Boiling Frogs

We’ve heard the story that if you drop a frog into a pot of boiling water, it will do everything in its power to leap out of the pot, whereas if you put the frog into a pot of room temperature water and slowly increase the heat, it will sit there contentedly and allow itself to be boiled to death.

Our expertise doesn’t involve frog boiling, by either approach, and we have no idea as to whether these facts are true or not, but the story is an excellent one. We use it to remind one another to pay attention to slow-moving trends that have important business implications. In this email newsletter, we’ll spotlight five such trends that have surfaced in many of the industries that we serve.

• Everyone is Retiring. In project after project, we’ve heard some version of that statement. “We’re losing so many key technical people that …”. “A huge fraction of our distributors are going through change, either selling out or passing the torch to the next generation.” Among the implications of this trend is that it will become increasingly important that technical support, from product documentation to ongoing training programs to more automation, be enhanced to avoid disruptions as expertise is lost and new individuals assume responsibility for critical elements of your value-added process.
• ‘e’ Stands for Expectations. It’s slightly hard to discuss ‘e’ business systems in a newsletter about slow-moving trends when it was barely a decade ago that we first heard of DotCom businesses. But in three recent projects in very diverse industries, the key message from customers to our clients involved the need for a significant improvement in their ‘e’ business systems. The message was that the bar is moving ever-higher in terms of the expectations of customers about the ‘e’ business systems of their suppliers. We can cite example after example of a focus on greater worker productivity as a 2011 priority. Much of this will come from improved business systems including virtualization, cloud computing, and better analytics, and if yours aren’t keeping up with the pace, now is the time to ramp things up.
• 81-19, 82-18, 83-17. One of our clients recently commented to us that “We’ve always known our business was 80-20, with 80% of our business linked to 20% of the customers. But every year, it’s creeping up, to 81-19, 82-18, 83-17.” We agree with his assessment and think it applies to many firms. A larger and larger percentage of the business at many firms is driven by a smaller number of large, key relationships. The CoDestiny concept we’ve emphasized is critical for firms facing this trend. Building a company-wide customer-facing culture is critical to position yourself for shared successes that reward your customers and your shareholders.
• The Rise of Raw Materials. Growth in large developing countries has brought to public attention the scramble to secure supplies of raw materials. Most prominent, due to its rapid growth, is China, which has recently threatened to cut off exports of essential rare earth minerals to Japan, has been buying a significant fraction of the gold produced in the world, and is buying up rights and developing mines across the world. Consequences of this trend will be dramatic, but slow to develop. Japan is launching major research efforts into developing new materials that substitute for those available only in China.
• Oh, Yeah. That Globalization Thing. The importance of global markets, competition, and innovation continues to grow, month by month, year by year. Most likely, the global share of your sales will increase once again in 2011. Some new countries like Indonesia, Peru, South Africa and the Ukraine made it onto the high-priority roster of firms with which we’ve been working on aspects of 2011 planning. We are seeing a new dynamic begin to emerge, in which developing countries, armed with their growing wealth, support their companies in the search for global success. Globalization is a slow-moving trend roughly the size of a large freight train.

We would appreciate getting an email from you describing other slow-moving trends that you think might influence business success in 2011 and beyond. We’ll share those that are suggested to us with the email newsletter audience in a future edition.