The Whiteark Guide to Strategy & Execution

The key building blocks to guide the process of strategy to execution.

Answering strategic questions will form the basis of the key components to the Company Strategy building block.

•What is your current situation?

•Where do you want to go from here?

•What do you want to accomplish?

•How do you get from where you are today to where you want to be in the future? What are the steps do you need to take?

•What obstacles will you have to overcome? What problems will you have to solve?

•What skills and capability do you require to achieve your strategic objectives?

•What problem does your company seek to solve?

•Why do you believe this problem needs to be addressed?

•Does this problem matter to others?

•What are your offerings to solve this problem?

•What is the nature of your products and services?

•What specific customer/consumer needs are you addressing?

•Who are your ideal/target customers?

•What is your unique selling proposition?

•Are there other comparable offerings in market?

•What differentiates you from your competitors?

In today’s unpredictable environment strategic planning needs to be adaptive.

Covid-19 has been the catalyst for companies to reset their business strategy. In a time of such uncertainty, executive leaders need to be increasingly reliant on adaptive strategies so that they can set long-term goals but still flex with evolving conditions.

Contents of the Guide.

• Key building blocks for strategy to execution

• Considerations for each building block

• Adaptive strategy

• Building block one - market and industry trends

• Building block two - companies strategy

• Building block three - build the plan

• Building block four -manage performance

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Looking for help with your strategy? Reach out.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes. We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. So, if you’re looking to transform, reimagine or upgrade your strategy, then give us a call on 1300 240 047 for an no-obligation conversation.

Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Simplicity

It's a theme for 2021. Companies want to drive simplicity, and many CEOs we are talking to consider this to be a key area of focus. Let’s explore why…

As companies grow, shrink and change, they find themselves more complex. But where does it come from? Ultimately complexity is driven by core business functions: process, policy, systems, operating models, and is fuelled further by unclear decision-making. 

Complexity costs companies’ both money and time – and probably more than you would think. On average, complexity costs companies 23% of their cost base. 

So, given its impact, it makes sense that a key area of focus is to reduce complexity. But how do companies do this successfully?

“Simplicity (noun) is defined as “the quality or condition of being easy to understand or do.” And “the quality or condition of being plain or uncomplicated in form or design.””

The five key steps to reduce complexity in your business:

1. Ask senior leaders to write a list of roadblocks in the organisation

2. Ask staff to ask it they could change one process in the company what would it be 

3. Identity themes (4-5) that would reduce complexity 

4. Identify measures of complexity for 4-5 items and targets to drive simplicity 

5. Start a program of work endorsed by the CEO around driving changes in 4/5 items and celebrate success 

It helps to put things in context, so here are some key areas where we have seen improved simplicity that has directly created a financial benefit:

• Remove unprofitable customers - reprice or remove 

• Remove Unprofitable products - stop selling 

• Remove number products in offering (do we neatly need 214 staplers?)

• Clear delegations driving improved and timely decision making 

• Bill / billing process 

Simplicity is an overused term and not many companies do this well. Ask yourself, is it time to spring clean the cupboards in your business? To remove the clutter, simplify the way you work and operate in order to drive a better customer experience and improved financial outcomes…

Remember the secret is to take a non-emotive view of things - no sacred cows!!

At Whiteark we love helping companies simplify through the 5 Step approach. The impact is beneficial for customers, employees and shareholders alike. 

Download our free guide below to help you analyse your business processes and get started…

James Ciuffetelli and Jo Hands have practical experience in helping companies implement change around simplification, and we have seen the benefits this provided first hand. Get in touch for a no obligation conversation about how you can strategically simplify your business.

Browse more articles about change and transformation.

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Need support in your organisation? Reach out.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.

We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Article by Jo Hands, Co-Founder Whiteark

Measure what matters

So much data, so many reports means we’re not sure what we should measure; inactivity of red metrics…  Metrics not measured against targets. Targets are soft. There are all issues that we hear from our clients. 

It sounds simple - and it is - but measure what matters.

 Be clear on strategy, priorities and key lead indicators for the business. One report with key metrics versus targets and an agreed plan where metrics are not on track. 

Here’s how I work out key metrics:

• Start with a driver tree of what key elements drive value 

• Pick top metrics - no more than 15 than it off work impact the results 

• Ensure there is clear accountabilities of metrics - which executive is responsible?

The report should go out each week with key call outs, and - if over a 4 week period - the metrics are off base, then a remediation plan is required to resolve and rectify issues.

At Whiteark we love helping our clients set up their reporting through:

• Building our driver tree 

• Identifying key metrics 

• Identifying targets and profiles 

• Building robust reporting framework 
  

Measuring what matters sounds simple but not many companies do well.

Do you? 

Want to know more…? Read other articles in this series - click here.

Browse more articles about change and transformation.

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Need support in your organisation? Reach out.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.

We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Article by Jo Hands, Co-Founder Whiteark

Simplification

Simplification... it's the buzz word. But it’s not to be eye rolled, because when done effectively, it can have brilliant (and profitable) outcomes.

The power of simplifying your organisation can:

• Drive improved employee experience

• Drive improved customer experience

• Drive efficiency and better commercial benefits

• Improved governance

• Improved simplification

• …and more

Companies create complexity as they grow, and action is required to change. You don't want to shave around edges, so instead create a set of criteria - and be very clear on what must change. Then build a program of work around this.

 Ask yourself, does your company have:  

• Too many products

• Too many price points

• A complex labour module

• A complex IT / technology set up

• Governance processes

• Decision processes

It's the time to take a hard line on simplifying your business in order to drive improvement. Download our free guide below to help you analyse your business processes and get started…

James Ciuffetelli and Jo Hands have practical experience in helping companies implement change around simplification, and we have seen the benefits this provided. Get in touch for a no obligation conversation about how you can strategically simplify your business.

Browse more articles about change and transformation.

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Need support in your organisation? Reach out.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.

We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Article by Jo Hands, Co-Founder Whiteark

Perspective...

There are certain things in life that result in an increase in perspective. It's normally something unpleasant.

So does it take something unpleasant to happen to you or someone you love in order to create perspective? Perhaps. 

The reality is, your newfound perspective needs to be strong enough to drive a change in behaviour. And this newfound behaviour must be consistent and enduring in order to make long term sustainable change. 

Ask yourself:

• What things in your life have given you perspective? 

• Has it resulted in a behaviour change, and if yes, for how long?   

Our recent shared experience of Covid19 has given everyone perspective (in differing degrees) which has resulted in behavioural changes throughout society.

These ideas have been taken from our podcast episode with Bernard Salt about Building A Better Australia (EP016). 🎧 Tune in to 𝐓𝐡𝐞 𝐂𝐡𝐢𝐞𝐟𝐬 🎧

Let’s explore some emerging thoughts as a result of altered perspectives:

• People are considering career changes

• People are thinking differently about work - and what flexibility means to them

• People are reconsidering overseas trips and business trips 

• People are considering where they live 

• People are considering how they spend there money 

These ideas have been taken from our podcast episode with Bernard Salt about Building A Better Australia (EP016). 🎧 Tune in to 𝐓𝐡𝐞 𝐂𝐡𝐢𝐞𝐟𝐬 🎧

This disruption has triggered major changes in the way people think and operate, and has resulted in a number of trends:

• A push for flexibility or people are changing jobs 

• Remote working: Living regionally,  working CBD 

• People changing jobs with a major challenge around War On Talent

These ideas have been taken from our podcast episode with Bernard Salt about Building A Better Australia (EP016). 🎧 Tune in to 𝐓𝐡𝐞 𝐂𝐡𝐢𝐞𝐟𝐬 🎧

So, what does this mean for organisations and leaders?

