A Winter Olympics story ….doing a Bradbury

Doing a Bradbury…

“I don’t think I’ll take the medal as the minute and a half of the race I actually won. I’ll take it as the last decade of the hard slog I put in”

Steven Bradbury – Gold Medal Winner 2002 Winter Olympics

With the end of the 2022 Winter Olympics comes a great story from the past.

So, who was Steven Bradbury and why did he become famous?

In 2002 Bradbury was the first athlete from Australia, and also the Southern Hemisphere to win a Winter Olympic Gold Medal. He was a former short track speed skater, a four-time Olympian and was also a member of the short track relay team that won Australia’s first Winter Olympic medal, a Bronze Medal in 1994.

So apart from being the first Australian athlete to win a Winter Olympics Gold Medal what was he famous for?

It was in the manner of his win. Bradbury slipped into the 1,000m speed skating final when two of his competitors in the semi-final crashed and another was disqualified. In the final, in the last lap as his competitors jostled for medal positions, Bradbury drifted further and further behind. With just metres from the finish line, a pile-up took out every other skater and avoiding the collision, he glided past to claim the Gold Medal.

His win entered the Australian colloquial vernacular in the phrase “doing a Bradbury” meaning an unexpected or unusual success.

However, there is more to this than chance. Bradbury was from tropical Queensland, not a state conducive to winter sports. He travelled the world, living hand to mouth to complete internationally, and competed in four Winter Olympics. At one stage he needed to borrow $1000 from his parents to repair his car so he could get to training. He supported himself by making skating boots in a home workshop. The years of hard work and training included nearly bleeding to death when a skate blade cut an artery requiring 111 stiches in 1994. Also in 1998, he fractured his vertebrae.

What are the lessons here for business owners and managers?

  • Hard work and sacrifice pay off.

In our logistics business there were times when a key customer left putting the business under pressure. However, with the previous hard work in networking and business development they were quickly replaced. Success can be a matter of luck, but it rarely is.  

  • Having a goal and vision

Bradbury’s goal was to win an Olympic medal on his own. The 2002 Olympics was his last chance. Despite his setbacks he hung in there, even when it looked increasingly unlikely that he would be successful, he succeeded and achieved his goal.

  • Being in the race

Yes, Bradbury’s tactic was to hang in there. This paid off as his rivals slipped, crashed and went spinning wildly across the ice. We had a customer in our logistics business who tendered for a lucrative post office franchise at an Australian airport. He was 5th or 6th in line, and eventually won the tender as his competitors were one by one, disqualified as being unsuitable, for reasons ranging from having a criminal record to no experience.

The Stephen Bradbury saga is a great story that resonates.  

Can you think of some other lessons?

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Eat that frog…

Eat that frog…

‘If it’s your job to eat a frog, it’s best to do it first thing in the morning. And If it’s your job to eat two frogs, it’s best to eat the biggest one first.

Mark Twain – American writer and humourist

When I was growing up in rural Australia, frogs were part of life. Normally they were green tree frogs and could often be found resting inside the overflow of the rainwater tank or in the toilet cistern. As children, we sometimes kept them as pets in a glass tank and fed them insects. However, I was never tempted to eat a green tree frog – although I must admit I have tried frog’s legs in a French restaurant.

How does the metaphor ‘eating a frog’ relate to productivity?

As managers and business owners, we are confronted each day with tasks and the challenge is to prioritise them. We can create a ‘to do list’ and then assign importance to each task:

  • A – most important,
  • B – next most important,
  • C – not important.

Determining what is important is a challenge.

Managerial tasks can be:

  1. Urgent and important – crises, deadline-driven activities, customer issues
  2. Not important and urgent – interruptions such as phone calls and emails, some meetings
  3. Important and not urgent – strategy and planning, building relationships, major projects
  4. Not important and not urgent – activities not beneficial to goals, personal emails, internet browsing.

One of the major problems for me, personally, and when speaking to other business owners, is that we do tasks we like doing rather than the tasks we should be doing. We procrastinate and often avoid the really difficult chores such as dealing with an employee’s performance or visiting a disgruntled customer.

Time is the great equaliser, as you cannot create any more time. Everybody has only 1,440 minutes in a day. The challenge is to manage time to get the best outcomes. The decision-making matrix for time management is a good model to use when determining where your priorities lie and where you should direct your energies to get the best results.

