Blue Monarch Management

Tag: Digital Transformation

  • Everybody Is Talking About Scaling. Should We Be Talking About It?

    Everybody Is Talking About Scaling. Should We Be Talking About It?

    Growth and scaling are two terms that are often used interchangeably in the context of business development, but they have different meanings and implications. Both may be important objectives for companies of any size, but they require different strategies and techniques, and those practices will certainly drive different outcomes, benefits, and risks.

    The (Traditional Slow) Growth Operating Model

    Growth, defined for this discussion, refers to increasing the revenue or market share of a business while ramping up assets and resources that help to build revenue streams. Companies that are built around a ‘growth’ operating model can add much cost to generate greater revenue. Some business model examples you might recognize as slow growth include medical practices, traditional post-secondary education models, consulting and other professional firms that operate through a trade-time-for-money model, many resource-intensive industries, and business models that have manual efforts by staff and contractors and/or high knowledge elements. Many traditional bricks-and-mortar operations that require optimization of time and space with people are also tied to this form of a traditional growth model.

    The Scaling Model

    Scaling refers to increasing the efficiency or profitability of a business that can lead to rapid growth. Companies that invest in scaling practices may invest smartly in leadership, systems, and culture development to avoid introducing ongoing costs while still driving revenue growth. Operating profits in a scaling company may have potential to generate higher free cash for reinvestment and accelerated growth. Scaling is the process of growing a business to meet increasing demand, reach new markets, and achieve greater impact. It’s not just about growing bigger, but also about growing smarter, faster, and more efficiently. Scaling requires a strategic vision, a flexible mindset, and a willingness to innovate and experiment. Scaling also involves overcoming various challenges and risks, such as managing complexity, maintaining quality, ensuring alignment, and fostering culture.

    True scalability involves adding revenue at a much greater rate than costs, ensuring efficient expansion without compromising quality or profitability.

    Scaling within medium or large-sized enterprise has been an area of professional interest since my days working within the  railroad industry. Following the 2008/2009 global financial crisis and further ongoing disruption in global commodity markets,  the ability to grow profit has depended increasingly on international market selection, cost management, productivity, demand, and capacity. These optimization investment trends are pervasive in resource and asset intensive industries such as transportation, energy, mining, and manufacturing.

    We have also been working with a more entrepreneurial client base whose primary aspirations are to transform their companies repeatedly and iteratively through innovation, great positioning, and relationship management, while either entering or creating new markets facing incredible pressures and disruptive forces. These companies consistently aspire to chase high growth through relentless innovation in what they perceive as untapped opportunities to solve well-known business problems.

    Scaling a business is not a one-size-fits-all process. It depends on various factors, such as the type, stage, and industry of your business, the size and nature of your market, the preferences and expectations of your customers, and the availability and suitability of your resources and capabilities.

    Should you Scale?

    The strategy and business cases to scale an organization should ask and attempt to answer these and other questions first – all focused on answering ‘why’ first, before getting to ‘how’ and ‘when’.

    Strategic Thoughts

    • Do you think your  products, services  and operating model can create a sustainable competitive advantage for you? What is your revenue and profit potential? What problems can you solve?
    • What market(s) should you select and is there a strong trend that will help you to quickly build momentum for profitable and fast growth?
    • Why do you want to grow? Are you (perhaps naively) chasing the “Unicorn” dream to be “the next…”?
    • Have others paved the way before you or do you have potential to be a market leader?
    • Do your plans follow rigorous business fundamentals or are you pursuing some ‘implied growth imperative’?
    • What happens if you fail and where are your potential failure points? How can you manage those risks?

    Practical Matters

    • How will you resource your rapid growth with people, funds, and time and what value are you potentially negotiating away?
    • Can you establish sufficient working capital to build control and stability into your growth?
    • What investments in projects and initiatives should you make and when?
    • Will you create ongoing dependencies on investors for revenue and funds to continue your operations?
    • How will you establish and build the right relationships with banks and other financial institutions to power your growth and manage sustainable operations and risk?
    • What leadership structures and cultures will  you need to develop…and when…to power your growth?

