As we chart our course out of the economic crisis, we understand that courage is required in large doses. Our great American icon, the Bald Eagle, provides an interesting lesson. First a question: would you jump out of a tree, several hundred feet above the forest floor, never having flown before?
Somewhere in the 2 to 4 month period, the fledgling eagle learns to fly. Flying is not an easy task. In preparation, mom & dad feed it constantly until it weighs more than they! Then the with-holding of food begins, and weight loss follows. All along, the parents fly by the nest with food in their talons or mouth. But instead of coming into the nest, they fly by to tempt the eaglet. As the fledgling gets critically emaciated, it becomes desperate for food. Sooner or later the eaglet, as the parent passes by, dives out for the food, misses, and has to glide, flap, and flounder his way to the ground. The parent then drops the food by the eaglet as a reward. During the next several days the parents look after the fledgling, teaching it to fly and hunt. This only happens following the jump; no jump, no learning. No learning, certain death.
Aren't we like the bird, safe in its nest, knowing we need to take the plunge, wanting the food (reward, outcome), but paralyzed by fear, & not acting until things become totally desperate? What is the final motivation for the fledgling to jump? Well, it's starvation and sure death, versus jumping to an "unsure" death. The bird understands the choice, and whether by instinct or a more intelligent decision, it not only survives (90% of the fledglings who jump out of the nest survive to fly, hunt, and mature), but thrives.
We often wait so long to become more aggressive in our stance that we risk choking our people and materially damaging the organization. We then emerge weaker and less able to compete. Our competitors leave us behind and our customers seek them out rather than us. As the "intelligent life", we need to overcome the fear with logic & reasoning. We must summon the courage to "lead" taking the plunge.
The last 2 articles, Recognizing Opportunities . . ., and The Fundamentals of Courage . . . made the logical point. The data shows & confirms it. We must act, and the time to act is now.
Hopefully, the fledgling eagle has made the emotional point; just take the jump!
Thursday, April 30, 2009
Wednesday, April 29, 2009
The Fundamentals of Courage & Taking Advantage
The Kellogg/Post story (previous article) is enlightening. So often if we learn well from history, we have the opportunity to change the end of the story; we don't reside in the past & its failed actions. In addition to the studies & outcomes, I believe there are three fundamental areas of opportunity now existing that call us to action: low interest rates; low real estate/occupancy costs; and the availability of good people.
As the famous hockey player, Wayne Gretzky said, "I don't skate to the puck, I skate to where the puck will be." Similarly, with the economic recovery, we must look forward to where our market will be in 6 months/year +, and build the organization, people, and resources to serve and take advantage of it. If we do that better than our competitors, we will emerge the winners.
It's fairly easy to understand that if we do nothing, the best we can be is at the same relative level as when we started. Don't we want to be stronger, better prepared, and more responsive to our customers? That's the real reason that doing nothing should not even be close to an option.
First, let's examine cash flow and the cost of money. "Cash is king" has been the favored phrase during the economic crises, and rightfully so. However, as we hit bottom & begin recovery, the opportunity is at hand to invest in growth at an extremely low cost, building a more agile organization. This of course is due to the Economic Stimulus and the resulting low interest rates. Never again, for several years at least, will we see them this low. And as others get on the bandwagon, the rates will go up; if we delay too long, we'll miss the opportunity.
At the same time, real estate values are at 20 year lows, both in the private as well as business sectors. So there exists a window here as well, to buy land for expansion, or existing space, at an extremely attractive rate. If you have leased property, it's time to extend and renegotiate that lease, whether it is due or not. During the recovery, this opportunity will be lost as well as the glut is dissipated. Accordingly, the window for action is probably this Spring.
The most important resource is your people; take special care of them. Hire the very best, of the highly qualified and experienced talent available, resulting from short sighted competitors and companies who cut back too deeply. Give them a new home. Invest in training and development to maximize that talent and you'll have a deepening pool of loyal folks who'll serve your customers well. Geometric improvement can be achieved this year; next year will be too late.
