June 11, 2025 • 53 mins
Tell us what you thought about this episode
Have you ever wondered why some businesses thrive while others with similar products merely survive? The secret often lies not in what they do, but how they think about what they do.
Dom Bish joins me for a fascinating deep dive into the critical difference between strategy and planning—a distinction that could transform your business approach. With five years at the helm of Bolster Risk Management and over a decade in financial services, Dom brings practical wisdom about creating genuine business value.
We unpack the concept of finding your unique "business sandpit" where you can outperform competitors. As Dom explains, "The blue ocean is where you want to be. Where's that sweet spot?" With approximately 590,000 small businesses in New Zealand competing across limited industries, carving out your distinctive space is more crucial than ever.
The conversation takes surprising turns, revealing how businesses often misunderstand what industry they're actually in. McDonald's isn't just in fast food—at the corporate level, they're fundamentally in real estate. This kind of strategic clarity changes everything about how you position and grow your business.
Perhaps most valuable is Dom's framework for thinking about your business as an investment asset. Just as property investors buy, add value, protect their asset, extract income, and eventually exit—business owners should apply this same strategic thinking to their most valuable asset. Yet many fail to plan their exit strategy until it's too late to maximize value.
Whether you're a solopreneur or leading a growing company, this episode will challenge you to elevate your thinking from day-to-day planning to genuine strategic analysis. As Dom powerfully states, "Strategy is not a plan. A plan is not a strategy." Understanding this difference could be your competitive edge.
Ready to transform how you think about your business? Listen now, and discover why the best time to start thinking strategically is today.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Kia ora, and welcome to Biz Bytes, the podcast that
takes a deep dive into the worldof business and technology.
I'm your host, Anthony McMahon,On this episode.
I'm thrilled to share anabsolute cracker of a chat I had
with Dom Bish.
Dom shares his fascinatingjourney through financial
services and we really get stuckinto some core concepts vital
for any business owner.
We explored the criticaldifference between strategy and
(00:22):
planning, highlighting whystrategic thinking isn't just an
option but a must-have forsuccess.
Dom broke down everything fromindustry analysis and exit
planning to boostingproductivity and creating value
through smart revenue growth andcost management.
We even touched on the timevalue of money and why acting on
your strategies now isparamount.
So if you're keen to unpacksome seriously valuable business
(00:43):
insights, you're in the rightplace.
This episode is packed withtakeaways that will get you
thinking differently about yourown business strategy.
Let's get into it.
Morning, Dom, Great to have youon the show.
How are you today?
Speaker 2 (00:55):
Mate, it's a pleasure I'm bouncing, I've got three
coffees in me and I'm ready togo.
Speaker 1 (00:59):
You're two up on me for today, so we'll see if I can
keep up with you, Nice.
You're two up on me for today,so we'll see if I can keep up
with you, Nice.
Speaker 2 (01:08):
Hey look, Dom Bolster , Risk Management tell us a
little bit about what you do andhow you ended up in that role.
Yeah, interesting.
So Bolster is back in threedays' time and the 1st of June
will be five years old, so weare a COVID baby.
Yeah, so I've been in financialservices all up.
(01:29):
I don't know where I'm at 11,12 years.
This is my third stint infinancial services, and when I
came back in I was working withan advisor who's out of
Christchurch and at the time itwas really exciting because the
industry was going through amassive change.
And when there's change I seeopportunity.
And as I was writing my 70-pagebusiness plan, there's this
little flu coming out of Chinanext minute.
(01:52):
So that was fun.
And two weeks after I handed mynotice in to the guy I was
contracting to, my wife was maderedundant.
So here we are with newbusiness no steady income,
mortgage pandemic what couldpossibly go wrong?
And yet here we are, five yearson.
Speaker 1 (02:14):
And look how much has your plan changed since you
started five years ago.
Speaker 2 (02:19):
Yeah, massively.
I know we're going to end uptalking about strategy and
planning a bit later on, but sofor me, writing that plan gave
me the confidence to start.
It helped clarify my thinkingand it meant that when I went to
the providers, to the insurancecompanies, and I said here's my
(02:40):
plan for doing business, mostof them were pretty shocked,
because most advisors don't dothat, but it gave them some
comfort that I might have half abrain and know what I'm doing.
Now to your point.
Within about 18 months Irealised that that plan was just
not fit for purpose.
The crux of what I was trying todo was to really use the social
(03:03):
marketing which I didn't know alot about first mistake and to
really focus in on financialeducation for people.
And at the time there were someother people who were doing it
far better than I could.
I didn't probably research thatwell enough and I came to the
(03:24):
realization a lot of peopledon't actually want to know for
themselves how to do stuff.
They just want someone who'sgoing to come in and do it for
them, someone who's trusted.
Dom.
I got this problem solved forme without necessarily needing
to internalize 20 years offinancial knowledge themselves,
right, so my my premise to startslightly wrong, but he gave me
a foot in the door.
Um, yeah, and so it's.
Speaker 1 (03:44):
Uh, the, the strategy now has just evolved, kept
evolving which which is nodifferent to some of the uh, the
conversations I have with myclients as well as they, they're
paying for the expertise, notfor the training.
Yep, exactly right, yep, solet's, let's just jump straight
into that, then, because you'veused two words in there that I
(04:05):
find are often interchangeable,but they're not, and what I mean
by that is people talk aboutplans and strategies all the
time.
I used to work for a ratherlarge organization that talked
about their blueprint and putthat up as a strategy.
We see these different wordscoming through, but treated as
if they were the same thing Aplan is a strategy, a plan is a
(04:26):
strategy, a blueprint is astrategy.
I've got my goals.
Why?
Speaker 2 (04:29):
are they?
Speaker 1 (04:29):
not the same thing.
Speaker 2 (04:32):
Okay, you might have noticed, I just took a nice deep
breath.
First up, I'm not an academic.
First up, I'm not an academic.
So I need to say that there's.
I love strategy and I loveplanning and we need both.
(04:56):
You and I both listened to thesame YouTube thing recently.
They're not the same thing.
I think that's how we ended upon this conversation.
Let me just back up a little bit.
One of the things that we knowis that very few businesses will
do good planning.
You know there's a statisticout there somewhere around 80%
(05:17):
of businesses don't plan whatthey do.
Now, if we think about planningas being a 12-month, maybe two,
three-year tick list I'll getto that in a moment so a lot of
businesses don't do that.
Of those that do do some kindof planning, very few do what I
(05:38):
would consider to be goodin-depth strategic analysis of
what they're doing Right.
So let's just park thatobservation for a moment.
I think the planning part isthe last bit that falls out the
bottom of all the strategic headwrangling, white boarding,
(05:59):
post-it note, conversationalwhirlwind of stuff that happens.
No, conversational whirlwind ofstuff that happens.
It takes time and brainpower toconceptualise what you're
trying to do with the businessYep and it really starts with
and there's a term that you'veused as well in your questions
to me the sandpit.
(06:20):
What is the playground that wewant to park ourselves in, where
we think we've got someadvantage over other people,
where we might increase ourchance of increasing our value,
either to ourselves orshareholders, customers or
whatever else?
Um, that is, we're starting tothink about strategy there.
(06:42):
When we're saying, um, I've gota target of a five percent
gross target, and how do Iachieve that?
And I'm going to hire threestaff and, I don't know, buy
another box of widgets andwhatever, that's not strategy,
that's the, the output of allthe strategic thinking.
Saying, okay, now we've got alist of tasks or actions that we
(07:04):
need to do to get us to thatpoint.
So that's quite a long-windedway of differentiating the two.
That, I think, really is thestart of it.
The whole thing about strategyis.
That's the part I love playingin, but, as an observation, too
few people do it, I think, andso we end up with a lot of
(07:27):
vanilla people in the marketdoing pretty much the same thing
over and over again.
Speaker 1 (07:33):
Yeah, and you touched on how you started with COVID.
I don't know how you found thisin the market you were in
trying to grow, but I certainlysaw it with organisations who
had no plan for a large scalepandemic, um, and this is even
the big ones, uh, the bigorganizations who suddenly found
(07:57):
themselves needing to do remotework and they had no plan for
how they were going to managethat.
So it became a mad scramble, um, and I'm just keen on your view
as to whether you think thatthat event topical because it's
timely it's an anniversary pointfor your business as well but
whether that event disruptedstrategy or whether it was an
(08:19):
ability to continue on strategy,if people had the right plans
in place, to evolve Right, wow,okay.
Speaker 2 (08:30):
So we've got quite a few things to unpack.
First up, the businesscontinuity planning.
That's not strategy, that'sjust risk mitigation, to your
point.
Do enough organizations, ofwhatever size, focus enough on
that as a risk managementorganisation?
(08:56):
No, an example of that is Iworked with quite a large health
insurer early 2000s and one ofmy roles was to develop a PCP
plan and I did some scenarioplanning.
So that's why I view things aswhat happens if something
happens, and so I used.
I used Christchurch having anearthquake.
(09:20):
Now, when I presented that pieceof work, the first thing people
said was it's never going to beChristchurch, it's always going
to be Wellington and because ofthat, turned off most brains of
the people who were looking atit, because that scenario didn't
fit with how things were goingto pan out.
Part of that was okay.
The head of the office inChristchurch is no longer there.
(09:42):
What happens to the people?
What do we do with the IT, allthat kind of stuff, right, so
kind of fundamental stuff.
And then, literally a few yearslater, what happens?
Yeah, I think we have a lot ofhuman biases in everything that
we do, from strategy to riskplanning to everything, and when
(10:04):
you're in an organisation thathas layers, multiple layers,
that you're trying to breakthrough.
There can be roadblocks so manytimes, and a lot of those
roadblocks are ego-driven.
Speaker 1 (10:16):
So that's that part.
Speaker 2 (10:17):
The next part you said was okay, we got COVID, and
was COVID a strategy disruptor,a strategy enabler or a
strategy continuum?
Effectively, it's three things,I think you said.
I think all three, depending onwho you are, where you're at
and what your business is doing.
So even in my industry, therewere some people who really just
felt like shutting the doorsand didn't do anything for 12
(10:39):
months.
Right, so okay.
There were others who were likewhoa, okay, okay, this whole
thing is open up, let's crackinto it.
And others are just kind ofbarely holding on by the
fingernails.
Yeah um, yeah, and I thinkthat's broadly across different
industries.
You know, for a lot of people,not just here in new zealand but
across the world, peoplebroadly fell into one of those
(10:59):
three buckets right um, and Ithink that comes down to um who
you are as a business leader,the type of business that you
have, the type of culture thatyou have, and if you've got any
robust planning in place forthat type of contingency.
Most won't have that kind ofcontingency planning.
So it comes down to really,where is the leadership, where's
(11:21):
the head of that leadershipteam?
Are they capable of um taking ataking a lemon and making
lemonade?
You know to use it.
Speaker 1 (11:28):
You'll do the same yeah, we're gonna focus and
that's a really good distinctionthat you put in there.
And and I'm going to focus onone of the points that you made
around ego-driven decisionmaking, um, because I've
certainly seen that in action um, we've all, and coming from a
(11:48):
technology lens and a technologystrategy perspective, there's
plenty of decisions are madearound what systems to use
purely probably more vanityprojects than ego driven, but
the two of them are, uh, toointertwined.
How much do you think, in yourexperience, have you seen
personalities disrupt strategybecause they just want to win at
(12:09):
a personal level rather thanthe organisation grow and
achieve its goals?
Speaker 2 (12:14):
Yes, yes it's.
