Small Business and Services Lead the Improving Economy

The ADP National Employment Report recently released its private sector employment data for April to May of 2016. Small business business is leading growth while services are taking over a larger share of offerings. The report could be hinting at larger geopolitical shifts that are making footprints.

 Small business hired 76,000, medium size 63,000 and large 34,000 employees. The change shows that small business is a proper focus of public interest. As we encourage small business to grow and develop we can create more innovation in society that leads to further employment.

We often focus on large corporations in our government decisions. They donate to campaigns and seek to create influence. Yet they are not the big employers nor are they the ones that change the market. Their advantage lies in their pooled capital and global penetration. You will also find in the report a change of employment of 175,000 in services and -1000 in manufacturing goods.

 The change could be an indication the country is moving more towards services industries and becoming less competitive in manufacturing. Manufacturing is an important part of building a solid middle class. It is hard to compete against foreign countries that have cheap access to labor and resources. However, by building stronger competitive regions we can create fundamental changes in the potential development and long-term success of our manufacturing industries.

The employment data only represents the time frame it was measuring but could indicate some broader changes. The environment is right for smaller service oriented business based on highly educated and experience professionals. Larger manufacturing companies will need to find competitive clusters where they can innovate and improve efficiency beyond their competition.

 http://www.adpemploymentreport.com/2016/May/NER/NER-May-2016.aspx

Failing to See the Alternatives in Business Decisions

Business after business has failed from poor decision making. Chronic poor decisions indicate a bigger problem. It isn't necessarily that the ideas brought forward aren't good but that they aren't well thought out. Where long-term planning is needed short-term decisions are made. Chronically poor decisions are a result of executives listening to the same logic of a tight group of individuals and begin to make decisions in a bubble.

Strategic decision making is a little like free flowing a piece of art where you come up with a lot of great ideas based on a few needed principles such as cutting costs or expanding services. Out of the many ideas that are generated most should be thrown into the mental trash can, a few put on the shelf as alternatives, and others explored for possible implementation.

The problem is that many organizations begin to engage in a cultural environment where the same actors and players make decisions about what is important. Good ideas are thrown out and poor ideas are kept and explored based on issues beyond the needs of the business. They use the same short-sighted justifications for their decisions and check with the same individuals to validate their ideas.

Good strategy figures out all the contingencies and options. It doesn't seek to push through an idea regardless of its merits. Surrounding yourself with people who will challenge your ideas when necessary, work with you on improving your ideas, and finding new solutions is important for overall success. Few executives have the foresight to think about the merits of disagreement.

Any strategy should thoroughly look at the risks of implementing that strategy. It should actively seek out the worst case scenarios and reevaluate to ensure that the strategy minimizes the risks.  Some very large and important catastrophes can be avoided if the extra effort and time was made to ensure decisions were truly in the best interest of the organization.

1.) Surround yourself with competent people who are willing to challenge ideas.
2.) Evaluate all worst case scenarios and adjust the strategy to minimize risk.
3.) Fire and hire new executives to ensure you have the right culture and people to compete.

Knowing When to Outsource Based on Transaction Cost

Firms can be thought of as a collection of transactions. The transactions within the firm are more efficient than what is outside the firm. Companies create theses efficiencies so they can compete against other firms and maximize profits. Knowing when  to outsource and when to bring in house operations can have a big influence on organizational success.

According to Transaction Cost Theory the cost of transactions will determine whether or not a service should be brought inside the company's borders. The efficiency by which a company can produce the product/service makes a big difference in their strategic approach. There needs to be a match between resources and need.

For example,a training department might consider the costs of conducting training internally or hiring an outside company to teach a course on a particular product. This would include the costs of hiring staff, facilities, and equipment. As the training becomes more complex and requires specialized equipment the more transactions costs rise.

Eventually, the cost of keeping the training in house versus outsourcing it reach parity. At this point, companies should seriously consider either investing in their training department or outsourcing the service altogether. The training program must add value beyond that which can be bought in the market.

Before making the decision to keep or outsource operations it becomes important to review the long-term strategies of the organization. Focusing on the core business allows for investment in lowering internal transaction costs while trying to be too much to too many, unless multiple focus creates parity and lowers long-term costs, can be a loosing game.

