Archive for the 'Future thinking' Category

Two reasons quality service can take you down

Successful customer service is the process of delivering value to customers in exchange for payment.

Surely this is the prime directive of any business. But that process isn’t truly successful unless the relationship can be sustained, and only quality produces sustainability.

But what kind of quality?

“Quality service” is a 20th century term that businesses use to declare a commitment to diligent customer support. But customers typically associate it with, and businesses too often tolerate it as promptly addressing a problem. Unfortunately, here’s what quality service often sounds like:

“We’re sorry we delivered the wrong size part. But we’re committed to quality service, so one of our trucks will be there in an hour with the correct part.”

It’s true. Sometimes quality service like that impresses the customer – and businesses even like to brag about delivering it. But while prompt attention is admirable, it’s not optimal because it has a negative impact on sustainability in at least two ways:

  1. The customer was inconvenienced by inaccurate service – you screwed up!
  2. Allowing an avoidable problem to occur is the worst kind of profit-eating inefficiency.

In the 21st century, successful small businesses have converted their problem-fixing “quality service” to the profitable and sustainable “quality process.”

Put simply, executing a quality process is serving customers correctly the first time. Accomplishing a quality process ranges from the very basic, accurate order filling, to the more complex, integrating into your operation only those vendors that share your quality process commitment. It shouldn’t be breaking news that your large business customers have been doing this for a couple of decades, to eliminate weak links in their supply chain.

The optimal goal of your quality process is sustainable customer relationships. That means 1) you did it right the first time; and 2) you made a profit and didn’t squander any of it on mistakes. Such sustainability is in evidence when customers return to find your profitable business still there, ready to serve them again with your quality process.

So why would anyone live with profit-eating quality service instead of managing with a quality process? Because cash is a drama queen and profit isn’t.

Delivering quality service is practiced by crisis managers. The crisis comes when you could lose a sale – possibly even a customer – because an order was filled incorrectly, creating a hit to your cash flow so quickly and dramatically that it takes your breath away: “OMG, get out there right now and fix this!”  Lots of drama for everyone.

Having a quality process is a commitment to profitability, requiring disciplined, long-view professional management. You’ll recognize it by the sound of no drama experienced by you or your customers … crickets.

Professional small business CEOs know that focusing on a quality process – doing it right the first time – takes a commitment to quality hiring, efficiency training, and a focus on what customers want, not just what they need. These practices produce sustained profitability and, in time, will eliminate your noisy cash flow drama.

Remember, the quality service you’ve been so proud of may seem admirable, but when delivered in response to something that was avoidable, it assaults profitability, threatens sustainability and ultimately will put you out of business.

Write this on a rock … Convert quality service into the more profitable – and sustainable – quality process.

My 2017 Crystal Ball Predictions

1. Here are my 2017 predictions. My 2016 accuracy was 78%. My 16-year record is 73%.

2. After eight years entrenched at barely 2% GDP growth, the U.S. economy will finally exit perpetual recovery mode into expansion status of at least 3% GDP growth.

3. From 2010 to 2016, regulatory pressure increased on businesses by an unprecedented 80% (Gallup). This investment-suppressing pressure will reverse in 2017.

4. The NFIB Index will report small business optimism increasing for the first time in eight years, as the economy responds to pro-business rhetoric and policies from Washington.

5. As the economy grows, small businesses will see increased profitability due to eight years of deleveraging.

6. For the first time in eight years, small businesses will increase business loan requests.

7. Business startups will increase at a rate not seen for several years.

8. Relevant small retailers will benefit as collapsing irrelevant giants, like Sears, Macy’s, etc., create a Main Street retail vacuum only partially filled by e-commerce giants like Amazon.

9. Small business job creation will lag economic growth due in no small part to productivity technology, which has redefined the growth = jobs symbiosis, forever.

10. With workforce participation at a 40-year low, the growing economy will not directly benefit millions of unemployed and underemployed who lack competitive 21st century job skills, like how to make – or even use – productivity technology.

11. Tax reform and regulatory abatement will cause Corporate America to practice more market capitalism on Main Street and less financial capitalism on Wall Street, benefitting the small business sector.

