The Business Trendsetter Podcast

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?

Planning for 2024 and beyond, the biggest factor determining your success is where you invest your resources.  Most of us invest in doing more of the same thing, only better, faster, cheaper.  But that has diminishing returns, and for most of us will have low payoff.  Greater success comes from investing in future trends, breaking out of our Lock-in to the past and investing in something new.

Using Tesla and the auto industry as a case example, this podcast explains how Tesla became #1 in EVs, while the entire auto industry ignored the opportunity.  Traditional competitors didn’t want to explore new opportunities, while Elon Musk made huge commitments to EV technology. Now he is reaping the rewards, while other automakers have uncertain futures.  And, simultaneously, we explain how BYD has transformed itself in just 5 years into the second biggest powerhouse in autos, growing revenues 6-fold and selling more electric vehicles than Tesla.  You could be Tesla or BYD if you follow our guidelines for investing, and recognize that increasingly success requires using external funding.

Thinking Points:

• Are you so bound up in your old business you don’t even have ideas for how to transform into something with more growth and profits?
• Do your plans for 2024 and beyond revolve around improving what you’ve always done, or are you planning to move into new growth opportunities where trends are more favorable?
• Do you recognize trends, and investigate what opportunities they create?
• Have you put in place skills to raise money if you hit upon an idea with serious growth potential?

Often leaders push their organizations to be “cost conscious.”  This almost always leads to bad customer service, which can really, really hurt your business.  This podcast digs into how some companies have bad service for years, like Comcast and United Airlines, while profits stall.  Others, like Sears and ToysRUs completely fail.  Yet other companies like Costco and Amazon turn customer service into an advantage offering greater profits and better operations.

Thinking Points:

• Do you tell your organization to put customers first, or profits?
• Do you let cost reduction opportunites hurt your customer service?
• Do you look for growth opportunities through better customer service?
• Would you like your company to have a good reputation, or a bad one?

Well, McKinsey finally did it.  After a full year of analysis they figured out what we’ve been saying on this podcast all along – that a growth strategy outperforms a defensive strategy, even in recessions.  Wow, pop the champagne corks. All of you readers already know this, and that their #1 method of growing in 2024 is (wait a minute) using automation and AI!!  Wow, I’m glad they finally had time to listen to our podcast!

This podcast also explores why so many economists struggle to predict things like recessions and inflation, largely due to using theories based on conditions unlike today.  And likewise Chairman Powell, et. al., can’t get economic, monetary or fiscal policy right if they work off the wrong assumptions.  So we go back to 2021 and explain what led to our current inflation – and its rapid decline.  This will help you prepare for not only 2024, but the next 5 years as you use the right assumptions to build your growth strategy.

Thinking Points:

• Do you have a growth strategy in place for 2024?
• Are you fearful of a recession or ready to charge ahead?
• Have you discovered the huge importance of the demographic shift on economic conditions and markets and factored that into your future scenarios?
• Are you capturing the profits available in this marketplace, or letting opportunity pass you by?

Rising Healthcare Costs, Rising Wages – Are American Employers Prepared?

 Healthcare in America is changing – but oh so slowly.  Only in the last year or two has telemedicine become viable.  And costs for so many procedures are wildly out of line with costs for similar procedures in foreign countries.  Meanwhile, only in America do employers pay for health insurance, something that is a government cost elsewhere, making their costs go up precipitously versus offshore companies. 

 Add on top of those costs the fact that demographics are driving far higher wages.  Strikes have driven up labor costs as much as 40% at the top 3 US auto companies.  And changing regulations mean that fast food workers in California will have a $22/hour minimum wage in 2024.  With fewer workers, higher wages and skyrocketing healthcare costs due to an obsolete funding mechanism the question is – are US businesses going to remain competitive in global markets?

Thinking Points:

• Have you considered alternative employee mechanisms, such as greater use of gig workers, to help control costs?
• Are you aggressively investing in robotics, autonomous systems and AI to remove labor from your business model?
• Are you lobbying for changes to health care delivery and insurance to move the costs off your P&L?
• Are you investing in changes to grow your business, or are you liquidating  your assets like GM?

What can the Heavy Equipment industry tell us about trends? In today's podcast, we talk with Louis Fernandez, an expert in the heavy machinery industry with years of helping companies find expense-side savings from the operations of a company. We draw from his expertise in the industry to learn more about how important heavy machines are to the economy and how they are integral to the support of emerging trends. We also delved into the realm of 'operational efficiency' - a pillar of the 'value delivery' side of the equation, and are reminded of the usefulness of this as part of running the business but also bringing to light the utmost importance of revenue growth for long term success.

