Nick Hindhaugh, director, Six Degrees Executive

Welcome to the October issue of Six Degrees Connected - our quarterly e-newsletter, which forms part of our highly successful Thought Leadership Program.

In this issue, Neil Sangster, director of analytic consulting at Nielsen Pacific explains how to get the most from your shopper marketing strategy, while Steve Roger, managing director of Lauras International Pty Ltd and Jeremy Praud, partner of Lauras International Europe look at how organisations can become more ‘lean'. Also in this issue Maryanne Mooney, director at Full Circle Feedback looks at 360 degree feedback, while Melissa Rosenthal, a director at South View Consulting discusses the art of managing mistakes.

It's been a tough 12 months for the recruitment industry but there does appear to be renewed optimism among many Australian businesses. According to National Australia Bank's recent Monthly Business Survey, confidence has returned, with many companies reporting improved sales and profits. With businesses feeling more positive about the future, many are now actively hiring again and the race for securing the best talent is hotting up. Candidates are also starting to feel more confident about their longer-term prospects which is encouraging them to more actively pursue opportunities. Despite this sense of optimism however, many companies are still exercising caution as we approach the end of 2009, so we're not quite out of the woods just yet.

Our Thought Leadership Breakfasts continue to be popular, with Nielsen providing its top tips for maximising competitive advantage in today's retail environment at our breakfast in June. In July, Kepner Tregoe spoke on the future of operations improvement and integrated performance management systems. Both breakfasts were held in Sydney. In August, we hosted a successful breakfast in Melbourne, which was led by Ben Crowe, co-founder of Gemba, who spoke on sponsorship in a tight economic market. Coming up in November in Melbourne, Portland Group will discuss the latest trends and challenges in procurement.

We are also delighted to announce that Six Degrees Executive has won the coveted 2009 FEMA Award for ‘Recruitment Firm of the Year'. In just over five years Six Degrees Executive has become Australia's premium specialist recruitment firm in sales, marketing, supply chain and engineering and we'd like to thank all our staff, clients, candidates and partners for helping us win this prestigious award. We were also very pleased to be named ‘Best Executive Recruitment Company' for the third year running at the Seek SARA Awards 2009 and wish to extend a warm thank you to everyone who took the time to vote for us.

We hope you find this issue of Six Degrees Connected enlightening and inspiring. If you have any story ideas or would like to contribute an article yourself, please contact Amy Hegvold at: amy@sixdegreesexecutive.com.au.

Neil Sangster, director of analytic consulting, Nielsen Pacific

Neil Sangster, director of analytic consulting at Nielsen Pacific discusses how to conduct targeted shopper research in order to collect the information you need to improve your sales performance...

"I want to understand how people shop in my category."

This is a typical question our clients (both manufacturers and retailers) include in their shopper research briefs when attempting to develop effective shopper marketing strategies.

My response to the client is usually to offer to save them a lot of money and simply give them the answer - "They walk down the aisle with a basket or trolley and they put things in it!"

This is not meant to be a facetious comment but rather to highlight the point that asking a general question often results in a general answer.

The reality is that shopping behaviour varies from the very simple - "I just buy the one I always do" - to the very complex - "Because my mother didn't love me."

Even if you understand the simple rationale underpinning a purchase, this may not help you if shoppers are not buying your brand. What you need to understand is why they always buy the other brand. Would they buy something else if it was better, cheaper or newer?

Understanding the problem

With this in mind, the first step of any shopper marketing strategy is to understand whether there is a problem. If there is, you need to identify what it is. Just like a visit to the doctor, there needs to be a diagnosis before you can find a cure.

So what sort of symptoms should you look for? (Refer to Charts 1 and 2).

There are three key drivers of sales that you should consider:

1. Shopping trips: Where are consumers shopping?
2. Shopper conversion: What is the conversion rate in retail outlets for the category and brand in question?
3. Spend: How much are shoppers spending?

To understand these key drivers, Nielsen uses the nationally representative Nielsen Homescan panel, which gives us access to 10,000 shoppers every week. This data provides a measure as to where Australian consumers shop and how often. It can also determine whether they buy various categories or brands when they are in those outlets, and what they pay for the items they purchase.

We can compare this information across channels, retailers and brands to identify where the problem areas are for our clients, and hence develop a targeted research program that focuses on the key issues. The result is the delivery of more cost-effective and actionable insights, without wasting time and money telling clients what they already know.

