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Building for the Future

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Building for the Future

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If there is one thing I've decided its that the future will look very different and if anyone wants to be in business in 20 years time they had better be prepared to make drastic changes to their business models.  Patience is key. Particularly in the US, business has had a free pass for close to 100 years.  People walked everywhere and if you opened a shop for a meager sum near just about any residential area, you were guaranteed to make enough money to keep the doors open and feed your family.  Your partner didn't have to work, your kids had a good college fund and your had enough financial security to take a long holiday or three.  A meager domicile, a comfortable life, and some a business you could take pride in.  All was well.

A number of things happened since that time in America, not least of which has been the demand for more and more "stuff" (George Carlin would be proud) to fit in houses that never seemed to be big enough.  While there is no shortage of people who are quick to blame one thing or another, one thing is perfectly clear - this is how it is now.

Oddly enough for those of us in the outdoor industry, life has always been a bit of a throwback to that ideal.  We have a saying that in this industry you can't get rich, you can only get happy.

I hate to say it, but the American business model of doing things simply and being happy worked right up until the 90's.  After that, the world of large corporations and endless red tape changed things.  Not all red tape is a bad thing and in fact, you could argue that if our businesses and models were still as simple as they were during those golden years of American manufacturing and growth, we wouldn't need to navigate the mind field of bureaucracy.  The simple fact is, American workers are much less happy than they were 50 years ago and this should not really come as a surprise to anyone.

So then, Mr. Author Man, how do we prepare and succeed in this world?  Well if I knew that I'd be far more successful.  As it stands I've only been successful in helping people and small organizations establish which way is up.  I have yet to be in a position to make true change on a larger scale.  Here's to hoping!

That being said, I don't mean to dodge the answer.

According to an amazing article on Patagonia, much has begun to shift in this industry and will hopefully spread to others.  While they can be looked at as a clear beacon of the future, I happen to think they needed the old model to put themselves into a position to ring in the new.  That being said - let's look at what some small companies have done and how its helped them build for the future.

A company called NextJump has actually instituted a "No Fire" policy wherein you become an employee for life once you come on board.  They cannot and will not fire you for performance reasons.  Rather, if you are having trouble you are coached and given help.  CEO Charlie Kim makes the analogy that if you were in a family and fell on economic hard times, would you downsize the newest family members?  "Sorry kids, rough year and we have to lay off our family to just three kids - you two are up for adoption."  When taking people on, they've decided to think of it as an adoption - and they do not remove family members.

One other consistency between Patagonia, NextJump, and other great organizations is they have adopted a business model that keeps them in business.  It doesn't have to grow, it doesn't have to make shareholders happy - it simply has to sustain itself and that is all.  Don't think this can work on a corporate level? Try Costco.

Costco's culture was started during a time when the business model didn't have to be over-generous to its employees.  In fact, competitors that have since followed Costco's model have subsequently made piles of cash by paying their employees below-industry standard wages as well as work them above-standard hours.  Walmart's Sam's Club change does exceptionally well as a direct competitor to Costco - while never quite doing quite as well as the original.  I happen to patently disagree with that article's logic.  There are numbers and Costco surely does have an overall strategy but the biggest difference is fierce loyalty - and its not created because they offer first-party branding.  Wal-mart does, too, remember?

I personally look at what a business has to do to be profitable, pay its employees well, and have a stash left over to prepare for a bad year.  In our industry, that usually means a bad winter (or four here in Tahoe).  But it also means adjusting the business model and expense strategies so that one year carries over into the next.  Marking things down the moment they aren't seasonally relevant is merely a slow death-spiral.  Protect your brand and display your products with pride.

The last five years have been truly eye-opening to me as I've gone from one corporate team to a small company and have been able to see just how transferable the headaches are.  In the end the message always seems to be the same for getting through tough times and for preparing for the future:

Be patient.