As the famous hockey player, Wayne Gretzky said, "I don't skate to the puck, I skate to where the puck will be." Similarly, with the economic recovery, we must look forward to where our market will be in 6 months/year +, and build the organization, people, and resources to serve and take advantage of it. If we do that better than our competitors, we will emerge the winners.
It's fairly easy to understand that if we do nothing, the best we can be is at the same relative level as when we started. Don't we want to be stronger, better prepared, and more responsive to our customers? That's the real reason that doing nothing should not even be close to an option.
First, let's examine cash flow and the cost of money. "Cash is king" has been the favored phrase during the economic crises, and rightfully so. However, as we hit bottom & begin recovery, the opportunity is at hand to invest in growth at an extremely low cost, building a more agile organization. This of course is due to the Economic Stimulus and the resulting low interest rates. Never again, for several years at least, will we see them this low. And as others get on the bandwagon, the rates will go up; if we delay too long, we'll miss the opportunity.
At the same time, real estate values are at 20 year lows, both in the private as well as business sectors. So there exists a window here as well, to buy land for expansion, or existing space, at an extremely attractive rate. If you have leased property, it's time to extend and renegotiate that lease, whether it is due or not. During the recovery, this opportunity will be lost as well as the glut is dissipated. Accordingly, the window for action is probably this Spring.
The most important resource is your people; take special care of them. Hire the very best, of the highly qualified and experienced talent available, resulting from short sighted competitors and companies who cut back too deeply. Give them a new home. Invest in training and development to maximize that talent and you'll have a deepening pool of loyal folks who'll serve your customers well. Geometric improvement can be achieved this year; next year will be too late.
Monday, April 27, 2009
Recognizing Opportunities, as the Economy Begins its Slow Recovery
If in fact, the bottom has been hit, the question is, how do we move forward now? Are there opportunities, and if so, what might they be? Is it in fact time to get a bit more aggressive and carefully plan a stronger & better future than before?
We should move forward thoughtfully. Here's a poignant example from the Great Depression: Kellogg & Post. The New Yorker Magazine wrote of it last week. In the beginning, both were involved in the packaged cereal market with no clear leader. When the Depression hit, no one knew what would happen to consumer demand. Post did what many companies recently have done, reducing costs, cutting budgets & advertising. Kellogg, on the other hand, doubled its budget, moved aggressively into radio advertising, and introduced Rice Krispies. In the four years it took the economy to bottom out, Kellogg raised profits 30%, & became the market leader in the process.
You'd think, that with stories like this, companies now would want to do the same, but what we've seen is most behaving like Post. They hunker down in a survival mode, cut spending, & make fewer acquisitions even though the costs to do so are down. They preserve instead of grow; they just want to get it over with.
There are studies proving companies that maintain spending during down times do significantly better than those who don't. A 1927 study by Roland Vaile showed organizations that kept advertising steady or higher saw significantly better sales than those who didn't. During the 1981-82 recession, firms increasing advertising
saw a "precipitous rise" in the next 3 years following. And in a McKinsey study of the 1990-91 recession, it was found that companies who remained market leaders, or became serious challengers during the downturn, had increased their acquisition, R.& D., and ad budgets, while companies at the bottom had reduced them.
Wow! The message is clear: the future winners will be those of us who act now. Yes it takes courage, but it must be done. Please look at the data; let's not repeat the mistakes of the past.
We may think that only the strong can afford to be aggressive, but the fact of the matter is that recessions create more opportunity for challengers, not less. Note that when advertising is reduced during down times, the challengers have more opportunity to stand out, and the investment is more effective. In the 1990-91 recession, Bain & Company found that twice as many companies leaped from the bottom of their industries to the top, as did so in the years before & after. What wouldn't we all give to move from the bottom to the top?
