84 days and counting until the release of Business at the Speed of NOW
Far more than a boxy black horseless carriage, the Ford Model T is a symbol for many things that made the U.S. a great nation. Not only was it the first automobile produced in mass quantity (15 million were produced between 1908 and 1927), but it fueled a revolution in management.
“I will build a car for the great multitude,” said Henry Ford at its initial release. “It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one – and enjoy with his family the blessing of hours of pleasure in God’s great open spaces.”
In 1909 it sold for $850 (equivalent in today’s dollars of $20,709), but by the 1920s mass production techniques were so successful that the sales price had dropped to $290 ($3,289 today). At that price, the automobile achieved Ford’s dream and became standard transportation for the masses.
While that reality is incredible in and of itself, the enduring contribution of Henry Ford was a system of thinking – a logic for running an enterprise – a management approach that was so effective and efficient it was widely emulated. Specialization, functionalization, centralization, simplification. Ford tuned his system, employing some of the earliest “management science” techniques, and that thinking is still in popular use in the vast majority of enterprises today.
The result of great efficiency was a circular economic engine that produced affordable products and worker wages sufficient to buy the very products the mass production engine generated. The great American middle class was born, fed, sheltered, and eventually made increasingly comfortable with dishwashers, plasma televisions, computers and an iPhone in every hand.
While a blessing in a thousand ways, Ford’s system of management became so ingrained in our management thinking that we lost track of the fact that it was an ideal construct for its time, not the only way to run an organization. Mass Production worked THEN.
Today, our economy thrives on Mass Customization. We live in an era where YES is the only viable value proposition and NOW is the only acceptable timeframe. This is NOW! Failure to understand this fundamental shift puts any business at risk of surviving through the biggest economic shift in a century.
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When the going gets tough, the tough get…creative. With the economy still gasping to catch its breath, survival is top priority for many business and organizational leaders or those looking to start up. Struggling to just keep your head above water in turbulent economic waters can be terrifying, but it pays to heed the age-old advice of “Don’t panic!” People still need products and services, and my guess is you’ve got a great one. How do we get it into the hands of the right people?
Increased sales, more customers or a new business altogether… sounds good, right? It is good and the even better news is that salvation is in reach of those with even the most modest of resources and it’s not difficult.
How do you grow your business during trying times? By using a method of thinking called effectuation. Scrappy entrepreneurs are often credited with being sharp effectual thinkers, but this nimble, bob-and-weave approach to growth can also benefit established companies, especially under tough circumstances. Float like a butterfly, sting like a bee.
“OK, but what is effectuation? This sounds like something I need, stat.” you implore.
Effectuation involves using available resources in creative ways to reach a goal, iterating on strategy (and sometimes the goal itself) as the landscape and competition changes and doing all this with minimal risk (think car sharing via Zipcar instead of buying a new BMW). In contrast, causal thinkers make plans and struggle to stick to them for better or worse, which means they may be missing out on unforeseen opportunities.
Seems simple enough. For some people, this is a natural way of thinking, but for others (you control freaks out there might be nodding your heads), this is a major shift.
How about an inspiring example of effectuation? A great professor of mine used the story of U-Haul—a company you are likely familiar with—to illustrate effectual thinking in action. In 1945, Leonard and Anna Shoen scraped together U-Haul using the resources they had around them. With barely $5,000 they collected from relatives, the young couple began buying used trailers and painting them bright orange in the family garage. To maximize their purchasing power, the pair then had the brilliant idea to sell the trailers to family and friends who in turn leased the trailers back to U-Haul. This dispersing of investment (and risk) freed up capital that was then applied toward the purchase of more trailers.
Newlyweds Leonard and Anna certainly didn’t have the resources to run their own nation-wide network of dealerships, so they arranged for gas station owners to keep and rent out trailers instead. Now there’s a clever partnership. Ten years later, there were over 10,000 trailers and today the bright orange U-Haul trucks are a common sight on roads across America. Not bad with $5,000, even in 1945 dollars.
“OK,” you say, “but I’m not in the one-way trailer rental business and I don’t have $5,000. What can I do today, on a shoestring budget, to yield great results like that?”