• Acquiring and retaining talent is more difficult 

• Policies around flexibility are critical 

• Building connection with team members will result in better retention 

• Leaders need to tweak their style as a result of hybrid working and find something that works for teams and organisation

• Executives need to proactively manage their people - creating a great place to work, with flexibility and opportunity and ensure attract and retain top talent . Having a clear people plan and communications will be critical

• Building a way to measure productive work is really important that moves from hours to time to be productive 

Leaders need to pivot to be relevant, right now.  How are you pivoting your style to be relevant?

Need some inspiration? Reach out to us for a no obligation conversation today.

Browse more articles about change and transformation.

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Need support in your organisation? Reach out.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.

We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Article by Jo Hands, Co-Founder Whiteark

How to effectively navigate change...

Change isn't easy. Most people resist it. Most people find a way or an excuse not to change. It's human nature. 

But change is inevitable and for high performing companies a must. So as a leader you need to determine how to navigate change…

Five key tips:

1. Make a case for change - the 'why'

2. Get Executive buy-in / sponsorship 

3. Build a champion network to drive change 

4. Set goals and measure success 

5. Communicate, communicate, communicate 

When you start change program, you will have naysayers - people who say it's not going to work, we have tried this before, it's not worth the effort. You need to push through and show them all you can make change - showing activity and outcome is critical. 

The culture of an organisation will determine how hard it is to drive change - and therefore doing some change around culture is critical.

There are so many things you can do to drive culture improvement but the most important is to have the right leaders. If you don't have the right leadership team, you will likely fail - and so your job is to get the right people in your team to run and manage the teams.

Change is required  - having a team that proactively manages change will give you the best outcome. 

Be bold, ignore the naysayers and make change.

Browse more articles about change and transformation.

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Need support in your organisation? Reach out.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.

We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Article by Jo Hands, Co-Founder Whiteark

Will Covid-19 make or break you?

We have had a year of ambiguity and we will never go back to ‘normal’ for some industries and companies this has meant growth / opportunities and for others it has been meant something quite different.

Regardless of how I have been impacted professionally; everyone has been impacted personally.  This experience could have been positive or not so much. 

However I believe we are in the fork in the road…which path are you going to take?

We are now in May 2021 and you need to be clear is Covid19 going to make or break you?

What we know:

• The world has changed

• Companies have changed

• Households have changed

• How we think about work/life has changed

• A lot has changed

• We are not going back to ‘normal’

• There is ambiguity

• Consumer/Customer expectations have changed

How we respond?

Our initial response is survival – what do we need to do to survive Covid19 – personally and professionally.  The focus was on being able to survive and working out how to work with teams remotely. 

The response then shifted to thrive – how do to create opportunity. Restaurants moved to delivery, takeaway and industries and businesses pivoted.  Looking for opportunities to capitalise/optimise the business.

We are now living with ambiguity but businesses need to start revisiting its strategy, priorities and operations to ensure it is maximising its results.  We don’t have all the answers, we don’t know what normal is but continuing to move forward, make decisions and pivoting on changes is critical.

Key things to ensure you consider:

1. Customer/consumer expectations & how this has changed. Use data to validate.

2. Do you need to rethink your supply chain, suppliers and how you source your key services/goods?

3. How can you make your operations more cost effective?

4. Do you need to rethink your talent strategy – what do you need to own, what can be outsource/partnering  

5. Measuring what matters and report regularly so changes can be made?

6. How do we maximise the cash flow of the business? Focus on short term and long-term initiatives to drive improvement in cashflow

7. Revisiting investments to ensure it supports new priorities reviewing investments to ensure it supports new priorities and ensure aligned return on investment.

As a leader in an organisation it’s imperative that you take decisive action to ensure you set up your business for success.  Running scenario analysis and understanding the ‘what if’ are important to understand how you will pivot if something changes.

It’s a chance to relook at priorities, operating model and how you measure success for your business.  It’s the chance to show strong leadership with your organisation and team and ensure it maximise it chance for success.

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Need support in your organisation? Reach out.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.

We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Article by Jo Hands, Co-Founder Whiteark

Preparing Your Business for Sale

The Guide to Getting Your Business Ready for Sale

To maximise the value of your business on exit it’s imperative that you commence strategic planning work at least 18 months to 2 years out from sale.

Key elements that need to be considered in your strategic plan include:

Key Business Drivers

• Understand the key drivers of the business. 

• Identify which of the drivers will have the greatest impact on the business valuation.

Competitive Environment

• How are your products or services positioned in the market?

• Who are your direct and indirect competitors?

• How does your pricing structure compare to the competition?

Global Mergers & Acquisitions

• Review global activity within your industry and understand the trends and key information.

Potential Buyers

• Understand potential companies that could acquire your business.

• What would they consider the most important value drivers?

Our 6-step guide to maximising value…

Key activities to undertake when preparing your exit plan.

Revenue & Margin Analysis

Understand which customers, products and markets generate the most revenue and the have the most attractive margins. This will drive improvements in performance, making your business more profitable and appeal more attractive to buyers.

Growth Plan & Scenario Assessment

Build a financial model that considers multiple scenarios to demonstrate how further profitable growth can be achieved to maximise your future sale value.

Overheads & Profitability

Analyse overheads and reduce fixed costs to enhance profit margins and increase the value of your business.

People

Create incentives for critical employees to remain in the business post the sale, to minimise risk for the buyer and to ensure the business valuation is defensible.

Financial Governance and Reference Books & Controls

Make sure that the business’ financial statements and accounting information is accurate. This will elicit compliance, assurance in numbers and transparency. Buyers like it when business operations run smoothly and efficiently so it is important to document business processes, review controls and update systems to improve the value and desirability of your business.

Data & Documentation

Ensure documentation required for the sale process is readily accessible to allow buyers to complete the due diligence quickly and efficiently. This will reduce risk for the buyer and maximising value for you.

Additional Funding

Top 3 key considerations for requesting additional funding for your business:

1. You have a guaranteed return on investment (ROI): You know if you have more money to invest you will be able to make an appropriate return.

2. Improve Financial Results: Additional investment will increase the revenue and gross margin of the business to cover the fixed costs and generate positive cashflow.

3. Overheads & Profitability: Additional investment / partnership will give the business a competitive advantage through new capability and linkage to the market.

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How Whiteark can help?

With extensive experience working across a range of services, we embed ourselves within companies to drive value, and deliver on key metrics.

Maximise Revenue

o Develop future strategies for way forward
o Understand market opportunities
o Build flexible workforce planning models
o Develop strategy and plans around a Buy and Build model to generate revenue growth
o Data, analytics and diagnostic tools
o Build comprehensive strategies across the business
o Customer experience & optimisation
o Marketing optimisation
o Go-to-market approach
o Pricing and packaging
o Account based marketing model
o Develop key metric reporting, aligning incentives to drive the right outcomes

Optimise Cost Base

o Utilise data, analytics & diagnostics to fully understand opportunities
o Develop strategy and plans around a Buy and Build model to realise operational efficiencies
o Organisational re-design, including outsource options
o Sales resource optimisation, aligned with GTM strategy
o Process review and redesign
o Benchmarking of costs against other industries and similar organisations
o Marketing spend optimisation
o Contract review to drive an improvement in costs
o Activity based costing model developed to understand financial drivers
o Cost optimisation strategies around activity based costing, specific to the business

In addition to the above services, Whiteark can help you secure funding (seed, investment or debt) through our network so reach out to see how we can help you.

