The New Global Economy Sends Mixed Signals

The NewGlobal EconomyThe New Global Economy continues to send mixed and perplexing signals making it difficult for business leaders to chart clear paths. Is now the time to re-trench again or accelerate growth? The answer is a resounding “It depends.”

Here are just a few highlights from the New Global Economy that makes navigating businesses now so challenging:

  • According to Zillow 15.7 home owners in the US were underwater on their mortgages at the end of March.  90% of these home owners are making their monthly mortgage even though there is little hope on the horizon that their equity will ever become positive.
  • Sales of new homes 3.3% in April according to the Commerce Department. Also the price of both new and existing homes increased. This gives hope that the housing market may be moving upward after the collapse in 2006.
  • As Germany’s economy stumbles the euro hit two-year lows the week of May 21. Many investors are concerned that countries like Spain may join Greece on the economic crisis watch.
  • The US economy is plugging along on a less than robust two and a quarter percent.
  • Unemployment for the “Lost Generation” (job seekers under 25) remains at 16% which is more than double the national rate. For many in this group pursuing the American Dream is becoming quickly diminishing mirage. Only half of recent grads are working full-time. Furthermore the starting salary of graduates from 2009-2011 are $3000 less than they were before the recession.
  • Hewlett-Packard plans to cut 27,000 jobs or 8% of their workforce in an effort to jump-start their growth.
  • America’s midsized companies are less optimistic than they were a year ago, according to a survey by Deloitte, LLC. The reason for their outlook was tied to slower economic growth, uncertainty in an election year, financial trouble in Europe and rising health care.
  • China announced new rules that will impact the four largest foreign auditing firms. Under the guideline the firms must limit the number of foreign-certified partners in China to a max of 40%. By 2017 the cap will be 20% but all senior partners must be Chinese.

What do these facts have to do with your business? Everything and maybe nothing.  In the New Global Economy unrelated trends can both signal and camouflage trends that can impact your business. What’s important is for business leaders to keep their eyes on the horizon looking for a trend that can lift your business to new heights or crash it on the rocks of the New Global Economy.

If you’re a business owner or executive and your primary focus is managing the day-to-day activities of your business watch out you’re about to get blindsided. In the New Global Economy be sure to devote time each day to monitor trends that are or can drive your business. What trends are you monitoring for your business? How quickly can you respond should a trend emerge that can impact your business’s success?

Is the American Dream Dead or Just on Life Support?

The American Dream is different for every person. To some it’s the opportunity to own their own home; to others it’s to work hard, save and live their golden years in comfort; to others it’s the opportunity to start a business and use it to build security and wealth for themselves and their families. So how is the American Dream working for you. For many today the American Dream is still very much alive to others its dead or at least on life support. Just consider the following:

Home ownership-One of the cornerstones of the American Dream

  • 11 million homeowners are upside down on their mortgage and have little hope on the horizon that their situation will change.
  • The value of the average American home has decreased 23.7% since the peak of May 2007 according to Zillow.
  • Foreclosures activity will increase this year as RealtyTrac expects 1 million homes to be repossessed by banks versus 804,000 in 2011.

Jobs Creation/Unemployment

  • Although 1 million jobs have been created in the last six months we’ve only replaced 43% of the 8.3 jobs that were lost in the Great Recession
  • Civilian labor participation is 63.6% which is the lowest since 1981. This means that in addition to high unemployment many people who can work are choosing not to for many reasons including: Baby Boomers retiring rather than continuing to work at unsatisfying jobs, second earners who find little incentive to rejoining the work force, student who stay in college because of limited employment opportunities and people on public assistance programs (food stamps, Medicare etc) who can’t afford to give up the benefits they receive if they become employed.
  • Although the Bureau of Labor Statistics’ unemployment rate is moving down towards 8% much of the improvement is created by workers who are still unemployed but aren’t counted anymore. Up to 500,000 workers have run out of benefits and have given up on looking for work so they are no longer considered “unemployed” by the Bureau of Labor statistics. If we added all people who are actually unemployed with people who are working part-time but who want full time work the number would be 16-20%. Adding people who have accepted jobs that pay less than the ones they lost about 1 in 4 Americans have been impacted by the New Economy.

