Life Lessons from the Indy 500

I had the chance to go to the Indy 500 over the weekend. Exciting race, perfect weather and the true highlight of the Memorial Day weekend. Since the race, I've been reflecting on some of the parallels that I see between this years race and life in general. I'm listing some of these below:

• It's tougher than ever to get in the race. There used to be a considerable difference in the qualifying speeds between the fastest car and the slowest. This year there was only 3 mph separating them... That sounds a lot like the people and companies that I work with on a regular basis. What used to provide you with a strong competitive edge merely gets you "in the game" these days. What are you doing to stand out from the crowd? Being the "best" at a traditional measure may not produce the results it once did.
  
• Performance across the field is at an all-time high. 19 cars finished the race on the lead lap, a new track record. It wasn't that long ago that 1/3 of the field would drop out due to mechanical "failure" of some sort in the first half of the race. It seems to be a given that a car can now race for 500 miles unless an accident takes it out of the field... Are your customer expectations any different? We used to think that a car with 100k miles was on it's last leg. New cars today don't even require service until then. What used to be an acceptable level of failure, will now turn a consumer to a whole new brand.
  

• A few big names (Helio & Danica) provided most of the exposure and the profitability... How "real-world" is that? You may provide a dozen high-value products or services, but the odds are your consumers associate only one or two with your brand. Are you taking proper care of those to ensure their longevity?
• Mario Moraes crashed on the first lap, and yet earned more prize money than Paul Tracy who finished the race on the lead lap... It's not always the traditional measures in life that drive our rewards. Being faster or working harder may not guarantee that we "win" more than others. Sometimes it's about being in the right place at the right time, or making the right networking connection. It could be about being the better negotiator early on. At a minimum, it's about being aware of the bonuses that life offers us along the journey.

Transitions

I went to my oldest son's graduation at Purdue over the weekend. It's hard to believe that he is already finished with college and is ready to enter his next phase of life. At the ceremony there were no protests, no alternate venues or controversy of any kind. But there was a lot of talk of near term discouragement. Over and over we heard that this was the toughest climate for new graduates to enter the job market since the Great Depression. I have no ideas of percentages, but none of my son's friends have been able to secure jobs as of yet. When companies have the choice of hiring new graduates or people that are currently out of work with 5-7 years experience, why would they choose the "newbie"?

As a dad, I'm trying to encourage him to take a long-term perspective and realize the current economy will not stay so dismal forever. And yet, he's facing the same reality that many companies (including my own Insight2) is facing, in that he has to somehow survive the near term to be there in the long term.

Something we're both learning in this interim phase is the importance of taking a non-traditional approach to the future. He went through numerous university sponsored interviews, taking many of them to the second and third levels. But ultimately to no success. Likewise, I've found that the way I've used to sell business is not effective in this climate. Now that he is out of school, I've been pointing him toward my network trying to surface opportunities. In just a week, I've been able to get him as many interested interviews as he was able to get through the university in a semester. From a business standpoint, I can't sell what I've been selling in the way it used to work. I'm having to really open my eyes to new networks to see where the opportunities lie. And I'm having to adjust what I sell to meet the needs of my new clientele.

This is a tough transition for my son. It's been a tough transition for many US companies. But those that survive it will come out of it with a whole new perspective, a leaner approach and a true appreciation for innovative approaches to doing business... or to finding jobs.

How do you define your business?

Are you in the "plastics business"? Perhaps you say that you make small appliances, or fishing tackle, or gas grills... Most people describe their business by either the technology they specialize in or the end products that they produce. That's not an inherently bad thing, but it can limit your growth, especially if your consumers don't operate by the same definitions.

Let's say for example that you make aluminum shelving. Your expertise revolves around the forming, shaping and packaging of aluminum shelving systems. You sell your products through big-box retailers and consider your competition to be low-cost imported aluminum shelving.

But how do consumers define your business? Realistically, they're not looking for shelving specifically, but rather a solution for organization. Specifically they are buying an "organized closet" or a "neat garage". When they go to the store, they are probably not pre-disposed to aluminum shelving at all. They look at wire, wood and plastic alternatives, then move beyond shelving altogether. Cabinets, peg-boards, tubs and wall-mounted rail solutions all come into play.

Every one of these products is vying for that consumers dollar, and they will ultimately decide which variation will provide them with the best option for their specific need. By definition, the aluminum shelving company plays into a very small sub-set of the consumer's consideration. No matter how "innovative" they try to be with their shelving they may or not ever intrigue the decision maker when it comes to a purchase decision.

Fast forward and assume this same company redefines themselves as a provider of home organization solutions. The world of opportunity literally opens up before them. Now they can learn what the real needs of their consumer are, and develop new products accordingly. While they will still wear the lens of aluminum forming core competency, they can look beyond that in terms of areas they can explore.

Don't let your definition of your company limit the possibility of your future.

Are "Big-Box" Retailers Killing Innovation?

I just got back from the National Hardware Show in Las Vegas where I was able to meet with several associates from different companies. One resounding and discouraging theme that I heard all centered around their absolute dependence on big box retailers such as Wal-Mart, Lowes and Home Depot. They all spoke of great product ideas that they had developed, but were not going forward with because they could not sell them in to these behemoths. The buyers are not interested in taking chances on "unproven" products or in expanding beyond their comfort zones. One of my associates used to work for a heating company. He told me that in the five years he was there, he went through 6 buyers. No single buyer ever lasted through an entire heating season. In other words, they were never around to be held accountable for the items that they agreed to put in their stores. He described these buyers as "ultra-conservative, MBA bean counters with a very short term focus". No one with this mind set is going to be willing to take a chance on "unproven innovation". They only want to force ongoing cost reductions as they focus on their internal margins. If a buyer is only going to be in a job for a short time, what incentive is there to take any risk?

Things have not always been this way. There was a time when I worked for Whirlpool Corp and was the product manager for Kenmore refrigerators. In those days, the appliance buyer at Sears was like a King. Once a person made it to that level, he was there for quite some time, until a larger category opened, or they left the company to go onto greener pastures. The buyer carried a lot of weight; one of the most important aspects they looked for was unique innovation. We would often include the buyer throughout the product development process, so they could appreciate the needs of the consumer, and recognize the value of the features that we placed on their products. They would work with us on merchandising and placement as we all had a vested interest in the product's success. As time went on, relationships grew and trust was strengthened. They were more willing to share in the risks with us as we ventured into new product spaces.

The companies that I was visiting with have been forced to cost reduce themselves to the point that they now only focus on the big box retailer. They no longer have the means to support distribution to the type of independent shops that would love a unique product offering.

It's truly a shame in my opinion. I saw several great ideas (behind closed doors at the show) that will not make it to market. And for everyone I saw, I heard of two more that fall into the same category. Many of these were products that I would personally love to own (or at least have the opportunity to buy). But I will never have the chance to. What has become of our enterprising culture of innovation? I love to save money just like the next guy, but you know what? When I'm not shopping for commodities, I'm going to start shopping at independent retailers. The ones that might be looking out for my best interests (as a consumer) instead of shear volume and short term profitability.