Tag: Alec Pendleton

A lot can change in 10 years

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changing technology and how we do business

 

(Courtesy of Guest Blogger Alec Pendleton, Big Ideas for Small Companies, powered by The MPI Group)

The iPhone was introduced 10 years ago, in 2007—or MMVII, as the Romans would have said. In celebration of that anniversary, Apple has just introduced its latest model, the X—or 10, as we would write it. While pondering this milestone, I realized that 10 years ago, I had no clue that the iPhone was coming, and once it did, I didn’t even begin to understand its implications. And not just the iPhone — but the hundreds of other changes that have transformed both the way we operate our businesses and how we live.

In 2007, Amazon was mostly in the book business and had just introduced the Kindle. Twitter was in its infancy. Airbnb didn’t exist. Tesla made a quirky little sports car. Facebook had about 100,000 business pages. Newspapers were profitable (well, sort of). I had a camera! If I wanted to deposit a check, I had to take or mail it to the bank; to pay a bill, I had to write a check. Buying a used car was a risky business.

Ten years later: Recent purchases from Amazon by my family include dental floss, office supplies, textbooks, a security system, and a hammock. We have a president who got where he is by tweeting. Millions of people pay to sleep in strangers’ guest rooms every night. Tesla can’t build its fancy electric sedans fast enough. Facebook now has more than 65 million business pages, and Internet advertising has taken (almost) all the profit out of the newspaper business. My camera is now in my phone, and I can deposit a check by taking a picture of it; I haven’t written a paper check in months. Even at the outdoor farmers’ market in our neighborhood, I can buy groceries with a credit card, which the Amish farmer scans with a tiny device on his phone. And a few months ago, I almost bought a used car until my daughter discovered – on her phone – that it had been in an accident a couple of years prior.

This is all amazing stuff. It and much more have made us happier and more productive, by allowing us to escape a lot of drudgery. It’s wonderful! But if you’re a retailer, or in the newspaper business, or in countless other fields impacted by these technologies, there’s also been a significant downside. Massive change means massive disruption, made all the worse because it was unforeseen by most of those who were damaged by it. Retailers and newspapers, for example, were caught unawares, and thousands of jobs were lost. It seems unlikely that former journalists and store managers are making ends meet by renting out their guest rooms.

So we must ask, what about the NEXT 10 years? What crazy, unimaginable new technologies will disrupt your business or your life? More importantly, what can you do about it?

I have a manufacturing company. If 10 years from now everyone has a 3-D printer, can I just transmit an e-file to my customer, allowing him to print my product for himself?

The possibilities are endless.

So how do we prepare? I’m not convinced that becoming an early adopter is the answer. All of these amazing success stories rest atop a much greater number of failures. Instead, I think the better course will be to focus on fully leveraging new technologies after they’re reasonably well established. The opportunities from last decade’s progress are still far from fully exploited; for example, there are many ways to deploy Apple or Amazon or Google technologies — or even our phones — to improve our businesses and lives that most of us still don’t use.

I also don’t think that guessing what comes next is a good strategy, because it encourages trying to time your investments — and few of us are smart or lucky enough to get it right. Get in too early and you’re often distracted, discouraged, or just plain wrong. Get in too late and you’ve missed the chance to seize opportunities or avoid threats. Perhaps the best approach is watchful waiting, with test investments of time and cash to embrace new technologies without being smothered by them.

That’s my plan for amazing change, anyway. What’s yours?

Alec Pendleton took control of a small, struggling family business in Akron, Ohio, at an early age. Upon taking the helm, he sold off the unprofitable divisions and rebuilt the factory, which helped to quadruple sales of the remaining division within seven years. These decisions — and the thousands of others he made over his time as president and CEO — ensured that his small manufacturing business thrived and stayed profitable for the generation to come. The culmination of a lifetime of experience, accumulated wisdom, and a no-nonsense approach to looking at the books allows him to provide a unique perspective on Big Ideas for Small Companies.

Low-Dollar Lou

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car salesman

Alec Pendleton(Courtesy of Guest Blogger Alec Pendleton, Big Ideas for Small Companies, powered by The MPI Group)

In a not-very-nice part of the town where I grew up, there was a used-car lot with a prominent sign reading: “Low-Dollar Lou has the Best Buy for You!” A quick look at his scraggly inventory and an even quicker encounter with Lou himself, with his broad smile and his two-handed handshake (the better to remove my watch?), led me to doubt that his slogan was true.

Every survey of buyers I’ve ever seen ranks price well down the list of priorities, lower than such things as quality, reliability, trustworthiness, location, convenience, etc. — yet the vast majority of advertising focuses first and foremost on price. A large metropolitan area might have as many as a dozen Chevrolet dealers, for example, and yet somehow every one of them has the lowest price. Furniture stores, grocery stores, gas stations, pizza shops, and even Lexus dealers want the world to know how low, low, LOW their prices are.

But why? I can only assume these merchants think that price is more important to customers than the surveys report. And yet, does a Lexus dealer really believe that price is the primary motivator of someone shopping for a $60,000 car? So she or he can brag to friends about saving $500?

I, for one, believe the surveys. I’ve seen two gas stations side-by-side, one with prices $0.10 per gallon higher than the other — and both were equally busy. I’ve shopped for low prices when buying cars, and always left the dealership feeling that there was something I didn’t know — that somehow, some way, the salesman had fleeced me. Worst of all, as a salesman myself, in pursuing an order I badly needed for my manufacturing business, I cut the price myself — without even being asked! (I got the order, and promptly lost money on it.)

There’s an adage that opportunity lies in following a different path than everyone else and that applies to competing on price. It’s a desperate, flawed strategy that inevitably leads to a downward spiral of revenues and profits, as a fixation on low, low, LOW prices attracts the least desirable customers. In a sense, competing on price means that success is defined as being the last one to go broke. It keeps you in a constant state of vulnerability, which is a damn unpleasant way to earn a living.

So what about you? Are you caught in the low, low, LOW price trap? Or have you defined your business — and your customer value — in more meaningful (and margin-full) terms? I’m not suggesting that Low-Dollar Lou change his slogan to “High-Dollar Hal will be your Best Pal,” but he might have attracted different customers — and earned a better living — if he’d focused on something other than price.