Debt Crisis

  • The United States now owes more than it produces. Our national debt is $15.5 trillion and our GDP is $15 trillion. Unfortunately there is no plan in place to address this issue and probably won’t be addressed until after the November elections. Given how the two parties have behaved in the past there is little evidence to support that a viable long term solution will be worked out any time soon.
  • Taxes are needed to run government programs and reduce the debt. However only 50% of Americans pay taxes. This means that the half who does pay taxes must carry the full burden.
  • Export sales are slumping. After a two good years of selling American products to a global market exports are softening due to economic problems in Europe and a deceleration in economic growth in India and China. With this decline in global demand our ability to grow our export business is limited.

The American Spirit-We as Americans have always faced adversity with optimism and a belief in our collective ability to surmount any challenge. This is part of our DNA. Two Gallop statistics suggest that our spirit is still strong but may be wavering a little.

  • 53% describe themselves a s thriving (This is the silver lining and reason for optimism)but 44% say they are struggling (This means close to half of Americans have been impacted by the New Economy)
  • Last year 65% of those polled by Gallop said they made enough to live comfortably but that figure dropped to 60% this year. That’s a trend that is going in the wrong direction.

So what’s the solution for resurrecting the American Dream?

I’ll give you a clue. It won’t come from Washington, it won’t have government strings attached to it and it won’t happen without innovation, courage and hard work.

The simple and unavoidable truth is that job creation is the fuel for the nation’s economic growth. When more people have jobs, more consumers have money to spend — and consumer spending drives about 70% of the economy. Economic growth is the driver of the American Dream.

This means that the road to recovery and restoration of the American Dream must be paved with an entrepreneurial spirit and the growth of small businesses! Why small businesses and not corporate giants?

  • Large corporations tend to be slow to adapt in a changing marketplace (Sears, Black Berry, Kodak, and Boarders Etc).
  • Large corporations are often driven by quarterly results and investors looking for short term profits.
  • Many corporate CEOs are charged with maintaining the status quo rather than igniting the passion that originally drove the business to success.
  • Many of our current economic problems can be traced to corporate leaders who were corrupted by power and greed (AIG, MF Global etc)

Although current data from Intuit and ADP shows small businesses are adding jobs at a faster rate than larger companies, many experts still project the end of 2013 before small business employment reaches where it was in 2007. This of course is dependent on the global economy remaining relatively stable during that period of time.

What has to happen to accelerate small business growth?

According to a recent survey by the National Federation of Independent Business (here):

“The two principal impediments to current small-business growth are business uncertainty and weak sales… The single most important indicator that would renew small-business owner confidence in business conditions is increased sales in their businesses.”

So how do small businesses increase sales and gain confidence?

Based on the research I’ve done for my book “Leadership in the New Economy”, there are two ways business leaders look at these challenges.

  • The first and easiest way is to say it’s a demand issue. These businesses feel that business will improve when the economy picks up. Unfortunately, those who are waiting for demand to “knock on their door “are struggling (and will continue to do so IMHO).
  • The second way is to look at these challenges as marketing and business operations issues. I’ve found that businesses who are thriving now are effectively market themselves and adding greater value for their customers.

If you own a small business don’t wait for the economy to carry you. Have the courage and conviction in your own business to market yourself more effectively and find ways to create more value for your customers. Create a customer experience that not only creates customer satisfaction but inspires loyalty as well. Improve your business operations by engaging your employees in ways that taps into their knowledge and passion for your business.

Leadership matters more now than any time in our nation’s history. I’m not just talking about the leaders we elect I’m talking about the leaders who will lead the small business revolution that will restore the American Dream for generations to come. To borrow form Shakespeare, the question is no longer “to be or not to be” the question for American small business owners is, “To become a leader or be forgotten.”

If you’re interested in learning how to increase sales and profits in your marketplace get FREE access to the Growth Positioning Survey by clicking here. You’ll get a strategic snapshot of your business that maps out what you need to do to grow your business.