Brian Tracy, in Eat that Frog!, outlines some great ways to stop procrastinating and become more productive. Tracy recommends you tackle the most important task first. Likewise, Kevin Kruse, a best-selling New York Times author, recommends that you identify your most important task (MIT) and tackle it first thing in your working day in 15 Secrets Successful People Know About Time Management. Kevin Kruse says the most productive hours of the day are first two to three hours where your energy and cognitive ability is at its highest. Your mind is clear and uncluttered by the day’s happenings. This tends to be the best time to tackle the task that appears to be the most difficult and insurmountable

By way of comparisons, like Mark Twain, I recommend tackling the hardest task first rather than the most important. That is my frog. While eating your frog may not be the most enjoyable outstanding task, it will energise you to then concentrate on other more important tasks to be completed during the day. These can be prioritised using the 80/20 rule or Pareto Principle.  Having a clear set of goals and a business plan is a good place to start.

For example, I needed to advise a sportswear customer that we would be increasing their rates as they no longer reflected the costs of their new order profile, their contract conditions no longer applied and, because of this, we were losing money. I kept putting off seeing the owner, who was a difficult personality, as I wished to avoid a confrontation – despite this costing the business money. When I finally met the owner, the meeting was less difficult than anticipated and we parted on good terms. Often, when the most difficult task is completed, the rest of the day gets easier and, more importantly, it is not as difficult as first thought. This was certainly the case with the sportswear customer.

How do you manage your time?

Do you have ‘to do’ lists but don’t prioritise your most difficult or important tasks?

What is the best use of your time to achieve your goals and the business’s plans – remembering you only have 1,440 minutes in a day?

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What is the difference between strategy and tactics?

What is the difference between strategy and tactics?

‘Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.’

Sun Tzu

In business we often confuse tactics with strategy. The media refer to some business’ actions as strategies when in fact they are in reality; tactics. For example, with the recent COVID outbreak in Australia, the media referred to hotel quarantine and border closures as strategies when in fact they were tactics in the strategy to stop the spread of the virus.

A tactic is an action or event to achieve a desired outcome.

A strategy is an integrated plan which helps an organisation achieve its objectives.

Tactics are usually designed by middle-level management, whereas top-level management create and implement strategy.

For example, if the strategy of a business is to increase profitable market share (a top-level management action), a tactic could be to increase prices or reduce discounts combined with a marketing campaign (middle level management actions). Tactics often change with the changes in market or economic conditions (the present), whilst strategy remains same for a long period (the future).

If the strategy is wrong, the best tactics in the world will not ensure the strategy is successful. Military conflicts are often good examples where despite sound tactics, a strategy that is wrong will never be achieved. In the Vietnam War, first the French and then the Americans failed due to poor strategy.

A better example is the nasty civil war called ‘the Bush War’ in Rhodesia (now Zimbabwe) from the early 1970s to 1979. In June 1977, Time Magazine reported that “man for man, the Rhodesian army ranks among the world’s finest fighting units“. The Rhodesian military developed a tactic called ‘Fireforce’.

It was a counter-insurgency military tactic using helicopter-borne and parachute infantry to envelop guerillas in the bush before they could flee. The operational assault usually comprised of a first wave of 32 soldiers carried to the scene by three helicopters and a Dakota aircraft, with a command helicopter and a light attack Lynx aircraft in support.  One of the advantages was its flexibility. When contact was made, typically with 6 to 12 insurgents, the 32 soldiers of the Rhodesian Army had immediate superiority on the ground. The tactic quickly yielded an 80–1 kill rate by trapping the guerillas and eliminating them by air and ground fire. However, despite its success measured by the kill ratio, it was not enough to keep the Rhodesians from losing the war, or realising that the war could not be won. KPIs need to measure progress towards an organization, or in this case a government’s strategic goals. Clearly kill ratios, which were also used by the Americans in the Vietnam War were not the right KPIs to meet the strategic goals.

What the Rhodesian Government failed to understand that the ‘bush war’ was political in nature. It was a war for the support of the Rhodesian Africans, not the minority white population. The right-wing government was ill equipped politically to win over the Rhodesian Africans to their side. The government’s budget and efforts were directed to the military side of the war and not the political one. The strategy of stopping majority rule was flawed, politically, morally and geopolitically. Having the best counter insurgency military in the world could not prevent black majority rule.

Also, a minority led white government, not recognised by many countries surrounded by hostile African nation states was never going to prevent guerilla insurgents from entering the country. Furthermore, in the later stages of the war the apartheid government in South Africa withdrew support further isolating the Rhodesian government. There was no plan B until the last year of the war and by then it was too late.

