Is Your Business Safe?

These days it seems we learn of more customer facing companies in difficulty every day; and I see lots of discussion about can they or will they be saved?

In the UK the recent list of companies falling into administration includes a lot of household name retailers like Comet, Clintons, JJB Sports, Peacocks, Game, HMV and Blockbuster. Retail week in April 2013 detailed how the biggest retail administrations leave creditors with £1bn of unsecured debt.

I understand when people question if a business can be saved when it goes into administration with all the uncertainty for their employees and customers and the question about a process of sale or wind-down that has a finite time to run. I am a little more confused when that question is asked of ongoing concerns or post administration as Philip Beeching has done recently when he posed can Hilco save HMV?

I’m not sure I agree with the concept of ‘saving a business’ rather just simply ‘running it’. If the answer to the question “Can we save a business?” is ever “yes”, then what have we saved it from and for how long is it safe? I don’t think any business is safe in the sense that it is ever free from harm or risk, financial ruin, aggressive competition or unhappy customers. In some sense every business needs to save itself every day.

Take Apple. After their first 20 years they were in serious financial difficulty, their product line in 1997 was a disaster, their customers leaving them, they even got a hand out from Microsoft. Few thought they could hang on; and even with Steve Jobs return in that same year (also the year of the first MP3 player on the market) the iPod was still 4 years away and iTunes 6 long years away. I’m sure it was a hard road back to success, as their share price over those years suggests. The first six years after Steve returned saw share price never get above $8 (split adjusted), today it is $390. And Apple didn’t invent the MP3 format or the digital music player but well done to them in taking other’s ideas and making a lot of money out of doing it better.

I think most people consider Apple safe. Safe to work for and safe to buy products from. However, do Apple have a patent on innovation? I don’t think so. Is it likely one day someone will think of something better than they can and do it faster and cheaper? History tells us that’s almost always the case. Could they be in trouble again in 20 years? Are they really safe? Why would we think so? Remember Motorola? They had 20% of the global mobile phone market and were growing rapidly when in a single quarter in 1997 they announced losses of $1.2bn, then came over 7000 redundancies and most of their talented workforce running off like rats from a sinking ship. Their party was over, eventually they were swallowed by Google and their global share sits around 2% today.

The point I am trying to make is that rather than ask can our business be saved, perhaps it’s better to ask are we saving our business today?

Success is driven by always looking to do it better for your customers. Smarter, cheaper, quicker. If you don’t think like that tomorrow, someone else definitely will. No business can afford to forget it. We see examples of those that do forget, and those that can come back from the brink by refocussing on it. Safety is an illusion, one that successful companies and successful people will never feel they can rely on.

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I Still Have A Lot To Learn

I like to categorize people who are successful in getting promotions or new jobs in business into two types; ‘Knowers’ and ‘Learners’. I’m interested if anyone else has experience of this, or agrees with me.

Knowers come with predetermined skills and knowledge; they often consider themselves an expert in their field. They exude confidence. They believe 90% of their decisions are right (when in fact the percentage is probably worse than 50%). They work on gut instinct or some “facts” that they know from a previous experience that supports their position but never present those facts for others to see. They hate concepts like testing or trial and error, they want ‘full roll out’ of their ideas now. When they’re wrong they react with confusion or incredulity and look for the person or event that should be apportioned the blame.

Businesses bring these people in to fill a skills gap that is deemed urgent. They want someone who requires little or no training and can ‘hit the ground running’. Perhaps these types will be incorrectly labelled in their business as ‘fanatic’ or ‘passionate’; they can be the person who rarely listens to any alternate point of view and goes about discrediting all opposing ideas. People will naturally be drawn to Knowers because they always look like they know what they’re doing. These people can do some good in a business with their singular purpose and strength of will, but they can also do an inordinate amount of harm when they are wrong. They have the chance of taking one small mistake and pushing it through to become a catastrophe.

Learners happily admit they don’t know it all. That never changes through their career. A Learner may not have the great big idea on day one but will double their value to their business in thirty days, after a year they will know exponentially more than they knew at the start and be equally more valuable; but they will be the first to say: ‘I still have lots to learn’.

Learners have no fear of making mistakes or taking responsibility for them as they know that mistakes only teach them more. Sometimes labelled ‘thoughtful’ or ‘enthusiastic’, they can often be the one who gets very excited by new ideas, and finds new ideas everywhere, from the colleague sitting next to them to the shop where they buy their groceries. They want to test ideas, and they may make many mistakes in that process, but they are small errors that help course correct to a much more favourable long term outcome.

I think these two personality types are at either end of a bell curve. 90% of people cluster somewhere in the middle. They know some things and they learn some things. The people at either end of the curve, the extremes, tend to stand out to employers. In business I think both extremes tend to get promoted faster, partly because they are simply different from the crowd, also because they tend to represent what businesses are looking for: an expert to be parachuted in to save the day (the Knower), or more like a healer to assess the patient and offer some new direction (the Learner).

Knowers do not improve with time. What they know after a year is the same as what they knew on day one. While they can show a benefit initially, as a business moves on and evolves they are left behind, they eventually look obsolete if they remain, or some will leave to find a new role with another desperate business in need of a quick fix to start the process again.

After a few years people start to think the Learners are indispensable, that they couldn’t function without these people, as the business evolves they evolve with it, they often lead that evolution.

Of course, we all start out as Learners. It’s just some people fall out of love with the idea or never liked it much in the first place. For others learning can be a more potent self improvement drug than steroids.