ARTICLE TEXT:
FUN,
FUNDS AND FUNDAMENTALS
In
an era of cuts, rationalizations and restructures, the following
article cuts to the core. Figuratively, it speaks about
the unspeakable. The issue need to be brought onto business
agendas. Therefore, we invite you to share it with those
in your network.
Be
careful of what is cut.
The
unintended consequences of brutal cost cutting, restructuring
and outsourcing decisions throughout the corporate sectors
and around the world are conspicuous. They are evident in
inadequate stock levels, lower staff member totals, insufficient
IT infrastructures, poor and spasmodic customer service
standards, as well as many other profiling characteristics.
Most
devastating are the instances of despondent staff morale,
negative self images and dysfunctional corporate cultures.
One
common thread in too many such instances is the outright
ownership or dominating control of funds managers, hedge
funds and private equity investors.
During
the last decade of the twentieth century and the first decade
of the current one, the broader finance industry assumed
top mantle of international, national and local business.
As a consequence key performance indicators were oriented
to financial ratios. Financial gearing, debt and fiscal
instruments have become the overriding drivers and measures
of business productivity, competiveness and worth.
With
the changes in philosophies and focus, past corporate values,
histories, achievements and beliefs were and are not recognised,
respected or valued. Sustaining corporate cultures were
dismantled or fractured. In short, many entities became
and often remain soul-less.
Long
term strategic plans, goals and objectives have been discarded.
These financial-geared corporate leaders typically had and
have trading horizons of two, three or, at a push, possibly
five years.
The
targets of such senior management actions centre on stripping
out excess “fat” and infrastructure, complemented by increased
transaction volumes, margins and profit, often underwritten
by reduced inventory and tighter cost controls.
Brand
names appear to be the only constant. However, behind the
signage, billboards, advertising and positioning statements
it was a very different atmosphere and working or business
environment.
Correspondingly,
funds and funds managers have become increasingly mobile.
There is a seeming perennial pursuit of optimal returns,
capital growth and the liquidation of equity in specific
entities, products and services.
In
the wake of these broad trend-line are the littered remains
of undercapitalised, highly geared corporations, retail
investors who carry book losses for investments in restructured
public listings and IPOs (Initial Public Offerings) and
a deep pool of disillusioned executives who were previously
dedicated professionals with a strong commitment to specific
industry ideals.
National
governments appear to be in tail spins, their taxation offices
bewildered by “Barbarians” who are no longer at the gate
or located in the head office, but rather long departed
for locations, opportunities and prospective investments
beyond country and regional borders.
Consumers,
clients, the media, suppliers, investors and political leaders
need not look far to be confronted by the ubiquitous presence
of such case studies. Few, if any, sectors appear to be
immune. Examples are evident in retail department stores,
fashion and food networks, engineering groups, property
development, commercial shopping centre investment vehicles,
construction, human resource practices and yes, even funeral
directors.
ALTERNATIVES
PREVAIL
For
those business owners, leaders and managers who choose not
to be involved or overwhelmed by this all too common trend,
there is considerable scope available to establish distinctive
presences in the marketplace, recruit and retain professional
staff members who are dedicated to certain positive corporate
cultures, values and philosophies and to foster closer,
mutually rewarding relationships with manufacturers, distributors
and supply chain management groups who assign considerable
value to belief systems in which satisfaction, service,
professionalism and respect are immutable foundations to
sustainable success.
A
NEW LANDSCAPE
The
new order or subset of corporate owners and leaders cannot
be ignored. It is assertive, focussed, driven and often
well resourced to pursue and achieve short term financial
outcomes.
However,
its success ratio is not high. The root causes of many liquidations,
mergers, acquisitions and floundering business entities
can be traced back to the emergence on shareholder listings
and ownerships of fund management, hedge funds and private
equity ownership.
As
the green shoots of new business growth and opportunities
appear on the corporate landscape it is significant that
a re-emergence of the small entrepreneur, females in particular,
is apparent.
Creative
and widespread use of the countless forms of low cost social
media is impacting on the value and nature of brand names
and images. Everyone, it seems, has an opinion to express
and a point to be made. They simply need a channel and a
platform.
The
balance of power is hanging.
Marketing
power is shifting to consumers, networks and entreprenours.
Corporations and business entities are being made to participate
and engage with customers and non customers, or to suffer
the consequences.
High
energy, expressive and open entrepreneurs have the capacity
to avoid or overcome previous impediments of size, worth
and established presence by ongoing use of social media,
like You Tube, Facebook and Linkedin.
Significantly,
the attributes which appeal to and most influence on-line
savvy consumers are the philosophies, values, cultures and
beliefs of the people behind the brand. It can be fun.
Callous,
disciplined adherence to objective and detailed financial
ratios, benchmarks and goals appear to have little market
appeal.
Behold,
the evolving presence and competitive advantage of “local”.
That includes delegated authority to corporate executives,
greater commitment by local members of buying, marketing,
supply chain and franchise networks.
Flexibility,
adaptability, engagement with local customers and direct
responsiveness will be the foundations of sustainable development
in the ensuing months and years.
There
is a new growing force in the marketplace and it is not
dependent on capital, debt, gearing and financial ratios.
May
the force be with you.
THE
AUTHOR
Barry
Urquhart, Managing Director of Marketing Focus, Perth is
an internationally recognised business analyst, strategist
and conference keynote speaker.
He
consults to big and small, new and established entities
in their pursuit of growth, development and competitive
advantage.
Email:
urquhart@marketingfocus.net.au
Web:
www.marketingfocus.net.au
Tel:
(08) 9257 1777
Mob:
041 983 5555
