Tag Archive for 'Future thinking'

The velocity of change and new customer expectations

And when I die, and when I’m gone, there’ll be one child born in this world to carry on, to carry on.
– “And When I Die,” by Laura Nyro, performed by Blood, Sweat & Tears.

As we know, change has been the one constant of existence on planet Earth. Each generation gives way to the next, so that over time fire became electricity and the wheel morphed into a computer.

For most of the history of the marketplace, change progressed at a pace slow enough to allow the creator of a model - a product, strategy, skill, etc. — to make a living with it for a lifetime, possibly even passing that model on to his children. But within the past century this paradigm began to shift.

During the second half of the 20th century, the life expectancy of a typical model generation was compressed into a calendar year. So while you were delivering the current year’s model to customers, you had to simultaneously create and prepare next year’s model to be ready to launch January 1.

That was a nice trip down memory lane, wasn’t it? Buckle up.

Since 1993 (the year the Internet became available to the public), an unprecedented confluence of innovations has further compressed the time between model generations. This compression produced high anxiety and frustration for any business that was in love with its model. Indeed, the life expectancy of a model that not so long ago would have been a calendar year was now measured in terms of an Internet year, which is 90 days — or less.

The headwaters of this increased velocity of marketplace change is innovations that are driving new customer expectations. And these innovations have become so seductively elegant and seamless in our lives that customers often don’t even realize their expectations are changing at all, let alone how fast.

But what about your business’s anxiety and frustration? Well, even if customers know, they don’t care. Because they worship at the throne of WIIFM. What’s In It For Me?

I have good news! You can avoid anxiety, frustration — and failure — if you know what your customers’ evolving expectations are, which you can determine by asking them these five questions - every day:

1. What do you want?
2. How do you want me to tell you about it?
3. When do you want it?
4. How will you use it?
5. How do you want it delivered?

Comparing the answer to these questions with what customers told you yesterday will provide all the information you need about current and future products, service and technology, including — especially — your social media and mobile strategy.

Let me put all of this in one sentence: If you want to know what your business should be doing tomorrow, next month and next year, ask your customers. They already know. And if you do what they tell you, you’ll be able to sing these new lyrics without any blood, sweat or tears:

“And when our model dies, and when it’s gone, we’ll produce a new model in this world to carry on, to carry on.”

Write this on a rock … Customers will tell you about their changing expectations - let them.

Welcome to Amazonia – third rock from the sun

Eeep—Eeep—Eeep —Eee

“Uh! Yes, Echo. I’m awake.” Walter’s answer stopped the noise and prompted this message from inside his pillow:

“Good morning, Walter. It’s 6:30am in Amazone 3, Monday, March 8, 2087.  Current temperature is a crisp 11 degrees Ama-Cius. Have a nice day.”

Walter Wallace had received the same wake-up notice every morning of his life since 2060, the year he turned eight. That was the year planet Earth, third rock from the sun, became Amazonia, wholly owned by Amazon.com.

By the middle of the 21st century, the world economy became dominated by Amazon and a few other online retailers and tech giants, like Google, Microsoft, Facebook, etc. For decades the megalomaniacs of those firms pursued shared goals of influence over sectors such as the global consumer goods supply chain, the content origination and curation universe, the global 24/7 news cycle, big data mining/consumer manipulation, etc. Ultimately, planetary control was complete as their long-held geo-economic dominance coalesced with their nascent global political influence.

In 2053, Amazon moved its headquarters from Seattle to occupy the entire lower third of the island formerly known as Manhattan — now called New Bezos, after the company’s late founder. By then, most Earthlings received whatever they needed in life – including employment – from some combination of the tech giants. By 2057, a final merger resulted in absorption of the other tech behemoths by the ultimate powerhouse, as Amazon controlled every function of society, commerce and governance.

Walking to his job as an Amazonia community planner, Walter no longer noticed the constant buzzing of the Amadrones, the iconic device for how the company gained global control, as they delivered goods. The internal nomenclature was “unmanned delivery and surveillance platform,” or UDASP, because they doubled as aerial spies. Everybody knew that. But Amazonians had long since suspended any expectation of personal privacy or self-determination.

Walter’s parents had told him stories about a diverse marketplace that included something called small businesses. But the same year the planet became Amazonia, the last one closed in what was once Lake Station, Indiana, now part of Amazone 4. Louis Lukedic, Jr. finally gave up the fight against the UDASPs and closed Louie’s Dry Cleaning, the 60-year business his father founded as the new millennia dawned. Besides, Louie Jr.’s children had all been assimilated by Amazon.