Reach out to us today for a no obligation conversation today.

Change isn’t easy, our guide to successfully navigate change

Change is not easy.  There are so many leadership books around change. Leading people through change, the change curve etc stories to tell people, videos to get people engaged and management courses on how to navigate it but change is a strange thing…

There is a natural resistant to change – more often than not people will put up a wall in relation to change – there are so many reasons not to change, to not do thing differently but above all else change takes effort and courageous and most people don’t want to make the extra effort or be courageous enough.

This explains why 70% of organisations fail to executive change.  They have the plan and strategy and it all makes sense but can’t make the change.  This is a major issue, cost and reason for poor financial / commercial outcomes for businesses, so what is the secret?

Strong leadership that explains the why and takes people on the journey to deliver.  A mandate to make change in the organisation is required from the senior leaders / shareholders otherwise it will fail.  Having strong leaders that understand the why and how and work with the team in the trenches to drive champion celebrate and push the change. 

It’s not easy  - it takes tenacity and persistent to continue to make changes to the organisation.  If you are doing it right there will be resistant and push back and barriers for you to keep going – you then know you are on the right track.  Find some people that support the change and can help champion with you to provide support.

Looking Back…

Looking back it’s the time in my career when I have overcome and adversity and made change despite the naysayers that I am most proud of the outcome.  Delivering outcomes for businesses is what I love – making a different to commercial model and financial outcomes is my number 1 passion.  There is such an opportunity to make a difference for businesses especially post COVID but having the courage to do this is critical.

What are the key things you should consider when making change:

• Having support at the senior level for the change

• Being clear on the why and communicating this

• Getting people to see the greater good of the work that needs to get done

• Track and measure the outcome

• Hold people to account

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Looking to reset your own strategic priorities and make some change in your organisation? Let us help.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes. We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Advice for resetting strategic priorities

From a recent poll on LinkedIn, 50% of people responded that resetting strategic priorities was a key focus area for 2021.  It makes sense, 2020 was a very different year to what people had planned. Companies pivoted, reacted, and made decisions that were focused on survival.  Survival mode was the ultimate focus; do we have enough cash in the bank? Can we manage through this period of uncertainty and upheaval and survive to see the new world?

Everyone is excited to see the back of 2020 and focus on the new 2021. We are not back to normal and never will be, but it’s a chance for a clean slate, a chance to reset and a chance for companies to transition from survival to revival.  Resetting your strategic priorities is paramount and will ensure that you set your business up for success. Your employees are looking for leadership, vision, and a roadmap for the future. We have provided 5 key tips to resetting your strategic priorities.

5 Key Tips to Reset your Strategic Priorities

#1
Understand your customer and consumer behaviours

How has COVID changed the behaviour of your customer and consumers?  The purpose of your business is to deliver a product or service to a customer/consumer.  Understanding trends of their behaviours, expectations, wants and needs is critical.  We’ve published a range of articles on the impact of Covid, from reports to industry trends and tips on how to adapt and embrace agility - to get your hands on them, simple search our Thought Leadership articles for ‘Covid’ or click here to explore.

#2
Develop a roadmap focused on targeting the customer and consumer expectations

• A new product/offering

• A new go-to-market model

• A new pricing model

• A new service model

• A new operating model

Move quickly to get the best place in the market.  What do your customers and consumers expect, want, and need and how are you going to pivot your model to give this to them? If you are not sure, do some tests and trials to understand the reaction to some options and what gains the most traction. Explore more here.

#3
Find money to invest

This is the time to invest. If resetting your priorities is critical to ensure your business is successful, then you need to stop other things and find the money to invest for your desired future state.

Cash has been tight for businesses so you need to reassess your priorities and review all expenditure. Just because you have always spent money on something doesn’t mean it’s a good investment. It’s time to look at all expenditure and assess what is required to run the business and what can be repurposed to invest in the future.  The businesses that make this change/pivot will be the most successful. Find out more by watching our ZBB Video on YouTube or reading the Whiteark Zero Based Budgeting Guide here.

#4
Invest in your people

There are two main considerations:

• Do you need additional capability in your business with your change in approach/strategy?

• How do you retain your top talent with development opportunities within the business? Know your talent and maximise the value that the business gets from the talent.

There is a war on talent and it’s a good time to secure exceptional talent for your business. You need to understand your capability gaps and focus on getting the right people in the business to be the subject matter experts. It’s imperative that you focus on recruiting the right talent that you will need for the future, not just what you need today.

Companies spend money on recruitment but don’t invest enough money on development opportunities for their people.  This doesn’t mean formal training but internal development opportunities to work in different areas, work on projects and gain new experiences. It’s time to invest in your top talent to ensure you get the best out of them. Want to explore more? Read our article on The war on talent.

#5
Measure the metrics that matter

It’s true that what gets measured gets done.  Take time to understand the metrics that are aligned with the company’s strategic priorities – lead indicators are critical to ensure that the company is on track.  One scorecard that measures the top 10 metrics that are aligned to the strategic priorities is critical to monitoring your success. You also need to have clear ownership, roles and responsibilities for each metric. Want to explore more? Read our article on What gets measured gets done.

Resetting your Strategic priorities is critical to set your business up for success in 2021. 

Take time to reflect on what is working and what needs to change.  The 5 key focus areas above is a good structure to consider when updating your strategic priorities.

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Looking to reset your own strategic priorities? Let us help.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes. We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Managing Uncertainty: Three Key Strategies

A recent survey by Whiteark found that people in business were more concerned about uncertainty than any other issue.  This is understandable given the shocks of the past year, including extensive, tragic bushfires, the COVID-19 pandemic, an economic recession, and electoral mayhem in our most important ally, USA.

When business executives are confronted by increased uncertainty, many seek to cut costs – both operational and marketing – which is usually not an optimum strategy.

We seem to experience major shocks about once a decade and there are smaller unexpected disruptions more frequently.  I have listed the major such events that I can remember in Appendix 1.  As in 2019-20 there are times when we have to cope with more than one disruptive factor.  Other potential catastrophes and their impacts are listed in Appendix 2.

Can we predict shocks such as these, and so prepare?  If not, how can we survive such shocks?  Why do some companies get stronger during a period of uncertainty?  Before addressing these questions, it important to consider the types of uncertainty that we may encounter.

Types of uncertainty

Reports that say there's -- that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things that we know that we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns, the ones we don't know we don't know.

Donald Rumsfeld (then US Defense Secretary) in February 2002, speaking about the lack of evidence linking the government of Iraq with the supply of weapons of mass destruction to terrorist groups.

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

— Mark Twain

It is a shame that Donald Rumsfeld was not more familiar with Mark Twain’s writing as he may have realised that there are two types of known knowns.  One is true known knowns and the other is fallacious known knowns.  The latter often stems from a false assumption or theory that has become a strong belief (had he known about the latter category, perhaps Rumsfeld may have referred to it as unknown knowns).