In conclusion, strategy is about choosing the best plan for accomplishing long-term goals of an organisation. Clearly kill ratios, which were also used by the Americans in the Vietnam War were not the right KPIs to meet the strategic goals. Tactics are normally the instant reaction of the organisation, in response to the changing environment whether political or business.

Can you think of examples of where tactics would successful, but the overall strategy failed?

The accompanying table below is a good reference for identifying what is a tactic and what is a strategy.

Basis for ComparisonTacticsStrategy
MeaningA carefully planned action made to achieve a specific objective is Tactics.A long-range blueprint of an organization’s expected image and destination is known as Strategy.
ConceptDetermining how the strategy be executed.An organized set of activities that can lead the company to differentiation.
What is it?ActionAction plan
NaturePreventativeCompetitive
Focus onTaskPurpose
Formulated atMiddle levelTop level
Risk involvedLowHigh
ApproachReactiveProactive
FlexibilityHighNormally less flexible
OrientationPresent circumstancesThe future

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Why do airlines offer cheap seats?

‘I don’t care what you cover the seats with as long as you cover them with assholes’

Eddie Rickenbacker – US aviator

It’s coming up to Christmas and in Australia it’s the summer holiday period. Yes, over the Festive Season unlike our friends in the norther hemisphere, we will enjoy sunshine and summer. Whilst the monthly blog is posted on 21st of the month, in December it is released early. After all, 21st December is very close to Christmas Day.

Summer holidays often means travel and with COVID restrictions lifting, air travel is often ‘front of mind’. Hence the December blog is about air travel

Today, flying as a form of travel is widespread and growing – so we, the general public, are affected by airline pricing. Airline ticket prices are not set and can vary significantly, with some airlines offering flights that seem to be ridiculously cheap.

Why do they do this?

Modern airlines have very sophisticated analytical programs that use yield management or dynamic pricing to maximise the seating capacity of each aircraft, while obtaining the highest price for each seat. As Rickenbacker’s quote implies, seats need to be filled. This is a concept relevant to many businesses, which is little understood. It is called marginal pricing and, if used carefully, can significantly increase a business’s profits.

What is marginal pricing?

Marginal pricing occurs when a business sells a product or service at a price that covers the variable cost of producing it. The marginal cost is the variable cost of producing an additional unit or service. The concept of marginal pricing assumes that the fixed costs and overheads are already covered by earlier sales.

How does marginal pricing work in practice?

With airlines, the marginal costs of getting additional revenue are very low. Once an aircraft takes off, the empty seat is gone forever. It is a perishable commodity and cannot be warehoused or sold on another day. The same can be said for scheduled truck deliveries with spare capacity. The marginal cost of additional passengers is virtually zero. This is why airlines can offer what appears to be drastically discounted fares.

The road industry provides a good example of how this works in practice. For example, the cost of operating a semi-trailer is $1,600 per day including variable costs – fuel, finance, tyres and maintenance, loading and unloading – as well as fixed costs and overheads such as insurance, registration, depot costs and the driver’s salary. This is based on traveling 900km per day and a freight carrying capacity of 22 pallets.

The semi-trailer is loaded with 18 pallets (82% capacity) with initial revenue of $2,160 ($120 per pallet).

•             Fixed costs and overheads: $450 per day

•             Variable costs: $1,050 per day

•             Marginal costs: $5.56 per pallet (loading and unloading a pallet).

With a spare capacity of four pallets, there is an opportunity for the vehicle to fill this capacity by using marginal pricing. The assumption is that no extra variable costs such as fuel and tyres are incurred, and the only additional or marginal cost is the loading and unloading of the additional pallets. According to the concept of marginal pricing, providing the marginal costs of $5.56 per pallet is included, and any additional revenue above this will fall to the bottom line as profit.

This is demonstrated in the following table:

Marginal Pricing of Semi-Trailer Delivery

This example clearly shows that the addition of three pallets loaded onto the vehicle, with revenue of $80.00 per pallet instead of $120.00 per pallet, increases the revenue from $2,160 to $2,400, with profits increasing from $559.92 to $783.24 per day, or 40%.

Within manufacturing, the marginal cost is the variable cost of producing an extra unit of output. Let’s use manufacturing 1,000 wheelbarrows as an example:

•             Variable cost of manufacture is $20.00 per unit

•             Fixed costs are $10.00 per unit

•             Overheads are $5.00 per unit

•             Total cost per unit for a single wheelbarrow is $35.00.