Here's the clincher. Two gentlemen from academia, Peter Dickinson & Joseph Giglierano have stated that companies now a days are worrying about two kinds of failure: "sinking the boat" (destroying the company by making an aggressive decision) or "missing the boat" (letting a great opportunity pass). Today, most companies are far more worried about sinking the boat than missing it. That's why jumping from last to first, or becoming a Kellogg, is a possibility. That's also why it takes so much courage to do it.
Who are we?
Who will we become?
We should move forward thoughtfully. Here's a poignant example from the Great Depression: Kellogg & Post. The New Yorker Magazine wrote of it last week. In the beginning, both were involved in the packaged cereal market with no clear leader. When the Depression hit, no one knew what would happen to consumer demand. Post did what many companies recently have done, reducing costs, cutting budgets & advertising. Kellogg, on the other hand, doubled its budget, moved aggressively into radio advertising, and introduced Rice Krispies. In the four years it took the economy to bottom out, Kellogg raised profits 30%, & became the market leader in the process.
You'd think, that with stories like this, companies now would want to do the same, but what we've seen is most behaving like Post. They hunker down in a survival mode, cut spending, & make fewer acquisitions even though the costs to do so are down. They preserve instead of grow; they just want to get it over with.
There are studies proving companies that maintain spending during down times do significantly better than those who don't. A 1927 study by Roland Vaile showed organizations that kept advertising steady or higher saw significantly better sales than those who didn't. During the 1981-82 recession, firms increasing advertising
saw a "precipitous rise" in the next 3 years following. And in a McKinsey study of the 1990-91 recession, it was found that companies who remained market leaders, or became serious challengers during the downturn, had increased their acquisition, R.& D., and ad budgets, while companies at the bottom had reduced them.
Wow! The message is clear: the future winners will be those of us who act now. Yes it takes courage, but it must be done. Please look at the data; let's not repeat the mistakes of the past.
We may think that only the strong can afford to be aggressive, but the fact of the matter is that recessions create more opportunity for challengers, not less. Note that when advertising is reduced during down times, the challengers have more opportunity to stand out, and the investment is more effective. In the 1990-91 recession, Bain & Company found that twice as many companies leaped from the bottom of their industries to the top, as did so in the years before & after. What wouldn't we all give to move from the bottom to the top?
Here's the clincher. Two gentlemen from academia, Peter Dickinson & Joseph Giglierano have stated that companies now a days are worrying about two kinds of failure: "sinking the boat" (destroying the company by making an aggressive decision) or "missing the boat" (letting a great opportunity pass). Today, most companies are far more worried about sinking the boat than missing it. That's why jumping from last to first, or becoming a Kellogg, is a possibility. That's also why it takes so much courage to do it.
Who are we?
Who will we become?
Sunday, April 19, 2009
Some Great Thoughts From Our Own Craig Faust
Prior to making final preparations for my talk for the International Business Association Wednesday night, I was going through the PIA (Printing Industries of America) Magazine. I came across a very fine article, "Prepare for the Upturn-Think Big, Think Small", from Milwaukee area's own Craig Faust, President & CEO of Hi-Liter Graphics, in Burlington.
I have followed Craig for some time now; first becoming acquainted with him through Jim Lacy of Inland Press, which Craig had purchased. Craig has quietly done things right, stood by his principles, and built a fine organization. The way he puts people first, even in difficult times, is especially noteworthy.
In the article, he focused on the opportunities that abound if we prepare for the inevitable upturn, stay disciplined, and increase our marketing efforts. No standing pat with Craig, or as he puts it, no paralysis.
Something which I have been emphasizing repeatedly is stating the importance of Strategic Planning, and the necessity of going through the process. Craig makes the point that, "Profit Leaders... have survived and grown by understanding their business profile and following their Strategic Plans."
On taking care of his employees: instead of just laying off people, he recognizes the need to invest in & keep his best people to be in position to reap the benefits of the upturn. Instead of cutting training expenditures, he makes the point that Profit Leaders outspend lesser performing printers.
