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Strategies for Surviving and Thriving in Challenging Times

Strategic Action #3 for Surviving and Thriving:
Adapt Your Life to Web 2.0 (Part 1)

Turning Your Company into a Complex Adaptive System

The real miracle of life is arguably not as much its existence per se – a California biotech company announced last week that it had created a human embryo from adult skin cells – as the complex system of biofeedback on which organisms depend.

Now, in a case of technology imitating life, the Worldwide Web has evolved into a higher cyberlife form called Web 2.0 that is animated by Web-based software in contrast with Web 1.0, which depends on external software such as browsers for its viability. Exactly how biofeedback systems work is still not completely understood by scientists.

Web.2.0 operates with a highly complex system of cyberfeedback that gives users instant readings – kind of like what happens every nanosecond in your body to keep it on an even keel on a proper course.

Among the most prominent expressions of Web 2.0 are Wikipedia, Facebook, My Space, Flickr, YouTube, Second Life and World of Warcraft. They are collectively known as social media because participants are co-creators of the content. Before the advent of social media, website owners were the primary producers of online content.

Web 2.0 takes the Internet as a complex adaptive system to soaring new heights of complexity. This is analogous to what happened three billion years after single-cell life showed up on earth: life began blossoming in higher, more complex multi-cell forms.

Take Wikipedia, for example. Like all organisms it functions in a continuing stream of change and adaptation. Of course, there are those who say, "Wikipedia cannot be as dependable a source of information as its primeval ancestor, Encyclopedia Britannica because you have all those people going into entries to change them at will."

Seen through the lens of traditional consciousness (see the previous two posts), there is every reason to assume that Wikipedia is subject to enough error to justify healthy suspicion about its accuracy. But, operating in the fashion of complex adaptive systems, Wikipedia has a self-correcting function that draws on feedback from participants in its organic evolution. The British science journal Nature conducted research last year and found Wikipedia generally comparable in accuracy to Britannica.

Web 2.0 has exponentially increased the available options in service of more productive and efficient use of the Internet. With the cyberspace equivalent of biofeedback, Web 2.0 enables people to share, collaborate and interact as social communities with a richness of experience and bounty of benefits not achievable at the Web 1.0 level of cyber evolution.

From a marketing perspective, Web 2.0 has generated a new calculus of supply and demand. The neat boundaries that have long had actors on the supply side in one sector of the transactional territory and the actors on the demand side in another sector are dissolving. Much as with a Mobius strip there is no front-back, forward-backward, or top-bottom dichotomy.

In the absence of the traditional supply-demand dichotomy, consumers have become active participants in creating value and shaping and mediating supply chain activity. Producers have become active customers of produce from the demand side.

If all this sounds a tad confusing, it’s mainly because it’s not very understandable seen through the traditional lens of economics and marketplace activity (see two previous posts).

An excellent treatise on the impact of Web 2.0 on business, on culture, on just about every sector of human activity can be downloaded from the Aspen Institute’s Communications and Society Program. You will want to download The Rise of Collective Intelligence.

No one really knows where Web 2.0 is going to take us, but a broad consensus holds that performing all the functions of business enterprise from research and product development to marketing and service will be radically different in the next decade than it was when this decade began. 

I will speak more to the subject of collective intelligence, which is at the very core of Web 2.0's transformative powers in my next post.

 

Strategic Action #3 for Surviving and Thriving:
Adapt Your Life to Web 2.0 (Part 1)

Turning Your Company into a Complex Adaptive System

Strategic Action #3 for Surviving and Thriving:
Adapt Your Life to Web 2.0 (Part 1)

Turning Your Company into a Complex Adaptive System

Strategies for Surviving and Thriving in Challenging Times

Strategic Action #2 for Surviving and Thriving:
Enter a New Consciousness (Part 2)

By now, just about everybody with a scintilla of knowledge about happenings in the world today has heard sanity defined as, “doing the same thing over and over and expecting different results.”

Why are we hearing that bon mot so often these days? Because with the scale and relentlessness of change washing away the status quo in every sector of human life, whole libraries full of solutions are obsolete. Despite that, however, legions of people in every sector are still flailing away at problems trying to make old ways work despite the insanity of their attempts.

To escape from the insanity of fruitless, repetitive tries at solving a problem depends on entering a different consciousness that reveals both  the utter uselessness of continuing in the current fashion and a new consciousness in which new insights can flow, unfettered by a barren and indefensible status quo.

