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Difficult People


ROI by Frank J. Rich







By Frank J. Rich



OK, hands up out there! How many of you have chosen not to take action with a difficult person when you knew it was needed? How many have reacted to another in an angry or non-constructive way? You with your head down—why isn’t your hand up?

Everyone has done both of these things at one time or another. There’s no shame in it. However, if we consistently repeat the same mistakes over and over and end up paying the cost by becoming a victim, we’ve chosen the path to unfulfillment.

So, why do we do it? Why do we choose to be victims? And why is it important to know why we make this choice? Simply, if we don’t know what it is about “difficult people” that causes us to make a poor decision, it isn’t likely we’ll be able to grow out of the “victim” disorder. If we don’t change, we are going to be a consistent victim.

There are a number of reasons why people make bad decisions, avoid taking action, or take inappropriate action. Most have to do with avoidance, while the last is biological and has to do with our initial gut reaction to difficult people and our feelings of threat. Let’s take a look.

Low Self-awareness

If you lack self-awareness (i.e. you don’t know what your own reactions mean and why they occur), you are not likely to have success with difficult people. Not coincidentally, the first step in learning to deal with difficult people is to examine oneself.

It’s important that you look at yourself to identify which of the reasons apply to you. When you are aware of the reasons you choose to be a victim, you will be better prepared to make better, more rational decisions.

An impediment to awareness is “denial.” Have you ever said to yourself, “I can’t believe he said that?” It is likely that you have. What we are saying in those words is that our expectation of another does not match well with their actual behavior. One reason we fail to take action with difficult people is we don’t expect them to be difficult. We are caught “off guard.” Most normal people don’t go through life looking for trouble. But when it appears, unexpectedly, such as in outrageous outbursts, we have a tendency to freeze like a deer caught in the headlights of a car. We’re at a loss for words, almost disbelieving what is plainly in sight. We are incredulous over it.

Not only can we freeze up in such moments, but some difficult behavior is so outlandish that we remain stunned by it well after the fact, or we deny it or excuse it as an aberration.


Believe it! Even the best of people do difficult, hurtful, and unpleasant things to others. Don’t pretend it isn’t happening. If you do, it may just get worse. We are, each of us, capable of the worst behavior imaginable. What keeps us from it varies—societal pressure, the law, moral suasion, inherent goodness, a positive life experience that recommends it, etc. Whatever works to bring each individual under self-control must be as apparent and available as a hammer to drive a nail.

Are you in denial? If so, recognize that people do hurtful, difficult things and that they are indeed real and are happening. To deny what is happening only serves to make the situation worse.


Even when we recognize that someone is being nasty, difficult or unpleasant, we may be reluctant to act because we fear getting involved. Or perhaps, you know that difficult person who argues about everything, and you are tired of him. We think, “If I say something, it’s just going to make matters worse.”

At times, you’d be right. There are times when making something of another’s rage is not only inconvenient, but also dangerous. Consider road rage. If we stop (or speed up) to confront another’s poor behavior on the road we might find ourselves on the receiving end of a weapon in the hands of a fool. The larger picture renders the issue trivial in most road rage incidents, so we go on our way hoping the angry “other” will cool down before hurting someone.

There has to be a happy medium here. We don’t want to jump on every little thing, but we must be prepared to confront real issues of poor behavior. We deserve better, and “help” is what the miscreant needs most. However, if we choose to continually ignore such abuse, we paint ourselves as victims.

Recognize that dealing with a difficult person in a constructive way doesn’t have to mean getting into an argument or a confrontation. Managers must be willing to make people accountable, and not only to agreed upon goals. We work with people, and their willingness and cooperation is necessary to achievement. We need to work at not allowing our dread of confrontation to keep us from taking control of difficult situations.

Bad Cop

Another reason people tend to wait too long to intervene with difficult people has to do with not wanting to come across as the “heavy.” This promotes a poor self-image, something we humans avoid like the plague. This is particularly true of managers who are sensitive to the need to use power sparingly in today’s workplace.