Through their research, PIA has determined that innovative technology is most important to their members. Craig believes in involving his people in problem solving and new solutions. He shares information with them such as waste, spoilage, job costing, and even gross margin, to facilitate it. They believe that finding a less expensive way to produce a job is a better way to compete than selling it at a lower price.
We've all heard the expression, "the devil is in the details." At Hi-Liter the discipline is in the details. They are very serious about Lean Manufacturing, have budgets that track expenses compared to last month & last year, and watch their ratios.
In short, when we look positively to the future, take care of our people, plan and focus on the correct things, stay disciplined, and reduce costs rather than margins, we are simply practicing good business. It not only gets us through the downturn, it prepares us in the most effective way for the upturn.
Creativity sells, not only in troubled times, but in all times.
I have followed Craig for some time now; first becoming acquainted with him through Jim Lacy of Inland Press, which Craig had purchased. Craig has quietly done things right, stood by his principles, and built a fine organization. The way he puts people first, even in difficult times, is especially noteworthy.
In the article, he focused on the opportunities that abound if we prepare for the inevitable upturn, stay disciplined, and increase our marketing efforts. No standing pat with Craig, or as he puts it, no paralysis.
Something which I have been emphasizing repeatedly is stating the importance of Strategic Planning, and the necessity of going through the process. Craig makes the point that, "Profit Leaders... have survived and grown by understanding their business profile and following their Strategic Plans."
On taking care of his employees: instead of just laying off people, he recognizes the need to invest in & keep his best people to be in position to reap the benefits of the upturn. Instead of cutting training expenditures, he makes the point that Profit Leaders outspend lesser performing printers.
Through their research, PIA has determined that innovative technology is most important to their members. Craig believes in involving his people in problem solving and new solutions. He shares information with them such as waste, spoilage, job costing, and even gross margin, to facilitate it. They believe that finding a less expensive way to produce a job is a better way to compete than selling it at a lower price.
We've all heard the expression, "the devil is in the details." At Hi-Liter the discipline is in the details. They are very serious about Lean Manufacturing, have budgets that track expenses compared to last month & last year, and watch their ratios.
In short, when we look positively to the future, take care of our people, plan and focus on the correct things, stay disciplined, and reduce costs rather than margins, we are simply practicing good business. It not only gets us through the downturn, it prepares us in the most effective way for the upturn.
Creativity sells, not only in troubled times, but in all times.
Have We Hit Bottom Yet?
Those of you that follow my writing know that I am an eternal optimist. I have been consistent in my recommended thoughts and actions in these challenging times.
During the last 6 weeks, the dazzling bear market rally has been over 25%, so my natural tendency is to think that we have hit bottom. While we may have, I feel compelled to balance potential enthusiasm with a reality check.
A week ago Friday, there was an interesting article in the Wall Street Journal. While there is no shortage of those who think we may be poised to be led out by the recent success of the financial sector, including one of President Obama's top advisors, there are also warning signs that should get their due.
The current crisis is unprecedented in 75 years; so do we really think that we could recover so relatively quickly? Perhaps, perhaps not. Skeptics point to another possible correction before the real recovery where more jobs will be lost & consumers will "hunker down." Job loss could create another round of contracted spending & lower corporate profits. Thomas Lee of JPMorgan Chase thinks there will be another 8 to 10% drop in the market.
Another line of thought has the non-financial sector falling off through lower earnings, and since the financial segment is not out of the woods yet, we could be dragged down. All the trauma we've been through has many in a very conservative, cautious mode. Who can say they're wrong?
Finally, Howard Atkins, Wells Fargo's finance chief said that while they had adequate reserves, and he was "very comfortable" they had already taken appropriate write-offs, he would not rule out taking more in the future. It seems everyone has a disclaimer.
Accordingly, I will not be any different. I believe that we DID hit bottom, and that a slow but steady recovery is at hand. The disclaimer is that we don't experience another "911" sort of experience, and that government spending somehow gets under control.