How do you unlock the door to a new consciousness?

First, think systems thinking:

Systems thinking is a social approach using systems theories to create desired outcomes, or change. It views certain problems as a part of the overall system so focusing on these outcomes will only further develop the undesired element or problem. Systems thinking is a framework that is based on the belief that the component parts of a system will act differently when the systems relationships are removed and it is viewed in isolation. The only way to fully understand why a problem or element occurs and persists is to understand the part in relation to the whole.

In contrast with traditional scientific methods of thinking, which is categorical, systems thinking is a holistic method of thinking. It is concenred with examining the linkages and interactions between the elements that comprise the entirety of the system.

(For more see the full article this was adapted from in Wikopedia.)

Second, recognize that systems thinking is a perspective for going beyond events, to looking for patterns of behavior, to seeking underlying systemic interrelationships which are responsible for the patterns of behavior and the events. It embodies a world-view which implies that the foundation for understanding lies in interpreting interrelationships within systems, which are responsible for the manner in which systems operate. (For more see the full article from which the foregoing was adapted.)

Third, learn techniques for moving from a fruitless consciousness into one that can reward you with new insight. Career and personal coach Tom Leary describes in one of his blog postings one way of getting into a new consciousness. It can be especially useful in tacking a problem with group action. It’s better than brain storming exercises. It’s a brain harvesting exercise – a way of plucking from your brain answers that already exist, but lie concealed under the cover of an outmoded consciousness.

Arguably, the world’s greatest living expert on transitioning into new and more productive states of consciousness is Edward de Bono. It is likely that nearly all of the world’s largest legacy companies have drawn on de Bono’s “Six Thinking Hats” processes.

“Six Thinking Hats is a technique that helps you look at decisions from a number of different perspectives. It forces you to move outside your habitual ways of thinking. It it helps you understand the full complexity of a decision, and to spot issues and opportunities to which you might otherwise be blind.

(For more see the Mind Tools website from which the foregoing was adapted.)

In closing on the topic of how to shiftfrom one consciousness to another, I want to share two thoughts:

First, since the first life on earth, long-term survival has depended on the ability of a species to adapt to change. Most haven’t, thus most are extinct. The very embrace of the status quo that brings stability is the very thing that killed them. Individuals and companies are no different. In these times of epochal change, those who will be doing best 10 years from now will be those who have learned how to adapt to a new scheme of challenges.

Second, reread the first line of the previous post. creative capitalism, new capitalism

 

Strategic Action #2 for Surviving and Thriving:
Enter a New Consciousness (Part 2)

The Attack of Capitalist Fundamentalists on Bill Gates

On Thursday, the richest man in the world made an impassioned plea at the annual World Economic Forum in Davos, Switzerland. He urges businesses the world over to adopt what he called creative capitalism as a way to sharply curtail abject poverty on a worldwide basis.

Gates was savaged on CNBC’s Kudlow & Company by an assortment of Wall Street cognoscenti. They accused Gates of forgetting his roots as one of the most accomplished capitalists in history and selling out to do-goodism.

A friend who saw Larry Kudlow and his incensed companions damn Gates emailed me, “In essence, they ridiculed tough CEOS who played “hardball” in building their companies and their assets, only to become evangelists for the importance of “doing good works” as part of the business platform, AFTER they’ve attained their market objectives. They see these CEOS as dangerous to the capitalistic values that made their companies great.”

While writing Firms of Endearment, my coauthor Raj Sisodia and I talked about controversy that could build around the book because it describes a new business operating paradigm. Old paradigms do not fade off in the sunset quietly. They die amid the shrieks and shouts and damnations of the old paradigms faithful.

We have all experienced the elevated temperature, quickening of breath, dryness of mouth, and quickening when someone has attacked one of our deeply held beliefs.

It all begins in our midbrain where sentinel posts are always on the alert to threat. Our beliefs are as much a part of us as our body parts. Our brain can react to assaults on our beliefs with as much a sense of dire jeopardy as to physical assaults. Just recall how violent people can in opposing others who disagree with them on moral, religious or political matters.

Philosopher Thomas S. Kuhn wrote brilliantly about scientists’ reactions to threats to their beliefs in The Structure of Scientific Revolutions. Published 45 years ago, it remains a best seller.

