Strategy & Leadership for the Replacement Economy
many televisions/screens do you have in your home? How many
additional units will you buy?
- Will your next vehicle be larger, smaller
or the same size?
- Do you go to Tim Horton's/Starbucks/Cafés
more often, or are you eating more from home?
- Are you using more/less energy
(electricity, gas, etc.) today than yesterday?
- Do you donate to more or fewer charities
today vs. 5 years ago?
- When did you last buy off the internet vs.
going to a retail store?
- Does your 20-something relative have the
kind of job they expected at this stage of career?
- Does your organization use more, less, or
same amount of consultants?
- Can your government (federal, provincial or
municipal) rely on the same level of corporate profits/average
personal income to generate the same tax revenues as in the
We are now well entrenched in what is called the
Replacement Economy - Now, more than ever, it requires
bold yet different strategy and leadership approaches than the
growth economy of the past.
THE END OF GROWTH? POSSIBLY, BUT ALSO MAJOR SHIFTS AND
"Growth" has been the mantra of all my years in business,
volunteer service and personal/family living. Indeed it has become
so inculcated over the past 40 years within North America plus Asia
and somewhat in Europe; that we don't even stop to think about the
underlying tenets that created growth economies after WW2:
- Imperialism/Commonwealth - dominant cultures drew wealth, raw
materials and inexpensively produced goods from geographic or
- increased oil & energy-driven consumption with rising
prices of fuel, new creation of drugs and therapies, new household
materials, fertilizers and other petrochemical applications;
- enhanced durability and quality of goods that have extended
product lifecycles; and,
rising debt levels of, well, everything; and more. Today we are
quite literally, reaching our limits;
- rising debt levels of, well, everything; and more. Today we are
quite literally, reaching our limits.
Indeed, somewhere around 7 years ago we slipped, somewhat
imperceptibly, from a growth economy into the Replacement
Here are some examples of these components, each of which can be
considered focus-worthy on their own.
"Demographics is Destiny" claims Canadian demographer David K.
Foot. Growth populations are those where the numbers of
younger people outweigh the numbers of older people. The "up and
comers" tend to have disposable income, and will spend money to
establish homes, purchase furnishings, cars, etc. - assuming they
have jobs that generate disposable income. 'Western" countries
typically have an inversion of their demographics where the older
age groups out-number the younger age groups. This means that there
will be less economic spending by following generations than the
previous generations and a "stalling" of the economies. Western and
Central European countries have experienced this stagnation for
many years now.
Asian, S. American and Arab countries all show significant youth
populations that will drive their economies forward in the next
decade or more. However, they must also be able to create
meaningful jobs that can generate wealth and disposable income to
drive purchasing power by the Gen Y/Echo/Millennials (median age
A few key countries, including USA, United Kingdom and China,
through either policy (for example, China's one-child policy) or
immigration, have found ways to be anomalous to the below trends…
flattening their pyramids.
Looking forward, we can see a replacement of the dominant
growth-established "Western" economies with the truly
growth-oriented developing economies. Key countries, such as the
USA, are maintaining their population with immigration largely from
Mexico. For some years, the United Kingdom has fostered immigration
from many previous colonies and developing nations. China has
largely limited their potential for a growing younger demographic
and can look forward to a decline in domestic population
China, Indonesia, India and Brazil are now emerging as the more
dominant growth economies of the world, essentially replacing the
traditional European and American economies. Strategy must take
account of demographic shifts.
& Concentration of Wealth
The first set of charts above for Canada, USA and the UK, show
that for median families, the past 20+ years have been
marked by marginal disposable income growth, meanwhile the top 1%
have consolidated their wealth, and in many cases sought offshore
tax havens to squirrel-away their wealth. The old axiom of
capitalism "the rising tide will raise all boats" has clearly not
actually happened. This has meant more and more difficulty for the
main sections of populations to increase their purchasing power,
and drive-up the economy in a sustained manner.
Disposable income in Western countries has remained largely
flat, and in several European countries has seen decline. At the
same time, many more options for how and what to spend
money on has exploded - with global distribution and global brands
getting products and even services to almost every corner of the
world. This means that in most countries/communities traditional
sources and products are being replaced by international
competition. Traditional recreational pursuits, family activities
and household expenditures are being replaced.
