When to have opinions
When should a restaurant express a view on climate change? When should a real estate company talk about traditional (indigenous) ownership of land? When should a (social) bank discuss COVID? When should a consumer electronics company have a view on gay pride?
I’m noticing a bifurcation on this question: there are those who express very few views (e.g., Apple overtly supports very few ‘causes’ but has recently released its Pride Watch) and those who feel that they should express views on many issues even tangentially related to their business (e.g., Danone explicitly supports more than half of the UN’s 17 Sustainable Development Goals).
When I’m asked by my clients how they should demarcate those issues on which they should articulate a view. I differentiate three things:
Policy: Contributing to your strategic directions, your direct action stance says, “We care about X, and therefore, we are doing Y” (Danone)
Position: Linked to your value proposition, an advocacy stance says, “We know a lot of our clients / customers / community members believe in X, therefore we wish to express our support for Y” (Apple)
Compassion: Sympathetic to an issue affecting clients and customers, your recognition stance is “We acknowledge X and its effects on INSERT” (the bank I talked about above)
If you don’t get the intent, tone and timing right, at best you’ll get ‘so what’ sighs, at worst, a flight of customers sensing your hypocrisy. But when you get it right, you will dramatically amplify your social license.
Question: Are you clear on which societal issues you should have policy, a position, or compassion?
Minus 30%
How would your organisation survive a multi-year 30% loss in customers — and even more in revenues?
My university clients are surviving precisely that: in the past 10 years, they have all pursued the enticing (and logical) growth path of international students, with those revenues tripling since 2010. But, then, COVID pulled that rug out from under their feet, quite suddenly, and absolutely.
But, could this decline have been predicted?
One of my clients had, in fact, undertaken some future thinking around 2015, where one of the scenarios their CFO insisted upon was this: “What if the political relationship between China and Australia breaks down, stopping all Chinese students from studying in Australia?” In the event, it wasn’t politics, but a pandemic, but the result was the same, and they were, consequently, slightly better placed than others, as they had a plan for what to continue, what to cut, and how to do it.
Resilience is conventionally measured as the ratio of unforeseen losses divided by reserves. And, if you look at this summary, you can see that the most resilient amongst them have reserves sufficient to fund 10 years of 30% “lost” revenue, whereas the least resilient have only two years before all ‘lost ‘revenue wipes out the totality of their reserves.
Some of you will argue, correctly, that this metric of resilience is overly simplistic: What about ‘new’ revenues? What about cost elimination? What about innovations that enable ‘doing things differently’, or not doing them at all? This is precisely what my university client had factored into their ‘Minus 30%’ scenario, which is why they’re on a bumpy road, but will survive.
Question: What proportion of your revenues could you afford to ‘lose’ and for how long?
Cool at a price
Do you know why I’ve long admired this little car: the 1950s Austin Healey “Bugeye” Sprite?
You can see that it was designed with verve and flair. But unless you take it on the road, you don’t know that it’s super-lightweight with near equal weight distribution, which offers an exhilaratingly pure driving experience (albeit with just 36 horsepower - the car you drive today probably has at least 200!).
But the real breakthrough was that this was done to a price.
Doorhandles were superfluous cost-wise, as were passenger side windshield wipers and even bumperbars. Even its most prominent feature, the ‘bugeye’ lights, were a last-minute replacement for the original design, a higher-cost pop-up headlamp design. This way, the car gained an appealing ‘grinning face’ which turned it into a design icon of its era.
Question: What’s a cost reduction measure in your business that could become a feature?
You’re doing me a favour by clicing the heart to say you’ve enjoyed this week. Many people write each week letting me know they’re sending onto others (please do!) or using the questions within executive team meetings (again, please do).
Enjoy your weekend, and see you first thing next Friday morning.
Andrew
As my Greek Australian contact reminded me, quoting an ancient philosopher, as citizens we have a responsibility to be part of the ‘polis’. To have a view and be active in building a better society.
Always love your prompting probing questions; I regularly use them with my boards to generate great discussion and thinking outside the box. Thanks Andrew