more so. Imagine if tobacco companies had self-controlled their greed and capitalised on customer goodwill and brand equity? Marlboro was the 7th most popular brand in the world – it COULD have spawned industries! Imagine if building industry had introduced an innovation to replace its asbestos voluntarily at any of the times points since 1918 when it was discovered to be dangerous. Ethical leadership could have created HUGE opportunity in every time this was ratified, in 1933, 1942, 1943, 1947, 1949, 1953, 1955, 1960 and 1964. Ethical leadership would have led to R&D with something better/safer/ newer. They could have “upsold” and avoided the legacy of corporate criminality. Imagine if petrol companies hadn’t bought up and buried alternative energy patents decades ago when they wanted to protect their businesses… So many companies might still exist if their CEO’s had vision through an ethical high-road expressed in Corporate Values.

 

4. The CEO Takes Bonuses and High Salary Regardless of Company Performance

Any CEO who puts personal gain before their Company can’t be trusted to lead. If they don’t have “skin in the game”, a sense of balance, dedication to employees, customers and shareholders before themselves, a higher purpose than personal wealth, beware.

 

4. The CEO Doesn’t Intimately Understand the Importance of Balancing all the Elements of the Marketing Mix.

If your CEO perceives the word, ”Marketing”, to mean sales, selling, promotion, advertising, getting people to buy stuff, marketing communications , and doesn’t recognise the 8 “P’s” of Marketing… you’re doomed.

 

My firm surveyed every Australian IPO over 3 years during the 2000’s and found almost everyone, WITHOUT a Marketing qualification of the Board, experienced a less than issue price per share. EVERY company with Boards inclusive of a marketing qualified board member, had a higher than issue-price market value per share. Not one failure/collapse, was experienced by tertiary qualified marketing representation on the Board.

 

Remember, businesses don’t fail. Brands don’t fail. Products don’t fail… It is Managers, leaders, decision-makers who make wrong decisions who cause failure.

 

What about the future?

November 20, 2013

Many businesses reach the height of their success just before they expire. Why?

Under the operational umbrella, they they have learned rights and wrongs, developed an understanding for their strengths and weaknesses, developed quality networks, and streamlined efficiencies.

Under the strategic umbrella, leadership and management are starved of skills.

Ignorance, being blissful – until things go wrong – remains in tact. Management blames the economy, their workforce, their trade channels, their advertising agencies, even their customers, for their demise.

The truth is they do NOT know what strategy is. They do not have strategic skills. They have not managed, or planned, strategically.

A decent strategic marketing plan protects against an adverse future, in fact it creates a utopian one.

A decent strategic marketing plan understands industry dynamics, capitalises upon competitive circumstances, caters for and creates opportunity in economic change, and prepares an organisation for evolutionary adaption to new market forces.

Life cycle stage analysis is a crucial element of strategic marketing. So is product portfolio management. So is brand portfolio management. So is trend analysis. Tracking change in market and segments alike is mandatory for strategic planning.

I was once told by the CEO of Australia’s biggest software and hardware distributor at the time (with 75% market share), “We write a marketing plan in 3 weeks”. They went broke within 2 years.

I once expressed concern to Australia’s biggest Office Equipment supplier that they needed to think about Strategic Marketing. The Sales Director replied, “Don’t talk to me about ‘marketing’, we just need to get out there and sell!” They collapsed into liquidation 18 months later.

I counselled a company for three years in photographic services and forewarned them of changes to consumer behaviour. Their CEO said, “This company has been going 44 years, and you think you can predict its demise.” Four years later he, and his business, were dead.

National Account managers in FMCG, senior consultants in global consultancies, CEO’s of multi-nationals… all can fall into the trap of mistaking tactics for strategies: Perceiving operational skills as strategic ones, with impressive success camouflaging the absence of outstanding success.

When a business becomes bullet proof, immortal, and self-perpetuating; even then there can be no rest. This is (traditionally) when the smooth talkers, diplomats and bureaucrats – overshadowing the gifted strategic thinker – win Board level roles.

Insightfullness, the ability to see the future with clarity, the skills to determine what factors are relevant, crucial or significant, is not necessarily accompanied by charisma, diplomacy, or graciousness.

It takes a brilliant mind, wisdom of the ages, entrepreneurial spirit and great basic training to lead a company to a dominant future.

This is the aspiration great leaders must envisage and pursue. This is how CEO’s should be assessed and evaluated, and rewarded. For my money, it’s ALL about the future.

[Anyone wanting to know more about strategic planning should go to: http://j.mp/markstrat ]

During my Feb 2012 presentation at the FMCG summit at MGSM in Sydney, I asked the group of about 60, “When did you do your last segmentation study?”.

I was appalled to find only 1 company had undertaken a segmentation study in the past seven years… SEVEN YEARS!!!!!!!! (Less frequent than 3 years is considered intolerable!)

There was once a time when FMCG marketers were recognised as leaders, gurus even, in the execution of marketing science: An FMCG marketer was the herald of super-normal profits, profit maximising decision making, and management leadership.

When segmentation is the most powerful tool in the arsenal of a marketer’s weaponry, and the professional standard slips to such a low, no wonder FMCG companies are crying poor!

But, are their marketing executives to blame? I wonder….

Could it be the declining quality of market research services in Australia has so declined as to undermine the anticipated value, insight or trend identification?

Could it be that senior management is so diluted in marketing training that those who control the purse strings – ignorant of how much they don’t know – simply are not allowing marketing departments sufficient budget for segmentation studies – denying resultant sustainable competitive advantage and brand equity investment?

Could it be that the pure-academic standards in the tertiary education of marketers has simply eroded the passing down of commercially important training and skills to the point where marketing graduates simply are not empowered with proper education in marketing anymore?

I sit, jaw agog, sometimes at the wasteful and poor marketing communications efforts in TV advertising spend and creative, at outdoor ads, online ads and other marketing communications execution that just denies justification, and I wonder… but with the revelation of such poor strategic marketing management helps me understand the woes of the industry and from where they come.