During the last 6 weeks, the dazzling bear market rally has been over 25%, so my natural tendency is to think that we have hit bottom. While we may have, I feel compelled to balance potential enthusiasm with a reality check.
A week ago Friday, there was an interesting article in the Wall Street Journal. While there is no shortage of those who think we may be poised to be led out by the recent success of the financial sector, including one of President Obama's top advisors, there are also warning signs that should get their due.
The current crisis is unprecedented in 75 years; so do we really think that we could recover so relatively quickly? Perhaps, perhaps not. Skeptics point to another possible correction before the real recovery where more jobs will be lost & consumers will "hunker down." Job loss could create another round of contracted spending & lower corporate profits. Thomas Lee of JPMorgan Chase thinks there will be another 8 to 10% drop in the market.
Another line of thought has the non-financial sector falling off through lower earnings, and since the financial segment is not out of the woods yet, we could be dragged down. All the trauma we've been through has many in a very conservative, cautious mode. Who can say they're wrong?
Finally, Howard Atkins, Wells Fargo's finance chief said that while they had adequate reserves, and he was "very comfortable" they had already taken appropriate write-offs, he would not rule out taking more in the future. It seems everyone has a disclaimer.
Accordingly, I will not be any different. I believe that we DID hit bottom, and that a slow but steady recovery is at hand. The disclaimer is that we don't experience another "911" sort of experience, and that government spending somehow gets under control.
Wednesday, April 1, 2009
Sales Turnaround in 30 Days
My previous article addressed corporate leadership climate, and specific attitudes that may now be prevalent in our turbulent economy. Much of this appears to be a focus on protecting assets, a reluctance to take risks, and limiting expenditures to only those that generate short term income.
Over the last several months, I have intensively analyzed this topic, conducting research, interviewing executives, & writing articles, some of which have been published. Later this month, on the 22nd, I have been asked to lead a discussion on it at the Independent Business Association of Wisconsin(IBA Wisconsin)Roundtable.
My interest has been driven by a need to discover what kind of assistance my clients want in this environment. Perhaps I have been slow to "get it", or maybe, since I own a consulting firm, a part of me doesn't experience the same dynamics. At any rate, my immersion has served to forge an understanding and a clarity which is not only wanted, but needed.
Simply put, results must be improved, and they must be improved NOW. Let's not look down the road too far; most of us are hemorrhaging too badly. If we're going to act on something, especially when requiring funds, let's get a very timely return. We cannot afford to invest in the long term when we are so busy just trying to survive. It's not that I agree with all of this (I'd like to see a bigger emphasis on taking care of our people), but it's what I see most often.
Now that's been settled, how and what do we turn around? Well, sales of course. Most executives have already cut costs, eliminated non-essential spending, and streamlined the work force. The flip side of reducing costs is to increase revenue: increase sales. If we take this at face value, and in light of the above, the question becomes, how can we revitalize sales quickly without spending a lot of time & money? And how can we do so carefully monitoring results so that the time frame is reasonable, and wasting precious cash is prevented?
How about a Sales Turnaround in 30 Days? If . . . IF this could be accomplished in a structured fashion, it would meet the above criteria: short term, relatively small cash outlay, defined time frame, specific goals, and measured results. Sounds good you might say, but what can be done in that short period of time?
Here's how I am accomplishing it: I will go on site with the ckient for a total of five days in the month, not including time spent off site with phone & e-mail. During the 5 days, I will interview members of sales management, the sales force, customer service, & operations. Customers, with approval, are interviewed via phone & e-mail. The sales force and selected management, customer service, & operations folks will be asked to complete a 10 minute personality profile.
With sales management, I will need access to marketing plans, previous & current sales goals & performance, previous & current sales remuneration plans, gross profit & value added performance, turnover, training plans, and other appropriate reports as needed.