12. More growing businesses will decide to “Stay private” as short-term performance expectations and expensive regulatory pressures associated with “Going public” increasingly conflicts with the prudence of longer-term planning.

13. Inflation will rise organically with a growing economy – not from Fed monetary policy, which inflation chickens will come home to roost later.

14. Partially due to inflation, the Fed will raise interest rates at least twice in 2017.

15. Global pressures, Trump protectionism rhetoric, if not policies, plus rising interest rates will cause the Dow-Jones to end the year closer to 20,000 than 21,000.

16. U.S. oil production will thwart OPEC attempts to increase prices, leaving the year’s average below $60bbl.

17. Although elected as a Republican, Donald Trump is no party ideologue, and will prove equally frustrating for Republicans and Democrats.

18. In repealing and replacing Obamacare, President Trump will be frustrated by Democrats and Republicans.

19. Complete Obamacare replacement will take longer to accomplish than conservatives would like, possibly years.

20. The Obamacare replacement will include broad market-based solutions (re: Enzi Bill, 2006), plus broad tax credits and no mandates.

21. Obamacare elements of guaranteed insurability and extended dependent coverage will be part of the replacement program.

22. Obamacare popularity now polls upside-down at 51 against/44 for (Gallup). Once established for six months, the replacement system will poll net positive.

23. The smoothest governing issue President Trump will have is with the Congressional GOP on business tax reform.

24. Congressional Democrats will play their perennial bargaining chip of increasing the federal minimum wage and President Trump will make that trade for something he wants.

25. President Trump will nominate two Supreme Court Justices in 2017.

26. Trump will manage Putin/Russia, but be greatly challenged by China.

27. The most serious global economic threat will come from issues associated with China’s government-controlled financial/banking system.

28. President Trump will regard cyber-attacks from states such as Russia, China, etc., as de facto acts of war.

29. By the end of 2017, very little, if any of the Mexican border “Wall” will have begun.

30. Hundreds of sanctuary cities will become President Trump’s most challenging domestic issue. The cities will lose, but probably not until after 2017.

31. The Trump administration will only pursue an increased deportation strategy against undocumented, known criminals, but will stop accepting so-called, Syrian refugees.

32. The Obama administration’s undermining of Israel in the U.N. will increase debate intensity about U.S. financial support of the world body.

33. While dealing with Brexit, the Euro Zone will also be challenged when Italy tries to use the 2015 Greek bailout playbook.

34. In defense of his legacy, President Obama will not adopt the precedent of outgoing presidents to stay below the public discourse radar.

35. Within two years, Barack Obama, and/or Hillary Clinton, will be proposed for a high-ranking U.N. position.

36. Senator Joe Manchin (D) from West Virginia, will become a (R).

37. The Alabama defense will deliver the NCAA Division 1 title for The Tide, defeating Clemson in consecutive Championship Games.

Write this on a rock … Buckle up. The Chinese curse, “May you live in interesting times,” will not cover 2017, partially thanks to Twitter.

