Growth at all costs

Image: FreeDigitalPhotos.net

One of the subjects I have occupied my mind with over the years is that of growth. I was therefore interested by this article (http://www.bbc.co.uk/news/business-18967294) ...
I have to admit that it is the first time I have heard of the organisation Casse, that support a steady-state economy.
At first reading, the steady-state economy sounds like a good thing, if one believes that consumerism has gone too far, and that we employ lots of people working overly long hours, producing stuff that we don't really want or need, that is then sold via massive marketing budgets. All that sounds a bit wobbly...like a house of cards about to fall. So the steady-state idea sounds good as an antidote.
The problem as I see it is that growth is not a target itself, at least not economic growth (apart from for governments who do not contribute much to that growth). Economic growth is the sum of all the companies and enterprises across a nation. And that's where the boundary between macro-economics (where I have an interest but am by no means an expert) and micro-economics (where I spend my time and efforts) is important.
The desire for an individual enterprise to grow is clear. To make more money. The pressures may come from various sources...

• Shareholders demand growth to see their equity value grow
• Lenders demand growth to ensure they can get both capital and interest elements of their loans repaid (especially when loans are given specifically to fund growth)
• Managers demand growth, often as a knock-on, to show that they are successfully managing the business
• Finally, we cannot ignore the natural human instinct to want more...the fundamental motivation behind all desire for growth, stemming from an individual level of wanting more than we currently have.

The fundamentals of a free market economy, dictate that companies compete with each other. While they do this, they inevitably "switch" some business - indeed in the supermarket business, a largely saturated market, the switching between the big companies is a critical KPI for measuring success. But history tells us that while doing this, what actually happens is that new customers are attracted to a product or service. This is much clearer in less saturated markets such as fitness clubs, but does also happen in the saturated ones like supermarkets.

Tesco was very successful in the 90's and 00's in expanding it's Non-Food offer. There is no doubt that a lot of business was taken from other retailers - just look at the specialist electrical retailers for an example of who was hit hard. But it is also apparent that people just bought more Non-Food products than before, simply because they were cheap and available in their local super/hyper-market. DVDs is a good example where supermarket availability led to impulse purchasing and a market increase.

Food is another good example. The amount we spend on food continues to increase. While recently some inflation has crept in, in most of the last decade the drivers have rather been an increase in the consumption of so-called "value-added", processed food products, along with a general increase in both the calories we consume, and the calories we buy but don't consume - food waste.

One of the criticisms of a Primal or Paleo nutrition approach is that if lots of people switched to the consumption of real, unprocessed foods, and eschewed products with sugar and gluten, then our economy, dependent as a big chunk of it is on these food products, could suffer a major collapse. Here we are not talking about the relatively insignificant 0.7 per cent contraction, but more major impacts. Not only would the food industry be dramatically affected, but also the supermarkets, the supply industries of packaging, the oil industry (plastic in packaging), etc etc. 

However, the argument runs that we would be healthier...having a further economic impact on healthcare services, drugs companies.

Interestingly, another common criticism of the Primal or Paleo approach is that it is too expensive. This often arises due to the large focus on top quality protein sources (meat, eggs and fish) that are indeed expensive in some cases. However, the use of all parts of animals, from bone broths to offal are also championed, levelling the cost playing field.

So why the apparent contradiction. How would a move towards this real, unprocessed way of eating both impact growth but also be more expensive for consumers?

Part of the answer is the healthcare part of the equation. Paradoxically, drug companies don't want us to be healthier, since their revenue stream is impacted if we are.

Another part is that producers of the real, unprocessed food would get a bigger slice of the pie - imagine beef cattle farmers getting  more than the cost of raising their animals, rather than dairy farmers getting less than the cost of milk.

I am a big believer in the power of people to see and exploit market niches. I think a large number of people would rally, would spot opportunities within this brave new world, using their improved health to focus on other economic pursuits instead. And ultimately, while growing, the Primal or Paleo movement will not suddenly take over - rather a slow movement towards real, unprocessed foods including animal products from sustainable and responsible sources is underway.

There are some massive opportunities for growth within that movement. Let's look for them, create them and exploit them for all they are worth. I'd like to think that's the sort of direction a steady-state economy would follow, with massive growth driven by the responsible sustainable businesses, offset by declines in the unsustainable, unhealthy and irresponsible businesses that form so much of our economy at the moment, and cause us to hold onto them for dear life as if they are our only hope. They aren't.

Sponsorship reactions

Image: FreeDigitalPhotos.net

While watching the magnificent victory of Bradley Wiggins in the Tour de France on Sunday, I considered my own reactions to sponsorship and specific companies.
Specifically on this occasion, Sky. I don't like Sky. I don't like the "hijacking" of top flight football that has happened over the last few years...the lack of live TV matches on free to air, the match timings to fit the Sky schedule etc. Even the general Murdoch empire, some of which has been exposed through recent enquiries, and does seem to be changing.
When it comes to cycling and the Tour de France, though, I have no such negative reaction. Instead, I applaud the achievements of the members of the team - especially Wiggins, Mark Cavendish and this year also Chris Froome - without a tinge of negativity.
Why?
I think the main reason is that of choice. The TdF has been on free to air TV. I am therefore able to watch it with a free choice, and do not feel "forced" into giving money to Sky. Their sponsorship of the event does not impact on my choice. I will not give my hard-earned money to the Murdoch empire, but their sponsorship of the cycling team with most of the Brits in it doesn't mean I have to. Sure, some people will sign up to Sky as a result of the sponsorship and the exposure it gets them. But that's different...
Is it?
My mind moves on to the Olympics sponsors, about which I have previously blogged. The sponsorship by McDonalds and Coke doesn't force me to consume their products (since I didn't get tickets...) so why am I so bothered about this one?