The concentration of wealth into the top 0.1% of the global
population is enormous. Government policies, regulations and laws
have completely failed to produce some semblance of fair
distribution of the overall rise of wealth in the world. The above
global chart shows that some 91,000 individuals from the 20
lowest-developing economies have put $10 trillion into private
offshore bank accounts is particularly egregious. Without measures
to spread the wealth at least somewhat, there is no money amongst
the masses to spur consumption and growth into the future. The rich
keep getting richer, and the rich-poor gap widens.
Of course, through the 2000's, the answer to sustaining the
ability of the masses to keep purchasing stuff was solved
by providing easy loans to consumers for houses, cars, everything.
Several national governments created low corporate tax zones to
attract business. These factors led to the first major recession of
2008-2010 caused by sub-prime mortgage crisis, bank failures, and
the PIIGS (the five eurozone nations of Portugal, Italy, Ireland,
Greece and Spain) sovereign debt crisis in countries of Europe.
When the recession did not rebound as expected, the USA, Canada,
and more recently the European Union (after austerity didn't work,)
started their quantitative easing programs - essentially printing
more money and racking-up significant national debt.
We now have the highest levels of country, corporate and
personal debt ever. If that doesn't cause people to start spending
their money more carefully and slowly, pulling back on growth, then
what will? Debt repayment has to replace purchasing of
discretionary goods and services. Meanwhile, many Asian countries
have been more careful with their debt levels, replacing
traditional purchasers of debt, such that China and others are now
the biggest creditors to traditional power countries and
Combined with aging boomer generations and their need/focus on
health care, this means also that there is less disposable income,
corporate and government resources (after debt repayment) for other
things such as:
- donating to charities (donors are replacing multiple donations
with 'select', scrutinized donations,);
- raising salaries (lower annual increases replaced by
- providing scholarships for education; and,
- funding of social services (both education and social services
are replaced with the need for health funding.)
Water Table, Aquifer and
As one example of the critical state of depletion of many
different resources; for decades now, major water tables around the
world have been depleted at a rate faster than they can be
naturally replenished. When the regular water table runs low, we
tap the next deeper aquifer and look for new water by drilling
deeper wells. Agriculture to feed rising populations, the increase
the percentage of protein (vs grains) in diets around the world are
both diverting more and more water. Bio-fuels and water for oil
drilling, fracking, oil sands reclamation, etc. have also used up
precious water and replaced "normal" agricultural use of water.
Water depletion will and already is causing us to
replace previous priorities for water use. As late as
2014, the state of California had NO regulations and policies about
who and for what purpose, people and companies and governments
could access water. They had a poor sense and understanding of
their natural bounty of freshwater. And when weather patterns
shifted - only then did the real state of this precious resource
California has been particularly hard hit with drought recently,
requiring new legislation being urgently put into place on the fly
after virtually no policy ever restricting water use. Gardening and
grass watering is being replaced by water priority for agriculture,
and growing city drinking water needs. Maybe we will need to make
further priority choices as well.
and Quality of Goods
According to a recent Forbes article, the age of the average
vehicle on the road in the US is 10.8 years! This is up from an
average of 7yrs only a decade ago. Car purchase financing of 7 year
loans is now commonplace. While this quality improvement is a good
thing, improved lifespan of goods means slower growth, a longer
replacement lifecycle and slower use of resources. Now, the reason
for buying a new article for your home is not likely due to
functional obsolescence. Instead, replacement will be due more to
new innovations, design changes or accidents/breakage. Also there
is an evolving trend for hardware (beyond the computer industry)
that is ever more durable, with hardware builders supplying
software updates able to change/improve the hardware performance or
experience. From computers to vehicles to smart homes and more,
software or smaller add-ons are increasingly being used to upgrade
the durable base item with refreshed or upgraded experiences.
Baby Boomers (still the dominant segment in western countries),
have today purchased all the numbers of things they will ever need.
They don't need to buy more stuff - just replace old
stuff, on a slower pace than before.
The younger Millennials are buying increasing goods of course,
as they establish careers and households, however, many do not have
the same values - they value quality experiences over "stuff". Many
are either forced to or are choosing to live with smaller
footprints. And, there are fewer Millennials than Boomers. In
Asian, Indo-Arab, and Central/Eastern European, African and S.
American developing economies, the next generations will likely be
forced to 'live small' simply because there aren't enough resources
on the planet to support 1/3 the population of China OR India to
achieve the lifestyle and quality of life Canadians enjoy.
Living Small will have to replace Living Large.