Consumer Spending Increases 1% Showing Cosumer Confidence

Approximately 2/3rds of the economy is based on consumer spending so a 1% increase last month, as reported by the Commerce Department, shows improving consumer confidence. Consumer confidence doesn't rest on purchasing power alone but how consumers feel about the economy and their prospects for the future.

When consumers are confident they can maintain employment and their incomes they are more willing to purchase items then if they are fearful. Optimism and fear seem to be the two main components here. When people are confident they want to spend and enjoy life but when they are fearful they want to hang onto their money.

The increased spending is a risk of current reward versus future risk. People typically scan their options and prospects about the future based on the subjective impressions, news, friends opinions, and jobs to determine whether or not a purchase is possible. In many cases it is as much a "hunch" and "feeling" as anything else.

A large increase of 1% in a single economy means that people are feeling good and have positive perceptions of their lives. They want to enjoy the things they purchase and not worry about tomorrow. As their optimism rises so does the general speed and strength of the national economy. How people feel when they go into a store is the first point of contact that determines consumer activity on a national level.

The Strategy Creation Process

The strategy creation process takes time and a well thought out approach to the market. Internal resources must be understood and considerable market analysis created before it is possible to truly match the two. As one moves down the process of strategy creation they will inevitably come across new challenges. Step 1: The need for change occurs due to market adjustments that leave the company less competitive than before. This pressure forces the company to rethink its strategy. Step 2: Defining the problem and its impact on the business can be difficult. Companies have often made the problem of misinterpreting the underlining cause of change and therefore won't be able to master a solution. Step 3: Determine the possible short and long-term solutions to those problems. This may take time, research and analysis to even have a solution. - Review the success and failures of other companies. - Understand the market and its demands. - Review the regulatory environment - Spend time understanding customers and what they need from the company. Step 4: Consider the overall needs of the customer and how they fit within the strategy. There must be some value proposition the company can offer that will appeal to customers and their need to purchase. Step 5: Scan Internal resources and see what the company currently has in place and can put in place to meet market challenges. Step 6: Review all possible strategies and ensure that investments in this strategy will create the most flexibility and options in the future. Step 7: Adjust all activities to meeting the new strategies and ensure that performance is rewarded for successful completion. Step 8: Continually review the strategy and match it against the needs of the market.

Getting in Touch with Performance by Getting in Touch with Self

Performance is seen as the primary marker of a person's success. Depending on whether a person is focused on short or long-term goals the way in which they approach the work environment will change. Intrinsically motivated people will focus on the personal value of their work while extrinsically motivated will seek the recognition from others to maintain momentum. Getting in touch with yourself will determine how you approach your work.

People who are task oriented focus on immediate gains that can be helpful for getting the work done. Sometimes they miss the big picture and fail to see why those tasks are important. They can continue on with the same tasks without questioning whether or not their work is ending in fruitful results.

Others are more long-term and question every task and its importance. If the task doesn't have real additive value or doesn't seem to be the best use of their time they will lose motivation quickly. They question the work they are doing and try and keep it as relevant as possible.

As you can tell the way in which we view our work and ourselves filters through everything we do. It becomes part of our work activities and perception towards that work. By tapping into our own potential, wants, and needs we are able to improve our work capacity and the organization.

Most importantly, we also come to like that work more as we find personal meaning in it and are able to identify with our tasks more. This is the ultimate goal of any organization that wants to develop long-term relationships with their employees and create a strong talent base. The more they can help employees reach their true potential the more they can benefit from the natural outputs of personal strength discovery.

Tapping your true potential isn't an easy road and takes lots of new experiences, learning, and integration of knowledge. Most people don't have the capacity to develop on their own and will continually fall into the same perceptions and patterns they are accustomed with. Through getting in touch with who you are you can find your personal strengths and weaknesses and put them to constructive work.

Monuments of a Commercial Past

Lighthouses are a monument of the past that represent a time when shipping was the main mode of transportation and method of moving products. The Great Lakes were an integral part of the country economy and movement of natural resources. The houses and families that once lived there are gone but the blinking lights that indicate land are still there.

People visit these monuments because they find them to be peaceful reminders of our past. They were part of what made our country great. As people visit these historical places they read about some of the families that lived there and what it all meant.

In Delta County Michigan there is a long maritime history of ore boats, logging, shipping, and natural resources. The water was one way in which people spent a great amount of time cultivating to ensure their survival in a harsh environment. The water and its gifts are still very much part of local life even though modern amenities have made their way into the area.