• There is of course, the possibility that my response is illogical to some degree
• There is an element that McDonalds and Coke ARE forcing choices - not mine, but those of every Olympics Park visitor. And that feels wrong to me...so maybe it's not the sponsorship but the extreme brand protection techniques?
• Lastly, it is possible that it is the incongruity of food and beverage manufacturers that I consider to be extremely unhealthy, sponsoring an event that should be celebrating the ultimate in fit and healthy

Ultimately from a business point of view, the following observations are relevant:

• We live in a capitalist society and the market forces behind all of these sponsorships are dominant in making these things happen. Consumer choice is paramount...I choose not to subscribe to Sky, but many do. That provides them the cash to invest in football sponsorship that restricts viewers to their medium (they would indeed be crazy not to restrict in order to protect their revenue stream). But it also provides the cash for the cycling team. I choose not to eat at McDonalds and drink Coke, many choose to consume. If enough choose the products, then the cash will be there for sponsorship.
• We cannot cherry pick the good bits of living in a market driven economy and complain about the bad bits - especially if they are only "bad" in our own personal estimation.
• The companies themselves are rarely to blame for the "bad bits". All of the above-named companies, as far as I'm aware, act honestly and legally in regard to their business practices. Some may not be what we would all like in some "ideal" world. But ultimately they are what WE choose, collectively.
• Only a massive change in consumer choices will change the products, companies and sponsorship deals we see.

In our free market economy, it's important that we express our own choices, allow others to express theirs, but also it's important to speak up about what we believe is right and wrong. If our opinions resonate and enough people change behaviour, great. If not, we accept it and move on...ultimately we can only control our own choices, and that's the beauty of the free market.

To sum up, going back to my favourite subject of the TV documentary series, The Men Who Made Us Fat...the point is this:  they didn't make us fat. I am the only man that is responsible for making me fat. I don't have to eat the sugar, I don't have to eat large portions. I choose.

Life and death....a knife edge?

Image: FreeDigitalPhotos.net

This may be a somewhat unusual post for me.
Yesterday I observed a black cat in my garden with something at his nose. I immediately feared the worst - that he had caught one of the baby rabbits belonging to the colony that lives at the bottom of my garden and regularly feeds on my grass. I sent my sons out to chase the cat off, but this only succeeded in driving him over the fence in next door's garden, with what was clearly a dead baby rabbit clenched in his jaws.
This scene made me think about life and death. In nature the line is incredibly fine. Most animals have predators and are in constant danger. As humans at the top of the food chain, we have none. OK, in some countries there are animals that could be deadly in the wrong circumstances, but no actual predators. And while this is a good thing, it does give us a somewhat false sense of security. 
I believe that this secure feeling can lead to a lot of inaction and inertia. Many people exhort us to "live for the day" in many different guises...but most of us don't do it in any real form. We mostly have jobs that pay us regularly at the end of the month. We have 20 year mortgages. We save for a "rainy day" (although given the weather in the UK the last 3 months, all our savings should by rights be spent...)
In business, there can more easily be no tomorrow. The loss of a major customer, a takeover, redundancy can all happen with very little, if any, notice. It is therefore in business that "living for today" has some important consequences. The most important of these is to grab any business opportunity that comes along.
I recently was asked to pitch for a consulting job. It was a good brief, exactly in line with my experience and skills. And I had no other projects or assignments in the pipeline. There was no reason not to take it. Yet still I had to ensure that I grabbed the opportunity, pitched in the most professional way possible, and did everything in my power to get the engagement. There were moments, even with everything going for me, when self-control and will power were required to make that happen. 
I'm sure some business people don't suffer from any such doubts. I however, think that to have the doubts is healthy - as long you deal with them, think deeply about why the doubts are there, and still grab the opportunity if it's right. Otherwise, the black cat could get you by the throat tomorrow...
Today I saw the rabbits, without their young companion of course, back on the lawn grazing. As a casual observer, nothing had changed. They didn't look any more skittish than usual. They didn't eat any less. Life went on as normal.
Sometimes I wonder if humans have something to learn from the animal kingdom about dealing with loss and bereavement. Whether that's the loss of a loved one or the loss of a business opportunity.
We all maybe need to get back out there and carry on eating the grass...with at least one beady eye keeping a watch for the greedy black cat.