Corporate Culture and Leadership: Lessons Learned from Goldman Sachs

The corporate culture and leadership at Goldman Sachs was put into an unflattering light by one of it’s own executives. Greg Smith retired from leadership and culturethe his position at the financial services company where he was executive director and head of the firm’s equity derivatives business in Europe. His parting gift to the firm was a March 14th op-ed in the New York Times, “Why I left Goldman Sachs.” He took unflinching shots at the company’s corporate culture and leadership by outlining “a decline in the firm’s moral fiber.” Smith wrote “Today many of these leaders display a Goldman Sachs cultural quotient of exactly zero percent. …Integrity? It’s eroding.”

Smith’s action brings to mind two key questions. First is Goldman Sachs really that bad? Second why would an executive take such drastic action against his former employer?

Let’s address the first question. Although executives at the Goldman Sachs have been disputing Smith’s claims the firm’s shares dropped 3.4 percent on the day of the op-ed. This suggests that there are shareholders who suspect that there may be some truth to the allegations.

Why did Smith write the piece? He said he did it as “a wake-up call” to the board “(to) make the client focal point (of its) business again.” The firm said he was a disgruntled employee. Only time will tell who is right. There is probably merit for both sides.

What’s the lesson to be learned?

These are stories told at the water cooler, at a lunch table or in the ladies or men’s room. These aren’t the glowing stories created by a PR firm or ad agency. These are the stories that reveal the true DNA of an organization.

If culture defines “how we do things around here” then the stories employees tell are the way it’s conveyed. In many organizations there are the SOPs and then “the way we really do things.” In other organizations they are one in the same. Which one are you?

Great companies have employees who tell great stories that are aligned with the direction set by their leaders. When negative issues surface great companies listen, discern and take appropriate action. They do this because they know failing to do so is the first step down a slippery slope towards a dysfunctional culture.

The challenge for you is to know what stories your employees are sharing. If your employees were to write an op-ed in the New York Times about your organization would it be glowing or scathing?

Corporate culture and leadership must be developed and cultivated over time. It’s based on what you say and the extent your actions support your words.  The by-product is the stories employees tell. Make sure your actions cultivate the stories you’d want to appear in the New York Times.

To get a better picture of your culture take the Growth Positioning Survey.

Corporate Culture and Leadership in the New Economy

Corporate culture and leadership are essential in the New Economy. Why? Because in turbulent times it’s imperative that organizations have a clear sense of direction and purpose. Not having everyone on the same page results in chronic organizational dysfunctionAligning Vision, Values, Mission and Culture in the New Economy where employees and departments are working at cross purposes by pursuing conflicting goals. Remember every misalignment squanders your company’s ITEAM *(Information, Time, Energy, Attention and Motivation) and drains your profits. (*Mike Jay, B-Coach)

Many companies may have a written mission, vision and values statement but most fail to formally develop their cultures. Because leaders put off the heavy work of erecting the scaffolding of values, policies, shared beliefs, rewards, rituals, and visual elements that form culture, a void is created. In that void, culture happens spontaneously, organically and usually chaotically. Culture becomes an aggregation of random decisions made by different people in particular circumstances. The notion is that if the people are good, decent and competent, chances are, the culture be good, decent and competent as well. This approach is a recipe for disaster. As the leader your biggest responsibility is creating a culture that is scalable and sustainable. With or without direction nature and nurture will combine to form organizational DNA that informs your people of “how we do things”. This message grows more visible and pervasive over time.

Many successful entrepreneurs aren’t content to leave their corporate culture and leadership to chance. From the beginning they select people, implement policies and clarify what’s important at every step of the way. Because they want a culture that can sustain itself these leaders believe in culture by design.

“If you don’t define the culture and you don’t work on it and you don’t progress it even when it’s 2-3 people, it’ll define itself. And it’ll define itself really quick, and it may not be the one that you like.” -Matthew Porter, CEO Contegix

Large organizations with well-developed cultures often neglect them resulting in the culture changing into something at odds with the organization’s vision and stated values.