Economist Frank Knight, in 1921, defined risk as a quantity which can be measured while uncertainty is not measurable.  That is, we can compute the likelihood of a risk event occurring in a given year (perhaps on the basis of past frequency of occurrence) but uncertainty does not have a known probability distribution.

There may be some factors or events which are impossible to imagine and so these are completely uncertain.  This is most likely because they have never happened before.  They are the “Black Swans” of Nassim Nicholas Taleb or the unknown unknowns of Donald Rumsfeld.   Taleb, in his books Fooled by Randomness and The Black Swan, describes Black Swan events as having three characteristics.  The first is that nothing in the past could have convincingly pointed to its possibility.  Secondly, the event has an extreme impact.  Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the event – retrospectively making it appear to have been predictable even though it wasn’t predicted.  Technological developments can be Black Swans when it comes to long-term forecasting – for example, it would have been very difficult for someone in 1945 to imagine that in less than 60 years  there would be cheap, very small and powerful personal computers with high bandwidth links to billions of others.

There are some events which we know can happen but we don’t know where or when and how severe their impact could be.  These could include extreme weather events (such as hurricane Katrina) and other natural events such as volcanic eruptions, earthquakes, tsunamis, large solar flares, collisions with large meteors or comets.  Then there are disease pandemics and terrorist acts.  While these are highly uncertain, we know they can happen and may be able to take some precautions – such is improving the levee banks for New Orleans, constructing resilient buildings in earthquake prone areas, developing tsunami and volcanic eruption warning systems, and developing new medicines.

Financial markets and consumer markets can also suffer from events which we know can happen, but we can’t predict their timing or likely severity.

Then there are changes which are slow moving and there is little uncertainty about their impact – and yet we take little or no precautionary action.  The only uncertainty is when we will act.  Examples of this type of change are provided in Appendix 3.

Can we predict shocks and so prepare for them?

Yes, we can predict some types of shock and we can have some idea of their likelihood.  The following is from the editorial of The Australian Financial Review of 4 July 2011.

“Imagine this. The year is 2017 and a virulent strain of H5N1 avian flu has jumped from poultry to humans in the crowded southern Chinese city of Guangzhou. The virus quickly spreads across the porous border into Hong Kong, then sweeps rapidly through the rest of Asia. The World Health Organisation declares the outbreak a pandemic as governments around the globe break open their vaccine stockpiles in an effort to protect their citizens from the deadly virus. But the measures taken by health authorities do little to stop the spread of the virus. The pandemic ends up killing more than 50 million people around the world, transport and trade systems grind to a halt, and the global economy tips into a recession more severe than that caused by the financial crisis of 2008-10.”

The 2020 pandemic occurred three years after that posited in this scenario.  It was not avian flu, but a corona virus – although it did transmit from an animal and probably started in China.  As at 30 November 2020, 1.46 million people have died rather than 50 million but 63 million are known to have been infected.  The current global recession is indeed more severe than that of the financial crisis of 2008-10.

The scenario cited by the Financial Review was from an OECD report at the time, which identified and described several other potential shocks.

The current pandemic has been described by some as a one in a hundred year event by reference to the so-called Spanish flu of 2018.  It is not!  There was a deadly flu pandemic in 1957-58 which killed more than a million people worldwide (Asian flu).  The Hong Kong flu pandemic of 1968 also killed more than one million.  In the past 17 years there have two earlier deadly corona viruses – SARS (severe acute respiratory syndrome) in 2003 and MERS (middle east respiratory syndrome) in 2012.  They petered out, but should have served as a warning.

Despite these warnings we were unprepared for the pandemic.  We did not have enough supplies of personal protective equipment and sanitiser.  There had been no pandemic rehearsal for over a decade.

Managing uncertainty means that we should treat how we managed this pandemic as a dress rehearsal and learn from the experience.  There will be another pandemic and it could be soon.

It was possible to predict a severe economic slowdown in 2008-09, but people in power at the time did not want to see the signals.  In mid-2007, I was able to predict the slowdown in Australia and to warn my clients.  I realised that three shocks could occur together in about mid-2008 and that the combined impact would be a significant slowdown.  One was the sub-prime home loan boom in the USA, which was likely to slow their economy when the bubble burst.  Another was the Reserve Bank of Australia’s interest rate policy.  They had been lifting interest rates since 2002 in an effort to quell inflation.  I knew they would go to far and so they did, lifting interest rates in August and November 2007 and in February and March 2008.  By the end of 2004, the proportion of household disposable income which was consumed by interest payments exceeded the 9.7% record set on the eve of the recession of the early 1990’s.  By mid-2007, the burden was 11.7% and yet the Reserve Bank piled on the misery, lifting the burden to 13.3% on the eve of the GFC!  They obviously did not see it coming.  The third predictable impact was associated with the Beijing Olympics in August 2008.  I had visited Beijing in April 2007 and witnessed the huge construction boom as the whole city was reconstructed – not just sporting facilities.  A metro with 500 underground stations, whole villages demolished and replaced with apartment towers – all built using steel made from Australia’s iron ore!  It had to come to a shuddering halt before mid-2008.

The Reserve Bank of Australia did not see the GFC coming, but they were not alone in that.

Legendary US Federal Reserve Chairman Alan Greenspan said in 2008 "I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms”.  He regretted his earlier opposition to regulatory curbs on financial derivatives which left banks facing billions of dollars worth of liabilities.

The danger signs for Australia were there as I have described above, but the experts in charge of monetary policy and financial regulation were oblivious to them.  All it took was good general knowledge and imagination to develop the scenario.  Both of these skills are important in anticipating shocks.

The 2019-20 bushfires were of unprecedented ferocity, but they were predicted long in advance (see Appendix 4).  Adequate preparation was lacking, despite the predictions.

Preparing for uncertainty  

We can prepare for uncertainty by using two techniques: scenarios and peripheral vision.

Scenarios are plausible futures, like those described above for a pandemic and a significant economic slowdown.  They must be accompanied by plans for managing should they eventuate.   Developing a set of scenarios can increase resilience.  The aim is to develop plans which can succeed across a range of scenarios.  We do not attach a likelihood to each scenario because we are dealing with uncertainty but we may be able to discern which scenario is most likely as time goes on, based on a range of indicators.

Peter Schwartz wrote the early guide to scenario development, “The art of the long view” (Currency Doubleday, 1991).  He lists eight steps in the development of scenarios:

1. Identify the focal point or key decision.  This will increase the relevance of the scenarios.

2. Identify the key factors – what will the decision makers need to know when making choices?

3. List the driving forces that influence the key factors.

4. Rank the driving forces by their levels of importance and uncertainty.  This will focus the analysis on issues which are both highly important and uncertain.

5. Select scenario logics – a diverse set of plots spanning the range of plausible outcomes.

6. Fleshing out the scenarios – develop the narratives associated with each scenario.

7. Implications for each scenario – what are the opportunities and vulnerabilities revealed by the scenarios and how should strategy be adapted?

8. Selection of leading indicators and signposts – which can reveal, as time progresses, which  scenario is closest to the course of events as they unfold.

The intended outcome is plans which are robust across a wide range of uncertainty.  The individual scenarios should be rehearsed so that implementation of strategy adaptation is smooth and efficient.

