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SME Chat with Lucas (2021 #GetChatty Series)

Lucas Merlo is the Founder and Principal Mentor at NewLedge. Lucas invented the NewLedge-Framework and CDI methodology (Capability-driven Innovation) during his PhD at RMIT and the CSIRO, to fill the transformation gap between ideas, innovations and new measurable values.

Transcript (00:**):
It’s actually quite an
interesting topic we’re talking about
we’re talking about um production
process and organization and it is a
technology side of impactor do you mind
sharing an introduction about like you
know what is it about
sure so
production process and organization
often it gets neglected in the
innovation sphere everybody’s concerned
with with product innovation but
production process is the step before
you produce a new or significantly
improved product so here we want to look
at how we can increase the product
solution value with new or improved
production processes also organizational
practices and maybe organizational
structure so we combine those in
i see and um but there are obviously
there are a lot of questions when it
comes to that um
are we going to lean a little bit more
towards something other
something with
industries with a product more a little
bit more in this episode
yeah that’s right that’s right so the
original research
that i came up with here was on the
food and agri business med tech
pharmaceutical and advanced materials or
manufacturing so obviously there’s got
to be an investment in facilities
production and capital so
this one it’s for companies that make or
produce tangible products it’s
applicable for sas companies if they
provide services to these manufacturing
companies as well you always have to
have an understanding of of what the
client’s facing at the coalface
there you go well let’s talk about
operation and facility uh when it comes
to productions i think this is there are
a few different factors that we need to
think about
um before or during the time that when
we like you know think about innovating
or reviewing our process um
what’s the first one you want to talk
about yeah sure so it’s it’s a big topic
so for each factor we look at enhancing
or transforming but for production
process we’ll just start with enhancing
so an enhancing innovation is going to
strengthen your existing production
organizational practices or structure
and the idea is improve business
performance and increase the solution
and interestingly
production process benefits are
experienced first so there’s usually a
lag before you get increased measures of
performance and good products and that
makes sense right so if you implement
something new into your factory there’s
a period of time before it leads to a
new or significantly improved product
and that product then leads to financial
market outcome measures of performance
so it’s an important one to tackle
we need to look for those indicators
that tell us that we’re in the right
direction to improve performance
and i think
during our very first video before this
series of the chatty about your local
businesses we talked about the gap
between r d and marketing i think this
could be one of the things that can help
building that bridge because you can
actually identify where you can improve
um so obviously uh well
of course today’s episode we talk about
the enhancing side of this factor and
there are things that are that are
tangible and there are things that are
not so um should we have a have a little
overview about those two
yeah good so
first first two questions just as you
said the first key question to ask is
have you identified and assessed the
tangible or situational conditions under
which your organization operates and
we’ll have a look at those okay the
second question is have you assessed the
intangible factors that contribute to
business performance and might fluctuate
over time
the third key question is actually after
we’ve done that can we perform a swot
analysis so we can match our resources
and capabilities to opportunities in the
external environment and minimize
threats so a good old swot analysis to
to finalize up the enhancing impact of
production process
well i don’t know about you but a lot of
the people that i work with that they
have their swot analysis uh
written down before they start the
business but most of them up up six
months in
everything’s different after they have a
little bit of experience of that but
that’s part of it like you know trial
and error
and that’s why business planning has has
changed for startups things like lean
canvas business model canvas the old one
pages because you can produce all the
most fantastic excel spreadsheets in the
world but you’re right six months in
your thoughts
and the thing is sometimes it is about
setting up expectation and
having these identifying these different
conditions can actually help um no
matter what size of business to
know what’s happening we would say to to
companies so
no matter whether they’re starting or
six months or five years in we would say
have you identified and assessed the
tangible conditions
and to be effective there we need to
assess situational factors
and some of those include for example
does your organization have the capacity
to operate 24 hours a day you know where
are your clients how are you giving them
the support
the age and life of your business
equipment so
if we remember we’ve already spoken
we don’t need to own assets anymore it’s
sometimes beneficial to just have
control of those assets because you can
have warranties and replacement
drive much more efficiencies and less
