Business Insight Zone

“If John Doe’s head splits open and a UFO should fly out,
I want you to have expected it.”

That’s what Morgan Freeman’s character says to Brad Pitt’s character as they prepare for the climactic scene of the horror-cop movie Se7en.¹ And that, in paraphrase, is my advice to you as you read the business news these days. We’ve been over this ground before.

Today’s offending story, from Bloomberg:

Housing Starts in U.S. Climb to Seven-Month High

Here’s how it opens:

Housing starts in the U.S. unexpectedly rose in June as construction of single-family dwellings jumped by the most since 2004, signaling the market is stabilizing.

Emphasis added, because “signaling the market is stabilizing” is more definitive that the data indicate and because I generally think “unexpectedly” is a cognitive Tar Baby in this economy — it looks cute at first, but then you find yourself all gummed up in the expectations.

Some caveats:

• The Bloomberg story as a whole is nuanced, and laden with hard figures.
• The “unexpectedly” refers to strong overperformance by U.S. housing starts against “the median of 73 forecasts in a Bloomberg News survey.” Fair enough.
• The story offers caution on the “market is stabilizing” thesis, e.g. when it says “a strong rebound [is] ‘not likely for some time’,” and “The report ‘quite potentially is signaling the early stages of a rebound’.”

To reiterate my fundmental premise: Companies should be ready for ANYTHING in this economy.

If you’re thinking “Hey, things are picking up!” and you somehow need that to be true — for your business, for own sense of well-being — I urge you to rethink. Hey, maybe things are picking up. I’ll be the first to celebrate if they are. But . . . maybe they aren’t. Or maybe they are, but not for your industry. Or maybe they are, but more slowly than you would ever imagine.

You need to be making choices, for yourself and your company, that prepare you to take advantage if and when things do pick up . . . and that prepare you to weather lots more stormy weather first.

And you don’t need to get caught up in the game of expectations.

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Related:

• Beware “unexpected”!
• What if the economic world has changed?

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Thanks to a pointer from Bob Sutton (whose blog I can’t recommend too strongly), I came across this trenchant column — which is about management, not economics per se — from one of my favorite business thinkers, Jeffrey Pfeffer:

‘Efficient Market’ Thinking Is Inefficient

Please do yourself the favor of reading the whole thing, but for now chew on this:

In virtually every area of business, the companies that have broken from the pack have not only seen some common sense business truths but have been willing to act on that insight, even when others weren’t.

The pack are the ones who are doing it “efficiently” — like everyone else. The great outliers are the ones who are doing it well — whether or not it jibes with what the pack is doing.

Looking over the current IPO Filings page at IPO Central, I was struck by the fact that filings from last week and this totaled more than $1.1 billion. (Remember, these are just companies filing so that they can later make an IPO — they’re not going public yet.) So I glanced back over the months of this year to see what the earlier totals were.

• January: nil.
• February: nil.
• March: nil.
• April: 1 for $100 million.
• May: 2 totaling $1.0 billion.
• June: 6 totaling $2.02 billion. (Note the four separate $500 million offerings in that mix.)
• July to date: 4 totaling $1.17 billion.

As I’ve said before, I’m not ready to proclaim that the IPO market has recovered — and, indeed, I think that the “recovered” market will look different from what we’ve been used to over the past 20 years.

But, hey, baby steps.

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Photo by wrestlingentropy.

Don’t get me wrong, I love the tradition of Buick represented by the Roadmaster here — and in fact I’m in the small group of American drivers under 40 who’s owned a Buick. But the brand has been trending old for years and years, and it won’t do for GM to watch the Buick customer base die of old age.

Sure, they’re trying to change that.¹ And the brand has been going gangbusters in China.

But is that enough? Given GM’s troubles overall, shouldn’t Buick head straight to the chopping block?

Care to convince me otherwise?

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Photo by dave_7.

Credit: Jeremy Burgin.

Thanks to this post from ProBlogger,¹ I’ve been fiddling with Feedburner’s handling of the daily e-mails² that subscribers to this blog receive.³

So, if you’re an e-mail subscriber, feel free to let me know (a) if you like the minor stuff I’ve already changed, and (b) if you’d like me to change anything else.

Thank you for your continued custom.

~

Notes⁴:

Because I know you want even more of them. (Right? Right?) The delightful Erin Lindholm of Frost & Sullivan saw the SCIP presentation I gave this spring and then interviewed me to get more of my thoughts on how companies can use social media to harvest competitive intelligence. The fruits of our Q&A are available in this PDF document — here’s a teaser:

In the past, we had well-established communications channels that we understood pretty well — television, print media, et cetera. These might compare to chess pieces: the interactions between the pieces are highly complex, but you can learn the basic moves of the pieces in five minutes.

But what do we see today? Constant evolution of platforms, channels and styles of communications. It’s as though the different chess pieces are adding wrinkles to their moves every few turns, or having certain moves taken away from them. I think that this reality requires us to have a more fluid approach, which means staying open to the new channels that arise, and reexamining our basic assumptions regularly.

Please do give it a read and let me (and Erin) know what you think. Oh, and while you’re at it, you might like to look over the rest of Frost’s current eBulletin on Competitive Intelligence.

Not great times for the VC business, eh?