Increased Scarcity &
Price of Oil Drives a Decline of Growth
In his book The End of Growth, Canadian
economist Jeff Rubin makes a compelling argument for the
connectivity of Energy (more particularly the price of Oil) to GDP.
Rubin asserts that, as the price of oil goes up, so does GDP. As
supply goes up and oil profitability rises, so does GDP - to
a point. At some point, increasingly scarce and more costly to
extract oil, causes the supply to level-off and or turns the growth
of profitability negative. In parallel, as the price of oil goes
up, at some point triple-digit price per barrel becomes
unaffordable and unsustainable. "We can't continue to increase our
energy utilization exponentially… [Also] when we stop finding
sources of oil/energy, our economies stop growing."
The short or medium term price decreases for oil due to market
gluts as we are experiencing in late 2014/2015, are occurring
simultaneously with a global slow-down of production and
utilization of oil, having the same effect as above… leveling off
of GDP and the end of several growth economies. It's clear that the
slowdown in this case is not due to rising oil prices. Instead, the
slowdown is likely caused by the other "pull" factors above.
Rubin does a masterful job of showing the complex
network of ramifications and implications of just this one
dimension of energy and particularly oil on the generalized slowing
of growth in Western societies.
The impact of slowdown across Europe and the Americas is also
reaching into South America. Asia, classically the producers of
goods for the Western economies are scaling back to adjust.
However, if Asia can get their expansive middle class to start
spending, countries like India, China, Indonesia and others can
develop strong internal markets and GDP growth.
So what? With all these trends
contributing reduced growth and/or the new replacement economic
dynamics, what does this mean for organizational strategy and
STRATEGY FOR NEW REALITIES
Within an overarching context for slowing of growth,
one has to start into Strategy thinking and planning with a clear
understanding of some key principles:
- First, this is a complex, system of systems (network) exercise.
You must lift yourself and your fellow executives and Board members
out of Analytical, single dimension thinking based upon
past parameters; to at least a Systems-level…
understanding the multiple relationships and interdependencies in
your marketplace, your industry sector and your company; or more
preferably to a Network-level… understanding dynamics in
the various markets that you touch and that impact your
organization, seeing and recognizing shifts in preferences and
replacement decision-making by customers/clients, plus 'flow' of
the movement within the marketplace and your network; to sketch out
where and how you want to be positioned amid these dynamics 5-10
years from now. Simplistic, inward thinking won't cut it
- Within a general flow towards the end of growth in
western societies, the various elements outlined in the first
section will all impact YOUR situation differently from others.
Canada, the US, Western and Central Europe may all be trending
towards stagnation; but there are and will be regional differences.
Some traditional businesses will have future opportunities very
different from some of the new businesses. Some health charities
for example may well be more attractive to older boomers, vs.
international aid and development charities attractive to
idealistic, well-travelled, culturally less-biased Millennials.
Even within a general inverted population pyramid of Canada shown
above, the regional dynamic of Alberta is very different from the
regional dynamic of British Columbia as shown below. Success is
still very possible in all conditions.
Clearly Alberta, and Edmonton in particular, has a very
significant Millenials group - bigger even than the boomers cadre
to drive a future growth-potential economy; whereas British
Columbia, and Victoria in particular, skews older with a more
modest Millenials replacement-potential dynamic. And this is only
ONE dimension variance! The same type of business based in Edmonton
must make different strategic choices compared to that of the
- Now, I know this is heresy; but we really need to re-think our
default assumption that Strategy is only about how to sustain
growth and improve profitability of one enterprise - and, measured
only in financial terms. This thinking is being replaced (out of
crisis, or necessity, or enlightened understanding) with more of a
focus on sustained Value provision and sustained moderate
Profitability, plus sustained moderate Return on Investment.
Perhaps we can also consider measures of social stability and
wellness as well as environmental wellness - the Triple Bottom-line
so to speak. This focus won't win fans of asset-growth investors,
nor is it the best assumption for our personal retirement funds,
but it is becoming clear that new investment approaches and
assumptions are needed to replace traditional ones.
Perhaps what we look for are sustained profit sharing and year over
year dividends of say 5% rather than capital growth. This might
just be the most sustainable way into retirement anyway! In and of
itself, 5% annual profitability is going to be incredibly demanding
of continuous innovation and productivity in our replacement
- Take time to strategically think, look at the various dynamics
in play around your organization and marketplace/community.