Kuhn pushed the word paradigm into mainstream conversations. He coupled it with the word shift, as in paradigm shift.

Kuhn rejected the common definition of paradigm as “an accepted model or pattern.” Instead, he argued that a paradigm is a bundle of cognitive processes directed towards the discovery of some truth.

For example, until relatively recently, the processes researchers used in studying intestinal ulcers assumed they resulted from stress. The processes they employed defined the processes directed toward the problem of ulcers. However, when research processes shifted away from behavioral contexts into the realm of microorganisms, it was discovered that up to 90 percent of intestinal ulcers are caused by the Helicobacter pylori bacteria.

As a paradigm gains support, its supporters begin erecting defenses against future threats to its existence. This, said Kuhn, is the main role of normal science – not to ferret out and prove the new, but to further define and protect the old. In other words, most science is devoted to preserving the status quo.

Back to the assault on Bill Gates’ idea that doing good while doing well in running a business is a good thing. Nobel economist Milton Friedman famously said in a New York Magazine article in 1971, “The only social responsibility of a business is to make lawfully profits for its owners.”

Gates, and growing numbers of other top executives including Whole Foods’ John Mackey, Starbucks’ Howard Shultz and now even Wal-Mart’s Lee Scott are saying that doing good whole doing well doesn’t mean shortchanging shareholders. In fact, Gates message was just the opposite.

Citing a book by renowned business guru C. K. Prahalad, The Fortune at the Bottom of the Pyramid. Eradicating Poverty Through Profits, Gates argued in Davos that lifting people out of poverty on a wholesale basis could be very good for shareholders. But such a process for building shareholder wealth is a new paradigm. So, Kudlow & Company, along with legions of defenders of the old Friedman-sanctioned paradigm to come, view Gates as having sold out to the dark side of human compassion.

However, the tides of a more compassionate exercise of capitalism are already too strong for what we call in Firms of Endearment “fundamentalist capitalist” to resist. Beat their gums as they may, Gates view will prevail.

 

 

 

 

Bill Gates Urges Companies to Adopt "Creative Capitalism"

I strongly recommend finding time to watch the speech Bill Gates' delivered yesterday at the 2008 Davos Economic Forum. His topic was what he calls "creative capitalism".  You can view it on YouTube.  You can also pick up the speech directly from the Davos Economic Forum webcast, which will allow you to watch it in full screen mode.

Gate speech delivery time is a little over 25 minutes. It is followed by about 12 minutes of Q&A.

With Gates' high profile entrance into the sustainability game you can count on the corporate sustainability movement ratcheting up and increasing the pressure on companies to climb aboard the movement.

Every company needs a plan for integrating sustainability into its marketing. This is a new area of service that agents of marketing can offer to clients. It’s not just about bragging to customers on what a company is doing on behalf of two of the three P’s – People and Planet. The third P, of course, is Profit because a company can’t sustainability address People and Planet issues if it has not profits.

A fully integrated marketing mix should address corporate sustainability from the perspective of every core stakeholder group – society, partners (especially suppliers), investors, customers and employees. 

Why is it important to take a broader approach to managing marketing activities? Because, as we learned in our research for Firms of Endearment, a fully integrated, holistic marketing approach tends to get more from time, energy and financial investment than traditional single dimension customer-centered marketing.

We found that synergies that form from a more comprehensive approach to marketing can improve marketing productivity at a cost per dollar of revenue that is less than what single dimension marketing costs.

Back to Bill Gates: Watch his speech. He is talking about the social transformation of capitalism on a global scale. After watching the speech, think about what your company or your clients can do to connect with the biggest change in capitalistic theory since Adam Smith published Wealth of Nations in 1776.

Surviving & Thriving Strategy in Challenging Times

Strategic Action #1 for Surviving and Thriving:
Create Insanely Happy Employees

Napoleon famously said that an army travels on its stomach. Could it be that companies travel on the happiness of their employees?   

Google’s employees are insanely happy. It ranked #1 in Fortune’s 2008 Best Companies to Work For list. Google was also #1 in 2007. It is an insanely successful company. You can also access the list at The Best Companies to Work For Institute, which is Fortune’s partner on the subject. You can get a lot of insights on that site on how to create insanely happy employees.

Creating insanely happy employees is the # 1 surviving and thriving strategy for challenging times. But that should be about the biggest duh you could ever come up with. Insanely happy employees create insanely satisfied customers.