Peripheral vision

The biggest dangers to a company are the ones you don’t see coming.  Understanding these threats – and anticipating opportunities – requires strong peripheral vision.
George S Day and J. H. Schoemaker in “Scanning the Periphery”, Harvard Business Review, November 2005.

Scanning the periphery is all about answering the question “what don’t we know that might matter”.  Often management reports are quite internally focused – on the business and the market in which they operate.  But demographic change, technological change, regulatory change, environmental change, amongst others can cause major disruptions to a business which are not anticipated.

Peripheral vision involves scanning the broad business and social environments for weak signals of potential change and analysing the implications.  This should be a continuous process.  Unfortunately, this activity can be seen as “nice to know” rather than “need to know” and investment in it can be seen as discretionary.  The global financial crisis which emerged in 2008 was not predicted by economists primarily because of groupthink and a failure of imagination.  Perhaps they had not invested enough in scanning the periphery.

Scanning is sometimes referred to as STEEP analysis (Social, Technological, Economic, Environmental, Political) and also has other acronyms such as PESTEL. 

Scanning the periphery differs from scenario analysis in an important way.  Scenarios start with a focus on the key decisions to be made and then identifies and qualifies influential factors.  Scanning starts with the broad business environment and then evaluates how future trends may influence the business.  I recommend that both approaches be employed as they provide complementary insights, which increases preparedness.

How can we survive during a period of uncertainty?

Some organisations lapse into pessimism and crisis mode.  They cut costs across the board, including marketing, and so hand market share to more optimistic competitors.  If the market is shrinking this is devastating and recovery is very difficult.

A study published by Harvard Business Review in March 2010 studied business responses during the three previous recessions to identify the most successful strategies.  It was found that the best performing businesses cut costs mainly by improving operational efficiency rather than by slashing the number of employees.  They also invested in growth. They developed new business opportunities by making significantly greater investments than their rivals in R&D and marketing, and they invested in assets such as plant and machinery to improve productivity.

During the current pandemic and recession governments and some businesses developed near real-time data so that strategy decisions were not based on out-of-date data.  Fortnightly data from the Australian Tax Office on payrolls was used to gauge employment and payrolls, banks provided data on consumer spending via debit and credit card records, the Australian Bureau of Statistics and private agencies conducted more frequent surveys to measure the mood and expectations of consumers and business managers.  Health departments provided daily updates on coronavirus infections.  Mobility data was provided by Google and Apple.

This is also referred to as “fast data”.  It is not only near real time, it is also more granular in respect to location, type of business and consumer demographic.

This regular flow of timely data allowed government economists, health officials, and businesses to adjust forecasts and strategy frequently – to be more agile.

Fast data is essential during periods of uncertainty and our experience in developing information systems over the past year and interpreting fast data will stand us in good stead for the next shock, when it comes.

Can we get stronger during a period of uncertainty?

Harvey Norman sales soared during the pandemic, and so did profits and dividends.  Gerry Harvey said it was the best sales growth he had experienced in 60 years of being in retail. “It started off with freezers and then it went to whitegoods and computers, then to televisions and then to furniture and bedding.  This performance was not by design, but was a consequence of working from home and compulsory cocooning during the pandemic.  Harvey Norman took advantage by strong investment in advertising from the outset.

Other retailers to prosper during the recession have been JB Hi-Fi, Bunnings, Kogan.com, and Temple & Webster.

During the global financial crisis most major brands of vehicles cut advertising investment significantly – because they were pessimistic about recent and expected future new vehicle sales.  One brand kept advertising and so significantly boosted share of voice and market share.  They have held on to that extra share ever since while one of the big brands then, Holden, have now exited the market.  That optimistic brand was Hyundai.

Nassim Nicholas Taleb, of Black Swan fame, recently wrote a book called Antifragile.  The theme is that resilience is not the opposite of fragile.  Something fragile breaks under stress, while something resilient does not: but something which is antifragile gets stronger under stress.  Hyundai during the global financial crisis is a good example of antifragility.

These successes reinforce the findings described in the Harvard Business Review article mentioned above.  Investment in growth during an economic slowdown, while also improving operational efficiency, is the best strategy for prospering during periods of uncertainty.

Key strategies for managing uncertainty

1.     Anticipate.  Use scenarios to construct a set of plausible futures complete with appropriate plans for each.  Rehearse the plans and use peripheral vision to be ready to respond quickly.  

2.     Respond.  A strategy which is a mix of improving operational efficiency and investing in growth through increasing market share or creating new opportunity is needed to survive and prosper during a period of uncertainty.

3.     Monitor and adapt.  Develop a “fast data” capability to increase agility as uncertainty develops, peaks, and ebbs.

Article written by Charlie Nelson, Director Foreseechange

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Looking to prepare and plan for uncertainty? Let us help.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes. We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Appendix

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Appendix 1: disruptive shocks over the past 50 years

This list is intended to illustrate the range of shocks rather than being comprehensive.

Appendix 2: potential disruptive shocks

Every year, the World Economic Forum brings out a risks report.  Prominent on the 2020 list were a cyber attack, extreme weather, natural disasters, and human-made environmental disasters.

In 2020 Australian population growth has slumped due to a fall in net migration.  Could there be a significant decline in fertility to continue slow population growth?  It has been speculated that fertility will fall because young adults will be reluctant to bring children into a world where COVID-19 is still a threat in the short-term and climate change is a threat in the medium-term.  The recession also has the potential to cause a temporary decline in fertility due to concerns about unemployment.  Australia’s fertility has been running at around 1.8 births per woman and other countries such as Italy and Japan have lower fertility of around 1.3.  This topic has been researched by foreseechange and current indications are that a significant decline in fertility for an extended period is unlikely but cannot be ruled out.  This research is ongoing.

Solar flares are a hazard for electronic communications.  The last major disruption was the Carrington event in 1859, in the days of the telegraph.  A huge solar flare followed by a large coronal mass ejection struck Earth and induced huge currents into wires causing extensive and costly damage.  Lesser events struck in 1921 and in 1989, the latter causing a huge blackout in Canada.  In 2012, there was an event of similar magnitude to the 1859 Carrington event which passed through Earth’s orbit – fortunately, the planet was in a different quadrant of its orbit.  A repeat of the Carrington event today would severely disrupt all forms of communication, power transmission, GPS and other navigation, and damage pipelines.  The recovery time has been estimated at four to 10 years and the cost at up to $2 trillion in the first year.

In 1908, a large comet or asteroid caused a major explosion over Siberia (the Tunguska event).  The energy released was up to 1,000 times greater than the atomic bomb dropped on Hiroshima in 1945.  Fortunately the area was sparsely populated, but such an impact on a major city would be catastrophic on an unprecedented scale.

A major volcanic eruption is capable of blocking sunlight over large areas for extended periods, creating severely cold conditions.  This can reduce food production and cause illness, as well as curtailing air travel.  There have been several such events in history and they may happen about once every 1,000 to 2,000 years.

Appendix 3: slow and steady disruptions

There are changes which are slow, but steady and seemingly irrevocable – because we do too little to manage the consequences and risks.  This procrastination has current and future financial and human costs.

