3/18/03

Here is more from Mr. David Goldsmith. I really like the second essay.
Soapman

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The MetaManagement Communicator Issue 03-03-A
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GET IN THE GROOVE: The Line With The Best Results
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Taking a leap over old ideas and ushering in the new isn't always easy. Tossing aside the tried and true for the unknown, no matter how promising, involves investment and risk. But if you want to keep pace with the pack or even outrun it, there are times when taking the leap is just what you need to do. Imagine where you'd be if you headed a large corporation and fought computerization. The prospect of personal computers used to be below 100 for the entire world. Today, one office may have thousands of computers. Furthermore, just because something was done in the past doesn't mean it would be right today.or that it was the best option yesterday.

In all industries, some beliefs must die with time to make room for more efficient ways of conducting business. Not long ago, the term "longer is better" dominated the ski industry. Longer skis, as much as 6 feet (200cm) in length, were considered the prime tool of the adept. Today, top-notch skiers use "150s" (150cm) which are nearly a foot shorter! Technology, tests, and science are responsible for the shift that blasted the belief that skis had to be straight and thin to be good. Over time, people discovered that the 200cm of cut edge could be shaped into an hourglass form, achieving the same amount of cut edge but in a shorter distance. The benefit: shorter skis are easier to maneuver, siphon less wear and tear from the body, and make turning faster and safer.

The same happened on the tennis court. Players used wood racquets with small faces until metal products with larger faces proved themselves. It wasn't an instant love affair, but eventually tennis players came to accept and appreciate the increased power and ease new developments and materials, such as fiberglass, brought to the sport. In swimming, shaving seconds off race times with outfits of tiger-shark-like scales outpaces shaving bodies.

Recently the CEO of a billion-dollar firm stated that he wanted his firm to remain an industry leader. He followed up by reacting to the prospect of a new way of doing things with, "What do you think.we all just crawled out of the ocean and stood up to get to this point? We're all using this industry model, because it works." Granted a lot of things work and work well. The industry model could work for a long, long time. But there's no guarantee it will stay that way, and if you want to succeed down the road, you have to at least entertain the prospect that something new could be better or that it could spell survival one day.

Making room for new ideas doesn't mean you have to break down the Wall of China. Small changes in beliefs, or ways of doing things, just have a way of creeping into everyday business. Think of the life of a chocolate bar. A host of manufacturing advances were made to get the product to market in the way it does today. The packaging alone has undergone facelifts, from design changes to the types of paper and ink that are used. Higher-speed printing equipment and processes saves pennies on packaging, adding to the bottom line. The supply chain has radically been altered just in the life span of the product.

Fast-food drive-thrus now offer a display screen that provides a line-by-line description of a customer's order. Customers see exactly what goes to the kitchen for order. If there's an error, the customer can now see it and notify the attendant at the time of the order, rather than at the window after the order has been packaged and paid for. This saves time, prevents errors, keeps everyone happy, and makes the entire process flow smoothly.

Prior to taking to the road, tractor-trailers are inspected for safety. A new technology-driven inspection system has been developed by Zonar Systems in Washington state. The system is designed to prevent quality gaps left by the current manual system. The gaps include poor inspections or no inspections at all. The new technology is being accepted by the DOT.hopefully school buses will adopt the new method before too long.

1. 1. Become aware: Ask yourself a series of three questions.
   • a. Why do I do things the way that I do? Look at how long systems have been in place. Think about the increased value your firm would derive from doing things better or faster or cheaper.
   • b. What would happen if I could increase efficiency or effectiveness by two? Consider what manual tasks could be automated or technologically advanced. Imagine processing a customer at a cash register twice as fast or sealing a floor in twice the speed.
   • c. If an outsider visited our facility, would he see efficiency and high standards or a disaster waiting to happen? Sure, you can clean up for the occasional visitor, but what is the norm?
2. Bounce your findings off others: There are a number of people who you serve and who serve your firm whom can be of assistance. If you have access to others who run the same kind of business but who may not be in direct competition (due to demographics, for example), find out what works for them or what's on the horizon. Complementary industries are good resources, too.
3. Act: Leaders have a responsibility to act when they know better. You might not find answers right away, but when you do, don't sit on them, do something about them.

Strange creatures we are.we work to achieve, and as soon as we get where we wanted to go, we want something else. That urge to explore, grow, and conquer fuels constant innovation, ideas, and evolution. Though leaving the comforts of a sure thing is tough for some people, it's a necessity for all of us at one time or another. Remember that change doesn't have to be drastic, but if you're constantly looking and thinking about new possibilities, you'll be able to seize the opportunities that new beliefs can bring.

