OBSERVATION, EVOLUTION AND SHEEP
By: Robb Good, President Good & Roberts, Inc.
I’m an observer. For most of my life I have made a good living by paying attention to what is going on and quickly adapting or doing the opposite. I say do the opposite because sometimes the crowd tends to blindly follow like sheep. It’s not good to be a sheep, especially when there are cliffs around. It helps when you are an observer to also have a good dose of common sense and thank God, for some reason, I got a good helping of that too. So what’s the point to all this observing? To spot changes quicker, adapt faster, and thrive. I think Darwin called it evolution, but for all the whining I hear today, you would think evolution was a new concept.
It’s no secret the economy isn’t exactly on fire. It is also no secret that many industries are really suffering while some are even dying. New technologies, new business processes and stiff competition are the contributing factors of business evolution. If you had any doubt, just ask Kodak, Blockbuster or Circuit City. These are good examples of people who were not observing or adapting to the times. The other factor in evolution relates to generational shifts. I often tell people that my great, great grandmother was shocked to discover that my wife did not know how to make butter. While this news is shocking to great grandma, the reality is that this particular skill is no longer necessary in this century. Attitudes evolve, technologies evolve, and business evolves. How many things from the past are you hanging on to that no longer matter or have become irrelevant? What do you do to make your business relevant and competitive in the current landscape?
I manage companies in two industries, technology and construction. Having a foot in both ponds I see two very different approaches to defining competitiveness. In the technology world competitiveness is defined by innovation. In construction it is defined by cutting cost. I am probably one of the few business leaders who think Wal-Mart got it wrong. The constant drive to lower prices is not a sustainable model. Eventually after most of the waste has been eliminated from operations, the next level of cost cutting comes at the cost of your employees, suppliers and often, loss of quality. The reciprocal effect of this price cutting philosophy also has a devastating impact on the supply chain, local jobs and our communities. I don’t know about you, but I am really tired of buying crap made in China. I will gladly spend a couple extra bucks to buy a quality product that lasts. When the focus is purely cost and the only way to make a profit is at the expense of your suppliers or employees, I believe you are sewing the seeds of your eventual demise.
In the technology world success happens when you innovate. There is no better example of this than Apple. Five years ago I gave the keynote address at the San Diego AGC Technology Briefing Round Table. I made the statement that the recently launched iPhone would become the personal computer of the future. The basis of this prediction was founded on the observation that, once again, Apple had created a new computing paradigm. In a room full of Blackberry and Windows users this was met with a lot of skepticism, but if you had spent anytime using the iPhone, it was clear that it was the game changer. Nobody in the cell phone or computing industry saw this coming, nor did they consider Apple to be a serious threat. In five very short years, the iPhone has reinvented the cell phone industry. The once dominant players like RIM and Nokia are now slashing cost and laying off employees in a desperate move to survive. How did Apple do this? Certainly not on low price or at the expense of their employees or suppliers, rather they did it by redefining the market and creating value while delivering an incredible customer experience.
There are many good examples of companies who create great customer experiences. None of them are known for having the cheapest price. In some cases, like Starbucks, they dominate their market segment. Even in a difficult economy these businesses have thrived, not because they slashed cost and jettisoned employees and not because they treated their suppliers and customers poorly. They thrived because they ran a smart business. They stay focused on the long term by building a sustainable business with great marketing.
In the construction industry we do a horrible job of selling value. Instead we largely compete on price. This price-focused mentality does not make a lot of sense to me when you consider that contractors take on enormous risk, build one-of-kind facilities and successfully coordinate hundreds of suppliers who often times have never worked together before. It is an interesting observation that many of our customers will shop at Apple, Starbucks, and Nordstrom, but when it comes to making a large risky purchase of construction services, they base the decision on who offers the lowest price. We are not selling sophistication and experience when we are only selling price. It takes real creativity and real innovation to compete on value and it is time for the construction industry to evolve. Our future depends on developing sustainable business models and utilizing marketing effectively to support that effort. Good marketing educates the consumer and reinforces the brand. As business leaders we must have courage to invest in a marketing strategy, new technologies and the advertising and resources required to support the message.
In the early 90’s I worked as a technology consultant.. In those days business leaders constantly asked me the same question, “Do I really need a website?” Today the question I hear most frequently debated is, “do I really need social media?” It is not a really hard question to answer if you’re paying attention to the generational shift and how the web environment is evolving. While many of us are still figuring out how to effectively use social media, the courageous ones are putting a toe into the water and preparing to take the dive. The benefit of social media is that it provides another avenue for starting a conversation with a customer and it can play crucial role in your marketing strategy. The choice is whether you want to evolve now or scramble to play catch up later. In challenging times the courageous ones pave the way, while the whiners follow the sheep. It’s not good to be a sheep.
Real leadership requires courage. It’s time to stop playing it safe and start taking risk again. It’s time to innovate. We can all sit around waiting for someone else to do it first, or we can take the gamble on new innovative ideas. If you want to know how playing it safe turns out, just ask RIM.