Inactivity

Image: FreeDigitalPhotos.net

I heard a(nother?) radio news story on Inactivity this morning, claiming that it is as big a killer as smoking and obesity.
As I've already blogged about sitting too much killing us, I don't want to focus on the inactivity piece here but rather on the subject of multiple dependent variables.
When analysing what's going on, whether in science, business or life generally, it is important to find causality. This search usually starts with correlation, but should not end there.
What do I mean? Well, if A causes B then we would expect there to be a correlation between A and B. However, just because X and Y are correlated does not mean that X causes Y.
There are some classic examples...I remember learning when studying for A level Economics that there is a very strong correlation between the consumption of sardines and deaths from cancer, measured by national rates of each. However, there is no evidence for a causative relationship.
One controversial point in the nutritional field is the correlation between red meat consumption and heart disease. Some believe this tells us red meat is unhealthy (and usually blame the saturated fats), while others (and I personally subscribe to this group) think that since there is no clearly established medical pathway between eating saturated fat and heart disease (and indeed many other scientific studies showing no relationship) that there is something else going on.
This "something else" normally takes the form of a so-called "confounder". It is the common link. Westernisation is the confounder in the sardines and cancer correlation - associated with both, and arguably, also the "cause" of both.
In the red meat example, the confounder may not be so simple...it could be that people who eat lots of red meat simply eat too much (of everything) and it is the over-consumption that is the problem. It could be that the red meat is too often consumed with lots of starchy carbohydrates (just imagine that red meat in burger form, sandwiched in a nutritionally poor burger bun and with a large pile of fries and a super-sized soda and you'll catch my thinking) and it is in fact the sugar and starch that is the problem. Based on other studies, both excessive calorie consumption per se, and high carb intake have been shown to have specific body and hormonal effects that tend towards weight gain and heart disease.
But back to my main point...how do we separate, for example, the impact of inactivity and obesity on the death rate? Surely lots of people are both inactive and obese...with arguments as to in which direction the causative relationship flows still open.
Traditionally, multi-variable correlation is used. This means that if we measure the correlation between N and P, and the correlation between M and P, then the strength of the single correlations guide us as to the amount of the variability in P that is explained by each of N and M. We can then combine N and M in a variety of formulae to work out how we can maximise the correlation between this M/N combo and P.
But, a warning, this is a statistical analysis. A result that shows we can explain 90% of the variation with a combo of M and N does not mean we have shown the causative process. We could still have a confounder in the mix.


In work I did with a major fitness club chain, we were looking for correlations between KPIs for the global clubs. We were looking to show that, for example, customer satisfaction survey scores were correlated with club performance (measured by membership, revenue or profit). Other possible "causes" of performance were retention scores, the physical state of the club etc. The statistical analysis showed that we could not find a single variable with a strong correlation with measures of performance. I found this fascinating. Surely, my thinking went, this means something big. Others in the management team were more sceptical, thinking that we never would find such correlations and that it was pointless looking.
My theory was that there was a confounder in the mix (maybe more than one). The best theory I could come up with was that the quality of club management (almost impossible to measure objectively) was the most likely confounder, explaining both the KPIs and the performance measures. It is broadly known in multi-site businesses that the management strength of the business unit managers is absolutely critical to success. 
The only way to demonstrate this with statistics would be time-series analysis of different clubs set against measurable management strength indices. Correlations between different variables will never get there.
And so back to inactivity. I am sceptical about the ability of the researchers to separate the figures from a causation point of view, even if they have been able to do so statistically.
Be very careful what conclusions you draw from correlation, especially if there are many competing and inter-related variables involved.

Continuous growth?

Image: FreeDigitalPhotos.net

The fitness industry in the US grew by 2.3% last year, that's 2.2% points ahead of the growth in disposable income, in a year of a stagnant economy, serious financial concerns for a lot of householders and general depression.
So how did it happen? And is it sustainable?
There are some stunning statistics in the fitness industry...

• Unlike in "saturated" markets like supermarkets and mobile phones, global westernised countries have penetration rates of gym membership of between 4% and 18%.
• Many "mature" markets show continuous growth over the last 10 years, regardless of the state of the economy. The UK market grew at a CAGR of c. 3% over this time.
• New clubs spring up all the time...in good economic times they may be weighted towards the luxury end of the market while in recession they tend towards the budget end. But open they do.
• On average, something like 50% of members quit their gym every year. While some join a different gym, at least half don't and are lost to the industry, at least temporarily.
• Margins can be very high. In a successful club, net profit margins can be in excess of 50% of Revenue. Essentially, there are no variable costs for additional members (except for modest sign up bonuses and sales commissions) making Gross Margins close to 100%.

And all this against a backdrop of increasing obesity rates. Broadly, two thirds of adults are overweight or obese in both the US and the UK, and not far behind in many other nations.

While it's hard to fully analyse this trend I do have some observations:

• People are becoming more health conscious. While this appears contradictory to the increasing obesity rates, I think the majority of the "right weight" one third are very conscious about staying there, and an increasing number of the overweight are becoming conscious it's a problem and need to do something, spurred on in part by TV programmes like "The Biggest Loser".
• People are becoming more urbanised. Even in our western nations where urbanisation has slowed, there is still a growth in the proportion of people living in cities. Cities that can be uncomfortable or even dangerous in which to exercise outside.
• People are becoming more "time-poor". The gym is a good solution to this problem, for example, being able to squeeze in a spinning session at lunchtime can feel a whole lot more achievable than a full blown bike ride after work.
• People are getting fed up with not achieving results. While a symptom of the gym industry, that lots of members do not achieve their goals, there are benefits of gym training. In particular the regularity of a group exercise session that becomes a fixture in the diary, or the expertise and motivation that a personal trainer provides, are often provided in the confines of the gym.
• People get best results with exactly the type of training provided in a gym. Whether you are into strength training and need the flexible dumbbells and barbells, or into CrossFit that can only practically be done in a CrossFit box, the results focussed latest training schemes require a gym membership.