Is there a better strategy for marketing than one that creates armies of loyal customers who keep coming back and who can’t stop telling relatives, friends and others how great the company is?

We talk about Google and 29 other companies that strive to create insanely happy employees, insanely devoted customers, insanely responsive suppliers, insanely embracing communities and insanely rich investors in Firms of Endearment. 

The list of benefits companies get from insanely happy employees is long; but here's a sampling: higher productivity, lower employee-related costs per dollar of revenue, higher repeat business from customers, lower marketing costs, typically higher share price earnings ratios, and quicker recovery in economic downturns.

If you work for a company that doesn't have a plan to create insanely happy employees, be an insurrectionist and get the movement going. If you are a supplier of marketing services to a company that doesn't have insaenly happy employees, be an agitator and tell your contacts the money they spend with you will get them further if they have insanely happy employees.

In short, become an evangelist for the insanely happy workplace and you'll get through whatever hard times lie ahead in great shape!

Book Review: The Future of Management

How practical do you think it would be for rank-and-file employees to make hiring decisions on job candidates for positions on their teams?

What would you expect employees to do if management let them democratically determine their benefits?

What would be the expected outcomes in a company that permits any employee to refuse any task set before him or her?

How much would a company that allows most of their workers to establish their own wages be exploited by employees gaming the system or thinking they’re worth more than they are?

How much would a company benefit from insisting that 20% of an employee’s time be spent doing whatever the employee wants to do?

In his new book, The Future of Management, business guru Gary Hamel writes about companies where nontraditional management practices are the rule.

Whole Foods lets employees choose their teammates and lets employees determine their benefits packages. Gore-Tex allows all employees to say no to any task request. At Semco, management and supervisory employees determine their own wages. Google’s production staff members are required to devote 20% of their time to tasks of their own choosing.

A pillar of traditional management philosophy is that supervisory and nonmanagerial employees cannot be trusted to have the wisdom, will or ways to do what is best for a company.

But companies that Hamel holds out as exemplars of a different view of frontline employees are rendering whole libraries of business books obsolete. These companies demonstrate the efficacy of what James Surowiecki calls “the wisdom of crowds” in his recent book by that name.

As royal families discovered long ago, position does not confer special insight. We’ve seen several examples recently of esteemed CEOs making grievously damaging decisions, including CEOs at Merrill Lynch and Citicorp.

Traditional hierarchical command and control business organizations are organizational dinosaurs. In an age dominated by older populations that more aggressively assert their autonomy and the Internet, which gives ordinary people extraordinary power to exercise their autonomy, hierarchically operating structures are obsolete.

Nearly three decades ago Tom Peters and Bob Waterman shook up the business world with their out-of-the-park, bases loaded homerun book, In Search of Excellence. Then, a dozen years later, Michael Hammer and James Champy implied that searching for excellence along traditional paths was inadequate. The times call for “reengineering” the corporation, they said.

In 2001, Jim Collins and company gave us Good to Great, one of the best selling business books of all time that was stunning with respect to the depth and breadth of research. The only problem is, despites its continuing success for its publishers, six of the 11 companies that were culled from the original 1,435 companies scrupulously examined, and that met Collins’ definition of greatness were already underperforming at the time we sent our manuscript for Firms of Endearment to our publishers in January 2006. We proposed in FoE that what made a company great should be redefined in view of the fact that six formerly “great” companies had fallen off Jim Collins’ pedestal.

The great companies of the 21^st century might not fit Collin’s criteria for greatness, but many are leading the pack in share price performance, as well as in Gary Hamel’s mind as to what constitutes greatness in “the future of management.”

Hamel’s thinking will take you well outside the proverbial box. If you plan to still be toiling away in the world of business five years from now, you will be better prepared for “the future of you” by reading this remarkable treatise on business models that will become the standard in as little time as a decade.

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In case you don't have plans to do anything particularly noteworthy come Nov. 29 & 30, you might not do better than to check out the Good and Green conference in Chicago on those days. There are some outstanding presenters as you will see when you stop in at www.goodandgreen.biz. Of course you'd get a chance to meet me because I'm doing the wrap up keynote on the 30th!

How Maslow Saved a Hotel Chain

Boutique hotelier Chip Conley has written a book that captures the ethos of what we call The Age of Transcendence in our own book, Firms of Endearment. Conley’s book is Peak: How Great Companies Get Their Mojo from Maslow.

