I have always been fascinated with demographics and the ramifications of what the mass of population is likely to do. For example, if we know the major US population is the baby boomer generation, we can accurately determine what kind of things they are going to be spending their money on. In our home furnishings business, we can determine that these folks have probably already filled up their primary houses with furniture. But there are opportunities for upgraded bedding as well as health and wellness products like Cozzia massage chairs. And in both cases, these categories are selling quite well.
The real guru of demographic study and what it means to the economy is a guy by the name of Harry S. Dent, Jr. He has been predicting with some level of accuracy what impact demographics will play in your business and investing decisions. His current thinking is that our economy is likely to improve in the third and fourth quarter and then it will get much worse in 2014. He believes the incredible stimulus from the Fed is getting less and less effective on impacting the economy. He believes they will lose control of interest rates and financial bubbles will start bursting around the globe. Without the stimulus, there is “no sustainable recovery given slowing demographic trends and unprecedented debt.”
It is a sobering message that all businesses should be aware of the risks in case he happens to be right. But what I found the most interesting in his recent newsletter was his analysis of how to survive a pending crisis. What was great about this analysis was even if times stay good, his suggestions will only make your company better. Here are his 5 points to consider:
- Do only what you do best and subcontract the rest. A couple of my largest customers have determined to forego container purchases unless it is the only option. They let vendors manage the inventory so they, the retailer, can focus all their efforts on selling the furniture to the end user. “Businesses should only invest in products and markets you can best serve, and if possible dominate.”
- Identify Your Ideal Customer . Then segment these customers into subsets and determine how to best meet their needs. Technology is critical in this segmentation.
- Organize each customer segment into who will serve them on front end (sales) and back end operations whose purpose is to support the sales effort. The back end operations should consider the front end effort as their customer.
- Each front end and back line unit needs to be accountable as if they were a standalone business. People will work harder if they know they responsible and accountable for their overall results.
- Management’s job becomes being the visionary, the architect and arbitrator of the business. The operation becomes self managing if constructed properly.
This customer centric, bottom up network logic is a great way to organize your business. This will provide a competitive advantage when times get tough, and a secret weapon in good times to grow your business through extreme customer focus.