So what could halt this growth phenomenon in the fitness industry?

• While health-consciousness is growing, so is the knowledge that the role of nutrition in weight issues is overwhelming and that exercise is a very distant second place.
• At some point, the technologically possible and promised flexibility to live anywhere and work remotely may actually lead to a reversal of the urbanisation trend. Going for a walk or run or cycle ride in the countryside will become a much more acceptable and achievable mode of exercise.
• I personally can't see an end to the time poor phenomenon, even though I believe it is more of a mindset than a reality. What I mean is that people place a massive value on "being busy" and feel undervalued if they are not. This fundamental psychological effect is unlikely to change. People will continue to look with suspicion on people who can plan enough time for an hour's hike during the workday. I could be proved wrong of course...
• As knowledge grows about the types of exercise that are most effective, there will still be a demand for a gym albeit a different type of one. During a slow work period recently, I had more time to exercise. I still "needed" the gym, but only for the assisted pull-up machine, and because my gym had a swimming pool. If my membership had not been complimentary, I may well have decided that I didn't need it so much after all.
• Strength training and Metabolic Conditioning work best. More people will get to know this and therefore demand for this type of training will increase. Body weight can be an effective option outside the gym, and a CrossFit WOD can usually be performed at home...whether they will be in the future is questionable. Decades of DVDs and TV fitness programmes, home gyms etc have not dented the gym industry growth...yet.

What I do think is that as people learn more about the over-riding role of nutrition, they will stop kidding themselves that they can eat what they want and "work it off" in the gym. As their eating habits move towards a more healthy diet of more unprocessed, real food, and away from processed, sugar-laden fodder, they may also lose the obsession with working out as a penance. As their bodies respond to proper eating, they may end up doing "natural", unprocessed exercise (like simple walking) instead of processed group sweat sessions. If the social part is also cracked (eg walking with one's family) then another major need for the gym disappears.

So, contradictory as it may seem, health education may end up being the one single factor that stunts the growth of the fitness industry as we know it.

Turning up

Image: FreeDigitalPhotos.net

It's not enough just to turn up. But it is a good start. 
News today that many G4S employees for the Olympic security team have not turned up for work. And this is an economy with high unemployment, where the people concerned have received training, and could get to be part of this major event for our nation. 
It almost makes me wish I'd signed up myself.
So while others will focus on the army, the morals of using stretched forces recently returned from active service, in advance of many of them being made redundant and replaced with reservists, I don't want to go there...
For me there is something inherently disciplined in turning up. Every day. On time.
It is a good start. No matter how well trained someone is, how pleasant, how hard-working, these traits can only come to the fore if the person is there at work.
It is a discipline that appears not to have great sway among the G4S recruits...or indeed in the wider population. And yet the vast majority of workers do turn up.
I believe this is a discipline which has to be encouraged. First get them there, and then worry about getting people to do what's needed in your business.
How to start? I would suggest this...be an example.
I have seen many small business owners who see it as their right, as the boss, to turn up when they want to. whether it's family commitments (or choices), leisure activities (check out the local gym at 10am most mornings and I guarantee you'll find some business owners - those that aren't at the golf course!), or simple arrangement of the working day to suit, because they can, I believe this can set a poor example of the discipline of turning up.
If you want your workers to turn up every day at 9am...then turn up yourself at 8.30am.

Simple vs hard

It occurred to me that I mention often that something is hard. Cultural change at Barclays is hard. Forming a new habit can be hard - whether it's eating healthily, standing up at your desk or going to the gym.
But that's not to say that these things are not simple.
Simple is not the opposite of hard. But many people I have met seem to act as if it is.
Simple is the opposite of complex.
Hard is the opposite of easy.
Some of the things most worth striving for are simple. And they are also hard.
In business, complexity can kill. In one major Retail organisation I worked with, there was a major focus on simple. There were projects to simplify in-store processes, like shelf-ready packaging. There were Simpler Office projects, some of which I led. We had seminars on simple communication delivered by David Yelland, ex of the Sun. 
The CEO at the time recognised the importance of "Simple" in the context of a multi-site (>1,000 locations in the UK alone), large employer (>200,000 people) business...and conversely knew that complexity had to be actively worked on to be driven out of the business. His mantra was: Do or write something, then simplify it, then simplify again. When you've simplified it 10 times, then it is probably as Simple as you can get. Of course most people don't put the effort in...one or two rounds of simplification happen at most. And I'm sure the CEO knew that he would not get 10 rounds...however the act of asking for 10 meant that he would get 2 or 3 more often.
Conversely, I could give examples of where complexity ruins a fundamentally good idea. The most obvious one for me is the leisure business looking to introduce a new incentive scheme. A complex formula including an over-performance element was developed, scenarios run based on the last quarter's performance, everything checked and rolled out. One region manager looked pleased but kept quiet. At the end of the quarter when the bonuses were calculated, his bonus was larger than all the other (10) region managers put together. A critical element had been missed, because the formula was too complex.


There are a number of questions to ask to determine if your idea or writing is simple enough:

• would my grandmother understand this? 
• What about my 10-year old son? 
• Can I explain it to someone in the 30 seconds it takes to go up in an elevator?

