Systemised Knowledge Works

 

Digital ad spending is $16 billion a year and growing in the USA.  It is bigger than traditional advertising.

There is a simple reason why they have grown so much so fast. Their marketing sells more products than traditional advertising. Digital marketing is a lot more advanced. These are the people who send you advertisements as you browse the web and facebook.

Learn from others

I came across this ad on how a company founder operated his digital marketing firm – here.

I could do the course because:

  • I wanted a middle-aged career switch,
  • better understand this part of business a DIY MBA, or
  • Understand how to systematise knowledge

For me, it was option 3. A late friend had been explaining how digital marketing operated. He passed away before he could explain the mechanics to me. I was struck how thorough and analytical this digital marketing industry was. As a lobbyist I was struck by what lobbying and Public Affairs could learn from them.

Systemized Knowledge

One of the reasons digital marketing is so effective is that the companies have systemized their knowledge systems. Nothing is left to chance. They have written down each and every step. They identified the best practice and wrote out the steps to be taken.

I bought this course to see how someone has systemized the knowledge of how his company works in this industry works. If this company owner can do it, why can’t anyone else do it.

Here is a checklist for one part of my work. I am going to write-up a lot more checklists.

What is interesting about the course is how people in the company have gone through and explained every steps and process of their work and how it adds up to a better product and service. The presentations are all in plain and clean English.  I have heard that  knowledge workers think it can’t be done “for their work”. They are just wrong.

I want to better understand how this systematization was done, what their checklists look like, and the advantages or not it brings to work. A few hours looking at the mechanics is interesting.

Nothing left to accident

Every step is planned out in advance. It is planned out on paper (electronically at least). It uses:

  • Written execution Plans
  • Written checklists
  • Video, transcript,  and audio explanations
  • Templates and examples
  • Excel tables of who is doing what and when and what it is going to look like and examples

The production of a marketing campaign or new web site is all planned out, every step of the way, and it is planned out on paper (electronically at least). The detail is amazing. Nothing is left to chance. If a project lead is away it is clear someone else can step in and the quality of the product and service will not go down.

 

Luddites

I have encountered a lot of reluctance to systematise knowledge. I am not sure why that is. The best reasons I can work out are:

  • People are worried that if they put their knowledge down in paper they will be replaced
  • People don’t want others to check out the quality of their work
  • People don’t really know what they are doing .If they put their operational instructions down on paper, they fear their ignorance will be called out

 

Observations

The fear that you are writing away your job is muddled. The law of comparative advantage means that is very unlikely someone else in your organisation are going to do the job. To understand why, read this article.

http://www.economist.com/news/finance-and-economics/21721136-law-comparative-advantage-200-still-winning-prizes-trade-economist

You may find out that the job is not being done well. Key steps are being missed out, key people not being met.  That is a good thing.

Now, systematization has to be done on paper. Telepathy does not work. A lot of people know I wrong and are keeping me in the dark on how to master telepathy.

It seems such a no-brainer, you would wonder why systematizing of knowledge is not more popular.

 

 

Peter Thiel’s Lessons for Green Firms

 

There is a lot of good advice from Peter Thiel in Zero to One. I recommend reading it.

Every environmentalist should read chapter 13, ‘Seeing Green’. It gives some great advice on what it will take make clean technology successful. He also explains why too many green firms flop.

 

7 Basic Questions To Answer

Thiel writes: “Most clean tech companies crashed because they neglected one or more basic questions that every business must answer:

 

  1. The Engineering Question. Can you create breakthrough technology instead of incremental improvements?
  2. The Timing Question. Is now the right time to start you particular business?
  3. The Monopoly Question. Are you starting with a big share of a small market?
  4. The People Question. Do you have the right team?
  5. The Distribution Question. Do you have a way to not just create but deliver your product?
  6. The Durability Question. Will your market position by defensible 10 and 20 years into the future?
  7. The Secret Question. Have you identified a unique opportunity that others don’t see?

You must be 10x Better than the alternative

I was struck by an observation he made to the first threshold, the engineering question. He writes “A great technology company should have a proprietary technology an order of magnitude better than its nearest substitute … Companies must strives for 10x better because merely incremental improvements often end up meaning no improvement at all for the end user”.

Written starkly and honestly, this 10x better makes a lot of sense. Why would you switch to a new energy source to power your home if it is not 10x better than what you are using today. People don’t believe the hype of the untested, they factor out the good news story, and instinctively fall back on what is tried, tested, and works 24/7/365.

The same surely goes outside the technology business. Why would a customer switch to another service provider unless the competition is not just a little better but hell of a lot better, say 10x better. It’s a high number, but it makes a lot of sense.

 

What Does  It Take

He reflects that “No matter how much the world needs energy, only a firm that offers a superior solution for a specific energy problem can make money”. And, it is clear that if your business model depends on the support of the government(whether by handouts or special rules), you have a very short future.

What Fishermen Could Learn from Foresters

I recently read Mark Spitznagel’s ‘The Dao of Capital’.

Mark Spitznagel is one the world’s most successful investors. More interestingly, he is openly an “Austrian economist”.