Consider various options for replacing existing products, services,
programs, experiences with new ones "tuned" for evolving dynamics
and where you can position yourself to create value 5 years from
now versus yesterday. Really think carefully and thoroughly - What
will be of value in 5 years to your clients and what they will be
wanting from you?... plus where you might innovate new offerings?
Assess where you need significant improvements in productivity and
cost control design of workflow. Then you can break it down in a
planning approach - setting goals, outcomes, measures of success
and building strategies.
- Wherever possible, try to eliminate emotional decisions or
position-taking based upon historical assumptions, the "good old
days" thinking and traditional politics/values. Now more than ever,
we must focus on future, shift changes within customers and
marketplace, and new dynamics, value flow and competitive
replacement services and products.
Trade-offs, Policy & Priority Setting
Let's take the example of the depleting water tables and
aquifers depicted in charts above. Water is already an
international, national and regional issue - where there has been
little serious dialogue and debate around priorities, relative
values, who owns what, and the "best use" of this incredibly
valuable but shrinking resource that we take for granted.
Should we use freshwater to prop-up dying resource extraction
businesses or industries where the growth is levelling off? If we
are going to transport water anyway, could we more appropriately
use sea water to inject into oil/gas wells and use fresh water for
If we use fresh water for more agriculture, what priority crops
or utilization should we have? Who owns the water?
- Where we have some abundance and easy access/transportation of
water, maybe we should use it for more valuable protein production
which can then be shipped internationally and generate higher
profitability - to regions of the world where scarcity of water
should prioritize its use for, say, drinking.
- This has an application to replacing our past
low-value business strategy of just bottling and shipping basic
water, to a more high-value intellectual capital leveraged
- This also has an application to public policy-making and
relative industry support programs at the regional government
level, plus also regulations and monitoring. Maybe while we pump
oil in one direction through a pipeline clearing, we can also pump
sea water in the other direction to support the extraction of oil
at the source. Maybe the seawater pipeline can have a "safety" and
"contingency" catchment and containment design for if the oil
pipeline should develop a leak?
- Although we have lesser policy challenges than the Nile River
flowing through multiple African countries; within regions we might
build policy and priorities around who and for what purpose and
what amounts can be siphoned off. This should be done with an eye
towards favouring future high-value usage vs. support for
industries already far down the replacement dynamic. Of
course this will be controversial, and also necessary.
- In the future, consumption (of oil, protein and other processed
food, water, knowledge products) is going to be skewed towards
emerging countries/economies and away from the developed
countries/markets. What might your organization do strategically to
access these new markets?
- Waste creation, pollution and carbon/toxic gases released into
the air are also skewed to these developing countries/markets.
Cradle-to-grave product life-cycle management is going to become
ever more a strategic consideration in all regions and industry
sectors of the world.
- Government taxation assumptions need to adapt very quickly from
the default assumption of growth business and growing citizen
disposable income, being able to pay continually rising taxes. This
is not sustainable in stagnating and replacement economy dynamics.
Governments need to re-prioritize its work, seriously think through
how to replace its own value proposition delivery elements, and
cut-back on old and outdated policy/programs - reducing costs of
What will you STOP
One of the
most important strategic considerations for senior leaders and
their Boards/Government Cabinets, is what to STOP doing so you can
redirect limited resources towards replacement initiatives and
priorities. What will your business, government department or
not-for-profit STOP doing in response to the replacement
LEADING FOR INNOVATION, PRODUCTIVITY, VALUE EXTENSION
Important to today's replacement economy is Innovation
& Productivity - two sides of the same coin. However, few
understand what it actually takes to facilitate this effectively.
Most innovations do NOT come from Research, especially in
Universities or Centres of Excellence (only about 30%.) Similarly,
most productivity improvement does NOT in fact come from automation
or IT solutions. The roles of professionals at the front-lines, as
well as in Operations/Sales/Client Service Management, generate 70%
and are critical in ensuring that innovation and productivity
initiatives lead to enhanced value of products and services - and
that they deliver bottom-line results. Of course research groups
and marketing departments can and should also contribute to
innovation as well.