You know, in economics, thetraditional economic theory is
that we're rational humansmaking rational decisions.
We will be available.
Actually, that's crap.
(12:36):
Doesn't happen because we'reemotional beings making
emotional decisions dressed upas logical, rational things.
Um, so every decision is alwaysemotional.
I think the sooner peopleunderstand that, the better you
can have all the pie charts andthe spreadsheets and all the
(12:57):
client analysis and feedbackdata you want.
When a decision is made, it'llalways be emotional.
That's it.
It'll always be emotional.
That is it.
Yes, I have experienced thatmany times at different levels
(13:22):
and I think what we're touchingon now is organization culture,
which is massively important andthoroughly underrated in
meaning that most firms don'tlook at it, even larger firms.
Larger firms can be betterbecause there's a generally,
there's a hr team in place whoseresponsibility is to think
about the culture andorganization, but for smaller
(13:46):
firms, definitely it's's anafterthought.
Uh hr person is normally thelast senior manager to be hired
after all.
The rest, the idea that youneed to have a culture that's
cohesive, um, that allows foropen debate, that uh encourages
(14:06):
uh the challenging of ideas fromthe bottom up and the top down,
allows those robust discussionsto have.
That's a hard thing from theget-go.
Most humans, any time we have achallenging conversation, we
think that's a confrontation andthat spirals down and then
nothing happens.
Being able to have a workingculture where some dissent is
(14:31):
encouraged in a some kind ofstructured form of way that
allows for good, robustdiscussions to have an output of
that generally is betterthinking, planning, whatever
else, and I think that's thepart that doesn't happen.
So to your point of um.
In a traditional top-down typeof mechanism leadership
(14:52):
structure, organizationstructure, um when you're
thinking about strategy orplanning or just task
implementation, there can beroadblocks because people are
saying, actually, that's goingto cut in on my turf.
You know, you're telling methat instead of having a team of
20, I need a team of 10 to domy job, because bob is going to
(15:13):
have a bigger team.
Hold on a moment.
I'm trying to build my empirehere in the company.
What are you doing here,sunshine?
Stop that right.
So we're not looking at it fromthe point of view of the
company or the customer, whichis normally the last person to
be thought about.
No, I want to protect my patchbecause I'm going to look better
on my CV when I leave here inthree years' time.
Yep, yep, right.
So yes.
(15:33):
I've seen that plenty of times.
Speaker 1 (15:34):
Now there's the other thing I'm building my career.
This is for the best outcomefor my career, regardless of
what it means for the and we seethis time and time again as
well with.
I've made a decision, or adecision was made five or six or
seven years ago, and all theside effects, challenges,
whatever of that decision arecoming home to roost, but the
(15:55):
person who made the decision iswell and truly gone and no one's
accountable anymore.
Yep, yeah and so let's come backto strategy on that then.
Because?
So let's come back to strategyon that then because it's very
easy and I think this happenswhen people just interchange
strategy, plan, direction,whatever Because it's very easy
(16:22):
to just throw the baby out withthe bathwater and start again
Because of the next big fad youknow we've got.
Something I see with AI,particularly for organizations,
is the board's focus ishyper-focused on what are we
doing with AI to win.
Now, megatrends like AI cancome along and enhance a
strategy, but they shouldn'tnecessarily cause you to throw
your strategy out the windowbecause your strategy shouldn't.
(16:45):
Let me just rephrase this Doyou agree that your strategy
should be an enduring document,or is it disposable?
Speaker 2 (16:54):
uh, it needs to be flexible.
Um, I think it needs to beflexible.
I think anytime you'rethoroughly rigid, uh, we need to
be cautious.
Now, that said, uh, if we thinkabout, um, some of our our
Asian friends they typicallythink in decades.
So when they're planning andimplementing what they're doing,
(17:15):
they're thinking in terms ofnot this decade or next decade.
How is this actually going tobenefit us in 20, 30, 50 years
time?
Yep, the more Western style ofthinking about planning used to
be 20 years, then it became 10years, then it was a five-year
plan, then it was a one-yearplan, and we're lucky if we get
(17:35):
a monthly plan of what our KPIsare supposed to be, and so we're
kind of going in reverse.
If you have that kind oflong-term focus, you have
concepts, principles, valuesthat you're aspiring to, the
(17:56):
details and that particularjourney might change the goal of
what you're trying to achieve,doesn't?
Yeah, in that video that wewatched on Harvard, there's a
really interesting point thatsays when you're creating a
strategy, there is no guarantee.
It's an idea, it's a thesisthat you're trying to prove, and
(18:20):
oftentimes you've got everyman's dog around you saying
it'll never work.
What are you doing that for,right.
And then in the last, you knowthe last nanosecond, it's like
good grief.
Look at what they did, how do,they do that you go from you
know zero to hero.
So it's having the convictionsof your idea.
(18:42):
Okay.
So strategy?
We've danced around this term.
What is strategy?
We've all played chess,sometimes badly, right, other
people with more skill andtalent.
Chess is not necessarily thebest one to use because really,
(19:02):
there are a fixed number ofpositions that can get you the
best result.
The Chinese game, go, is muchbetter.
So what is strategy?
A fixed number of positionsthat can get you the best result
?
Um, the chinese game, uh, go ismuch better.
So what is strategy?
You're you're developing amethod to help you win, whatever
.
Win means win more market share, win more clients, win your
sandpit, whatever.
(19:23):
That's not.
That's not, so it's figuringout.
When I think this through, whenI start this through, I start
right at the top.
What's the industry?
So you asked me about my planto start with.
What is my industry?
How much do I know about myindustry?
What's happening in my industry?
What are the changes?
(19:44):
What's the regulatory changes?
What are some of the forcesaround that industry that are
happening?
What's the regulatory changes?
What are the some of the forcesaround that industry that are
happening?
What's the macro environment atthe time?
It's covered, okay, or whatever, um, but what are, what are, um
, the forces around that?
What are the technology forcesthat might impact what, uh, the
business model I'm looking atcreating?
So again, a real top level viewof stuff.
(20:07):
Not necessarily telling me whatthe model is going to be, it
might not even tell me what theproduct is yet.
It's just giving me an idea ofthe world view, I guess the big
macro view.
And then we start coming downto, I like using the business
model canvas that came out, Idon't know, 10, 15 years ago.
It's a really nice way of layingout nine parts of the business.
(20:29):
The key one is what's yourvalue proposition Now?
We have an idea of what themarket's doing.
What's the value propositionNow?
most of the time, if you askmost businesses any size, most
businesses what is your valueproposition, they'll go what do
you mean?
What are my values?
No, no, no.
(20:49):
What's the thing that you'repromising to do for your clients
that other people can't match?
I have integrity, okay,Everyone.
As a life insurance guy, youknow what's the typical things.
You're going to die once youneed life insurance.
Great, trust me, I'm aninsurance advisor.
(21:11):
Okay, they're not valuepropositions.
Let's not get confused.
So what is the thing that you'repromising to be able to do to
give some value to your clients?
Who is your customer?
A lot of people get that wrong.
What's the industry you'replaying in?
(21:31):
What's your value proposition?
Who is your customer?
So these are we're starting tofigure out.
You know what are some of thethings that we're doing?
Um, you know some of the.
There's some great books.
You know your theory.
You think about, um, blue oceanstrategy.
You know what's, what's the,what's the?
What's the place I can.
I can play in that.
No one else is playing.
The red ocean is where there'sall the competitors.
They're fighting amongst eachother.
(21:52):
The waters are all bloodyhorrible.
The blue ocean is where youwant to be.
Where's that?
Where's that sweet spot?
Yeah, um, how do?
Um, sorry, interesting littlelittle segue.
Um, I was talking with someonefrom, uh, tiger tiger trade, one
of the senior managers, and Isaid how would you describe your
business?
And he said, actually, we're atechnology business, we just
(22:17):
happen to trade shares.
I thought now that's someonewho knows the industry.
They're in Something I heardyears ago.
I don't know you can argue this, but something I heard years
ago McDonald's.
We think they're in the fastfood burger industry, property,
property, property.
They've got all over the siteNow again know the industry that
you're in?
(22:37):
Yep, right, you could argueagain.
I'll get comments about this,but you could argue Apple, is it
a technology company?
Or is it a luxury item company,right, or a, you know, high
brand company?
Don't assume that the theindustry that you're in is
(22:58):
actually the industry you're in.
Speaker 1 (22:59):
Because you figure that out, a whole lot of stuff
starts getting reallyinteresting and let's just pick
up mcdonald's for a moment,because there's a good point in
there, because there's twolayers at play in there.
There's mcdonald's global,mcdonald's international, the
corporation, who are in the realestate industry.
Um, you're absolutely spot onthere.
Then there's the local operator, the, the franchisee who runs
(23:21):
that store.
Yes, they're in the fast foodindustry.
Yes, okay now this.
Speaker 2 (23:25):
This comes to one of the best things, um, that I.
There's a lot of things I tookaway from when I did the mba,
but one of the things thathelped me, uh, disaggregate this
whole strategy, yeah, was tothink about how.
It was said to me there's threelevels of strategy.
Corporate level strategy whatis the corporation trying to
achieve?
Right, right, and your examplehere is bang on.
(23:47):
And then there's the businesslevel strategy.
So the corporate might haveseven different business units,
right, the overall strategy thatthey're trying to achieve.
Then the business levelstrategy Okay, so what is each
business unit within thecorporate?
What are they trying to achieve?
What is their industry?
What is their value proposition?
Who is their industry?
What is their value proposition?
(24:07):
Who is their customer?
And it's probably going to bedifferent for each of the things
segments under the corporation.
And then you've got so you'vegot corporate, business level,
and then functional level, yep,functional level, operational
level.
This is where you're startingto blend into planning, capital,
(24:28):
implementation, that type ofstuff.
So it gets a bit harder todisaggregate and it depends on
the size of the organisationyou're talking about.
So, again to your point, youcould say that there's
McDonald's corporate, there'sthe McDonald's franchise.
Perhaps your business level andthen operational level is
actually your franchise holder.
(24:49):
Great Right, because they'rethe one who's actually serving
the customer.
So what do they need to do on adaily, weekly basis?
And yes, they've got their ticklist of all the things they
need to do.
But not all McDonald's are thesame.
You say they are, but actuallythey're not, because you can go
into one place messy as all hellin a bad location.
Another wine is just mint andit's looking really good and the
burgers actually look almostlike the picture, almost, almost
(25:11):
.
So you know.
Again, thinking about and it'sgoing to be harder for different
sized businesses, but thinkabout what is the corporate
strategy, what's the businesslevel strategy?
And then what's the functional,operational level?
And that's a good way of I doit, mine.
(25:34):
So I've got a corporatestrategy, I've got a.
The business unit is what mylife insurance part of what I do
does.
And then I've got me as anadvisor, and me as an advisor is
less on the strategy, it'sactually more just on my kpis,
all right.
Speaker 1 (25:46):
so yeah, yeah, yeah.
And let's stick on mcdonald'sfor a moment because there's one
I want to just explore a littlebit more there because, while
and and your three tiers ofdifferentiation spot on as well,
completely agree with that, um,but at that local level the
restaurant owner they may nothave a strategy for their
restaurant, for what they'regoing to do.
(26:06):
They've got a plan.
They've got a plan on howthey're going to serve more, how
they're going to keep thingsticking over, keep the store
running.
Their strategy might be on howthey plan to get out in 10 or 15
years.
Speaker 2 (26:17):
Fantastic.
There we go.