Chart 1: The Shopper Research Cycle - the problem must be diagnosed before a solution can be implemented

Chart 2: Shopper sales drivers - Shopping trips, shopper conversion and spend 

 

Case example: Declining shopper conversion rate

The following example highlights how this unique shopper research works in practice. In a recent study we identified that the problem for the client's brand was a declining conversion rate - particularly among households with teenagers.

By conducting interviews with these 'problem' households and combining the results with price and promotional modelling - we discovered that there were five key reasons for the declining conversion rate:

1. Increasing competition from new entrants to the category
2. Declining brand relevance
3. Lower consumption as part of a meal
4. A poor promotional program
5. Increasingly price sensitive shoppers in the category

By understanding the causes of the problem we could then conduct more detailed analysis to recommend appropriate actions to remedy the issues.

We proposed a range of activities targeted at one or more of the issues that we had identified:

• Increased price promotional activity to stay in shoppers' repertoire
• Ensure appearance in catalogues is supported with display to increase in-store presence
• More special events/sponsorship aimed at teens
• Communicate how the brand fits with meal occasions
• Innovative packaging to refresh and modernise the brand image
• Improve distribution in non-grocery channels where teenagers shop
• Improve distribution of the key sub-brand that has high appeal to teenagers.

Once these actions were implemented we could then monitor the impact on sales (via store tests) and purchase behaviour (via matched Homescan panel analysis).

So the first step in a successful shopper marketing strategy is identifying what the problem is. If there is a clear understanding of where the areas of weakness are, then you can focus on what needs to be done to improve your sales performance.

Conducting targeted shopper research collects the information you need to ultimately deliver the best strategy to maximise the return you get from your shopper marketing tactics.  

Neil Sangster, director of analytic consulting at Nielsen Pacific. The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). The privately held company is active in more than 100 countries, with headquarters in New York, USA. Please send any comments or questions you have in relation to this article to: cindy.panzera@nielsen.com

Steve Roger, managing director, Lauras International Pty Ltd and Jeremy Praud, partner, Lauras International Europe

In the current economic climate everyone is talking about the importance of being ‘lean'. But what does it mean to be lean and are your efficiency measurements actually hiding opportunities for improvement? Steve Roger, managing director of Lauras International Pty Ltd and Jeremy Praud, partner of Lauras International Europe LLP provide a few tips to help companies measure their losses correctly as the key to becoming lean...

In the landmark book, The Machine That Changed the World: The Story of Lean Production, authors Womack, Jones and Roos chronicle the automobile industry's evolution from mass production to lean production. The term ‘lean' was coined by the authors to describe Toyota's successful production system. Indeed Toyota's efficiency was remarkable - in the 1980s it took 17 hours for a Toyota car to be built and ready to ship, whereas a Mercedes spent that amount of time in the rework area alone. The Toyota Production System (TPS) transformed this small post-war Japanese car company into a world leading car manufacturer, and has become a model for efficient production worldwide.

The core aim of being lean is to eliminate ‘non-value adding' activities (i.e. those that customers wouldn't want to pay for) in order to compress production time and create competitive advantage by optimising resources (i.e. people, space and capital).

Toyota defined seven types of waste (muda) to describe ‘non-value adding' activities:

1. Overproduction
2. Defects
3. Inventory (more than minimal)
4. Transport (further than required)
5. Waiting
6. Motion
7. Processing (unnecessary).

They applied key principles to reduce these wastes, including ‘Right First Time Quality' (jidoka) - or the quest for zero defects and ‘Just In Time' (JIT) production - or reducing the costs associated with inventory.

Each key principle has associated tactics. ‘Right First Time Quality', for example, involves mistake proofing (poka yoke), ‘One Piece Flow' (i.e. having a batch size of one to detect defects immediately) and ‘Stop The Line' (i.e. authorising employees to stop the line for a defect - the expense involved in stopping the line helps to fix the problem).

JIT reduces inventory through ‘One Piece Flow' and ‘Pull' production - or making only what the customer wants, and stops expensive overproduction.

JIT principles include:

• Tightly controlling small quantities of strategically placed inventory (kanban);
• ‘Single Minute Exchange of Dies' (SMED) - reducing the time to change products    means the stock can be minimised; and
• ‘Production Smoothing' - making sure your production line is flexible enough to produce a diversity of products without compromising efficiency.

