Sunday, March 24, 2013

PAUL MARTIN, UNDER APPRECIATED

It seems strange that there was a long buildup to Paul Martin becoming Canadian Prime Minister and only a short time before he was out of elected office.  From my perspective he has before during and after being Prime Minister proved to be one of the very best in the entire world in the necessary long range thinking that is so missing in world governance.  Politics as a game played with restricted resources that all too often works out not so good for the citizens.

As the son of a prominent Canadian cabinet minister, also named Paul Martin many people think he started with a leg up.  To a large degree he would acknowledge that and Paul Jr would proudly admit his father was a model.  Others felt he must have inherited a lot of wealth to have been owner of a large shipbuilding company.  He was smart enough and connected enough to work at Power Corporation.  At one point he was asked to find a buyer for CSL group, a major shipbuilder and instead wondered what he could do to buy it.  He didn't have nearly enough money, but did seek out a partner and was able to finance it.  It wasn't a sure thing at all. Canadian shipbuilding was very limited, but he realized one of its strengths was that because they had relatively short hauls compared to ocean liners they had developed a lot of inland unloading capacity. They developed the concept for other countries with in land shipping concerns.

One factor that impresses me the most is that Paul Martin is perhaps the best example of a long range thinker.  One of his themes in his "Come Hell or High Water" is inter generational fairness.  That was one of his motivations for reducing the deficit.  He could see that today's deficits would be paid by tomorrow's taxpayers and didn't feel that was ethical.  Lots of conservatives pontificate about how government's waste money, but Martin did something about it with the long range goal of making government finance more effective for all Canadians.

He also didn't think it fair that the G7 made decisions that affected the whole world, but excluded many of the upcoming powers such as China, India and Brazil.  Starting as finance minister he worked to set the foundations for the G20.  It was not just a question of fairness, but of being more effective for everyone's benefit.

Most Canadians reflexively hate the GST, but Paul Martin can see beyond the outcry.  The GST actually is a replacement for a hidden tax, the Manufacturer's Tax that hit every Canadian consumer. In the Canadian economy as in most advanced industrial countries was shifting activity from manufacturing to service and manufacturing tax was diminishing. Again a long range viewpoint concerned about fairness and effectiveness.

He looks at native Canadians not as unjustly treated over the centuries, but as a lost resource.  As a student working summers he spent time above the Arctic Circle becoming more aware of the plight of natives.  As Prime Minister he convened many native leaders together at Kelowna and worked out some agreements.  Lately he has been involved with educational initiatives and organizing  to give natives practical business experience and capital to start businesses.

He also took an interest in Africa, again realizing there is hidden potential.  There has been a history of Canadian politicians supporting African causes--Brian Mulroney worked against apartheid, Jean Chretien advocated strongly for Africa at the G7 level.  Paul Martin carried those concerns forward and has made it one of his focal points after leaving the government.

He feels the Palestinians have been treated unfairly.  He notes that when Israel withdrew from Gaza unilaterally they allowed Hamas to claim it as a military victory instead of giving Fatah a chance to claim some diplomatic leverage.  Canada needs to be balanced in its approach to Israel and Palestine which cannot be said of the current government.

The environment was still another concern. He was well aware that Canada could not live up to the Kyoto agreement.  He found the Americans under George Bush very obstructionist on climate change.

You don't get to be Prime Minister by being naive about politics.  The long buildup developed as he proved himself to be the key to the Liberals staying in power, but was kept in place by a resentful boss.  Politics can be viewed as a dirty game.  He first ran for Parliament in a Montreal riding and overcame some disadvantages to win.  He made an early run for the leadership and although he made a strong impression Jean Chretien did win.  When the Liberals came to power his reward was to be made Finance Minister which is not considered a stepping stone to the top office, although it must be said Chretien did go that route previously.  Paul became one of the best Finance Ministers in history and for many Canadians overshadowed Chretien.  That caused a lot of resentment.

