Robots vs Humans, Lucid Motors, IKEA, COVID continues, RACI Model & ‘It’s not my job’
18th October 2020 Evolution Partners Newsletter
“Always think with your stick forward.” (Gotta keep moving, can’t slow down.) – Amelia Earhart
Hope you’re Thriving!
I’ve had a fantastic week, with impactful meetings, recorded my podcast as well as another one with a New York family business specialist and I had 3 days at an online conference. The start times were pretty challenging with 6am, 5:30am, 4am, 3am and 5am as the conference was on US time, but the learning was fantastic. It’s funny how just seven months since we were all forced to use Zoom for video conferences and workshops we have adapted so well, and we can get so much done, and, create so much value in our time together. I’ve got several clients whom I work with now where we’ve turned their business around, and yet I’ve still never met them in person. One, in particular, comes to mind where their board didn’t believe that we could deliver a comprehensive plan to an engaged leadership team over 2 days and were shocked when we did. That’s the thing, whatever happens, people adapt.
Best Leaders Strengths
I’d love to share so many things I’ve learned this past week with you, but I’m constrained by trying to make this readable and digestible for you. As it should be. One thing that I really enjoyed was hearing from Bob Anderson who co-authored two books Mastering Leadership and Scaling Leadership his latest book which he was talking about where they are trying to codify or quantify leadership. Bob and his team at Full Circle Group have assessed 2 million leaders across the globe understanding what the best leaders do to build the best teams. They’ve identified the process successful leaders use to scale leadership is;
- Start with self – “I am the project” For a lifetime
- Develop your team – Build a team of teams
- Build the leadership system – The extended leadership team
What’s important, and this aligns with Jim Collins Level 5 leadership concept, is that the first step is to begin at the top. In the Scaling Leadership book, Bob proposes that there are two types of leaders, creative leaders and reactive leaders, and those creative leaders are endorsed as being successful 2.3 times more often. Furthermore, the difference between the most successful, the creative leaders and the unsuccessful, the reactive leaders presented a few key strengths as shown in the chart below. These are the percentage of gaps between the creative and reactive leaders in the assessment.
Robots vs Humans
So why does the quality of leadership matter?
Surely in a Work From Home over Zoom world, with more and more independent contractors, then leadership is going to matter less?
Well, the problem is that increased complexity requires increased leadership qualities. If you begin to consider the global, national, state and local challenges we face, without even thinking about your business, the urgent need for high-quality leadership becomes apparent.
Last week in this newsletter, I discussed the ability for robots, or Artificial Intelligence to lead, and how many of the key traits of leadership are in fact today able to be performed by AI.
Well, this week I came across another interesting graph about robots. Everyone knows that for many years robots have been taking people’s jobs and as we look to the future, and as AI becomes more capable — as provided in last weeks example — this trend is likely to continue, especially in manufacturing. And I think the graph below provides an excellent visual of why this is. If we use 2014 as a baseline, the cost of manufacturing labour has increased a few per cent per year, while the cost of robots is dropping around 15% per year.
Any manufacturer who doesn’t already have a lot of automation in their upcoming plans, and as a part of their strategy, soon will.
This decreased cost of robots, along with increased wages, trade wars and increased nationalism is driving more local manufacturing, and less reliance on manufacturing in China.
Electric Vehicle Strategies Emerge
But two really interesting things happened this week in the manufacturing sector, specifically competition within electric vehicle manufacturing, and one in China.
Firstly Lucid Motors, founded in 2007 released its first production sedan for order as a direct competitor to Tesla. With the luxury finish, 480HP and 653Km range, as well as having over 2,000 charging stations across the US through a partnership, the immediate reaction from Tesla was to drop the price of its Model S by $5,000 to just under the Lucid pricing. Yet there are still some very strong points to the Tesla business model and strategy which will remain favourable. That’s a beautiful car, but I fear they’re competing to be the best, not competing to be unique.
In order to consider the second main event in electric vehicle manufacturing this week, I first need to mention Clayton Christensen and his book The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty where he describes Market Creating Innovations as innovations that involve the development of “simple products for unserved populations who historically couldn’t afford or didn’t have access to something”.
