NASDAQ 6,000 and Your Business


 

Yesterday, the NASDAQ crossed the 6,000 mark, its first breakthrough "round number" since 2000 when the widely followed technology index reached 5,000 for the first time.

For sure, fueling the index's steep recent rise (up 17% since November 7th) has been the solid uptick in business confidence and enthusiasm since the election.  

But this is only a small part of the story. 

The rest of the story is told in the list of the world’s five most valuable companies, as in:

#1. Apple, approaching an all time high value yesterday of $758 billion and the most valuable company in the history of the world (wow). 

#2. Google, valued at $607 billion.

#3, Microsoft, at $596 billion.

#4. Amazon, at $434 billion. 

#5. Facebook, at $425 billion.

Looking at these famous names and these astronomical numbers, our first thought often can be great for them, but what does it have to do with me and my business

Or with the other 99.99% of businesses without the vast financial resources, global brands, and treasure troves of intellectual property like these tech behemoths?

How about everything?

For today and evermore. 

Because, in this NASDAQ 6,000 world of ours, we are all either technology businesses...

...or we are nothing at all.

Because if we can’t face and overcome the intense and business fatal threat of technological obsolescence...

...of machines and code allowing these tech. giants and their ilk, or businesses of a similar size to our own, but nimbler and more innovative... 

...to do the work we do for our clients better, faster, and cheaper that we can with our legacy systems and processes...

...then irreversible business decline is our certain fate.

Now, of course it is not all clouds and rain.

NASDAQ 6,000 also shows us that the counter is true too - that as we do technology right there are billions and trillions of dollars out there and ours for the taking.

Unfortunately, here is where too many of us get stuck.

In spite of dawn-to-dusk work ethics...

In spite of lifetimes of impressive academic and professional achievement...

In spite of deep training and vast real world problem solving experience in our chosen fields, industries and markets...

We don’t think we can do it.

That tech. is "over our head".

Or even worse that our only choice is to hire outsiders to do it for us.

The dreaded "IT guys."

Or, the tattooed, nose-ringed millennial that "knows social media."

Or the overseas firms that will build for us "this stuff" on the cheap.

Sure, these business types all have their value - in my business we work at least one of each of the above.

But if we want to - as the Big Boys do - capture the value for ourselves - as the Big Boys do - we can’t outsource it.

We have to be the technologists. 

All of us - in every business.

Yes I know, it is a long and hard road to build a technologically impressive company.

But the first step is to understand the “Innovate or Die” nature of the challenge.

That should get us out of our bed early to get after it.

And all of the money to be made in a NASDAQ 6,000 world should keep us there. 

To Schedule a complimentary consultation as to your company's technology and innovation strategy Click here.
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The Fall of American Retail: Don’t Let This Happen to Your Business


 

The retail industry's woes have crossed the tipping point...

Already in 2017, we’ve seen these store closing announcements:

JCPenney (138 stores to be shuttered), Radio Shack (552 stores), Payless Shoes (400 stores), Macy's (68 stores), Sears and Kmart (150 stores), The Limited (250 stores), American Apparel (110 stores), BCBG (120 stores), and Staples (70 stores).

This amounts to more than 89,000 retail workers being laid off since October, with sadly many more to come.

The root cause is obvious - the unassailable competitive pressures brought on by the cost, convenience, and customization advantages of e-commerce that builds every passing year (more than $40 billion / year in online cannibalization of retails sales every year since 2013) and now probably has reached the point of no return.

Now let's put aside the cultural implications of a world of hollowed out shopping malls, boarded up down towns, job dislocation and the poignant shift from an in-person commerce model in place since the start of recorded history to us all sitting alone in our underwear and just pressing “click."

Let's put it aside because as business people our jobs are not to engage in wistful sentimentalities, but rather to address economic conditions and technological realities as they are and will be and not as perhaps we would like them to be...

...and plan and act accordingly.

And so the next time we walk by a shuttered store front - especially one of a retailer where perhaps in our youth was a particularly special place (for me it was Radio Shack) it is ok to be sad for a moment but then we must transition quickly to the passionate and even angry feeling that "This will not happen to me and my business!"

