Lost in Noise is Learning

We are so bombarded by noise at times it’s hard to think. The raging debates around coronavirus public policy, racial injustice, and the presidential election form a perfect storm of noise. A cacophony of this magnitude only naturally sends us to seek shelter from the storm.

Don’t give in to the temptation of numbness. Where there is noise there is a signal. Sometimes you have to listen hard for it, but it’s worth the effort.

Where there is crisis there is learning.

During the entirety of the Covid-19 crisis, my own company has been digging deeper into data, questioning every one of our prior assumptions, revisiting foundational convictions that have proven to be upended by circumstances. It’s been meticulous work, exhausting in many ways, but every bit of analysis has been worth the long hours of difficult discussion. Through a highly Socratic process, we have reinvented our business model for the better.

All of that has me thinking: What else might these crises be telling us? What else can we learn from the turmoil all around us if we don’t allow ourselves to hide from the rhetorical barrage?

Here are a few ideas penetrating my consciousness in the realms of global warming, trusted communications, and government core competency.

Everyone Doesn’t Have to Drive Every Day

I live in Los Angeles. I look outside and the air is clear. The freeways are empty. Coincidence? An accidental moment without significance? Perhaps that’s the case, as some have argued the temporal reduction in emissions and anecdotal benefits of fewer cars on the road, but what if it were sustainable? Could one of the answers to climate change be so obviously right before our eyes? I’m not a scientist with the credentials to make such an assessment, but I certainly would like the problem studied objectively.

Until a few months ago, we woke up daily with the habit of getting in our cars and driving to work no more questioned than brushing our teeth. It was just something we did. In no previous discussion of environmental distress did I hear anyone credibly propose getting more than half our cars off the road, because the proposition would have been a non-starter. Then one day a bunch of us stopped getting in our cars. Poof, just like that, we were working from home. We also got the commute time back for more productive work, and while I’m at it, how about all of those car accidents that stopped because people behind the steering wheel weren’t texting. We will go back to the office regularly at some point, but does it have to be every day, for every person? Not in my world. The benefits are yet to be understood. Let’s understand them.

Media Desperately Needs Reinvention

We don’t understand fake news. We don’t even have a common definition of fake news. Some of us define fake news as the biased reporting of a media brand. Others identify it as the blatantly false information peddled to the public for effect without fact-checking. I remain a fan of journalism and consume branded media daily with my own filter for accuracy, but my litmus test for truth will never be yours. Until we can agree on some form of objectivity, we will continue to debate the source of our information rather than the implications of the information’s validity.

This is not healthy. If we can’t agree on what constitutes an empirical fact, the clear and present danger to our decision making is likely to have a catastrophic impact. No source, however reputable, is without fault. The New York Times isn’t sure what belongs on its op-ed page. Facebook as a public platform of democratic exchange has become an unmitigated disaster in its inability to parse purposely placed disinformation in unending disguises, free or paid. Elections are won cynically on ad volume, fueled by cash, fueled by special-interest investment in yet more noise. We know we need journalism, but given how few people want to pay for it and how compromising its ad base has become, its business model has failed. Whoever reinvents this business model is going to change the world. I believe this will happen, because accurate information is not a luxury but a necessity.

Readiness Is Pragmatic

Perhaps my most troubling observation is how flat-footed the United States has been caught with the ramifications of the pandemic. Of course no one knew any sooner than late 2019 that Covid-19 could interrupt every aspect of our lives, but we’ve been around long enough to know pandemics exist. How could we have so few of the necessary medical supplies or personal protective equipment in stockpiles for such a calamity? How could we not have a clear chain of command between federal, state, and local authority? How could we shut down the nation for three months and not make strides on healthy measures to address the next semester of student education?

We are a pragmatic nation known to focus our vast resources on innumerable global crises throughout our history, but have we become so focused on the here and now that we aren’t paying enough attention to scenario planning and game theory? If we don’t think carefully about reallocating resources to planning for the unknown, the chances we will be struck down even harder by the next surprise attack would seem to be 100%.

Do yourself a favor: Tune out the noise, but tune in the learning. Opportunity is always around us if we muster the discipline to trade demoralization for inspiration. That’s how we get better.