One of these is the ageing population, combined with still increasing lifespans.  The baby boom of 1946 to 1964 was followed by a baby bust in the 1970’s as women became more able to control their fertility.  This meant that there would be a large generation reaching the traditional retirement age around 2011, followed by a smaller generation than would have previously been expected.  This future problem was evident before 1980.  The predictable consequences were increased funding to pay age pensions, increased demand for health and aged care facilities, and a need to encourage people aged over 65 to keep working.

In the 1990’s a compulsory superannuation scheme was set up and every other predictable need was also put off.  We have not caught up with the needed infrastructure and services yet and there are too many people over 65 who want to keep working but who cannot secure a job.

Another is climate change.  The countries of the world gathered in Rio di Janeiro in 1992 and agreed to take action to reduce the risk of dangerous climate change.  In the 28 years since, the concentration of carbon dioxide in the atmosphere has continued increasing at the same rate.  Temperatures in Australia and much of the world continue to increase.  Sea levels are increasing at a faster rate.

Appendix 4: predicting extreme bushfire conditions in 2019-20

Twelve years ago, economist Ross Garnaut made a prophecy that has devastatingly come true.

In the 2008 Garnaut Climate Change Review, which examined the scientific evidence around the impacts of climate change on Australia and its economy, he predicted that without adequate action, the nation would face a more frequent and intense fire season by 2020.

ABC News, 8 January 2020

I, too, provided warnings.  In July 2011, I wrote to the Victorian water minister predicting severe drought in the period 2017 to 2022.  The prediction was applicable to much of south eastern Australia.  The reply, In September 2011, said that the driver of drought which I proposed was not considered by mainstream climate scientists to have a plausible mechanism.  The reply said that planning processes are designed to cope with variability including severe drought.

In January 2019, I again wrote to the Victorian water minister saying that my prediction had come true and that it was time my predictions were taken seriously.  I included a copy of the previous correspondence.  It was a different water minister and a government of a different political party, but the reply was almost a carbon copy:  the government works with Australia’s most experienced and respected researchers and planning processes are designed to cope with a wide range of climate futures including prolonged drought.  Only months later the many victims of the terrible bushfires would disagree with that statement!

Twenty-three former fire and emergency leaders say they tried for months to warn Prime Minister Scott Morrison, beginning in April 2019, that Australia needed more water-bombers to tackle bigger, faster and hotter bushfires.  They were not able to get a hearing.

The catastrophic bushfire conditions were caused by both extremely low rainfall and record high temperatures.  This combination of conditions was unprecedented, but predicted.  The charts on the following page show how severe the conditions were in the three years 2017 to 2019. 

Chart 1 shows the annual rainfall in the Murray Darling Basin, along with the rolling three year average.  The average over the period 2017 to 2019 was the lowest ever recorded three year period, consistent with my 2011 prediction.  Chart 2 shows the mean temperature  and the three year average.  The three year average temperature over the period 2017 to 2019 was the highest on record by a huge margin.  Even more severe conditions may be less than 20 years away!

Chart 1

Chart 2

Article written by Charlie Nelson, Director Foreseechange

Guide to Zero Based Budgeting

Zero Based Budgeting (ZBB) is a method of budgeting where all expenses are justified at the beginning of each new budget cycle and all assumptions documented.

So, what exactly is Zero Based Budgeting?

• Budgets are not connected to prior year spend

• Funding is allocated to activities aligned to strategy

• Eliminates sandbagging practices - evenly distributing expense increases/reductions across business units

• Requires comprehensive understanding of activities and cost structure

• Budgets are allocated to necessary business activities and based on the levels of effort required

• Requires analysing and prioritising activities and expenses

The Benefits of Zero Based Budgeting

• Strategic priorities and focus areas can be achieved more successfully under zero-based budgeting

• Business units are forced to link their spend to focus areas/initiatives that support the organisational

• objectives

• The annual review ensures no initiatives continue beyond their productive life

• Efficient allocation of resources, as it is based on needs and benefits

• Identifies and eliminates wastage and out-of-date operations

• Drives managers to design and develop cost-effective techniques for improving processes

• Detects inflated budgets

• Promotes questioning and challenging attitudes

• Increases staff motivation because it gives them more responsibility and the ability to contribute to the

• decision-making process

• Increases communication and coordination within the organisation

The Challenges of Zero Based Budgeting

TIME & RESOURCES

• It is time consuming having to justify each expense in order to arrive at a solid foundation to support the requirement.

• A lot of manpower is required to successfully build a ZBB.

BIAS TOWARDS SHORT-TERM PLANNING

• ZBB can reward short term thinking.

• Can limit investment in growth because short-term benefits may take precedence over long-term planning.

DETAILED KNOWLEDGE

• It is necessary to train managers well as they are ultimately responsible for the management, decision-making and the communication of the entire process.

• Difficulties associated with ranking functions that are qualitative in nature mean there is a risk of cutting non-core costs that support a customer’s or consumer’s experience. This ultimately puts into jeopardy brand value in the long-term.

AWARENESS FOR DETAILS

• As the volume of the required data & forms is very large, no one is capable of knowing every detail of its content and decisions.

• There is a risk to compressing information and details because this might remove critically important data.

BIAS TOWARDS SHORT-TERM PLANNING

• Honesty and consistency of the managers must be reliable and uniform.

• There could be possible manipulation by managers to get more resources into their department.

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How to build a Zero Based Budget in 7 Steps

1. Determine Group Strategic Goals/ Priorities

2. Align investment and initiatives to Group Strategy 

3. Communicate budget process, timeline and expectations

4. Provide key assumptions and templates for each P+L item

5. Create templates for CAPEX, Balance Sheet, Cash Flow, Treasury

6. Document all assumptions and supporting data to refer to during budget reviews

7. Be courageous and curious when reviewing business unit budgets

Need help to build your own Zero Based Budget? Reach out.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes.

We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Measuring transformation success

We know it’s cliché, but “what gets measured, gets managed”. A transformation program is undertaken to enhance an organisations performance and boost its health; it is fundamental to the success of your transformation that you measure your progress along the way.

The following checklist can be used as a guide for measuring the success of your transformation program:

Define Success

Agree on what success is for your transformation program. This is something you would have agreed early in the strategic planning phase.

KPI Scorecard

Define the key metrics that are crucial to evaluating the transformation’s success and build a scorecard. Use a combination of lead and lag indicators and qualitative and quantitative metrics.

Baseline

It is fundamental that you have a baseline for all your metrics prior to commencing your transformation program. This will allow you to understand the true impact the transformation is having on your organisation. You need to be able to see the movement on your scorecard.

Pivot

Incorporating leading indicators will help detect any challenges or risks early on and allow you to pivot in order to influence a more positive result for your transformation’s success.

Frequency

It is critical that your scorecard is refreshed at a reasonable frequency to monitor the movement relative to the effort/changes being executed.

Need to curate your own transformation checklist, specific to your business needs? Let us help.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations. Focused on delivering both commercial and financial outcomes. 

We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Six tips for leading people through change

All companies undergo change, but few execute change successfully.

When leading people through change, the most effective leaders devote substantial effort in engaging everyone involved in the change, and understand that people need time to adapt to the change.

The magic six

There are six key competencies required to successfully lead people through change - communicate, collaborate, commit, support, influence and learn.

Communicate.

Communicate what the change is and the purpose and benefits of the change, this will increase buy-in.

Collaborate.

Bring people together to plan and execute change - encourage employees to break out of their silos and don’t tolerate unhealthy competition. It’s important to include employees in decision-making early on to strengthen their commitment to change.