The total cost for 1,000 wheelbarrows is $35,000 (1,000 x $35.00).

However, the cost of manufacturing an additional 500 wheelbarrows is $10,000, as $20.00 per wheelbarrow is the variable cost of production. The manufacturer could sell the additional 500 wheelbarrows at $40.00 each and make a profit of $20.00 per wheelbarrow.

Marginal cost pricing is a valuable tool for businesses, providing an opportunity to increase profits significantly if managed – particularly with unused capacity, such as in a manufacturing plant and in services such as transport.

However, there are dangers in marginal pricing. As a business, you must know and understand your costs – and this includes the cost of the sales staff.

Are there opportunities in your business to increase profits by marginal pricing?

What are the dangers if you decide to implement this strategy?

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As a manager will the ‘cobra effect’ come back to bite you?

“The best way to increase wolves in America, rabbits in Australia, and snakes in India, is to pay a bounty on their scalps. Then every patriot goes to raising them”
— Mark Twain – American author and humourist

As a manager will the Cobra effect come back and bite you?

So, what is the cobra effect?

During the times of British Colonial India in the city of Dehli, government officials were terrified by the large number of venomous cobra snakes in the city and sought to solve the problem.

The solution?

The government offered a bounty for every dead cobra. Initially the strategy was successful as large numbers of snakes were killed. However, some of the enterprising citizens of the city began breeding cobras as a source of income. After a while, the government officials began to realise that there were too many cobra skins being handed in, so the scheme was terminated.

What was the outcome?

The ‘enterprising’ cobra breeders on seeing that their snakes were worthless, set them free. This increased the number of snakes, wriggling, loose, wild and free in the city making the initial problem worse.

In French Colonial Indochina a similar situation occurred in Hanoi. The colonial officials deemed there were too many rats, so a bounty scheme was introduced. Not for dead rats, but for their tails. Before long, the officials noticed the city was full of tail-less rats. The ‘enterprising’ bounty hunters didn’t kill the rats, they just cut off their tails and released them back into the sewers. There they continued to breed which further increased the rat catchers’ income.

In more recent times we have seen another example of the ‘cobra effect’. In the 1980s, the USA provided money, military equipment and support to the Mujahideen insurgents fighting to overthrow the Russian army and the Marxist government in Afghanistan. One of the insurgent leaders was al-Qaeda’s Osama Bin Laden. With the fall of the government, Bin Laden was provided a base from where to plan the 9/11 attacks in 2001. This in turn lead to the US invasion of Afghanistan and the subsequent misery and death that continues to this day.

In conclusion what is the ‘cobra effect’?

It’s an anecdote where a problem’s attempted solution only makes it worse through unintended consequences.

As managers how can we take into account the ‘cobra effect’ in our jobs?

It’s important to remember that there is a section of any group of people who have a tendency to take advantage of a solution that tries to effect how people behave, like breeding cobras or cutting off the tail of rats. This may not be intentional, although it often is. They take short-term advantage of the system, even though it may lead to unintended consequences and more complex problems.

In our logistics business we had a major Australian retailer as a customer. They used our services to manage the opening and stocking of their new flagship store. One of the KPIs for retail store managers was sales per square metre. The ‘whiz kids’ at head office deemed that in-store replenishment storage of stock should be negligible as this reduced the sales per square metre. As a result, insufficient space in the new flagship store was allocated to in-store storage. The result was stock could not be replenished in time by store staff, overall sales decreased, and additional staff were employed to manage stock flows into the store. The new store had to be redesigned and modified. We continued to manage an offsite replenishment warehouse of the retailer until the store was reconfigured. Good for our business, but not for the retailer’s shareholders.

How can you prevent the ‘cobra effect’ on your organisation?

It’s easy to have a bright new idea on paper. First order effects are easy to identify, second and further effects require much deeper consideration and are much harder to identify.

When you have a ‘brilliant idea’, I would recommend you get your best and brighest people together and ask them about the possible ‘cobra effects’ before implementing. An idea can be fine-tuned by spending the time as suggested and hopefully any negative impacts will be minimised.

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Who’s managing the meeting?

Meetings

Who’s managing the meeting?

‘Meetings are indispensable when you don’t want to do anything’

John Kenneth Galbraith – Canadian writer and economist

Each December we send out the monthly management blog early, and not on 21st of the month as is the standard. Here is the December blog:

The quotation by Galbraith sums up what many of us experience with meetings. Are meetings of value and do they contribute to improving the operation of a business?