Economists often use statistics like construction spending and heavy equipment sales to help them predict the state of the economy; as of today, many heavy equipment stocks are rallying, signals opposite to the general economic indicators of an impending recession. How can we look at trends to predict large economic events? Well, if we look at the top trends creating the most momentum in the market: AI, the environment, demographics, mobility, etc. we can see that each of them will require some level of moving earth around. 

For example, AI needs more computing farms, which need buildings erected to hold the computers: needing heavy equipment; "the environment" is driving the growth of electric cars, which need raw materials to create the batteries: needing heavy equipment;  demographics drive where people are living, which need housing: needing heavy equipment. And so forth...

We also explore how those top trends are also driving the direction of the heavy machinery industry as well. For instance, mining was among the first industries to adopt autonomous and electric vehicles for their heavy earth moving machines.

So, by more deeply understanding trends and how they are vastly interconnected to the rest of the economy, we can see that the simplistic economic indicators of heavy machinery or the length of woman's skirt (known as the "hemline index"), may not always hold true to their history. We now need to consider how trends 'work together' to provide a blueprint for your economic success. In the end, we see that trends will always drive the economy and all industries, heavy equipment included, will be driven by them and might even help move them....

Thinking Points:

• How can we look at trends to predict large economic events?
   
• What interrelated trends will drive the growth of your business?
• Are you only focused on cutting cost or are you focused on growing your revenue?

Exxon is making a huge acquisition of Pioneer.  Chevron is buying Hess.  Kroger bought Albertsons.  Cedar Fair and Six Flags are merging.  These will all grow the revenues of the acquirer, and revenue growth is a good thing.  So are acquisitions a good strategy?

This podcast explains why the bulk of acquisitions are done for the wrong reason.  They are competitors trying to become the “last man standing” in a declining market.  And always – yes always – these do not end well.  It allows the buyer to sustain for a bit longer, but they don’t thrive and eventually they die.

On the other hand Microsoft has made a huge investment to buy Activision Blizzard.  This is being done for the right reason – to grow revenues.  For years Microsoft has lost money in gaming as the weakest competitor vs Sony and Nintendo.  But now Microsoft will launch into the top spot, and be positioned to grow much faster and finally make a return for investors.  Because this is an acquisition focused on growth, it is a very good thing.

Thinking Points:

• Do you make acquisitions for potential “synergies” or to invest for growth?
• Do you understand how markets are shifting, and will this acquisition create a new direction shifting with the market launching new products and services?
• If you own a business, and your market is shifting, are you ready to invest to keep up with the shift – or should you sell to someone who can invest?

If you know how to analyze trends you can get more “bang for your buck” with expenses and investments.  This podcast explains how to analyze the performance of Instagram, Pinterest, Snapchat and Twitter in order to figure out where the best place is to run ads.  After you understand the analysis, the answer becomes really clear.

This podcast also analyzes the trend to home schooling, and explains how this is becoming a serious opportunity for entrepreneurs and companies in the education business.  Although the market seems small, it is growing at over 50%/year and is getting a lot more money than it used to, with potentially a whole lot more soon.  Even if you haven’t noticed it, this market is very close to reaching the tipping point for mainstream market adoption and a long, explosive run.

Thinking points:

• Do you know how to analyze different suppliers to determine which will get you the most for your spend?
• Are you using trends to make your investment decisions?
• Are you identifying early trends and collecting data on them?
• Are you ready to invest in explosive growth opportunities that can add a billion dollars to your revenue?

Often we hear people say that headlines make trends hard to understand. One headline pitches a view, then another headline pitches an opposite view.  Leaders become confused. 

This podcast explains how leaders can move beyond headlines to really understand trends, so they can undertake successful scenario development and make smarter investments.  Focusing on how employees are working, we can see that hybrid work from home is going to be a permanent fixture.  Less office space is needed, and employers can move now to save costs, while simultaneously making employees happier.  Investing in work from home will pay off, but investing in facilities will not.  Also, you have to avoid fads that are nearly always a waste of money – like NFTs!!!

But beyond investing money, how leaders invest their time and alter their decision-making practices will play a key determinant in success.  If you have proximity bias you will favor employees in the office vs. those that digitally commute, leading to poorer inputs and poorer decisions.  Leaders have to adjust their styles as trends cause markets to move if they are going to be successful. 