The alternative is to stick with what we’ve got. I hope we’ve learned that’s not much of an option.

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Image: Pixabay

Embrace Turbulence

How many really bad things can go wrong in business in a single day? One or two? Five? Dozens? Dozens of dozens?

A key employee leaves because a spouse is offered a job a thousand miles away.

A key partner botches a supply chain handoff and your warehouse is empty ahead of an annual sale.

You discover a critical hidden formula error in one of your financial spreadsheets that even your auditors missed.

Your customer service lines light up for a problem with your competitor’s product being confused for your own.

Sound like a normal enough day?

Then why do we think of turbulence as extraordinary?

Maybe a better question is how many things can go right in a day. Sometimes if you achieve one modest success you count your blessings and call that an outstanding day! A win is the welcomed exception. Problems are the norm.

Just remember one of the key maxims in career longevity: If you’re a manager, problems are job security. If there weren’t problems in business, we wouldn’t need management. Lucky for us, huh?

I was recently talking with a colleague about his desire to offer calm to his staff after a rough few weeks. He wanted to give a talk where his message and tone signaled that the bad stuff was behind them.

I advised against it. How could he possibly know what fate might bring even later that afternoon. You never want to make a liar out of yourself with stuff you can’t control. Besides, the very notion of calm to me signals surrender.

What is the stuff you can control? Attitude, anticipation, and readiness.

It’s a question of urgency over fear. Fear in the form of debilitating anxiety may not be your friend, but urgency in the form of nimble responsiveness is always your friend. There is so little in our future that we can control, pretending it is otherwise is advancing the clock on the certainty of smack down.

Complacency lets down your guard. Predictive, proactive realism keeps you sharp at all times.

How many times have I heard hardworking but tired employees utter the phrase: “If only we can get through this [fill in the blank], we’ll be fine.”

Remember this instead: The reward for getting over a hill is the opportunity to climb another hill. There is always another this to get through. Beyond each valley is always another hill, often steeper and higher than the one behind you. That is the nature of economic cycles. That is the nature of problem-solving. Whatever you solve today may create an opportunity, but the market response to that opportunity will likely create the next problem on your plate.

It’s no different for capital and equity markets, where despite our hope for smooth sailing, volatility is the norm. That’s why for so many stock picking is a loser’s game. You’re in for all the good and bad days or you’re out.

What to do then?

Embrace turbulence before it becomes turmoil.

Make turbulence your constant companion. Celebrate small wins, but never be fooled by a quiet few hours. Once you are comfortable with the inevitability of unpredictability, your confidence level will rise. You will learn to address change because you accept the inarguable market force that change is constant.

A good sales quarter is always exciting, but as every prospectus states, past performance is no guarantee of future results. You know that like you know your boss’s ugliest shirt. Why pretend otherwise?

Did AOL fall on hard times or fail to respond to turbulence?

Did Yahoo suffer an explainable devastating blow or wander aimlessly amid turbulence?

Did Kodak get ambushed by new technology or fail to play its strongest hand in a climate of turbulence?

Each of those companies allowed turbulence to become turmoil. When turmoil escalates to the unbound, creative destruction has usually made its decision.

Think about what those implosions mean to you.

Did the last project that didn’t go your way take you down or prepare you to outperform it?

Did your last failed product launch demoralize you or teach you how to make a better product?

Are you looking for comfort in the quiet ordinary or comfort in outrageous curiosity?

Big Company Syndrome is believing your paycheck will always show up. Smart Company Syndrome is knowing you have to earn your keep every day. Doing work and adding value are not the same things.

Turbulence in business is the norm, not the exception. Companies that win do so because they surf over, around and through turbulence. They might purposefully avoid an obvious storm they can’t navigate, but they expect storms, they don’t anticipate their magical elimination.

In daily business dealings, if you know that bombs are regularly going to drop, you won’t be surprised when they do, no matter from where. If you’re a CEO or close to one, you know it’s the job of leadership to address crises, not to hope they will slink away.

Make peace with turbulence. Pace yourself for a ceaselessly bumpy endurance contest. Expect an unruly rollercoaster ride and be mildly pleased the days it doesn’t throw you from the train.