That NO our businesses will not be reduced to a statistic, to a misty water-colored memory

Instead, we will learn from the causes of the fall of traditional retail and not do those things. As in:

  • Not get into a position where legacy, high cost structures make it impossible to realistically compete with leaner, more efficient rivals. And if we are in a high cost position now, we will unwind those costs immediately because if we don't do it for ourselves, our customers flocking to lower cost providers will very painfully do it for us.
  • Not think our brands and reputations, no matter how old and sturdy they might be, will save us. Yes, it can be helpful in a trust challenged Internet world to have a known brand and sturdy reputation, but the former can quickly turn to a stodgy liability and the latter can fall apart in an instant (see Airlines, United).
  • And just not think that the particular business model we have now is going to last forever because it won't.

So if the writing on the business wall is such that your particular way of doing things is firmly in the cross hairs of the modern technological onslaught, then sometimes the most honorable and profitable (or loss mitigating) thing to do is to accept your business model as it stands now is truly doomed...

...and either radically change it or shut it down and do something else.

Now, the good news is that in the long run it is far easier to win at something that is aligned with modern progress than to fight to keep alive for “just another day” a flawed and anachronistic business model.

So no matter how stuck or old or frustrated we might be, we just gotta believe that a new and better business thing is right around the corner and is ours for the taking...

...because this is the only right kind of sentimentality for our technological age.

Need Help with Your Innovation and Growth Plan? Click here to schedule a complimentary consultation.
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Tesla Worth More than GM? Why You and Your Business Should Care


 

Earlier this week Tesla became America's most valuable car maker, with a market capitalization at Monday’s close of $50.9 billion, surpassing that of General Motors for the first time.

Last year, Tesla sold 72,285 cars, with revenues totaling $7 billion, and in so doing accrued $674 million in losses.

In that same time General Motors sold 10 million cars, with revenues totaling $166 billion and in so doing made $9.4 billion in profits.

So many found it interesting that sophisticated investors and market observers decided that Tesla was a more valuable company than GM.

But few found it surprising.  Here’s why:

Tesla is led by Elon Musk, one of the most iconic and admired entrepreneurs of the past 50 years. A business leader who has driven fundamental change in two of humankind’s most fundamental technologies - ground and air (through his other company SpaceX) transport.

General Motors is led by Mary Barra, a 37 year veteran insider of GM’s notoriously ponderous bureaucracy.

Tesla's brand, even after just a few short years in business, ranks alongside Porsche, Mercedes, and BMW as one of the most valuable in the world, and its Model S was famously rated as “the best car Consumer Reports had ever tested,” with a perfect 100 score.

And yes Tesla is young (founded 2003) and General Motors is old (founded 1908).

While GM’s age offers some advantages - consumer trust and loyalty, institutional knowledge, assets acquired long ago at low cost basis - these advantages are outweighed by the burdens of age - legacy cost structures, cumbersome decision making, and the challenge of attracting and retaining change and innovation-focused talent to an older organization.

Contrastingly, Tesla’s youth, on balance, is a great advantage.

 What it may lack in organizational maturity and depth of industry talent, it more than makes up for in the "Tabula Rasa" benefits of being organizationally new - simplicity and the ability to more easily put into use the best and newest "business things" - technologies, work processes, culture, etc.

What all this adds up to is in spite of General Motors by any traditional measure being a far weightier company than Tesla, investors believe that as the years roll on Tesla will be the more impactful one and the one with the far brighter future

The future.

In all of the most meaningful and important ways, it is these future prospects that most fundamentally drive business value.

Let us learn from this “Tesla versus GM” comparison and do everything we can to ensure our company’s strategies and tactics are focused more on what might and will happen in our industries and markets as technologies and buyer preferences evolve and far less in what has had and is happening.

Here is an easy shorthand to do so - just ask yourself “What would Tesla do?”

And perhaps even “What would General Motors do?"

The answers that come back will be surprisingly accurate as to what the future forward business decision should and should not be.

Ask and answer this question correctly enough times, and before you know it your company too might be valued as Tesla is...

...on its future prospects and not its past results.