No matter what your goal, the Internet is littered with software-as-a-service tools (that are available for little to no cost) that you can use to build and grow a business. And the big mother of them all is social media. Maybe you are happily using social media or maybe you’ve heard of it but avoid it like the plague (many people are). Regardless, with social media marketing, you get the world-wide, lightning fast reach of the internet coupled with personal recommendations made from friend to friend (also known as word of mouth marketing, which as any student of marketing will tell you, is the crème de la crème of all recommendations).
How about another, more current, example of a group using effectual thinking and social media? In May 2009, the California State Parks Foundation used a social media centered campaign to raise almost $1,000,000. Facing crippling budget cuts as the economy withered, the foundation had a goal of leveraging its tepid Facebook page with just 517 fans into a robust PR and fundraising machine with over 5,000 fans in just two weeks. To their surprise and delight, they leapt to over 33,000 fans! That’s an almost 64x increase in engagement and it paid off handsomely for both the foundation and those people that treasure our state parks. It was a win-win.
“Oh! Oh!” you say, “I NEED that!” But then you pause. Maybe you are too busy treading water right now to take on a whole new social media marketing campaign, or perhaps you don’t know a lot about social media (or even how to turn on a computer), or maybe creative thinking isn’t your strong point (sometimes it’s hard to see the forest for the trees, especially if the wolves are nipping at your feet).
Well, here is your first chance to overcome this obstacle using effectual thinking (and you haven’t even finished the article yet!): leverage your networks and ask someone for help. Maybe you have a niece or nephew who is doing a business project for school or a tech-savvy friend or relative who can pitch in or recommend someone you can talk to. Maybe you want to take the plunge and start your own social media marketing campaign (there are lots of great how-to books on the subject).
Or maybe there’s a creative, tech-savvy author whose article you just read that seems like a nice person to have on your side when the going gets rough. Or maybe you’ll pass on social media marketing, thank you very much. Either way, you can use effectual thinking to help you navigate stormy waters to calm, sunny seas.
Get scrappy. Get creative. Get going.
Have you used effectual thinking or social media marketing to grow your business or organization? If so, tell everyone about it in the comments!
Ok … sometimes we need to take the larger view of things. That includes our planet. As the Space Shuttle era comes to an end, there are many new projects that will come to be. Some will look way out into the past (as in looking at the light from almost the time of the big bang) in order to understand the universe. Others will look at earth to better understand how we should manage our lives. Take a look at this first in a series of NASA features. It truly is about growth.
Every once in awhile we need a little reminder to fight off the bad news on housing. Here’s a quick one.
The housing market continues to do battle with strong headwinds. Unemployment hovering at the double digit levels, disruptive appraisal requirements, more challenging loan underwriting and in many areas, foreclosure or distress sales exerting their negative influence. On the bright side, for buyers, lower prices combined with historically low interest rates has pushed true affordability to record levels. Here are a few other points to consider:
1. While falling values predominate across the country, there are only six states where values fell by more than 10% over the last year.
2. Unlike other investments, housing puts a roof over your head. That has always been its primary function. Yet, along with that benefit it is still an investment and in comparison to most others, it has compared favorably. Over the last 5 years, the vast majority of states still show positive appreciation with half even showing double digits. The same can not be said for the stock markets.
3. Over time, home prices across all states have risen at average annual appreciation rates ranging from the high 3′s to over 7.5%.
The movement towards change is a difficult course to navigate for many companies. Emerging technologies, such as Social Media have thrust change onto many of us like it or not. Accepting that the environment is changing is the first step. The size of your company is not always the issue. I have seen many large organizations (500+) adopt and still stay nimble. Here are three key ways these companies have guided their ship though the treachous waters of change:
To grow revenue, improve profits and be competitive, leaders need to continually improve how they manage their organizations. Leaders must be very strong at communicating, connecting and guiding people. However, the challenges facing most leaders and their employees are often daunting. These challenges include uncertainty and misalignment about the most important strategies, goals and processes. In addition, ineffective planning and communication impede the ability to execute initiatives as employees are unsure of their roles and key responsibilities. Compounding these challenges is the lack of systems and tools to ensure accountability and precise execution. Continue reading »
If you believe that most human beings actually care about their work and want to make positive contributions, then it’s easy to see how frustration can get displaced in unproductive ways. If you work inside an organization where it doesn’t matter how much you care because nothing comes of it, what would you do. I have to admit to some actions in my early career that clearly caused trouble when I once worked for a boss who was a jerk. Continue reading »
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