BlackFriday/CyberMonday: Sacrificing Stability for Cheap & Easy

I've noticed a disturbing trend in a lot of industries for many years - they seem to be chasing short-term wins at the expense of ensuring long-term sustainable business models and valuable brand identities.  The chicken and egg of technology and globalization have disrupted most sectors of the economy. Organizations established before this disruption are having a very, very difficult time adapting.  Instead, they respond by eating away at their value, one holiday discount at a time. My response to the frenzy of retail marketing in the last month of the year is to think that most retailers have an antiquated business model if they cannot reach profitability in the other 11 months of the year.  Not only does it suggest that the retail business model is broken but it makes those businesses very hard to operate because of the extreme seasonal volatility.

This trend is not only happening in retail - it is happening in media.  Ted Koppel recently published a rant on the death of real news and his perspective really stuck with me "This is to journalism what Bernie Madoff was to investment: He told his customers what they wanted to hear, and by the time they learned the truth, their money was gone."

The mortgage crisis is just one more example. It was cheap and easy money that everyone in the financial market knew was a house of cards but they did it anyway - and the consumers who bought the mortgages didn't stop to think either.

I see it in public companies and the stock market where day trading and automated trading has created enormous volatility and focus on the extremely short term.  A large percentage of the market is being driven by a gambling mentality rather than an investment mentality.

I see it in the cheap 6,000 sqft houses being built to last for 10 years vs. 100 - hey, as long as there is stainless steal and granite, who cares how it is built, right?

I see it in the health care debate... we don't want to pay to insure everyone but we accept that many will continue to get primary care in emergency rooms - adding unreasonable costs for everyone.

I see it in agriculture because people want cheap food but the result is less competition and lower quality because the only farms that can provide food that cheaply are huge industrialized farms.

Whether at the individual or organizational level, we no longer collectively know how to invest for the long term or why taking a financial/emotional hit now will make things easier in the future.  We seem to almost always choose the easiest and cheapest route to what we want. 

But doing hard work first has enormous benefits. It came up recently when speaking with Jamie Punishill about getting executive support for a new social initiative - it turns out, if you do the hard work of convincing your legal, regulatory, accounting, IT, and HR teams first it is much easier and quicker to get approval from business owners. Do the hard work first and everything else follows much more easily. 

Doing the hard work first also has amazing benefits when raising children, growing communities, learning, planting vegetables, creating new products, and building sustainable companies and brands. Don't take easy money, customers that are a poor fit, or advantage of employees just because you can. If you do, you will find out too late that it was a mistake.

However, the concepts of amortization and delayed gratification is not very socially acceptable these days. I'm here to tell you a secret... ok, it's not my secret... I think it is Warren Buffet's advice if I recall correctly: Buy when everyone else is selling. Sell when people want to buy. Be calm when everyone else panics.  If you follow the heard, you are too late to gain an advantage.

This holiday season, sit back with a drink by the fire while everyone else makes themselves crazy running from one store to the next. Chances are you will be healthier, wealthier, and wiser for it.

Comments

[Maggielmcg]

Amen! This is a huge reason why I hate this time of year--people (like me) who already have everything they could ever want and much more feeling obligated to rack their brains to think of gifts to buy for people who also already have too much of everything. Then you're supposed to endure huge crowds and possible bodily injury to buy the stuff? I hate the whole thing. AND it's cold out and gets dark at 5 pm.

[Rachel Happe]

Ha - it is dark... which is why it's perfect to stay in doors by the fire/candles. I love Christmas eve... smoked turkey, roasted veggies, gingerbread, Christmas cookies, mulled wine in front of the tree and a nice fire. It's cozy and calm - not at all the same feeling as the mall.

[Pbrannigan]

Rachel... You are so correct. Anything worth doing is worth doing well. It is so evident when receiving a gift with no thought put into it. I like to think of the Gift of the Magi story when selecting presents. Why will the receiver really like the present? If I can't come up with something, gift card! Find your own special gift at after Christmas prices...

In terms of a social strategy, you are also right. Companies need to spend the time to build consensus internally, find the champions and the people that need to be educated or their fears recognized. Goals, internal procedures, a well thought out engagement strategy and content strategy makes for a successful business process leveraging social technology.

I hope you have a wonderful Holiday with your little one with plenty of fireside chats. @pbrannigan

[Rachel Happe]

Hi Pauline - yes, it's definitely quality of quantity this year for me... and narrowing down the number of people on my gift list in favor of spending time on them.

I hope your holidays are bright and social!