So now we're starting to bringin it's less about the actual
business and more about what'sthe value for the person within
the business, Correct, yeah.
What's the value for the personwithin the business?
Correct, yeah, because that isa business within the business,
right?
So from their own point of view, they all have their own plan.
In fact, many of thosefranchise owners, they're
multi-franchise owners, sothey've got multi-sites and part
(26:39):
of their plan is actually tosell their 10 sites as part of
their retirement plan.
So it's definitely a differentlevel down.
Yeah, look, the other part Ilike about that is bringing in
the idea which I talk aboutoften your business is your
asset.
So if you have a business and itis an investment asset.
What are you doing with that?
(26:59):
Yeah, I don't know too manyproperty owners who have
investment properties who justdon't even look at it for 20
years and then they decide tosell or do whatever they do.
No, they're monitoring their,their mortgage, their
maintenance, their um, whateverelse.
They've got their estate agentfees and all the other bits and
pieces, property management, allthat kind of stuff.
(27:20):
They'll be doing that on anannual basis and they'll be
definitely they'll be monitoringthe value of that investment
over time and have an eye onwhen is a good time to sell and
exit out of that business.
Speaker 1 (27:30):
Yeah, why don't?
Why don't business owners do?
exactly the same and come backto culture, because culture has
played a big part.
You know, traditionally the newzealand model has been for
small business, at least smalland medium the.
The new zealand model ofsuccess has been the three b's
the beach, the beamer and theboat.
Uh, the beach house, the batchbeamer and we hear stories all
(27:54):
the time of people that have hitthat layer, that success.
Suddenly they've got the and itmay not be the three Bs anymore
, but there's certainly a layerthat business owners look at and
go.
I know I've got it because I'vemade it, because I got to this
point, but it's that lookingbeyond still, isn't it?
It's that need to go out and go.
Well, okay, great, I'veachieved the three lifestyle
goals I wanted.
But then the question is what'snext?
(28:15):
How are you going to get out ofthat business?
And and you've talked aboutthis quite a few times, um over
the last few months is aroundthat, that, um, how you plan to
leave your business?
Do you feel that a lot ofindividuals there's probably
predominantly individuals thatare in this position aren't
thinking that far ahead?
They are literally justthinking about how to get their
paycheck through?
Speaker 2 (28:35):
yeah, I think that's just my spot, thinking about how
to get their paycheck through.
Yeah, I think that's.
That's the most part.
Um, I think at the back of themind of many business owners
they'll have but have an idea ofwhat they want and quite golden
and rosy.
(28:57):
Um, actually, I need to comeback and qualify that a little
bit.
It seems to me that businessowners tend to fall into broadly
two camps.
One says I'm building somevalue in my business.
I don't know what that is, Idon't know how much it's worth
now, I don't know how much Ineed for retirement, but I'm
building some kind of value andI'll think about that when I get
there.
And then there's the other campthat says there's no value in
my business.
It's get there.
(29:25):
And then there's the other campthat says there's no value in
my business.
It's just me.
I'm a solopreneur.
Uh, the business is my income.
There's no right or wrongeither.
I'll actually challenge thosesolopreneurs and say if you wrap
a business system around it,you can still create some value
that you could sell over time.
But that's part of that for thetime being.
Um, for the ones who whounderstand they've got some
capital value in their businessand they're trying to build that
, I would suggest that they needto start thinking about their
(29:46):
exit as soon as possible.
I mentioned this at ournetworking thing the other day.
The ideal again, if we look atan investor, a share investor, a
trader.
They know what their exit isgoing to be before they enter.
So do you know the value thatyou want to sell your business
(30:07):
for before you start yourbusiness?
Now, that is a concept that formany is foreign, so that's not
likely to happen for many.
Okay, that's fine.
So then at the other end of thescale excuse me we'll hear
accountants say you need atleast two to three years to tidy
up the books, to actually havesomething resembling a good
(30:31):
package for owners to thinkabout.
It looks like a good businessto buy.
So we've got two ends of thescale.
We've got knowing the value youwant to sell at before you even
start through to.
You've got three years and thenyou're going to try and sell.
I would say, try and get on assoon as possible.
Part of the reason for that isif you know you've got an asset,
(30:54):
are you not going to try andmaximize the value of that asset
?
So if we look at it frominvestment property here in New
Zealand, we love our property.
So let's go through a littlestory.
You buy a property great.
You give it a lick of paint,you put a new bathroom, new
kitchen in there you're addingsome value.
Great, you're going to protectthat property.
(31:17):
You'll probably get someinsurance on there.
You'll need to for yourmortgage.
Probably you might even have aproperty manager to go around
and keep an eye on it and allthat kind of stuff.
So you're protecting the riskas you go through with all the
rest of the rental income,paying for the costs.
Okay, so you're extracting someincome along that journey and
(31:38):
then, because property tends togo up over time, we know there's
going to be some capital growth.
So when you exit it's going tobe worth more.
Four stages We've got thepurchase building more value,
protecting the value, extractingthe value on the way and then
exiting.
Okay, why do we do that withour business so intuitively?
(32:00):
People will have a business andthey'll try and make
improvements and their 12-monthplan.
I need to grow my clients.
Okay, I need to hire more staff.
Okay, let's just step back amoment.
Have we got our ladder againstthe right wall?
Are we actually on the rightstrategy?
(32:20):
This is just going right backto the whole point of the
discussion.
How do we know the clients thatwe're getting are the right
clients for us?
Yeah, how do we know that theservices and products we're
trying to sell are actually theright products and services.
Yeah, we've got 10 people inour neighborhood selling exactly
the same stuff as us.
Is there a better way?
Is there something else we cando?
(32:42):
So that's where you start tothink about, think about
strategy.
So I'll challenge people tothink.
Think more deeply about yourbusiness, understand the
industry you're in.
Think about your competition.
Porter's five forces ofcompetitive advantage.
What are you?
Why are you better?
What is it that you're doingthat you can't have someone
(33:06):
substitute your product forsomething else.
And the whole point of doingall that is because you want to
add value Right back to thetypical house.
You want to add your bathroom.
You want to have your liquorpaint.
You want to tidy, uh, thetypical house.
You want to add your bathroom.
You want to have your liquorpaint.
You want to tidy up the gardens.
You're creating value withinyour business.
Why?
Because when you come to sellthat thing, it's going to be
(33:27):
worth more why is?
that relevant, because yourfamily will thank you, because
you don't have to work throughthe age of 85.
You can have the round theworld trip 17 times with your
wife.
You can you the round-the-worldtrip 17 times with your wife.
You can fund your kids'education, their grandkids'
education.
You can do whatever thosethings that you want to do,
because you're taking the timenow to think about.
What business am I in?
(33:48):
How can I add value?
How can I maximise that valuefor my retirement?
Speaker 1 (33:52):
Yeah, and there's some things you're saying in
there that I've always held trueas well.
And coming back to when I didmy master's degree, too long ago
now, some of the things thatcame out of that, the concepts
were, through it, you can'tscale what the market doesn't
(34:14):
want, and that you might havethe greatest idea in the world,
but if you don't tell anyoneabout it, they're not going to
buy it.
Both of those I see time andtime again.
I've made mistakes on thesecond one more often than I can
count.
I've got a great idea, I'mtalking to a few people about it
, but it's not the same asmarketing, right?
And that's where you start tobring that in of what's my
long-term vision.
And the house is exactly thesame If and the house is exactly
(34:34):
the same If you've got a rentalhouse and a rental property.
Sure, it might be easy to donothing now while you've got a
tenant in there, but you've gotto be thinking about what to do
when that tenant moves on.
And if you haven't done thegardens and if you haven't
painted it, and if you haven'tput the carpet down, replaced
the carpet, and if you haven'tkept the basic maintenance stuff
done, that marketing spend getsreally, really hard in a very
(34:59):
short period of time, becauseunder New Zealand law at least,
the tenants can give you I thinkit's four weeks notice and
they're gone.
So you've now got four weeks totry and repair two, maybe three
, maybe four, maybe five yearsof neglect.
Speaker 2 (35:16):
Otherwise people aren't going to want to live
there.
That's right and thatinterrupts your income, yep, and
that's your investment.
Roi just goes down the toilet.
Speaker 1 (35:25):
Yep.
And business is the same thatif you neglect the.
I wrote a quote down the otherday on this one.
Actually, that strategy is alittle bit like going to the
dentist you don't have to do it,but the longer you leave it,
the more painful it's going tobe.
Speaker 2 (35:42):
And that root canal.
You know, if you don't get ascene to it it can kill you.
Yep, that's the guts of it.
There are a lot of businesses inNew Zealand.
Whatever the number you want touse, somewhere around 570,
590,000 small businesses in NewZealand.
That's a lot.
We don't have that manyindustries.
That means there's a lot ofpeople fighting in the same
(36:04):
sandpit for the same stuff.
Yep, okay, my industry is nodifferent.
My industry financial advisors.
It depends on the number youlook at, but somewhere around
$4,000 or $5,000.
Right, you're going to die oneday.
(36:27):
Trust me, I have integrity holdon, okay.
Speaker 1 (36:28):
So what's the sandpit ?
Speaker 2 (36:28):
that you can create, very few other people can be.
Um, I mentioned some earlier.
Um, some people are doing thatfinancial education piece
extremely well.
They've carved out their ownmarket and they're able to
charge a premium and do all thethings that they can do because
they've taken the time to thinkabout what is their value
proposition, what's the marketthey're in, what is the industry
they're actually playing in andthey're doing really well.
(36:51):
So I'll challenge other peopleto think about that as well.
And if you say to me but Dom, Ijust mow the grass, I just cut
lawns, really Okay, we've got agreat example of that Jim's
mowing out of Australia.
That's all he did.
Speaker 1 (37:07):
Look at where he's gone.
Look at where they are now.
Yeah.
Speaker 2 (37:10):
Jim's dog washing and all these other kind of crazy
things that spun off from it.
Speaker 1 (37:21):
Jim's cleaning.
There's, yeah, jim's dogwashing, jim's mowing.
And then the one that that tookme by surprise when I found out
about it was jim's cabletesting.
Right same jim, they just goaround and and test electric
cables to make sure they arestill compliant good grief.
Speaker 2 (37:31):
Yeah, there we go.
So who knew right?
So, um, so, with enough, withenough thought and lateral
thinking, you can create thesandpit that you want to be in.
Yes, that's the part, really.
This is the crux of the wholeshow.
That's the part that isn't doneenough, I think.
And it takes a bit of time andit's not for everyone and it can
(37:54):
be challenging and you need tobe challenged.
You need to challenge your ownassumptions.
If you've been doing somethingfor 10 years we talked about ego
before if you've been doingsomething for 10 years and
you've had some modicum ofsuccess to then have some
upstart, you know little kidcome along and say have you
thought about doing thingsdifferently?
Oh, yeah, I'm good at what I do.
Yeah, great, okay.
(38:14):
But if you've got another 10years before you actually go to
sell your business, you dosomething different.
You actually double, triple,quadruple the size of your
business because you do thingsslightly differently.
And that's what's on the table.
I got to get my little soapboxin here.
We're concerned about NewZealand's productivity and it's
(38:37):
always in the news in some way,shape or form.
The productivity in New Zealandis not where it needs to be,
but it measures against otherOECD countries, right, okay, how
do we change that?
Yeah, I talked about this atour networking breakfast With so
many small businesses.
If we just take 1% of thatcohort and improve the
productivity by 1%, we'd have amassive ramification, positive
(39:00):
ramifications, not just for thebusinesses, the customers, the
families, but for New Zealand asa whole.