Get over it! We get paid to manage—so manage. Whether it’s someone not doing a good job or interfering with the work of others, or someone polluting the work environment, managers, indeed all stakeholders, have a responsibility to co-workers to act when necessary. You are, in effect, charged with ensuring the welfare of those in your care.

They’ll Do It

There is a tendency in organizations to think that the really tough problems ought to be solved by “them.” It is the great lie in all societies—commercial and familial. We expect it of our politicians, our teachers, our pastors, our bosses, and our parents. Perhaps, this is why 85% of families and 70% of organizations are deemed dysfunctional. If we allow one employee to make life difficult for another, there’s a fair chance that the “victim” will come to blame us, even though we aren’t directly involved. As managers and leaders, we are ultimately responsible for results—at all levels of participation.

Just as “intervening” need not bring about confrontation, stepping in need not make us the bad guys. There is something of value at stake for all involved; reasonable people can come quickly to an understanding of it.

Fight or Flight

The final underlying reason for mishandling difficult situations is the “fight or flight” phenomenon. It’s biological—all animals have it. It works this way; when we are threatened, our bodies react by sending hormones and neurological messages to prepare it to either run away (escape or take flight), or to stand and fight.

It’s these chemical changes in our bodies that cause things like sweating, elevated heart rate, or even shaking during or after perceived danger.

Unfortunately, those same chemical changes, while allowing us to make a quick escape, or a fight of it, also cause quick and destructive verbal responses. So, there’s actually a biological reason why you might speak or react too quickly when dealing with a difficult person.

Fortunately, we can choose not to be slaves to the “flight or flight” thing. We can learn to control ourselves, and even to react less aggressively when in difficult situations. Perhaps, what is most helpful is to accept that the term “difficult people” describes us all, at times. Try first to defend that person’s position, then consider what to do about his behavior. The exercise may give you the empathy necessary to clearing most misunderstandings, and the path to appropriate behavioral modifications.


September 22, 2017 |

Group Decision-Making


ROI by Frank J. Rich







By Frank J. Rich



Making decisions within a group can often be challenging. When things go well, they can go very well. However, when things go wrong, groups can end up mired in conflict. Some group members may fight for recognition and position, others may be over-critical or disruptive, while still others may sit quietly and not contribute anything to the overall effort. Because of this, groups can often spin out of control and make poor decisions, suggesting that decisions by individuals working on their own is a better approach.

When this happens, it’s easy to see why some throw up their hands in frustration and give up. But when a group works in effective ways, it really works. Groups that function effectively together can outperform individuals and make much better decisions.

But how do you make your group effective? How do you get all members to contribute and inspire one another to great ideas and solutions? One way is to “prepare” the group for success. This is a “tried and true” method, and is applied across the board in most decision-making. Good preparation makes good practice, and good results.

  • Set an agenda that requires interaction. Ask group members to speak of their experience with the meeting topic and how it might contribute to an understanding of the issues and the expected outcomes. Alerting them to the interactive exercise ahead will stir their creative juices.
  • Assemble those who would carry the initiative forward — that is, those who have both the skills and the inclination to contribute to the venture going forward. You’ll begin to see the workings of the team you’ve assembled and form a view of the cohesiveness of the group and any missing links.
  • Ask group members to recommend the talents of those in the room for assignment. Each ought to be given the opportunity to elucidate the special talents of group members. This prepares people for the selfless dedication to the other’s success that best informs teamwork.

The Stepladder Technique

The Stepladder Technique is another useful method for encouraging individual participation in “group decision-making.” This simple tool manages how members enter the decision-making group. It encourages all members to contribute on an individual level before being influenced by others. It results in a wider variety of ideas, prevents people from “hiding” within the group, and it helps people avoid being “stepped on” or overpowered by stronger, louder group members.

How to Use the Tool

The Stepladder Technique has five basic steps:

Step 1: Before getting together as a group, present the task or problem to all members. Give everyone sufficient time to think about what needs to be done and to form their own opinions on how to best accomplish the task or solve the problem.

Step 2: Form a core group of two members. Have them discuss the problem.

