moneyFYI
Financial Freedom Is Merely Organized Common Sense
Change Is The New Standard
General Electric is not in the Dow Industrial Index
GE, once the icon of old and established, is no longer part of the Dow. Those few that take the Dow seriously are no doubt a little upset. After all, GE was the last of the original Dow companies to leave.
- American Cotton Oil,
- American Sugar,
- American Tobacco,
- Chicago Gas,
- Distilling & Cattle Feeding,
- Laclede Gas,
- National Lead,
- North American,
- Tennessee Coal and Iron,
- U.S. Leather pfd. and
- U.S. Rubber
all disappeared earlier and no great calamity befell the market. This time will be no different.
Greek Tragedy
One of the great themes in Greek tragedy is the flawed hero. Commonly hubris brings down the once lofty hero and we are to draw the lesson into our own lives.
Being a member of the Dow or the S&P 500 is hubris inducing. It’s like being on the all-star team. Clear evidence of success. Something to notice and be proud of. But like star athletes, eventually they ask, “What have you done for us lately?” Businesses have the same problem. The customers soon take for granted your best efforts and look for more.
Do not fall in love with your current business and its lofty position.
Adaptation.
I had a client whose office decor included a large poster on the wall. It was a dinosaur, in a swamp, enjoying an unstressed lunch of vegetation. The caption on the poster was meant to keep him focused. “Adapt or Die!”
So it is with business. Especially now and likely even more so in the future. Staying informed about markets, products, people, and change is crucial. The ability to adapt is quite often the only skill that really matters. Change is difficult and change is accelerating. We become aliens in our own world. The old is not the way of the new. Values change. Motivation changes. Customers, employees, and suppliers acquire different priorities.
Businesses must meet those needs, not rely on their “good old days”
Connectedness changes everything.
People must connect to a business in order to process a transaction. That method changes towards price advantage and convenience for the customer. Retail is easy to see.
Catalog shopping was once a big thing. It is no more. Malls were once a big thing. They still are big, but their future is cloudy. Box stores and Walmart are huge, but growth is flattening. The dollar stores are reminiscent of the old Woolworth’s five and dime. They will last as long as delivery of cheap items is economically impossible. Online is not yet an enormous share of retail, 6%, but growing faster than any other sector.
If a capable retailer from 1975 reappeared today, they would have difficulty adjusting to the changes.
Other areas where connectedness matters
Retail is the easiest to see the connection factor advantage, but it will affect everything. Universities for example can be replaced by Massive Open Online Courses. MOOCs. University professors often think they cannot be replaced and they are wrong. A well crafted MOOC could replace anyone. And at a much lower price.
Barbara Oakley’s “Learning How to Learn” is the most frequently downloaded course. It cost less than $5,000 to develop initially and has been downloaded nearly two million times. Its cost to take is negligible. Some courses, like ones with a laboratory, will not lend themselves as well to MOOC format, but those are not dominant in number.
Businesses will be using this format for staff development. You would be smart to examine the Coursera syllabus. Extension courses may vanish eventually.
Education in general will change with programs like the Khan Academy.
Delivering service
Tesla was recently panned by Consumers Reports for braking problems in the Tesla 3. The company remedied the problem with a software change delivered wirelessly to the vehicles. Tesla is the leading edge at this, but other car companies will not be far behind. What should dealers do as the repair department shrinks?
Electric engines will change things too. An electric engine has only about 10% of the parts of a gas engine.
Connectedness matters
As people learn and use new ways to connect, they will change the way they buy things. Even the things they buy. We don’t fully understand it yet.
Businesses will face new questions. Ones like, “Why must our head office be in one place and downtown in a major center?” Connectedness will allow distributed head offices in less costly places.
It is early innings. The changes in the future will be profound. Ubiquitous, faster, and better connected processors will accelerate change. Old rates of change and methods of change will seem quaint. Change will change too.
There are great opportunities and there are great catastrophes in the making. Think it through.
Every business must adapt or die.
I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.
In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. don@moneyfyi.com 705-927-4770
moneyFYI 