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Times Are Good, What is Your Business Doing About It?


 

Try these latest measures of business and consumer confidence:

  • Last week, the National Association of Manufacturers released its Manufacturer’s’ Outlook Survey, showing 93 percent of manufacturers feel positive about their economic outlook. This is the highest in the survey’s 20-year history, up from 56.6 percent one year ago and 77.8 percent in December.
  • A report released by the Pew Research Center on Tuesday showed that 58 percent of Americans say that the current economic situation in the country is either “very good or somewhat good,” up from 44% a year ago, the largest one year improvement in the survey’s history, and the most positive assessment of economic conditions since 2007.
  • Gallup’s US Economic Confidence Index, which measures whether Americans feel the economy is improving or getting worse, has remained positive for 20 straight weeks, the longest positive streak since Gallup began tracking the measure in 2008.
  • The Conference Board’s Consumer Confidence Survey increased sharply in March to its highest level since December 2000, with “Consumers expressing much greater optimism regarding the short-term outlook for business, jobs and personal income prospects.”

I'm less interested in the reasons why (political and otherwise) these numbers are so rosy as I am as to how businesses of all types of sizes can benefit because of them.

On this April 5th, here are three of my favorites:

#3. Be a Bearer of Good News. At some point, in large swaths of American Society it stopped being "cool" to outwardly express optimism and confidence in both the economy as a whole, and in one's own business in particular.

To heck with that!

Great business leaders are almost always great business cheerleaders.

A habit I love is to start every business conversation with both concrete statistics and heartfelt enthusiasm as to the unique and sustainable opportunities allowed by current economic conditions.

Tone setting like this is always beneficial, but is especially so now because of all of the political noise that too often spills into business conversation.

The sweet spot here is to pull the business positives from the present political landscape, tax and regulatory reform being at the top of the list, and to offer no opinion on anything else (which, in our role as business people is almost always ineffective to comment upon).

#2. Get Granular. Once our “there are windfalls to be had” point of view is out there, then our focus should turn to the “micro-specifics” of delivering to our customers higher quality at a lower cost so to actually earn these windfalls for ourselves.

Delivering higher quality requires examining our products and services under a harsh and microscopic light and asking - “Do they really deliver “wow” experiences and outcomes?

For far too many businesses, the unfortunate answer is either "not really" or that maybe they once did but have become sadly outdated as technology and more innovative competitors have passed them by.

And then doing something about it.

As in tearing our products and services down to their studs and rebuilding them in line with updated technology and evolving customer needs and demands.

And then let’s use that same microscope on the business cost side -  ruthlessly looking at all of our processes and personnel and finding the fat and waste and inefficiency and just cutting, cutting, cutting, and optimizing, optimizing, optimizing.

Attacking one of the two sides of the “higher quality / lower cost” business coin will yield good results.

Attacking them both, rapidly, in these great markets well...

...you just may need a wheelbarrow for all the money you'll be making. :)

#1. Run Free. When we combine the stance and mindsets of optimism and confidence with the hard, granular work of products, service and business process improvement...

...from this inspired and healthier base, we can let our entrepreneurial, creative, and innovative business minds and spirits run free.

Run free in how we market, how we sell, how we deliver.

In how we build and sustain a vibrant company culture and team.

And run free in the expanse of possibility and accomplishment we dream for ourselves and our businesses.

Not pollyanna dreams, but dreams grounded in the opportunities of today's markets, and dreams possible because we're willing and eager to do the hard, daily work of continuous, business improvement.

And always with a smile and a skip in our step.

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Is Your Business One of the Chosen Few?


 

Is your business healthy and interesting enough to attract an investor and / or buyer to take a “leap of faith" on it?

As in funding / buying it at a price well beyond what its historic “proof” - customers, revenues, cash flows - might reasonably justify?

The hard reality, for most businesses, is that this is just never going to happen.

The equally hard reality is that, again for most businesses, that this is an unfixable problem. Unfixable for reasons including:

  • Lack of scalability to their business models (see most, but by no means all service businesses) or non-existent / de minimis brands, intellectual property, trade secrets, etc.
  • They compete in industries in long-term decline, usually because of technology advances (see retail, newspapers, commercial printing, desktop computing, cable television, et al.).
  • And my overlooked favorite, their management lacks the “right stuff” - talent, training, work ethic - to ever fix the business problems "of consequence."