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WHAT'S YOUR BASELINE: Don't Use The Economy
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Does looking at the economy and then back at your financials make you grim? You might not be as bad off as you thought you were. Since the economy shifted, the DOW and Nasdaq have hit new lows, droves have walked the unemployment plank, and now the threat of war is looming. No wonder executives and business owners are feeling the strain, especially when a lot of them aren't hitting previous years' numbers. But what if the next step in the battle against the economy is as simple as readjusting the baseline you use to measure your firm's successes?

The baseline for most businesses traditionally involves last year's financial figures. For example, for sales managers to deem a current year a success, total sales might have to increase by "X" amount over last year's numbers. For production managers, the baseline might include quality control figures, per-unit output numbers, or on-time delivery stats. Regardless of your job title, the baseline you use also determines whether you're getting an accurate status of your company. Unfortunately, too many people use the wrong baseline, forcing their companies in counterproductive directions.

A sales drop is not only discouraging, it could mean the end if changes aren't made quickly. Don't assume the right change is to aim for a sales rebound; it may be close to impossible to do so. Shooting for the impossible puts pressure on everyone, and that's not healthy either. As a decision maker, people look to you for hope and inspiration. To pull your company up and keep it going even when the economy doesn't cooperate, you have to look at how your business is improving, not just at how it compares to easier times.

Accept the reality that the gains from the great boom of the nineties may not be achievable today. However, the good news is that your company may be better than it was before. Compared to a decade ago, does your company have new equipment, better-trained employees, and more efficient computerized systems? Are you able to achieve greater productivity per employee than in the past? Are your products of greater quality and positioned better in the marketplace? Maybe you have stronger working relationships with your vendors and your customers as a result of the improvements funded by the bull market. These are the areas you need to be searching to get a picture of your firm's overall health.

There are other places to look, too. Product mix plays a big role. Do you subscribe to an industry-specific publication that publishes average annual statistics? What you're reading could be giving you a skewed picture of your organization's position. For example, you're a million-dollar company in the spring-manufacturing industry, and you're reading income figures stating the average net is $8 million. Falling below the $8-million line doesn't mark you as weak. Figures don't show us specific product-mix information. Are you accounting for the fact that you produce small springs found in pens, but that you're comparing yourself to manufacturers who produce springs for mattresses or large equipment?

Be sure to consider your firm's demographic position when comparing your company to others. A small-town bakery earning its keep from a limited number of citizens is not likely to gross what a bakery in a large metro area will. First, your per-unit prices will be lower. Second, the number of customers entering the shop is likely to be less, because the population is smaller. However, the small-town bakery may net much more than the big-city bakery, because overhead expenses are lower. Where you fall demographically must be taken in to consideration, as well.

Statistics are not always trustworthy. Look at Enron or WorldCom. How accurate are the numbers you work with? More companies than you'd care to know about don't have the most efficient standards for collecting and tracking financial data. You could be making assumptions based on inaccurate data, whether from your own firm or from someone else's.

1. Make a goal to increase efficiency. Dell desktop computers are now as low as $495 versus the $2000 of just years ago. You can probably afford more than you think. You might not be able to afford not to improve, anyway.
2. Put more into marketing, but challenge the results. We all know that those who market when times are rough come out stronger on the economic upside, but only if it's the right marketing.
3. Assess based on improvement, not always by the numbers. Unrealistic demands that force a company to fall short demoralizes employees and counters efforts to improve.
4. Beware the value curve. Dropping prices can backfire; the strategy may be seen as dropping value. When you drop prices, a competitor might be raising them. Work to improve value, and not only don't you have to drop prices, you might even be able to raise them.
5. View long-term prospects strategically. Look at market trends, new technologies, and world changes that may change the face of your products and services in the marketplace.or that could force your wares to be obsolete.
6. Stand out in the crowd. The camera always finds the goofs who paint themselves up at a football game. Want uniqueness? Look at a Las Vegas tourism ad. Everyone's got their own game, their own niche. What about you?

The message here is that your role as a business leader is to examine ways in which your company can improve and can continue to improve. Though trying to hit target numbers can be a good thing for your firm, be sure that you aren't too narrowly focused on that one baseline. To do so is to lose sight of the vast number of ways you can hold steadfast, weather the storms ahead, and come out stronger in the future.