Step 3: Add a third group member to the core group. The third member presents ideas to the first two members BEFORE hearing the ideas that have already been discussed. After all three members have laid out their solutions and ideas, they discuss their options together.

Step 4: Repeat the same process by adding a fourth member, and so on, to the group. Allow time for discussion after each additional member has presented his or her ideas.

Step 5: Reach a final decision only after all members have been brought in and presented their ideas.

The Stepladder Technique is similar to the Delphi Method, another tool that’s often used in groups to prevent Groupthink* and to encourage participation. While both tools have the same objective, they differ in a few key ways:

  • In the Delphi Method, an objective facilitator or leader manages the group. In the Stepladder Technique, all members are equal.
  • The Delphi Method keeps members anonymous. The facilitator manages the flow of information, and members may have no idea who else is in the group. The Stepladder Technique involves face-to-face meetings, so everyone knows who the other members are.
  • The Delphi Method is a lengthy process, while the Stepladder Technique is much quicker.
  • The Delphi Method is often used for major decisions that need input from a large number of people. The Stepladder Technique works best with smaller groups that make a wide range of decisions.

Some groups can begin to lose their effectiveness and ability to make quality decisions if they have too many members. Keep your group small — four to six team members — to maximize effectiveness.

The Stepladder Technique is a step-by-step approach to help ensure that all members of a group participate and are heard. The technique allows shy, quiet people to present their ideas before other group members can influence them, and it allows everyone to hear many different viewpoints before reaching a final decision. All of this helps the group make better decisions. The techniques help curb worker ferment and eliminate fainéant members who fear engagement.


*Groupthink is a phenomenon that occurs when the desire for group consensus overrides people’s commonsense desire to present alternatives, critique a position, or express an unpopular opinion. This is what happens in the legislatures of most nations, where the unique view of parties divides people in the decision-making process into membership of a common view.

September 15, 2017 |

The Most Powerful Tool


ROI by Frank J. Rich







By Frank J. Rich



Agreement may be the most powerful device known to mankind. Most everything we know is formed of it—treaties between governments, laws within them and contracts of all kinds, marriages, and the terms of life. Even the oddest of partnerships is formed by agreement, such as a nut and bolt, a bottle and cap, a horse and carriage, etc. We’re getting carried away; you see the point.

The logic in agreement reveals “disagreement” at its root. We come together over differences, or no effort could be measured by the process of agreement, or by agreement itself. Most distinct and disparate positions and things must find agreement to coexist. Metal has no natural affinity for plastic, yet they can be bolted together or fused to form a better result for both—one providing unique strength, and the other light weight and color adaptability. The plastic and metal combinations on an automobile are examples, each contributing uniquely to deliver a better result—lighter, more durable, and fuel efficient.

For the most part, agreement produces a better result. It is the purpose in diplomacy, preventing or stalling a bellicose alternative, at least until livable terms can be worked out. Agreement reveals another important element; that is, the desire for harmony. It is, unfortunately, not always accompanied by the will for it, thus leading to strained relationships. Simply, agreement is the forming of relationships… between people and things. It is not only necessary to a world in constant change, but also vital to it.

A more useful way to see agreement is as: 1) establishing joint vision, 2) the end product of an effective conflict-resolution process, or 3) and, as the foundation for success of any new team, partnership or relationship.  This is true whether it is with your business partner, colleagues, work teams, joint ventures, or your company and its employees or customers.

Collaboration, the coordinated activities of people working together, is the foundation of any accomplishment.  Successful collaboration is like dancing; often we have different ideas about the steps in the dance. These differences can lead to greater synergy or to breakdown.  Because agreements define how we coordinate, excellent results depend on clear agreements. The art of crafting effective agreements is the lever that increases the potential for desired outcomes.

There’s an important distinction between agreements for “results” and the familiar “agreements for protection,” which are negotiated from an adversarial perspective. The latter shifts the focus from what you want to create to what can go wrong.  They foster an adversarial climate in new relationships, when you desire collaboration and joint vision.  Protective agreements have diminishing value in our complex transactional milieu. When agreements focus on results our attitude turns decidedly positive. We are no longer looking at what can go wrong, instead, focusing on what are the right results.

