Ellison Chair in International Floriculture
Ellison Chair in International FloricultureTeaching, Research, Extension and Service

Leading at a Higher Level

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While “vacationing” this week [spring break], I happened across an article by Ken Blanchard in a periodical I had never heard of before called Success At Home, a magazine targeted at home-based businesses. In this article, Ken recounts leadership principles that I think are applicable to Green Industry firms that take a differentiation strategy serious. For example:

When you are leading at a higher level, you have a both/and philosophy. The development of people is of equal importance to performance. As a result, the focus of leading at a higher level is on long-term results and human satisfaction. Leading at a higher level, therefore, is a process.

Ken has found that in organizations where leading at a higher level is the rule rather than the exception, leaders do four things well.

They set their sights on the right target and vision. Great organizations focus on three bottom lines instead of just one. In addition to financial success, leaders at great organizations know that measuring their success with people—both customers and employees—is just as important as measuring the success of their financial bottom line.

They treat their customers right. To keep your customers today, you can’t be content just to satisfy them. Instead, you have to create raving fans—customers who are so excited about the way you treat them that they want to tell everyone about you.

They treat their people right. Without committed and empowered employees, you can never provide good service. You can’t treat your people poorly and expect them to treat your customers well.

They have the right kind of leadership. The most effective leaders realize that leadership is not about them and that they are only as good as the people they lead. These kinds of leaders seek to be serving leaders instead of self-serving leaders.

To read the complete article [which I highly recommend], click here!

Unhappy times are unhappy in their own way

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“Happy economic times are all alike; unhappy times are unhappy in their own way.”

A recent article by Ram Charan in Fortune Magazine (2/18/08) reiterated many of the points made in my earlier posts about NOT cutting back too drastically during economic downturns; especially in terms of marketing programs. Here are the highlights:

What makes the current economic downturn distinctively unhappy is the unprecedented confluence of three things. First, there was a Fed-induced housing bubble – too much cheap money for too long. Then there was the rampant use of exotic financial instruments, such as collateralized debt obligations, to disperse risk among people who didn’t understand it. Finally, the rating agencies failed to catch the poor quality of a great deal of highly rated debt. With lots of momentum – and faulty brakes – the financial system hit the skids.

Whether this turns into an official recession (two straight negative quarters) is immaterial: What matters is how their business is affected, segment by segment. But certain principles apply broadly:

Keep building. When the top line looks shaky and the bottom line worse, the temptation is to go after discretionary spending. Fine – but do not consider product development, innovation, and brand building optional. Sacrificing your future for a slightly more comfortable present is not worth it. If you keep building, you can come back strong.

Another area to build on is personnel. It may seem counter-intuitive to pay bonuses when profits are falling, but sometimes it’s the right thing to do, particularly if a specific unit is creaming the competition. Rewarding excellence – through new challenges, public recognition, and, yes, money – in bad times as well as good builds loyalty.

Communicate intensively. Get information from where the customer action is, and get it to the operating people – fast. Companies should do so routinely, of course. But they don’t. It’s counterintuitive but true that when the economy slows down, the pace of decision-making has to speed up, because you can’t put off the tough choices anymore. The companies that are readiest to act on solid information are primed to shoot ahead of the business cycle.

Communication needs to happen among teams in the company. In the hot summer of 1787, the Founding Fathers locked themselves into a room and wrote the entire Constitution in a matter of weeks. That’s not a bad model for a company under pressure. Fill a room with people from operations, service, marketing, and sales, and require them to hash out their expectations for the next eight quarters or so – what if demand goes down? if prices of key inputs go up? – and then to devise coordinated plans to meet them.

And keep it up, repeating the exercise every month. When the facts change, to paraphrase Keynes, so must your strategy. Research has shown that when people have thought through their reactions to high-stress scenarios – such as a disaster or being a victim
of a crime – they are much more likely to survive it. Ditto for business.

Evaluate your customers. In good times, companies manage the P&L; in bad times, cash and receivables matter more. Therefore, you need to identify your higher-risk, cash-poor customers. You could decide to simply not supply them anymore – that’s harsh but sometimes necessary.

Alternatively, and this helps build good relations, work out a way to keep going – for example, by helping finance purchases or supplying smaller quantities. The point is, a downturn is a very good time to do a quality check on your customers.

Just say no to across-the-board cuts. By all means cut costs if it makes sense to do so, but make sure there is purpose in how you do it. It may be useful to clean out the metaphorical attic – for example, by pruning your product line. The key: If you have to cut costs, don’t try to be fair about it. As I have said before, the world does not inflict pain evenly, and you have to deal with that reality.

Being on the downside of the business cycle is not much fun. That said, a slump can also be an opportunity if you use the sense of urgency to improve strategy, management, and discipline. In that sense, happy and unhappy times are alike: The companies that take charge and outcompete will win.

Profitability in a Maturing Marketplace

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There is little doubt that the green industry has been characterized with unprecedented growth, innovation, and change over the last couple of decades. Yes, the fact that the green industry in the United States represents $148 billion in economic impacts and almost 2 million jobs nationally is impressive. The fact that nursery and floral production still represents one of the fast growing sectors in agriculture means profitability in the industry has been evidenced otherwise such growth would not have occurred. However, slowing growth in demand tighter margins (along with other aforementioned factors) point to a maturing market. Survival in the next decade will require a progressive mindset and perhaps a willingness to strengthen existing or develop new core competencies (which may incur greater risk).

While the crystal ball may be somewhat fuzzy in terms of the growth and nature of consumer demand, there is little doubt that innovativeness will continue to be a requisite skill in ensuring the survivability and profitability of green industry firms in the future. As the new competitive character of green industry maturity begins to hit full force, any of several strategic moves can strengthen a green industry firms’ competitive position including pruning the product line, improving value chain efficiency, trimming costs, accelerating marketing and sales promotion efforts, and acquiring struggling competitors.

For more on this subject, click here.

Why you need a stategic business plan!

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This morning has been filled with the stories and helpful advice of Dr. Pete Johnson at the 2008 TNLA Management Workshop regarding the ins and outs of strategic business planning. Pete contends (and I agree) that many companies today roll their eyes when the mere words strategic plan are mentioned. However, there are some very important reasons as to why companies should engage in this process. Besides those mentioned in the previous post (regarding the economic state of our economy), here are a few more to consider:

  • It serves as a roadmap for your business – provides a basic sense of direction and helps maintain focus on business objectives.
  • It is necessary to obtain capital from investors and/or bankers – to determine true economic potential relative to risks involved.
  • It helps evaluate business structure alternatives – reality check to protect you from proceeding with an idea that doesn’t make good “business sense.”
  • It provides a benchmark to evaluate results of previous strategies.