We do not want to change!

Do we follow people or strategies?

Perhaps a better title but the result is the same. Managers or / and business leaders upfront are excellent promoters of their own skills and responsibilities but when it comes to changes in their setting the interest suddenly drops.

It is like their strategy is cut off during a conversation or meeting. As long as it is in their own interest they are willing to cooperate. The interest does not depend on what is good for those who pay them.

In fact the following example is a good reflection of following people as a strategy:

Networking tools such as LinkedIn often ask you to respond to a discussion or survey set up by a direct contact or member of a similar group of interest (which is necessary to participate).

Recently here was asked to share in one word what kind of manager or business leader you are.

You will not be surprised 99.9% of the responses were positive and clearly overstating the reality of a person´s own objective reflection .

When all these people are really top managers and apply to their own positiveness the world nowadays would look different or at least better.

Sure, these responses come often from middle management while the real higher management is not active or hardly active at sites like LinkedIn. It also gives to these surveys a kind of Facebook image. I am nice, do you want to be my friend?

In fact they are doing all the same; calling for changes (after being criticized) but not making critical decisions to avoid personal damage (read less income or corporate power).

We already know that for centuries but the fact the middle management copies this behavior of not making changes is disturbing. You have nothing to win but all to loose?

All these managers are send to expensive trainings and courses but when it really matters they often do not decide or change the status quo.

They talk about budget cuts, restrictions, fusions, mergers, reorganizations and other excuses to postpone purchasing your services while sitting in the safety zone.

Why would I risk your service and make a more serious attempt?

I would say because it benefits you and your company but it seems they are not inspired (enough).

Inspiration normally leads to becoming an example to others, open minded, stronger, better informed, prepared and willing to contribute and overall to win.

When not being open for changes you will loose, not win. Still people have the tendency to claim a win while not changing anything. They even believe they can inspire others.

What is said or sad then is that it is too risky to make a change, so they prevented a loss. Really?

Often here is added that when changing for example an external provider of services the work to be done to complete this change is already seen as a loss (of time).

The administration, informing the involved employees, answering questions about the decision and the follow up to complete the new setting; it is all not worth it!

In my work I see this often. But unchanging does not contribute and it certainly not helps the one who takes care of your paycheck.

But look around! Where else do you see this happen besides the corporate arena?

Everywhere! In politics from government to city hall, in the media where news is dictated by a few global parents and even in your private setting where it is amazing how Facebook or Twitter influences your life.

Let´s face it. Change is personal and can be done very fast while changing a setting takes ages. Then it is time to change strategies and focus on other people!

Why the economy can be blamed instead of bad management.

Why the economy can be blamed instead of bad management.

The past twenty months or so and in current corporate reporting the executive branch uses the economic downturn and some pickups in regional economies as arguments for not being able to give full year or quarterly guidance to share and stakeholders.

First of all there is not much they can do about it. These recoveries are fresh and in many countries too small to even call it a recovery. Some countries are excluded but exceptional companies when it comes to avoiding economic risks are hard to find.

So far understandable and the guidance from executives will remain without a clear vision for the time being. This might slightly improve but as limited is this outlook is also the ability to predict corporate results for 2010 and even beyond.

Secondly it seems when it comes to economic risks for many this is still not related to the real economy but only an easy phrase or excuse. Based on first hand communication with several business leaders world wide, especially those with a focus on emerging markets and BRIC markets, improvements or needs of more quality data / information are not a priority (of their management).

Too often professionals using macro for completing market analyzes, for making business decisions, supporting management meetings, doing internal reporting or using the data as a strategic or financial planning tool they rather rely on one source only. In most cases the same source used for industry specific data.

This is very strange and also kind of worrisome. Imagine this is also done for Pension Funds or IT Security. Billions invested in only one stock, for example Walt Disney, a good example when discussing fairy tales or economic forecasts of one source. Using one provider for IT Security will give them a lot of power.

Companies are crowded by advisers, especially coming from banks and other financial institutions. Mostly external ones get paid heavily for sharing an opinion that is different from any other. Does this not look familiar when talking about economic opinions? All these opinions from IMF, World Bank, OECD, central banks, governments, corporate economists, experts, gurus etc?

We all know they are all wrong but these same advisers work with institutions which have their own economists. Again each divided about any economic country trend. No one can really outperform because all face the same interference from political, social, demo-graphical or other kind of instability, disturbance or equal phenomenon.

So, why then relying on one source? Or is economic guidance no longer helping the company? Why mentioning economic reasons of slowing down your results or using recovery signals as hope for a short term revival?

A third argument that contributes to blaming the economy, and not taken economic risks (more) serious, instead of blaming management are the claims of having sufficient information or teams doing already economic analyzes.

Does sufficient indicate no other data can be better and therefore ruling out economic risks? Does sufficient cover for bad management decisions? Since when next to your global leadership in the food sector your core business involves macroeconomic research?

And when internal teams do these analyzes should that justify no other analyzes can be better? Justified how? In costs? Savings? Better guidance?

Unfortunately when looking at the above many companies still seem not to worry about economic risks and find it an easy way to blame their bad management. They keep on relying on one provider, they do not care about the quality of available information and do not consider non core business corporate time as a problem for cutting core business time (including labor expenses rising).

The worst of worst is the decision of budget restrictions. No, we are not interested in cutting costs by 90%. Sorry, our management blames the economy, not me.