The method I prefer is to simply try it out on colleagues or direct reports first. Get their input, ideas and feedback. Then do it again with others. Once you have done a few rounds, seriously challenging yourself at each go around, then go back to your original confidant again. There's nothing better than feedback that says: Aah, now I get it...much simpler than last time.

And if you do that, you will find more success in selling your ideas. Consider the runner-up in The Apprentice 2012, Nick. He failed to present what was a simple idea in a simple way, and you could argue that he lost because of it. OK, Lord Sugar may still not have gone for it as it wasn't in his realm of things he likes to do, but I suggest that a simple delivery would have massively increased Nick's chances. Lord Sugar - along with other business leaders and financiers - don't like ideas they can't get immediately. If they have to ask basic questions, then you haven't explained it right. Ricky (the winner) pitched a safe, one could say boring, idea, but in a clear and simple way, winning him the day.

How can a Simpler approach help you in your business?

PS One word of warning. Over-simplification also exists...but it's much rarer, and a subject for a future post.

The men who made us fat

I have been an avid watcher of the BBC2 series "The men who made us fat", combining as it does my twin interests of business and nutrition.
The series concluded last week with the summary programme, the first two episodes in the series having expertly shone the spotlight on a) sugar, and b) portion sizes, as the 2 horsemen of our current nutritional apocalypse.
The third programme was a fascinating insight into the food industry. 
The Sunny Delight section was particularly poignant for me...I was working in the Procter & Gamble Beverages division when Sunny D was launched in the UK - albeit I worked on the "other side" of the business looking after the slightly more nutritionally sound fruit juice/drink brands in Germany, Austria and Netherlands. My nutrition knowledge and interest was relatively low at the time - as evidenced by my somewhat excessive (and legendary) consumption of Pringles! But I always had reservations about the formulation of Sunny Delight...reservations I couldn't quite express at the time but which were pretty clear in the programme.
The main focus point for me though, was how the food scandals of BSE, salmonella in eggs etc, created the business opportunity for suppliers and supermarkets in Organics, and in making health claims (like "low fat", "no added sugar", "contains calcium" etc) for products that are essentially not so healthy.
The programme did a better job than I can do of expressing the health arguments and opening some interesting political questions regarding possible regulation to address some of these issues...what I want to talk about is taking opportunities.
What I think business people can learn from this is the absolute expertise shown by Tesco and the other supermarkets, along with food manufacturers, in exploiting a market gap. How do they do that?

• They are experts in consumer psychology and behaviour
• They have a captive audience
• They are very fleet of foot in trialling, launching and adapting products
• Once they see an opportunity, they drive a large fleet of delivery trucks through it, establishing new trends incredibly fast and creating a new "normal"

I glanced at the shopping basket of the customer behind me at the supermarket today and was confronted by a massive array of "low fat" this and "reduced calorie" that. I wanted to ask them if they'd seen the programme - and to recommend it on the i-player if they hadn't.

The reality is, it will take the supermarkets with a similar opportunistic approach to change things for the better.

And I personally am a fan of giving them the incentive to do it. Slap a tax on sugar and sugar substitutes to start with and watch as the supermarkets find the new opportunity in that. Sure, they will find a way...and that's why sugar substitutes must be included as they are potentially even more harmful to our weight and our health than sugar (which, as "The men who made us fat" so clearly demonstrated, is public enemy number one.). But the response will be rapid and effective - you can rely on that!

Stand up!

News today that less time sitting extends your life.
I am tempted to repeat the Dennis Leary line about smoking reducing your lifespan...and how the years it reduces are the ones he doesn't want, the ones at the very end...
What struck me, and indeed strikes me about 3 times a year when I have chronic back problems, is that sitting is proscribed to millions of office workers every day - I have sat at an office desk for over 25 years, and my back reminds me of that fact often...
Businesses set up their offices with desks that can only be sat at.
Some enlightened businesses encourage certain measures to counteract this. I am a big fan of the standing up meeting, with a waist to chest height table for papers, coffee etc, but no chairs. Studies have shown that such meetings are more productive, quicker, and participants more alert and involved. Completely practical for a 1 hour team meeting , one-to-one discussion with a direct report, maybe less so for an all-day Board or strategy meeting.
And businesses should care...not only does sitting a lot reduce your lifespan (and let's face it, most of those lost years will be in the employee's retirement years, not affecting the company at all...or worse, impacting them "positively" by reducing pension payouts) but it also impacts general health. Just ask my back...
Practically, I have experimented with the idea of a standing up desk. It is great (for a short while to start with...but you can build up time with practice). But too often, my home office looks like a normal office, with some extra storage boxes on the floor next to the desk, designed to prop up the monitor and the keyboard/mouse to enable standing up. The issue is of course, that my boxes are more often on the floor than they are on the desk doing the job they were selected for.
Part of that is habit. It doesn't actually take that long to switch (maybe 5 minutes to rearrange cables etc). And like most habits, it will take 3 to 4 weeks of daily implementation to fix. The photo is my desk in its "stand-up" mode...3 boxes and a few minutes is all it takes to convert from sitting mode to standing.
I would encourage you to try it out...and encourage myself to do at least an hour standing up every day. My commitment is that this blog will, from this day forward, always be written standing up.
Also, if you are a business owner, experiment with some stand-up meeting tables and see what happens. You might just be amazed by the positives, both directly on your business of more efficient and effective meetings, and on your employees health.