Value is often an intangible concept. The best place to start when deciding whether to hold a meeting is to calculate the cost of holding a meeting. Using a ‘back of an envelope’ style calculation, add up the costs of salaries and their on-costs in time spent at the meeting, preparing for the meeting and following up post-meeting – as well as travel to and from the meeting and other costs, including meals and accommodation. The cost can be frightening.

Once calculated, determine the outcome of the meeting. For example, if the meeting cost $2,000, did the outcome to the business exceed this amount and warrant holding the meeting? This can give you a benchmark on whether the meeting is worth holding. Never hold a meeting which does not have an agenda that will lead to a clear outcome. The purpose of the meeting must be clear.

I was consulting to a business which held a weekly meeting by telephone, attended by state managers and operations supervisors. The agenda never changed. Literally dozens of key performance indicators (KPIs) were tabled by branch, the managers were often late calling in and took calls on their phones, the meeting chair rarely kept to the agenda, and the length of the meeting varied from 30 to 60 minutes. Action points were rarely completed on time. Furthermore, the business was in financial trouble. Clearly, these meetings were symptoms of what was wrong with the business.

What are the lessons to be learnt from this example?

  1. Tailor the meeting agenda to achieve the desired outcome.
  2. Clearly communicate the aim of the meeting.
  3. Set strict starting times and allocate minimal meeting time for the agenda.
  4. Only invite the right people to the meeting.
  5. Turn mobile phones off.

Meetings can take up to 40% of a manager’s working time – and much of this time is lost in idle banter, people being late, and people using meetings to delay decisions and offload their responsibilities. Meetings are a necessary evil in an organisation, however the number of meetings held and the way they are conducted must be managed with discipline. Otherwise, money is wasted, staff become demotivated, people are not held accountable and little is achieved to meet the organisation’s overall goals. For example, one of my partners in our former business – who was responsible for an operation that was performing poorly – would claim in the management meeting that he would implement a plan of action to rectify performance by a set date. Each month we were given the same story and, unsurprisingly, the performance never improved. This not only affected our profitability but also demotivated others and sent a poor message about accountability.

Most people are motivated when they see things being achieved. Meetings can do this, providing there are strict disciplines imposed on behaviour, procedures and actions while also holding people to account. Performance and outcomes must be measured. Some of the most effective meetings are short stand up 15-minute meetings, where information is disseminated, issues discussed, and time-bounded action points with assigned responsibilities are included.

There are three golden rules for conducting a successive and constructive meeting:

  1. The chair should conduct the meeting in a disciplined and professional manner, keep on track and have a clear aim or desired outcome.
  2. All participants must be prepared, be on time, have a positive attitude and be respectful.
  3. At the end of the meeting, the outcome should be confirmed, action points with deadlines agreed and assigned.

Are meetings in your business meeting these criteria?

How can you minimise the time spent in meetings and the number of meetings, while achieving the desired outcomes for the business?

In conclusion, meetings are good indicators of the health of an organisation. The responsibility of managing and conducting meetings is up to you. They can be vehicles for desired and positive outcomes or, conversely, an opportunity to avoid responsibility and waste everybody’s time and money.

On behalf of the 5-Dimensionz team, we wish you and your families the blessings of Christmas and for a prosperous and wonderful 2021. Due to the COVID-19 pandemic, this year 2020 has been very difficult for many people throughout the world.

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Does your organisation suffer from Komodo Dragon Syndrome?

Does your organisation suffer from Komodo Dragon Syndrome?

“Dragons are creatures of legend, but in a world as fantastic as Indonesia, myths become reality. On a small, 22 mile long island among the thousands of Indonesian isles lives the planet’s only living dragon -the Komodo (Varanus komodoensis)”

Extract from Wild Indonesia

In 1910, in eastern Indonesia on the island of Flores a Dutch colonial administrator, Lieutenant J.K.T. van Steyn van Hensbroek received word of a “land crocodile” living on the nearby island of Komodo. Intrigued, he decided to visit Komodo to investigate. He returned with a photo and a skin. The reptile was not a crocodile, but a large monitor lizard. In 1912, it was recognised as new to science and the first formal description of the lizard was published. It became known as the Komodo Dragon, the world’s largest living lizard.

So, what is Komodo Dragon Syndrome?