Thinking Points –

• Do you engage people with differing viewpoints in discussions, or do you try to include those who will reach a consensus easily?
• Do you make decisions on your personal preferences, or using trends to connect with where markets are headed?
• Do you “trust your gut” or do you get the data and involve the most people to make good decisions
• Do you leap from headline to headline, or do you dig into the stories and data to understand what’s really happening?

Over and again we see big companies, often leaders in their industries, fail. Despite having vast resources, ability to hire top talent, and legions of customers they “blow it bigtime.”  Sears, Hostess Baking, Kodak, Xerox, Fannie Mae, GE – how could they end up a failure? And if they blew it, how can you avoid a bad outcome?

The podcast explains how regardless of size, if your business falls out of line with trends it will end up in trouble.  The first sign is often trouble keeping up your revenue growth. That leads to focusing on earnings instead of sales. Which leads to protecting “sacred cows” and historical operations while cutting costs. And as trends unfold, the company becomes farther and farther off trend, until the margins have eroded and failure is the result.  But failure is usually several years after trends indicated change is needed – leadership simply failed to manage for trends.

Rite-Aid, Walgreens, CVS 40 years ago were retail leaders with some of the highest margins.  Now they are marginalized retailers. Failing to use trends when planning, demographics left them with fewer customers and far lower margins. Electronic commerce and discount chains ate up what margin might have been left. Because these companies never fully understood their customer Value Proposition they Locked-in on their historical products and assets, leading to overcapacity of drug stores with very little reason for customers to keep returning.

Thinking Points:

• Do you have a handle on how demographics is leading to big changes in your business? How about AI or Environmenetal awareness?
• Do you know the “sacred cows” in your business that keep you from doing something new?
• Are you actively using White Space team(s) to develop new growth opportunities, rather than leaving it all up to senior leaders?
• Are you updating future scenarios – 3, 5 and 10 years into the future – every month so that you keep trends at the forefront of your planning?

War in Ukraine. War in Israel. Threat of war in Taiwan and South China Sea. Near war in Kosovo & Serbia. A House of Representative with no Speaker.  It seems like one of the biggest trends is incredible conflict.  How can business deal with this?

This podcast explores how conflicts begin due to differing beliefs based on historical experiences.  In business we often “Lock in” behaviorally, structurally and with our costs to a model – or way of doing business.  We create “sacred cows” that cannot be challenged easily within the organization.  And due to commonality of participants frequently we develop “not invented here” defenses against new ideas, processes, products, technologies and even regulations.  As time passes we become ever more firm (locked in) to defending and extending the business as it was created, rather than addressing how external events require change in order to sustain. 

Kodak Locked-in to film.  Xerox Locked-in to click meters.  Hostess Locked-in to sliced white bread and sugary mass-produced pastries.  Toys-R-Us Locked-in to physical stores.  Radio Shack Locked-in to an outdated product line for electronic hobbyists.  IBM Locked-in to data centers and big computers.  Unwilling to address sacred cows and allowing not invented here to drive decisions these companies were devastated by external market shifts.

The best way to deal with conflict is to dig into how organizations, or parts of the organization, are locked in and address when they locked in, why, and compare that previous environment to today’s.  Then we can identify how alternatives have developed (and can be developed) due to changes in the external environment, which are best dealt with by overcoming the Lock-in and evolving toward a future better aligned with trends.  Rather than argue about “who is right” (conflict) it is better to identify the sources of Lock-in and then attack those processes and assumptions in order to gain agreement for new solutions.

The podcast closes with a look at how Disney has suffered horribly due to its Lock-ins.  When a new CEO redirected the company to new markets with new products during the pandemic he launched a new strategy aligned with market trends.  But the old CEO went to the Board and got him fired, playing on Lock-ins to old business models.  Now Disney is mis-aligned with markets, revenues are stumbling, and the stock has cratered.  An unwillingness of the old CEO and Board to overcome Lock-ins has turned a tremendous strategic shift into a strategy-free disaster.

Thinking points:

• Do you know your organization’s “sacred cows?”
• Can you identify ideas that were dropped because they were “not invented here?”
• Do you have people who see it as their role to say “no” to change in order to preserve historical practices?
• Do you allow people to attack old business practices, products, methods, technologies and assumptions – or are people who attempt to attack Lock-ins shunned, even pushed out?