At the end of the month I meet with top management to discuss improvement opportunities. Such things will be included, but not limited to: hiring effectively, aligning sales remuneration with corporate goals, increasing time in front of the prospect/customer, reducing turnover, improving training to reduce time in developing senior sales people, increasing sales $/sales person, facilitating sales management development, increasing incoming gross profit & value added, profitably providing customers exactly what they want, & facilitating a cooperative spirit between sales, customer service, and operations.
The client's investment is limited to only my 5 billing days + expenses. With my 35 years in the business, the upside far surpasses the downside. If the choice is to do nothing with it (difficult to imagine), we all still learn much, which serves us well in the future. Much more likely, if the choice is to take action on some or many of the recommendations, the sky's the limit as to what can be accomplished.
The client can choose to facilitate implementation, or I can help them with some or all of it as they move forward. Even in this economy, there is so very much to gain, and so very little to lose.
When can WE begin?
Over the last several months, I have intensively analyzed this topic, conducting research, interviewing executives, & writing articles, some of which have been published. Later this month, on the 22nd, I have been asked to lead a discussion on it at the Independent Business Association of Wisconsin(IBA Wisconsin)Roundtable.
My interest has been driven by a need to discover what kind of assistance my clients want in this environment. Perhaps I have been slow to "get it", or maybe, since I own a consulting firm, a part of me doesn't experience the same dynamics. At any rate, my immersion has served to forge an understanding and a clarity which is not only wanted, but needed.
Simply put, results must be improved, and they must be improved NOW. Let's not look down the road too far; most of us are hemorrhaging too badly. If we're going to act on something, especially when requiring funds, let's get a very timely return. We cannot afford to invest in the long term when we are so busy just trying to survive. It's not that I agree with all of this (I'd like to see a bigger emphasis on taking care of our people), but it's what I see most often.
Now that's been settled, how and what do we turn around? Well, sales of course. Most executives have already cut costs, eliminated non-essential spending, and streamlined the work force. The flip side of reducing costs is to increase revenue: increase sales. If we take this at face value, and in light of the above, the question becomes, how can we revitalize sales quickly without spending a lot of time & money? And how can we do so carefully monitoring results so that the time frame is reasonable, and wasting precious cash is prevented?
How about a Sales Turnaround in 30 Days? If . . . IF this could be accomplished in a structured fashion, it would meet the above criteria: short term, relatively small cash outlay, defined time frame, specific goals, and measured results. Sounds good you might say, but what can be done in that short period of time?
Here's how I am accomplishing it: I will go on site with the ckient for a total of five days in the month, not including time spent off site with phone & e-mail. During the 5 days, I will interview members of sales management, the sales force, customer service, & operations. Customers, with approval, are interviewed via phone & e-mail. The sales force and selected management, customer service, & operations folks will be asked to complete a 10 minute personality profile.
With sales management, I will need access to marketing plans, previous & current sales goals & performance, previous & current sales remuneration plans, gross profit & value added performance, turnover, training plans, and other appropriate reports as needed.
At the end of the month I meet with top management to discuss improvement opportunities. Such things will be included, but not limited to: hiring effectively, aligning sales remuneration with corporate goals, increasing time in front of the prospect/customer, reducing turnover, improving training to reduce time in developing senior sales people, increasing sales $/sales person, facilitating sales management development, increasing incoming gross profit & value added, profitably providing customers exactly what they want, & facilitating a cooperative spirit between sales, customer service, and operations.
The client's investment is limited to only my 5 billing days + expenses. With my 35 years in the business, the upside far surpasses the downside. If the choice is to do nothing with it (difficult to imagine), we all still learn much, which serves us well in the future. Much more likely, if the choice is to take action on some or many of the recommendations, the sky's the limit as to what can be accomplished.
The client can choose to facilitate implementation, or I can help them with some or all of it as they move forward. Even in this economy, there is so very much to gain, and so very little to lose.
When can WE begin?
Subscribe to:
Posts (Atom)