You can read his 10 chapters to understand he became a self made billionaire. You may be tempted to skip to the last two for him to reveal the secret of his success.

But, he’s also produced one of the best-written and clear books on Austrian economics and investing – Henry Hazlitt’s Economics in One Lesson being the best.

Forests and Fish

Martin Faustmann wrote about the Economics of Forestry in 1849.

Martin Faustmann wrote a guide on the best term to harvest trees so as to get the best economic return. His work stressed the importance of a long – term perspective, which in forestry is important as the best growth in some trees only kicks in at 25 years old.

Growing capital and value takes time, often a long time. Spitznagel’s explains that we humans have a big weakness. We like to take immediate benefits, rather that wait longer when we would get greater rewards. We are too impatient!

Impatience is not a virtue

Some entrepreneur’s have learned to have a long term “time preference”. There are not many. Mark Spit angel and Henry Ford are two examples that managed to deal with their urges to take short-term profits, and instead waited and played the long game, and harvested great profits.

Could Fisheries Conservation Learn from the Austrians

I have just read a good report “Towards Investment in Sustainable Fisheries: A Framework for Financing the Transition” from EDF, 50in10, and the Prince of Wales’s International Sustainability Unit.

UNEP have guestimated that $240 billion is needed to rebuild fisheries. This would lead to an annual gain of $50 billion. That’s a bit return on a very big investment.

With numbers like this, you wonder why people are not investing their funds to make some great returns.

The price of fish is likely to keep going up. With around 2 billion more people to feed in the near future, this healthy and delicious form of protein will be in demand. And, if supply does not grow, and it’s been in gradual decline for a long time, the price is going to keep going up.

 

Great Returns

The report notes three cases were sustainable fisheries has been practiced, it has led to increased revenues. The pacific halibut industry saw revenues rise from 1995 to 2008 by 222%; the Ben Tre clam fisheries increase their revenues from 2006-2009 by 49%; and New Zealand’s fisheries grow by 103% from 1986.

 

Investors Needed

A lot of money is bine g spent by NGOs, governments and fishermen in fisheries. But, they have not got access to the skills or the money needed to meet the $240 billion challenge.

Investors could help with the large sums of money needed.

Some investors are stepping in and are financing the transition, like:

http://www.californiafisheriesfund.org

http://www.seachangemanagement.com/fund/

 

Why So Few

With returns so huge, why are entrepreneurs and investors holding back.

As Spitznagel points out successful investors wait. They wait for certain conditions to be there, and they only move when those conditions occur. A key sticking point for any investors to put their own money in the game is the lack of
Secure tenure; monitoring and enforcement; sustainable harvests (long term thinking) by the regulators on setting quotas.

With those conditions, investors will provide much needed capital. But, if the industry is dominated by people with short term thinking, the industry will become stunted, fragile, and suffer low or no profits.

Maybe the best thing for the global fisheries industry is for someone to write Martin Faustian blueprint for fishing.

 

40 years of improvement – the UK Car’s industry

 

I’ve just got back from a day trip to England. People seemed to be prospering, although a lot of people seemed to have drunk the cool aid that things were so much better before the UK joined the EU in 1972 than they were today.

I was curious. The UK car industry is touted as an example of why membership of the EU has been bad for the UK.

Do the facts add up: Car Production

Car production seems to be doing very well.

I checked on line, and the UK Car makers have this very helpful chart that shows that things really are doing well.

Screen Shot 2014-04-20 at 12.00.45

 

Source: http://www.smmt.co.uk/2014/01/uk-car-manufacturing-hits-six-year-high/

Also, it seems that a lot of skilled people are working in the UK making these cars.

Screen Shot 2014-04-20 at 11.55.33

 

Source: http://www.thisismoney.co.uk/money/cars/article-2548149/How-booming-British-car-manufacturing-helped-drive-economy-upwards.html

A Lot has changed for the better in 40 years

Now, the numbers are down from the 1970s. But, a lot has changed in 40 odd years since the UK joined the EU. A car plant from 1972 and a modern one is a very different place. Computers and robots are two good things and no-strike agreements are another.

Now it seems that British Leyland used to employ nearly 180,000 people in the early 1970s. Now, my recollection was that they produced embarrassing rust buckets that British customers were happy to switch away from to Japanesse cars were allowed in. British customers still had to pay for British Leyland via the infusion of taxpayers’ subsidies. Of course it did work and British Leyland was finally and thankfully closed down.

Some people, like the UK Socialist Party (I was surprised to see they still exist) are against these improvements. Economic nationalism has it appeals, but this the gutter of the economic scoundrel, and the direct pathway to poverty.

People can make a lot more from a lot less. It takes less human and natural resources – and that’s a good thing. That the cars we can buy in the UK are now better, more efficient and reliable, and cost a lot less, is a case for celebration. That we have on offer so many choices from the UK and other countries is a case to rejoice. You can try and stand up against these forces of nature but your chances of succeeding in the real world are about as much as anyone wanting to buy the Austin Allegro.