A good example of corporate culture and leadership that went awry is AIG. According to Corporate Culture: The Ultimate Strategic Asset*, AIG’s failure during the global financial crisis of 2008-09 in part can be attributed to misaligned values and a changed culture. AIG had as a core competency managing risks and a culture where anyone could challenge a trade. Under Joseph Cassano, the financial products group sold hundreds of billions of credit protection in the form of CDs without having to put up any real money as collateral. As sales grew the group took on more and more risk. Under Cassano’s leadership the culture evolved into one in which transactions couldn’t be criticized. When, in the financial crisis of 2008, investment banks sought insurance money for their collapsing derivatives, AIG could not deliver and received a bail-out from the taxpayers. A culture of growth at any cost overshadowed the old culture of managing risk and the rest as they say is history. (*Corporate Culture: The Ultimate Strategic Asset, Eric Flamholtz and Yvinne Randle,Stanford University Press 2011)

Many successful organizations like FedEx, IBM, Amgen and Disney have “woken up” to find that their corporate culture and leadership weren’t aligned with their vision. This “Ah Ha moment” forced leaders to impose a cultural re-alignment. This was a painful process (IBM laid off 60% of its workforce).

When you look at your company’s corporate culture and leadership what do you see? Are your company’s Culture, Mission, Vision and Values aligned so everybody in the organization understands and acts congruently with them? Take the Growth Positioning Survey and discover where your company stands.

The 7 Biggest Leadership Mistakes in The New Economy

The new economy has claimed many business casualties in the last few years. Unfortunately most of these casualties have been a result of self-inflicted leadership mistakes. Making mistakes in this tough economy can have devastating results including loss of sales, profits, key employees and customers.

leadership mistakes

This article describes seven leadership mistakes that leaders make that are as avoidable as they are devastating.  Like the captain of the cruise ship Contra Concordia the tragedy didn’t occur because the captain didn’t know better. It happened because of his decisions and actions. Don’t be that Leader!

As you read each article remember every CEO who has made these mistakes thought to themselves, “This could never happen to us!” It did and it will happen to your company if you don’t take the appropriate action to prevent it.

1.      Unclear or Misaligned Mission, Vision and Values and Culture

In turbulent times it’s imperative that organizations have a clear sense of direction and purpose. Not having everyone on the same page can result in chronic organizational dysfunction where employees and departments are working at cross purposes by pursuing conflicting goals. Remember every misalignment dissipates your company’s ITEAM (Information, Time, Energy, Attention and Motivation) and drains your profits.

 Are your company’s Culture, Mission, Vision and Values aligned so that everybody in the organization understands and acts congruently with them?

2.      Focusing on the Wrong Who 

What you don’t know about your customers is putting your business at risk. Why? Because market trends and customer needs are changing more rapidly than ever before. If you don’t know who your ideal customers are, as well as how, when and why they are motivated to purchase your solution, you can’t position your solution to uniquely satisfy their needs.  

When your customers’ needs shift how quickly can you re-align your company to serve those needs? If you don’t take care of your customer someone else will.  To survive many businesses have resorted to discounting, coupons and promotions to attract customers. What they found was that the customers left as soon as the promotion ended or the coupons expired. They didn’t acquire customers they merely leased them. This is not a long-term sustainable strategy.

What are you doing to identify your ideal customers and make sure you know them well enough to predict their behavior?

3.      Having a Solution that’s Just “Good Enough”

In the past companies could survive and even thrive by having “me too” products or services that were good, but not great. Customers were plentiful, less informed and not as discriminating. Today customers are more informed (thanks to the Internet), more demanding (due to more choices) and more discriminating (thanks to tighter budgets and more scrutiny on every purchase decision). Customers are looking for solutions to their problems (both technical and emotional). They want companies who will help them make the right decision now and in the future. Therefore the stakes are higher. Your solution must uniquely meet your ideal customer’s buying criteria and emotional needs.

 Can you deliver a Solution that uniquely meets your Ideal Customer’s buying criteria and emotional needs?

