ANAHEIM – Rich Karlgaard, the publisher of Forbes, says that in order to grow, American businesses should take a page from the football coach that predicts the team will be 5 percent bigger, faster, more aggressive and smarter by next year, according to Rich Karlgaard.
The publisher of Forbes made the suggestion in an address here before an elite crowd of advisors—those who qualified for Court of the Table and Top of the Table at the 2012 Million Dollar Roundtable
If businesses were to adopt a similar approach, “We (businesses) would be healthier than we are today,” predicted Karlgaard. In particular, he said, companies should focus on being smarter, faster and more empathetic.
Being smarter entails several elements. One is to be a well-designed company, he said. Today, design is standing out as a proxy for intelligence as it has never before, he said, citing Apple as an example. That company “puts a lot of thought into their products.”
Turning that thought toward his financial services audience, he asked, “are you known (by clients) as a standout in your field?”
Smarter companies also analyze data better than their peers, Karlgaard said. One example is of a baseball franchise that analyzes the attributes that make a player more productive than others. In business terms, that might translate into analyzing who is generating profit and increasing customer retention, he said.
Team organization can make companies smarter, too. Research from neuroscience is showing that it takes just two to five people to have an effective team, he said. That may be a smaller number than many people think, he allowed but, in some cases, even two people can make “perfect partners” — for instance, when one person is an extrovert and the other an introvert, or when one is a mentor and the other a student.
To be faster, he said American businesses need to find ways to serve both types of customers — the 80 percent who will argue on the price of an item and the 20 percent who won’t argue but who will “want it when they want it.”
In addition, the business culture needs to be one that responds to requests “right now” rather than in a few weeks or even at the end of the day. And firms should provide their people with “great technology, because “people today want great technology,: Karlgaard said. At growth oriented companies, they are getting it, he added.
Where does empathy fit in? That “has to do with getting up in the morning and feeling good about what you do.” he said. To make it work, “you need to have a clear moral purpose in your organization, so that the people feel really good about what they do. If you don’t have purpose, I’d argue that you won’t have empathy as an organization.”
The global slowdown
Karlgaard tied his suggestions to the widespread concern about today’s global slowdown and the doom-and-gloom commentators that predict things will get worse.
The U.S. economy is currently growing at 2 percent, he allowed. “By comparison, since the end of World War II through today, the U.S. economy has grown by an average of 3.3 percent a year.” That era included 11 recessions, he continued, and in non-recessing periods, the growth rate was about 4.5 percent.
The common explanation for today’s 2 percent growth is that the current turndown is different than the other recessions, the Forbes publisher said. They say the country has never had a recession with a financial component, nor one where everyone is trying to get out of debt at the same time, he added.
But another view, one he prefers, is that “businesses are paralyzed.”
For example, businesses are hesitant to hire the next employee or to open the next factory even when they could do so, he said. He blamed a lot of this on the general lack of clarity about the direction in which the country might go. In particular, he pointed to uncertainty about the outcome of the presidential elections this fall.
The doom-and-gloom forecasts are “a reaction” to the lack of clarity, Karlgaard said.
A contributing factor is the embarrassment that he thinks professional investors and economists feel over not seeing the start of the 2008 recession, which was a black swan event that no one saw coming. “Now they see black swans everywhere,” he quipped.
As for defaults, Karlgaard pointed out that lots of companies and governments have defaulted on loans — sometimes more than once. But defaults are often followed by restructuring of loans, and during those restructuring periods, some companies have done very well, he pointed out.
For now, in these confusing times, he urged U.S. businesses to focus on working smarter, faster and with empathy.