What’s Keeping Top Execs Awake at Night?

A recent issue of CFO magazine published the results of the Duke/CFO Global Business Outlook Quarterly Survey. The results are not surprising, as CFOs are more pessimistic than ever, but these numbers introduce objective support for a company looking to change.

The next survey may look even more grim. After all, this study was conducted before the fall of Lehman and the approval of bailout packages.

The Great, Online Executive Job Search

CareerBuilder? Monster? Not if you have a decade of industry and managerial experience under your belt. Basic job search sites are great to launch a career, but here’s our list of job resources that cater to modern executives. Think of it as life after CraigsList.

Theladders

• The Hook: Premium professional jobs, most with salaries above $100,000.
• The Line: Thousands of new jobs posted each week, and a sealed front door keeps opportunities legitimate and serious.
• The Sinker: Their “Pay to play” business model ranging from $30 to $120 keeps you wondering what’s behind the login screen before signing up. Some previous customers have chosen not to renew out of a lack of quality postings.

NotchUp

• The Hook: Post in front of organizations that look for top-level executives.
• The Line: NotchUp offers a free service that sorts out lackluster applicants and postings with review process, leaving great applicants with great opportunities.
• The Sinker: Submitting your resume is the extent of the interaction of the service. Applicants have to wait for employers to find them.

Itzbig

• The Hook: Posting a resume on CraigsList is not anonymous, but Itzbig promises an anonymous job search.
• The Line: Its simple main page asks two questions: “Where do you want to work?” and “What do you want to do?” After entering your email address to view results, you’ll see matches unique to the industry where you want to live.
• The Sinker: Most results we saw came back with “Our current opportunities are not an exact match based on the position and location you selected.” Itzbig has potential, but give it time to grow.

JobFox

• The Hook: Pitch your own interview.
• The Line: Post your “mini-interview” and select the companies you want to apply to.
• The Sinker: Lacks management consulting and finance positions, and may not be ideal for senior executives.

Global Startups

On July 2, 1962, Sam Walton opened the first Walmart Discount City store in Rogers, Arkansas. Walmart incorporated and grew into new states over the years to follow, but it wasn’t until 26 years following the grand opening of the first store that Walmart opened stores in a different country.

Many young businesses realize their idea could work just as well abroad as on their homeland. As a result, companies are beginning to skip the initial growing stage and launch internationally to pool resources from across the world. A company could choose to incorporate in the state of Delaware, but Switzerland may provide better tax advantages. Suppliers may offer a product or component a few hours away, but suppliers in Asia may provide even better prices.

It’s even become cheaper to work with suppliers and vendors from other countries. A quick selection process is available for free with a web search, and online directories categorize data and contact details. The only limitation is initial funding.

A few obstacles as well.

Launching internationally has a few more obstacles that companies launching in one market would not experience.

• International laws and tariffs: Setting up shop in a new country does not provide the founders with a native’s advantage. Most markets are supportive of capitalist companies coming in, but each market requires a separate analysis to review every part of your business to assure compliance.
• Cultural limitations: Messages and packaging would have to be translated, but companies also may have to observe how natives view products or services in that industry. A separate logo or company name may have to be created.
• Time zones: Some suppliers are hard enough to reach during normal business hours. Dealing with suppliers who can sometimes be fourteen hours ahead of your clock could affect the outcome in times of crisis.

Entrepreneurs have to be able to articulate to their investors reasons why they are going global, and larger revenues, economies of scale or first mover strategy are not justified reasons. Entrepreneurs also have to realize that relationships between the suppliers they want to work with have the potential to destroy their company. Supplier relationships should not be created with the intention of saving the most money; instead, they should be created with a potential ally in the industry where both parties can depend on each other.

When an idea has the potential to work well in multiple markets—and startups find ways to gather investors and distinguished members for the board—entrepreneurs may be willing to deal with the hassles of launch and navigate unknown territories to build a promising, global organization.

Pirates: Somali, Illegal Downloads & Jack Sparrow

Portfolio.com recently published an interactive map showing how pirates of every type—from hostage situations to MP3 downloads and Disney franchises—are affecting the business world.

Click here to explore.

The Delicacy of Detroit’s Big 3

We see plenty of analysts and critics on either side of the decision for Congress to lend tax dollars to keep GM, Chrysler and Ford afloat. Both sides have great points, too.

Give ‘Em the Cash, and Keep Americans Employed.

• Falling to help the Big 3 won’t only affect the board of directors in the situation, but it will trickle throughout their partners. Entire companies have formed to provide parts, service and support for these companies. Not helping the Big 3 will put entire industries out of business.
• Paying for the bailout will be expensive, but paying unemployment to millions of workers over the next three years will be even more expensive. The federal government stands to lose billions in tax revenues in the next five years. With the bailout, we could get that money back. With the Big 3 closing, we won’t get any of it back.

Let Them Learn from Their Mistakes, and Don’t Spend Americans’ Tax Money.

• The Big 3 are seeing this situation because of their stubbornness and refusal to adapt to consumer preferences. Their business model began failing a decade ago, and they never changed. By passing along the money, we won’t see any change; we’ll simply allow them to hold their head above water a bit longer. The bailout is a life jacket, not a rescue boat. And in this situation, they should no longer be in the water anyway.
• The Big 3 are giving us a hefty dose of black-and-white reasoning. If we give them the money, they claim their industry will see short-term changes and return the companies to the glory days of black budgets and rewarding pensions. If we don’t give them the money, they claim the entire industry will fail, millions of people will lose jobs, and America’s economy will never recover. Both situations are extreme, and analysts cannot exactly pinpoint which view is closer to reality.

