Henry Ford once said, “There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.” Ford was interested in producing an automobile for the mass market and he knew that if he didn’t pay a reasonable wage, the masses wouldn’t be able to buy his cars. This is a pretty simple concept that seems to get lost periodically. Robert Reich, in TheNation.com , recently pointed out that the two biggest economic crises in our country occurred in the year following peaks in the percentage of income going to the richest 1% of Americans. In 1928 and 2007, almost a quarter of the income went to 1% of the people. In the late 70s, only 8 or 9% of America’s total income went to the richest 1%. Draw your own conclusions.
We are swimming in a sea of Edsels, or at least with a mess of Edsel tadpoles. Things change. And during a major recession, things change more than usual. Add to that a health care crisis, an energy crisis, and an environmental crisis or two and if you think business as usual will return and continue as usual, you are probably trying to sell one of those Edsels. Here is one example: I met with two business women over coffee on a recent morning. The menu was loaded with Edsel tadpoles. Each of us struggled to order something to go with our coffee – it just seems the decent thing to do when occupying a table for a lengthy discussion.
Acquisition opportunities, like breakthrough product ideas, can capture one’s imagination and start a stampede. Occasionally, the stampede is appropriate. More often, it is not. So when does an acquisition make sense? The purpose of an acquisition is to gain access to business advantages important to your strategy*. Examples include: Ready access to markets via brand, shelf-space, relationships, sales methods, etc. A new product line that complements, protects, expands, or replaces existing products Intellectual property and licensing rights
It always makes sense to learn about your customers’ wants and needs. Great ideas for how to satisfy those wants and needs can come from up, down, and outside your organization and can become invaluable inputs to your strategic planning process. But a list of ideas, even a sorted and filtered list, is not a strategy. Too often organizations chase promising ideas rather than develop a strategy. This is like trying to acquire a team of top athletes without first deciding which sport you intend to play. You may be able to build a team around a top athlete, just as you may be able to build your business around one fabulous idea, but that is the exception, not the rule.
Three CEOs have told me in the last few weeks that they are having trouble getting parts to fill orders. Suppliers, who cut back on staff and inventory, are either still too cautious or just too slow to ramp up. Part of it is understandable. From one end of the supply chain to the other, cautious forecasts beget cautious forecasts and suppliers play wait and see. Then, when an order comes in, the scrambling begins. Compromises are made, new suppliers are found, and old suppliers lose. Few win in such a scramble. It is time to anticipate your recovery and prepare for success. People who wait and blame factors beyond their control are not likely to come out on top, assuming they survive at all.
Org charts and goals can be extremely hazardous to profit margins. You may wonder how this can possibly be, especially after all the recent focus on cost cuts. The reason? Not all revenue dollars are created equal and not all cost cuts increase profits. With everyone responsible for something other than profits, profits suffer: The sales force is responsible for booking orders; big orders and lots of orders are what counts. They may not have any idea which customers and products are most profitable. The production people are responsible for shipping quality products on time. The more products that go out the door on time, the bigger their bonuses and raises. It doesn’t matter how many of those products have low or no margin.
A clear and compelling strategy: Is focused, competitive, and profitable Builds unique capabilities to provide distinctive value Leads to smart, aligned daily decisions throughout the organization Leaves you feeling confident about the future of your company A clear and compelling strategy is not: A plan, especially not a thick one that collects dust An event, like your annual physical, to endure and check off the list A mom-and-apple-pie statement on a plastic card Set in stone Worth anything unless it is implemented Need help charting a strong future? Creating a shared vision? Let’s talk. Call us today at 800-527-0087.
Which best describes your strategic predicament and attendant risk? You offer compelling value to a rapidly growing marketBiggest Risk: You aim too low and succeed – while others swoop in and capture the lion’s share of the opportunity You see dwindling demand for your products and servicesBiggest Risk: You wait too long to take a sharp right turn toward new opportunities while cash, leverage, resources, and opportunities dwindle as well You have many, many promising ideasBiggest Risk: You spread resources thinly or wallow in indecision, both of which ensure you move nothing of significance forward You are headed on a new or greatly expanded trajectoryBiggest Risk: Your current organization is the wrong organization for your new goals and is simply not up to the new challenges
It is the 21st century. If you don’t have a website, you are missing the boat! When I want to meet a friend for coffee in a mutually convenient location, I google coffee shops so I can easily pass on a name, address and directions. Coffee shops without websites lose. My last dry cleaning experience was a huge disappointment so I googled a recommendation from a friend. No website? I may end up at the wrong place despite my efforts to find the one recommended.
Can you stitch? Quilt? Knit? Then you may find yourself in demand if you visit a truck stop near you – discretely. Today’s WSj unveils the truckers who have discovered the benefits of productive hobbies like knitting while they kill time between loads: Idle Pastime. They have the time, inclination, and, in some cases, sewing machines mounted in their trucks. But where are the instructors? Sounds like an opportunity for someone to me. Not a stitcher? Then where is your opportunity? Are you paying attention? This recession has changed many habits. What has changed that affects your customers’ needs and desires? What has changed that has/can create new customers for you? What has changed that allows you to provide new value? Always watch the changes around you. Keep your ear to the ground. And when it is time, get thee to your truck stop!