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The Importance of Continuity

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The Importance of Continuity

I've decided to dedicate my first real blog post to something that gets overlooked nearly everywhere you go and in every industry you visit.  Continuity.  And its important to make a distinction here.  Continuity isn't "the same guy at the top."  Its a consistent approach, a consistent team of people, and a consistent message to your employees, your customers, and to yourself.  I'll use sports a lot to provide the most cogent (and verifiable) arguments.  I like to use sports because they translate so well - we are teams trying to accomplish something in sports or business.  While you don't have "practice" necessarily if you're running a business (you do, actually, if you plan accordingly), you definitely have a game plan, a coach, a set of teammates, and a goal. Teams that pride themselves on the goals of the collective over the goals of the individuals often have success.  True.  But what does that matter if the coaches do not practice it - or the GMs, or the owners, or the trainers.  It takes more than just an enigmatic phrase over a locker room or break room door to bring a team together.  To bring a team together is merely a result of continuity.

For a past example in sports I can actually use the Chicago Bulls.  The Bulls hired Phil jackson as the full-time head coach in 1989 but did not win their first title until 1991.  Phil is largely credited with being the greatest coach of all-time.  How come it took him three seasons to win?  Gregg Popovich took over the San Antonio Spurs as coach in 1996 - the first two seasons were disastrous before winning a championship in 1999.  He's been the coach ever since and they've since added three more.  Oh yeah, Phil Jackson won five more with those Bulls and another five more with another team based out of Los Angeles, which is in California.  What was their name...

For opposing examples?  The Oakland Raiders, New York Yankees, New York Knicks, Chicago Cubs... all teams with vast amounts of talent and resources that continually tried and failed year after  year.  The Yankees are a much more recent example of attempting to "buy" championships by acquiring the best talent.  This tactic actually works fairly well in baseball as its largely a sport played without much-needed chemistry but a lack of chemistry still affects the team's ability to play well together even in a sport that's mostly a series of one-on-one encounters.  The Raiders are the best example - hiring and firing more coaches than any other team in the league for 15 seasons.  They have only recently attempted to form a basis of continuity and even then are still in turmoil and are still being met with limited or no success.

Think of what the best organizations in sports have in common:  The Pittsburgh Steelers, New England Patriots, Green Bay Packers, San Antonio Spurs, Dallas Mavericks, San Francisco Giants.  Since 2007 none of the above-mentioned teams have fired a single coach.  In fact, only ONE (Dallas) has even hired a new guy in that time frame (after the last coach had been there for 8 years).  The Patriots (2000), and Spurs (1997) haven't changed coaches in over FIFTEEN years.

Want a more recent, budding, example?  There are a few in basketball unfolding before our eyes.  The Atlanta Hawks hired Mike Budenholzer in 2012 - he of San Antonio Spurs fame.  At the point of this writing they are in first place in the much-improved Eastern Conference and are moving the ball better than anyone in the league and playing spectacular defense.  Mike has committed his team to a type of team-first ball-movement teamwork that has won San Antonio four championships.  Teams like the 76ers, Timberwolves, and even Lakers are looking for lightning in a bottle by drafting the next big thing but the Hawks have only one player in the heavy rotation that's been a draft pick in the last two years.  Everyone else is smartly signed as role players within a system.

So now that I've lost half my audience with a bunch of boring basketball and sports business lingo, let's get to the crux of my point.

Continuity wins.

Dotcoms and lightning-in-a-bottle and the-next-big-thing fizzles and dies.  Ask TiVo, ask LA Gear, ask the Miami Heat.

Nike has been telling us to "Just Do It" for over 25 years.

In-N-Out Burger hasn't changed their menu much at all since 1948.

The North Face hasn't changed their logo since 1971.

These aren't brands that struggle or that have ever really faced legitimately "tough times."  They've maintained their core ideals, their core message, and in everything they do they have been consistent in relaying that message and in producing that continuity.

For those of you looking for business insight, coaching insight, or leadership insight, this is an invaluable lesson that the old age "you either change people or you change people" is not only false but detrimental to your cause.  You don't have to change people - you have to provide a framework for everyone to operate in that doesn't change over time.  The pieces within that framework change, sure (players retire, get injured, leave for more money), but the framework itself never changes.  The companies, teams, and leaders that stick to one philosophy and one way of doing things FOR their people are the ones who meet with success and rarely have "bad years."

I greatly enjoyed writing on this subject because its something that inspires me to work with the companies I work with without the need to drastically change personnel.  They hired who they hired for a reason and we need to not only make that reason known but we have to let that reason shine and to let that person shine and become who they are meant to become.  This approach is my own continuity - that you hire nice people and you keep them because you desired them working for you on purpose.

Thanks for reading.

-mC

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