Thursday, February 08, 2007


Why Telling Businesspeople to "Embrace Change" is Meaningless

Go to an industry seminar, a trade show, or read a trendy business book, and you'll undoubtedly hear something like “you have to embrace change to be successful.” How trite. How simple. How misguided. How lucrative, if you're on the speaking circuit.

Its corollary is “change or die.” The advice does little to improve businesses or improve businesspeople. We will die whether we change or innovate or not. We're sorry to break the news to you this way, but it was the only free newsletter we were sending you at the time. When you choose to embrace something, it also means that you can choose to let it go. Whatever you embrace does not necessarily become organic to the organization. It is just embraced. What kind of value can it have if you can choose to let it go?

They must be telling us to embrace change for a reason. What is the goal of this advice? It is to have businesses, their owners, and managers, recognize that they are in a dynamic marketplace. The advice assumes that they are ignorant that marketplaces change, even though the signs of change are all around them. Because the marketplace is dynamic, managers need to be constantly aware of how those unstoppable forces create opportunities, make current products and methods obsolete, and more importantly, affect their customers and prospects. They already know that. Can you imagine an industry seminar or event that was promoted as "Come to find out how our industry will stay the same"? People read industry magazines, visit web sites, go to trade shows and seminars precisely because they are concerned about change.

The advice is also myopic and not as generally applicable as it sounds. There are things that should never change. Strong financial controls. Good employee recruitment and relations. Emphasizing long-term and sustainable profitability. Performing your work well. Understanding your costs. Knowing your customer's needs and goals. A reputation for being reliable and trustworthy. Change? Why would we want to change these things? What kind of change is it that we are supposed to be “embracing”?

Many small and mid-size businesses were started by owners who had a particular vision for themselves and their businesses. Over the years, circumstances, market forces, and trends, affected the nature of that vision's implementation, and the owners navigated them accordingly to their capabilities. Eventually, the business looks nothing like it did when it started. That's good... that's because it changed. For businesses to survive three or five or ten or twenty years, it had to be able to confront change. Telling a business person to “embrace change” is like telling them to “embrace breathing.”

The central process that businesspeople use to navigate the marketplace is planning. Too often there is a regular admonition about the inability of printing businesses to plan, but nonetheless they manage to survive and outlast the seminar programs about planning and the people who admonish them. Planning in small businesses tends to be more culturally-based and transmitted by actions, not by documents. The issue becomes whether or not that culture can detect changes in its customer prospect base and its overall market, and profitably adapt. It's not whether or not it embraces change. Planning is a process by which we prepare for anticipated changes to our businesses, customers, competitors, and the marketplace. This is why it's so important to conduct the planning process effectively.

Business owners deal with change every day. They hire salespeople to go into the market with the job of changing the ingrained purchasing habits of their new sales prospects, and are willing to make changes in their business to accommodate the new customers. An employee quits; a new employee joins. A customer is gained, an old customer goes out of business. New equipment is purchased, old equipment disappears. Remember, we're the industry that went from letterpress to offset to digital, from hot type to cold type to desktop publishing, from black & white to process color to digital color, from press proofs to off-press proofs, to digital proof. Name the function, it's changed.

A problem arises when managers ignore the changes around them or are not sufficiently tuned into how those changes might affect them. The issue is not whether they embrace change. Not a single manager or owner whom I have ever met does not want their business to change, to be more successful, to be more efficient, or to satisfy its customers better. To want things to improve is to want things to change. Yet, sometimes managers have a deaf ear to the marketplace or even to their own business. This is not a problem with change. This is more a problem with the ability to detect change or the ability to create change.

We should not misdiagnose a lack of desire for change as an inability to embrace change. Desire for change always needs to be accompanied by capital and knowledge. Managers and owners are faced by so many options that it is usually hard for them to choose, and that is always complicated by other considerations of people, customers, timing, and other resources. Some business owners may seem to lack the desire for change, but what they really have is an inability to know what changes to implement, why they should be implemented, and may not be able to gather the needed resources and people. Some of these owners know that the cards for change are stacked against them, and for that reason decide to hold on to their business as long as they can until things turn in their favor, knowing full well that such circumstance may not happen.