Once in power of course the other parties are maneuvering to take him down.  He developed a reputation as a "ditherer".  In fact he was very careful to consult all stake holders and analyze all options.  Not a trait that most politicians strive for, but one more suited for long range thinking.  He had been kept away from Quebec patronage, yet found himself being implicated.  He was far more open about a judicial enquiry than any of his opponents and I believe has since been vindicated. Nonetheless this doesn't stop the opposition from pressing their distortions as dramatically as they can.  The Conservatives under Stephen Harper were implicated in misuse of election funds and in fact did catch the Liberals off guard.  The Harper government to my way of thinking has proved they don't value fairness in election financing as they repealed the rule that gave smaller parties (and the established ones) a small amount of money for each vote they were able to gain.

Outsiders never really know what politicians are up to and I do not have inside information.  I read his book and checked my memory and a few other more reliable sources.  Most politicians I have observed are big on promises, but mostly concerned what they have to do to stay in power.  To be sure they mostly have an idea of what they would like to accomplish.  I align myself with most of Paul Martin's vision and appreciate what he has done and is doing to move us closer.

To keep up to date on Paul visit his website at www.paulmartin.ca

Monday, March 18, 2013

MY SILVER WRIST BAND VISIT TO CUBA

In my mind I am always seeking new and interesting things, but in reality my limited resources get used to the comfortable and the familiar.  Recently came back from my fourth visit to Arenas Doradas in Veradero, Cuba.  It was enjoyable and new ground was covered.

An unexpected bonus was that Sharon and I were given special silver wristbands to identify us as repeat customers.  One of the tangible rewards was a  bottle of rum.  We always liked the people at Arenas Doradas which is a big reason we come back.  I didn't really notice any special treatment from their staff, but they have always been attentive.



A few new experiences for me.

I checked out some caves within walking distance--Cueva Ambrosia.  At first I was given a flashlight, but after wandering around a bit on my own a guide came and explained a few things.  There are no aboriginals that survived in Cuba but they did leave a record.  Bats also lived in caves and they did survive.







Another new experience for me was a brief sailing trip.  The resorts realize that sailing can be dangerous, especially for novices and one particular day was one of the very few in my four years that sailing was allowed.  It was just a catamaran, but it was surprising how fast they can go and that not all sailing is smooth.  You get right close to the water in a catamaran and I got a good dose of salt water.

Going into town in previous years I had been content to take the free shuttle service as the timing seemed acceptable.  This year missed one connection and decided not willing to wait so went on a special double decker bus.  For one low price (5 pesos) you could get off and on the bus all day traveling from the far end of Veradero up to the far end of the Peninsula.  Sent into town for one souvenir shopping expedition I was able to make a second trip (to nail down the best deal we could identify).

There was much that we had tried and liked that was repeated.

A lot of comments about Cuba are about how bland the food is. Part of that no doubt is that they offer all inclusive packages that boil down to buffet dining which in turn is somewhat bland.  However if you are adventuresome some of those weird things can be tasty.  A la carte is usually a step up.  As a few people have commented when you go on longer tours the selected restaurants are pretty good.  We found some of the cooks were very good.

Another aspect we enjoyed was the entertainment.  They had a regular dance troop we watched two times and respect their talent. They brought in a professional Cuban band on our last night and encouraged everyone to be part of the entertainment.  They also have game type events that always make us laugh.  I do remember one emcee calling out the countries of the visitors and getting a few cheers and he added in "anyone here from the United States?"--dead silence and we all laughed.  In fact although Canadians including Quebeckers are in the majority there are people from Britain, Italy, Germany, eastern Europe and South America.  Much of the staff can speak English and French in addition to Spanish.


It rained the last time I visited Josone Park, but this time I made two trips in sunny weather. What I like about it is its natural setting. Plenty of birds, trees.  With three or more restaurants, and paddle boats one can spend several enjoyable hours. A side trip to the Museo Veradero across the road made me aware that the town has a history that is more than just tourism.

Veradero has one of the nicest beaches in the world.  I had thought pelicans were clumsy birds, but I have learned they are very graceful and powerful and willing to come close to humans.

Tourism is important to Cuba, not only because of the raw amount of money, but because it provides jobs.  One big thing is bus drivers.  They take you from the airport to your resort, then they take you into town or on tours.  Of course there are other drivers of taxis and horse carriages.  A lot of people needed  to feed you, to guide you  and to clean up the mess.  I think they sell a lot of rum and cigars which also provides jobs for those who might otherwise be unemployed.  For the most part I find the people wonderful.  At one of our a la carte dinners a couple with their two children were celebrating their anniversary and shared some champagne and cake with other guests including us.  Sharon later played Crazy 8's with them.

