A potash cartel?

Yesterday it was announced that one of the two global potash cartels is disbanding, sending the natural resources market and the stock market into a frenzy. Belarus Potash Company (BPC) will no longer exist as one of the companies involved has decided to walk away from the partnership.

This could have a huge impact on Canpotex Ltd, which is made up of three other organizations. These two marketing groups, have been considered and perceived as cartels because they control so much of the world’s potash supply and control the market for pricing. The global potash market was essentially a duopoly before this announcement.

Canpotex includes Potash Corporation of Saskatchewan, Agrium Inc, and Mosaic Co. Companies that most people have never heard of. The BPC consists of Uralkali from Russia and Belaruskali. These two marketing groups combined control about 70% of the world’s potash exports and have combined revenues of more than $10 billion, so this is a sizable industry that most people have never heard of.

The interesting point about this news is not only that one of the marketing groups is disbanding, but that there are only two marketing groups in the world and they control most of the production and pricing of potash. Who knew?

Saks Yonge Street?

Richard Baker just made many a Canadian luxury shopper happy this morning when it was announced that HBC was going to acquire Saks Inc. Saks is of course is best known for it’s Fifth Avenue store in New York and the high end items that it sells.

This is no small deal, in numbers or in significance. HBC is paying $2.4 billion (US) cash for Saks Inc. and there is significance that a Canadian company is buying the iconic US company. Finally, us Canadians have an acquisition go the other way. Usually it is a larger foreign company that ends up buying our iconic Canadian companies. Baker just won one for the Canucks.

What is also interesting about this acquisition is that it continues HBC’s turnaround since Baker took over the failing company. He has taken prudent risks and been patient to find the right opportunities for growth. Steady responsible growth. Baker has shown that it takes time to turn things around, but it can be done successfully when done effectively.

Baker had a vision of what he wanted the company to be when he first took over; to restore HBC to it’s iconic status through reputation, product selection and service.

Then he hired the right people. As an example, Bonnie Brooks has been instrumental in changing the perception of the Bay by bringing in well-known designers and labels.

Then, he executed on the strategy effectively. He didn’t rush to try and change everything overnight or grow the organization too fast. He has made strategic decisions that align with the ultimate strategy.

High-end consumers all across Canada are toasting champagne to Baker today, anticipating the announcement of when they can get their hands on the merchandise from Saks in their own backyard.

The new Global Innovation Index

Cornell University, INSEAD and the World Intellectual Property Organization have recently launched the Global Innovation Index.This new index looks at the university education, patents and publication of scientific research in order to rank different countries and how innovative they are. I think this is a good start in terms of a new index to measure innovation, but there are still some gaps in it.

For starters, the new innovation index only focuses on the top three schools in each country and only focuses on patents in certain countries and specific publications. Everyone seems to have difficulty measuring innovation, but I think we look at innovation the wrong way. We need to remember that innovation can be game changing and disruptive, but it can also be an incremental improvement, and anything in between. This index is really only looking at game changing innovation on a global scale. But what about a country that is great at making incremental improvements and enhancements to things that already exist? Are they any less innovative than another country? According to this index, the answer is yes.

We need to look at innovation as the creation of something productive and useful. Organizations can measure innovation by measuring new ideas and enhancements that have become a commercial success. They can measure the percentage of their revenue represented by those new ideas. Why not look at something similar here? Only looking at the top schools is like an organization measuring innovation purely based on their best ideas and the ones that worked. The index really tells us who has the best ideas from a global perspective, which may or may not equivocate to being the most innovative.

Why not look at how many ideas have been successfully used or put into practice. Or ones that have become commercially viable, or made an improvement somewhere? What’s the point of innovation if it doesn’t make a difference in the way someone does something? Measuring patents is important, but what if those patents never get used? A critical element of innovation is execution. If we only measure the number of ideas, or patents, or citations, then we are only seeing half of the picture. We need to also consider what is being done with those ideas and patents and citations. Are they being turned into something that we can use to improve our lives? Now that’s an index worth reading about.

Miller’s Monday Morning Message

Andrew MillerMiller’s Monday Morning Message
presented by ACM Consulting Inc.

Andrew Miller on operational excellence, strategy, life balance and everything in between