When you have one of those good days—and you will—you will appreciate it even more. Your definition of a good day may also begin to change. Mine certainly has. Stay tuned to this channel for how.

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Image: Pixabay

Staying Alive

This will be the third post in an unintended trilogy following my last two on why companies that might appear to be “built to last” may suddenly evaporate before your eyes. In response to those stories (Gone So Soon and 8 Warnings That Your Company Is Toast), I received several inquiries wondering if there were ways to spot an imminent mudslide while there’s time to escape.

Executive turnover is something to watch closely, especially the C-suite. Either too little or too much turnstile rotation can be a warning sign. With no leadership change over long periods of time, a company might become entrenched in its plodding, convinced it knows how to do things so well no seismic shift in the landscape requires reinvention of the company’s ways. When executives are repeatedly jumping ship in under a year, the lack of stability in teamwork, embrace of new ideas, or core strategy might be signaling a torpedo crater in the ship’s hull that can’t immediately be seen underwater. Certain presidential administrations come to mind.

An escalating executive dump of equity holdings will usually light up an analyst’s eyes, but what about yours? If your top management is seeking liquidity while proclaiming they are simply reducing concentration and balancing their holdings, ask yourself why now. It’s good to be loyal when there’s a reason to be loyal. Ignoring the siren to go down with the ship will never seem as noble when your colleagues have departed in first class and you are left treading ice water. Much of the dot-com bubble unraveled this way, with most of the stock prices dropping swiftly to zero.

Ever sit in a meeting, listen to a colleague or team of co-workers present an innovative, visionary solution to a core concern the company has long identified as critical to its survival, only to see the framers of the big idea summarily dismissed without adequate explanation? Sure you have, most of us have. Perhaps those framers then quit, go across town and put their concept to work for a competitor, of course without violating their nondisclosure or trade secret agreements, modifying their ideas to a variation on the theme. If you believe they are as smart as they think you are, consider following them. That’s how companies like Intel started.

Do you observe evidence that your company understands its core competency, protects it through a culture of learning, and openly admits its weaknesses as opportunities for improvement? When you go to an offsite, is the point of that retreat an honest evaluation of the company’s strengths and threats, or is the current leadership pontificating on how unlikely it is that your competitors can take your market share? Sears has been dying for decades. I wonder when in each of the past years they thought they were winning.

Are you building a project or a company? A lot of people aren’t sure. Most startups begin with a product offering, but if the company building that product defines itself too narrowly, it may soon cease to be a company when it is folded into a larger company with a lot of “synergies” found in the combination. If the word “synergies” doesn’t ring a bell for you in the world of mergers and acquisitions, it usually means overlapping functions that are removed as redundant costs, possibly you. Look at the string of product builders that companies like Microsoft and Google synergized throughout their history. How many of them can you still name?

Are analytics, diagnostic evaluation, empirical assessment, and primary research core to your company’s self-evaluation? Are key decisions made on gut instinct or debated with facts? Ask yourself if that’s what the top leaders in your company say they want to do or if it’s what they really do. That which gets measured gets done. That which gets quantified gets fixed. If you’re in the room where people are swapping stories rather than interpreting data, you’re probably better off gambling in a casino where the odds are at least known.

Another way to think about this is whether you believe top management in a company is truly focused on staying alive, and whether you can help overcome the challenges to a company you love or want to love. If the decision-makers around you are people you trust who are committed to vetting solutions, perhaps you can be as well. Too often when the axe falls, we acknowledge in hindsight what we should have applied in advance thinking. There are artifacts of knowledge all around you—both positive and negative—if you choose to pay close attention to the reality of your situation.

You can always be pleasantly surprised or devastatingly rocked by good or back luck on the job. Predicting the likelihood of an outcome is a learned task that is likely more tangible than you think.

8 Warnings That Your Company is Toast

Last month I reminded you that no big-brand company lasts forever, and few of today’s technology phenoms last long at all. One of my readers emailed to ask if I might dare to note some of the warning signs that suggest company extinction might be zeroing in on your own workplace.