And part of that is stopping tothink that if you're a
solopreneur, okay, that's fine,good.
Earn an income from that, okay,that's good.
Can you be challenged a littlebit to think a little
differently, to perhaps grow abusiness system that can evolve,
(39:26):
that you actually have an assetthat you can sell down the
track and help your family, helpyour retirement, but in the
process actually do somefundamental things for the
country as well?
Just that ability to think alittle differently.
We're not talking about beingpointy heads and square eyes,
(39:46):
whatever kind of thing you wantto conjure up.
There are some relativelysimple things you can do.
There are lots of models on theinternet that you can follow
around, strategy to help youthink things through slightly
differently and, just you know,add more value to your business
and ultimately that's got to begood for everyone.
Speaker 1 (40:04):
Right, and just keen for your thoughts on this as
well, because I've heard, seenstories, heard stories of
organisations where the pointyheads for want of a better term,
but the managers lockthemselves in a way in a room,
come up with a strategy, thinkthey've identified all the
problems and then walk back outand tell them to the staff, um,
and only to be told what thehell are you on about?
(40:25):
Versus those stories where, umand I don't remember all the
details on on the one I'm goingto talk to, but it's a really
good example of it was a um, apushchair manufacturer in New
Zealand somewhere, and they hadmassive delays in getting their
pushchairs out the door and partof the reason, they thought,
(40:47):
was because the end of theproduction was the problem.
Instead of just sitting thereand trying to solve the problem
at the top, they actually wentto the guy at the end and said
what's causing the problem?
Why is this taking so long?
Took his feedback on board.
Now this is the guy who's beendoing the job for 10, 15 years,
right, so he knows.
And so instead of trying tosolve him as a problem and
saying he was too slow and, likeI say, I don't remember all the
(41:09):
details of this I've got tocatch up with a good friend of
mine who knows it off by heart.
Instead of trying to solve himas the problem, they went to him
and said what causes theproblem and worked their way
backwards.
And I find that's reallyvaluable.
Is actually getting out to that, to, whatever you want to call
it, the coalface, the front line, the people at the end of the
supply chain, and saying why isit causing a problem, and then
(41:32):
work your way backwards fromthere Would you agree with that?
Speaker 2 (41:38):
Yeah, absolutely.
Uh, the ivory tower syndrome isright, um, and it goes back to
the ego and all the rest of it.
I've made it to the, themanagement team.
Yeah, you worry about the plebsdown there?
Thank you very much.
I know, I know what I'm doing,you know you talk to them and we
can, you know, go away for aweek and have a piss up and
we'll do half an hour strategyand, you know, play golf for the
(41:58):
rest of the four days.
Yes, seen that plenty of timesand you're absolutely right.
When you can bring in peoplefrom all levels and really,
really get a robust, it kind ofgoes back to what I was saying
if you've got the organisationalculture, that can have a good
conversation, a good robustconversation about different
(42:19):
aspects of the business.
We're currently talking tothese customers with these kind
of operational problems.
This is kind of what ourcharging, this is what our costs
are and this is kind of what'scurrently going on.
Let's throw it all against thewall and go.
Is this all accurate in today'sworld?
We've been running thisbusiness for 10 years.
(42:40):
Is all this still accurate?
Is all this still valid?
And in fact, just before westart doing that.
Let's just take a step back andhave a look at our industry
Before we start doing that.
Where are we in the world?
What's going on in this worldat the moment?
What are some of the key trendsthat we know of?
It's all about AI or big dataor whatever else.
Let's just map all that out,get an idea of where all that's
(43:00):
going.
Right, yeah, then let's comeback to what we think our
industry is.
Let's just are we actuallystill in that industry?
Are we or should we be inanother industry, or should we
be there?
Okay, well, if we do that, well, then that means that our
(43:22):
suppliers should be these guys.
Our clients are actually theseguys.
Our value proposition would bethis, not these guys over here.
And if you're doing that with aroom full of people at different
levels of the business, thenyou're getting buy-in from every
level because everyone's havingtheir room put.
You know you can create somereally interesting magic from
doing it.
Most firms won't do thatbecause it takes effort and
there's a real it's a risk,right, yeah, if you go to the
(43:43):
board of a mid-sized company andsay, actually, we want to put,
we're thinking about putting ahandbrake on a current direction
and go here.
You know what are you doing.
You know this one's given a 15%a year.
But if you're thinkinglong-term, okay, well, in the
next five years we won't have abusiness.
We've got seven entrants comingin.
(44:04):
Who's going to chip away at ourmargins?
If we don't do it now, we'll bedead ducks.
So it's being able tounderstand that, being able to
have clear conversations aroundall that.
Speaker 1 (44:14):
Absolutely.
And coming back to your point,making decisions as well and I
find um for many consultants,our best value has been able to
ask questions of those clientswe're working with and draw them
to a conclusion where they canmake a decision, as opposed to
coming in and trying to make thedecision for them.
If a consultant is making adecision for the client,
(44:36):
something is like you don't wantthat.
Speaker 2 (44:46):
Um, there are a lot of consultants out there and
look on, you know, technicallyspeaking, on one, you're one,
there's, there are.
Everyone you bump into seems tobe a consultant about something
, consultant about something,which is fine, and I think it
helps if we are able to give adifferent perspective for the
people running a business.
Yeah, my view, and I think itseems like you share this view
(45:08):
it's their business.
Yeah, they know their industry,they know their business.
They know what they're doingfar better than I will.
Even if I spend, you know,three months of spend three
months of immersion at theircost, I'm still not going to
know everything.
So what we can do is have someframeworks and facilitate Get a
whole lot of sticky notes andwhite paper and whiteboards or
(45:31):
pens or whatever you need to doand have the whole brain mess
that goes on and facilitate byasking good questions and having
some structure around wherewe're trying to take things.
But it has to come out of theirheads because they know it.
It's their business, correct?
Speaker 1 (45:49):
And AI is a good one on this one.
I've run into this quite a fewtimes lately.
Where it's just drawing thatout of their heads is what do
they want AI to be?
Because there's a lot of hype,there's a lot of press, there's
a lot of fact, there's a lot offiction about what AI can and
can't do, and everyone's lookingaround the table going well,
our competitors are doing thisthing.
We should be doing it as well.
(46:13):
And the question I first ask iswhat do you want the AI to be?
Not, what problems are we goingto solve with this?
What problems are we going tosolve with?
This is a great one, but it'snot the first question I'll add
in.
It's what do you want it to be?
Do you want it to be somethingthat drives your revenue and
therefore you're creating an AIplatform that you're going to
sell to the market or do youwant it to be something that
supports your existing revenue?
(46:34):
And coming back to your point,the unique selling proposition
or the value proposition is doyou want AI to be your value
proposition or do you want it tojust make you get better at
what your value proposition is?
And the minute that question ison the table.
There's the chance to sit backand stop and think and go.
Well, what's the difference?
Where do we go from here?
Where do we go Once we land?
Nine times out of ten, most ofthe companies that I've worked
(46:56):
with have gone from.
We need to be doing AI to okay.
We need to be doing this and weneed to use AI underneath it to
empower it.
Speaker 2 (47:03):
Yeah, yeah, it's.
I really try and bring it backto if I'm talking to a business
owner.
Just try and simplify thislanguage because it can get
quite exclusive in some ways.
(47:24):
If we make it really simple,the activities that we do fall
into two camps, or should doOnes that create revenue, ones
that fall in the cost bucket.
It's either revenue bucket orcost bucket.
The customers how we communicatethe customer messages, customer
(47:48):
segments, all of that productskind of stuff falls into the
revenue side.
Stuff falls into the revenueside, the cost side, the
suppliers, what's the underlyingmechanism, the operational
costs and all that kind of stuff.
And in the middle you've gotthe value proposition.
It kind of feeds off both.
It can be a low-cost operatoroffering high-value service.
(48:10):
It can be done, but that's partof your value proposition.
When you talk about somethinglike AI, and you're exactly
right, where does it fit?
Cost minimization and is thatpart of your strategy or is it
part of your revenue generatingfunction?
Yeah, be clear.
So when you're talking aboutany activity, where does it sit?
There's a quote um, there's agreat book I've read called um.
(48:34):
There's a quote.
There's a great book I've readcalled the Four Cornerstones of
Corporate Finance.
It's a small little book fromMcKinsey.
One of the quotes out of thatis anything that doesn't
increase cash flows, doesn't addvalue.
Yeah, that's a pretty harshstatement because you'll have
(48:54):
the HR person going oh, hang on,I don't sell on things If the
activity you're doing isn'tenhancing cash flows, it's
enhancing value.
I'm not talking aboutprofitability, I'm talking about
value.
So value might be driven in awhole lot of different ways, but
that starts to get really makespeople really uncomfortable.
(49:15):
Yeah, ways, but that starts toget.
Really that makes people reallyuncomfortable.
Yeah, is what I'm doing.
Am I creating, am I increasingthe flow of money coming through
the business or am I decreasingthe amount of money coming
through the business?
Am I adding value or am Idecreasing value?
Ai sitting on the valueenhancing part or on the cost
minimization part, which isactually still increasing value?
Speaker 1 (49:35):
yeah, so um, yeah, it's something we we used to use
.
We other industries use thesame graph.
We called it jaws.
When I was at bnz and and thefinance department put out the
jaws graph and on one axis wasthe um revenue, uh, sorry, uh,
income, um, no revenue, revenue,uh.
And on the other axis was cost.
(49:56):
And as long as they were a big,wide open jaw where revenue was
going up and cost was goingdown, value was great.
The closer they got together,the more nervous people got, and
the worst possible obviously iswhen they overlap and cost is
going up and revenue is goingdown.
That's when you've got aproblem and I keep thinking back
to that when I'm working withcustomers now as well, because
it's a great model is as if youwant to increase revenue, you've
(50:18):
got to push that cost line up,or you've got to drop the um
sorry, you've got to push thecost line down.
Get it the right way around.
This is the important part pushthe cost line down, drive
revenue up, and that's wherevalue will increase.
Um, and within that, I thinkthat's.
That's something that also tiesinto some of the other models
that are out there ofunderstanding that you may
(50:39):
actually slightly increase costfor a period it's going to
decrease, but you're going toget to where you want to go as a
J-curve investment, and what Imean by J-curve is that you're
going to have to spend a littlebit of that income and increase
costs a little bit in a shortperiod of time to then start
getting the gains that you'reseeing.
Spend a little bit of thatincome and increase costs a
little bit in a short period oftime to then start getting the,
(51:02):
the gains that you're seeing,and and uh, the.
The goal should be to uh toreduce as much as possible that
expense going out and have itfor as a shorter period of time
as possible yeah, you brought ina fantastic concept.
Speaker 2 (51:09):
Um, from a from a finance point of view, uh,
what's the time value of money?
Yeah, so what's the value ofmoney today versus value value
money tomorrow?
What is that period of time?
Uh, what's it actually going tocost in real terms?
And what's the roi at the endof the point, at the end of the
project?
Yeah, unless we do a wholeother podcast on.
You know, net present valuestuff 100 100.
Speaker 1 (51:30):
do we get rid of the server now or do we hold it for
another three years?
Exactly, exactly.
Speaker 2 (51:36):
Yeah, yeah, yeah.
I have to keep bringing it backto value.
Yeah, what is the value today?
What is the value you're tryingto achieve tomorrow?
How do we plug that gap?