Conley founded the Joie de Vivre hotel brand in the 1980s, in San Francisco. His business plan called for catering to niches that do not typically show up on the radar screens of legacy names like Marriott. For example Conley’s first hotel, The Phoenix, is a funky establishment that caters to artists, friends of artists and sundry others inclined to travel away from the mainstreams of society.

Getting all the way down to a “niche of one,” the Joie de Vivre web site invites you to answer five questions. Yvette will then match you up with a Joie de Vivre hotel that best fits your personality. This honors Conley’s intention that a Joie de Vivre hotel experience delivers “identity refreshment” to each guest that validates him or her as a distinct individual.

Peak recalls the darkest days in the hotel industry since the Great Depression that occurred in the wake of the dotcom collapse and the horrific events of 9/11. Occupancy rates plunged to 50 percent in Joie de Vivre’s markets. Some competitors filed for bankruptcy, including hotels operated by the biggest names in the business. But Joie de Vivre hotels averaged about a 20 percent annual market share pickup before the hospitality business returned to normal.

Abraham Maslow is the hero in Conley’s story. As improbable as it may seem to some, he attributes the success of the Joie de Vivre brand to the creative application of the ideas of Maslow. Conley's heaviest Maslovian focus is on promoting the self-actualization of employees, customers and investors.

Maslow defined self-actualization in its simplest terms as “being all you can be.” Once in the zone of “being all you can be,” a person has a frequency of “peak experiences” not available to those yet to reach the lofty maturational levels of self-actualization.

People who still toil away to meet basic survival needs or who are still preoccupied with achieving greater social, vocational and material success have only occasional peak experiences.   

In describing his Maslovian-grounded recipe for saving and growing his company, Conley writes, “I came to realize that creating peak experiences for our employees, customers and investors fostered peak performance for my company.”

Peak shows why Maslovian-grounded management is not a New Age inspired approach to running a company. Rather, it is an eminently practical style of management that can produce superior results. It promotes peak performance throughout an organization at less net cost per employee than a more traditional style of management could achieve.

Take marketing costs, for example. With over $200 million in sales annually, Joie de Vivre spends less than $50,000 a year in print advertising.

Other benefits of the Joie de Vivre style of management include lower employee turnover, higher employee productivity and the deeper customer satisfaction and loyalty that inevitably flows from highly motivated, committed and satisfied employees.

Joie de Vivre is a quintessential "firm of endearment" – FoE. It follows the multiple-stakeholder operating model that is fundamental to the FoE way. Joie de Vivre is operationally organized as a network of teams rather than as a hierarchy based on title and function.. Like many FoE brands, Joie de Vivre hotels achieve virtual cult status in the eyes of many customers. That is the biggest reason FoEs typically have significantly lower marketing costs than their competitors have.

In the course of extending his points beyond the Joie de Vivre story, Conley cites other companies whose management reflects a Maslovian orientation. These include Whole Foods, Starbucks, Progressive Insurance, Harley-Davidson, Google and Best Buy – all of whom are FoEs that we hold up in Firms of Endearment as exemplary followers of the multiple stakeholder business operations model.

Conley has performed a great service by showing everyone including competitors how he steered his company through times of nearly unprecedented challenges and built it into the second largest chain of boutique hotels in the world.

Peak is a book for the times. It poignantly demonstrates the others-centered bent of a new breed of CEOs who have rejected the traditional ways outlined in Jim Collins’ monumental best seller, Good to Great and set out to build great companies through a more humanistic style of management.

The Largest Movement in the World (That Almost No One Saw Coming)

I apologize for the two-week hiatus. I took an unplanned 5-day vacation at INOVA’s Fair Oaks Hospital near my home in Reston, Virginia last week.

I’m fine, now, so there’s no cause for concern. All in all, the experience was more enjoyable than not. The customer (patient) experience was terrific and I got a ton of reading done, including Paul Hawken’s new book, Blessed Unrest.  Hawken’s take on a massive social transformation of government and business is eye-popping. This is hinted in the book’s subtitle, How the Largest Movement in the World Came into Being and Why No One Saw it Coming.

Hawken takes the reader on a journey through time, starting out many centuries ago, to show how we got to where we are today in terms of how we are dealing with major societal problems, such as the beleaguered state of our natural environments.