Komodo dragons are endemic to eastern Indonesia. They are found only on the northern coast of Flores and on three nearby islands including the island of Komodo. The Komodo Dragon can grow to over 3 metres in length and weigh up to 130 kgs. They are territorial, can run at up to 20 kph, are carnivores and have very sensitive forked tongues that sense prey and food, such as rotting flesh kilometres away. With a powerful tail, large claws and serrated teeth they have a fearsome reputation. Their bite is toxic due to the bacteria in their salvia and glands in their mouth produce a venom that prevents blood clotting and leads to unconsciousness.  Known to occasionally eat humans, they predominantly eat deer and pigs, which they ambush and bite, and wait then for them to succumb to their toxic bite.

No, it’s not about a fierce venomous predatory reptile.

The Dutch had been in Indonesia as a colonial power since the early 17th Century with the establishment of the Dutch East India (VOC) Company in 1602. The VOC was one of the world’s first multi-national companies. By 1800 however, due to mismanagement, corruption and fierce competition from the English East India Company, the VOC was bankrupt and was nationalised by the Dutch state.

The Dutch had been in Indonesia for over 300 years and had not found the Komodo Dragon, the world’s largest and most dangerous lizard. Even Lt van Steyn van Hensbroek, the ‘discoverer’ of the Komodo Dragon who was living on the island of Flores where it also lived, went to the island of Komodo to find it.

This defies explanation.

How could such an animal remain ‘undiscovered’ for so long?

This is what I call Komodo Dragon Syndrome, where the management can be so inward looking that something so obvious can be missed.

Perhaps the Dutch colonial administrators were ostrich managers or were so blinded by their colonial superiority and preconceived ideas that they failed to see what was virtually right under their noses.

The message is, to avoid suffering from Komodo Dragon Syndrome, we as managers need to ask questions, be inquisitive and manage by walking around.

Are you being complacent?

Too comfortable in your position, inward looking and missing the obvious?

Perhaps you have Komodo Dragon Syndrome.

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Do you a have business risk management plan?

16. Example of Risk Matrix V4

Do you a have business risk management plan?

‘The kinds of errors that cause plane crashes are invariably errors of teamwork and communication’

 Malcolm Gladwell – Canadian author and journalist

Being in business is a risk, and it is a challenge for businesses to manage that risk. Risk varies from business to business, from industry to industry and from country to country. Every business will have inherent risks. A business that handles cash, for example, is more susceptible to theft than a quarrying business with stockpiles of raw materials.

What is business risk?

It is an event or situation that has a negative effect on your business. This can range from additional costs caused by the risk to situations that threaten the business itself. Risks can never be completely eliminated. However, they can be managed and controlled.

There are two broad types of risk:

  • internal risks that are primarily related to what happens inside the business
  • external risks where events and actions affect the business from the outside.

As business owners and managers, it is our responsibility to manage business risk. For example, workplace safety is a managerial responsibility and a serious incident can have a substantial negative impact on the business.

How can business risks be identified?

  • The first step is identifying all the risks that could potentially negatively affect the business. Discuss these initially with the management team, dividing them into internal and external risks. For example, in a mining company, external risks could include country or sovereign risk, weather risk, exchange rate risk and economic risk. Internal risks could include operational risk, safety, people, customers, events such as power outages and fire, and reputational risks.
  • The second step, after identifying the risks, is to assess each of the risks. In my experience, the most effective method is to develop a risk matrix where severity or consequence is rated against the likelihood of the event occurring. Effective communication and consultation with the management team and other stakeholders will improve the quality of the risk assessment. For example, involve an expert in IT to help assess the risk of data breaches and system breakdowns.

Risk Management Matrix

  • The third step, after assessing and ranking the risks, is to develop a risk management plan. There is an international standard (IEC/ISO 31010for risk management, which covers identification, analysis, evaluation, monitoring and reviewing risk. This process is very detailed and involves other disciplines such as finance, safety and human resources.

The management of risks falls into four main areas:

  1. Avoidance – eliminate the risk. A good example is decommissioning dangerous machinery.
  2. Reduce – actions that mitigate the risk. In warehousing, where the risks of manual handling injuries are high, place limits on carton weights and have regular ‘toolbox’ safety meetings to reinforce the importance of using equipment safely and reporting heavy or awkward stock items.
  3. Share – transfer, insure or outsource. Some obvious examples include insuring against events such as fire and accidents, and outsourcing transport services to a third party who have managerial expertise in this area.
  4. Retain – accept the risk and have a plan to manage it. In transport, this could include improved selection of drivers, driver training and ensuring vehicles are maintained to the highest standard.