Over the past two decades all of these principles and tactics have been successfully used in many manufacturing and non-manufacturing businesses worldwide. So why do many businesses not achieve the benefits expected?

Probably the main reason businesses fail to become lean is because they don't know how to measure their losses correctly.

Here are four common mistakes that businesses make when measuring efficiency:

1. Measuring activity, not productivity - An administrator notices a mistake whilst processing forms - she gets a fax confirmation and corrects the transaction. She ticks the boxes for ‘missing data' and ‘confirmation fax', which gives an extra allowance of 60 minutes. Although the transaction took 90 minutes instead of the normal 30 minutes, her efficiency holds up because of the extra activity.
2. Ignoring the elephant in the room - Many companies mistakenly exclude losses that are no longer seen as problems. Remember, it is better to include losses than overlook them completely. Ignoring a problem won't make it go away.
3. Using the wrong bottleneck speed - A common pitfall, and one that is hard to spot, is that many organisations allow say 20 minutes for a phone call, when the call could have been be made in 10 minutes. I could spend all morning making calls, stop at lunchtime, and still report 100% efficiency, when in fact my efficiency is under par.
4. Confusing the target with 100% - Some organisations seem to feel bad about admitting to a low efficiency, so they have standards with hidden allowances. Unfortunately, making allowances and ‘hiding' losses doesn't help us improve.

So what to do about it? Here are a few things you can do right away to become more lean:

1. Ask what is included in your efficiency measure. Listen carefully. The only correct    answer is ‘everything'.
2. Ask a few of your senior team "What are the top three business losses?" If they come up with different answers, it's time to ask some tough questions.
3. Actually watch a production line for 10 minutes. Check the output, and ask the operator what the maximum output could have been. If there is a difference, find out where it is recorded.
4. If there are large variations in employees' workloads, but the job always gets done, ask yourself how. Also, find out what activities your employees undertake at the end of their shifts.

Ultimately, measures do drive behaviours, so make sure you're really measuring your biggest wastes - this is the first step to making your company lean.

Steve Roger is managing director of Lauras International Pty Ltd and Jeremy Praud is partner of Lauras International Europe. Lauras International partners with businesses to drive rapid and sustained bottom line improvement. Their core expertise is in training and implementing change. Please send any comments or questions you have in relation to this article to: stephen.roger@laurasinternational.com

Maryanne Mooney, director, Full Circle Feedback

Full Circle Feedback has recently reviewed the data it has collected over the last decade from the 360 degree feedback profiles of thousands of leaders of some of Australia's top private and public sector organisations. Here, Maryanne Mooney, director of Full Circle Feedback reveals the qualities we most value in our leaders and explains how 360 degree feedback can help leaders address some of the key challenges they face...

There are many qualities that we want our leaders to display but what do we consider the most important of these?

According to the data we have collected over the last ten years from thousands of 360 degree feedback profiles, the strengths that Australians most value in their leaders, as perceived by leaders themselves, their peers, direct reports, managers and stakeholders, in order of importance are:

1. Results focus
2. Problem solving
3. Strategic focus
4. Decision making ability
5. Focus on quality
6. Customer focus
7. Teamwork
8. Accountability

Our research also explored what people perceive to be the greatest challenges to leaders. According to our review, in order of importance, the biggest challenges that leaders face are:

1. Developing people
2. Conflict resolution
3. Innovation and change management
4. Managing performance
5. Developing trust
6. Celebrating success
7. Influencing and motivating people
8. Developing self

So how can 360 degree feedback help leaders improve?

As managers and leaders we are all works in progress. One of the great benefits of 360 degree feedback is that we catch people when they are on their journey, help them focus on their strengths and ask them to honestly examine how they can be the type of leader that everyone wants on their team.

360 degree feedback allows leaders to gain honest feedback from their peers, direct reports, managers and stakeholders. Gaining such an holistic picture of their performance as a leader can help leaders become the very best they can be. It also allows teams and organisations to strategically build their leadership capacity.

So what areas does 360 degree feedback address?