Gyms for specific target groups?

News reached me today of a gym in Canada that is only opening to women needing to lose 50lbs or more.
The consumer choice element of this idea is clear: there are a number of women out there that feel intimidated by regular gyms and that removing the sources of that intimidation, whether muscle-headed men or skinny women, will help them to join the gym, keep attending, and lose the weight they want to. People who do not want this choice can always choose other "normal" gyms if they don't like this idea, or indeed are male or not significantly overweight.
From a business point of view this interests me as an example of product splicing to a small but (hopefully) loyal niche market and customer base. By providing exactly the product that this small group want and nothing else, the operators hope to carve out a profitable niche.
All seems well, perhaps, until you throw in some specifics of the gym industry for consideration...

• People leave gyms all the time. World class retention rates in the industry are in the 80 to 90% range. The majority are more like 60%. Below about 40% and you have a serious problem likely to end up in closure or bankruptcy, or both.
• Many "target groups" don't want to feel like a target group. Sure, they'll tell you in market research that they want a women only gym, or a seniors gym, or a women with more than 50lbs to lose gym. Reality can be very different.
• Limited sales. However much we might not like it, the gym industry is a sales industry, and because people leave all the time, new members have to be added. When running a gym chain, we had some "women only" gyms in the portfolio. One colleague expressed the problem perfectly: "the pond we are fishing in has only one quarter of the fish of other ponds. Women only already limits it to 50%, and then 50% of women want to train in a mixed gym." Applying this to the Canada situation and adding in the overweight criterion, I predict this gym will struggle for sales...after a potentially successful pre-launch and early start.
• Lack of role models. A lot of overweight people want to see skinnier people in their gyms. It gives them hope that they too can lose the weight ("if they can be lean, so can I" mentality). They also want some subconscious confirmation that their gym delivers results. If everyone is overweight, this effect can be missing.
• Challenge. People want to be challenged to do more. And they also probably need it. Not everyone can afford a personal trainer, and the motivational impact of the fellow class member with more weight on their BodyPump bar should not be ignored.
• Lack of results. Unfortunately, the majority of people do not reach their fitness goals. A gym targeted at the more weight-challenged will likely suffer even more from the visible lack of progress that a large majority of the members will likely make. This, in the end, will probably lead to even more attrition and put this particular gym at the lower end of acceptable retention rates.
• Long term loyalty. Let's take a best case example; a lady joins with 100lbs to lose. Over a length of time they successfully shift 50lbs of this. What then? Kicked out for not being overweight enough? Of course not...so now you have members with less than 50lbs to lose, but no new members. Oops, now we have a problem. The reality of a gym is that you need to deal with every member individually but have some principles and consistency in the treatment.

A more fundamental issue...

My personal belief and experience, after many years of trying to shed excess weight while visiting my gym at least 3 times a week, is that losing weight is perhaps 10% about exercise at most, and 90% about diet. The very concept of a gym being the answer to weight issues, is in direct contradiction of this observation. Some studies have even demonstrated that exercise increases the amount people eat by more than the calories burned in the gym. Not that I subscribe to the strict calories in vs calories out theory of weight loss - but there is an element of calorific values that is relevant. 

Some gyms do a great job of educating their members on nutrition, but it is still down to the individual to control what goes into their mouths for every minute of every day - and their success is much less dependent on the 3 hours per week they may spend at the gym.

I hope that this gym educates and instructs their members on nutrition, that they do have weight-loss success, loyal members and a great business model. But since I have experience in the gym industry, I'm not holding my breath. And I'm not going to advise clients to follow their lead and open copycat or similar niche gyms.

The business of healthy eating

It struck me this morning that the business of eating healthily presents a potentially unsolvable dilemma for business...

Healthy eating = real, unprocessed foods = local, small producers = small food

while...

Unhealthy eating = processed food = large, global manufacturers = BIG FOOD

BIG FOOD has a stranglehold over consumers:

• Food addictions, especially to sugar (and the metabolically close relations, starches) are a human condition that we all share. Though our responses to this addiction are very individual, the common ground is the way our bodies respond to these substances, craving more and more.
• Availability - go into any supermarket and be confronted with thousands of choices, most of which are the choices between unhealthy options
• Marketing - many unhealthy foods are marketed by focussing on the least unhealthy element (in the consumers mind, no regard to the science) eg "low fat" and my personal favourite "no added sugar" ('favourite' because it usually masks a whole lot of artificial sweeteners, which many studies have shown to be even worse for us than sugar)
• Price - Sugar and carbohydrates are cheap. Just compare the price per gram of a loaf of bread with even the cheapest cut of meat.
• Product Differentiation - the foods that are best for us are generic and cannot easily be "differentiated" in marketing speak (meat, fish, eggs, vegetables, nuts and seeds) while the unhealthy stuff is largely branded, packaged and subject to being "marketed"
• Convenience - we crave the easy life, and the supermarket is just easier than the farm shop
• Longevity - ever noticed how supermarket "fresh" vegetables last suspiciously longer than allegedly equally "fresh" ones bought at a farm shop? This means that we need to shop less frequently in supermarkets, and more than weekly in farm shops etc. That's just too much trouble, even for the most ardent supporters of fresh, local, organic, real food.