    Ethics and Morality: Sustainability Considerations

    • What ethics and morality principles should you follow around staffing and labour practices, particularly in higher risk / higher rewards growth scenarios?
    • What are your obligations to your people as your growth potentially outpaces your systems, infrastructure, and culture development?
    • What are your obligations to your communities as you develop and position your products and services in untapped markets?

    Conclusion

    The nature of growth, positioning, and scaling companies will be the topic of a series of posts by Blue Monarch Management over the coming weeks. We will continue to develop narratives around investment in systems, people, leadership, culture, and strategic analysis.

    Jeff Peterson is the Founder and CEO of Blue Monarch Management and is a professional Management Consultant specializing in Strategy, Governance, and Organizational Development for companies designing and driving transformational investments.

  • Painting Pictures, Telling Stories with Data

    Painting Pictures, Telling Stories with Data

    “Over the next two years, enterprise data is projected to increase at a 42.2% annual growth rate. Only 32% of data available to enterprises is put to work. The remaining 68% goes unleveraged.”

    These were critical findings in a seminal market report prepared by Seagate Technologies in 2020. Consider key global developments since the article was published. A global pandemic, prompting an acceleration in the development of technologies that change where and how people work and create value. Heightened focus on how products and services reach the market with disruptive investment in supply chains. Far more aggressive development in cyber security technologies to combat the exponentially increased threat of cyber attacks. And now, disruptive releases of world-changing artificial intelligence capabilities that are usable by everyday users. Political and sociocultural trends that have challenged basic definitions of ‘truth’, ‘facts’, and ‘evidence’ have heightened the importance of strong information governance and ‘informed decision-making’.

    To a Management Consulting firm deeply embedded in a Management Consulting industry, our livelihood is at risk because so much of what we do for our clients depends on the reliable and insightful interpretation and critical thought developed from data, reading, and research.  Colleagues in our industry have staunchly defended the relevance of Management Consultants as being relatively safe and inimitable because of our ability to develop critical assessment.

    But we are not so sure.

    In April of this year, Noor Gillani from Science Alert, summarized the opinions of five AI experts around whether AI could ever become as intelligent as humans. The consensus across the experts was that AI will achieve human level intelligence, reaching ‘artificial general intelligence’, and that much of what we once believed machines incapable of doing has been proven to be false. There are still significant questions around the potential capacity for creativity and emotional intelligence, but this year interestingly and to illustrate the point, AI and robots have been tapped for companionship to combat loneliness and mental health issues. In other emerging articles looking at the evolving ‘intelligence’ of AI, current models could meet or exceed average human IQ, with future generations potentially reaching much higher. What does this mean? In short, it means we are open to the possibility that everything we think we know or believe about ‘what AI can or will be able to do’ may be wrong. It also means we need to move quickly to build new pathways forward.

    How do we help?

    Significant global investment, inquiry, and early conversation are driving new regulations across parts of the world. We have an obligation to know the arguments, understand the ethics discussion, and to become comfortable with how to manage the technology-driven transformational changes that our clients take on as part of their pursuits for growth and development.

    As an advisory firm working with professional clients, we have long since understood the power and potential of data – but that data needs to be accessible, structured, managed, protected, interpreted, and developed for the company – and people yet have a significant role to play. Thriving businesses need to tap into the data they have and reimagine the data they need to accelerate the path to demonstrated wisdom. “Data is fairly worthless to most of us; it is the product of research or creation (such as writing), but it is not an adequate product for communicating. To have informational value, it must be organized, transformed, and presented in a way that gives it meaning.” (Shedroff, 1994).

    Our data and business analysis work powers the strategy development work and storytelling used by our advisors to drive complex change. Blue Monarch Management continues to pivot and invest in growth and development of professionals, partnerships, and capabilities along three intelligence dimensions: Business intelligence, Business Analytics, and Market Research & Competitive Intelligence.

    As one of our business analysts remarked, “BAs transform raw data into useful and actionable insights. We can transform numbers into images. But to get to there we first must work with our advisory team to understand the KPIs and metrics that will be meaningful to our clients. On that basis we extract the data and “clean” the data using such tools as PowerBi or Tableau. At all times, we recognize data’s intrinsic (face value and structured) and extrinsic (functionally useful) nature. This duality closely mirrors the business analyst’s approach to the client need vs that of the advisor – and both are required to shape a useful client deliverable.”

