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What’s next

Do you spend too long looking back at what happened trying to make sense of it, or too much time thinking about what the future could be and planning how to get there? Do you live in the past, or the future, but never the now? The past gives us learning, the future is a guide, but it's what we do now that makes our lives what they are.

Of course the past gives us some very important things, Knowledge and Experience and it’s allowed us to hone our skills, we bring all that to bear on what we need to do. Our vision means we are looking in the right direction driving on the right road with care and certainty. But if a child steps out in front of us we need to be present, right now, without fail. So too in business, when something needs our attention we had better give it, 100%, Now.

When it’s done, whether that’s an emergency dealt with or a milestone achieved, it’s good to reflect, to enhance our stock of knowledge, to add to the bank of experience, and to hone our skills. Then, it’s time to ask, “What’s next?"

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The lessons from the FA Cup for Business

Over the weekend quite a few big teams lost games to lower opposition in the FA Cup. (if you aren't a sport fan, keep reading) Some other big teams won easily and some with some difficulty. 

It was extraordinary, and yet there were some common factors. The teams that were punching above their weight; that won; did something the ones that lost didn't, and in that there's a lesson for all businesses.

What the successful small teams did was start as they meant to go on. Whilst they respected their opposition they treated them as equals, not superiors. In business too another business may be bigger, have more money, more customers, more offices, higher paid executives, and a better reputation, but they are just a company. So am I, and if you run a business, so are you.

Don't stand in awe, get moving, show what you can do, take the shots you can, after all you'll miss all the ones you don't take, and if you get ahead, keep playing. Right up until the final whistle.
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The rising risks in our food supply.

Tesco's new strategy[1] included reducing prices on a number of well known brands, driven by continued downward pressure on prices from deep discount stores. It's not all good news. 

[Market Approach] vs [Market Position]

When we analyse business models we look at the consistency between the approach to business and the market position sought. These two aspects are aligned right through the business models of the best businesses. 

Deep discounters like Aldi and Lidl seek a Market Position of best value, Tesco's one of supporting and meeting customers' needs, ("Every Little Helps") and Waitrose of high quality. 

The discounter's approach has two specific elements, generally absent from the major supermarket's modus operandi, that help them acheive their goal. Those are a) they sell brands you may not have heard of, and b) when they are gone they are gone. 

The 'traditional' supermarket model needs continuity of supply. When they choose to compete on a single dimension (price) that their overall approach isn't designed for its inevitable that pressures appear in other parts of their operation. To cope they have sought, perhaps aggressively, to share price pressure along the value chain. The impact of that deeply affects the business models of suppliers [2]. For some, beyond the point of no return. 

External influences on pricing like the falling oil price helps, but it helps everyone. (If there is a differential benefit it falls more to those where distribution costs are a higher proportion of turnover)

In the long run the overall food supply model is strained in several places and could break. That may take an external shock, like a sudden rise in oil price or a crop damaging weather event. When a market is strained, as this one appears to be, something quite small can trigger a shift in the whole market environment. It's our view that the risks of that happening are now very high. The danger is that if it does fail, the number and variety of suppliers will shrink significantly and quickly. Any market that moves (catastrophically) to less competition and fewer alternatives tends to see prices rising very steeply. 

It's probably in all our interests to care more about the supply chain than we do, and, just a little bit, less about the headline cost.

[1] - http://bui.st/s/1v 
[2] - http://www.bbc.co.uk/news/business-30841416

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