Now, I'll get to some options for unfixable businesses in a moment.  

But let’s first look at the other side, those “chosen few” companies that opposed to being unfixable have the wind at their backs and oysters at their feet!

These businesses have the "good stuff" going on - growing revenues, healthy margins, next gen technology, cool brands, charismatic leadership - and their main stress is just to decide which of the plentiful, high potential opportunities to pursue.

For these businesses, there are investors and buyers everywhere that are excited to take big leaps of faith and offer them money to grow and / or sell.

And as I talked about on my “Maximizing Business Value in the Trump Economy” webinar last week, with business and consumer confidence soaring now is one of the best times ever to reach out to them. 

With that happy aside, what are those folks at businesses that just feel “unfixable” to do?

Well, the cold truth is that they most likely need to either:

1.  Try to sell themselves to a “strategic” buyer - someone to come in and either a) replace tired management with new blood and / or b) exploit “synergies” such as combining a business with strong marketing with one with great products / services or finding efficiencies through reducing redundancies, admin, etc.

2.  Just accept that the business just can’t be sold
nor fundamentally grown. And then like heck work to just suck as much money out of it as possible before its inevitable demise.

And oh, if there is just not enough money in that unfixable business to make it worth it to keep doing at all?

Well then let's shut it down, cry in our soup for perhaps even more than a little bit, and then move on to that next bigger and far better thing.

So if you are one of the chosen ones, or very much believe that you might be, then go for it full force.

And do so now when conditions are hot like this. Investors and buyers are wanting and waiting to take that chance and leap of faith!

And if you’re not, that is ok too.

Because yes in this 21st Century World of ours, there are a million ways to go.

One of those ways might be to sell the business, another to run it as absolutely best you can as profitably as you can. 

It is just always very good to know what you are - and what you're not.

And to then plan accordingly.

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Maximizing Business Value in the "Trump Economy" [Recorded Webinar]


 

Since Election Day, the stock market has risen more than 15%, and business confidence has reached its highest level in 9 years.

This exuberance was on full display earlier this month with the Snap IPO, both the first big tech IPO of 2017 and one that performed above even its most optimistic expectations, with a market valuation at today’s market close north of $24 billion.

For a company with less than $500 million in revenues, and that last year lost $47 million.  

Remarkable on one level, but when viewed through the wider lenses of the bullish outlook for the economy and the “it just goes on and on” low interest rate environment, not entirely surprising.

 While frothy conditions like these have characterized past markets, the dynamics of this "Trump Rally" just feel different.

Let’s start with the dynamic of tone.

Quite simply, when the highest profile person in the world's economy - the U.S. president - is in so many ways a pure “promoter personality,” that this quality of “hype and sizzle” is only naturally more rewarded and expected.

For executives seeking to launch new products, raise capital, and / or to sell their companies at a high valuation, this does not mean just “blowing hot air” is an effective strategy but...

...it does mean that if ever there was a time where talking through the more “optimistic scenarios” as to our business forecasts is both okay and to be expected, then that time is certainly now.

The next dynamic is political.  

With Republicans in control of most levers of the Federal Government, big policy changes affecting huge swaths of the U.S. economy are potentially coming - to health care, taxes, regulations, infrastructure, trade, immigration, and more.

Whatever your political opinions are of these changes, they are on the minds of business and investment decision-makers everywhere.

And so we all need a plan as to how to react and profit from them.

A third dynamic not entirely unique to this rally, but always characteristic of bull markets is the heightened value placed on speed and velocity.

In this context, a long time Silicon Valley venture capital colleague of mine shared with me his views on a low revenue, no profit but $2 billion+ valuation company in which his firm was invested.

He said he and his partners felt at least 25% of that valuation - or $500 million dollars - was driven solely by the charismatic and “velocity-focused” leadership of that company’s CEO and founder.