And if you don't know any ofthose three parts, you've
probably got a problem, great.
Speaker 1 (51:54):
Great, and that is probably a good note to leave it
on Value and we'll have to comeback and have another
conversation on value.
But just to wrap us up, dom,what's three key takeaways that
you want people listening tothis to think about when they go
back to their business?
Speaker 2 (52:08):
A strategy is not a plan.
A plan is not a strategy.
If you're not doing planning,start.
If you're doing planning butnot doing a strategy, start.
Speaker 1 (52:19):
Is there a third one?
There's probably.
I think there's four in there.
So take them as they are andyou're spot on.
Start today, because the besttime to start is right now.
Hey, thanks, dom, reallyappreciate your time today.
Thank you so much for coming onboard.
It's been a lot of fun.
Thank you Absolutely.
Kia ora, and welcome to Biz Bytes, the podcast that
takes a deep dive into the worldof business and technology.
I'm your host, Anthony McMahon,On this episode.
I'm thrilled to share anabsolute cracker of a chat I had
with Dom Bish.
Dom shares his fascinatingjourney through financial
services and we really get stuckinto some core concepts vital
for any business owner.
We explored the criticaldifference between strategy and
(00:22):
planning, highlighting whystrategic thinking isn't just an
option but a must-have forsuccess.
Dom broke down everything fromindustry analysis and exit
planning to boostingproductivity and creating value
through smart revenue growth andcost management.
We even touched on the timevalue of money and why acting on
your strategies now isparamount.
So if you're keen to unpacksome seriously valuable business
(00:43):
insights, you're in the rightplace.
This episode is packed withtakeaways that will get you
thinking differently about yourown business strategy.
Let's get into it.
Morning, Dom, Great to have youon the show.
How are you today?
Speaker 2 (00:55):
Mate, it's a pleasure I'm bouncing, I've got three
coffees in me and I'm ready togo.
Speaker 1 (00:59):
You're two up on me for today, so we'll see if I can
keep up with you, Nice.
You're two up on me for today,so we'll see if I can keep up
with you, Nice.
Speaker 2 (01:08):
Hey look, Dom Bolster , Risk Management tell us a
little bit about what you do andhow you ended up in that role.
Yeah, interesting.
So Bolster is back in threedays' time and the 1st of June
will be five years old, so weare a COVID baby.
Yeah, so I've been in financialservices all up.
(01:29):
I don't know where I'm at 11,12 years.
This is my third stint infinancial services, and when I
came back in I was working withan advisor who's out of
Christchurch and at the time itwas really exciting because the
industry was going through amassive change.
And when there's change I seeopportunity.
And as I was writing my 70-pagebusiness plan, there's this
little flu coming out of Chinanext minute.
(01:52):
So that was fun.
And two weeks after I handed mynotice in to the guy I was
contracting to, my wife was maderedundant.
So here we are with newbusiness no steady income,
mortgage pandemic what couldpossibly go wrong?
And yet here we are, five yearson.
Speaker 1 (02:14):
And look how much has your plan changed since you
started five years ago.
Speaker 2 (02:19):
Yeah, massively.
I know we're going to end uptalking about strategy and
planning a bit later on, but sofor me, writing that plan gave
me the confidence to start.
It helped clarify my thinkingand it meant that when I went to
the providers, to the insurancecompanies, and I said here's my
(02:40):
plan for doing business, mostof them were pretty shocked,
because most advisors don't dothat, but it gave them some
comfort that I might have half abrain and know what I'm doing.
Now to your point.
Within about 18 months Irealised that that plan was just
not fit for purpose.
The crux of what I was trying todo was to really use the social
(03:03):
marketing which I didn't know alot about first mistake and to
really focus in on financialeducation for people.
And at the time there were someother people who were doing it
far better than I could.
I didn't probably research thatwell enough and I came to the
(03:24):
realization a lot of peopledon't actually want to know for
themselves how to do stuff.
They just want someone who'sgoing to come in and do it for
them, someone who's trusted.
Dom.
I got this problem solved forme without necessarily needing
to internalize 20 years offinancial knowledge themselves,
right, so my my premise to startslightly wrong, but he gave me
a foot in the door.
Um, yeah, and so it's.
Speaker 1 (03:44):
Uh, the, the strategy now has just evolved, kept
evolving which which is nodifferent to some of the uh, the
conversations I have with myclients as well as they, they're
paying for the expertise, notfor the training.
Yep, exactly right, yep, solet's, let's just jump straight
into that, then, because you'veused two words in there that I
(04:05):
find are often interchangeable,but they're not, and what I mean
by that is people talk aboutplans and strategies all the
time.
I used to work for a ratherlarge organization that talked
about their blueprint and putthat up as a strategy.
We see these different wordscoming through, but treated as
if they were the same thing Aplan is a strategy, a plan is a
(04:26):
strategy, a blueprint is astrategy.
I've got my goals.
Why?
Speaker 2 (04:29):
are they?
Speaker 1 (04:29):
not the same thing.
Speaker 2 (04:32):
Okay, you might have noticed, I just took a nice deep
breath.
First up, I'm not an academic.
First up, I'm not an academic.
So I need to say that there's.
I love strategy and I loveplanning and we need both.
(04:56):
You and I both listened to thesame YouTube thing recently.
They're not the same thing.
I think that's how we ended upon this conversation.
Let me just back up a little bit.
One of the things that we knowis that very few businesses will
do good planning.
You know there's a statisticout there somewhere around 80%
(05:17):
of businesses don't plan whatthey do.
Now, if we think about planningas being a 12-month, maybe two,
three-year tick list I'll getto that in a moment so a lot of
businesses don't do that.
Of those that do do some kindof planning, very few do what I
(05:38):
would consider to be goodin-depth strategic analysis of
what they're doing Right.
So let's just park thatobservation for a moment.
I think the planning part isthe last bit that falls out the
bottom of all the strategic headwrangling, white boarding,
(05:59):
post-it note, conversationalwhirlwind of stuff that happens.
No, conversational whirlwind ofstuff that happens.
It takes time and brainpower toconceptualise what you're
trying to do with the businessYep and it really starts with
and there's a term that you'veused as well in your questions
to me the sandpit.
(06:20):
What is the playground that wewant to park ourselves in, where
we think we've got someadvantage over other people,
where we might increase ourchance of increasing our value,
either to ourselves orshareholders, customers or
whatever else?
Um, that is, we're starting tothink about strategy there.
(06:42):
When we're saying, um, I've gota target of a five percent
gross target, and how do Iachieve that?
And I'm going to hire threestaff and, I don't know, buy
another box of widgets andwhatever, that's not strategy,
that's the, the output of allthe strategic thinking.
Saying, okay, now we've got alist of tasks or actions that we
(07:04):
need to do to get us to thatpoint.
So that's quite a long-windedway of differentiating the two.
That, I think, really is thestart of it.
The whole thing about strategyis.
That's the part I love playingin, but, as an observation, too
few people do it, I think, andso we end up with a lot of
(07:27):
vanilla people in the marketdoing pretty much the same thing
over and over again.
Speaker 1 (07:33):
Yeah, and you touched on how you started with COVID.
I don't know how you found thisin the market you were in
trying to grow, but I certainlysaw it with organisations who
had no plan for a large scalepandemic, um, and this is even
the big ones, uh, the bigorganizations who suddenly found
(07:57):
themselves needing to do remotework and they had no plan for
how they were going to managethat.
So it became a mad scramble, um, and I'm just keen on your view
as to whether you think thatthat event topical because it's
timely it's an anniversary pointfor your business as well but
whether that event disruptedstrategy or whether it was an
(08:19):
ability to continue on strategy,if people had the right plans
in place, to evolve Right, wow,okay.
Speaker 2 (08:30):
So we've got quite a few things to unpack.
First up, the businesscontinuity planning.
That's not strategy, that'sjust risk mitigation, to your
point.
Do enough organizations, ofwhatever size, focus enough on
that as a risk managementorganisation?
(08:56):
No, an example of that is Iworked with quite a large health
insurer early 2000s and one ofmy roles was to develop a PCP
plan and I did some scenarioplanning.
So that's why I view things aswhat happens if something
happens, and so I used.
I used Christchurch having anearthquake.
(09:20):
Now, when I presented that pieceof work, the first thing people
said was it's never going to beChristchurch, it's always going
to be Wellington and because ofthat, turned off most brains of
the people who were looking atit, because that scenario didn't
fit with how things were goingto pan out.
Part of that was okay.
The head of the office inChristchurch is no longer there.
(09:42):
What happens to the people?
What do we do with the IT, allthat kind of stuff, right, so
kind of fundamental stuff.
And then, literally a few yearslater, what happens?
Yeah, I think we have a lot ofhuman biases in everything that
we do, from strategy to riskplanning to everything, and when
(10:04):
you're in an organisation thathas layers, multiple layers,
that you're trying to breakthrough.
There can be roadblocks so manytimes, and a lot of those
roadblocks are ego-driven.
Speaker 1 (10:16):
So that's that part.
Speaker 2 (10:17):
The next part you said was okay, we got COVID, and
was COVID a strategy disruptor,a strategy enabler or a
strategy continuum?
Effectively, it's three things,I think you said.
I think all three, depending onwho you are, where you're at
and what your business is doing.
So even in my industry, therewere some people who really just
felt like shutting the doorsand didn't do anything for 12
(10:39):
months.
Right, so okay.
There were others who were likewhoa, okay, okay, this whole
thing is open up, let's crackinto it.
And others are just kind ofbarely holding on by the
fingernails.
Yeah um, yeah, and I thinkthat's broadly across different
industries.
You know, for a lot of people,not just here in new zealand but
across the world, peoplebroadly fell into one of those
(10:59):
three buckets right um, and Ithink that comes down to um who
you are as a business leader,the type of business that you
have, the type of culture thatyou have, and if you've got any
robust planning in place forthat type of contingency.
Most won't have that kind ofcontingency planning.
So it comes down to really,where is the leadership, where's
(11:21):
the head of that leadershipteam?
Are they capable of um taking ataking a lemon and making
lemonade?
You know to use it.
Speaker 1 (11:28):
You'll do the same yeah, we're gonna focus and
that's a really good distinctionthat you put in there.
And and I'm going to focus onone of the points that you made
around ego-driven decisionmaking, um, because I've
certainly seen that in action um, we've all, and coming from a
(11:48):
technology lens and a technologystrategy perspective, there's
plenty of decisions are madearound what systems to use
purely probably more vanityprojects than ego driven, but
the two of them are, uh, toointertwined.
How much do you think, in yourexperience, have you seen
personalities disrupt strategybecause they just want to win at
(12:09):
a personal level rather thanthe organisation grow and
achieve its goals?
Speaker 2 (12:14):
Yes, yes it's.
You know, in economics, thetraditional economic theory is
that we're rational humansmaking rational decisions.
We will be available.
Actually, that's crap.
(12:36):
Doesn't happen because we'reemotional beings making
emotional decisions dressed upas logical, rational things.
Um, so every decision is alwaysemotional.
I think the sooner peopleunderstand that, the better you
can have all the pie charts andthe spreadsheets and all the
(12:57):
client analysis and feedbackdata you want.
When a decision is made, it'llalways be emotional.
That's it.
It'll always be emotional.
That is it.
Yes, I have experienced thatmany times at different levels
(13:22):
and I think what we're touchingon now is organization culture,
which is massively important andthoroughly underrated in
meaning that most firms don'tlook at it, even larger firms.