The effort at forming agreement is toward building a partnership for performance. This is simply the outcome we hope for, plan for, and the mechanism by which we achieve a win-win-win for employee, employer, and customer. Agreements are necessary to any accountability system—we cannot reasonably expect of another what we have not agreed to. They are also key foundational elements to the measurement of agreed upon goals against performance. They are the glue to high-functioning organizations. And, they encourage a learning attitude, a trust-based environment, creativity, and a “we culture.”

Learning the Art of Agreement

In forming agreements, we must know where we’re headed; what we hope to accomplish by them. This is the intent in agreement, or why it is formed. The process of agreement might take any number of approaches, but all must include the following, beginning with intent or setting goals.

The next step is to define the area(s) of responsibility and the attendant duties in them—the roles of all stakeholders. This is necessary to forming the vital commitment to results that must be made by both parties.

Measurement metrics are next—the things that make agreement less ambiguous and more real.


  • What areas of responsibility do I want to influence?
  • How will I know the job is being done?
  • What will good performance look like on each goal?

Judge the competence of the stakeholder(s) and their commitment. The first helps match the appropriate leadership style to their needs; the latter is the all-important measure of willingness.

Match the leadership style to the needs of the stakeholders whose performance you wish to partner with. A self-reliant achiever, for instance, requires a different leadership style than the disillusioned learner. Poor matching can risk the loss of commitment in stakeholders.

Be certain to put time stamps on expected outcomes; open-ended commitments have little emotional content, resulting in a casual approach that produces a similar outcome.

Agreement is necessary for those whose performance and alignment is productive and secure, as well as for those tangential to the organization. Encouragement is “condition blind,” but it is important to register both the commitment and willingness to improve performance. Without these, no partnership is formed as the parties are unequally yoked, pulling in diverse paths.

The opportunity in agreement is the “like heartedness” that produces extraordinary results. It’s a multiplication effect, and the thing that empowers teams.

September 8, 2017 |

The Puzzle Is a Picture


ROI by Frank J. Rich







By Frank J. Rich



Most of us find the path to solutions by methods unique to us. It’s that quality that defines us as individuals, and we revel in the view that there is no other quite like us. At the root of such methods are the dynamics of life, the things that influence our decision making, those we consider on our way to finding a solution. But when specifically tasked with a problem to solve, we usually turn to sequential logic or thinking. This method is a step-by-step linear thinking over time, while the holistic approach, where all knowledge is interconnected in space, is called spatial or visual thinking.

The sequential system relies heavily on what has happened before, and involves analysis, progression from simple to complex, organization of information, and linear deductive reasoning. Hearing and language and an awareness of time are also influences. In contrast, spatial thinking involves synthesis, an intuitive grasp of complex systems, (often missing the steps) simultaneous processing of concepts, inductive reasoning (from the whole to the parts), use of imagination and generation of ideas by combining existing facts in new ways (creative thinking). It is influenced by “visualization and images” and an awareness of space.

The fifth “mindset” in John Naisbitt’s book, Mind Sets! suggests that we “see the future as a picture puzzle.” According to Mr. Naisbitt, to see the big picture better informs a view of the future. As it happens, it works as well for other things. Let me explain.

I was once given a puzzle (along with a number of others) to ponder while a magician tidied up after his performance. It looked simple enough and quickly brought us all to a preoccupation with finding the solution to it. It was a piece of paper with a small hole at one end. In the center of the paper’s length was a narrow strip that had been cut and lifted away from the paper, though still connected at both ends. Through it was a string, which also threaded the small hole. And at the two ends of the string were tied round balls—too large to fit through the hole.