Walking to work in what was once Cincinnati, Ohio, all around Walter were Amazon branded buildings, including commercial structures for doing the corporation’s business, and high rises, to house Amazonians. Just last year, Walter, his wife and two children moved into one of the newest buildings. His parent’s generation were the last to experience home-ownership.

Every morning Walter stopped at an AmaMac SDD (sustenance delivery device) to procure a green breakfast wafer that tasted better than it looked, and coffee-flavored liquid. As a holographic scan confirmed whose personal Amaccount to debit, a strange noise came out of the SDD.

Eeep—Eeep—Ee —

“Wazzat?”  Walter grunted loudly, as he slapped the snooze button. “Where am I?”

“Honey, are you okay?” Walter’s wife, Wilma asked. “I think you had a nightmare.”

“Boy, I’ll say,” Walter exclaimed, wiping the sweat from the back of his neck.  “I dreamed Amazon had taken over the world. I tell you, Wilma, it was awful — they owned everything. There were no small businesses anywhere. All the people had blank stares on their faces as they went about their lives. Even me.”

Opening the morning paper at breakfast, Walter felt a chill as he read this very real headline, “Retail Ice Age advances as Amazon and other e-tail giants transform Main Street.”

In his small business later that day, Walter thought about his nightmare, the newspaper headline and another dream of his — the one about passing his business on to his children. In a meeting that morning, Walter vowed to fight back harder than ever as he encouraged his staff.

“We must stay focused on what customers expect from us,” Walter continued, “which is our special sauce of combining a certain level of high tech AND the high touch only we can deliver. We’ll combine both to achieve higher margins with what customers want – customization, and leave the commodities – what customers need – to Amazon.”

“And here’s Breaking News: Amazon is 100% digital, but customers are 100% analog. Amazon may deliver dozens of different back scratchers, but it can’t scratch one back. Only a Main Street business like ours can reach that analog itch that’s unique for every customer. Amazon can’t beat us if we keep customers focused on that advantage.”

Write this on a rock … Deliver the small business special sauce and you’ll have nothing to fear from Amazon.

Beware the Barbell Effect, unless you’re a small business

Once upon a time, in a land far, far away – in Internet terms that’s about 10 years ago – a small business owner didn’t have to worry too much about macro-economics. Well, that was a nice trip down Memory Lane.

Today, Main Street business owners have to operate every day in their micro-economy, while keeping an eye on what’s happening at the macro level. Alas, macro-economics isn’t easy to get your head around when your highest priority on Monday morning is to cover payroll on Friday.

Here’s a handy macro-economy metaphor: the Barbell Effect. Essentially, this phenomenon occurs when natural forces – new technology, innovations, shifts in demographics and behavior, etc. – disrupts entrenched, legacy practices of an industry. The disruptive pressure squeezes industry players who fail to adapt causing them to contract into the bar. Those who adapt find their way to the bell ends, where there’s room to expand.

At the macro level, the barbell doesn’t exist prior to the disruptive pressure – it’s the result, not the cause. In the marketplace, the energy causing the disruption is customers empowered with new expectations. This will be on the test: When customers are empowered, businesses are disrupted and barbells are likely.

There have been many examples of the Barbell Effect – some small and local, and some even global. I read recently about a housing barbell in one city where units on the high and low ends – the bells – were selling well, while the ones in the middle – the bar – not so much. The American banking industry has experienced its own Barbell Effect this century. As big banks got bigger on one end of the barbell, community banks hung in there on the other end, while medium-sized banks experienced financial claustrophobia as the bar got thinner and thinner.

Right now, the Barbell Effect is creating an existential reaction that can literally be watched by Main Street small businesses from their front doors as no-longer-relevant retail giants are closing hundreds of stores at a breathtaking pace. Here are some numbers: As of this year, 200 Sears stores closing brings their numbers down 60% in the past 5 years, while K-Mart is shuttering over 100 locations. Macy’s is closing 100 stores, and JC Penney is projecting 300 store closings. And besides these big guys, many medium-size retailers are also making the acquaintance of the bar between the bells.

The pressure creating this retail barbell is arising from new and evolving customer expectations, which increasingly means higher adoption of e-commerce – online shopping/purchasing. But the new expectation isn’t about unique products, lower prices, or better service, it’s the most powerful relevance advantage in The Age of the Customer: saving time. Technological innovations and customer care practices – easier mobile shopping and electronic payment, plus free delivery and easy returns – are saving customers enough time to change their shopping behavior and create a barbell.