Larger firms can be betterbecause there's a generally,
there's a hr team in place whoseresponsibility is to think
about the culture andorganization, but for smaller
(13:46):
firms, definitely it's's anafterthought.
Uh hr person is normally thelast senior manager to be hired
after all.
The rest, the idea that youneed to have a culture that's
cohesive, um, that allows foropen debate, that uh encourages
(14:06):
uh the challenging of ideas fromthe bottom up and the top down,
allows those robust discussionsto have.
That's a hard thing from theget-go.
Most humans, any time we have achallenging conversation, we
think that's a confrontation andthat spirals down and then
nothing happens.
Being able to have a workingculture where some dissent is
(14:31):
encouraged in a some kind ofstructured form of way that
allows for good, robustdiscussions to have an output of
that generally is betterthinking, planning, whatever
else, and I think that's thepart that doesn't happen.
So to your point of um.
In a traditional top-down typeof mechanism leadership
(14:52):
structure, organizationstructure, um when you're
thinking about strategy orplanning or just task
implementation, there can beroadblocks because people are
saying, actually, that's goingto cut in on my turf.
You know, you're telling methat instead of having a team of
20, I need a team of 10 to domy job, because bob is going to
(15:13):
have a bigger team.
Hold on a moment.
I'm trying to build my empirehere in the company.
What are you doing here,sunshine?
Stop that right.
So we're not looking at it fromthe point of view of the
company or the customer, whichis normally the last person to
be thought about.
No, I want to protect my patchbecause I'm going to look better
on my CV when I leave here inthree years' time.
Yep, yep, right.
So yes.
(15:33):
I've seen that plenty of times.
Speaker 1 (15:34):
Now there's the other thing I'm building my career.
This is for the best outcomefor my career, regardless of
what it means for the and we seethis time and time again as
well with.
I've made a decision, or adecision was made five or six or
seven years ago, and all theside effects, challenges,
whatever of that decision arecoming home to roost, but the
(15:55):
person who made the decision iswell and truly gone and no one's
accountable anymore.
Yep, yeah and so let's come backto strategy on that then.
Because?
So let's come back to strategyon that then because it's very
easy and I think this happenswhen people just interchange
strategy, plan, direction,whatever Because it's very easy
(16:22):
to just throw the baby out withthe bathwater and start again
Because of the next big fad youknow we've got.
Something I see with AI,particularly for organizations,
is the board's focus ishyper-focused on what are we
doing with AI to win.
Now, megatrends like AI cancome along and enhance a
strategy, but they shouldn'tnecessarily cause you to throw
your strategy out the windowbecause your strategy shouldn't.
(16:45):
Let me just rephrase this Doyou agree that your strategy
should be an enduring document,or is it disposable?
Speaker 2 (16:54):
uh, it needs to be flexible.
Um, I think it needs to beflexible.
I think anytime you'rethoroughly rigid, uh, we need to
be cautious.
Now, that said, uh, if we thinkabout, um, some of our our
Asian friends they typicallythink in decades.
So when they're planning andimplementing what they're doing,
(17:15):
they're thinking in terms ofnot this decade or next decade.
How is this actually going tobenefit us in 20, 30, 50 years
time?
Yep, the more Western style ofthinking about planning used to
be 20 years, then it became 10years, then it was a five-year
plan, then it was a one-yearplan, and we're lucky if we get
(17:35):
a monthly plan of what our KPIsare supposed to be, and so we're
kind of going in reverse.
If you have that kind oflong-term focus, you have
concepts, principles, valuesthat you're aspiring to, the
(17:56):
details and that particularjourney might change the goal of
what you're trying to achieve,doesn't?
Yeah, in that video that wewatched on Harvard, there's a
really interesting point thatsays when you're creating a
strategy, there is no guarantee.
It's an idea, it's a thesisthat you're trying to prove, and
(18:20):
oftentimes you've got everyman's dog around you saying
it'll never work.
What are you doing that for,right.
And then in the last, you knowthe last nanosecond, it's like
good grief.
Look at what they did, how do,they do that you go from you
know zero to hero.
So it's having the convictionsof your idea.
(18:42):
Okay.
So strategy?
We've danced around this term.
What is strategy?
We've all played chess,sometimes badly, right, other
people with more skill andtalent.
Chess is not necessarily thebest one to use because really,
(19:02):
there are a fixed number ofpositions that can get you the
best result.
The Chinese game, go, is muchbetter.
So what is strategy?
A fixed number of positionsthat can get you the best result
?
Um, the chinese game, uh, go ismuch better.
So what is strategy?
You're you're developing amethod to help you win, whatever
.
Win means win more market share, win more clients, win your
sandpit, whatever.
(19:23):
That's not.
That's not, so it's figuringout.
When I think this through, whenI start this through, I start
right at the top.
What's the industry?
So you asked me about my planto start with.
What is my industry?
How much do I know about myindustry?
What's happening in my industry?
What are the changes?
(19:44):
What's the regulatory changes?
What are some of the forcesaround that industry that are
happening?
What's the regulatory changes?
What are the some of the forcesaround that industry that are
happening?
What's the macro environment atthe time?
It's covered, okay, or whatever, um, but what are, what are, um
, the forces around that?
What are the technology forcesthat might impact what, uh, the
business model I'm looking atcreating?
So again, a real top level viewof stuff.
(20:07):
Not necessarily telling me whatthe model is going to be, it
might not even tell me what theproduct is yet.
It's just giving me an idea ofthe world view, I guess the big
macro view.
And then we start coming downto, I like using the business
model canvas that came out, Idon't know, 10, 15 years ago.
It's a really nice way of layingout nine parts of the business.
(20:29):
The key one is what's yourvalue proposition Now?
We have an idea of what themarket's doing.
What's the value propositionNow?
most of the time, if you askmost businesses any size, most
businesses what is your valueproposition, they'll go what do
you mean?
What are my values?
No, no, no.
(20:49):
What's the thing that you'repromising to do for your clients
that other people can't match?
I have integrity, okay,Everyone.
As a life insurance guy, youknow what's the typical things.
You're going to die once youneed life insurance.
Great, trust me, I'm aninsurance advisor.
(21:11):
Okay, they're not valuepropositions.
Let's not get confused.
So what is the thing that you'repromising to be able to do to
give some value to your clients?
Who is your customer?
A lot of people get that wrong.
What's the industry you'replaying in?
(21:31):
What's your value proposition?
Who is your customer?
So these are we're starting tofigure out.
You know what are some of thethings that we're doing?
Um, you know some of the.
There's some great books.
You know your theory.
You think about, um, blue oceanstrategy.
You know what's, what's the,what's the?
What's the place I can.
I can play in that.
No one else is playing.
The red ocean is where there'sall the competitors.
They're fighting amongst eachother.
(21:52):
The waters are all bloodyhorrible.
The blue ocean is where youwant to be.
Where's that?
Where's that sweet spot?
Yeah, um, how do?
Um, sorry, interesting littlelittle segue.
Um, I was talking with someonefrom, uh, tiger tiger trade, one
of the senior managers, and Isaid how would you describe your
business?
And he said, actually, we're atechnology business, we just
(22:17):
happen to trade shares.
I thought now that's someonewho knows the industry.
They're in Something I heardyears ago.
I don't know you can argue this, but something I heard years
ago McDonald's.
We think they're in the fastfood burger industry, property,
property, property.
They've got all over the siteNow again know the industry that
you're in?
(22:37):
Yep, right, you could argueagain.
I'll get comments about this,but you could argue Apple, is it
a technology company?
Or is it a luxury item company,right, or a, you know, high
brand company?
Don't assume that the theindustry that you're in is
(22:58):
actually the industry you're in.
Speaker 1 (22:59):
Because you figure that out, a whole lot of stuff
starts getting reallyinteresting and let's just pick
up mcdonald's for a moment,because there's a good point in
there, because there's twolayers at play in there.
There's mcdonald's global,mcdonald's international, the
corporation, who are in the realestate industry.
Um, you're absolutely spot onthere.
Then there's the local operator, the, the franchisee who runs
(23:21):
that store.
Yes, they're in the fast foodindustry.
Yes, okay now this.
Speaker 2 (23:25):
This comes to one of the best things, um, that I.
There's a lot of things I tookaway from when I did the mba,
but one of the things thathelped me, uh, disaggregate this
whole strategy, yeah, was tothink about how.
It was said to me there's threelevels of strategy.
Corporate level strategy whatis the corporation trying to
achieve?
Right, right, and your examplehere is bang on.
(23:47):
And then there's the businesslevel strategy.
So the corporate might haveseven different business units,
right, the overall strategy thatthey're trying to achieve.
Then the business levelstrategy Okay, so what is each
business unit within thecorporate?
What are they trying to achieve?
What is their industry?
What is their value proposition?
Who is their industry?
What is their value proposition?
(24:07):
Who is their customer?
And it's probably going to bedifferent for each of the things
segments under the corporation.
And then you've got so you'vegot corporate, business level,
and then functional level, yep,functional level, operational
level.
This is where you're startingto blend into planning, capital,
(24:28):
implementation, that type ofstuff.
So it gets a bit harder todisaggregate and it depends on
the size of the organisationyou're talking about.
So, again to your point, youcould say that there's
McDonald's corporate, there'sthe McDonald's franchise.
Perhaps your business level andthen operational level is
actually your franchise holder.
(24:49):
Great Right, because they'rethe one who's actually serving
the customer.
So what do they need to do on adaily, weekly basis?
And yes, they've got their ticklist of all the things they
need to do.
But not all McDonald's are thesame.
You say they are, but actuallythey're not, because you can go
into one place messy as all hellin a bad location.
Another wine is just mint andit's looking really good and the
burgers actually look almostlike the picture, almost, almost
(25:11):
.
So you know.
Again, thinking about and it'sgoing to be harder for different
sized businesses, but thinkabout what is the corporate
strategy, what's the businesslevel strategy?
And then what's the functional,operational level?
And that's a good way of I doit, mine.
(25:34):
So I've got a corporatestrategy, I've got a.
The business unit is what mylife insurance part of what I do
does.
And then I've got me as anadvisor, and me as an advisor is
less on the strategy, it'sactually more just on my kpis,
all right.
Speaker 1 (25:46):
so yeah, yeah, yeah.
And let's stick on mcdonald'sfor a moment because there's one
I want to just explore a littlebit more there because, while
and and your three tiers ofdifferentiation spot on as well,
completely agree with that, um,but at that local level the
restaurant owner they may nothave a strategy for their
restaurant, for what they'regoing to do.
(26:06):
They've got a plan.
They've got a plan on howthey're going to serve more, how
they're going to keep thingsticking over, keep the store
running.
Their strategy might be on howthey plan to get out in 10 or 15
years.
Speaker 2 (26:17):
Fantastic.
There we go.
So now we're starting to bringin it's less about the actual
business and more about what'sthe value for the person within
the business, Correct, yeah.
What's the value for the personwithin the business?
Correct, yeah, because that isa business within the business,
right?
So from their own point of view, they all have their own plan.
In fact, many of thosefranchise owners, they're
multi-franchise owners, sothey've got multi-sites and part
(26:39):
of their plan is actually tosell their 10 sites as part of
their retirement plan.
So it's definitely a differentlevel down.
Yeah, look, the other part Ilike about that is bringing in
the idea which I talk aboutoften your business is your
asset.
So if you have a business and itis an investment asset.
What are you doing with that?
(26:59):
Yeah, I don't know too manyproperty owners who have
investment properties who justdon't even look at it for 20
years and then they decide tosell or do whatever they do.