4.      Having your message lost in the noise of the marketplace

Having your message heard is a function of the media, message, timing, frequency and delivery. A recent LinkedIn survey revealed that the number-one challenge on the minds of sales professionals was “getting the attention of prospects”*. Customers are bombarded with information, so much so that everything begins to sound like “Blah, Blah, Blah”. Making matters more challenging is the fact that only 3% of your target market is in the buying mode at a given point in time. If they aren’t buying they aren’t listening.  Getting your message to your customers too early, too late or without impact is a waste of time, money and energy.

How does your message help your Ideal Customers clearly understand how your solution uniquely satisfies their buying criteria and emotional needs; and is delivered when it will most influence the buying decision in your favor?

5.      Not delivering enough value

Since the recession started, many salespeople and companies alike are complaining that all their customers want is a lower price. If this were true everyone would drive a Kia, live in a one-bedroom condo watching TV on a 26-inch TV and never eat dinner at a restaurant.

Price is never the top priority unless there isn’t enough value provided. If customers understand the differences you provide and value those differences they will pay the price. If they don’t understand the differences or don’t value it, they won’t pay. Remember customers always decide by differentiating. If you don’t differentiate your solution somebody else will. Don’t leave it to chance, or worse, the competition.

Does the Value delivered by your solution far exceed what your customers pay so that “price” is never the primary factor in the buying decision?

6.      Delivering a customer experience that satisfies but doesn’t WOW

Customer experience is defined as the sum of all experiences a customer has with a supplier of goods or services, over the duration of their relationship with that supplier. This means every touch impacts that experience positively or negatively. Your ability to deliver an experience that sets you apart in the eyes of your customers serves to increase how much they spend with you and, optimally, inspire loyalty to your brand.

As evidenced by the number of business casualties over the past few years most companies talk about becoming customer focused, but few actually do it. Doing customer satisfaction surveys is one thing, changing the company’s culture based on what was learned from the surveys in something totally different.

Does your Customer Experience make sure that every Customer Touch reinforces your unique selling proposition and endears customers to your organization while transforming prospects to customers, customers into loyal customers and loyal customers into raving fans?

7.      Mismanaging human capital

To succeed a leader must know the strengths and motivation of each person on the team, as well as how the individual impacts the performance of the team. Recognizing a person’s talent and then managing it creates a motivated and engaged workforce. Failure to hire the right people for the jobs and not putting people in positions where their talent can soar is a waste of a company’s resources.

Successful companies have specific plans for recruiting, interviewing, hiring and developing new employees. They also invest the time, energy and resources to develop employees for their current and future jobs.

 Do you have the Right People in place so that their talents and motivation are fully utilized while executing your sales and marketing strategies?

A key concept behind the mistakes in this article is that they are interrelated and have a compounding effect on each other. For example, if your employees aren’t aligned with your Mission, Vision, Values and culture you’ll be hard pressed to have them deliver customer touches that are consistent with your unique selling proposition. If you have the right message but it’s delivered too early or too late, it won’t influence the sale in your favor or advance your strategy. If you spend selling effort and resources pursuing customers who don’t need, can’t or won’t buy your solution, your sales and profits will suffer. The key to success is to take action to avoid all the leadership mistakes and constantly monitor them to make sure they don’t become obstacles to growing sales, profits and customer loyalty.

Leadership Lessons From Linsanity

Sports often provides good leadership lessons and this is true for the phenomena known as “Linsanity”. Even casual sports fans have heard about Linsanity the term that refers to the buzz being created by Jeremy Lin the New York Knlinsanityicks overnight sensation. Lin’s saga is like “Rocky Balboa plays in the NBA” because Lin wasn’t supposed to be doing what he’s doing.

Just to re-cap what Lin has done. The New York Knicks were struggling with a record several games below five hundred and playing without their best player.  Out of desperation Lin was inserted into the lineup and since then he has led the Knicks to seven wins in their last eight games. He’s averaging 25 points and more than nine assists per game while outplaying some of the best players in the NBA including Kobe Bryant and Dirk Nowitzki.