capital on your books
so the equipment you’re using what’s the
age the life expectancy do we need to
capabilities of staff okay of course
your human resources
critical to operating all your
production and capital goes hand in hand
are you up skilling and training your
and when there’s lots of
industrial relations
yeah the industrial relations is an
interesting one so i mean if you if you
just think about the fact we looked at
operating 24 hours a day okay so how do
you pay your employees
how does that how do those wage
for night shift weekend public holidays
we know that
the fair work act is obviously a strong
thing that has to be abided by so all of
these things impact your um
tangible situational
facilities and production
and the tangible part of it that you
know is an overview it is about your
operation about your your premises of
how your where your production is or and
uh what helps you what help that
production line which is like for
example your equipment your machines and
everything and also your people and
that’s that’s a lot that’s a lot to
think about
it is isn’t it i mean yeah sometimes
again i say that sas companies have it
easy um
if you’re making the investment into
tangible technology you know production
you’ve got to evaluate things like swot
analysis become much more important
because the costs of getting it wrong uh
higher in my opinion yeah well um i
agree because the overhead can be quite
crazy and
obviously that
it sounds like that intangible um
factors can be a
costly in a way but we still need to
have a really close look at it like you
know um are our things going to change
over time and things are changing
quickly quickly i mean even even we’re
recording this on zoom uh zoom start to
have a bit of changes since this time
last year like you know when we’re
recording they have this little robot
voice this meeting is being recorded and
these are the changes one of them isn’t
yeah yeah so i mean if we look at the
changes with technology so when i was
working at rip curl the surf company
started there in 2003 spent five years
there so we were still buying servers so
physical servers so we had a capital
outlay for the technology infrastructure
there’d be an email server web server
there’d be crm server
nowadays as you know the barriers to
entry are lower so we we subscribe to
cloud-based platforms which are still
servers located somewhere else but just
not in our facilities so those barriers
to entry are lower
but of course it changes all the time
yeah yeah and the thing is based on
those um
for example um sas product or different
kind of intangible uh resources that you
can be built on are more intangible
resources for example your brand or
what’s the reason what’s the buying
factor why people buy your stuff
and those are important those are very
important isn’t it
yeah that’s right so if you think about
the the rumors of manufacturing being
dead in australia we know that you know
we’re just becoming more advanced and
part of that is the brand and the belief
in the product whether that’s food which
we know we’ve got such great quality
food and
you know
innovations coming out of agritech and
now we’re making big inroads in
biomedical technology and
pharmaceuticals so
those two industries really spring to
mind as having that brand and intangible
um value attached to products and
yeah and the thing is once you got the
brand then it’s about building your
image and your perception and it is
important because sometimes that we
think we know our audience well we think
we know our customers but once you’ve
gone through all of your
like gone for a few months on operation
or gone through
interaction with your client you know
there can be a perception that was built
without your knowledge and sometimes it
work for you sometimes it work against
you so that’s why it’s important to
communicate that brand image to your
your customers and hey that’s where
marketing come in
or publicity depending on like you know
absolutely yeah yeah
it becomes a little bit harder i think
for b to b
manufacturers when they’re just
supplying a part or a component it’s
more those
those network relationships and and who
they know and how well they fit into the
value chain so
there it’s a little bit different you
might be able to give me advice for b2b
you’re approaching and communicating
your brand it’s
it’s once you’ve got a presence and
you’ve got runs on the board it’s easier
isn’t it to get an initial inroad is um
quite difficult well i mean one of the
good examples i have is that sometimes
depending on
the the the
age group of
my client
then there’s a different way you
communicate with them
it’s it’s different it’s just the way
that they are and sometimes it’s not
just about getting the getting the image
out that you need to know what your
capability is and then you can work it
out and then that’s why because that’s
how you build trust that’s how you got
customers to come back particularly when
it comes to um a b2b particularly with
manufacturing b2b that because you know
imagine that if
they’re not going to randomly pick
someone on google you need to build that
trust you need to have that right
branding i mean just imagine that if
someone with a horrible scandal popping
up that’s not gonna help
yeah yeah i was talking to a company a
few weeks ago that has a an active dry
yeast product that increases the quality
of red wine and he was telling me that
you know he has to deliver through
intermediaries particularly in in
countries like china before the tariffs
but those relationships can take years
to build and hold onto it’s not
something that a glossy brochure is