No, they're monitoring their,their mortgage, their
maintenance, their um, whateverelse.
They've got their estate agentfees and all the other bits and
pieces, property management, allthat kind of stuff.
(27:20):
They'll be doing that on anannual basis and they'll be
definitely they'll be monitoringthe value of that investment
over time and have an eye onwhen is a good time to sell and
exit out of that business.
Speaker 1 (27:30):
Yeah, why don't?
Why don't business owners do?
exactly the same and come backto culture, because culture has
played a big part.
You know, traditionally the newzealand model has been for
small business, at least smalland medium the.
The new zealand model ofsuccess has been the three b's
the beach, the beamer and theboat.
Uh, the beach house, the batchbeamer and we hear stories all
(27:54):
the time of people that have hitthat layer, that success.
Suddenly they've got the and itmay not be the three Bs anymore
, but there's certainly a layerthat business owners look at and
go.
I know I've got it because I'vemade it, because I got to this
point, but it's that lookingbeyond still, isn't it?
It's that need to go out and go.
Well, okay, great, I'veachieved the three lifestyle
goals I wanted.
But then the question is what'snext?
(28:15):
How are you going to get out ofthat business?
And and you've talked aboutthis quite a few times, um over
the last few months is aroundthat, that, um, how you plan to
leave your business?
Do you feel that a lot ofindividuals there's probably
predominantly individuals thatare in this position aren't
thinking that far ahead?
They are literally justthinking about how to get their
paycheck through?
Speaker 2 (28:35):
yeah, I think that's just my spot, thinking about how
to get their paycheck through.
Yeah, I think that's.
That's the most part.
Um, I think at the back of themind of many business owners
they'll have but have an idea ofwhat they want and quite golden
and rosy.
(28:57):
Um, actually, I need to comeback and qualify that a little
bit.
It seems to me that businessowners tend to fall into broadly
two camps.
One says I'm building somevalue in my business.
I don't know what that is, Idon't know how much it's worth
now, I don't know how much Ineed for retirement, but I'm
building some kind of value andI'll think about that when I get
there.
And then there's the other campthat says there's no value in
my business.
It's get there.
(29:25):
And then there's the other campthat says there's no value in
my business.
It's just me.
I'm a solopreneur.
Uh, the business is my income.
There's no right or wrongeither.
I'll actually challenge thosesolopreneurs and say if you wrap
a business system around it,you can still create some value
that you could sell over time.
But that's part of that for thetime being.
Um, for the ones who whounderstand they've got some
capital value in their businessand they're trying to build that
, I would suggest that they needto start thinking about their
(29:46):
exit as soon as possible.
I mentioned this at ournetworking thing the other day.
The ideal again, if we look atan investor, a share investor, a
trader.
They know what their exit isgoing to be before they enter.
So do you know the value thatyou want to sell your business
(30:07):
for before you start yourbusiness?
Now, that is a concept that formany is foreign, so that's not
likely to happen for many.
Okay, that's fine.
So then at the other end of thescale excuse me we'll hear
accountants say you need atleast two to three years to tidy
up the books, to actually havesomething resembling a good
(30:31):
package for owners to thinkabout.
It looks like a good businessto buy.
So we've got two ends of thescale.
We've got knowing the value youwant to sell at before you even
start through to.
You've got three years and thenyou're going to try and sell.
I would say, try and get on assoon as possible.
Part of the reason for that isif you know you've got an asset,
(30:54):
are you not going to try andmaximize the value of that asset
?
So if we look at it frominvestment property here in New
Zealand, we love our property.
So let's go through a littlestory.
You buy a property great.
You give it a lick of paint,you put a new bathroom, new
kitchen in there you're addingsome value.
Great, you're going to protectthat property.
(31:17):
You'll probably get someinsurance on there.
You'll need to for yourmortgage.
Probably you might even have aproperty manager to go around
and keep an eye on it and allthat kind of stuff.
So you're protecting the riskas you go through with all the
rest of the rental income,paying for the costs.
Okay, so you're extracting someincome along that journey and
(31:38):
then, because property tends togo up over time, we know there's
going to be some capital growth.
So when you exit it's going tobe worth more.
Four stages We've got thepurchase building more value,
protecting the value, extractingthe value on the way and then
exiting.
Okay, why do we do that withour business so intuitively?
(32:00):
People will have a business andthey'll try and make
improvements and their 12-monthplan.
I need to grow my clients.
Okay, I need to hire more staff.
Okay, let's just step back amoment.
Have we got our ladder againstthe right wall?
Are we actually on the rightstrategy?
(32:20):
This is just going right backto the whole point of the
discussion.
How do we know the clients thatwe're getting are the right
clients for us?
Yeah, how do we know that theservices and products we're
trying to sell are actually theright products and services.
Yeah, we've got 10 people inour neighborhood selling exactly
the same stuff as us.
Is there a better way?
Is there something else we cando?
(32:42):
So that's where you start tothink about, think about
strategy.
So I'll challenge people tothink.
Think more deeply about yourbusiness, understand the
industry you're in.
Think about your competition.
Porter's five forces ofcompetitive advantage.
What are you?
Why are you better?
What is it that you're doingthat you can't have someone
(33:06):
substitute your product forsomething else.
And the whole point of doingall that is because you want to
add value Right back to thetypical house.
You want to add your bathroom.
You want to have your liquorpaint.
You want to tidy, uh, thetypical house.
You want to add your bathroom.
You want to have your liquorpaint.
You want to tidy up the gardens.
You're creating value withinyour business.
Why?
Because when you come to sellthat thing, it's going to be
(33:27):
worth more why is?
that relevant, because yourfamily will thank you, because
you don't have to work throughthe age of 85.
You can have the round theworld trip 17 times with your
wife.
You can you the round-the-worldtrip 17 times with your wife.
You can fund your kids'education, their grandkids'
education.
You can do whatever thosethings that you want to do,
because you're taking the timenow to think about.
What business am I in?
(33:48):
How can I add value?
How can I maximise that valuefor my retirement?
Speaker 1 (33:52):
Yeah, and there's some things you're saying in
there that I've always held trueas well.
And coming back to when I didmy master's degree, too long ago
now, some of the things thatcame out of that, the concepts
were, through it, you can'tscale what the market doesn't
(34:14):
want, and that you might havethe greatest idea in the world,
but if you don't tell anyoneabout it, they're not going to
buy it.
Both of those I see time andtime again.
I've made mistakes on thesecond one more often than I can
count.
I've got a great idea, I'mtalking to a few people about it
, but it's not the same asmarketing, right?
And that's where you start tobring that in of what's my
long-term vision.
And the house is exactly thesame If and the house is exactly
(34:34):
the same If you've got a rentalhouse and a rental property.
Sure, it might be easy to donothing now while you've got a
tenant in there, but you've gotto be thinking about what to do
when that tenant moves on.
And if you haven't done thegardens and if you haven't
painted it, and if you haven'tput the carpet down, replaced
the carpet, and if you haven'tkept the basic maintenance stuff
done, that marketing spend getsreally, really hard in a very
(34:59):
short period of time, becauseunder New Zealand law at least,
the tenants can give you I thinkit's four weeks notice and
they're gone.
So you've now got four weeks totry and repair two, maybe three
, maybe four, maybe five yearsof neglect.
Speaker 2 (35:16):
Otherwise people aren't going to want to live
there.
That's right and thatinterrupts your income, yep, and
that's your investment.
Roi just goes down the toilet.
Speaker 1 (35:25):
Yep.
And business is the same thatif you neglect the.
I wrote a quote down the otherday on this one.
Actually, that strategy is alittle bit like going to the
dentist you don't have to do it,but the longer you leave it,
the more painful it's going tobe.
Speaker 2 (35:42):
And that root canal.
You know, if you don't get ascene to it it can kill you.
Yep, that's the guts of it.
There are a lot of businesses inNew Zealand.
Whatever the number you want touse, somewhere around 570,
590,000 small businesses in NewZealand.
That's a lot.
We don't have that manyindustries.
That means there's a lot ofpeople fighting in the same
(36:04):
sandpit for the same stuff.
Yep, okay, my industry is nodifferent.
My industry financial advisors.
It depends on the number youlook at, but somewhere around
$4,000 or $5,000.
Right, you're going to die oneday.
(36:27):
Trust me, I have integrity holdon, okay.
Speaker 1 (36:28):
So what's the sandpit ?
Speaker 2 (36:28):
that you can create, very few other people can be.
Um, I mentioned some earlier.
Um, some people are doing thatfinancial education piece
extremely well.
They've carved out their ownmarket and they're able to
charge a premium and do all thethings that they can do because
they've taken the time to thinkabout what is their value
proposition, what's the marketthey're in, what is the industry
they're actually playing in andthey're doing really well.
(36:51):
So I'll challenge other peopleto think about that as well.
And if you say to me but Dom, Ijust mow the grass, I just cut
lawns, really Okay, we've got agreat example of that Jim's
mowing out of Australia.
That's all he did.
Speaker 1 (37:07):
Look at where he's gone.
Look at where they are now.
Yeah.
Speaker 2 (37:10):
Jim's dog washing and all these other kind of crazy
things that spun off from it.
Speaker 1 (37:21):
Jim's cleaning.
There's, yeah, jim's dogwashing, jim's mowing.
And then the one that that tookme by surprise when I found out
about it was jim's cabletesting.
Right same jim, they just goaround and and test electric
cables to make sure they arestill compliant good grief.
Speaker 2 (37:31):
Yeah, there we go.
So who knew right?
So, um, so, with enough, withenough thought and lateral
thinking, you can create thesandpit that you want to be in.
Yes, that's the part, really.
This is the crux of the wholeshow.
That's the part that isn't doneenough, I think.
And it takes a bit of time andit's not for everyone and it can
(37:54):
be challenging and you need tobe challenged.
You need to challenge your ownassumptions.
If you've been doing somethingfor 10 years we talked about ego
before if you've been doingsomething for 10 years and
you've had some modicum ofsuccess to then have some
upstart, you know little kidcome along and say have you
thought about doing thingsdifferently?
Oh, yeah, I'm good at what I do.
Yeah, great, okay.
(38:14):
But if you've got another 10years before you actually go to
sell your business, you dosomething different.
You actually double, triple,quadruple the size of your
business because you do thingsslightly differently.
And that's what's on the table.
I got to get my little soapboxin here.
We're concerned about NewZealand's productivity and it's
(38:37):
always in the news in some way,shape or form.
The productivity in New Zealandis not where it needs to be,
but it measures against otherOECD countries, right, okay, how
do we change that?
Yeah, I talked about this atour networking breakfast With so
many small businesses.
If we just take 1% of thatcohort and improve the
productivity by 1%, we'd have amassive ramification, positive
(39:00):
ramifications, not just for thebusinesses, the customers, the
families, but for New Zealand asa whole.
And part of that is stopping tothink that if you're a
solopreneur, okay, that's fine,good.
Earn an income from that, okay,that's good.
Can you be challenged a littlebit to think a little
differently, to perhaps grow abusiness system that can evolve,
(39:26):
that you actually have an assetthat you can sell down the
track and help your family, helpyour retirement, but in the
process actually do somefundamental things for the
country as well?
Just that ability to think alittle differently.
We're not talking about beingpointy heads and square eyes,
(39:46):
whatever kind of thing you wantto conjure up.
There are some relativelysimple things you can do.
There are lots of models on theinternet that you can follow
around, strategy to help youthink things through slightly
differently and, just you know,add more value to your business
and ultimately that's got to begood for everyone.