• Item: Venture Capital Fund-Raising Plunges In First Half (WSJ Venture Capital Dispatch)
• Texas venture capital funds raise zero (Dallas Morning News)

That being said, there will be good VCs (here’s one candidate, here’s another) who will come through this period stronger than ever. And, as I’ve suggested before, if the VC business collapses — and its own practitioners say that it’s “broken” — something new will rise in its place to fund innovation.

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Addendum, Thursday afternoon: You might also want to read this from the New York Times.

Venture Capitalists Look for a Return to the A B C’s

There will be “a ton of venture capitalists who disappear over the next 18 to 20 months, and it’s going to be painful for a while,” said Bryan Roberts, a partner at Venrock. “But the best thing that could have happened to V.C. is this economic crisis, because it’s lowering the flow of capital into these funds.”

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Please pardon me for quoting myself from the comments to last week’s post about how much businesses think about themselves:

The more I study business, the more I’m struck by how many errors of management or leadership boil down to an unwillingness to face things that are emotionally painful (strained personal relationships, coming to grips with past errors, etc.), rather than technically difficult.

For now, set aside the point about personal relationships, which mostly seems to affect individual manager-employee relationships.* Focus, instead, on “coming to grips with past errors.”

How many companies have been torpedoed because executives couldn’t swallow the bitter pill of sunk costs and then kill the projects that needed it? (GM, maybe?)

How many companies have run aground because an acquisition that never should have happened never did get digested properly — but wasn’t cut loose in time, either?

How often does a manager (or a board of directors) waste huge resources trying to justify a bad hire rather than recognizing it for what it is and fixing it?

How much wealth was destroyed because players in the financial / mortgage / real-estate world couldn’t admit that they were overexposed to bad loans?

Fact is, we don’t like being wrong, and — to quote my friend Liz Scherer, whose comment prompted my reply above — “Looking within, whether you are a business or an individual, is a painful process.”

What do you think? Does management get hung up more for technical reasons? Or for emotional ones?

Now that I think about it, this is something that I’ve written about before (in March 2008) at greater length:

• Cognitively complex? Or emotionally difficult? The germ of an idea.

But the questions seem as fresh as ever.

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* Okay, but as I think about it, one of those relationships was between Sandy Weill and Jamie Dimon at Citi. So sometimes they really are Big Management Issues.

The goal of vacation is to come back to your normal life with new eyes. I’ve been thinking about this today, since this was my first day back in the office after ten days spent with friends and family way up in the North Woods. My refreshed eyes have allowed me to see better what I’ve been aiming for — wittingly or unwittingly — with my existing work routines.

All the work you could do is like a big target.

There are many interesting things in that target’s outer rings. You could, for instance, start from this post, use the search box in the sidebar, and spend the next hour finding items worth reading just on this one blog. (I’m not making any special claims for quality, but with more than 1,100 posts here, you’re sure to find something you’d like in the archives.) But as much as I’d love for you to do that, it probably wouldn’t be the very best use of your working time.

The best uses of your time are right at the bullseye of the target. That’s the sweet spot for your job, your career, or your company — the stuff that makes you stand out.

You only have a few arrows in your quiver.

These are the hours of your day. By being very efficient, you might get a couple of extra arrows in a day, but not dozens more.

Given the limited supply of arrows, you’re best served to aim right at the center. For me, this means re-focusing my efforts around some simple-but-difficult guiding questions:

• What serves the customer most directly?
• What attracts new customers most directly?
• What builds the value of the enterprise most directly?
• What saves us money most directly?

I keep repeating “most directly” because it’s easy to do things that bear tangentially or indirectly on these questions . . . but these things live in the outer rings of the target.

This economy encourages focus.

As I talk with people — within our own walls, among our customers, in the business world at large — I hear over and over that this economy has focused lots of folks’ minds on what’s really important to their businesses. Even mediocre businesspeople are doing what the good ones do in all economic weather by re-evaluating all of their business activities for how close they are to the bullseye.

Improve your aim.

Recently my friend Dan Markovitz, who’s an expert on Toyota-style Lean management, asked “How Lean Is Your Own Behavior?” It’s one thing to set up processes and teams to instill Lean principles into an organization; it’s something else — something harder — to apply those same lessons to yourself.

Today was a day of applying those lessons for me, or maybe I should say it was a day of running smack into them. On a day like today — coming back to an overflowing inbox and RSS reader — it’s easy to see where tasks get tangled up in processes, and where processes bog down around particular tasks.

The hard part is making the changes that need making — old habits die hard — but in the end you get what you aim at.

With this day under my belt, and with the fresh perspective of 10 days of vacation, I can see better what I’ve been aiming at, and what I need to aim at instead.

Are you putting your arrows close to the center of the target?

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Photo by Joe Hagan, used under a Creative Commons license.

I’m back from vacation, I’m well-rested, and I have a tall hankerin’ for reader requests. (Hey, I’m from Texas — I can have a “tall hankerin’” if I want, right?)

So, if there’s a business topic of general interest about which you’d like me to opine, please tell me so by leaving a comment here, by tweeting your question to me, or by e-mailing me at

twalker {the symbol known as “at”} hoovers {a dot} com

I look forward to hearing your questions.

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Photo by Marcin Wichary, used under a Creative Commons license.