Why is this so special? Because according to all the experts and using all the data available to the NBA’s brain trusts Lin wasn’t supposed to be playing in the NBA let alone carrying a left for dead franchise on his back.

Lin was undrafted out of college because his stats and size weren’t anything special and he played at Harvard which isn’t known for producing NBA players.  Lin is also the first-ever American born player of Taiwanese descent.  The bottom line was Jeremy Lin just didn’t fit the established profile of an elite NBA player. Although he did make to the NBA he was cut twice this year before joining the Knicks. He saw little action and has averaged less than 3 points a game.

The coaches and experts who assess talent looked at Jeremy’s profile and used that to judge his ability to play basketball. It wasn’t until he was given a chance to actually play the game that the experts were proven wrong.

So what’s the lesson here for business leaders? The NBA like most businesses is looking for ways to minimize risk and to make good business decisions (i.e. selecting players). To that end they’ve developed metrics and profiles of what an elite NBA player looks like. However relying too heavily on the data can blind them from seeing real talent that exists outside the profile parameters.

This happens in business as well.  Business leaders spend more and more time looking at data and forget to look at the actual business.  As important as data and metrics are, business leaders must not confuse good data with good judgment.  In your efforts to quantify, systematize, incrementalize and operationalize all aspects of business you must not abdicate judgment. Data and metrics are supposed to help make decisions not make them for you.

Think back for a moment about the number of bad business decisions that you’ve seen that were made based on good data. The data said that this would be a great location; the data said that she would be a perfect candidate; the data said that we couldn’t miss. The list of examples is almost endless.

If you want a great basketball player watch him play basketball.  If you want to understand your customers better talk to them. If you want to engage your employees spend time with them.

Linsanity is a celebration of an individual who overcame the short comings of his “profile” by showcasing his talent where it mattered most… on the court. To apply the leadership lessons from Linsanity make sure that you celebrate your decisions where they count most by using data as a guide for your good judgement.

Leadership Makes the Difference

leadership makes the differenceIn spite of all the doom and gloom on the news many companies large and small are thriving in the same market spaces that are  claiming former industry leaders. Apple, Michael’s, Ulta, ITW, Honest Tea, Contegix, Convergint Technologies, Information Experts, JD Norman Industries and Foursquare are a few of those that come to mind. What are these companies doing that allows them to step out from the pack? One word: Leadership.

It’s easy to lead when times are great and your company grows based on the market you’re in and not by the ability to execute business fundamentals. A bad economy doesn’t cause good leadership to become bad, it simply reveals deficiencies that were shielded by the robust economy. These deficiencies are now exposed so that they can be exploited by the marketplace and competitors alike. If you don’t understand the difference between being lucky (being in a good market) and being effective you’ll become a quick casualty in a tough economy.

The New Economy is similar to the playoff season in the NFL. The competition intensifies and stakes become higher. Each team enters the playoff game armed with knowledge of their competitor’s strengths, weaknesses and tendencies. This information is used to develop a game plan designed to leverage their own strengths and exploit the weaknesses of the competition. The team with the best game plan and execution of that plan wins the game and advances to the next round. The team that fails to plan well or execute effectively is left to ponder what went wrong and what could have been. In sports they say, “Wait until next year”. In business there may not be a next year especially for the CEO or president.

I’ll guarantee that the CEOs of the struggling companies like Kodak, RIM, HP and BOA don’t wake up every morning thinking; “What can I do today to lose more shareholder value, de-motivate my employees while making more customers choose our competition?” Even if the results suggest that they did. The truth is that they just weren’t prepared as leaders to navigate in the New Economy.

What can your company do to ensure success in the NEW ECONOMY?

During every economic downturn there have always been winners and losers. Companies with great leadership take market share from those that don’t. In the Great Depression companies like Campbell’s, Coca- Cola, Kellogg and others prospered during and afterwards because of their leadership and commitment to customers, brand and employees.