Back to Jeff Rubin's book again, The End of Growth,
Chapter 8 looks at both the concepts of "Zero Sum World" and "The
New Consumer" - largely from his oil price perspective. This is
equally valid and well argued. As Rubin points out; "In the 1980's,
China's oil consumption was 2 million barrels per day. Today its
consumption is verging on 10 million barrels per day… In a zero sum
world of global oil supply, China's demand for fuel will come at
the expense of say, the United States." "Americans consume roughly
20% of global oil production, while producing less than 10%. That's
a big gap that the United States currently bridges from importing
oil from foreign countries. If China's economic growth continues to
outpace that of the United States, China will gain competitive
advantage for more barrels." Western economies with declining
populations and/or GDP will be competing in the future with
developing countries and their growing populations/GDP for
everything from oil to water to steel to wood, rare earth metals in
electronics - everything!
The new consumer meanwhile, particularly from the millennial
generation, is starting to embrace living small. Living small does
not have to mean a lower standard of living - just different. This
generation is already showing preponderance to valuing
experiences over stuff…..
All of these trends suggest that organizations geared towards
innovation of new products and services, plus focused on improving
productivity, are going to be the organizations that replace others
that are not oriented this way in market share and customer
connection. Innovation and productivity simply must become
important components of future strategy. Even those in the
not-for-profit context and government departments/agencies will
need to adopt innovation and productivity - plus the ability to
show tangible positive impact on the community using fewer
INNOVATION FOR VALUE CREATION
In a world of frugal spending, more durable goods, massive
choice from amongst global competitors, an incredible global
distribution and shipping network, access to knowledge and
experience through inexpensive web-based communications, and more
sophisticated customers with personal social media networks of
influence and reporting of bad players; the very essence of
leadership must embrace the ability to facilitate innovation
towards specific and measurable pay-offs and profitability.
This starts with investigating client/potential client needs
and/or problems - often not well enunciated by the client/potential
client. Getting out to observe your clients in action, and building
relationships with them directly (face-to-face or using
technology/media) becomes critical to generating innovation ideas.
Solving Customer Problems has proven to
be just about the 'best' challenge for successful innovation. If we
can identify a customer problem or paradox - Innovation can work on
that tangible issue and generally find success. As a leader, you
must be part of the active exploration, identification and
narrowing of focus of the innovation efforts. You can't demand this
of your people then walk away.
Facilitative leadership, collaborative problem
solving, pattern-connecting, and product/service strengthening are
important leadership skills for the replacement economy
environment. Following on from here is the ability to
champion its potential for investment funds to be apportioned, then
tenacity to marshal people and system resources to build and
reliably deliver the promised solution. Finally there is the sales
and marketing process - into both existing clients and new,
untapped markets/clients with the innovation - delivering payback
of the investment within the initial or early second cycle of its
creation. Very demanding. Very important. Very different, from a
habitual growth market dynamic.
Hardware vs. Software
vs. Combined Innovation
What the computer, cellphone and 'pad' revolutions have shown,
is that simple hardware development and sale is not enough. Even
with consumer product replacement life-cycles of 2-3years; software
updates weekly, which improve the features and experience of the
hardware, are incredibly important and linked.
Now however, this expectation has become so ingrained, that
consumer expectation is that this will be a part of not just
electronics products - but all products and service areas including
homes, vehicles, sports stadiums, offices, even outdoor adventure -
all should be finding ways to embrace software-updateable
The Replacement Economy moniker thus has yet another
connotation; regular replacement of content, and features and
applications through software upgrade as the expected basis for
sustained value proposition. Even as product replacement cycles may
lengthen towards say a 4year cycle or longer on more expensive
items; expectations for continued upgrading of value by customers
will need to be built into your innovation thinking and
If low or no growth becomes particularly well established, then
consumers may even go further eschewing replacement of capital
investment products on a much slower cycle, and expecting or
shopping for "upgrades" and or "add-ons" or base hardware
"extensions" as a basis for sustained relationship and value
attachment to the original product purchase. Living small may
become reality, but still people will aspire to living with
regularly improved performance of purchased items. Again, think how
this might apply to your business, homes, cars, tourism, offices,
employment, education, consulting services, Charity donations,
Government services, and more.
Product vs. Experience -
Value Proposition Design
If changing attitudes towards buying stuff is replaced
significantly with buying experiences, then every innovation needs
to consider not just the item itself, but the customer's experience
of the item. The future added value experience of the item may
actually be replaced with the purchase of just the experience, and
not even purchasing items at all.
Interface Inc. (worldwide modular carpet company) realized
several years ago that are we aren't really buying a carpet or rug
for my floors, but for the experience of having a clean,
warmth-inspiring, "cozy" experience of floor coverings. The product
manufacturing and single sales strategy assumptions "growth of
units of carpets sold" is replaced instead with the concept of
selling orders for a fresh and cozy experience in the home
environment - with a regular profitable service/software/modular
update income from a long-lasting relationship with the client. If
a stain or tear in the carpet occurs, the service provider replaces
a carpet tile to keep everything looking fresh and new.
