Changes in Change

The only thing that says constant is change. Or at least that's the theme of many books, articles and speeches. However, what is generally not fully acknowledged is that change itself is not constant, but variable.

A few years ago Wal-Mart moved into a neighboring town. That was change. However, it was very predictable. Predictable for me--I could get to Wal-Mart in 15 minutes instead of 30! And predictable for them--typical blueprint, same building materials, normal start-up process, etc.

In short--predictable to execute with predictable results.

This is our favorite type of change. Students move predictably (we hope) through school grades. Buildings are built to carefully drafted blue prints. Machines preform to predetermined specifications. It is tempting to think that all change can be logically designed, planned and executed and should have predictable results.

If only that were the case.

A couple years ago another change took place at my local Wal-Mart. Apparently the bean counters at Wal-Mart headquarters in Arkansas determined that according to their models Wal-Mart would do better if it offered a "cleaner" store. Instead of a mass variety of different products crammed onto the shelves it would offer a smaller selection of carefully targeted items. Think about it--why force customers to scan through 14 dish soaps when Wal-Mart buyers can pre-select the three best soaps for the customer?

Wal-Mart is a good operator so not surprisingly the change was carefully planned and beautifully executed. As a customer I didn't even realize what was happening until the products I loved stopped showing up in my local Wal-Mart. Visits to other nearby Wal-Marts confirmed that products I wanted simply were not available anywhere in the Wal-Mart system. As time went on the lack of products became more and more pronounced. Instead of switching to the "better" alternatives I started shopping at competing stores. Perhaps I'm an isolated anomaly, but guessing from the way Wal-Mart stock has performed the last couple years SKU reduction hasn't exactly been a smashing success.

Change can be roughly grouped into these categories:

• Predictable to execute with predictable results (opening a new branch store)
• Predictable to execute with unpredictable results (new strategy like SKU reduction)
• Unpredictable to execute with predictable results (farming)
• Unpredictable to execute with unpredictable results (new internet startup)

Before starting down the road to change, think about the kind of change you are attempting. Each type requires a very different set of tools to successfully navigate.

Disclosure: I am a huge fan of the index fund and do not own any individual Wal-Mart shares.

The Triad that Destroyed American Manufacturing

1) Social Customs: When was the last time you heard a proud parent say, "My child is very interested in manufacturing?". Never I'll bet. Over the years manufacturing has gotten quite a social black eye. Some of it has been fairly earned, some simply hype. Nevertheless these social attitudes towards manufacturing directly impact American competitiveness against foreign companies. Particularly if those companies are working in countries where society holds an opposite view on manufacturing.

2) Foreign Sales of US Government Bonds: Every dollar invested in US debt are dollars not spent on US made products.

3) Computer/Internet: Before the days of computing the logistics of delivering goods to local communities in the quantities needed at the times needed was impossible to do on a global level. In those days redundancies in supply were necessary to handle shifting demand. Today however it's possible to globally supply demand from only a few centralized suppliers through the wizardry of computer managed supply chains.

Advanced Business Principles Reading List

If you thought your university economics class was boring, dull and confusing you didn't read Money Seeds by Lee Wibberding. Lee explains complex topics using clear simple illustrations that brings life to basic business principles.

The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It is a must read for anyone considering striking out on their own and starting a business. This book really changed how I though about the process of creating a new business.

OK, I'll admit it I've never read this book...because it isn't published yet! I have however had enough exposure to Dave Ramsey to be totally pumped about his upcoming book EntreLeadership: 20 Years of Practical Business Wisdom from the Trenches.

Change: Planning for the Journey

Change is relentless. Each destination is a milestone one the road to yet another change. However we generally plan and execute change as if it were a destination. Destinations are important--if I'm going to the beach I'd better pack sunscreen and swim trunks. But I also must be prepared for the journey--are the tires in good shape? Has the oil been changed? Most importantly--is the DVD player hooked up with plenty new stuff for the kids to watch!

On many trips the journey is a bigger deal than the destination. Change works the same way--don't focus on the destination so much that you miss out on the journey.