The risk management plan should have the identified risks listed in a risk register. It should include the following:

  1. Responses – actions to mitigate the risk
  2. Contingency plan – plan if mitigation strategy fails
  3. Risk rating – severity, likelihood and residual
  4. Trigger – what is likely to trigger the risk occurring
  5. Owner-manager or person responsible.

Although not all risks can be eliminated – and some risks are inherent in the industry or business – having a plan, monitoring and reviewing the risks regularly, and updating the plan when required is good practice. The collapse of McAleese Transport  is an example of how poor management of mitigating risks can have severe implications on a business and its employees. In conclusion, the risk management plan should include a crisis management plan.

What are the risks in your business?

Can you categorise the risks easily into consequence and likelihood?

Are they in your risk management plan?

A lesson in taking information at face value.

A lesson in taking information at face value.

“Get your facts first, then you can distort them as you please”

Mark Twain – American author and humorist

Many years ago we were staying with some distant relatives in the Orkney Islands. Our visit became a lesson in not taking alleged ‘facts’ at face value.

Over a few drinks we were asked: “Have you heard of the island of St Kilda?”

No.

This sparked our interest as at the time we were living in the Melbourne bayside suburb of St Kilda. The local Australian Rules Football club were called ‘the Saints’ with a saint as their emblem.

Was the suburb named after a Christian saint?

No.

St Kilda is a group of wind swept, isolated and now uninhabited islands in the Outer Hebrides of Scotland. The main island of Hirta, until 1930 had been inhabited for hundreds of years and was a breeding ground for millions of seabirds, from gannets, puffins to fulmars.

It appears that the word St Kilda is derived from the Norse or Vikings ‘sunt kelda’ meaning ‘sweet well water’ and was not named after a Christian saint. I could guarantee that very few if any St Kilda Football Club supporters would know that there was never a saint called St Kilda.

Our relatives gave us a book to read about the history of St Kilda. It was a fascinating story about a group of islanders who had a hunter gatherer lifestyle. During the summer and spring months the men gathered sea birds, collecting them for feathers for pillows and bedding, and oil to sell to the occasional passing ship.  They clambered up and down the 300 or more metre cliffs in bare feet – assisted by large prehensile toes allowing them to climb on the cliffs more easily.

Was the suburb of St Kilda named after the islands of St Kilda?

Not exactly.

In the 1840s a trading ship called ‘The Lady of St Kilda’ was anchored in Melbourne for many months. The area was referred to locally as ‘The St Kilda foreshore.’ Legend has it, that the then Governor La Trobe named the new village St Kilda.

Not from a Saint, or an island but a ship.

However, the ship had a link to the islands of St Kilda. The owner of the ship, Sir Thomas Dyke Acland named the ship to commemorate a visit to the island of St Kilda by his wife, Lydia, in 1810. Acland had named the vessel in honour of Lady Grange, the wife of a Jacobite Noblemen, who in 1734 who was about to reveal her husband’s treachery. She was imprisoned on St Kilda for 17 years. It is hard to imagine how the noblewoman endured years of living alone in extremely primitive conditions in a stone dwelling with an earthen floor, amongst a small local population who spoke no English (the islanders spoke Gaelic) in the island’s harsh climate and lifestyle.

What are the management lessons from the St Kilda story?

As managers we should never accept things at face value as what are believed to be ‘facts’ may not be true. This could affect how we effectively manage the many situations that arise in the course of our managerial responsibilities. Furthermore, it is important to be curious, do your homework and ask questions.  Looking back on my career, at times I certainly have been guilty of not heeding this advice.

If you would like read a book about the history of St Kilda (not the Australian Rules Football Club), the book below is recommended.

“Island on the Edge of the World: The Story of St. Kilda,” by Charles Maclean

Are you chasing field mice or antelopes?

Lion anetlope

Are you chasing field mice or antelopes?

“A lion is fully capable of capturing, killing, and eating a field mouse. But it turns out that the energy required to do so exceeds the caloric content of the mouse itself. So a lion that spent its day hunting and eating field mice would slowly starve to death. A lion can’t live on field mice. A lion needs antelope. Antelope are big animals. They take more speed and strength to capture and kill, and once killed, they provide a feast for the lion and her pride. … So ask yourself at the end of the day, ‘Did I spend today chasing mice or hunting antelope?’”

Newt Gingrich – speaker of US House of Representatives

What is Gingrich’s underlying message?