The campaign for real food, on the other hand, depends on a large number of individual consumers seeing through all of this and choosing, often at higher cost, lower convenience, the healthy real food way. And that's hard. I'm a committed real food advocate (Really? You couldn't tell?) and I find it tough. I usually get the farm shop twice a week but still need to "top-up" at the supermarket. The farm shop is kind of convenient, being on my journey between home and my gym...but is still out of the way compared to the very convenient supermarket. In fact, in terms of convenience, I can get to 2 large Tesco stores, 1 Tesco Express, 1 Morrisons, 1 Co-op and 1 Nisa faster than I can get to the nearest farm shop. And I live in the country. For the majority of urban dwellers, forget it!

I have looked at the economics of a start-up business, looking to deliver locally produced fresh produce in a medium sized city, numerous times a week, using sustainable delivery methods. The problems are numerous:

• Distance - food miles are almost impossible to avoid in getting the produce from the growers to the consumers
• Price - buying economies of scale are limited in such a scenario
• Profit margin - as I stated above, real food are commodities, and as all business people will know, commodities are incredibly difficult to turn a margin on. It is the processing of ingredients that is the "value add" in the supply chain, enabling a decent margin on ready meals, while prohibiting much (or any) margin on fresh real food. Look no further than milk prices for this demonstration...real, fresh milk: price paid by supermarkets to producers is below cost (consumer price @ c. 25p per litre). Milk drinks with added sugar and chemicals: massive mark-up for the manufacturers and supermarket (price @ roughly 75p per litre). The same applies to meat, fish, eggs, vegetables, nuts and seeds.
• Range - even if you could provide 100% of the consumer food needs through such a business, what about all the other products that we know and love and can't leave out. Clothes still need washing, floors need cleaning, pets need feeding, babies need nappies. It would be a challenge to find more than a handful of households that also eschew all of these products, and why should they? What this does mean though is further inconvenience.

All things together, the threshold for the vast majority of consumers in terms of price and convenience, mainly convenience, is simply too high to effect much change.

I am still convinced that there is a key to all this that will unlock the problem. Maybe it's in the hidden healthcare costs of our current system catching up with us. Maybe it's in taxation of sugar containing products.

Or maybe the willingness of consumers to accept the trade-off - or better still to see the trade-offs as worthwhile and valuable - is growing and will continue to grow in a groundswell of real food.

I hope so. And if you read this, I urge you to join in. Start small, start with yourself. Get yourself down to your local farm shop. And if you live in a big city and there is really no option, order online from the organic delivery guys (I know Abel & Cole but other suppliers are available...)

And if enough people join in, maybe that start-up delivery business of mine will have a chance.

Olympic sponsorship

Today's post follows on from Newsnight last night, and the discussion on the sponsorship of the Olympics by Big Food.

The "choice" of sponsors for the Olympics has long bothered me. The event that symbolises the very peak of athletic performance being associated with major global brands that sell the key products that make the general population obese seems like a case of strange bedfellows.

Dig a little deeper and of course there is no strange relationship here. The crux of the matter is money. That is the common tie that binds. The Olympics needs money from sponsors, and the sponsors make lots of money out of willing consumers interested in the Olympics. A marriage made in heaven?

But let's dig another level...

The Olympics needs money from sponsors?
Or does it? Sure, to be on the scale it is, to have the ticket prices it does, to have the massive Opening and Closing ceremonies etc, the Olympics needs money. But surely the point is that there are a number of choices that are made by the IOC that drive the need for this sponsorship money:

1. Scale. The Olympics, at least in the ideal, is about the sport. The provision of the facilities needs money, but surely we the taxpayers are paying for that. The actual Games themselves don't need the sponsorship. I'm not so close to how the funding works: I suspect the sponsorship money goes directly to the IOC and has little to do with LOCOG. How the largest McDonalds in the world, based on the Olympic Park, interplays between the two, I'm not sure. An aside is also the question of what happens after the Games; my prediction - it will be the only money-making location on the Park for many years to come!
2. Ticket prices. All other things being equal, the ticket prices represent price points that are too low, if the Olympics needs sponsorship money to make up the difference in the coffers.
3. Ceremonies. In "the good old days" there was no major ceremony....the athletes paraded with flags and anthems were played. Done. Yes, we've all got used to lavish choreographed events with a cast of thousands. But necessary? I think not.

The real point is this...the IOC makes a whole lot of inter-related choices that result in the whole Olympics as it is. That includes the scale it is, the ticket prices, the ceremonies and the sponsorship, and the funding from the taxpayers. There are lots of moving parts...and it may well be that to choose not to take the money from Big Food sponsors may require a rethink of the whole scale of the thing, or ticket pricing, or both.

My interest in nutrition leads me to other observations too...

Real food will never have sponsors available to promote the alternatives to Big Food. Real food is locally grown, sustainable and usually small-scale. Making any money in that market is tough enough, but making enough to sponsor an event like the Olympics is so far out of sight. Given this void, it's not surprising that Big Food steps in. The harsh business reality is that they only have the money to fund sponsorship because lots of people choose to feed themselves on their offerings, both at the Olympics and the rest of the time.

Ultimately, the consumer choices decide the world we have. If enough people choose to eat real food instead of the fodder served up by Big Food, then the profits will not be there to be re-invested in sponsorship deals. I for one will be continuing not to eat McDonalds' Big Macs or Cadbury's chocolate, nor to drink Coca Cola, during these Olympics. But then I eat and drink only a tiny amount of them anyway. That's my choice.