As I considered the puzzle, I looked first at how simply it was put together, then abandoned any notion of an easy solution in favor of some arcane knot tying that would surely solve the problem. “Just how did I do this as a child?” I thought. I worked earnestly at discovering the genius that held so many in stupefying rapture—each working hard at his own “step-by-step” process of elimination. In frustration, one among us pulled hard on the string end with the balls tied to it, and discovered the solution, not a moment before tearing the strip from its mooring. Amazed at the solution, we all saw the “picture” that had eluded us before.

We have all heard the expression, “You can’t see the forest for the trees.” It’s common enough to take its meaning easily. That is, that our narrow focus on the trees often sacrifices the larger view of the forest. In wrestling with the magician’s puzzle, we had prepped ourselves for the work of sequential thinking—eliminating one “trick” answer to the puzzle after another as though our logical minds would come upon the solution in time. It didn’t! Later, I heard most say that they knew the balls (which would not fit through the small hole) needed to be somehow relieved of the connected strip in the center of the paper. A simple tug on the balls would have pulled the strip through the hole, where the string and balls could easily slip free.

To explore, suggests Mr. Naisbitt, “we have to make connections between things that seemingly don’t fit, are obviously related, and sometimes seem to contradict common sense or formulas.” “Who has ever solved a picture puzzle by first putting the pieces in a straight line?” he adds. In this case, making connections is more intuitive than precise calculations. His point: “breakthroughs break old mindsets,” because discoveries are revealed in things that are already there. Birds fly; why not man? The atom was well known, but atomic physics was not before Einstein and others (Fraunhofer, Bohr, etc.) modeled it. Indeed, the world has always been round, but only a few could visualize it before 1492.

Whatever it is that we do, one thing is common to all. We must know something about the future to ensure the hope in continuing what we do. We must know what employees will do and will refuse to do, how customers will behave under various circumstances, how the competition will affect our own efforts in the marketplace, and not least the scalability and obsolescence of our capital equipment. Not perfectly, but with the surety of early explorers who knew that stepping out in faith would teach us more than torch us.

The pieces, merged together, seem always to form a picture that balances the “material wonders of technology with the spiritual demands of our human nature.” It seems a fitting conclusion in a world preoccupied with short-term results.


September 1, 2017 |

The Customer is (Not) Always Right


ROI by Frank J. Rich







By Frank J. Rich



In our efforts to apply the “truths” of business, we often err by the casual use of things we think we know. It’s the cogito ergo sum of a well-worn practice that allows such license, and the kind of careless thinking that leads to misunderstanding and ultimately, failure.

One such dictum is the oft-heard statement, “The customer is always right.” In its essential meaning it suggests that customers are to be treated with respect and deference, a special anointing that allows them the unusual privilege of obvious misstatements … about you, your company, or even the industry you work in. If you have customers, as most who work do, examples come easily to mind. But armed with such miscalculations we often face the most important objective in business—to satisfy the customer’s needs—with resentment and bitterness for having suffered through the dictum above. Increasingly, distinguishing the meaning in the statement from its expression becomes important as the requirements for “knowledge workers” rely on competence and careful assessments of the marketplace.

In fact, the customer is not always right, but he is never wrong. The heuristic in this seeming nuance is, perhaps, more important than most realize. Not only must we learn well how to serve the primary purpose in business—to create and keep customers—we must learn and practice an approach to the customer that encourages an effective response. When we choose to inform and educate, to become the assistant buyer customers seek, and not push and pontificate, then the métier of our choice is more fulfilling by the achievement of our goals. The alternative is the atavism of a Paleocene order, that which separates the future of business practice from the past.

Were this focus on the choice of words only the splitting of hairs, it would hardly be worth the paper they’re on. Rather, the careful consideration of words spoken and actions taken is the atelier of the mind, that workshop where all behavior takes shape. None of us wants to hear that we are wrong, but most are happy to learn something from another who is sincere and caring. The learning urge is fundamental to the human condition.

In his book, People-Focused Knowledge Management, Karl Wiig, asserts that mental models are the foundation of knowledge, personal or enterprise. As reference models, they encode personal experiences, and those from other sources. People and enterprises use these mental models to anticipate events and deal with situations. In simple terms, thought becomes behavior, and most thought is an essential combining of emotional responses to actual experience. How we “think” about the customer is how we will “behave” toward him. And this is why millions of dollars in sales are daily slain by the jawbone of an ass.