Recapping my 2016 crystal ball predictions

Here are my 2016 predictions, what happened and my score. My prior, 15-year record is 73% accuracy.
1. Prediction: Wall Street’s digital greed, Washington’s anti-business policies and collusion between the two will continue a moribund economy for small businesses.
Actual: The 44-year old NFIB Small Business Index reported flat Main Street sentiment for the 8th straight year - Plus 1, unfortunately.
2. Prediction: With a declining global economy and exhausted financial manipulation options, capital markets will struggle in 2016.
Actual: What was I thinking, applying economic fundamentals and reality in my analysis? All stock indexes are in record territory for the year - Minus 1.
3. Prediction: Mature Main Street small businesses will fare well in 2016.
Actual: Small businesses surviving the Great Recession continue to report deleveraging while finding a way to operate profitably in a 2% GDP economy. I call this phenomenon “Invisible Hand Operating”: the balance sheet gets stronger whether the owner intends it or not - Plus 1.
4. Prediction: Economic and regulatory pressures, plus demographic trends, will perpetuate an unprecedented decline in small business numbers.
Actual: According to a Gallup report, for the first time in 35 years, American business deaths outnumber births - alas, Plus 1.
5. Prediction: New crowdfunding rules for direct investment in small businesses will not become a funding silver bullet for this sector.
Actual: New Securities and Exchange Commission rules make it easier for direct investment in small businesses, but won’t change inherent impediments to direct investment for most small firms, like unsophisticated financial records and misaligned exit expectations - Plus 1.
6. Prediction: Unlike its investor equity sibling, crowdfunding lending (aka peer-to-peer) will proliferate with small businesses.
Actual: Morgan Stanley reported recently 2016 P2P lending growing by more than half, from $23B to $36B - Plus 1.
7. Prediction: Global headwinds, the specter of terrorism, seven years of anti-business policies, and presidential campaign drama will contribute to a flat 2016 economy, with annual GDP stuck below 2.5%.
Actual: U.S. economy remained in the now 8-year perpetual recovery mode with GDP growth under 2% - Plus 1, unfortunately. For the third year in a row, the real economy doesn’t reconcile with the record-breaking stock market (see #2). What’s wrong with this picture?
8. Prediction: The perfect storm of a slowing global economy, a crude oil glut, newly approved exports from U.S. producers and OPEC’s loss of pricing power, will keep crude averaging below $50 per barrel.
Actual: Crude averaged approx. $42 bbl. in 2016 - Plus 1.
9. Prediction: Slow global growth and deflationary threats will prevent the Fed from making more than one rate increase in 2016.
Actual: All my economist friends disagreed with this prediction, and the same one I made in 2015. They were wrong and I was right both years - Plus 1.
10. Prediction: Putin and Iran will become more desperate and dangerous.
Actual: Putin continues to flex his Soviet-like designs in Eastern Europe and the Middle East, meanwhile Iran thumbs its nose at the Obama Administration after signing the nuclear deal - Plus 1.
11. Prediction: In an unprecedented response to ISIS, moderate Muslims around the globe will denounce intolerance and violence in the name of their religion.
Actual: Alas, my hope springs eternal, but we’re still waiting on the Muslim majority to take back their religion - Minus 1.
12. Prediction: You’ll hear more about blockchains and distributed-ledger technology applications, disconnected from Bitcoin.
Actual: Global financial institutions - as much for defense as offense - announced adding blockchain technology to their business and financial security plans, plus the U.S. government will begin introducing it in 2017 - Plus 1.
13. Prediction: A mere shadow of its former self, Obamacare will continue to collapse under its own structural defects, causing the President’s namesake policy to go from legacy icon to caricature.
Actual: Clearly the perfect storm timing of more premium increases for the not-so-Affordable Care Act just prior to Election Day contributed to the loss by the candidate who defended Obamacare, and the win for the one who promised to repeal it - Plus 1.
14. Prediction: In his last year, Obama will increase anti-business executive actions.
Actual: According to the Competitive Enterprise Institute, the 2016 Federal Register of new regulations and rules will exceed the previous record, also under the Obama Administration. The poster child for this behavior is the DOL’s plan to double the overtime exemption amount, which was so excessive it was struck down by an Obama-appointed federal judge - Plus 1.
15. Prediction: Obama will go after the 2nd Amendment in his final year.
Actual: The President was no more vociferous about this in 2016 than any other year - Minus 1.
16. Prediction: Obama’s Justice Department will not indict Hillary Clinton in 2016, but the critical mass of her baggage will cost her votes.
Actual: The proof was in the pudding. I should take two on this one - Plus 1.
17. Prediction: The GOP primary process will not produce an apparent nominee going into their convention, unless it’s Trump or Cruz.
Actual: Trump was the nominee - Plus 1.
18. Prediction: Republicans will not win the White House unless the ticket includes a Hispanic and at least one person from Ohio and/or Florida. Look for Trump/Rubio or Cruz/Kasich.
Actual: This looks like a push, since I included Trump, but it’s more like one-fourth accurate, since I missed the FL/OH connection, soooo - Minus 1.
19. Prediction: The social conservatism of Republicans and the socialistic economics of Democrats will create electoral challenges for both parties in 2016.
Actual: Let me say that another way: President-elect Donald J. Trump - Plus 1.
20. Prediction: If Trump wins the election, it will be because he’s the only candidate most likely to avoid defending the bankrupt elements of either party.
Actual: Isn’t that exactly how he won?  - Plus 1.
21. Prediction: A liberal member of the Supreme Court will exit in 2016, probably in the first half.
Actual: A member of the court did exit in the first half, so that’s two of three elements. Scalia died in February, but I said “liberal,” so I’m calling this a push.
22. Prediction: With every member of Generation Y, aka Millennials (80+ million), old enough to vote in 2016, the electoral influence by this generation is now at critical mass.
Actual: Young voters didn’t turn out for the Democrat in 2016 as they did in 2012, but turned out about the same for the Republican in both elections. I really expected the Gen Y impact to be more dramatic, sooo - Minus 1.
23. Prediction: More than just a president, the 2016 election results will reveal the future trajectory of America.
Actual: With Real Clear Politics reporting a “Right-track/Wrong-track” number of 57:33, the 30-state, heartland-America electoral majority loss by Clinton, diverse by both state and demographically, repudiated and reversed the eight-year political trajectory under Obama - Plus 1.
24. Prediction: Alabama will become the NCAA Football Division I Champion.
Actual: Alabama 45, Clemson 40 - Plus 1.
Write this on a rock … My 2016 accuracy number is 78%, with my 16-year record at 73%. Notice that ten months before the election, I went 4 for 4 on Trump (without endorsing him). How’d you do? Look for my 2017 predictions in two weeks.