Toronto – July 22, 2013
Since Loblaws announced this past week that it would be acquiring Shoppers Drug Mart, I thought I would bring back some ideas from a recent Monday Morning Message on successful acquisitions. I had identified three key things that organizations need to do in order to be successful in their acquisitions:
  • There needs to be a clear decision as to the future culture of the overall organization.
  • There needs to be a fit at all levels.
  • There needs to be an alignment of goals.
And I would like to add one more:
  • Don’t lose focus on your existing business. It’s easy to get caught up in all of the integration activities that need to happen with a large acquisition, but organizations need to ensure they don’t lose focus on the growth of the existing business and its customers.
These are important for Loblaws to remember as the acquisition of Shoppers Drug Mart will have a very complicated integration. On the surface, the acquisition looks like a great fit because the organizations compliment each other and are not major competitors. But when you look deeper into the acquisition, Loblaws will have some tough decisions to make:
  • Can they continue with two separate customer loyalty programs? If not, which program wins out and how will they transition over to one program?
  • Can they just replace existing Shoppers products with President’s Choice products?
  • Will there be any impact on the pricing? Can Loblaws offer products at the same price in both Loblaws and Shoppers locations?
  • How will Loblaws manage the transition of employees? Will there really be no changes or layoffs?
  • Will Loblaws need to close any stores because they are too close to each other?
This is a very interesting acquisition,” says Andrew Miller, president of ACM Consulting. “It really takes Loblaws to another level in terms of what it can offer to customers and how it can compete against the likes of Target and Walmart. The next 12 months will be essential to the success of the acquisition.”
 
To request an interview or more information, please contact:
 
Andrew Miller
416-480-1336
 
Follow me on Twitter @AndrewMillerACM
© Andrew Miller. All rights reserved. 2013.

An executive shortage by 2016?

I just recently saw the results of a study from Odgers Berntson from 2011 showing some very frightening statistics about executive succession planning. When you look at the numbers below, think about how your organization is handling this issue.

  • 17% of organizations expect to lose more than 50% of current leadership by 2016
  • 25% expect to lose more than 20% of leadership
  • 68% have no executive team replacement strategy
  • Next generation of leaders likely to be at least five years younger
  • 43% anticipating a shortage of executives by 2016

The first question that comes to mind is, “What are we doing about it?” I would be interested to know if the answers from these same executives have changed since 2011. This shows a clear lack of succession planning, which is something that we see every day. For some reason most organizations don’t do it. As a leader, one of your accountabilities is to find a top-notch replacement for yourself. We all know this, yet it’s often not done effectively.

Think about these statistics and then think about what you can do to ensure you don’t fall into one of them.

Shoppers and Loblaw’s, a match made in heaven?

As you have already likely heard, Loblaw’s has agreed to buy Shoppers Drug Mart for more than $12b. This is actually a seemingly smart acquisition for so many reasons. The loyalty programs that both companies have. The ability to attract different customers to the various stores and leverage their strengths. The securing of Loblaw’s as a force to compete against Target and Walmart. Yes, this deal makes a lot of sense on paper.

Hopefully Loblaw’s will be able to make the integration work. They have said it will take 6-7 months and that customers will see no difference and that all employees will keep their jobs. I hope that is the case. This is a very complex acquisition and it might just be easier for Loblaw’s to keep Shoppers running as a separate division, as it has proposed.

This changes the Canadian retail landscape once again as we see additional consolidation in the grocery industry. As you may remember, only a few short weeks ago, Sobey’s parent company Empire agreed to buy Safeway. So the big get bigger. This is great if you are a supporter of Canadian businesses.

Another interesting angle…think how many service providers, consultants, lawyers, etc., will be lining up to try and get a piece of the acquisition pie. No doubt there will be money available for “integration” of the two companies.

I wish them all the best as I hope this turns out to be as good a move for both organizations as it appears to be on paper.

Miller’s Monday Morning Message

Andrew MillerMiller’s Monday Morning Message
presented by ACM Consulting Inc.

Andrew Miller on operational excellence, strategy, life balance and everything in between

Toronto – July 15, 2013
Last week I delivered a teleconference to over 200 Canadian healthcare leaders about how to increase the adoption of innovation in our healthcare system. The time is right for us to be discussing this concept. Budgets are being squeezed, the healthcare system is being asked to do more with less, we are seeing increased regulation, funding models are being changed, public scrutiny is higher than ever, and all the while, the volume of patients is growing higher.
 
This has led to risk aversion, taking the path of least resistance, and the creation of a collaboration gap. But this financial crunch has also forced us to look at the way we operate. We have no choice but to innovate if we want to improve, or even sustain, the healthcare system that we have.

Here are some of the key points to consider:
  • We need to develop a new mechanism for identifying, evaluating and adopting healthcare innovation that is outside of the current method by which we make buying decisions. This would include different evaluation criteria and success metrics. We need a different approach and mindset.
  • We need to take more risk. These can be calculated risks, but risk aversion will not get us where we need to be.
  • We need to increase collaboration between healthcare providers, suppliers, government and other stakeholders. We need more incentive and we need to have different conversations that are focused on outcomes and results, not just cost savings and price.
“We have a tremendous opportunity to improve on our healthcare system,” says Andrew Miller, president of ACM Consulting. “We just need to approach things differently and focus on the best outcomes for the best value. This will encourage healthcare providers to partner with their suppliers and other stakeholders to determine what is best for the healthcare system as a whole.
 
To listen to the entire teleconference on healthcare innovation, click here.

To request an interview and more information, please contact:
 
Andrew Miller
416-480-1336
 
Follow me on Twitter @AndrewMillerACM
© Andrew Miller. All rights reserved. 2013.