with The Strategy Guy
Investors Warren Buffet and Charle Munger like to invest in firms that are low-cost producers. These firms often aim to be The Cost Leader in their field. Becoming The Cost Leader results in high levels of operational efficiency. However, operational efficiency is not a strategy. Every business should aim to be operationally efficient.
Indeed, most companies have 'money lying around on the ground' waiting to be collected once processes and operations can reduce cost and create more value. Operational efficiency should be a goal for all companies, whether they choose to compete uniquely using a Cost Leadership, Differentiation or Focus approach.
When it comes to your strategic approach, it is essential not to get 'stuck in the middle.' Firms that Focus on a particular segment or Differentiate from the pack will often scale well, to a point. However, achieving massive scale is often challenging (but not impossible) without ultimately becoming a Cost Leader in some way....
What is a Strategic Accountant?
I am looking forward speaking at the CA ANZ 2021 Accounting Conference this month.
I will share that Strategic Accountants make it their business to understand their client’s business. These accounting paragons focus a client's attention, energy, and investment in three ways to help them analyse the past, manage the present and lead the future.
My presentation will assist accountants to reimagine their firm, its services and their career path. Notably, I will discuss the impact of inertia, entropy and bias. I will reveal why accountants should learn to juggle and ensure their clients do the same.
After three months of researching and writing The Strategic Accountant, the book is nearly finished :-)
This week I finished my early drafts of eight chapter illustrations for the book.
Each 'picture tells a story' about how to become a Strategic Accountant.
1. Why accountants should learn to juggle.
2. Remember Enron and meet the 'gorilla that is still in the room'.
3. Find money 'on the ground' in any business.
4. Sow your seeds wisely and inherit the Kingdom.
5. Strategy offers us learning loops, if we are prepared to 'Live.Die.Repeat'.
6. Why you might like part of a Neanderthal Brain in your head.
7. 'Culture Eats Strategy for Breakfast'.
8. Future-proof your accounting firm with AI and 'bots'.
A special thanks to my wonderful reviewers: Bryan Worn, Dale Edwards, Natasha Milne, Natalie Kidcaff, James Carlopio, Oscar Hauptman, Dolores Cummins, Brad Reece and Tom Smith.
The positive market response to Apple's new Silicon computers highlights the power of parallel processing. Apple achieved this with a reduced instruction set computer (RISC) design. RISC microprocessors are not new. In the late 1980s, as a Systems Engineer at Hewlett Packard, I compiled and executed code on a quarter-of-a-million-dollar Unix workstation that housed the world's first and fastest parallel reduced instruction set microprocessor (PRISM). Apple's M1 microprocessor is 10,000x faster than the first PRISM microprocessor and sells for just eight hundred dollars!
RISC computing breaks down complex software instructions into smaller parts that run in parallel on microprocessor arrays so that software programs compile and execute much faster. While computers can handle multiple tasks simultaneously, by comparison, humans are poor at multitasking.
The pandemic highlighted human multitasking limitations to me. Once CEOs became distracted with managing the moment-to-moment issues...
Like a chess player, every business owner makes a series of moves. If the number of winning moves outweighs the losing ones, the business may survive. When the number of winning moves significantly outstrips losing moves, the business thrives. Waiting is considered a move when it is done consciously.
Every business experiences inertia, entropy and bias. When these three take a hold, businesses ‘fall asleep at the wheel.’ Once asleep, companies believe they can’t predict the future and have little hope of changing it. This sort of thinking is ‘the elephant in the room’ and reduces competitiveness and profitability.
The best approach to the elephant in the room is to create the future. My most successful clients regularly commit to four high-level days over six to eight weeks.
DAY 1 - UNDERSTANDING
Once the right people are in the room and in the right seats, I facilitate conversations that deliver a clear and dispassionate view of the industry...
There is a Zen saying... “The Great Way is not difficult for those who have no preferences.” In Zen, the true nature of things or Tao can be found in moments of choiceness awareness. To deny the truth of things is to miss reality. If we allow our personal preferences to impact our choices, our choices will be grounded in personhood rather than reality.
The Jesuits and many others understand personhood this way. “Give me a child until they are seven years of age and I will show you the adult.” EEG scanners reveal that in the first years of life our brain frequencies are much slower and we spend a great deal of time under the influence of Theta waves. Theta waves are pre-conscious in nature, which means as little children we are highly impressionable and programmable. These preferences and conditions in our holding environment, before the age of seven, are systematically laid down in our personality.
Our personality based choices are spontaneous,...
Once upon a time, there was an old King who was a widower. His Queen had left him with three children: two sons and a daughter.
The elder son, Boris, was a fearful, outspoken, yet happy sort of a chap.
The younger son, Donald, despite his fancy appearance, was a loud, angry and unhappy dude.
The youngest, Jacinta, was a quiet, melancholic and thoughtful girl.
One day, the King devised a test for his children. He summoned Boris, Donald and Jacinta to the Royal Chambers and said, “I will be going on a long journey for many years. When I return home, I will name one of you to be my successor.”
The children solemnly acknowledged what the King had said.
The King continued, “I will leave each of you with a bag of seeds to take care of in my absence.”
The next morning the King called for his horses and said farewell. In parting, he handed Boris, Donald and Jacinta each a bag filled with seeds.
Boris took his bag of seeds to the Palace Treasury and locked them...
Some sobering facts about businesses are:
96% of firms fail within ten years [and that was before the pandemic].
79% say they have insufficient time to do strategic planning [that was also before the pandemic].
67% say they have insufficient strategy skills in-house.
Last night I had the pleasure of speaking to 30 grateful, heroic and youthful (and co-operative ;-) members of the Brisbane Rotaract in the Brisbane CBD.
Early in my talk, I polled the audience. Everyone in the room (100%) felt that strategy was important. Around 30% of my humble audience shared that they were good at strategy, but tragically only 5% felt their organisations did enough to train them to think strategically!
Does your firm or organisation do enough to teach its leaders and teams to think and operate strategically?
It is important to know that businesses grow through six stages.
Stage 1 - Existence
Stage 2 - Survival
Stage 3 - Success
Stage 4 - Take-Off
Stage 5 - Maturity
Stage 6 – Reinvention
In the early stages of business growth, a good strategy can be helpful. However, there are often few new decisions to make, and a business owner spends most of their time working in the business. As a firm enjoys more success, with the right strategy, it can eventually take off and become a mature business. As each business grows, the number of decisions required expands rapidly, and the business owner needs to work 'on the business' and not in it.
After speaking with business owners and leaders at the Hilton Cairns last month, it was clear that some mature tourist-related Cairns and Port Douglas businesses had slipped back into survival mode and had come along to learn the six-steps of the Strategic Mindset Process to help revive their business.
Last month I was delighted to provide a presentation to an Advance Queensland Forum on Financial Strategies for High Growth Enterprises. On this occasion I shared the stage with three other high-profile presenters including Dr Sarah Pearson, Innovation Lead and Deputy Director-General Innovation from the Department of State Development, Tourism and Innovation. The Q&A session that followed highlighted the diversity of Queensland’s innovation ecosystem and the positive outcomes that the Queensland Government’s Advance Queensland initiative is achieving for the State’s economic growth and future jobs.
In my talk, I shared strategic priorities and financial tactics for both scale-up and long-term success. During the life of a successful enterprise, there are periods when there is plenty of money around and periods when outside capital is needed. Great investments are those that increase the functionality of the team, help enhance a firm’s on-going...