How to Survive the Recovery

According to many studies and reports like this one from Inc. magazine, companies started during a recession (or Great Depression) have a much better chance of succeeding than businesses launched during a boom.  There are three reasons:

1.  Starting during a boom is like buying stock at the top of the market.  Who bought Google at $400? When the market's at its peak, there's only one way for it to go in the short term, and that's down.

2. Starting up during a recession almost guarantees built-in frugality.  The recession has taught everyone on the team how to survive on a shoe string, how to work a little bit harder, and how to plow profits (whatever they may be) back into the company.  But starting during a boom when VC funding grows on trees teaches another lesson:  how to generate an awesome burn rate. 

3.  This might be the most important of all.  During recessions, companies tend to shed some of their best employees or offer voluntary exit packages that let their most ambitious minds take a chance on the idea the company never let them try.  During booms, companies will overpay to keep talent. 

This is great news if you've been laid off and you're smart, ambitious, and risk happy.  It could be very bad news if you've laid off these sorts of people.  They will be the new competition you never saw coming.

If you're a company that just (or is about to) cut to the bone to survive the recession, you better also plan on investing in R&D, marketing, and a new business model to survive the subsequent recovery.  Here's one way:

1.  Dust off the proposals your employees have given you in the past two years--the ones you thought didn't make sense.  Consider launching them now before the person who proposed it uses his severance package to prove the concept sound. 

2.  If you think there's no money for R&D, you need to cut more and use that money for R&D.  Someone will innovate during the recession when there's less concern about new business stealing resources from the skunk works project.  That someone will get on the front page of the Wall Street Journal above the fold when they capture 80 percent of your domestic market with their revamped, streamlined, updated, and innovative release of whatever it is you both sell.

3.  Act like you're a start-up again.  Forget the fact that you control four floors of prime real estate in the most prestigious business center in the Midwest.  Let 3/4 of that space sit empty, save the energy costs to heat and cool, cram all your smart people into overcrowded offices and cubes, and let them work like today's output pays for tomorrow's electricity.  It does. 

4.  Outsource everything you're not the best at.  If you have your own data center but it's not as good as IBM, Savvis, AT&T, or Rackspace, then get rid of it.  If you have your own printing service but it's not as good as FedEx Kinkos, then get rid of it.  The place to own the supply chain is upstream of your core business, not downstream.  Anheuser-Busch owns hops farms in the US and Europe--but someone else owns the distributorships. 

5.  Get rid of the stupid perks that don't sell your products, but invest in useful perks that make people work smarter.  iPhones might make your people more productive, or they might create a distraction that prevents your best minds from learning and thinking.  Know the difference and act accordingly.

6.  Invest in business process automation.  If your people seem unable to follow a documented process, either automated so they have no choice or eliminate it.  People are smarter than you. 

In 2009 or 2010, you'll read about the new leaders of the coming boom.  The faces in the article will be familiar--they'll be yours or the people you laid off last week.  If you run a business or a business unit, you have the money, the experience, and the networks to stave off their competition.  But if your inefficiencies and lack of innovation helped create the recession--they'll kill you in the recovery if you don't remodel yourself now.

Technorati Tags: innovation,recession,recovery,threats

What's In Your Rewards Program?

Do you earn points, free gifts, cash back, or any sort of premium for doing business with a company?

I want to know only about your favorite Reward or Loyalty program.  It could be grocery store, a shoe store, a coffee shop, or your local garage. 

And I have only 2 simple questions:

1.  What's the name of the business?

2.  What's the number reason for participating in this program?

Simply leave a comment below.  Be sure to read other people's comments, too, because you might just learn about a program you can use that you didn't know about before.

Technorati Tags: loyalty,rewards

Watch Your Personal Tagline

I had an email debate with a colleague (never smart) concerning approaches to selling change within an organization.  I was pushing for something bold:  the vision of a better, calmer life for people who have been battered for years.