Certainly, the Pareto Principle or 80/20 rule is implied in this quotation . However, there is another message for managers and business owners here, that is to focus with discipline on the issues that provide the best return for your resources of time, money and expertise. The danger is business failure, as explained by Michael E Gerber in The e-Myth Revisited – Why most small businesses don’t work and what to do about it. This is where a business owner and manager who understands the technical nature of the business but does not understand the business is likely to fail. In summary, they do what they are comfortable in doing and what they know, not what they should be doing.

Jim Collins in his book Good to Great: Why some companies make the leap and others don’t, describes how a ‘culture of discipline’ is evident in successful companies. This begins with disciplined leaders who display empathy, personal humility and intense focus. They do not suffer from ‘I’ strain and rarely appear in the media seeking celebrity. Before purchasing our logistics business, I worked for a privately-owned transport company. In an industry that was known for its larger than life personalities who courted the media, the owner was virtually unknown. He ran a highly successful business which was far more profitable than many of the publicly listed companies in the industry. He was extremely disciplined in strictly adhering to his market niche which enabled higher profits and greater customer service.

In another example of discipline, I managed a large division of a transport business in a large regional centre where the managing director was passionate about truck safety. This involved vehicle journey’s being monitored by on-board computers to prevent speeding, exceeding mandated driving hours and excessive idling as it wastes fuel. If drivers exceeded the speed limit by 5% in a week they were disciplined and if this occurred three times within 12 months the driver was terminated. Like the lion it was targeting the areas that significantly affected the successful operation of the business. Each week the performance of the trucks and drivers was given to me to action. I decided against the advice of my peers to post the results on the drivers‘ notice board.

Did the drivers react negatively to being compared to others as I had been warned would occur?

No.

Instead each week many of the drivers would compare their performance of their vehicles and themselves. Some drivers would personally seek me out to ask if there were problems with their vehicle and why for example their vehicle had appeared to be idling excessively. They became self-disciplined team members who were more accountable and didn’t need to be micro-managed. Fuel economy improved and more importantly our accident record was the best in the business despite having drivers’ company-wide who travelled the most kilometres each week. Within the ‘safety framework’ a culture of freedom and responsibility had developed.

For a business to grow or change in a positive way, the discipline required must be where consistent behaviours align with achieving the organisation’s goals. Note the words – “discipline” and “consistent”. The aim is for consistent productive goal-oriented behaviours to become habits. Habits once formed become entrenched, however they must be right habits and they must align with the organisation’s vision and goals. In the drivers’ example, safety and performance became a habit. With the niche transport company, the discipline was only remaining in its narrow market niche. Both examples required disciplined people acting in a disciplined manner, demonstrating that discipline must start at the top.

Here is another example. I was engaged to undertake a business review by a niche logistics business which had suddenly begun losing money. Determining the prime reason was relatively easy; the business had lost a major customer who had contributed the majority of their previous profits. This was only a symptom of what was wrong. A walk through their numerous warehouses provided some answers. The warehouses were dirty, stock was not in the correct locations and staff were inadequately supervised. Management was focussed on managing day to day crises, were not enforcing operational disciplines, rates had not increased in several years and customer service was inconsistent. Classic chasing field mouse behaviour.

The business review formed the basis of a new business plan. New benchmarks for performance were established and a renewed commitment to improving customer service was implemented. This was underpinned by imposing operational disciplines in the warehouse following consultative meetings with staff. Several managers and supervisors exited the business and a new general manager and senior management team were appointed. In the first year the company made a modest profit. In the second year, profits exceeded expectations, revenue grew through targeted strategic sales in the business’ market niche, prices increased, unprofitable customers were forced from the businesses, a warehouse was closed and new leases with more favourable terms were negotiated. This was a good practical example of what Jim Collins describes in his book, Good to Great: Why some companies make the leap and others don’t; disciplined people – first who; then what, disciplined thought; confronting the brutal facts, and disciplined action; a culture of discipline.

Being a successful business owner, leader and manager requires discipline. Lack of discipline manifests itself physically in examples such as untidy and dirty warehouses, poor telephone manners and uninspiring first impressions.

What are the antelopes you should be hunting in your organisation?

Have you identified the field mice?

Is it clear to others in the business?

Do the antelopes align to your vision, values and goals?

Discipline in the areas of accountability, teamwork, and attention to detail are required. Disciplined leadership is defined by is defined by sound habits, rigour, consistency and routines. A disciplined environment assists in putting both management and employees on their best behaviour leading to improving productivity and profits.