For the first time in my life, I’m actually concerned about the future competitiveness of America. It has nothing (at least directly) to do with the recession we are either in or just completing. It has everything to do with the USA going against type.
I just finished reading a research report discussing why and how banks are under extreme margin pressure. The report states:
“Conventional wisdom holds that a steep yield curve is good for banks — borrow short, lend long. With a Fed Funds rate of essentially zero and banks paying almost nothing for deposits as well, bank-funding costs are at all-time lows. Unfortunately, after a prolonged period of near-zero rates, bank assets (both loans and securities) are also re-pricing to all-time low levels. Banks also remain cautious about lending, choosing to park cash in safer, but lower yielding assets.”
As I read this report, it made me think of what the television networks are doing with reality programming. Because of their low cost, networks are almost guaranteed to make money – just not much.
These two points are symbolic of a series of actions that I’m seeing taking place in companies – both big and small. Every time a company makes the decision to focus on exploiting its current assets, rather than exploring how to deepen and expand those assets and the impact of those assets; it is behaving like the banks and television networks.
I’m concerned that many American companies are coming down on the wrong side of a critical, philosophical business question: “Are profits the result of having the right focus or are they the focus?.”
When banks stop lending, or television networks begin relying on cheap reality programming, they are making the decision that profits are the focus. When you’re focus is on profits, you start extracting value from your market and you stop taking real risks because they’re, well, risky.
When you focus on your customers and you answer the question – “what can we do to improve their lives like no one has done before,” and then you pursue that path with dogged determination; then you’re making the decision profits are the result of the right focus. When you make that decision, you see risk through a new prism, and while it does, in fact, represent risk it also provides great reward.
For more than 100 years, America has been the most profitable country in the world by focusing on taking the right risks and creating value better than any other nation. I sure hope we don’t lose that.
Last month, we held three very successful webinars focused on helping business grow – regardless of economic conditions. Making It Rain Even In A Drought focused on three key areas:
- What is “the drought” and why are we in it
- What causes rain
- Three steps to what we call “The Raindance,” that puts you in a position to create demand and make your competition irrelevant.
We got so much positive feedback, we decided to share it with the readers of this blog. Enjoy. Feel free to leave any questions or comments you have about the ideas in the comments section – I promise to respond to every question.
Part I – Focuses on The Drought & What Causes Rain
Part 2 – Focuses on the first critical principle to making it rain, instead of being forced to wait for the rain
Part 3 – Focuses on why most sales efforts fail to create economic value and how to monetize your sales efforts.
Thanks for watching. Please feel free to ask a question or leave your thoughts in the comment section.
On our recent webinar Making It Rain Even In A Drought, I focused on some of the key actions companies need to take to grow in any market conditions – even down markets. It’s a process we call The Raindance. The first is to understand the market conditions you are in. The are three underlying conditions (a Perfect Storm if you will) that are creating the margin and growth pressures businesses are now facing – I call this The Drought. I thought I’d share an excerpt of the program with you.
By the way, we do still have spots available for September’s 2 Making It Rain webinars. Click here for details.
I had a fascinating conversation with the CFO of one of our clients today. We were talking about whether all the recent news about the economy was indicative of a bottom, and if it were, what a recovery would look like.
I shared with him my insights that the biggest danger about the recovery is that while executives are intellectually acknowledging that this recovery will be different from any before, most of them are still acting as if the recovery will mirror past recoveries (albeit not as fast). My opinion is that the faster executives understand that tomorrow’s rules will have little to do with yesterday’s, the healthier their businesses will be.
Simply put, if you are expecting the same customers to buy the same stuff, you’re in for some heartache. If you’re expecting the pricing for your traditional offerings to rebound as the market recovers, you’re in for some bad news. If you’re expecting that the same thoughts, strategies and actions that led to results yesterday will lead to those same results tomorrow…well, good luck.
The most valuable commodity in the executive suite today is intuition and a willingness to experiment. Unfortunately, most suites are going heavy duty of rational thought, attempting to “think things through.” The only way to succeed today is to manage disruption – both the disruption you are bringing to the market and the disruptions that the world is bringing to you. This is not a new thought, by the way, as almost 20 years ago, Jack Welch of GE fame, said, “If the rate of change outside your organization is greater than the rate of change inside your organization, your organization is in trouble.”
The challenge is that it is a completely natural desire to bring rationality to the table. As a matter of fact, if you don’t “think things through,” it feels like you are more likely to miss something. Also, during the industrial age, managing processes was the critical success driver. Management requires rationale, linear thinking. Management is about dealing with the known.
Today, however, the keys to success are disruption and transformation. By their very nature, disruption and transformation eliminate the realm of certainty. When you take the thought approach designed to manage certainty and apply it to inherently uncertain stimuli, the natural result is paralysis and inaction.
The bad news today is that all the experience and the lessons you’ve learned in the past have very little correlation to your potential success tomorrow. The good news is that the future is completely yours, you no longer have to be limited by your past.