One complaint, that might be shared for other tourist destinations is the overwhelming lack of original souvenirs.  We walked by dozens of boutiques and saw pretty much the same trinkets with the same designs. Some of them were attractive, but we wanted something unique.  We bought a piece of art  (paint and wood carving) where we saw the artist putting it together.  It was attractive and we felt we were helping to support someone making a truly artistic effort.

One of my favorite activities is reading.  Sometimes it is nice to have ocean waves in the background and other times to be isolated.  Of course numerous hours in an airplane or waiting for a bus.  Finished five books; two biographies and three novels on my Kobo reader.  I also bought a book on José Marti to read on the plane ride back home.

When we got back to the Toronto airport and waiting for our shuttle bus I remarked that a 20 degree difference was hard to adjust to prompting another person to comment that she too was adjusting to a 20 degree difference, but in her case she was adjusting from Thunder Bay.  Everyone has their own perspective!  Vacations are wonderful.

Sunday, March 17, 2013

THE INNOVATOR'S DILEMMA

In this age of mega corporations we have been told that size confers advantages and good management is attracted to large companies. Many established, well managed companies have been confronted by what Clayton Christensen calls "disruptive innovations" and he contends that good management and size doesn't always protect them.

Originally Clayton who is a Harvard professor did a study on disk drivers noting that a series of innovations had displaced established companies.  The displaced companies did almost everything right as far as evaluating the new challenges.  They kept in touch with their most important customers to determine what they wanted in the future.  They spent money to improve their product lines.

Yet new companies using new technologies originally aimed at small niches were able to take over established markets.  The most detailed examples are in the disk drive business.  The initial disk drive manufacturers provided ever more efficient disks and disk drives for the large mainframe computers.  When smaller disks were brought to the market they were considered inefficient and not cost effective, but their size opened up new doors that the large disk manufacturers felt would generate too little profit.  As time went by new processes resulted in smaller and smaller disk drives that eventually became more and more efficient.  They displaced the established disk makers.

Another example was with steam shovels.  The goal was to make shovels able to reach further and take in larger amounts of earth.  Manufacturers became very efficient at this. A new system using hydraulics instead of steam power and cables at first was not very efficient in terms of reach or load capacity, but found a niche in small jobs where they did have an advantage.  Eventually their efficiency improved for the bigger tasks as well and they displaced the established steam shovel manufacturers.

Still another example concerned Honda motorcycles.  They were used in Japan for local small deliveries and were very much appreciated.  The executives had the idea they could be easily adapted for American highways.  Unfortunately they were not up to the demands of highway driving and the American manufacturers were not threatened.  One of the Japanese staff in America took his Honda motorcycle for a run through some hills in California.  One of his neighbors noticed and asked if he could do the same.  Eventually they realized they fit in a niche that they helped create--Dirt biking. With this toehold Honda was able to build up its efficiency and really cut into the market share of the established American and European manufacturers.

The author repeatedly makes the point that the established business were usually following good business practices when first confronted by disruptive technologies.  But they were handicapped without realizing it.  Their best customers actually had control of the direction management would follow.  The goal was to extend their efficiencies to keep ahead of their established competitors.  The thinking from top to bottom was to please their biggest customers.  They analyzed profit margins and gravitated towards increasing them and avoiding activities with lower profit margins associated with their new competition.

Disruptive products always had difficulties breaking into established markets.  They were seen as having lower profit margins and initially as very risky.  Those that succeeded did so by finding unmet needs of the market.  They became used to failing in their initial attempts.  Whereas the big mainframe manufacturers were striving to hold more information in disks, others were interested in cutting the size to fit into smaller containers.  The size was sometimes more critical than how much information could be contained.  Eventually they increased the efficiencies to compete against bigger machines while gaining the advantages of being more portable and taking up less space.

I found the book to be difficult in places because Clayton wanted to document in detail how he arrived at his conclusions which at first glance seem counter intuitive.  That meant lots of complicated (for me at least) charts and a lot of history of products long since displaced.  Bigger companies seem to have all the advantages over smaller companies.  But actually disruptive technologies have great difficulty in being accepted by large companies.