    The introduction of the Business Analyst role was a strategic move for us that goes back to our earliest planning days. The industry of management consulting has shifted such that large companies have brought strategists in-house – something that used to be the Consultant’s bread and butter offering. The dimensions of competition on which good strategy is developed have changed as well. To boost the quality, depth, and insight of our strategic advisory work, we have had to bolster our ability to conduct research and understand analytics and data. Management Consultants tell stories and use those stories to shape the business transformation narrative. Our BA team brings to our client work real depth and quality. And while it’s still early, our BAs have begun to strengthen our work in strategy and change by introducing data modeling, advanced analytics, and data visualization to our toolbox.

    Want to know more about how the power of information and automation can integrate with your organizational and leadership development? Why not contact us to start a conversation.

  • Tactical Cost Management

    Tactical Cost Management

    Effective management of total costs should be a top priority for any company, whether during periods with recessionary pressures or during times of growth and prosperity. When facing a crisis, companies can face hard decisions about how to manage through an emergency and set up for recovery, and often have little time to consider choices and develop options. In the months following the Covid-19 pandemic, global interest rates have risen at an alarming rate in response to inflationary pressures – impacting such elements as:

    • The ability to service debt.
    • The ease of acquiring, operating, and maintaining assets.
    • Access to stable and qualified labour.
    • Other resources required to operate a business.
    • A company’s free cash and access to working capital.

    Inflation and Market Uncertainty

    The Canadian monthly inflation rate peaked at 8.13% in June 2022 and has come down to 3.12% by October 2023 (ycharts.com, October 2023). In early October 2023, Bank of Canada Governor Nicolas Vincent noted the trend of businesses raising their pricing more frequently was likely contributing to higher-than-expected inflation and has the potential to drive a self-fulfilling prophecy of continued high inflation (CBC.ca, October 2023). The consequence – continued interest rate hikes by the Bank of Canada to combat inflation and drive towards a target of 2%. Current world events, the pandemic and recovery, and a period of heightened inflation and interest rates have influenced significant market disruption, which has impacted many businesses over the last few years.

    The Relationship Between Costs And Solvency

    How would you answer these questions?.

    1. What kind of business do you operate and how are your costs structured? Are they largely fixed, or do they fluctuate in response to your business activities?
    2. Do you feel your costs are high? How do they impact your cash outflows?
    3. What could you do if you had more free cash at the end of each month? How would you use it?

    While these questions may seem elementary, they are (or should be) part of a fundamental practice for companies of all sizes and levels of maturity. Smaller organizations often struggle because they don’t have the size or clout to negotiate favorable terms on agreements, and many have leaders who have not yet faced cost management decisions and pressures. Large, established enterprises often struggle with cost management – due to inefficiencies that have built up over time and deeply rooted inertia that prevent any easy fix.

    Cost Management and Competitive Advantage

    Understanding and effectively managing costs can create significant competitive advantages for companies of all sizes. Companies might:

    • Gain market share by offering their goods and services at a lower price than competitors.
    • Improve profitability and free cash by retaining more margin on each sale, allowing for reinvestment in the business.
    • Create the capacity for faster recovery from an emergent crisis.

    Minimizing vs. Optimizing costs

    While reducing costs may be advantageous for any business, we prefer a more nuanced optimization strategy rather than seeking the lowest cost position. Costs are required to generate value for a business and its customers. Driving out costs that lead to erosion of service or quality may impact growth potential, while optimizing a cost position for a given set of business requirements, risk appetite, and strategic goals may help a company to gain advantage.

    Tactics for Cost Management

    There are (cost effective) tactics any business can apply to better understand and reduce (or optimize) their costs. While not a complete list, these cost management tactics have proven to help organizations get a handle on their costs during times of crisis and improve profitability even during times of growth and stability. These tactics can be developed into programs, standard operating procedures, policies, and stand-alone projects without necessarily requiring expensive technology solutions.

    Our advisors can help you develop a better understanding of your total costs, how to manage them, and how to drive your business towards a more competitive and sustainable future.