How the Business Landscape has Changed – In More Ways than You Realize!

I woke up today and realized the business world had changed for the better. You are likely saying to yourself that I am nuts. With unemployment up to record levels and consumer spending still depressed, what must I be thinking? But a newly available talent pool created by this craziness is a good thing for America. Let me tell you why I am so optimistic about the future.

Just eight short months ago, our business landscape looked like a normal bell curve. We had 70% of our enterprises working against their approved business plans. We had 15% of the players that were upping their sights on something more aggressive. Additionally, there was 15% of the business population in trouble. The landscape reflected the chart below with the majority of great talent locked in their existing organizations.


Wow, what a difference a few months made. The companies just “working to plan” has dramatically shrunk to 20%. The number of companies in trouble has tripled to 45%. But the number of companies that are aggressively re-positioning themselves has grown to 35%. That reflects more than a 200% increase in companies that are poised for substantial growth. Why are they well positioned? Strong Balance Sheets! The business landscape today is reflected in the chart below and has several very important silver linings including a wealth of available, motivated, and highly qualified talent.

Two key lessons to learn from this current challenge come from history. One, the majority of new job creation as we climb out of this recession will come from smaller/start-up companies, not large coporations. Two, great new companies are born from economic downturns. And with the shift in talent pools and capital focus, now I understand why.

All the ingredients necessary to form great companies are just starting to come together. Great talent combined with innovative ideas with access to capital can do great things. Let’s take a quick look at why each of these ingredients is becoming available.

· Great Talent – I have had a chance to spend time with many displaced leaders and employees over the last few months – this is a very talented group and not like “reductions-in-force” in the past where the poor talent was being released. This time entire business units are being shutdown freeing up great talent.

· Innovative Ideas – We have seen a number of significant game changing ideas in clean energy, bio-technology, environmental management, and communications that are poised to make real differences in the world. These new solutions along with a changing political landscape create a great opportunity to solve new problems with government alignment and sponsorship.

· Access to Funding – Available funding for start-up companies and expansion round needs for growth companies is just coming back to the market. These companies are not funded by the large venture capital or private equity firms, but gain their funding from small investor groups or individual angel investors. These smaller investors are just returning to the investment game after getting burned last year by their institutional investments. They are ready to move from Cash and Treasury Bonds to something with a better return potential. But that money is not going back to Wall Street. They will be investing a lot more into smaller companies where they can develop personal relationships with the founders and potentially have a greater say about how their investments are leveraged.

I am convinced that the human spirit in this displaced talent pool and those who believe in “what can be” will turn this country around. I just hope that the new administration appreciates the lessons of history and places some of this “bailout” investment money into where real jobs will be created – the small business market. What do you think about my reflection on the current business environment? Are the large markets (New York, Los Angeles, Boston, etc.) significantly different than the middle market cities (Denver, Kansas City, Dallas, Silicon Valley, etc.)? I look forward to your thoughts and comments.

Cutting Your Way to Success in Today’s Economy – Are You Kidding?

Today, “Unemployment hits new record” is the main headline on the denverpost.com. It appears that the current definition of executive leadership in many companies is defined as “how quickly can we cut 10% of the workforce”. That’s not leadership – it is the lack of imagination to conceive the correct way to grow out of new challenges. The long term impacts on those left behind become hard to measure, but loyalty to help the company live long enough to fight another day is gone. Other incentives may keep the key players together for now, but when the tide shifts – look out!

The truly great companies which survived previous down cycles and have grown successfully during difficult times have always triumphed because of how they treated their talent. A number of large companies that fit this talent-first profile are highlighted in the book “Built to Last” by Jim Collins. There are also some great examples in Colorado that are smaller in size like CH2M Hill and MWH that put their talent first. That talent combined with the right leadership rewarded these organizations with:

1) the insight to figure out how the competitive landscape had changed
2) the knowledge to deliver new and redesigned offerings to match customers' new needs
3) the courage to quickly execute any required channel changes
4) the skills to develop and acquire new capabilities

All leading to results that drove revenue up in spite of the bad economy.

Why did these organizations succeed? Because everyone cared about the same things and worked together. They felt empowered by the trust and a clear vision that great leaders had established for them. All this success when other companies were cutting investments and expenses until the business just became no longer relevant. What type of organization do you live in? A message to business leaders everywhere - before you cut talent to meet a number, can you lead? Let me know if you agree or am I just short-sighted.