In a public policy sense, should a regional government build
policy based on supporting the sale and export of lower-margin
"stuff" (measured in traditional GDP, and competing against perhaps
lower labour-priced regions elsewhere in the world)? Instead,
perhaps we should shift towards policies and programs that attract
tourists looking for the "experience" of the uniquely beautiful,
safe, natural, affordable, soul-stirring environment that can be
sold profitably and supported over time with relationship enhancing
and possibly repeat-visit inducing software-generated enhancements
of the experience when they return home. What innovative
experiences would your organization/team provide?
PRODUCTIVITY IMPROVEMENT FOR SUSTAINED PROFITABILITY AND
STANDARD OF LIVING
Continued pursuit of efficiency and quality
experience improvement, developed/delivered in cost effective ways,
is not only the basis for enhanced competitiveness, but it is also
the basis for sustained standards of living of employees and our
communities at large. Just like Innovation on one hand, so too
Productivity is critical on the other hand. This is not always well
understood. [Financial Post, May 22, 2015 by William Watson]
Surprisingly few organizations ensure the following fundamentals
of productivity are implemented well. These are important
Are your people focused, motivated and effective? What is your
turn-over rate? (Regularly having to recruit and re-train
individuals really takes a notch out of your productivity). How is
your level of internal collaboration, information-sharing and
appropriate involvement in decision-making? Do you have the right
talent for the challenges at hand? Do they understand and focus on
"advancing the business" of the organization?
Most importantly, do people truly understand what a highly
productive 8-hour day looks like, sounds like, and feels like?! Do
your employees understand what it takes for them to personally
create "value" above and beyond their individual cost to the
organization - every hour?! This is a concept that has been ignored
by so many organizations and senior leaders for so long, that the
average employee does not even know what they have to do and/or why
it is necessary for them to create more value than their all-in
costs to the organization.
In another recent article, Trevor Tombe of the University of
Calgary, and author of the book Better Off Dead: Value Added in
Economic Policy Debates, presented this chart showing the
value-added contribution of a selection of jobs in various
industries. [Financial Post, May 21, 2015 by Trevor Tombe]
Unfortunately, just focusing on GDP gets us reacting to the
chart in a biased manner. Entertainment and recreation (in the
chart "VALUE ADDED PER JOB",) may score low in the GDP sense,
however, they score high in the social cohesion & community
stability area. These lower GDP roles also done in an intentional
manner, might contribute to environmental sustainability and thus 2
areas of a triple bottom-line measure of community benefit. All
jobs need to focus on the value-added they are contributing.
Are your people deployed in the best manner to deliver the
customer service, programmatic impact or product appreciation you
are working to achieve? "Form" really should follow "function", and
as the organization shifts its resource complement, its service
evolution, and/or its relationship with clients/distribution
partners/end-consumers then so too it needs to be able to flex the
organizational design and job descriptions. Today it is not
uncommon to adjust the org. design annually!
Do your reward mechanisms support the new expectations of
performance? Are your performance management (annual performance
plan + annual performance appraisal) mechanisms in place and
adjusted to be synchronized with the new work design and
expectations? Are compensation/reward elements reinforcing the same
expectations amongst everyone?
Perhaps the most under-appreciated element and often the biggest
barrier to advancement is the integration of technology with our
human creativity and capacities. First, the technology just has to
work properly! Second, the software and people interface has to
support the org. design and desired new human/team practices.
Third, technology has to help elevate performance and impact in the
manner that actually has more value to the customer. Often
technology can create more work for employees, and turn out
marginal value to the client.
Executives are an important part of productivity success.
Employees often simply can't 'do more with less' or figure out
productivity improvement when the senior leader simply demands it
in staff meetings. Executives need to be on the front-line with
staff to see and understand how the elements above are working
together. Executives provide context and understanding to employees
about why priorities and focus are the way they are. And often,
executives must personally connect individuals, capture and
champion good ideas, and/or bring clients, employees, and
technology support people together to explore improvements. Indeed,
executives themselves must have an ability to visualize what
success might look like, or include and facilitate that exploration
and solution building amongst employees and broader network players
(such as suppliers, consultants, community, clients and
Quality, LEAN, Six
Sigma, Kaizen, BPR Processes:
The use of these initiatives must be applied to the advancement
of the organization towards their operational goals. Sometimes,
projects in Quality Improvement (QI) or Business Process
Reengineering (BPR) can take on a life of their own, and it's not
clear how they are actually advancing the organization - towards
Executives must ensure that these initiatives are integrated
within new org. design and technology application and that they
align with the new strategic/operational plans.