Yes, investors were willing pay a half billion dollar premium for a leader capable of driving fast business action and results.

These are both strange and uniquely encouraging times and markets.

The future remains uncertain, but for now the guidance is to bake speed, political awareness, and perhaps even more than a bit of hype into your business model and presentation...
...and watch both your business results and its value soar.

P.S. Recorded Webinar: Five Steps to Maximize Your Valuation in the "Trump Economy"

Please follow this link for a recorded video webinar - Five Steps to Maximize Your Valuation in the "Trump Economy" - where I discuss the 5 steps you can take to dramatically increase the sale price of your business, and dramatically decrease the time needed to achieve it, including:

  • How to tailor your business value and sale story specifically for the unique conditions of the Trump Economy.
  • The 3 Mistakes that most Entrepreneurs and Executives make that effectively render their businesses unsellable
  • The 5 things that all businesses that sell for high valuations have and do
  • A simple formula to determine how much your business could be worth if you execute the right plan

Webinar Recording

To listen to the recorded webinar, follow the below link:  

https://attendee.gotowebinar.com/register/6422083971613896449 

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Mr. Aravinda Korala on ATMs, FinTech, Mobile and More [Recorded Video Conference]


 

On this recorded video conference, Mr. Aravinda Korala, Founder and Chief Executive Officer of KAL Software, joins us for the March edition of our Growthink Innovators video conference series.

Mr. Korala started his company in 1989, and has built KAL into the world’s largest independent supplier of Automated Teller Machine (ATM) software, with installations in more than 80 countries and over 300,000 ATMs worldwide. Marquee clients include Citibank, ING, UniCredit, and China Construction Bank.

Along the way, Aravinda has truly travelled the world, averaging more than 40 weeks per year of international travel, visiting with banks and financial industry technology providers around the globe.

From this lifetime of experience and relationships, Aravinda has developed deep wisdom as to what is real and what is hype when it comes to banking and financial industry disruption brought on by the FinTech revolution.

A Conversation Not to be Missed!

On the recorded video conference Aravinda and I discuss:  

  • The transformations that will shape the bank branch of the future 
  • The role of the ATM and other types of self-service machines in the future delivery of financial transactions.  
  • How can banks’ IT departments can preserve their flexibility and protect their budgets as their hardware and software vendor(s) scramble to adjust to the various and significant FinTech industry disruption and changes
  • And much, much more!

Who is This For?

This Innovator Series conversation is designed for:

  • Entrepreneurs and executives looking to learn from someone who has truly done it - built a great, global company from scratch and from a lifetime of high intensity, high integrity effort
  • Banking professionals (both in business and technical roles), with a vested stake in the fast-changing financial technology landscape.
  • Anyone just curious about how consumers and banks will be impacted by the projected $150 billion investment into new financial technologies over the next 3-5 years.
To view the video conference recording, click the link below:

https://attendee.gotowebinar.com/register/2633180096350683394

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What Do Top Athletes and Top Executives Have in Common?


 

Businesspeople, of course, love sports. This is evident in so many ways.

From the vast sums spent by companies on sports advertising, sponsorships, luxury suites, etc., and more to the point from the common sayings and cliches of both worlds.

These range from the classic sales axioms - "take your swings," "get the deal across the end zone," "this one is a Hail Mary," to the universal pleas of coaches and managers "to be a team player," "support each other", and my eternal favorite to “bring your A-game.”

The sayings might be trite, but the mindsets and daily actions of top athletes and top executives are
very similar.

It starts with sports at its most fundamental - keeping score and at the end of the game having a winner and a loser.

Top executives lead from a similar “no excuses” frame.

Top marketers know their prospects either filled out the “Contact Us” form or they didn’t.

For top salespeople, their prospects either bought or they didn’t.

Top managers have either happy, productive employees, or they don't.

And the companies that top CEOs lead are either growing and profitable, or are shrinking and losing money.

And just like with top athletes, it is all on them and them alone.  

The flip side of this tough love “win or lose and there is no in between” frame is how "tabula rasa" sports naturally are.

The best athletes always focus on the next game.

They don’t rest on past glories and accomplishments nor catastrophize the "damning effect" of past losses and setbacks.