So Tesla has a strategy to become unique by combining autopilot software, removing dealers – buy through the internet and the charging network. Two of these are at risk from Lucid as above, which is why they are now beginning to compete on price.
What about the other end of the EV spectrum when thinking strategy? When considering Christensen’s “simple products for unserved populations who historically couldn’t afford or didn’t have access to something” as mentioned above, the big news out of China this week was that a car company called Wuling HongGuang which only started in April this year is now already the most popular electric vehicle in China by beating the previous number 1, the Tesla Model 3 (which sold 11,329), by selling over 24,000 units in September, and with orders of 50,000 on the books they have a bright future. At $4,200, with a range of 120Km and a top speed of 100km/h the car is both simple and affordable. Check out the interesting Wuling HongGuang MINI EV advert here focusing on mobility and boot space, simple and affordable features demonstrating strategy comes in many shapes and sizes.
IKEA’s new strategy
And this week, IKEA demonstrated a completely new shape and size for its strategy when they launched a second-hand furniture store inside their IKEA stores. It seems that when analysed, one of the main competitors to IKEA customers buying new furniture is actually either second-hand furniture or people giving away furniture to other people (think Buy Nothing or selling it at greatly reduced prices. So what IKEA is actually doing here is taking a lot of product out of the market and increasing customer visits.
From the press release;
“”As new” items, with no scratches, will get 50% of the original price, “very good” items, with minor scratches, will get 40% and “well used”, with several scratches, will get 30%.
They should then return them – fully assembled – to the returns desk where they will be checked and the final value agreed.”
In return customers get 30% to 50% provided as a store voucher – you bought a table for $100, it’s in OK condition with minor scratches so they will give you a voucher for 40% of that $100 or $40 to spend in-store. It’s simply brilliant because not only do they get to resell that item but also they get to capture your spending on another piece of furniture. Plus they get environmental credentials because they are recycling.
Looking back over the past few years IKEA financial results, they’ve averaged a 44% Gross Margin. So you can bet that every piece of furniture to be resold has been calculated to exceed that gross margin wherever possible. Don’t forget, even for an item with several scratches only getting 30% of the original price, customers can only use that to spend in-store. Read more in this interesting BBC article.
The question is then, is there a way you can use the key concepts within that IKEA strategy in your business. To recycle, increase spending and customer visits, and take the product out of the market is definitely an effective strategy.
A couple of interesting graphs I came across this week I wanted to share with you.
Firstly is the flu cases in Australia from March until October compared to the five year average from 2015 to 2019 where we can see the spike through winter compared to 2020 where there’s almost nothing registered.
Second is the EU catching up to the US quite rapidly in terms of the daily confirmed COVID-19 cases per million people with the seven day rolling average.
This week on The Growth Whisperers podcast
On episode 27 of The Growth Whisperers, Kevin Lawrence and I talk about the following.
RACI: Accountability vs Responsibility
This week on The Growth Whisperers Kevin & Brad talk about the difference between accountability and responsibility, and how this simple concept is so powerful in driving better execution.
Also, they explore the RACI model which further adds in the concepts of who needs to be responsible, accountable, consulted and informed, ensuring the right people are involved in the decision and therefore the team is more effective at execution.
Listen to The Growth Whisperers
From the vault
3 simple reasons you want staff saying ‘it’s not my job’
In a start-up, everybody must do everything. There are no set roles and few set rules. When something needs to be done, it gets done. If the copier paper needs replacing, do it. If we need to develop an ad campaign, or decide on a supplier, do it.
As a business Scales Up, however, eventually the mindset where everyone does every job or task, can lead to an absence of accountability, and this can become incredibly frustrating for both employee and employer. Who really wants to work in an environment where you don’t know exactly what is expected of you, or in fact what you need to do well in order to succeed? Not my job
I was speaking with my brother the other day who was disappointed in a co-worker when he asked if she would help him meet a deadline by arranging the copying of some documents. Her response was ‘that isn’t my job’. Perhaps, depending on her job role that was either appropriate or borderline misconduct. Either way, is it always a bad thing when staff say it’s not my job?
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