We have heard that there are two rules for business success regarding customers. Rule one is, “The customer is never wrong.” Rule two is, “When in doubt, refer back to Rule one.” Customers can be selfish, demanding, vain, fickle, arrogant, and disloyal; much like all of us when we turn into customers. What they are in search of is themselves, those qualities in the marketplace of suppliers that most relate to their own sense of value and belonging. If they come upon it accidentally, count yourself lucky. More often, it requires careful attention to their wants, needs, and habits, and good communications skills to win them over.

For example, I heard from someone at a gathering: “So, you’re a trainer. My company has a trainer already.” This, after answering his question about what Encore Prist International does. My quick answer was, “organizational development!” My second response was to ask if he had ever considered a difference between training and development. He had not, but was interested, so I obliged his curiosity. I asked how long he had been with his company, how old the company was, and the tenure of most in management. His answers all pointed to short work spans for most in the company, and a problem with turnover. I then asked what seemed most important to his employer when he was hired, his skills or habits. He pondered the question for a moment, then returned that he had not been asked at all about his habits, just a lot about what he had accomplished where he worked previously. I explained that his experience was fairly typical and that most short-term employees are let go for lack of good attitude and habits. Skills and knowledge can be taught through training, by skilled trainers, but attitude and habit journeyed longer in the making. Development, I offered, has a focus on the latter, and by the examination of right principles and practices as integral parts of the person and his values and belief system. With that, he admitted that his company had been wrestling with a turnover problem for some years, and that he had personally been looking furiously to fill slots in his department in the midst of a very competitive job market. Development, he concluded, might be just what his company needed.

Customers have three choices. They can buy from you, from another, or not at all. Most business success comes from developing customers of the “third kind,” those that drive other customers to you because they themselves feel so taken care of. Customers also have two important questions. “Why should I buy this product or service at all?” and “Why should I buy it from you?” Know the answers to these questions, and never make the customer wrong.


August 25, 2017 |



ROI by Frank J. Rich







By Frank J. Rich



Potential is one of those oft-quoted terms used to express the opportunity in someone or the future of some thing, such as a business venture. It is usually followed by a concern that reaching that potential requires something yet to form. Potential, it appears, has a dark side. Perhaps, it is because so few of us know how to measure it.

In simple terms, potential is the “likelihood of doing or becoming something in the future.” As it applies to business, we see new products, services, capital improvements, businesses, and personnel decisions, for their potential to be profitable. NPV (Net Present Value), IRR (Internal Rate of Return), and other calculations are used to help measure the “potential” success of these things. But like most things, we have less than perfect knowledge about them and proceed with certain “reasonable” assumptions in place. Good business sense, a knack for judging people, education, and experience all combine to reduce the risk of poor decision making. But, as you might imagine, the opportunity in “potential” begs for serious efforts at measuring it. One such measurement device is called Five Forces Analysis (M. Porter), and means to focus attention on a common experience to achieve very practical results—the kind that seem to have a greater “potential” for success. Here’s how it works:

Five Forces Analysis assumes that there are five important forces that determine competitive power in a situation—supplier and buyer power, competitive rivalry, and the threats of substitution and new entries. Each locus provides an opportunity to look carefully at the fundamental elements of any business venture. A review of these practical (common) experiences provides unusual acuity in measuring the potential of most ventures.

Supplier Power, or how easy is it for suppliers to drive up prices. This is measured by the number of suppliers of each key input (of your product or service), the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers’ help, the more powerful your suppliers become.

Buyer Power, or how easy it is for buyers to drive down prices. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with a few powerful buyers, they are often able to dictate terms to you

Competitive Rivalry, or the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you’ll most likely have little power to operate freely in the marketplace. If suppliers and buyers don’t get a good deal from you, they’ll go elsewhere. This is often the scenario created by poor customer service. When a company fails to measure, specifically, its success at satisfying customer requirements, it is sitting on a time bomb. When its customers become aware of an alternative they bolt to another supplier. On the other hand, if no others can do what you do, then you are dealing with the market from a position of strength.