Why strategic alliances are a 21st century imperative

In the 1990s, when I began thinking about how to help entrepreneurs prepare for the 21st century, I condensed the areas requiring a heightened level of importance into three critical disciplines:

1. Leveraging technology in every aspect of your business;

2. Professional networking, as opposed to just meeting new people;

3. Building strategic alliances as a growth strategy.

If by now you haven’t become at least somewhat proficient with the tech stuff, you don’t have much time to adapt, adopt and survive. Better get busy.

And thanks to the work of people like the legendary Ivan Misner, founder of Business Network International (BNI), most of us now subscribe to what I call Misner’s Razor: “It isn’t netplay; it’s network.”

But what about that alliance thing?

Blasingame’s Second Law of Small Business states: It’s redundant to say, “undercapitalized small business.” It’s a natural law that small businesses come to the end of their resources - people, assets, technology, cash and credit - much quicker than do our big business brethren and sistren. So by that definition, we have to do something as primordial as when Og asked Gog to hold the chisel while he carved out his new stone invention that looked a lot like a donut. We have to seek and develop alliances.

Answer these questions:

  • Is your business growth hampered by a lack of people, capital or other assets?
  • Would you like to bid on a request-for-proposal (RFP) that has specifications beyond your company’s ability to perform?
  • Are you reluctant to ask a large customer about their future plans for fear that your organization may not be able to step up to the answer?

If you answer any of these - or variations thereof - in the affirmative, perhaps it’s time to pursue one or more of these three alliance examples, in descending order of formality.

Partnership

A partnership is more formal and typically longer term. Regardless of how it’s structured, in general, all partners have a vested interest in the success of the entire enterprise. Think of two business owners buying a commercial duplex and sharing the space because neither has the cash or credit to swing the deal alone. Most partnerships are best organized with the help of an attorney. But remember, because it’s more formal, probably even legally binding, choose your partners well.

Once, when consulting a mentor about choosing a business partner, he used hyperbole to encourage caution by saying, “A partner is only good for two things: sex and dancing.” But it isn’t hyperbolic to say that alignment of values between the parties is imperative to a successful partnership. This is a natural law: Regardless of how symbiotic the combined contributions may be to the venture, a partnership founded by parties with conflicting values is doomed from the beginning. Choose your partners well.