Large companies are based on what Clayton terms "sustaining technologies" where the goal is to move forward with incremental improvements.  They monitor what their customers want and allocate their resources accordingly.  All the staff are geared to do what pleases their customers so the mentality is focused.  If someone inside advocates for a disruptive category they are resisted not only in resources, but also in support.

To be successful with a disruptive technology it is necessary to take a different attitude.  Failure is to be expected and the goal is not to please existing customers, but to find a market.  If a large company tries to mix disruptive and sustaining technologies they have to be careful to completely separate the two and make the disruptive part independent realizing they need a sufficient budget to go through at least one failure.

Clayton gives useful guidance.  Do not attempt to fit a disruptive technology to standards of your existing customers.  The first mover principle favours disruptive technologies.  The most successful large company adapters completely separate the new disruptive technologies from the established parts of their company.  They recognize that the establishment mentality cannot think in the new culture necessary for success.

To learn more of Clayton's thinking check his website, http://www.claytonchristensen.com/

Saturday, March 2, 2013

APPLICATIONS IN SELLING

Awhile back I was asked to explain marketing.  It can be complicated, but the bottom line is finding some application that people are willing to pay for.  A classic example is that people do not buy 3/4" drill bits because they want to own one, but because they want to drill 3/4" holes.

For many of us this can be a trial and error process as it is very difficult to predict what people will respond to as they can't often articulate it and may not really know.  How many of us enjoy things that were unimagined even a few years ago?

One recently read example was Honda motorcycles, courtesy of Clayton Christensen.  The motorcycles were very popular in Japan for making small, local deliveries.  Honda had the idea they could be adapted for American highways, but unfortunately the mechanics didn't work out.  One of the executives liked to ride his Honda motorcyle up and down country hills in California as kind of a frustration relief.  A neighbour wanted to do the same thing and in a short time Honda found a new application as a dirt bike.  From there they were able to build up to a wider range of products.

I will be doing a book review of Clayton's book, "The Dilemma of Innovation" and here will just mention some other examples he gives involving disk drivers and steam shovels.  In both these cases a few companies had established standards and took on their competition with incremental improvements in what seemed a logical progression.  Along came some new products tracking a different direction (smaller size) and naturally were ignored, until new applications led to new markets and eventually new efficiencies that took over the old markets.

My most personal experience, not nearly as dramatic as Christensen's examples was with a cleaning product.  I didn't discover it, nor did the company I represented.  When I first became aware of the opportunity I arranged to meet someone at a busy shopping mall kiosk type of table.  Time was limited and I was a bit impatient and just asked if they could please give me some literature before I made a decision.

One of the reasons I was impatient was that I was getting headaches after running out of a cleaner for my anti-reflection coated glasses.  One of the given testimonials was from an optician who commented that this cleaner when diluted  down to being mostly water was superior for cleaning anti- reflection coated glasses.  A few years later my boss noticed I was using his product for cleaning my glasses and urging others to try.  Without telling me he developed a bi-product for cleaning glasses.

The main target of the cleaner was veterinarians and pet stores for cleaning up pet messes.  That eventually led up to another very powerful application which led to another that we had no understanding of.  But before then we added the glasses cleaner to our list of veterinary products, mainly just for computer screens.  One vet clinic needed to clean its microscope slides immersed in oil as a regular procedure.  They found our glass cleaner more effective than anything they had tried.  Unfortunately you don't need a lot to keep microscopes slides clean over a year, but certainly establishes a level of credibility.

The other applications we stumbled on from the basic cleaner was for de-skunking and anal discharges (something  my boss with his dog had experience with, but had been unable to explain).  I couldn't understand the skunking application until I read a book about skunks.  Their odour comes through an oil.

Most of these new applications were discovered by customers, not us.  A few were discovered by our own trial and error or accidents.

Most products can have a wide variety of applications.  We learned an interesting strategy by one of our competitors.  Windex we discovered is a fairly good all purpose cleaner (better than the popular all purpose cleaner we used for comparisons), but they must have been smart enough when entering the market to focus on one niche where there was little competition--cleaning windows.  They added blue coloring which fit the image they were trying to convey.

It still takes money to turn an idea into a market.  One of the first steps is to find a viable application. If you don't have a big budget you can try to make up for it with more effort over more time.