really going to
penetrate new markets for him well i
mean once your glossy brochure that
attract people to talk to you then
for sme many people that the the owner
or the operator or the person who in
charge of sales that’s the face that’s
the ambassador of your brand
you know they gonna match the message
otherwise that it will be like what
there are some
not very consistent messages around
and then when you’ll be like oh i’m not
gonna trust that we shouldn’t talk about
the swat analysis because this is where
we identify
which intangible and intangible factors
that needs to be looked at isn’t it
yeah yeah so the swot analysis the swot
analysis is criticism of late one of the
criticisms with swot analysis is that
your your strengths and weaknesses are
considered current so you’re looking at
your current capabilities
and then opportunities and threats are
sort of into the future so they’re
saying there’s a disconnect but i think
i think that any time you’re actually
going through the process of analysis
you’re going to get benefits whether
it’s a swap whether it’s a pestle
environmental analysis whether it’s
riding a business plan it’s it’s always
going to be beneficial so
start by looking at the strengths and
some of the strengths you might have you
might have patents you might have the
ability to protect your ip
as we said strong brand brand name
good reputation through
your customers these sorts of things you
can build on because
you have to think about your strengths
in relation to your competitors or the
substitute products because once you
identify those strengths they’re the
ones that you you focus on
i um
many of the small business that i work
with um i often ask them the question
why you start your business um and
actually that’s usually is the question
that talk about kind of like an
opportunity or threats part part of it
which is like were there any gaps
that you found and that’s why you start
your own business and that’s actually a
really good starting point yeah
yeah absolutely so that then that’s why
this what is so useful so once you
you’ve got your strengths and then you
can identify
opportunities you match your strength to
the opportunities you’ve identified
threats and then you use your strength
to mitigate or minimize that threat so
that process of matching up strengths
and weaknesses to opportunities and
threats in a simple table
you know you get a few people giving
input into that and you’ll come up with
one or two strategies you haven’t
thought of it’s it’s it’s a really good
process we know as small businesses if
we know out what’s our opportunities and
what’s our strength that’s a good way to
prevent just trying everything
because yeah you know we don’t have the
money to try every thing i mean
and then yeah and and then that’s
what for individuals is just as valuable
oh yes it’s a little bit like okay i
know that you are interested in so many
things which is great but let’s start
with what you got let’s start with what
you’re good at and then build upon that
yeah absolutely and and with businesses
you can actually find ways to to
looking at what you’re not good at but
what you do need to compete and then who
provides it so
in the same way if you’re starting a
business and you’re a sole proprietor as
you said look at what you’re good at
look at who you know the connections you
have look at what you’ve already got
then look at the opportunity and then if
you need to bring somebody else in well
you don’t try and do it all yourself you
bring somebody else in and that’s how
success is is born really
well um i i would express i do
understand that many sme also traders
sometimes they do want to do a lot and
this is their baby i understand that i
don’t want to disrespect them but
sometimes a way to overcome your
weakness is about
finding someone to collaborate with or
sometimes you just don’t want to stretch
too thin if you’ve got a good
broad range of skill sets it’s good to
actually try different things so that
then when you outsource it you know
you’re not getting ripped off yeah even
if it comes things like seo and keywords
like people can pull the wool over your
eyes and make that sound so complicated
but once you understand
what it takes you don’t necessarily have
to do it yourself but you can
communicate in the right terms to your
service provider and make sure you get a
good deal really sometimes i got um
because you know i mean there will be
plenty of cold callers or emails and
things like um
providing marketing solutions to me and
um i know that there’s even things i may
be interested in because i don’t want to
spend too much time on that but then i
was like well
we we do need to look
beyond that glossy
promotional material and just find out a
little bit more about the other person
before we collaborate but sometimes yes
so um collaborating is important and by
knowing your swot having your swot
analysis it’s a great way for you to
spot where
you can find that to help you in your
business yeah maybe we can drop a it’s
called a toes analysis it’s a just a
table that shows how to match your
strengths to opportunities and threats
we can maybe drop that table in the link
to the table in the section for our
viewers so thank you so much and thank
you lucas and thank you for the audience
for taking uh for watching this so
everyone have a great day ahead yeah
thanks to chatty qriter thanks thanks
oh gosh anyway all right well time time
to go and thank you thank you for being
flexible today uh we’ll figure out a
time on thursday and we can like message
each other can confirm in the morning
sounds good mate all right talk to you