Research conducted by the Harvard Business Review on how companies responded to the downturn in 2000 indicates that a combination of selective cost reductions and strategic investments in new business opportunities allowed businesses to not just combat the downturn but laid the foundation for continued success when the downturn ended.(Harvard Business Review)

Michael’s, the craft store chain, is embarking on this path as they have a strategy of using 50% of their cash flow to pay off debt and 50% to invest in growth. According to CEO John Menzer, “Reducing debt reduces our business risk, yet we continue to invest and grow stores and invest in technology, especially in the promotional side”.

Menzer’s three suggestions for leading in this economy include:

  • First of all, adjust your business to economic conditions. Make sure you know where your expenses are going to be as well as where your cash flow is going to be.
  • Make sure you have a very strong program if you want to grow. Because, if you want growth you’re going to have to drive your business. But you do it in a way that minimizes business risk.
  • And if you’re going to continue to grow, then you better have people ready and you better be communicating to your team.

Michael’s strategy is paying off. Through the third quarter they are realizing record sales due to new approaches to marketing and increased earnings generated by improved operational efficiencies.

Companies who are thriving now share many things in common including:  having a clear sense of who they are, knowing who their customer is (and isn’t), understanding the market they compete in, and then aligning their sales and marketing efforts to uniquely communicate and deliver their solution. Simply put they have “Right Sized” their organization to deliver the right solution, to the right customer, at the right time and at the right price… and they do it in a way that ensures bottom line results and grows customer loyalty.

Is your business positioned to thrive or stumble in the New Economy. Find out by taking the Growth Positioning Survey.

Say Goodbye to the Status Quo

It’s time to say goodbye to the status quo. In the New Economy you can’t afford to lead by looking in the rear view mirror, holding on to the status quo and doing more of what you’ve always done. (How did that work for Kodak, RIM, and Hostess to name a few?)  Instead stay focused on your vision and the road ahead.  As a CEO or business owner you must leave the state of denial and wake up to the fact that it’s not gosay goodye to the status quoing to be business as usual…even if it may seem like it now. Shift happens and things can change in a hurry. First Solar, the solar energy panel manufacturer, was racking up record sales and profits over the past several years and was even named the fastest-growing tech company by Forbes in February of 2011. However, before the end of the year the company’s financial foundation was shaken with softening demand and cheap competition forcing dramatically lower prices and profits and the CEO being forced out so that new leadership could be brought in to deal with the new marketplace.

Experience is the best teacher but the cost is often prohibitive. You can crash your company on the rocks of the New Economy or you can learn from the CEOs who’ve gone before you. Now is the time to develop a new mindset and start looking at the marketplace and your business with new eyes and listening for different signals so that you don’t get lulled into a trance by short periods of the “familiar”.

As a CEO you must learn to become comfortable with these three answers to almost any question you may ask:

  • I don’t know
  • It depends
  • We’ll need to test that

Instead of feeling compelled to have your people give you definitive answers that indicate certainty, embrace the opportunity that exists in the unknown. Instead of accepting compliant answers to complex issues, create dialogue by gaining facts about what’s really happening. Surround yourself with people who will tell you the truth. Develop the discipline of constantly testing, challenging and validating your assumptions as you move forward.

By challenging the status quo instead of trying to preserve it you create a dynamic organization that is better attuned to compete in a fast changing marketplace.

In what ways are you constructively challenging the status quo so that you can learn, adapt and grow?

Welcome to the New Economy!!!

If you own or run a business today you know we’re experiencing an economy that is different than anyone has seen in the past. Our current business landscape is filled with one crisis after another. Like waves on a beach they just keep pounding away. Here are a few of the economic “challenges’ we’re facing:Welcome to the New Economy

  • Unemployment and underemployment is impacting 20-25% of the workforce and recovery is expected to be both slow and painful
  • 11 million homeowners are upside down on their mortgages with little or no options on the horizon
  • The Baby Boomers lost 30-40% of their wealth over the past few years
  • Our debt ceiling/budget crisis is hopelessly deadlocked in DC
  • Local and state budget deficits are becoming more common
  • Financial uncertainty in Europe is spreading as nine countries saw their Standard & Poor’s credit rating downgraded in January 2012.
  • The economy in China is slowing down and prices are increasing on imported goods.
  • Consumer confidence continues to be low

