Self-employed, Productive Paranoia, Keep it simple & Jiffy Lube
20th September 2020 Evolution Partners Newsletter
“We’re not even thinking about, thinking about, thinking about raising (interest) rates” Jerome Powell, Federal Reserve Chairman 30 July 2020
Hope you’re Thriving!
It’s been a pretty busy week here with 3 quarterly planning sessions and much of the remaining time either researching or doing interviews for my new book about Onboarding. For most of the teams I work with there is a real sense of cautious confidence at the moment. Now I’m conscious that hubris is always followed by nemesis but there seems a level of stability in the economy, people are aware that the Government stimulus will end soon and believe they have sufficiently stabilised their business. In fact, some are saying they have never been busier. Back in March and April we switched all our efforts to execution planning as was necessary and put strategic work on hold in a lot of cases. There were desperate meetings to stay open, to assess the new normal and adapt to that. Next, we entered a period of stabilising the business, and it seems that now we are looking to re-start or accelerate in many cases the strategy work. To build businesses that have a unique and valuable position in the market that is different from competitors.
Prepare for a long road to global inoculation
In those early days, many people were saying that a vaccine could be available within 12-18 months, and those people were competing for airtime against those who were saying it’s all overreaction to just another flu.
A lot has changed since then.
We’re seeing a very serious second wave going through Europe with cases doubling in the past two weeks in more than half the EU states. Maybe second waves are mostly caused by human nature, maybe it’s another case of hubris being followed by nemesis. Perhaps it’s just people who desperately want life to go back to normal and are tired of compliance. But one thing is for sure, it’s not the virus, the virus is opportunistic and only spreads when it can.
If the initial estimates were right, and we are now 6-12 months away from an effective vaccine, that doesn’t mean the world will return to normal in 6-12 months. In fact, this week Adar Poonawalla, CEO of the world’s largest vaccine manufacturer, said that “not enough COVID-19 vaccines will be available to inoculate the global population until at least the end of 2024”, and that “pharma firms were not ramping up production capacity swiftly to be able to inoculate the world population in less duration”
The long-road impact on business
What does that mean for you? For your business?
How can you factor that into your planning?
Author and philosopher Ayn Rand said, “We can evade reality, but we cannot evade the consequences of evading reality”.
- Over the past 6 months, Governments around the world have pumped unprecedented stimulus money into their economies. This can’t go on forever.
- Many employees around the world are being paid even when they are not working. This too can’t go on forever.
- Many people are living from savings or spending from savings. This can’t go on forever.
When we change the timeline from 6 months to 4-5 years, we change the way we think about the problem.
Now I’m pretty confident that when a vaccine is proven to be safe that there will be a fight amongst countries to get their populations inoculated as quickly as possible and to get a hold of the large quantities of the vaccine for them will be a real challenge with a lot of trade tactics and blocking occurring. Unfortunately, this means that the first world, rich countries will likely be the first in perhaps 1-2 years from now, if we’re lucky.
Therefore, as we think about this next phase of the pandemic, going for a year or two, we’re likely to see more of the following:
- Large second waves as people’s tolerance decrease, complacency increases and northern hemisphere winters reduce Vitamin D in populations and increase COVID-19 spread.
- The duality of increased pressure on Governments from different parties to both stop and maintain stimulus, and increased concerns over escalating unsustainable Government debt.
- Transitions from employees paid by Government stimulus, to unemployment programs, again as pressure on Governments increase.
- Increased entrepreneurship and gig economy workers.
Transition to self-employed
This week the latest Australian unemployment figures were released, and the media was stating “The unemployment rate unexpectedly fell to 6.8 per cent in August from 7.5 per cent the previous month, fuelling optimism that Australia may have passed the worst of the pandemic recession.
”Yet buried amongst the surprisingly good jobs figures was a graph that spoke to perhaps the real story. Almost all the increase in employment was for the self-employed. So perhaps people who have lost their jobs from affected industries are starting new businesses, or perhaps joining the gig-economy.
The civility dam is beginning to leak
If there’s one way to bring a group of people together, it’s a common enemy. When you start a new business with a business partner there is an antagonist to your story. A common enemy you both can work together to beat – not failing in starting a sustainable business. Yet once the business is sustainable often the common enemy, the protagonist fades away and the time for differences and arguments appears. I think that in Australia over the past month the common enemy in Coronavirus has faded, and the civility that we saw in society 4-5 months ago, and the enemy we were so proud to see people working together to overcome, has faded away, like cracks appearing in a dam wall, letting ever more water begin to slip through. What’s interesting is that it seems to be across the board. One always expects the crackpot radio show host or extremist podcaster to have wild shouty views, attacking everyone they can. But I seem to have noticed some everyday leaders, in distinguished positions attacking and provoking on both social media and the general media. I don’t offer an opinion on what they are attacking about, I subscribe to science first. But I just make note that in the past month or so the social discourse has turned quite nasty for some, in a way I don’t think I’ve seen before.
Prevent hubris with Productive Paranoia
“Well gee, you’re a negative chap aren’t you Brad?”, you might think.
As Andy Grove of Intel said, “We must look for the black cloud in the silver lining”
We live in perhaps one of the most unpredictable times in the modern era. We face global trade wars, the largest recession in 100 years, civil unrest and technology disrupting many areas of life and work. And that’s just the beginning. Right now, your little business would be like squishing an ant to these macro forces shaping the world economy.
What I’m exercising is a concept called Productive Paranoia, for hubris, the personality quality of extreme or foolish pride or dangerous overconfidence, can easily appear when the Government has been paying the bills for the last 6 months, you’ve survived the pandemic and you are quite busy. The best leaders exercise Productive Paranoia by always asking “What if? What if? What if?”
The concept of Productive Paranoia, from Jim Collins, is best described here“By preparing ahead of time, building reserves, maintaining “irrationally” large margins of safety, bounding their risk, and honing their disciplines in good times and bad, they handled disruptions from a position of strength and flexibility. They understood, deeply: the only mistakes you can learn from are the ones you survive.”
Read more about the Productive Paranoia concept.
This week on The Growth Whisperers podcast
On episode 23 of The Growth Whisperers, Kevin Lawrence and I talk about the following.
Why keeping it simple wins every time.
One of the great traps leaders and leadership teams fall into is excessive complexity. Smart people particularly want to use their intellect and not let it go to waste. They don’t want simple strategies, yet most of the time simple strategies or simple tools are the most effective, especially when they are built by people with a deep understanding. Brad and Kevin talk about the importance of keeping business strategy and business tools simple, and what happens when you don’t.
Listen to The Growth Whisperers
From the vault
Differentiating activities – Jiffy Lube example
Founded in 1972 Jiffy Lube is a franchised drive-through oil change shop that changes your oil & filters, tops up your other oils and vacuums your car’s interior in less than 10 minutes and without an appointment. Unlike other motor mechanics and vehicle repair shops, Jiffy Lube is only focussed on fast oil changes at a low price and doesn’t claim to repair all problems with your car. However, the items they do work on, they claim to know very well, use quality materials and provide a low price.
In particular, Jiffy Lube has 3 main differentiating activities;
Only provides lubrication services – not other car repair services
Retail high traffic locations – not industrial estates
10-minute turnaround no appointments required
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