Threat of Substitution, or the ability of your customers to find a different way of doing what you do. For all businesses the greatest source of competition is the alternative use of the same resources. If substitution is easy and viable, this weakens your power to influence the buying decisions of your customers.

Threat of New Entry, or the ability of others to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it. This is why it is imperative for companies to invest in technology.

The Drill

Begin by checking the factors above for the size and effect of the force noted above. For example, use a single “+” sign for a force moderately in your favor, or “” for a force strongly against you. Finally, assess your particular situation in light of the strengths and weaknesses you have noted in each of the areas above. Think through how each affects your “position” and “potential” for achieving the goals you set. The tally will help you see what changes are needed to increase your power with respect to each force.

The Porter method is a useful tool to help measure “potential” and to determine the balance of power in your industry. It is not a perfect predictor of these, but an effective tool in the effort to prepare a favorable market model for yourself and your company. Discovery is often the means to greater success, and not surprisingly, great fun.



August 18, 2017 |

Demand or Command Economy



ROI by Frank J. Rich







By Frank J. Rich




The trouble with transition models is that if you don’t have enough propulsion to get you to the new model while you’re leaving the old, you could fall into the abyss. Habits die hard, so when the transition is from “brick and mortar” models such as manufacturing to digital media and channels, the tendency is to circle the wagons to protect the last vestiges of the old—revenue you can count on—and snap up the new when it appears, as though sushi on a conveyor belt. All this while holding less and less inventory.

Historically, we’ve relied on the balance between production and consumption to fulfill market demand. You build it, hold it in inventory, promote it, and then pick it off the shelf for delivery. Like most exchange models this one too is based on confidence. But things have changed; consumers have turned into “simplifiers,” more in search of what they need than what they want—and for good reason.

The current economic malaise has left us with low employment, negative consumer credit leading to increased savings rates—each percentage point representing roughly $500 billion in spending—and increased debt, a gray cloud that chokes the enterprise from endeavor. Together, they have reduced the energy for consumption by over $1 trillion. Such coping mechanisms are habit forming—behavior that is hardest to form and hardest to break. In 2009 people were forced to examine their means; they have now learned to choose to live below it, a habit government might benefit from. Deficit spending is a well-endowed short-term catalyst to growth, a shot in the arm—at least history would confirm, our current recovery model in point. Long-term measures target the foundations of monetary and fiscal policy, things like paring expenses until funds meet the demand for them. To be clear, supply must grow to meet demand, and not the other way around.

But with demand so low, what must we build or imagine that might shake consumers into an exchange of goods for money? Perhaps, it is no less than products so embryonic that the need for them is yet undefined. Auto repair done at one’s home or office, framing parties (aka Tupperware) that get all those photos and prints tastefully on the wall and out of the attic, bicycle clubs for the unfit everyman riding rental equipment, the return of home delivery trucks that bring us organic everything like milk in a bottle, etc. Defining such markets is fundamental economics—see need before desire. Simplifiers are like that!

The Command Economy

The obverse side of demand is command, as in controlled—the centralized control of all means of production and attendant resources that provide birth-to-death products, services, and support of all things deemed “necessary to the common good,” at least by the controlling entity. When feeling angry over one’s state of disenfranchisement, voting alignment with those who promise to ease your burden (by giving you your due) touches the deepest pain in people—the desire to be “as good as” another—something psychologists agree comes by a realistic self-assessment and personal achievement. It is not something one can give to another. We will not find what we are looking for if we don’t venture out to seek it.

Such Hobbesian conflation proves dependency a greater influence on poverty than one’s birth circumstances. Its purpose intact; a command economy educates, equips, and produces only that which sustains itself—the natural law of survival. It equivocates need and want, a system that exorcises diversity. As such, freedom to choose may become the defining anachronism of the American way. Luckily, it is still our choice.



August 11, 2017 |
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