Regardless of the decision, Americans will pay with taxes: either through the bailout or to cover the loss of tax revenues. While analysts and politicians will continue to bicker over the financing, modern executives should be wondering exactly what will Detroit have to become to return to the glory days. Is it anything like Better Place, where Hawaii just joined to become a test state for the system of electric cars?

The American automotive industry needs to reinvent their business model, not just their automobiles. The terrifying part about dreaming up new business models is that they may realize that they have to change more than they can to stay in the black. Even worse, they may realize that the industry has changed, and following a new business model in the global automotive industry may almost make them irrelevant.

Whatever You Do, Don’t Cut Your Ad Budget

If we’ve seen a recent pattern of topics from prominent publications, it’s the suggestion for companies to avoid cutting any of their marketing dollars. Harvard Business School, Knowledge@Wharton and Chief Executive are all pitching in to offer their reasoning on why a recession is the perfect time to not only maintain but actually increase ad budgets.

Modern day executives are looking to trim their expenses under the pressure of tighter budgets. Every year, professionals are asked to do more with less, and 2009 will be one of the toughest years in decades. When looking to reduce spending, why not start in the marketing department? After all, running a single-page advertisement in a magazine can cost as much as $150,000 (like People magazine), and social networking initiatives provide hazy forms of measurement when looking at results.

Why wouldn’t we cut out the ad department? We’ve heard the adage that sales increase with marketing. Decrease marketing and you’ll see a drop in sales.

John Quelch from Harvard Business School adds to the discussion by writing in his blog,

It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times. Uncertain consumers need the reassurance of known brands, and more consumers at home watching television can deliver higher than expected audiences at lower cost-per-thousand impressions.

Knowledge@Wharton agrees by adding,

As companies slash advertising in a downturn, they leave empty space in consumers’ minds for aggressive marketers to make strong inroads.

Aside from the immediate affects of sales, brand perception also changes. Products that are no longer in the marketplace begin their gentle march to the back of customers’ minds. Businesses should maintain a steady level of advertising. Brands are there for the best of times for consumers; they should continue to nurture and comfort consumers in other times as well.

How Best Buy is Surviving the Holiday Season

For Black Friday, the nation’s largest shopping day of the year, the manager of a Manhattan Best Buy set up amenities for both employees and customers: a new Red Bull vending machine for exhausted employees, and an in-store dog sitting service for stressed out customers.

The retail electronics industry has been struggling for the past year to remain profitable, and Best Buy may be one of the last standing major players.  An article from Sunday’s New York Times writes,

[Best Buys'] chief rival, Circuit City, recently filed for bankruptcy protection and is closing 155 stores. Tweeter, a high-end rival, shut down this week, and Sharper Image’s stores, which sold more exotic electronics, are liquidating. CompUSA closed most of its stores last year.

But no retailer is immune from the drop in consumer confidence and spending, especially one that specializes in gadgets, not groceries. Sales at Best Buy stores open more than a year were down 7.8 percent in October, compared with the same month last year. The company will not release November figures until Dec. 16, but it’s already clear that November was a brutal month for electronics retailers.

After several prosperous quarters, Best Buy president Brian Dunn was a little surprised on how quickly sales in their company changed. Other stores were closing stores, and with a few less competitors out there, customers would naturally start flocking to Best Buy, right?

Best Buy’s president, Brian Dunn, discussed the challenges the company faced. “The depth and speed with which the economy stumbled was extraordinary,” said Mr. Dunn, who started as a salesman at the chain 23 years ago. “I’ve never seen anything like it. Our business was growing really nicely and then, all of a sudden, boom!”

Best Buy is responding to the change in revenue by cutting their inventory and advertising budgets. They are also pushing a few exclusive products designed to increase traffic to the chain’s stores. Apple, HP, Sony and Samsung are recognizing the challenges and modifying their contracts to change inventory levels. Plus, like every retailer pushing high-ticket items, Best Buy is promoting their financing options.

MaximumCEO published an article recently on how companies may need to revisit their business model and ask if their way of doing business is still relevant to their industry. During the peak of the retail industry’s year, we should recognize that Best Buy is making a few gambles, but their decisions on how to change seem justified.

What ‘Structural Breaks’ Mean To Your Business

During volatile times in a company or economy, a company’s crisis may be the signal that their business model is no longer relevant to their industry.  As an industry continues to change, companies must change with it or go disappear altogether.Richard P. Rumelt writes in an article from the McKinsey Quarterly that now is the time for companies to be strategic, and adjustments are crucial for survival. 

Structural breaks render obsolete many existing patterns of behavior, yet they point the way forward for some companies and at times even for whole economies… Difficult and volatile conditions wipe out some organizations—yet others prosper because they understand how to exploit the fact that old patterns vanish and new ones emerge. The first order of the day is to survive any downturns in the real economy (see sidebar, “Hard times survival guide”), but the second is to benefit from these new patterns. A structural break is the very best time to be a strategist, for at the moment of change old sources of competitive advantage weaken and new sources appear. Afterward, upstarts can leap ahead of seemingly entrenched players.        

 Continuing with a company’s current strategic plan may not be the best option in order to weather this economy. Companies that hope to succeed will have to analyze their business strategy and ask if it is still relevant to their industry.