The colleague didn't want bold.  He wanted something safe.  He didn't want an internal marketing message to promise something that the customers might not get.  He didn't want to paint a picture that drove people to applause because we might not deliver.  He made good points about overselling and under delivering.

Then I noticed his personal tagline, below his signature.  It was a call to action, a call to boldness, a warning that timidity leads to meaninglessness.  

In other words, his tagline reflected, not his view of the world, but the flaw he recognized in himself.  Emotionally, I shooed away his objections the way I'd wave at an annoying fly.

If a quote inspires you to be something different than you think you are, print it and stick on your wall, make it your screen saver, read that author every night for a year.   But never end your emails with a quote that strikes the reader as the perfect contradiction of yourself.

Technorati Tags: tag lines,consistency,messaging,personal tagline

Outside the Box

During economic slowdowns and in stressed industries"outside the box" thinking is more than some companies can handle.  How can you remain innovative and distinct when radical change is too expensive or risky?

Like everyone else, I tired of the term "outside the box" a decade ago.  But the concept--the ability to think "zebra" when you hear hoof-claps--remains a key distinction between great achievement and mere survival.  But smart people and smart companies, not to mention people who think they're not particularly creative, can reach higher by thinking inside a bigger box.

For example, the IT industry has grown leaps and bounds over the past 20 years.  IT specialists, whether networking and hardware specialists or programmers and architects, often generate brilliant ideas that no one in the business knows what to do with.  The IT people have no idea how to translate the potential in their minds into a sellable product.  The idea falls on the floor.

In this scenario, outside the box thinking by the software designer ran into the brick of wall of tiny mental boxes--his own and the business's.  To monetize the good idea, both parties need a mental box large enough to grasp ideas on the fringes.

The architect needed some basic business skills in addition to his professional skills.  These include:

Marketing:  Could the idea be piloted and measured with a micro-segment to determine its financial potential?  What are the key measures to determine the viability of the idea? CWhat have respected industry experts said about trends that point to your idea being a game-changer?  Businesses that are reluctant to invest $200,000 in a wild idea might very well invest $5,000 in a pilot project, but the IT architect needs enought marketing knowledge to propose the pilot, to help identify the metrics, and to identify the target. 

Finance:   What is the project's payback period?  What's the net present value?  What's the internal rate of return?  The IT professional probably has a handle on the total cost of the project, and you don't have to be the CFO to use Micrsoft Excel's finance tools (click here for an easy tutorial).  The IT person who can talk IRR and NPV catches the favorable attention of the people with the purse strings.  Even if your calculations suffer from rookie mistakes, the CFO, or her delegate, will be more prone to pitch in and clean it up if she thinks you know what the concepts mean.   

Whatever your current role, you can benefit from broadening your knowledge of business concepts, and marketing and finance are the most critical to selling your ideas internally; marketers and finance own the budget and the product catalog.

If you're a business manager, help your people expand their boxes.  The finance folks will be more effective with a strong understanding of the value of innovation.  Have them study IDEO or Google.  Your marketers will benefit from learning more about technology's costs and time requirements to develop new products.  (I've found that marketing people think other people's ideas take 10 years and cost $10,000,000 but their own ideas take an hour and cost $5.)  Your operations people can be your best assets in innovation and creative--they need the same marketing and finance knowledge that the IT professional needs.

Enlarging your mental boxes will bring innovation and creativity inside the safe boundaries of your SOP.   And the competition will never see it coming. 

  

Great Marketing Sites

I'm amazed the valuable information some smart people give away for free.  Sure, their blogs might help them sell books or speaking engagements, but 99 percent of the people who learn from these folks give nothing back.  

If you're tangentially associated with marketing, you should do yourself a favor and read these two sites.  

Tim Manners on Reveries

Seth Godin's Blog

I discovered Reveries through my daily updates from Seth Godin.  Seth is a leading thinker.  I won't narrow his qualifications by adding an industry or discipline.   His book "The Dip" helped save me when I was in the midst of a career crisis.  He even took the time to provide me with personal advice.

Again, if you ever need to influence others, make Seth and Reverie regular reading.