Speaker 1 (40:04):
Right, and just keen for your thoughts on this as
well, because I've heard, seenstories, heard stories of
organisations where the pointyheads for want of a better term,
but the managers lockthemselves in a way in a room,
come up with a strategy, thinkthey've identified all the
problems and then walk back outand tell them to the staff, um,
and only to be told what thehell are you on about?
(40:25):
Versus those stories where, umand I don't remember all the
details on on the one I'm goingto talk to, but it's a really
good example of it was a um, apushchair manufacturer in New
Zealand somewhere, and they hadmassive delays in getting their
pushchairs out the door and partof the reason, they thought,
(40:47):
was because the end of theproduction was the problem.
Instead of just sitting thereand trying to solve the problem
at the top, they actually wentto the guy at the end and said
what's causing the problem?
Why is this taking so long?
Took his feedback on board.
Now this is the guy who's beendoing the job for 10, 15 years,
right, so he knows.
And so instead of trying tosolve him as a problem and
saying he was too slow and, likeI say, I don't remember all the
(41:09):
details of this I've got tocatch up with a good friend of
mine who knows it off by heart.
Instead of trying to solve himas the problem, they went to him
and said what causes theproblem and worked their way
backwards.
And I find that's reallyvaluable.
Is actually getting out to that, to, whatever you want to call
it, the coalface, the front line, the people at the end of the
supply chain, and saying why isit causing a problem, and then
(41:32):
work your way backwards fromthere Would you agree with that?
Speaker 2 (41:38):
Yeah, absolutely.
Uh, the ivory tower syndrome isright, um, and it goes back to
the ego and all the rest of it.
I've made it to the, themanagement team.
Yeah, you worry about the plebsdown there?
Thank you very much.
I know, I know what I'm doing,you know you talk to them and we
can, you know, go away for aweek and have a piss up and
we'll do half an hour strategyand, you know, play golf for the
(41:58):
rest of the four days.
Yes, seen that plenty of timesand you're absolutely right.
When you can bring in peoplefrom all levels and really,
really get a robust, it kind ofgoes back to what I was saying
if you've got the organisationalculture, that can have a good
conversation, a good robustconversation about different
(42:19):
aspects of the business.
We're currently talking tothese customers with these kind
of operational problems.
This is kind of what ourcharging, this is what our costs
are and this is kind of what'scurrently going on.
Let's throw it all against thewall and go.
Is this all accurate in today'sworld?
We've been running thisbusiness for 10 years.
(42:40):
Is all this still accurate?
Is all this still valid?
And in fact, just before westart doing that.
Let's just take a step back andhave a look at our industry
Before we start doing that.
Where are we in the world?
What's going on in this worldat the moment?
What are some of the key trendsthat we know of?
It's all about AI or big dataor whatever else.
Let's just map all that out,get an idea of where all that's
(43:00):
going.
Right, yeah, then let's comeback to what we think our
industry is.
Let's just are we actuallystill in that industry?
Are we or should we be inanother industry, or should we
be there?
Okay, well, if we do that, well, then that means that our
(43:22):
suppliers should be these guys.
Our clients are actually theseguys.
Our value proposition would bethis, not these guys over here.
And if you're doing that with aroom full of people at different
levels of the business, thenyou're getting buy-in from every
level because everyone's havingtheir room put.
You know you can create somereally interesting magic from
doing it.
Most firms won't do thatbecause it takes effort and
there's a real it's a risk,right, yeah, if you go to the
(43:43):
board of a mid-sized company andsay, actually, we want to put,
we're thinking about putting ahandbrake on a current direction
and go here.
You know what are you doing.
You know this one's given a 15%a year.
But if you're thinkinglong-term, okay, well, in the
next five years we won't have abusiness.
We've got seven entrants comingin.
(44:04):
Who's going to chip away at ourmargins?
If we don't do it now, we'll bedead ducks.
So it's being able tounderstand that, being able to
have clear conversations aroundall that.
Speaker 1 (44:14):
Absolutely.
And coming back to your point,making decisions as well and I
find um for many consultants,our best value has been able to
ask questions of those clientswe're working with and draw them
to a conclusion where they canmake a decision, as opposed to
coming in and trying to make thedecision for them.
If a consultant is making adecision for the client,
(44:36):
something is like you don't wantthat.
Speaker 2 (44:46):
Um, there are a lot of consultants out there and
look on, you know, technicallyspeaking, on one, you're one,
there's, there are.
Everyone you bump into seems tobe a consultant about something
, consultant about something,which is fine, and I think it
helps if we are able to give adifferent perspective for the
people running a business.
Yeah, my view, and I think itseems like you share this view
(45:08):
it's their business.
Yeah, they know their industry,they know their business.
They know what they're doingfar better than I will.
Even if I spend, you know,three months of spend three
months of immersion at theircost, I'm still not going to
know everything.
So what we can do is have someframeworks and facilitate Get a
whole lot of sticky notes andwhite paper and whiteboards or
(45:31):
pens or whatever you need to doand have the whole brain mess
that goes on and facilitate byasking good questions and having
some structure around wherewe're trying to take things.
But it has to come out of theirheads because they know it.
It's their business, correct?
Speaker 1 (45:49):
And AI is a good one on this one.
I've run into this quite a fewtimes lately.
Where it's just drawing thatout of their heads is what do
they want AI to be?
Because there's a lot of hype,there's a lot of press, there's
a lot of fact, there's a lot offiction about what AI can and
can't do, and everyone's lookingaround the table going well,
our competitors are doing thisthing.
We should be doing it as well.
(46:13):
And the question I first ask iswhat do you want the AI to be?
Not, what problems are we goingto solve with this?
What problems are we going tosolve with?
This is a great one, but it'snot the first question I'll add
in.
It's what do you want it to be?
Do you want it to be somethingthat drives your revenue and
therefore you're creating an AIplatform that you're going to
sell to the market or do youwant it to be something that
supports your existing revenue?
(46:34):
And coming back to your point,the unique selling proposition
or the value proposition is doyou want AI to be your value
proposition or do you want it tojust make you get better at
what your value proposition is?
And the minute that question ison the table.
There's the chance to sit backand stop and think and go.
Well, what's the difference?
Where do we go from here?
Where do we go Once we land?
Nine times out of ten, most ofthe companies that I've worked
(46:56):
with have gone from.
We need to be doing AI to okay.
We need to be doing this and weneed to use AI underneath it to
empower it.
Speaker 2 (47:03):
Yeah, yeah, it's.
I really try and bring it backto if I'm talking to a business
owner.
Just try and simplify thislanguage because it can get
quite exclusive in some ways.
(47:24):
If we make it really simple,the activities that we do fall
into two camps, or should doOnes that create revenue, ones
that fall in the cost bucket.
It's either revenue bucket orcost bucket.
The customers how we communicatethe customer messages, customer
(47:48):
segments, all of that productskind of stuff falls into the
revenue side.
Stuff falls into the revenueside, the cost side, the
suppliers, what's the underlyingmechanism, the operational
costs and all that kind of stuff.
And in the middle you've gotthe value proposition.
It kind of feeds off both.
It can be a low-cost operatoroffering high-value service.
(48:10):
It can be done, but that's partof your value proposition.
When you talk about somethinglike AI, and you're exactly
right, where does it fit?
Cost minimization and is thatpart of your strategy or is it
part of your revenue generatingfunction?
Yeah, be clear.
So when you're talking aboutany activity, where does it sit?
There's a quote um, there's agreat book I've read called um.
(48:34):
There's a quote.
There's a great book I've readcalled the Four Cornerstones of
Corporate Finance.
It's a small little book fromMcKinsey.
One of the quotes out of thatis anything that doesn't
increase cash flows, doesn't addvalue.
Yeah, that's a pretty harshstatement because you'll have
(48:54):
the HR person going oh, hang on,I don't sell on things If the
activity you're doing isn'tenhancing cash flows, it's
enhancing value.
I'm not talking aboutprofitability, I'm talking about
value.
So value might be driven in awhole lot of different ways, but
that starts to get really makespeople really uncomfortable.
(49:15):
Yeah, ways, but that starts toget.
Really that makes people reallyuncomfortable.
Yeah, is what I'm doing.
Am I creating, am I increasingthe flow of money coming through
the business or am I decreasingthe amount of money coming
through the business?
Am I adding value or am Idecreasing value?
Ai sitting on the valueenhancing part or on the cost
minimization part, which isactually still increasing value?
Speaker 1 (49:35):
yeah, so um, yeah, it's something we we used to use
.
We other industries use thesame graph.
We called it jaws.
When I was at bnz and and thefinance department put out the
jaws graph and on one axis wasthe um revenue, uh, sorry, uh,
income, um, no revenue, revenue,uh.
And on the other axis was cost.
(49:56):
And as long as they were a big,wide open jaw where revenue was
going up and cost was goingdown, value was great.
The closer they got together,the more nervous people got, and
the worst possible obviously iswhen they overlap and cost is
going up and revenue is goingdown.
That's when you've got aproblem and I keep thinking back
to that when I'm working withcustomers now as well, because
it's a great model is as if youwant to increase revenue, you've
(50:18):
got to push that cost line up,or you've got to drop the um
sorry, you've got to push thecost line down.
Get it the right way around.
This is the important part pushthe cost line down, drive
revenue up, and that's wherevalue will increase.
Um, and within that, I thinkthat's.
That's something that also tiesinto some of the other models
that are out there ofunderstanding that you may
(50:39):
actually slightly increase costfor a period it's going to
decrease, but you're going toget to where you want to go as a
J-curve investment, and what Imean by J-curve is that you're
going to have to spend a littlebit of that income and increase
costs a little bit in a shortperiod of time to then start
getting the gains that you'reseeing.
Spend a little bit of thatincome and increase costs a
little bit in a short period oftime to then start getting the,
(51:02):
the gains that you're seeing,and and uh, the.
The goal should be to uh toreduce as much as possible that
expense going out and have itfor as a shorter period of time
as possible yeah, you brought ina fantastic concept.
Speaker 2 (51:09):
Um, from a from a finance point of view, uh,
what's the time value of money?
Yeah, so what's the value ofmoney today versus value value
money tomorrow?
What is that period of time?
Uh, what's it actually going tocost in real terms?
And what's the roi at the endof the point, at the end of the
project?
Yeah, unless we do a wholeother podcast on.
You know, net present valuestuff 100 100.
Speaker 1 (51:30):
do we get rid of the server now or do we hold it for
another three years?
Exactly, exactly.
Speaker 2 (51:36):
Yeah, yeah, yeah.
I have to keep bringing it backto value.
Yeah, what is the value today?
What is the value you're tryingto achieve tomorrow?
How do we plug that gap?
And if you don't know any ofthose three parts, you've
probably got a problem, great.
Speaker 1 (51:54):
Great, and that is probably a good note to leave it
on Value and we'll have to comeback and have another
conversation on value.
But just to wrap us up, dom,what's three key takeaways that
you want people listening tothis to think about when they go
back to their business?
Speaker 2 (52:08):
A strategy is not a plan.
A plan is not a strategy.
If you're not doing planning,start.
If you're doing planning butnot doing a strategy, start.
Speaker 1 (52:19):
Is there a third one?
There's probably.
I think there's four in there.
So take them as they are andyou're spot on.
Start today, because the besttime to start is right now.
Hey, thanks, dom, reallyappreciate your time today.
Thank you so much for coming onboard.
It's been a lot of fun.
Thank you Absolutely.
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