The choice you must make is whether you want to be paralyzed, or liberated, by this reality.
I’m seeing it all over the place – desperation. The quiet desperation of an entrepreneur or salesperson who needs sales. Who could blame them? It’s a difficult time for everyone (even those who are growing – and there are plenty of businesses that are growing); and an almost impossible time for some.
Desperation is dangerous for many reasons. Among other problems, desperation begets desperation and repels opportunities. The biggest danger is that it creates a disabling form of myopia that kills productivity. Desperation leads to panic, the brain gets overwhelmed with adrenaline, and the first area of the brain to become dis-impaired is executive function where judgment resides. The ability to prioritize and focus also disappears and this further reduces confidence (which was the original cause of the desperation); and thus a vicious-cycle begins.
Because adrenaline is running high, we become more comfortable “doing things,” and we focus on more and more activity. Because our judgment is impaired, we are neither able to think through the implications of the ideas nor are to focus on effectively executing the good ones. The mind focuses more on “what” we are doing and “how much” we are doing; rather than “why” are doing something and “how well” are we doing it. Because we keep piling more on the plate, we under-allocate resources to a wide variety of actions, under the rationalization that “we don’t know what will work or when, so we need to put it all out there.” The end result of this is that we run around faster and faster and get absolutely nowhere – if we’re lucky (what happens even more frequently is we end up worse off than we started).
The effective approach (albeit much harder – physically and mentally) is to focus on progress rather than activity. To do this, we must – MUST – disconnect from our “problems.” We must work with them as if they were not ours. We must deal with reality and be completely honest in all aspects of our analysis (one of my favorite quotes is, “All Progress Begins With Honesty”). It is far better to eliminate activities and over-allocate resources to them, under the premise of “Do one thing, do it well, then do the next thing.” It requires patience to allow change to occur. At the risk of using a trite analogy, growth starts “below the surface” and if you don’t tend to it, you’ll never see it. This approach requires deliberate, focused action, and effective judgment.
I get how difficult this is, but it’s important to remember that the highest value words to deal with difficult times is “No, we’re not going to do that.”
It is not new advice – I remember hearing it when I was eight years old and my parents owned and ran a travel agency. You can’t cut your way to success. My guess is that no one reading this post hasn’t heard this before. I’d also bet that at last 90% of readers agree with this statement. However, that knowledge is not stopping people from trying to do it today.
Look, I understand the fear about this market. I’d be lying if I didn’t say that I wasn’t concerned (even though the demand for what we do is skyrocketing and we’re getting ready to bring on more clients than ever before). Here’s what I know – today there are two (and only two) critical objectives for every business:
- Position yourself to survive this storm. We don’t know how long it will be, or how bad it will be – and you must ask yourself, “What am I (we) doing to ensure that we will survive the storm – however long or bad it is?”
- Survival, however, is not enough – you must also position yourself to thrive when the storm is over.
There you have it – SURVIVE & THRIVE.
This may sound mutually exclusive in a devastating market, though the reality is that it is not. It calls for a singular approach with two prongs:
1. Allocate your resources and investments towards those actions that provide direct growth opportunities – cut everything else. That doesn’t (necessarily) been eliminate, but cut disproportionately. Don’t take what I call a “peanut butter” approach to cuts – those that are spread evenly.
There are tremendous opportunities to cut and grow at the same time. My friend, and staffing guru Bob Corlett just wrote a post on how you can upgrade your talent and reduce your costs – at the same time!
Today is a great time to cut those actions that are no longer the focus of your future. Remember – don’t focus on improvement when transformation is necessary.
2. Focus on growth, even if there is no chance of “growing” next year. This may make no sense, but it’s critical to understand. We have a client whose market is down by almost 50%. No matter what he does, his business will not do more in revenue next year than it did this year or last year. That doesn’t mean that he isn’t maniacally focused on growth. He realizes that now more than ever, he must push his “growth engine” to full tilt.
Think about it, if you’re going into a head wind, you better have forward momentum, or the wind will wipe you out!
Additionally, if you don’t focus on growth – doing the things to grow and thinking about growth – you and your business will atrophy. If the battle cry is survival, your “growth muscles” will atrophy. That’s double jeopardy: you’re weaker to deal with the strom if it continues and you’re too weak to grow when the storm ends.
Well, it’s official – 2008 is a recession (of course, the announcement is kind of like historians telling us that they’ve determined that WWII ended in 1945). As I’ve written before, recessions make it more important that ever to have a growth agenda. When markets are good, mistakes are forgiven. In today’s market, mistakes are disproportionately punished. The good news is that you can gain a distinct, and lasting, advantage if you do the right things.
Three weeks ago, we conducted a webinar Sustaining Growing In Devastating Markets that shared:
- The difference between Demand Creation and demand fulfillment – and why Demand Creation is the only viable strategy going forward.
- The 5 Unbreakable Rules for Creating Demand
- The 7 Critical Actions to take NOW to ensure your growth