Strategy Archives - Page 2 of 4 - Quadrant Consultants

William Annandale March 9, 2016

Quangos – 7 steps to stay off the bonfire

Quangos are a hot topic of discussion in the UK; the acronym being quasi-autonomous non-governmental organisation and typically meaning an organisation to which the government has devolved power. They cover different ‘arm’s-length’ government bodies, including non-departmental public bodies, non-ministerial departments, and executive agencies.

Around five years ago, the UK coalition government announced that hundreds of publicly funded government agencies would disappear with the aim of improving accountability and costs, the famous ‘bonfire of the quangos’. In fact, according to a National Audit Office report from March 2014, 285 public bodies had been abolished, apparently saving over £2.6bn, but 184 new organisations were created at the same time. Interestingly, of the 184 groups set up between 2010 and 2014, 66 of them are companies in which the government owns some or all of the shares.

This suggests that quangos are not the epitome of bureaucratic waste and excess, as some have suggested. In our experience, these types of organisations often have good people, brand goodwill and engaged customers. At a time when their government funding is either being reduced significantly or withdrawn completely, what they don’t typically have is a commercial approach or culture.

What therefore to do with an organisation that has a future, but not enough funds?

Identify what market you are serving; as a quango or similar, you will have had a captive or guaranteed market for your services. Using a combination of market research and consultation with your existing contacts, the market in the commercial world can be identified and quantified, enough to help strategic direction and help raise funds.
Develop a customer proposition; transform your existing offerings into a customer (value) proposition, to answer the question – ‘what can you do for me (target market)?’ and test with a few prospective customers
Create a distinctive positioning; there will undoubtedly be competitors already providing similar services, so evaluate what you have to offer and determine what is distinctive (unlikely to be unique) versus others
Initiate product development; identify how the current services could be developed and improved, for example by talking to existing customers, and start a programme of new product development; initially building on your in-house capabilities
Produce (or update) a business case and plan; an important discipline to help establish whether there really is a commercial opportunity but also for approaching potential funders with a well thought through rationale
Consider future status and structure; there are many options for the future status of the organisation, including whether the team want to continue to be part of a not for profit enterprise. There are also key questions about governance and structure; who has the expertise for different roles, where are the gaps and how are they going to be addressed, how is remuneration and ‘equity’ to be decided etc?
Develop a communications plan and ‘launch’; the new enterprise cannot be the best kept secret, it needs to communicate and promote your services. Quite likely a ‘soft launch’ initially, contracting with some warm contacts before committing to more ambitious plans

7 steps; quite straightforward in principle, not so easy to achieve but a robust way of transforming from quango to a flourishing enterprise.

How many will then find themselves on fire as opposed to being on the bonfire?

Peter Hayes January 5, 2016

Innovative retail propositions breathing life into the high street

ArkHive retail proposition — ArkHive – the new Identity shop from Timpson

If you go down to the shops today, you’re sure of a big surprise. Look along the high street, and you might see some amazing new retail propositions. Let me highlight a recent new proposition, ArkHive®, the identity shop from one of our oldest and most loved retailers, Timpson. Oldest? They do not come much older than established 1865. Most loved? A regular top 10 in the Sunday Times 100 Best Companies to Work For.

New kid on the block

Let’s take a look at ArkHive, from the outside in. Let’s see what it says about the high street, and a reappraisal of bricks and clicks combined.

From the kerbside in, we can work out some of the driving forces behind ArkHive. A large retail estate, over 1400 shops, to defend and develop. Timpson’s photo subsidiaries Snappy Snaps! and Max Spielmann were both facing a ‘PESTLE’ problem with a capital P, but have turned it into an opportunity.

Combining great ideas with a cool PESTLE analysis

Politics. The state is driving more of us to transact online. For this, millions of us will need to verify our identity. Timpson must be keeping a close eye on this. ArkHive seems like a good place for them to explore what services people are going to need, related to access and identity.

