133. Your Reply to the 2020 “Crisis of Capitalism”

FIRST-WORLD EMPLOYEES ARE RESTLESS

The “Yellow Vest” protests in Europe echo the “We are the 99%” (Occupy Wall Street movement) – back in August ’11. Both are symptoms of declining, discretionary income for the bottom 95%+ of households (in first world economies). Buying homes and having kids in the US is unaffordable for the average Millennial. And, if you have any promising, young employees, are they job shopping?   

There are underlying causes for rising income inequality. But, politicians address symptoms. A recent Financial Times article covered: “the new worldview…for capitalism based on the watchwords of purpose, inclusion, and sustainability”.

For 2020 US elections, look for an alliance of politicians, academics, and regulators to be demagoguing a new ideal. Bernie Sanders’ economic fantasies – on steroids – will have more fans.  

YOUR EMPLOYEE-RETENTION OPTIONS?

Keep doing what you are doing. Quote Milton Friedman’s 1970 article: “The Social Responsibility of Business is to Increase its Profits”. Friedman’s advice is still good, but he was blind to subsequent discoveries. In 1970, no one knew that 60-80 percent of premium profits over competitors was due to “innovation”. Financial Management (assumptions and guidelines) ruled the day and still (regrettably) does too much!

What are the blind spots of:

  • Buy low
  • Sell high
  • Hire cheap, work hard
  • Cut costs (no fresh vision-strategies to invest in?)
  • Grow Sales with more feet on the street (reps) to get elusive economies of scale.

And, the corollaries like: “Any and all types of customers and margin dollars are good.” (Even though a big majority of customers, picks, and orders cost more to fulfill than the margin-dollar content?) 

Or, switch to all-win, Service-Value innovation! In the ‘80’s, “Quality is Free” (like “zero- errors and 100% on-time-delivery”) started to get traction. Service value innovators like Southwest Airlines, FedEx, and Costco invented what is now called the Service Value Chain. Shorthand: People, Service, Profitable Growth; all best stakeholders are won, rewarded, engaged, and retained.  

These innovators use Open-Book Management with gain-sharing to enable high-performance cultures. Everyone and all service processes improve. Coasters can’t hide. They either change or quit due to gainsharing peer-pressure.

ACTION STEPS?

Get fresh analytics, insights, strategies, innovation metrics, courage, and change-champion talent. If you haven’t acted upon both customer and SKU profitability analytics insights, do! How? It’s all in my free “Core Customer Renewal Roadmap” (bruce@merrifield.com).   

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