Famed coach Bill Belichick is a great example in this regard.

Before he won five Super Bowls with the New England Patriots, his record in his first head coaching job with the Cleveland Browns was a middling 36-44.

Yes, it is nice to have a track record of business success, and for sure it is discouraging to have one of failure.
 

But...top executives know that the true value of their enterprises is based solely on its intended plan of accomplishment - and its probability of achieving that plan- in the months, quarters, and years to come.

And then my favorite, and hardest, lesson from sports for business is how much top executives can learn from the life choices of the very best and most successful athletes.

The very best athletes - the Olympic Gold Medalists, the Masters Champions, the Super Bowl Winning Quarterbacks - define and value themselves through their sporting accomplishments.

For the very best, it is far more than a game.

It is a burning desire to win that runs as deep and hard as desire can.

And from that desire flow a whole series of life choices and disciplines.

What to eat, what to drink.

When to sleep, when to rise.

Who to have as trainers, advisors, coaches.

All of these life and professional decisions and more are guided by the simple goals of winning, of striving to win, of being the best.

Now, does being a peak performing executive require the same kind of monomaniacal focus and discipline?

Yes it does.

The negative of this is that it is a lot of work and sacrifice.

The positive is that for the executives at the top of their profession, and for those striving hard to get there, their work is truly a labor of love.

And the sweetness and joy and satisfaction they feel when it all comes together and their businesses just take off and prosper....

....makes it so much worth it!

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It's March 1st, Five Ways to Profit from Today's Frothy Markets


 

Today the Dow Jones Industrial Average closed at 21,068, up 15% since Election Day, with since that time more than $3 trillion in new investment wealth having been created.

This rally has been both deep and consistent, with almost all market sectors participating, and with market volatility levels at their lowest level in 34 years.

What is driving the rally is the hope that the aspects of the new administration's policies that are clearly pro-business, namely tax, regulatory, healthcare reform and infrastructure investment, will outweigh those that potentially are not - trade and immigration.

Whatever the long-term might hold, and let us always remember legendary economist John Manynard Keynes’ dictum that "In the long run, we are all dead," at this moment the “animal spirits” of capitalism are at a
very juicy high water mark.

So the smart and ambitious executive feels and knows that now is the time to just get after it.

So, on this March 1st, with all of the exuberance and confidence in the business air, here are five ways to take advantage:

#5. Sell Your Company. Rising public markets, with big companies flush with fresh equity and thus able to more assertively pursue growth-by-acquisition strategies, creates a virtuous trickle-down effect on valuations and business sale probabilities for even the smallest of firms.

Primarily, the acquisition targets of the public market big boys are mid-sized businesses - $100 million to $1 billion in transaction value.

These mid-sized companies in turn look to, via acquisition as well, improve their strategic profile and growth rate through seeking buyout targets with enterprise values of less than $100 million.

Both observing and participating in this uptick in buyer demand are private equity firms - sensing a shorter time frames to exits for their portfolio companies.

For sellers, the natural result of all of this buyer confidence and urgency is better pricing and faster closings.

These conditions won’t last forever of course, but right now is about as perfect a business sale climate as we have seen felt since the 1990s.

#4. Prepare to Sell. The above is all well and good, but the significant majority of companies are just too small and financially unimpressive to even consider being sold.

If your business falls into this category, then instead focus on preparing to sell through researching and then emulating the attributes of the more successful businesses in your market.

Even if this research yields just the “obvious” insights - i.e. that my business needs to make more money, have more predictable revenue, have a better brand, etc. - simply taking the time to make the comparison is almost always illuminating and actionable.

#3. Ask Yourself What is Wrong. Talented executives are usually well aware of what they need to do to grow their businesses to attain their strategic and financial goals.

But they just can't seem to get it done.

Their classic bugaboos have been the same since time immemorial - clients not buying as much, or as easily, or at as high a price.

And / or employees not performing well enough, or the better ones not sticking around long enough.

How about instead of blaming stalling growth on problem customers and employees we place it where it squarely belongs?

On the shoulders of our leadership.