Commit.

Display resilience, persistence, and willingness to adapt to challenges and remain positive and patient with results.

Support.

Remove barriers to employee success, including personal barriers such as wounded egos and a sense of loss, as well as professional barriers such as the time and resources necessary to carry out a change plan.

Influence.

Influence is about gaining compliance and commitment to drive change. Identify critical stakeholders and define what “buy-in” looks like from each of them to result in leading to a successful outcome. Communicate the vision for the change in a way that resonates with their value drivers.

Learn.

Never assume you have all the answers, ask questions, and gather formal and informal feedback. Input and feedback will allow you to make constant adjustments during the change.

Navigating change is not easy, hence it is critical for leaders of change to be resilient, because it helps people cope with the inherent pressure of change, uncertainty, and any setbacks.

Need to lead your team through change? Let us help.

Focused on delivering both commercial and financial outcomes, we take care of your people to ensure they remain engaged and excited. We understand that when it comes to strategy, execution is actually the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for your business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you, by emailing us on whiteark@whiteark.com.au

The importance of innovation during a pandemic

According to McKinsey, organisations that have focused on innovation during the recovery of a crisis came back 30% stronger than companies who did not. Concentrating on the long term and planning for growth rather than survival will help gain a competitive advantage during the recovery.

The COVID-19 outbreak has impacted nearly every industry; and as the government begins to ease restrictions, companies are exploring ways to recover their losses. During the onset of COVID-19 organisations innovated rapidly with a short-term focus on continuing operations and employee safety. In the recovery phase, companies will require a considerable amount of strategic innovation (growth and change) rather than reactive innovation, to explore future opportunities centered around core business models.

It is key for organisations to innovate with a purpose to increase their likelihood of success for the long term. Companies should focus on growth and gaining an advantage over their competitors. The below framework will help with explore growth strategies.

Assess changing demands and needs of consumers

The recent pandemic has fundamentally changed the way most businesses operate, particularly because of the rapid adoption of digitisation. Companies need to understand the demands and needs of consumers by analysing the new patterns of spending. Once change has been identified, analyse what it means and its impact on your industry and business.

Consider ways to respond

Now that you understand the change in consumer spending patterns, explore ways in which your organisation is equipped to respond. This requires planning for the future, think about the pain points the changing consumer behaviour reveals and task your innovative experts with creating some new products or services to address these customer pain points.

Change your business model

Organisations need to accept that the way that their business operated prior to COVID-19 is history. It is important to identify ways in which your former business model has been permanently changed and then look at ways you can transform these models into new ones to make way for future growth.

Each industry and each company have their own unique challenges and opportunities to explore, so innovation will look different for everyone. One critical enabler to strategic innovation post COVID-19 is technology. Once you identify opportunities to pivot your business model, consider what technologies can help you get there - e-commerce, artificial intelligence, virtual realities, touchless technologies etc.

When considering your innovation strategy, remember to adapt to changing consumer wants, explore new opportunities, and allocate resources towards innovation.

Need to map your way forward through Covid19 and innovate from the inside out? Let us help.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations. Focused on delivering both commercial and financial outcomes. We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

How to ensure your transformation is successful

Getting your transformation right is more important than ever. We are approaching the pointy end of 2020 and it’s time to think strategically and anticipate, and prepare what your business will look when the new normal emerges.

Your company may need to move in a new direction, accelerate product and service innovations, accelerate digitisation across the organisation, reduce expenses and improve efficiencies, or strengthen your competitive position. No matter what the business driver is, they will require a shift from the current state.

Planning and executing a transformation program to realise critical strategic objectives isn’t easy. It’s hard to believe that more than 70% of transformation programs do not successfully deliver what was required. Often, the plan that has been developed is right, it’s when you get into the execution phase that problems start to arise. People in the organisation then start to become cynical, “the last transformation program didn’t deliver the desired results so why would this one be any different”. Renaming the transformation program or allocating a different group of resources doesn’t usually result in the achievement of your desired outcomes.

We provide practical hands-on tips on how to ensure your transformation program is a success:

Lead from the front

Appoint a leader that is to be accountable for the program.  Be sure your leader is prepared to effectively lead people through change, be visible and drive the importance of this program. 

Be clear on what success is

Define what you are going to do, why you will do it, what the benefits of change are, and what the dangers of not changing are. Ensure you get buy-in from key stakeholders who will support the transformation.

Checklist:

• Has a clear vision of the future been articulated and widely accepted?

• Is the rationale for change sensible, clear and sound?

• Are benefits well defined?

• Does the case for change/opportunity outweigh risk?

• Has a clear roadmap been developed and shared to gain input and support?

• Have stakeholders who are critical to the transformation’s success been identified and their personal value drivers learned?

Is it clear how stakeholders will be proactively involved in making the transformation happen, to build their support and maintain their engagement?

Find your champions

Develop a champion network across the organisation to support and drive the program; ensuring key messages and impacts are well understood and accepted. Use this network to do communications, get feedback and help you create a positive momentum in the organisation / team around this program.

Importance of Change Management

Don’t underestimate change management requirements to successfully embed change in the organisation. Change management is a buzz word but the importance of it is critical to ensure the program is a success.  Work out what the team needs to support the change and provide the guidance required to ensure that the change is implemented.

Measure success

Accurately measure and track success. Ensure you are transparent where things are off track and communicate risks and challenges and appropriate mitigation plans.

This framework will guide you through your transformation, but the real power is in the effectiveness of the execution. And that’s where we come in.

Need to ensure that your own business transformation is successful? Let us help.

Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations. Focused on delivering both commercial and financial outcomes. We understand that execution is the hardest part, and we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au

Digital Commerce

According to Gartner, five areas of digital commerce are being transformed due to the effect of Covid-19 on customer behaviours and businesses accelerating their adoption of online and digital alternatives.

1. Contact Purchasing

Contactless purchasing has become a preferred payment. Gartner predicts 80% of ordering and replenishment  will be contactless by 2024.

Customers:

Contactless payments and pickup/delivery

Operations:

Contactless business operations where companies can use robotics, artificial intelligence and computer vision to assist employees across the supply chain

2. Virtual Product Reviews

Currently the adoption of 2D and 3D product previews remains light.

Gartner predicts the uptake  will increase - software vendors offering visual configuration tools have reported a rise in business due to the pandemic.

Virtual Product Reviews may reduce the need for samples and showrooms and enable more customer self-service when buying configurable products.

3. Live Commerce Streaming Services

Live commerce involves video streaming to demonstrate products and interact with shoppers in real time to encourage purchases. Brands that have implemented livestreaming for selling or customer engagement are seeing early signs of success.

4. B2B Buying Experience

Businesses that sell B2B should think about transforming their shopping platform into one that has a more consumer-like feel to gain traction with younger professionals as they will expect a B2C like experience.

5. Enterprise Marketplaces

Enterprise marketplaces are online marketplaces operated by organizations that enable third-party sellers to sell directly to end customers.

Need to make the most of digital commerce trends?

Let us help. To learn more about how to leverage digital trends and pivot your business, contact us on whiteark@whiteark.com.au

How to prepare for sale?

To maximise the value of your business on exit it’s imperative that you commence strategic planning work at least 18 months to 2 years out from sale.

