Using Demographics to Make Better Decisions

GE was founded on April 15, 1892.  On April 2, 2024 there will be  no more GE.  This podcast explains that what took 108 years to build, culminating in Jack Welch’s huge growth spurt from 1980 to 2000, was systematically destroyed by CEO Jeff Immelt and his successors.  How?  By focusing on earnings rather than growing revenues.

This week Boeing was put under criminal investigation.  Its reputation is a disaster as we wonder if its planes are safe.  Founded in July, 1916 Willliam Boeing created the commercial aviation industry.  And Boeing led it for decades.  This podcast explains how leaders that focused on cutting costs, defending and extending old platforms rather than using new technologies to develop new products, led to Boeing selling planes that lose doors in flight – or worse – crash.

These stories remind us that business exists to make solutions that meet customer needs.  Earnings are the RESULT of meeting needs, not and end unto themselves.  Forget that and your business – large or small – can find itself in the situation of GE or Boeing.

Thinking points:

• Do you put revenues first or earnings/cash first in your strategic planning?
• Are you investing in new technologies to make new solutions to better meet customer needs, or are you investing in defending and extending what you already have?
• Do you realize no company ever saved its way to prosperity?
• Do you recognize that business success comes from making new products that people need, want and buy – not by trying to make more money with what you already have?

This podcast interviews Tom Koulopoulos, Founding Chairman of Delphi Group, Executive Director of the Babson College Center for Business Innovation, past Director of the Dell Innovation Lab and contributor to Inc Magazine as well as many other journals. We overview his latest book (#14) “GIGATRENDS” offering insights to the major trends creating opportunities for entrepreneurs and small businesses globally.

The 6 Gigatrends act as lighthouse beacons for those sailing the seas of change.  They explain how demographics, artificial intelligence, health care collapses and changes in our identities and how we work will be shaping the next decade and beyond.  Tom sees these trends as uniting people rather than dividing them, and uplifting the more than 4.7B people currently living below the poverty line – in short the ocean of opportunity.

Thinking Points:

• Are you thinking about how gigatrends that cut across the globe will impact your local market?
• Are you ready to move beyond your historical markets to serve the vast underserved markets around the world?
• Are you being foresightful about how demographic shifts will create a declining China (and its history as a supplier to the world) while an emerging Africa will be far more dominant?
• Are you prepared for the health care collapse that will likely emerge if we don’t change health care administration as an aging population needs far greater services?

There is a lot of immigrant bashing in the USA these days. Somewhat ironic, given that almost all Americans have an immigrant background. Nonetheless, there is a perception among a lot of people – business leaders included – that immigrants are bad for the economy.

This podcast sets out to reverse that thinking. Reviewing ample data from the Congressional Budget Office, Department of Labor and regional Federal Reserve offices we overview how immigrants are adding $7trillion to the US economy, and have been responsible for avoiding the expected recession.  Undocumented immigration is actually down 14%, while legal immigration is up 29% - and wages have been rising even as immigration has grown the last few years.  And despite common belief, even the Texas Dept of Public Safety reports that immigrants are less than half as likely to commit a crime as native born Americans.

The data supports a robust level of immigration. Yet policy makers have been failing businesses that have a serious need for workers. Listen to hear the facts, and how they impact your business.

Thinking points:

• Are you trying to hire, but finding it difficult to fill positions?
• Are you biased against people who speak English as a second language, or struggle to speak English?
• Do you let media headlines influence your decision-making when it comes to hiring?
• Do you let a single data point, like a story about an immigrant criminal, influence your opinion about entire group of people?

Starting next week Amazon.com will replace Walgreens on the Dow Jones Industrial Average (DJIA.)  This 100+ year old index may seem out of date, but it does still have meaning.  Being selected for inclusion means a company is relevant and growing, and being opted out is the opposite.  We discuss in this podcast how changes in the DJIA and the Dow Transport Average (which just opted in Uber to replace Jet Blue) provide insight to how really big money investors look at the importance of relevancy and growth.

This podcast also overviews how important it is to use trends to make your company relevant, which can lead to growth.  Big investors may not be looking at your company, but your growth will depend on identifying trends and using them to grow so customers, employees, communities and suppliers find you relevant.  This week Nvidia’s value exploded into the trillion dollar group, adding $277B value in ONE DAY, by accomplishing 300% annual growth with its AI products.  You too can find huge value by investing in AI like Nvidia and Microsoft.

Thinking Points:

• Are your products so important to your customers that you are one of their most important (thus relevant) suppliers?
• Are you letting market changes drive right past you while you try to do more of the same in your business – like Walgreens?
• Are you investing in AI applications to be more relevant to your customers?
• Are you investing your portfolio in opportunities for growth so you can create superior returns?

Fed Chair Jerome Powell and Treasury Secretary Janet Yellen have both confirmed we will have a commercial real estate debacle on our hands soon.  Great, they finally figured out what Manny and Adam have been saying for over a year!  Better late than remaining ignorant!  So what does this mean for you?

This podcast explains the risks this is creating for CRE owners and banks with loans on these properties.  And those risks will impact regional banks most, which are the banks that also mostly serve small and mid-size businesses.  If they lose their reserves, they can’t loan to the small guy.  Worse, if those banks fail (like our leaders finally admit is likely) it means real estate prices collapse, bankruptcies – and a lot of empty space on the market at low prices.  It means you can plan for lower real estate costs to help you be more successful, and lots of opportunities for conversions into more valuable space (think residential) for offices.

Further, this podcast delves back into the ways demographics feed this very predictable scenario. And how those demographics are affecting all businesses looking to hire for more growth.  Future scenarios have to include these remarkable trends toward too much space, and simultaneously too little labor!

