You can grow wealth in 2011
Adam Hartung – Dec. 24 2010 – Forbes
- Never be desperate. Go to where the growth is, and where you can make money. Don't chase just any business, chase the business where you can profitably grow. Be selective to invest resources in growth markets.
- Focus efforts on markets you know best. I add that it's important you understand not to do just what you like, but learn to do what customers VALUE.
- Let go of crap, traditions and "playing it safe" actions. Growth is all about learning to do what the market wants, not trying to protect the past – whether processes, products or even customers.
- More lemonade making. You can't grow unless you're willing to learn from everything around you. We constantly find ourselves holding lemons. Those who prosper don't give up – they look for ways to turn those sour experiences into desirable lemonade. What is your willingness to learn from the market?
- Austerity measures are counterproductive 99% of the time.Efficiency is the biggest obstacle to innovation. You don't have to be a spendthrift to succeed, but you can't be a miser investing in only the things you know, and have done before.
- Communicate, communicate, communicate. We don't learn if we don't share. Developing insight from the environment happens when all inputs are shared, and lots of people contribute to the process.
- Get off the downbeat buss. There's more to success than the power of positive thinking, but it is very hard to gain insight and push innovation when you're a pessimist. Growth is an opportunity to learn, and do exciting things. That should be a positive for everybody. Remember, we don't fear change, we fear the unknown. As your experiences teach you about new opportunities and markets your fear will subside and excitement will replace it.
Realizing that you can't beat the cost-cutting horse forever, it's time business leaders realize that we've been under-investing in innovation for the last decade. While GM, Circuit City, Blockbuster, Silicon Graphics and Sun Microsystems have been failing, Apple, Google, Cisco, Netflix, Facebook and Twitter have maintained double-digit growth! Those who keep innovating realize that markets aren't dead, they're just shifting! Growth is there for businesses willing to innovate new solutions that attract customers – and their dollars! For every dead DVD store there's somebody making money streaming downloads. Businesses simply have to invest more in innovation and less on efficiency and "core" programs.
Fast Company gives us "Five Innovative New Year's Resolutions" well worth adopting:
- Associate. Work harder at trying to "connect the dots." Pick up on weak signals, before others, and build scenarios to understand the future impact of these signals as they become stronger. For example, 24x7WallStreet.com predicts that greater use of mobile devices will wipe out some businesses in "The Ten Businesses The Smartphone Has Destroyed." But for each of these (and dozens others the next few years) there will be a large number of new business opportunities emerging. Just look at the efforts of Foursquare and Groupon to see where growth businesses are headed.
- Observe. Pay attention to what's happening in the world, and think about what it means for your (and every other) business. $90/barrel oil has an impact; what opportunity does it create? Declining network TV watching has an impact – how will you leverage this shift? Pat Robertson wants to decriminalize marijuana, what does that say about social norms? Don't just wander through your market, reacting to events using auto-pilot. Figure out what new trends are developing, and learn to recognize growth opportunities. Use market events to be proactive.
- Experiment. If you don't have White Space teams trying figure out new business models, how will you be a future winner? Nobody "lucks" into a growth market. It takes lots of trial and learning – and that means the willingness to experiment. A lot. Plan on experimenting. Invest in it. And then plan on the positive results.
- Question. Keep asking "why" until the market participants are so tired they throw you out of the room. Then, create scenarios and ask "why not" until they throw you out again. Markets won't tell you what the next big thing is, but if you ask a lot of questions your scenarios about the future will be a whole lot better – and your experimentation will be significantly more productive.
- Network. You can't cast your net too wide in the effort to obtain multiple points of view. Nothing is narrower than our own convictions. Only by actively soliciting input from wide-ranging sources can we develop alternative solutions that have higher value. We become so comfortable talking to the same people, inside our companies and outside, that we don't realize how much we hear only reinforcement for our biases. Develop, and expand, your network as fast as possible. Oil and water may be hard to mix, but blending inputs creates a good salad dressing. And the dressing is most profitable element of the salad!
ChiefExecutive.net headlined "2010 CEO Wealth Creation Index Shows a Few Surprises." Who creates wealth? Included in the Top 10 list are the CEOs of Priceline.com, Apple, Amazon, Colgate-Palmolive and DeVry. These CEOs are driving industry innovation, and through that growth. This has produced above-average cash flow, and higher valuations for their shareholders. As well as more, and better quality jobs for employees. Meanwhile suppliers are in a position to offer their own insights for ways to grow, rather than constantly battling price discussions.
Who destroys wealth? In the Top 10 list are the CEOs of Dean Foods, Kraft, Computer Sciences (CSC) and Washington Post. These companies have long eschewed innovation. None have introduced any important innovations for over a decade. Their efforts to defend & extend old practices has hurt revenue growth, providing ample opportunity for competitors to enter their markets and drive down margins through price wars. Penny-pinching has not improved returns as revenues faltered, and investors have watched value languish. Employees are constantly in turmoil, wondering what future opportunities may ever exist. Suppliers never discuss anything but price. These are not fun companies to work in, or with, and have not produced jobs to grow our economy.
Any company can grow in 2011. Will you? If you choose to keep doing what you've always done – well you shouldn't plan on improved performance. On the other hand, embracing market shifts and creating an adaptive organization that identifies and launches innovation could well make you into a big winner. Next holiday season when you look at performance results for 2011 they will have more to do with management's decisions about how to manage than any other factor. Any company can grow, if it does the right things.