Too simple would also be the explanation of missing realistic forecasts. Like as no one can make them, why arguing about them? While it is true this pure outlook cannot be given it does not exclude improvements. Especially not when paying too much, spending too much or not benefiting from synergies.

What will these companies do the coming years?

They will keep on blaming the economy for the bad results instead of bad management. They will continue cutting costs but only the easy core ones. Oeps, another restructuring charge. They will reorganize in the hope to attract better managers instead of better instructions. But as budgets will remain under restriction, good people will leave the company, competition benefits etc.

But they mostly will fail because those who do not take economic risks serious by focusing only on core business or do not demand full concentration of its employees on core business and those who believe one source is enough to guide them through rough times will miss a lot of opportunities for improvements.

These opportunities can only be discussed when the decision maker is truly identified, is open minded and is interested in business deals. Not someone who is only interested in his or her own position. Because then we only hear and see the same excuses over and over again, the economy is again blamed for not being able to make a corporate change.

This can easily be measured in labor costs. For every manager, analyst, director or corporate leader monitoring the underlying economic trends of countries of interest a process is needed. Either someone delivers them internally a report or this report is purchased directly.

People do not like reading but most reporting is useless when not using the best tools. Lots of corporate value time is lost when stopping searching for these tools. Every process of macro data is therefore an underestimated cost and time inefficient process when using one source or counting on own research.

On an average at least one hour per week people read about economies. Not to study but just a number or country report. Based on an average corporate salary per year this reaches easily 2,000 US$. Multiplied with an average of 10, 20, 50, 100 or more people, depending on company size, these costs are a waste of assets and valuable time. Big companies loose 100/200K while for smaller 10/20K is acceptable.

Excluded here from better data and cost / time efficient tools are the positive effects on eliminating risks, recognizing better economic trends, better prepared for internal and external meetings, more core corporate business time available and more core corporate budgets available.

Including these last items for missing revenues or miscalculations losses can reach millions.

When that is not of an interest, it is clear why economic risks are not taken (more) serious and why the economy is only used to cover up mismanagement.

"It's the economy, stupid"

"It's the economy, stupid" was a phrase in American politics widely used during Bill Clinton's successful 1992 presidential campaign against George H.W. Bush.

The recession at that time cannot be compared to the current one (in size and matters) but when looking at corporate campaigns the phrase has lost a lot of value.

Corporate spending on information has drastically been reduced as part of a total cost cut. This looks relevant and necessarily but what about economic intelligence?

Since May experience learn a lot about corporate spending behavior. Where outlooks remain grey and lacked with visibility it is not a surprise budgets for information have been cut.

Market conditions still show a volatility that should keep professionals informed of the potential business opportunity, even the smallest, which world wide is much decentralized.

This requires more time and stress testing to make sure when getting back into markets risks remain under control as far as possible.

Professionals in prosper times easier can make decisions as market conditions remain profitable but why not exploring better tools in desperate times?

To answer this it might be a false accusation but is it logical when economic outlooks are missing any visibility to continue with existing data providers or tools?

What makes decision makers decide to maintain essential economic information to support operations while the past 12 months no additional value was seen?

There can be five explanations for these questions:

1. They simply do not care or miss time to care. Business leaders, although referring to the economic impact on corporate development, do not look at macroeconomics or find them relevant in their decisions. They have other priorities.

This can be true because at certain levels, at the top, there is not time to monitor every country of interest. But what about lower levels of corporate finance & control, strategic planning, business development, market intelligence etc?

Why would in these departments managers not consider more effective tools for macroeconomics?

2. They leave these decisions up to their teams. Why would professionals not inform their upper management of possible improvements?

3. Only in good times it is allowed to spend on secondary information, such as macroeconomics. In other words when there is a budget left over.

4. A change would implement extra attention and labor to make the change successful. The fear of a change to distract people and learn another tool seems to override the potential benefits.

5. As discussed in other blogs it is fear itself of making a wrong decision. Rather no changes than any change that can jeopardize someone’s position.

Combining the above it still does not justify not welcoming improvements in terms of less spending, more time efficiency and overall benefits for each employee using macro to complete micro. What happens when nothing changes?

1. Total costs remain at the same high level or are even increased. While with current information providers discounts could be achieved any kind of synergy will be missed as long as additional benefits cannot be integrated.

2. Besides costs such as fees labor expenses are often higher because not all employees have access and need to find alternatives (internet is the worst alternative). People often forget to be on the pay roll.

3. Costs of risks cannot be calculated but when not improving any efficiency level operational results will rather decline than remain stable. Professionals in downturns often face higher work pressure and risks will be higher.

What can happen when making the right changes?

1. Total costs will be reduced as no longer (over) expensive and overvalued information providers are used or new tools are added to compensate them.

2. Corporate time savings will lead to lower labor expenses. As people have more time for core business, core business will directly benefit which increases the ROI.

3. Less stress and better time management can help risk assessments in for example market analyzes, financial reporting or strategic planning. Even business decisions are better supported.

Conclusions;

Instead of walking away from changes or being afraid of them it is better to consider them. It is too easy to claim satisfaction or sufficient access to available alternatives.

The past period has learn there is no such thing as “security”. When not being open for change will harm your corporation. It is then no longer the economy but corporate inefficiency, stupid!

p.s. This blog is written on personal title but related to my work as Global Sales Manager of FocusEconomics