It’s time to get back into the game
- March 1, 2012
Let’s face it; good news is actually a lot less popular than we think. Economic indicators have been slowly rising for quite some time. The recession had its technical end in 2009. Yet, rarely a day goes by without some market shattering report that points to “possible concerns” over settlement of the Euro debt crisis. Still, the stock markets — have continued a slow rise and unemployment a slow fall. Even housing prices eventually will recover.
Perhaps, the root problem is patience. Few, if any, of these economic gains are happening as fast as we might like. Sure, we’d all like it to be easier, but the dot-com bubble burst long ago and the days of repackaging financial products into bundled derivatives that magically gained value simply because no one understood them are long gone.
This is a time to return to values, not the so-called social values that increasingly are the currency of our political spectrum, but old-fashioned business values like great customer service, taking care of employees, making great products, listening to people and keeping promises.
Now is the time to invest, but sometimes it seems that we’ve forgotten what we ought to be investing in. Gaining and sustaining growth is one of the most stubborn of all business challenges. Using a solid set of values as a guide to leadership decision-making generally only fails when the values are flawed. Therefore, we must choose them wisely.
“Competitive Advantage,” a classic 1985 business book by Harvard Business School professor Michael Porter, was written long before the current crop of values-based leadership books. Porter takes a starkly utilitarian approach. He introduced the concept of the “value chain” as the sum of all activities a company undertakes to create value for its customers.
The genius of Porter’s thinking is that it leads to the profound conclusion that a firm’s values are best characterized by its cost structure. In other words, if you want to understand the values of a company, look how it spends money.
That’s the crux of the question: How should we spend our money to return to business growth. Porter’s value chain analysis was a conceptual driver for the use of business re-engineering (downsizing) as a tool to respond to shrinking markets. To a large degree, we’ve been so diligent about rightsizing (downsizing) that even the slightest economic uptick requires new spending to be able to take advantage of opportunities for growth.
Turning to more recent writing, I’m quite fond of a scene in Walter Isaacson’s 2011 biography “Steve Jobs” where, in response to the suggestion of getting market research for the Macintosh to see what customers wanted, Jobs replied “No, because customers don’t know what they want until we’ve shown them.” His point was that customers usually don’t imagine a need for products that don’t yet exist.
These two examples point out the conundrum that companies must spend money to grow, and often there is no one to tell us how to do it. If we wait and follow, opportunities may pass by.
My suggestion is to invest in simplicity. Follow the mantra, “People, people, people.” Focus on customers, employees and suppliers. Sales come from outside of the building. Good leaders spend significant time building external relationships.
Talent is required for sustained success. There are many talented people available in today’s market. Don’t mistake experience for talent; they are different. Talent can be hard to spot. Experience is a safe choice; safe but often mediocre.
Good supplier and vendor relationships are also important. These are the people who can make you or break you in good times and bad. Remember it isn’t about getting the upper hand; it’s about win-win. If your suppliers are unhealthy, problems soon will follow.
To a large degree this is all good news. The economy is getting better, business is picking up, talent is available and great products gain loyal customers.
Volatility gets attention in the financial markets the same way that a bad weather forecast keeps you tuned to the news. We live in a global marketplace that is undergoing some needed adjustments. My bet is that things will be difficult in Greece for an extended period of time, but that ultimately takes pressure off the rest of the world. Sooner or later the Germans will shift their Euro-market export losses to growth in markets like India and China. That’s how a global economy works.
Patience is a virtue, but it is time to step off the sidelines and back into the game.