As we witness the disruption – if not the end – of traditional, big box retail, let’s remember the good news about the Barbell Effect: It has two fat ends – the bells. On one end of the retail barbell are disruptive companies like Amazon, Google, and any other purveyors of the online retail model. On the other end are small businesses that understand that the online, digital model cannot fulfill all of the expectations of their analog customers. Indeed, the current Barbell Effect is producing a customer experience vacuum that will be filled very profitably by small retailers who deliver the special sauce of the both/and business model: traditional, analog retail (High Touch), combined with online, digital capability (High Tech).

In my next column I’m going to reveal what it takes to maintain occupancy of the fat ends of the barbell, and why this current retail phenomenon is great news for small business CEOs who see the micro-impact of the macro-economy.

Write this on a rock … Blasingame’s Law of Business Love: “It’s okay to fall in love with what you do; it’s not okay to fall in love with how you do it.”

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.

Three fundamentals of small business capitalization

The first sentence in the job description of every CEO should be, “Get the capital your company needs.”

Webster defines business capital as, “any asset, tangible or intangible, that is held for long-term investment.” Capital blended with operating cash flows becomes the financial fuel your company’s engine uses to operate with and fund growth.

•  Investment Capital — from you or someone else.

•  Borrowed Funds — for most small businesses, from a bank loan.

Additional capital is required just to STAY in business beyond what was necessary to START the business. And the stay-in-business capital is much more than the get-in-business capital. Success begets growth and growth eats capital like Cookie Monster eats chocolate chip cookies. So without a capitalization plan you can grow yourself out of business.

Here are three capital allocation guidelines. Don’t use operating cash to purchase assets. Don’t borrow money for operating expenses. Funding growth with borrowed money is okay, if you have a plan to convert growth funding from debt to retained earnings.

Retained Earnings

As the CEO or your business, it’s your job to acquire, manage, allocate and maximize all sources of capital.

Jim Blasingame is the author of the new book,”The Age of the Customer: Prepare for the Moment of Relevance.

Ask the owner of your business where it’s going

Do you know where your small business is going next year?

The best way to find this answer is to ask your business’s owner. But do you know the right questions to ask yourself in order to increase your ability to accomplish next year’s business goals?

To help you get started, here are five questions proposed by John Dini, one of the top management experts I know. Following John’s questions, I’ve added my thoughts to give you a little jump-start.

Question One: How much sales revenue do we want to achieve next year?
If you want to grow, it all starts with driving the top line on the profit and loss statement (P&L). How does your prior sales performance, organizational capability and ability to grow customer relationships support your new sales projections?

Question Two: What gross profit goal do we need to achieve to accomplish our operating goals?
Gross profit is sales revenue minus cost of goods sold (COGS), and it’s what covers operating expenses on the way to net profit. Be sure to align this goal with your new sales projection, because increasing revenue at the expense of gross profit is a fool’s errand.

Question Three: What are the most important things we can do to achieve this performance?
Better marketing? More advertising? Better sales training? Staff changes? New products? Better online capability? Expand market penetration? Start with the one that looks the most like low-hanging fruit and proceed from there.

Question Four: How should my own role in the company change in the coming year?
Each year, every business owner should fire themselves from jobs they no longer have to do and promote themselves to new jobs only they can do. Delegation and professional growth is the key to management success and ultimately, business performance.

Question Five: What is the most desirable personal goal I would like to make for myself?
If a genie gave you one wish to make your personal life more fulfilling, what would it be? More family? More golf? More bridge? More fishing? More whatever-the-heck-I-want-to-do-whenever-I-want-to-do-it? You’ll be a better manager with healthy outside interests.

Of course, these aren’t the only questions – just good ones to start with. Our job – John Dini and me – is to help you climb out of the trenches long enough to ask the owner of your business where it’s going.

Ask yourself these, and any other questions you think of. Then write down the answers and make it happen.


On The Small Business Advocate Show I regularly talk with John Dini, founder and operator of the most successful peer group franchise in North America, overseeing 15 monthly meetings of business owners’ groups under the auspices of The Alternative Board®, about growing your business - and your employees. Click on one of the links below to listen to our conversations on starting the New Year off right.

Starting the New Year off successfully

How can you grow revenue and profits?

Evaluating your role as the leader of your business

Check out more of Jim’s great content HERE!

Take this week’s poll HERE!

Watch Jim’s videos HERE!

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