The best executives, when they see that their prospects and the customers are the wrong ones, they pivot and instead pursue, secure, and service the right ones.

If their employees aren't performing as they should, they either fire them or usually far better identify and improve those aspects of their business culture holding everyone back.

Yes, let’s channel Harry Truman and
always have the buck only stop with us.

#2. Learn More, Complain Less. Whether one agrees or with the policies of the new administration, or finds irksome the personality of the new President, the incessantly negative and gossiping media coverage about it is mostly pointless and usually depressing.

Let’s instead listen to Bill Belichick, the most winningest coach in football history and “Do Our Jobs.”

Let's tune out all of the toxic noise and instead invest our “media time” in learning how to do more of what we as executives and business owners should always focus on above else - growing the sales, profits, and value of our companies. 

#1. Speed Everything Up. No one knows how long the current market rally and big leap in business confidence will last.

But it will come to an end.

And instead of riding this upward wave, we will be dragged down by a declining and fear filled market.

So while the going is good, let’s act.

Let’s write that business plan. Launch that new sales campaign.

Make that new hire. Invest in that new product.

Do so with care and preparation and precision for sure, but absolutely don’t wait for things to be perfect before you do so.

We are in arguably historically good markets.

Shame on us all if we don't fully take advantage.

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What Do You and Elon Musk Have in Common?


 

This past week, I had a pair of experiences that painted in inspirational relief the power of innovation to change the world for the better.

The first was first reading the cover article of the most recent issue of BloombergBusinessWeek, featuring Tesla's and SpaceX's founder Elon Musk and his new "Boring Company, " and then traveling to SpaceX’s headquarters just a short drive from my Los Angeles office to see for myself what all of the hubbub was about

The Boring Company is Musk's and fanciful idea to build giant tunnels under the congested freeways of Southern California.

Musk and his team have already started digging, along with calculating the reduction in tunnel cost per mile, currently at $1 billion / mile(!), to make the economics of the project work.

This, like Tesla and SpaceX, is innovation on the grandest and most inspirational scale.

My second experience last week was one of innovation on a smaller and yes much more “boring” scale.

Through my firm’s advisory practice we are in the process of developing a business and marketing plan for a team of executives with a lifetime of experience in reducing workers’ compensation costs in high injury prone environments like large construction projects.

Sadly, for many of these projecs and work environments injury and workers compensation costs amount to as much as 12% of the total project cost.

This statistic is probably not surprising to any business person with first hand experience of workers' comp, especially in ”pro-labor” states like New York and California.

At the heart of the problem is the adversarial relationship that has traditionally existed between management, labor, and the insurance company before, at and after when a worker gets injured.

Our client's key innovation is to "flip" this traditionally adversarial dynamic to one of partnership and collaboration.

While the details about how they do it are confidential, suffice to say they are able to effect workers’ comp savings of as much as 80%!

The “aha” connection I immediately made was that it was the smaller, "boring" innovations like workers’ comp reform that make possible the larger, headline - making ones like Elon Musk’s giant tunnels.

Yes, we all need the Elon Musk’s of the world to dream and make happen very big ideas like the Boring Company...

But just as much so Elon Musk needs the smaller process and relational innovations to make his big ideas economically feasible and possible.

Very importantly, for the vast majority of businesses and entrepreneurs, it is almost exclusively through these “smaller” innovations where real money can be made.

This simple fact is more true today than ever, as the modern economy is so dominated by a relatively few number of societal-changing giant technology companies like Apple, Samsung, Amazon, Google, Facebook, Uber, Tesla, SpaceX, et al.

Odds are very long that any of our businesses will grow to their size and impact but...

...if we plan and act right, odds are very short that we can devise, build, and market new business models that thrive off of their big innovations.

So hopefully, the next time you are driving in Southern California, rather than crawling along on one of the region's painfully congested freeways, you are instead whisking to your destination through a safe and state-of-the art giant transportation tunnel.

I hope you do so with a big smile on your face, both from awe and excitement for this new mode of transport.

And because you had made your business thrive by finding and pursuing opportunities that handsomely profited from the big changes and innovations around us always.

No matter how small and boring they might seem.

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