At Full Circle Feedback we typically look at four key areas:

1. The tactical/strategic tension - Today's workplaces have a frenetic pace and we see many people caught in the ‘day-to- day' trap. We ask leaders to consider their roles as both a manager (involved in immediate situations) and as a leader (involved in more future-oriented activities). People need both management and leadership skills but as they become more senior, we often find they lack strategic thinking and influencing skills. 360 degree feedback can help leaders address these shortfalls.
2. People - A high degree of emotional and social intelligence is critical for management and leadership success. The ability to demonstrate that leaders value and care for their people, even when under pressure, is often sadly lacking in many of the stories we have heard from our 360 degree feedback participants. Managers who are promoted for their technical skills and their ability to complete tasks can often struggle in this area.
3. Balance - Achieving work-life balance is a huge issue in today's 24/7 world. We often talk to managers and leaders about using the 80/20 principle (i.e. 80% of what I do is likely to be ineffective!) and help them to manage their energy and time better. Many of our clients have faced severe resources cutbacks, which can put extreme pressure on them, especially when you consider the escalating demands of the Information Age and consumer expectations.
4. Stepping into the leadership vacuum - If I had a dollar for every senior manager who admitted to feeling like a bit of a fraud or an accidental success I would have made a mint! We work with people to explore what is blocking their real success and help them step into the leadership space.

Everybody needs honest, constructive feedback to help them be the best they can be. After ten years of conducting 360 degree feedback projects, we believe it is one of the most effective ways to gain honest feedback and help leaders build on their strengths.

Maryanne Mooney is the founding director of Full Circle Feedback Pty Ltd, an Australian company that specialises in individual and organisational change using 360 degree feedback, staff and organisation surveys and leadership development and coaching. Please send any comments or questions you have in relation to this article to: mm@fullcirclefeedback.com

Melissa Rosenthal, director, South View Consulting

Everyone makes a mistake at some point in their career. It's inevitable. So how should a good leader respond to a mistake made by one of their team members? Melissa Rosenthal, a director at South View Consulting offers some advice...

When people make a mistake they tend to react in one of two ways:

• Contrition - they freely admit the error and are keen to work to rectify the issue as soon as possible; or 
• Denial - they try to cover up the error and if/when discovered, they may look to apportion blame elsewhere. This type of response is more difficult to manage.

As a leader it's important to recognise which of these reactions you're dealing with and respond appropriately.

A common response is to publicly yell and scream with frustration, which usually produces the worst outcome, especially if you need the person to fix the problem.

So next time someone in your team makes a mistake it might be worth considering the following before losing your cool:

1. Name the issue, not the person - it's important to define the problem rather than name and shame the person. This takes the emotion out of the issue. For example, I know an excellent manager at a large industrial steel company who has an agreement with his staff that when something goes wrong they come to him and refer to the mistake as a "technical problem". He knows that an error has been made by that staff member but the focus is on issue resolution, rather than on the person.
2. Fix the symptom - identify any critical stakeholders, bring them together and develop an immediate action plan. (Note: The extent of this will obviously depend on the size of the mistake). Don't forget to communicate the action plan so that everyone affected by the mistake is aware of what is happening.
3. Fix the problem - assess the source of the problem. Does it stem from a skill deficiency, an attitude problem or a process breakdown? If you only fix the symptom, it is highly likely that the mistake will be repeated. This is easier with someone who is ‘contrite' than with someone in ‘denial' because they are more likely to be open to considering why the error occurred. This step is often forgotten as the team moves on to other priorities.
4. Maintain perspective and measure your response - how big is the problem? There will be times when the problem is truly significant - for example, when someone gets hurt on the factory floor - while at other times, the mistake may be relatively easy to correct - such as an error in a customer letter. It's important to react appropriately to the problem at hand. If you overreact to a minor mistake, this can discourage team members to be open and honest when future mistakes occur.
5. Close the book - don't forget to discuss the issue with the individual concerned. I've seen many instances where the issue is resolved from the organisation's perspective, but the specific feedback is not provided to the individual until their performance appraisal when it's used against them. It's important to deal with the relevant feedback in a timely manner.
6. Manage your emotions - you're entitled to feel angry and frustrated by the mistake but try to find an outlet that doesn't involve anyone associated with the issue at hand. This can be a colleague in another area of your organisation, a family member or even an executive coach. A calm approach to the mistake and the person responsible will ensure the error is rectified in an effective and efficient manner and can also significantly enhance employee engagement and loyalty.

Melissa Rosenthal is a director of South View Consulting, a Melbourne-based executive coaching firm dedicated to improving business results through leadership and management development. Please send any comments or questions you have in relation to this article to: melissa@southview.com.au