Given the links though, I am also considering my "involvement" in the Olympics in terms of spectating and viewing. Something deep inside of me tells me I should probably be "boycotting" the Games...until they return to the wholesome, sport-focussed, Olympic ideal principles. I fear that means boycotting them for the rest of my days...

Barclays and cultural change

For my first post I want to talk about the major business story of the last week...Barclays.

I am not a banking expert, so I'm not going to focus on the technical aspects of what Barclays did to allegedly "fix" LIBOR...I'd rather leave that to MPs and journalists who claim to know more about it.
BUT, first things first, the photo above is a joke and has been photo-shopped. I do not want to be part of propagating the misinformation that this is real...
The one observation I do have about the technicalities: the fact that Barclays' submissions were always at the top of the range of the views on LIBOR from all the banks that submit, suggests to me that they were a) consistent and b) that they were often excluded from the calculation as an outlier. Therefore the actual influence on the LIBOR was minimal, if not non-existent.

What I find interesting from my point of view as someone engaged in business transformations is the expectations we can all reasonably have on the cultural changes that are (almost) universally acknowledged to be necessary within Barclays...and likely within other banks once the full story comes out.

Cultural change is hard.
For an individual to overcome a "cultural change" takes dedication, consistency, perseverance and a lot of will. My favourite examples of this relate to nutrition, a subject I have researched a lot about over the last few years. Every person has a nutritional culture, developed over many years from family influences, experiences, beliefs and habits. Whether you eat lots of carbohydrates, if you are vegetarian, if you follow the Paleo or Primal diet and lifestyle (as I do) - all of this stems from a wide variety of influences. My personal journey of cultural change over the last 2 years, from a classic SUKD (Standard UK Diet - credit to Simon of @Primalliving) of cereals for breakfast, sandwiches for lunch and ready meals or fast food for dinner to a Primal diet (with appropriate credit to Mark Sisson and The Primal Blueprint), there have been many challenges, stumbles, back-slidings. I am still tempted by croissants and tortilla wraps - and give in to them albeit less often than I used to. It's hard. I keep going largely because I have control over what I eat, I am convinced by the science and the experiences of myself and others that the Primal approach works and is healthy for me. In simple business terms; I have a vision, I have a strategy, I have accountability, and I have power.


For a company, cultural change can be even harder to achieve. The sheer numbers of people involved, each with their own views, beliefs, principles and experiences make consensus hard. Usually, the task of shaping the vision and strategy fall to the Board or the CEO.
And here we already see the largest problem Barclays faces. It would likely have been speedier, and possibly more effective, for Bob Diamond to have led the cultural change. Being already accepted by the Barclays people as their de facto leader already gives him a massive head start vis a vis his successor. But, the vast majority of people, both inside and outside Barclays, now agree that he had to go and his position had become untenable

In companies, when a new CEO takes office, there is an inevitable period of "storming", when people will air their differing views on the suitability of the leader. In summary these will fall into 4 groups:

• We should never have got rid of the old CEO
• This new CEO is the right person for the job and I'm fully behind them
• We should have appointed Person X (a specific other person)
• The most difficult group, for whom no CEO would be good enough

In order for the new CEO to effect cultural change, they must first recognise that the needs of these groups are very different. And while the vision for the new culture will be, indeed must be, the same for everyone, the strategies of engagement for these groups have to be assessed individually.

The storming and norming phases may proceed at different speeds and with a different focus.

In one transformation I was involved with, I was "injected" as the new COO, along with a new MD. This was in a country that was not native to either of us, nor did we speak the primary language. The business was declining, and quite rapidly...business changes (like pricing, structures, people, policies) were all needed, but so was a cultural change. This particular country had a bit of an insular reputation for rejecting anything from outside as irrelevant to them. So the struggle was for the team to accept direction from these "outsiders", while not giving up on certain aspects important to their national and corporate cultural identity.

Now I don't claim to have been 100% successful in the task, but certain changes were made. Some members of the team were thought-leaders, accepting us as a new management team immediately, and ready and willing to go with us in the new direction we wanted to take the business. Some of these knew we had it "right" and had been longing for the change. Other colleagues trusted these thought-leaders and followed them more than us. But that was still a big tick in the box. As long as people were going in the right direction, I knew the cultural change would come in time.

But there were some big issues. Interestingly in my case, these were some other members of the management team, in particular 2 guys that had been around the longest, and were partly responsible for the previous poor performance that we were trying to recover from. After months of cajoling, inclusion, consultation, we finally gave up and just started directing. When our efforts were still undermined and ignored, the door was the only thing left to show them. If I had my time again, the one thing I would do differently is to have shown them the door much sooner.

And so back to Barclays and the learning for them...there will no doubt be a number of others, some of them in senior positions, that need to be shown the door. My view is to determine who is critical, analyse which of the 4 groups they belong to, and then deal with them appropriately. And that means quickly.

Welcome

Welcome to GT Times...

The purpose of this blog is to share my views, mainly on business. I will explore some of my experiences, my views on events in the news, or reactions to other blog posts I read.

I hope this blog is useful for you...or at the very least informative and entertaining.

Happy reading!