Reviewing your internal processes and applying LEAN, 6-Sigma
and/or LEED methodologies will aid in the integrity of your
product/experience, and allow you to constantly adapt and
This is particularly important if you decide strategically to
stop doing a particular line of business or service, replace it
with a higher priority line, and seek to find innovative new value
propositions for these changing global/regional dynamics. Both
older and new processes should be regularly addressed with proven
productivity processes. Again, today's senior lead must be capable
of facilitating productivity exercises/initiatives with their
people and/or outsourcing to others with this expertise.
Both innovation and productivity can be creative processes. Both
can be engaging, satisfying, collaborative, and profit-generating
In reality, the economies of Central and Western Europe, the USA
and Canada and other closely aligned countries, have been living
the Replacement Economy for more than seven years. The
global sub-prime mortgage debacle was the first significant and
public signal that most of the Western world was living far beyond
their means. This has been further exacerbated since 2012 with
stimulus monetary policy and government debt-creation, first in the
USA, then Canada, and more recently most of Europe - with even
Germany now backing off its original austere approach. Now,
individuals and families are also taking advantage of globally low
interest rates to expand personal debt - with the non-mortgage debt
being the most dangerous if not offset by improved asset value. Oil
is currently not driving GDP as it once did.
Most of the stimulus and debt accumulation has been
done with an assumption that the current economic challenge is just
something we have to 'weather' or get through. Then,
once things are back on-track in a couple of months/years we will
be able to pay-back the debts.
But what if this is not just a phase we are going through,
what if this is actually the new normal?
It's been going for over seven years with no signs of rebound yet!
Indeed most of the factors described above suggest the Replacement
Economy condition IS the new normal, and it will be next to
impossible to repay the accumulated debt! Regardless of an eventual
bounce-back, "normal" is not going to return anytime soon!
This means you, me and senior leaders of
government/civil service, business and not-for-profit's
must all re-think our current programs and services and roles in
the community; replace the old-school/old-thinking priorities with
new, more appropriate and value-generating initiatives that take
account of our regional unique conditions, and re-frame our
strategies towards a new world order. Failure to do
so, will not just be a failure of personal/organizational
leadership, it will be failure towards our children and
grandchildren, and communities at large.
Now, does anyone want to talk Strategy for thriving
in the Replacement Economy?
Are you ready to vigorously pursue new areas of Innovation for
Shall we get serious with our own personal, team, organization
and societal Productivity in order to maintain jobs and protect our
standards of living?
Status quo, is simply not sustainable, and likely means your
organization will be replaced by a more innovative and
higher productivity enterprise if you too don't embrace these
Doug Macnamara is the President & CEO of Banff Executive
Leadership Inc. He has more than 25 years' experience in
Leadership, Governance & Executive Development, Strategic
Facilitation and overall Organizational Development.
He has specialized in strategy formulation and implementation,
wilderness/high risk environments, organizational leadership,
branding, and sales/marketing/service development. In an executive
capacity, Doug has successfully led new business unit start-ups,
downsizing/turnarounds, and restructuring/transformations. These
have included strategic/marketing repositioning and re-branding of
image. As a consultant, he has assisted over 100 organizations
through these processes.
Doug has a B.Sc. in Biochemistry, B. Ed. in Environmental &
Adult Education, Outdoor Educator's Certificate and Certificate in
Employee Benefits, the Certified Human Resources Professional and
Certified Management Consultant Designations. He also completed the
MLE program (Management & Leadership
Education) at Harvard University. He is currently the Fellow for
Leadership & Governance with Entovation International, and
Fellow of Intentac - the International Entrepreneurship
Doug joined The Banff Centre in March, 1994 and served as Vice
President, The Banff Centre and General Manager, The Banff Centre
for Management. In July 2001, he started Banff Executive Leadership
Inc. which offers strategic thinking/planning facilitation around
the world, plus public and customized programming to improve Board
Governance and Executive Leadership Practices. Please visit
www.banffexeclead.com for further assistance.
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