Thursday, February 25, 2010

Again. Again. Again.

It’s hockey time at the Winter Olympics, and for anybody older than 40 that brings back vivid memories of the 1980 Lake Placid games and Team USA’s incredible victory over the Soviet empire.

There are some obvious comparisons to 2010. In 1980 the country was mired in the worst economic crisis since, well, today. We were also coping with a belligerent Iran. Gas prices were on everybody’s mind, and there was a great deal of public dissatisfaction with the nation’s political leadership. “Malaise” was the word of the day.

But there’s another parallel I’d like to draw out; one that serves as a metaphor for today’s business environment.

If you saw “Miracle,” the thrilling movie chronicling Team USA’s formation, ascent and ultimate triumph, you’ll remember one particularly compelling scene. After the young team mailed in a lame performance during its first European tour, coach Herb Brooks made the players stay behind for an extra practice session. He forced them to skate a seemingly endless series of sprints, shouting “Again!” after each one even as the young men choked and puked from fatigue. They had no idea when it was going to end, which only added to their misery. It was difficult to watch, and one can only imagine what it was like to experience. But it was a defining moment and played a pivotal role in their crystallization as a championship-caliber team.

It’s easy to remember the miraculous victory Team USA pulled out when it counted. It’s also easy to forget that these young players had no idea what they could (or would) accomplish when it hurt the most. All they could do was pick themselves up and skate as best they could, fighting through the pain and trusting that somehow it was all for their good.

The economy is still fragile, and capitalism is under attack. Yet we can all take heart from America’s energetic, entrepreneurial and perhaps somewhat naive 1980 hockey team.  They were able to face down a seemingly invincible foe and find a way to prevail only because when things were most difficult for them, they stayed on their skates, stepped up to the line, and sprinted forward. Again and again and again.

Monday, February 15, 2010

A Little Certainty, Please

The National Federation of Independent Business (NFIB) says that small business optimism grew slightly in January. Slightly. The NFIB Optimism Index currently sits at 89.3, ten points below where it was prior to the recession.

Commenting on the index, Lawrence Mishel, president of the Economic Policy Institute, said, “To absorb the over 15 million officially unemployed workers in this country…job openings and hirings must rebound dramatically. This report offers no indication that this is happening.”

The NFIB’s report is consistent with Decision Analyst’s January Economic Index, a survey of several thousand households based on nine different economic measurements. The index remained unchanged for the third month in a row, stuck at 94, well below the 110 which signals an economic expansion. This index tends to lead the U.S. economy by up to a year, suggesting the economy will remain sluggish throughout 2010.

That’s what the CEO of Unilever, one of the world’s largest consumer product companies, is preparing for. Speaking of the economy, Paul Polman says, “It’ s not going to just drastically change in the next 12 to 24 months. We will be in for a long and slow recovery, and that’s what we’re planning our business on.”

Policy makers continue to point the finger at the difficulty of securing business credit. But the indexes above suggest the bigger problem is simply a lack of revenue growth, meaning employers simply don’t need to hire. That sentiment is borne out by the fact that fewer than one in ten owners surveyed by the NFIB added employees in January, while more than twice as many cut jobs.

Businesses don’t want to borrow money as long as economic uncertainty remains high. What we most need now is normalcy, not big ideas. Let’s hope the politicians are paying attention.

Wednesday, February 10, 2010

Dear Cable TV,

I don’t want 300 channels. I only want 18 channels. OK, the average person wants 18 channels. I really only want six. Why can’t I have just six?

I know, I know, it’s the economics of the industry. But industries change, don’t they? I mean, look what has happened to the music industry. I used to have to purchase an entire CD just to get the one or two songs I want, but now I can buy and build my own playlists song by song. It’s funny, but I’m sure I spend more on music now than I used to.

You should know I just bought an Apple TV box. That’s not your fault–since the Blockbuster Video stores near me closed (and RedBox, while cool, doesn’t exactly offer a huge selection) I didn’t really have a good option for renting movies. So I thought it was worth a try. Now I can select from a huge selection of movies and TV shows, and when I’m not in a buying mood I can use it to watch YouTube on my HDTV. I’m beginning to think of YouTube as the ultimate TV network–there’s so much on-demand entertainment there. (Hmm. You might want to make a note of that.)

Speaking of entertainment, I’ve held off on getting a Kindle because I knew Apple was coming out with a similar device. I’m excited to get my iPad, not only to check my email and surf the web but to download books. I guess Apple is shaking up the book publishing industry just like it did the music industry. “Saving it” is probably a more accurate description; I’m sure my book purchasing behavior will mirror my new music buying habits. I wonder if they’re thinking along the same lines when it comes to TV. I guess time will tell.

So if you don’t mind, I’d like to subscribe to individual cable channels. For that matter, I wouldn’t mind subscribing to individual programs. I know you won’t get as hefty of a monthly fee from me, but I’d be willing to pay more per network than you’re getting now. And I suspect other people would be too.

Anyway, it’s something to think about. But no pressure. If you don’t do it, I’m sure I can find other things to do with my time and money.

Monday, February 1, 2010

Strategy vs. Speed

Cristobal Conde is CEO of SunGard, a leading global software and IT company. In an interview with the Wall Street Journal, Conde was asked what has been the best move he’s made during the downturn. He answered, “We could have generated more earnings by having more layoffs. We wanted to protect R&D.; We wanted products ready to go at the end of the cycle. I saw a huge competitive opportunity to protect programmers when others weren’t.”

Conde’s perspective is smart, but rare. Our research shows that most companies overreact to a downturn and cut not just fat, but muscle. If they go beyond what’s absolutely necessary, that can easily compromise their future. Conde turns the fear on its ear by asking his employees “What is it you need to do now so you will remember the crisis as a gift?”

Chilean by birth, Conde has developed a taste for a uniquely American institution: NASCAR. Perhaps it’s because he sees in racing similar patterns to those of business. “Going into the crisis is not that different from going into a turn,” he says. “You slam on the brakes. In the turn, the most important thing is your position relative to other cars. I’ve been telling people, ‘Focus on our relative market shares rather than overall volumes you can’t control. What are we doing to improve our position?’ After the turn, you take that better position.”

Conde can’t guarantee that SunGard will come out of the recession a winner, just as even the best NASCAR drivers don’t know when they’ll cross the finish line first and when they’ll come up short. But races are decided by the strategy of the driver as much as the speed of the car.

Drive smart.