Subcontractor

By definition, a subcontractor becomes a contractual participant you bring in to help fulfill a larger project for which you are the lead vendor or general contractor. Unlike a partner, a sub expects to get paid for delivery of work or products regardless of how the project turns out.

Subcontractors are a great way to leverage your business without giving up control of the opportunity. But remember that with this step you’ve created a performance chain. And we all know that any chain is only as strong as its weakest link. A weak subcontractor could undermine your performance, harm your brand, and may even take you down.

Like partners, choose your sub-contractors well.

Strategic alliance

This relationship is typically less formal. Let’s say a web designer, a programmer and a search engine optimization expert plug each other in on projects as peers, instead of as subcontractors. After a project is executed and paid for, the participants go their own way until the next symbiotic scenario. The most successful professionals I know claim, nurture and go to market with many and varied strategic alliance relationships. And most were born from networking.

Going forward, I believe we’re going to see more enthusiasm and growth in the marketplace than in the past few years. That should mean more business, which should present more opportunities for alliances.

Before giving up on a project because you don’t have the in-house resources, look around for ways to create alliances that allow you to take advantage of an opportunity.  Start establishing them now - before you need them.

Write this on a rock … If Og the caveman can create an alliance, you can, too.

When trust is a best practice, profit margins increase

Few contemporary prophecies have stood the test of time better than this one by John Naisbitt, from his 1982 watershed book, Megatrends: “The more high-tech, the more high-touch.” I call that, “Naisbitt’s Razor.”

The reason for Naisbitt’s accuracy is simple: High tech, by definition, means digital. But you and I are not the least bit digital; we’re 100% analog. And our analog nature manifests as a desire to connect with - or as Naisbitt says, “touch” - other humans. So the value of touch increases proportionally with the increase in the velocity of our lives.

Digital is fast; analog is not. We may transport ourselves virtually at the speed of digital, but once there, we touch -eye, ear, hand - at the speed of analog. So how do we reconcile the fact that as high-tech consumers who desire and eagerly adopt each new generation of digital, we’re still, and will always be, analog beings? One word: trust.

Nothing is more capable of accelerating with high-tech while simultaneously governing down to high-touch than trust. Naisbitt didn’t directly address the concept of trust in his book. But I interviewed him twice on my radio program and I think he wouldn’t mind if I expanded his razor to: The more high-tech we have, the more imperative trust becomes.

In another of my favorite books, Built On Trust, by co-author and frequent guest on my radio program, Arky Ciancutti, M.D., I found this: “We are a society in search of trust. The less we find it, the more precious it becomes.” For millennia, customers did business with the same businesses because they wanted to deal with the same people. We trusted the people first and the company second. In an era where erosion of the high touch of trust is often lamented by customers and employees, there are still places where it not only exists, but was actually born. Where, in contrast to the rest of the contemporary marketplace, trust is still found in abundance. Those places are almost all on Main Street in the form of small businesses.

With trust now more precious than ever, build the foundation of your small business’s culture on it. And when you can deliver on trust as your North Star, you’ve earned the right to go to market with it. Here’s an example:  Reveal the combined industry tenures of your leadership team (101 years), or the average tenure of your staff (18 years). When prospects see those numbers, they hear T-R-U-S-T.

In one interview on my show, Arky said, “An organization in which people earn one another’s trust, and commands trust from customers, has an advantage.” Since contemplating that, I’ve maintained that being devoted to trust is not only the right thing to do, it’s a business best practice. Let me explain.

As the velocity of the digital marketplace increases, our business has to move faster, and our stakeholders - employees, vendors, etc. - have to keep up. As one of my vendors, if I can trust you to keep up, that’s a relevance value worth more to me than the competitive price of a low-bidder I don’t know. You just converted trust into higher margins.

In the greater marketplace, where devotion to trust is no longer ubiquitous, small businesses have been handed a rare gift. And all they have to do to claim it is create and leverage the relevance advantage Arky means when he says, “The advantage trust gives your organization is there for the taking, waiting to be harvested. It’s not even low-hanging fruit. It’s lying on the ground.”