What is the right advice? It's definitely not to “embrace change” because businesspeople deal with intended and unintended changes every day. The right advice is to make sure that whatever planning process is employed, even if the most informal, that it is more robust than it was before and is capable of detecting change sooner and point to the best long-run options for a profitable and proactive response. That planning process must include good controls and the ability to act decisively to be sure that the desired results are attained. No one should be creating opportunities that satisfy your customers' emerging needs other than you. If your planning process does not enhance your ability adapt to a marketplace and provide renewable and superior value to your customers, then it's not worth planning, or being in business, at all.

Embrace change? Sorry. We're business people. It's part of everything we do.

Thursday, February 01, 2007


In Creative Destruction, the Media Reports only the Destruction, Especially About Itself

As a reminder that you have to look at the data and the methodology to interpret what's really going on, last week's press reports that were headlined “Planned Media Job Cuts Up 88% in 2006” was one of the best we have seen lately. More importantly, it's a lesson that when markets change through the forces of creative destruction, only one side of the story seems to get reported, and that's especially the case when the reporters see death, destruction, plagues, and layoffs all around them.

Challenger, Gray & Christmas, the company that compiled these data, is not responsible for the context of how it eventually gets reported. CG&C is a famous outplacement firm that handles searches for the world’s biggest companies, and its top executives. Years ago, they started to track announced corporate layoffs. That is, any time a major company would report downsizing activities, it would track them and issue a press release. It brings them great publicity, and they use it very well, supplying talking heads for all kinds of news broadcasts. In this case, there were “17,809 job cuts, up sizably from the 9,453 cuts announced the prior year, according to the job outplacement tracking firm.” The press automatically went into sky-is-falling mode.

Let's look at the real data, compared to last year:
Even more interesting is self-employment and microbusinesses in publishing. In 2001, there were 68,000 of these entities. By 2004, the number had increased to 80,000, according to the Commerce Department. We suspect that the number in 2006 was in the range of 88,000.

Blame technology, desktop publishing, the Internet, aging of the workforce, or whatever. This is the creative force in “creative destruction” and it's never reported in the media at all. Markets are a constant give-and-take of growing and declining trends and businesses. When growth occurs in small businesses, or in the “new economy,” no one seems to notice, though the figures are just fascinating.

Self-employment and microbusinesses trends in other content-creation businesses is booming. Between 2001 and 2004 there were 16,000 more self-employed and microbusinesses in advertising, and 29,000 more in design services. Of course, some of these people might be considered unintentional entrepreneurs, but if this kind of employment is rising at the same time payroll employment in these industries is also rising. This is a sign that for most of these workers, being self-employmed or in a microbusiness is now the manner to which they have become accustomed.

More astounding is that when we compare this kind of employment to the total number of employees, self-employment in publishing was 7% of the publishing workforce in 2001. By 2004 it was 9%. In 2006 we estimate it was 10%. By 2010, we expect it to be 12%.

In graphic design, the percentages are even more eye-opening. Employment in microbusinesses or self-employment began to outnumber payroll employees in that industry starting in 2000. In 2004, there were 40% more designers in freelance mode than there were in payroll mode. We expect that this number will continue to grow.

In the end, it seems like lots of these jobless publishing folks are finding jobs in their own publishing industry, and often a different corner of it. One company’s layoff is someone else’s new hire. Remember, these employees can also exit the workforce, change industries, but usually end up working for a smaller and more nimble company in the same or related industry. Many of them, it seems, become self-employed.
This is a longer term trend that started in the 1990s; it's not new at all. People who follow “big media” or live in that environment have to come to terms with the creative part of creative destruction, and realize that it's the bad news that is no longer newsworthy. The revolution has started without them.

Planned Media Job Cuts Up 88% in 2006
creative destruction (in the first paragraph)

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