Welcome to the New Economy. What do I mean by the New Economy? In the past, periods of economic slowdowns were followed by calm seas and long periods of steep recovery. Today recoveries still occur but they’re more fragmented, shorter and less steep. Unfortunately the economy and business aren’t going to return to “the good old days any time soon, if ever. What we see is what we’ll be getting for the foreseeable future. For up to a decade or longer volatility, uncertainty, complexity and ambiguity (VUCA) will be our constant companions. The choice is to embrace the New Economy or surrender to it.

For many businesses the New Economy represents a real and present danger. To others it represents tremendous opportunity.

Which one are you?

As a business leader there are several options available to you for navigating this tough economy including:

  • Ignoring the economic mine fields and continue “business as usual”.
  • Taking a defensive approach by cutting costs and reducing spending until the crisis is over.
  • Taking advantage of the uncertainty in the marketplace and growing aggressively.

Which approach is best for your business? It depends. There is no “cookie cutter”, textbook response for surviving or thriving in the New Economy. We can look back at how businesses thrived in the Great Depression and in the down turns in the 1980s and 2000. You can also observe and learn from what thriving companies are doing now. These approaches can give clues but no approach will work unless you have a clear understanding of where your business is right now and where you see it going in the future. From those two perspectives you can begin assessing your marketplace, competitors, customers, employees and business operations to craft a strategic business plan. Your plan, strong leadership and effective execution are what you’ll need to survive and hopefully thrive in the New Economy.

Improving Performance: Are You Treating the Symptoms or the Cause?

Are your initiatives for improving performance treating the symptoms or the cause? Your answer may mean the difference between success and failure of the initiative and maybe your company. Let me explain.improving perfromance

A few weeks ago I developed knee pain and went to my orthopedic doctor. After an MRI and some X rays he told me the pain was from arthritis. My treatment options were physical therapy to strengthen my knee, cortisone shots and drugs to give temporary pain relief, surgery or knee replacement. When I asked him what the cause was he simply said “It was age and wear and tear from years of playing sports.” He said another option was to stop playing tennis and basketball because they put so much pressure on the knee.

Not satisfied with the options I was given I went to another doctor. Instead of focusing on my knee he examined my spine and my feet. He took X rays and picture of my feet (they’re flat). The doctor said that the options outlined by my orthopedic doctor were appropriate  for treating the symptoms. However if the cause of the knee pain wasn’t corrected I would continue to create the dynamics that caused the knee pain in the first place. This would especially be true is I continued to play sports.

The solution outlined by the second doctor involved correcting the imbalances in my spine and correcting the instability in my feet with orthotics. The goal is to stabilize my foundation and core structure so that my body can withstand the demands put upon it by high impact sports. This solution would relieve the pain now and help prevent it in the future. This is the option I chose.

What does my knee pain have to do with business? Everything. All too often companies throw resources at symptoms without addressing the underlying cause of the business pain. Treating symptoms may be expedient but it rarely produces sustainable results. In many cases it adds to the problem.

In today’s New Economy volatility’s and change are no longer the exception. Responding to the dynamics created by constant change puts stress on the foundation of any organization. If your company’s foundation (i.e. vision,values,strategies,people and processes) becomes unstable business pain in the form of performance issues can start showing up in any number of places.

When business pain like turnover,customer churn, decreased sales or profit erosion do surface don’t take a prescribed remedy until you fully understand the underlying cause. Take the time to gain the perspective needed to understand the relationship between the performance symptoms and the cause. If you can’t see a relationship yourself seek an outside resource to help you. This can be a coach,consultant,advisory board or mentor. In the heat of battle business owners and executive often have difficulty seeing the forest for the tree. Give yourself the benefit of clear vision before committing valuable resources.

Once you understand the cause of the business pain you can then select the solutions that can relieve the symptoms and address the cause. A good diagnosis is an essential first step in the success of any prescribed treatment. This is as true for business pain as it is for knee pain.