Key elements that need to be considered in your strategic plan include:

Key Business Drivers

Understand the key drivers of the business. 

Identify which of the drivers will have the greatest impact on the business valuation.

Competitive Environment

How are your products or services positioned in the market?

Who are your direct and indirect competitors?

How does your pricing structure compare to the competition?

Potential Buyers

Understand potential companies that could acquire your business.

What would they consider the most important value drivers?

Global Mergers & Acquisitions

Review global activity within your industry and understand the trends and key information.

Our 6-step guide to maximising value…

Key activities to undertake when preparing your exit plan.

Revenue & Margin Analysis

Understand which customers, products and markets generate the most revenue and the have the most attractive margins. This will drive improvements in performance, making your business more profitable and appeal more attractive to buyers.

Growth Plan & Scenario Assessment

Build a financial model that considers multiple scenarios to demonstrate how further profitable growth can be achieved to maximise your future sale value.

Overheads & Profitability

Analyse overheads and reduce fixed costs to enhance profit margins and increase the value of your business.

People

Create incentives for critical employees to remain in the business post the sale, to minimise risk for the buyer and to ensure the business valuation is defensible.

Financial Governance and Reference Books & Controls

Make sure that the business’ financial statements and accounting information is accurate. This will elicit compliance, assurance in numbers and transparency. Buyers like it when business operations run smoothly and efficiently so it is important to document business processes, review controls and update systems to improve the value and desirability of your business.

Data & Documentation

Ensure documentation required for the sale process is readily accessible to allow buyers to complete the due diligence quickly and efficiently. This will reduce risk for the buyer and maximising value for you.

Cashflow is King

It’s not complicated, confusing or easy to manipulate, it doesn’t lie and shows the real health of a business. Even non-accountants understand cash as they all have to manage their personal cashflow – to ensure there is more inflows than outflows and managing the debt levels for the inflows in the household.

When assessing the underlying performance of a business cash is the best indicator to show how the business is performing, how healthy the business is and being able to accurately determine if your business model is viable for the long-term.

Despite the fact that cash is king, everyone understands it, and without it, a business can’t function.  Businesses don’t spend enough time understanding their cashflow to be able to proactively drive improvement in the cashflow of a business.

There are four key things to consider when managing your cashflow:

1. Understanding the past – understanding the activity that drives cash inflow and cash outflow and the timing of these elements

2. Shape your future -

   • Make changes to your business that bring cashflows in earlier (change in payment day terms, utilise credit cards for customers to pay etc)

   • Take an aggressive stance to work with customers that pay you for your services.  Pre-screen customers for credit history to ensure you are not generating revenue with no cashflow

   • Make changes on how to delay cash payments going out the door through utilising credit cards, changing payment terms, negotiating extended terms or move monthly to quarterly, delay purchasing until required

3. Daily cashflow forecasting helps you really manage tightly the cashflow of the business

4. Daily reporting on cashflow drives good discipline and an ability to make quick decisions.  This reporting can show actuals versus forecast.

Making even a small change can make a huge impact on ensuring your business is maximising its cashflow position.

If you want some more advice around maximising your cashflow reach out to Whiteark; we have experience in cashflow improvement.

COVID19 has challenged many companies specifically in how to proactively manage cashflow to be able to stay viable; some tips to consider that might help your business maximise cashflow in this period:

• Ask your customers to pay you as early as possible

• Provide other payment options for customers (credit cards, afterpay etc) so you can get your money sooner

• Negotiate payment terms with key suppliers

• Review expenditure that can be stopped / delayed or deferred

• Utilise credit cards to delay payments to be made; credit cards can be used for majority of transactions and even most suppliers take credit card as well

Need to take a closer look at your cashflow?

Let us help. To learn more about how to make cashflow king in your business, then contact us on whiteark@whiteark.com.au

Resetting Your Digital Strategy

COVID-19 has caused disruption for all businesses across Australia, whether it be positive or negative. One of the impacts that has been positive is that it has sparked digital acceleration for many companies and industries.

Companies have been forced to scramble, improvise, and embrace new ways of operating within weeks instead of what would normally take years. It is now clearer than ever that our future is digital. The key enabler for this acceleration in digital adoption is the increased connection to technology for businesses and consumers.

It is now time to reset your digital strategy for post COVID and explore new opportunities that a time of immense change inevitably elicits. You should review things that have worked well for you during the pandemic and avoid regressing to former ways of operating.

Below are 5 areas you should focus on when revisiting your digital strategy:

1. Priorities

2. Customer

3. Innovative Ideas

4. Digital Roadmap

5. Increasing Focus and Agility

Priorities

Have you begun to pivot your priorities to meet the demands of this digital world? Are the core objectives and assumptions that informed your strategy still relevant? Consumers have changed their media habits and purchasing behaviours with an increase in mobile usage, a surge in the percentage of consumers shopping online for groceries, and the amount of consumers now tackling home improvement projects. You need to explore the market opportunity as there are high chances there will be new markets to enter and new customers to engage; or possibly what used to be a small component of your business pre-covid, is now one of the biggest contributors. It is time to pivot and reset your goals and priorities in a way that responds to the new reality with digital channels at the core.

Customers

Your customer journeys that were relevant pre-covid are now most likely incorrect or redundant so you need to explore what matters to your customer in this new reality. You need to revisit your customers’ attitudes, needs, motivations and behaviour as it relates to your business. The more you understand your customer the better you will able to market to them, create products and services that meet their needs, gain a competitive advantage, proactively identify shifts in purchasing intent and behaviour, and increase your chances for success. Ultimately you will be more equipped to identify, understand, analyse and retain your customers as you focus on enhancing your customer experience. Companies that develop a comprehensive voice of customer research and strategy have seen significant reductions in customer service costs and have had much higher customer retention rates. Despite the financial downturn, now is the time to boost your digital customer experience since digital is now the primary channel for many.

Innovative Ideas

Mass digitisation and disruption has meant consumers and businesses are more open and willing to adopt new approaches to doing things. This is the time for businesses to pilot innovative ideas and delivery models. At a time when traditional strategies have been upended, COVID has encouraged leaders and businesses to pivot quickly and explore new things and assess new approaches, value streams and delivery models.

Digital Roadmap

When resetting your digital strategy, you need to ask yourself the question, is my digital roadmap solving the right challenges? You need to review digitisation across your entire organisation – How are you interacting with your customers? How are different departments doing their jobs now? How are you launching new products? Nurturing relationships with prospects? It is time to evaluate the approaches that are working, those that can/need to be scaled, where optimisation is required, and what requires a complete overhaul. Re-prioritise your technology investments or develop a newly inspired digital roadmap with clear priorities and fresh insights. As part of your review audit and rate your digital capabilities, infrastructure, and experience to measure how you stack up against your competitors and where urgency is greatest.

Increasing Focus and Agility

COVID has been a catalyst for change and we have seen how quickly companies can pivot during these unprecedent times. Are you able to lift your focus and agility? Your organisation could benefit from having greater clarity of focus and alignment of strategic objectives to reduce silos, empower collaboration and agility, and inspire your top talent.

As you begin to reset your digital strategy, make sure you revisit your priorities, customer journey and experience, innovative ideas, digital roadmap and increasing focus and agility.

Looking to reset your own digital strategy? 

Let us help. To learn more about how to reset your digital strategy contact us on whiteark@whiteark.com.au