At times a reader might wonder why Hawken pauses in the journey he takes us on to talk about life centuries ago. However, in the end he pulls together threads harvested from multiple spools of thought into a beautifully fashioned literary tapestry depicting humankind’s present situation on this planet.

The explosion of interest by companies the world over in addressing many issues we’ve become accustomed to government taking a lead in seeking solutions to is staggering. These issues include environmental problems and a host of social causes ranging from severe poverty and education to health and medical challenges in Third World nations.

Of the world’s 100 largest economic entities, 63 are countries. The other 37 are companies. The combined annual turnover of the 10 largest companies in the world exceeds the GDP of most countries. At the present pace of corporate wealth building, it will not be long before capitalistic enterprises make up the majority of economic entities.

Like politicians and – yes, marketers – denizens of the corporate enterprise universe have not ranked very high in public polls that ask people about their levels of trust and respect for those in government and business who serve them. Marketers have been ranked just a notch above used car salesmen in some polls.

In a recent Gallop poll, 7 in 10 people said they did not trust CEOs of large companies, and nearly 8 in 10 believe that top executives will take improper actions to help themselves at the expense of their companies. In less than a year following 9/11, the number of Americans who see big corporations as an actual threat to America’s future doubled to 38%.

I see a different picture of the role of business enterprise in America’s – and indeed, the future of all humankind. We talk about this picture in Firms of Endearment, of which I am co-author. It seems obvious that people are hungry for a more optimistic image of business judging by the sales record of Firms of Endearment. Released just in February, it is already in its third printing and will soon be out in both Chinese and Italian versions.

Paul Hawken’s optimism about the path being taken toward a better world by a rapidly growing body of business enterprises is similar to our own. While Firms of Endearment gets down to the nitty-gritty of specific companies that take a broader view of their role in making the world a better place, Blessed Unrest works from a different perspective. It provides a 40,000 foot view of the greatest social transformation in the theory and practice of business since Adam Smith published Wealth of Nations in 1776. The view from 40,000 feet is truly breathtaking.

As he went to work on the book, Hawken estimated that there were some 100,000 organizations including NGOs (non-governmental eleemosynary organizations) as well as entities that operate more like profit-making enterprises but with a defined social purpose. Mohamed Yunus, founder of Grameen Bank that issues micro business loans to the poor in developing nations won the 2006 Nobel Peace Prize for his successful capitalistic approach to reducing severe poverty.

Hawken’s research revealed that the number of quasi-public and business entities dedicated to “saving the planet” and elevating life quality for people everywhere runs at least to a million, and perhaps to as much as 2 million organizations.

I do not agree with everything Hawken posits in Blessed Unrest, but that doesn’t detract from my opinion that this is one of the most important reads I’ve had in my hands for sometime. Without the benefit of many insights Hawken delivers to us in Blessed Unrest, you will be groping toward the future through a fog of misperceptions wafting up from old, outdated paradigms.

This is a critical fact: The future cannot be predicted by what has happened in the past. We have entered a discontinuous state in which is replacing a several centuries-old obsessive focus on the individual with a more holistic focus on human survival. As I see it, in this scenario, private organizations of every description in alliances with business enterprises – not government – represent the last best hope for our survival. You’ll understand better why that is when you read Blessed Unrest.
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In my next post I will resume the thread about the legacy I would like to leave to my core profession, marketing.

Drucker's Consumer Population Conundrum

Peter Drucker wrote in Management Challenges for the 21st Century, “The most important single new certainty – if only because there is no precedent for it in all of history – is the collapsing birthrate in the developed world. (His italics.)

Collapsing birthrates are drastically shrinking consumer populations. Germany: from 85 million to 25 million in this century. Russia: from 146 million to as little as 85 million by mid-century. Japan: from 126 million to about 100 million by 2050.

Some people say, “Don’t worry. Population growing in Asia, especially in India and China will come to the rescue.” But we should note that these countries are developing the means to make at lower costs much of what they now import.

Moreover, the average age of China's population is on a rapid ascent. After family-raising years, consumer demand begins declining. In the next decade, China will have the fastest aging population on earth.

I recently talked to a German businessman about his nation’s plummeting consumer population. He answered, “Those are only numbers.” Others have said to me, “Who knows – maybe we'll see a new boom in births." Too many people are taking an ostrich’s approach and choosing not to think about it.

