Building for the Future

If there is one thing I’ve decided its that the future will look very different and if anyone wants to be in business in 20 years time they had better be prepared to make drastic changes to their business models.  Patience is key.

Particularly in the US, business has had a free pass for close to 100 years.  People walked everywhere and if you opened a shop for a meager sum near just about any residential area, you were guaranteed to make enough money to keep the doors open and feed your family.  Your partner didn’t have to work, your kids had a good college fund and your had enough financial security to take a long holiday or three.  A meager domicile, a comfortable life, and some a business you could take pride in.  All was well.

A number of things happened since that time in America, not least of which has been the demand for more and more “stuff” (George Carlin would be proud) to fit in houses that never seemed to be big enough.  While there is no shortage of people who are quick to blame one thing or another, one thing is perfectly clear – this is how it is now.

Oddly enough for those of us in the outdoor industry, life has always been a bit of a throwback to that ideal.  We have a saying that in this industry you can’t get rich, you can only get happy.

I hate to say it, but the American business model of doing things simply and being happy worked right up until the 90’s.  After that, the world of large corporations and endless red tape changed things.  Not all red tape is a bad thing and in fact, you could argue that if our businesses and models were still as simple as they were during those golden years of American manufacturing and growth, we wouldn’t need to navigate the mind field of bureaucracy.  The simple fact is, American workers are much less happy than they were 50 years ago and this should not really come as a surprise to anyone.

So then, Mr. Author Man, how do we prepare and succeed in this world?  Well if I knew that I’d be far more successful.  As it stands I’ve only been successful in helping people and small organizations establish which way is up.  I have yet to be in a position to make true change on a larger scale.  Here’s to hoping!

That being said, I don’t mean to dodge the answer.

According to an amazing article on Patagonia, much has begun to shift in this industry and will hopefully spread to others.  While they can be looked at as a clear beacon of the future, I happen to think they needed the old model to put themselves into a position to ring in the new.  That being said – let’s look at what some small companies have done and how its helped them build for the future.

A company called NextJump has actually instituted a “No Fire” policy wherein you become an employee for life once you come on board.  They cannot and will not fire you for performance reasons.  Rather, if you are having trouble you are coached and given help.  CEO Charlie Kim makes the analogy that if you were in a family and fell on economic hard times, would you downsize the newest family members?  “Sorry kids, rough year and we have to lay off our family to just three kids – you two are up for adoption.”  When taking people on, they’ve decided to think of it as an adoption – and they do not remove family members.

One other consistency between Patagonia, NextJump, and other great organizations is they have adopted a business model that keeps them in business.  It doesn’t have to grow, it doesn’t have to make shareholders happy – it simply has to sustain itself and that is all.  Don’t think this can work on a corporate level? Try Costco.

Costco’s culture was started during a time when the business model didn’t have to be over-generous to its employees.  In fact, competitors that have since followed Costco’s model have subsequently made piles of cash by paying their employees below-industry standard wages as well as work them above-standard hours.  Walmart’s Sam’s Club change does exceptionally well as a direct competitor to Costco – while never quite doing quite as well as the original.  I happen to patently disagree with that article’s logic.  There are numbers and Costco surely does have an overall strategy but the biggest difference is fierce loyalty – and its not created because they offer first-party branding.  Wal-mart does, too, remember?

I personally look at what a business has to do to be profitable, pay its employees well, and have a stash left over to prepare for a bad year.  In our industry, that usually means a bad winter (or four here in Tahoe).  But it also means adjusting the business model and expense strategies so that one year carries over into the next.  Marking things down the moment they aren’t seasonally relevant is merely a slow death-spiral.  Protect your brand and display your products with pride.

The last five years have been truly eye-opening to me as I’ve gone from one corporate team to a small company and have been able to see just how transferable the headaches are.  In the end the message always seems to be the same for getting through tough times and for preparing for the future:

Be patient.

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