You may have heard me say that the Price War is over and small business lost. Well, the Trust War is on, and small business is winning.

Write this on a rock … To claim that victory you must operate at the speed of trust.

What you should know about the Internet before we give away ICANN

Allow me to tell you a story of innovation bordering on the miraculous, scientific stewardship driven by professionalism and shared values, and global leadership that qualifies as agape. And the possibility that all three could be headed for an intersection where the best intentions of good people could be in jeopardy.

Approximately 23 years ago you and I were given access to the Internet, an invention that a generation earlier would have been considered science fiction. Most experts define the headwaters of this seminal invention to be the digital protocol work of Bob Kahn and Vint Cert, both researchers for a division of the U. S. government. Subsequent to its commercialization, these two and a few other geniuses created a number of digital innovations that enabled the Internet and established it as an unprecedented resource.

First question: How did the rest of the world get the Internet?

Since it was initially considered part of national defense, all of this mad scientist stuff was funded by the government’s National Science Foundation and its various contractors. As it became evident that the Internet had commercial applications, the U.S. began sharing with the world what we knew and what we had. Nothing was withheld, enabling the Internet to rise in every corner of the world.

Second question: Who operates the Internet?

Think of it like a private toll road system. The U.S. government allowed private investment to create interconnected computer networks into a “backbone” system that, for a “toll,” delivers our digital business around the world using the protocols created by Kahn and Cerf, and later applications like browsers. Similarly, more private investment built out the infrastructure to transfer digital info from the backbone to last-mile users, like you and me, at the speed of light.

Third question: Who’s in charge of Internet governance?

Who runs the Internet is more complicated to explain, but it’s important because of that intersection thing mentioned earlier. In fact, the U.S. government allowed Kahn, Cerf and others to create governing bodies like the Internet Society, the Internet Engineering Task Force, the Internet Architectural Board, and the World Wide Web Consortium, as organizations overseeing governance, access and standards for the global proliferation of the Internet. The Internet Society, which is the incorporated parent of two of these organizations, has 80,000 stakeholders and 110 chapters in 140 countries. That’s a lot of shared governance with one goal – a free and open Internet, sans politics.

The reason I’m telling you about the origin and governance of the Internet, is because a very important, last piece of U.S. direct influence of an Internet possession is about to be lost. The 18-year contract between the U.S. government and the Internet Corporation for Assigned Names and Numbers (ICANN) expires on September 30, 2016. When you create a new website it actually has two addresses: 1) a name, like abcsupply.com, for humans to remember and manage; and 2) a number value, like 207.111.167.145, for the way computers work. If you type either the words or numbers assigned to your website into a browser, the same page will be delivered.

According to NetChoice.org Executive Director, Steve DelBianco, in 2014 the Obama administration instructed ICANN to create, and transfer itself to, a “global, multi-stakeholder community.” On my radio program recently, DelBianco reported that this new body has been created and will take over on October 1. As part of the transitioning team, he says the new ICANN will be not unlike the other bodies mentioned earlier who’ve been governing the Internet for decades. That’s the good news.

Last question: If the Internet had been the property of Russia, China, or even France, would access and control of such a powerful resource have been so freely shared?

I think not. Consequently, in spite of my confidence in DelBianco and his colleagues, I’ve been very outspoken in the past three years against this plan for ICANN. I’m concerned about the loss of the last thread of direct influence by the U.S. government. I’m worried about what will happen if when we reach that intersection in the future, global, multi-stakeholder organizations, who’ve governed so dispassionately – without ideology – for decades, somehow become influenced or overridden by bad actor states, or possibly worse, the United Nations. The UN has a long history of coveting control of the Internet.

The United States is the most benevolent broker on the planet and has never let geopolitics influence Internet access or governance. With so many experts projecting that cyber-attacks pose a more imminent threat to our sovereignty than nuclear weapons, I fear the best intentioned Internet governors and investors may ultimately be no match for someone named Putin, Jinping, Khamenei, Jong-un, or their proxies.

Write this on a rock … Pray the world doesn’t regret America’s divesting of this last vestige of U.S. Internet ownership and control.




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