It's the under-50 population that's shrinking. The 50-plus population is actually mushrooming in developed nations. So, rather than acting like an ostrich, companies should be trying to figure out how to tie their growth to the lift forces of burgeoning older populations. God knows, growth is not going to come from younger markets.

Maybe tying growth goals to older consumer populations is not a perfect solution, but it’s the best one most consumer product companies have. How many do you know that are dealing with Drucker's Conundrum?

(This post originally appeared May 31, 2004.)

Peter Drucker wrote in Management Challenges for the 21st Century, “The most important single new certainty – if only because there is no precedent for it in all of history – is the collapsing birthrate in the developed world. (His italics.)

Collapsing birthrates are drastically shrinking consumer populations. Germany: from 85 million to 25 million in this century. Russia: from 146 million to as little as 85 million by mid-century. Japan: from 126 million to about 100 million by 2050.

Some people say, “Don’t worry. Population growing in Asia, especially in India and China will come to the rescue.” But we should note that these countries are developing the means to make at lower costs much of what they now import.

Moreover, the average age of China's population is on a rapid ascent. After family-raising years, consumer demand begins declining. In the next decade, China will have the fastest aging population on earth.

I recently talked to a German businessman about his nation’s plummeting consumer population. He answered, “Those are only numbers.” Others have said to me, “Who knows – maybe we'll see a new boom in births." Too many people are taking an ostrich’s approach and choosing not to think about it.

It's the under-50 population that's shrinking. The 50-plus population is actually mushrooming in developed nations. So, rather than acting like an ostrich, companies should be trying to figure out how to tie their growth to the lift forces of burgeoning older populations. God knows, growth is not going to come from younger markets.

Maybe tying growth goals to older consumer populations is not a perfect solution, but it’s the best one most consumer product companies have. How many do you know that are dealing with Drucker's Conundrum?

(This post originally appeared May 31, 2004.)

Peter Drucker wrote in Management Challenges for the 21st Century, “The most important single new certainty – if only because there is no precedent for it in all of history – is the collapsing birthrate in the developed world. (His italics.)

Collapsing birthrates are drastically shrinking consumer populations. Germany: from 85 million to 25 million in this century. Russia: from 146 million to as little as 85 million by mid-century. Japan: from 126 million to about 100 million by 2050.

Some people say, “Don’t worry. Population growing in Asia, especially in India and China will come to the rescue.” But we should note that these countries are developing the means to make at lower costs much of what they now import.

Moreover, the average age of China's population is on a rapid ascent. After family-raising years, consumer demand begins declining. In the next decade, China will have the fastest aging population on earth.

I recently talked to a German businessman about his nation’s plummeting consumer population. He answered, “Those are only numbers.” Others have said to me, “Who knows – maybe we'll see a new boom in births." Too many people are taking an ostrich’s approach and choosing not to think about it.

It's the under-50 population that's shrinking. The 50-plus population is actually mushrooming in developed nations. So, rather than acting like an ostrich, companies should be trying to figure out how to tie their growth to the lift forces of burgeoning older populations. God knows, growth is not going to come from younger markets.

Maybe tying growth goals to older consumer populations is not a perfect solution, but it’s the best one most consumer product companies have. How many do you know that are dealing with Drucker's Conundrum?

(This post originally appeared May 31, 2004.)

The FoE Movement Is Spreading

In case you missed it, Fortune’s annual list of most admired companies appeared in the March 19th issue. The list is compiled from the results of a survey of the Fortune 1,000 conducted by the Hay Group. Hay survey asked executives, directors and analysts to rate companies in their industries on eight criteria, from investment value to social responsibility.

Not surprising (at least to us) firms of endearment took five of the top 10 slots, starting with Starbucks who came in second after GE. Interestingly (again, at least to us) GE appears to be moving toward FoE status. We also have seen signs of FoE-ness emerging at Proctor & Gamble, which place in the 10^th spot of most respected companies.

Thus with two near-FoEs and five confirmed FoEs, it seems that FoE-ness is catching on in a big way.

Despite this, those whom we have dubbed “capitalist fundamentalists” are still alive and well, often fighting with mean spiritedness against any notion that proactive social responsibility has a place in corporate purpose.

One such is the Free Enterprise Action Fund. It looks upon companies that have bought into the corporate social responsibility movement with contempt. But rather than attack the executive leadership of those companies, FEAC goes after faceless “left wing activists” who would turn capitalism against itself. Read more...