Thinking Points:

• Have you planned out your real estate needs for the next 5-10 years, including factoring in the big changes in how we work?
• Have you worked through what you’ll do if your current bank is swamped by real estate losses, can no longer loan or even goes bankrupt?
• Have you explored opportunities to grow by taking advantage of cheaper real estate?
• Are you hoping you can hire in the future, or building plans that address the totally predictable long-term labor shortage

Trends are long-lived customer behavioral changes.  Trends cause customers to develop new needs and allow companies to supply new solutions.  Thus, trends are loaded with opportunity, and the source of obsolescence.  But far too few companies use trends in their planning.

This podcast overviews how we verify trends, identify trend reinforcers, and then use those trends to plan. We dig deep into the 4 trends we identified at the pandemic onset(Mobility, Asynchronous Work, Artificial Intelligence and Gig Economy) for verification of their ongoing importance – including new technologies, government programs and environmental changes like real estate, e-commerce use and applications of social media.  Then we explore the importance of the emerging trend around sustainability and environmental awareness – and the overall impact of demographic trends on all business trends. 

Thinking points:

• Have you incorporated the 4 big trends into your planning?
• Are you tracking events for their impact on trends and customer behaviors?
• Are you aware of how trends are changing, adapting and affecting your products and services?
• Are you updating your scenarios for events and their impact on trends?

Do you know WHY people should want to do business with your start-up, without discussing HOW you do it?  This #Podcast interviews Jordan Shepley founder of The Headling Lounge.  In this interview Jordan describes exactly why people should want to buy her products. Over and again she describes the benefits customers receive, short and long-term.  We almost had to pry the Value Delivery System out of her.  And for that reason she’s selling 100% of her capacity, and looking to expand her 6 month old business.  It’s a great example of understanding the under-served, poorly met needs of customers and coming up with a solution for that need so your business can see rapid growth right out the chute.

Thinking points:

• Can you clearly state your Value Proposition without a mention of how you deliver that value?
• Are you focused on adding value, or running the business?
• Do you know your target customer and their needs, or are you trying to sell something which may have little or no value?

Despite the reliability of demographic data, and projections, few business leaders use demographics as part of their future planning.  Because most leaders assume demographics won’t change much, and they need to appeal to today’s marketplace.  But we are facing a global shift in demographics that is changing business conditions in every market – right down to the local level.

This podcast overviews how the aging society, and low birth rates, is contributing to a significant shift in demand and supply.  It affects how businesses perform even at the most local level, because it affects the supply, demand and pricing of almost everything.  Big changes in demographics that are happening now in places like India, China  the US and Africa mean substantial changes are happening quickly in economic growth – and the availability of labor.  Every business, regardless of size, needs to analyze the impact of demographic shifts locally, regionally, nationally and globally on their future revenue prospects.s

 

Thinking points:

• Are planning for a very different future, or assuming the future will look like the past?
• Do you understand how demographic changes will affect demand for your products/services?
• Do you understand how demographic changes will affect your ability to supply your products/services?
• Do you know how to position your business for growth by appealing to the right demographics?

US businesses are struggling to find workers, a topic this podcast has discussed many times.  And political divisiveness has been making it hard to implement policies to grow the economy.  To grow your business now could well be a good time to consider Mexico, as a final market or as part of your supply chain.

This podcast overviews Manny’s recent trip to Mexico, and discusses the impact of the 3 big trends – Demographics, ESG (environmental awareness), and AI (artificial intelligence) – on Mexico’s business and tourist industries.  With a much younger workforce, effective and affordable health care, workable environmental regulations, and rapid adoption of new technologies the economy is growing,  And it is supported by government investment in growth industries like tourism.  Listen and learn.

Thinking points:

• Have you considered searching for supply chain partners in the adjoining country of Mexico?
• Have you considered growing your business by setting up sales operations in Mexico?
• Are you aware that trade agreements with Mexico make it far less risky to do business than almost anywhere except Canada – and especially China?
• Are exploring ways to grow your business outside your historical business processes? If not, have you considered taking a trip to Mexico to find some personal White Space to develop new ideas?

Demographics are one of the most important trends for business forecasting.  They are extremely predictable, and offer tremendous insight to future markets.  From the 1980’s onward it was clear there would be a demographic problem of aging in the developed world which would create conflicts as major countries started to suffer declining populations.  Yet, universally no developed country prepared for the situation.  And now we have repercussions – like too few workers in the USA for the number of open positions.

This podcast explores how Russia’s declining population led to annexing Crimea and invading Ukraine. China’s declining population has led them to build islands and military bases in the South China Sea, preparing for a take over of Taiwan.  Despite massive immigration to Europe, the continent’s population is declining – yet leaders in Italy, Germany and France are screaming to reduce immigration, while 1 in 5 people are retired and needing public services.  England’s economy is in the doldrums, yet the Prime Minister is trying to send immigrants to Africa.  And the American news waves are awash in stories about “the crisis at the border,” while business people are screaming they have too few good candidates for jobs they desperately need to fill.

The trend toward globalization, declining worker protections and consistent economic growth are all being altered by predictable changes in demographics.  And the future will not look like the past.

America is at risk of becoming a failing economy, like Russia and Europe, unless we boost our population.  America desperately needs more immigrants for the jobs we have right now.  Letting politicians bog themselves down in minutia of “immigration reform” should not be tolerated.  We need immigrants now more than ever if we want to keep the American economy growing.  Look beyond the hyperbole to forecast needs, then adapt your business policies to find paths to growth do to this demographic trend transition.

Thinking Points:

• Do you know where you will source candidates for your company if you grow your revenues?
• Do you let a lack of candidates keep you from investing in growth?
• Do you avoid hiring Gen Z workers into your business?
• Have you taken any action, like contacting your member of Congress or your state Governor or state Congressperson, about simple immigration reform NOW?