Of course if I knew the full answer to that, I would spend the rest of my career shorting all those imminent losers traded in the public markets. Creative destruction is difficult to see in its earliest phases because it often begins simmering silently in the background when your company is riding a wave of enormous good fortune. Funny how that infecting vulnerability sneaks its nose under the tent precisely when a business seems to be at its healthiest peak.

While the corrosion can be deceptively invisible at first, there are usually festering symptoms we can observe, watching the makings of a crash in slow motion long before opposing forces collide. Here are eight thumbnail questions to help diagnose the severity of your company’s illness and whether it’s likely to be terminal.

What is the company’s R&D budget as a percentage of sales?

If research-and-development spending is declining as your company matures, it’s possible that company is being harvested by its owners as a cash cow. While strong cash flow is an indicator of company health, take notice of how much of your business is being driven by recent successes vs. legacy brands. If new products aren’t breaking, sniff around and see how much of that cash is being invested in next-generation ideas. If increasingly more cash is going to ownership and less to building your company’s future, you may have reason to worry.

Is your CEO surrounded by people who hold the same views of the company’s excellence?

Without gadflies who question everything, you’re likely to keep doing the same things. That could make you a cash cow, a one-hit wonder, or any number of limited-thinking results. Great senior leadership in a company encourages constructive conflict, because no single viewpoint in management can possibly see around every corner or predict a competitive threat. If lots of ideas are flowing, you have a much better chance to reinvent yourselves. Where dialogue is limited and funneling to a singular point of view, trouble is coming.

Does senior management actually use the product or service you produce?

This is the old argument for eating your own dog food. If the people who make and sell something only talk about why it’s great rather than obsess over what will make it even better, it’s likely to stay the same. If there is cynicism around your success and products become passionless widgets, customers will see that soon enough. Your customers can’t reinvent your products, just reject them. If you’re not a fan of what you’re doing, why should they be?

Does senior management regularly sample, investigate, and dissect competitive products?

If you think what you’ve got is the best and don’t even bother to see what could soon be eating your lunch, your lunch will soon be eaten. Be paranoid, be aware of everything competitive, commission and dissect research, never be comfortable that your moat is impenetrable. It’s okay not to use your competitor’s products day-to-day. It’s not okay to ignore them. If you happen to like them better than your own, wake up, the nightmare is about to become real.

In your company’s last earnings crunch, was marketing expense an early and severe casualty?

Marketing is an investment spend. If the money you are spending on marketing doesn’t add value to profitable sales, it should be cut now. If it’s driving profitable sales, it’s downright irresponsible to cut it. Marketing should be seen as a profit center, not a cost center. If there is no measurable return on your marketing spend, you’re already killing the company from within. If the return can be quantified, cutting it in bad times is senseless and irresponsible.

Is great marketing intended to help a mediocre product perform better than it deserves?

Said another way: outstanding marketing helps a bad product fail faster. If the product is garbage, all marketing can do is get it in the hands of early adopters. Once these market influencers trash the product, all is lost. If the product needs refinement before you invest to take it to market, take the extra time to get it right. If the product stinks and can’t be saved, kill it without a dollar of marketing spend.

Does your company culture resist rather than embrace change?

Also earlier this year I suggested that you keep your ears open for the phrase “But we’ve always…” whether it’s uttered in the break room or a key milestone review meeting. If your colleagues have unending excuses as to why you should stick with tried-and-true ways to fail because your company has always utilized a set of urban legends in your planning, you’re going to find it hard to carve a new path into the future. Doing what you’ve always done simply because you’ve always done it that way is a great way to succeed in any business that isn’t dynamic. Go make a list of businesses today that aren’t dynamic and tell me you should remain set in your ways.

Are you patching your platform or re-envisioning a new one?

Never confuse maintenance with progress. Think about just how fast industries are moving. I recently had the pleasure of watching the movie First Man. One of my favorites lines reminded me that it was a mere 66 years from the Wright Brothers first motorized biplane flight at Kitty Hawk (1903) to Neil Armstrong walking on the moon (1969). If you’re anywhere in the vicinity of 60 years old, that doesn’t seem like much time at all. If you’re fixing your biplane while your competitor is building a Saturn V rocket, it doesn’t matter that you’ve happened upon some world-class glue. When the rocket launches, you’re toast.

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Image: Pixabay