From another angle, the high street is begging for community hubs, ones that serve small businesses, and local residents.

ArkHive does what it says on the door.

An identity store.

Economic reasons are also forcing a rethink in having a retail presence. Local shopping for local folk has made a surprising comeback. Austerity has led us to shop locally, on foot and more frequently. Circumstances now favour the brave.

Old and new brands making a move

And Timpson is not alone. Some of the newest and brightest brands are back into bricks, with creative retail propositions. Virgin Money is investing £3m a year to create home comfort Lounges, intended to drive up customer advocacy and drive down the cost and risk of acquisition marketing.

How to create retail breakthroughs

Here is my take, on what retail propositions like ArkHive remind us of:

Think where customers are heading, get there before the others – and own it.
Design a great experience (place, process, and people) and execute it brilliantly.
Make all channels work from the start, without bias and not as an afterthought.
Build trust from doing one thing well, say what you mean and do what you say.

Time for bold retail propositions

All of this means that the high street is ready for some bold retail propositions, and thank you ArkHive for showing us that a 150-year-old Timpson can be as innovative as any of the newer, edgier challenger brands.

Welcome ArkHive, the identity shop by Timpson.

If you go down to the shops today, you’d better not go in disguise.

William Annandale January 5, 2016

Risk Evaluation for Business Models

Quadrant has been fortunate enough to work for a very broad range of organisations over time. We’ve maintained a good cross section of client businesses, believing that lessons from one sector are transferable to others. And, looking back, a theme which emerges regularly is the need for proper risk evaluation. There is a tendency for management teams in certain business circumstances to underestimate or misunderstand the risks to their enterprises.

Certain circumstances? What we mean here are artificial situations which create a temporary advantage or opportunity. Frequently, management teams can’t, or won’t, fully appreciate how this can distort their business model, and what risks this creates for their future. A couple of examples where more thorough risk evaluation would have helped our clients:

NAAFI .

The NAAFI has been, and continues to be, a major supplier to HM Armed Forces, with grocery stores, leisure outlets, catering and other services. In this position, it was well placed to create a sustainable, balanced business. However, for many years, it existed through a tax anomaly; it could sell duty free alcohol and tobacco, and generate big margins on these products. For many years, this part of its business underpinned all the rest, resulting in a major cross-subsidy and distortion of their business.

This situation carried at least two major risks for NAAFI:

The government could change the rules on duty free
The service clients would object to the NAAFI’s role in encouraging smoking and drinking by the troops, with the inevitable impact on their fitness for duty and health

It took a lot of courage, and a holistic approach to strategy, to move NAAFI away from a peddler of booze and fags to a less risky long term position, as a true supply partner for the military. We were fortunate enough to work with the management team who formulated and executed this tough decision

You can also observe instances of risky cross-subsidies in the banking industry. Here, the meaning of ‘bad’ and ‘good’ customers is reversed. The ‘bad’ customers, who go overdrawn, make late payments, and run up debts, subsidise the ‘good’ customers, who avoid these behaviours. It would be in the interest of the ‘bad’ customers if their banks helped them to adopt ‘good’ habits; but what would happen to bank profits? How would ‘good’ customers feel about having to pay real money for services? Eventually this cross subsidising will fall into disrepute and have to be replaced. But, it’s fair to ask, are the banks doing enough to educate ‘good’ customers about ‘fair charging’?

Risk evaluation and mitigation is another of those areas, like PESTLE analysis, that is sometimes a ‘going through the motions’ activity rather than a serious endeavour; a page to be completed by junior managers. In our experience, one of the characteristics of a good senior management team is the ability to really understand what risks the business runs, and how they might impact; and then put in place long term programmes to manage them down. For example, many major brand owners saw the long-term risk from retailer consolidation, and maintained long term investment in brand marketing and product development to mitigate this major business risk.

So- check the risk evaluation pages in your latest plan. Think the worst – or, as a good client once expressed it to me, ‘panic early’.