Have you ever wondered why adding more lanes…

…doesn’t alleviate traffic congestion?

For those of you who, like me, are fascinated by counter-intuitive thinking, I’ve got a book you won’t want to miss.  It’s entitled Simplexity, http://www.simplexitybook.com/SimplexityBook.html.  Jeffrey Kluger, the author, offers fascinating insights into human behavior and why so many solutions we craft don’t produce the results we desire.

One of the examples he offers is the adding of new lanes to a roadway or adding another bridge to alleviate traffic congestion.  He admits that for a few months traffic gets better, but only a few months.  Then we return to the same congestion as before.  How can that be?  The population in our community doesn’t grow that rapidly.

Mr. Kluger says that the additional lanes and bridges invite more people to take their cars instead of using alternative transportation systems.  The result is that drivers fill the available space (hmmm, sounds like nature abhors a vacuum).

It’s counter-intuitive, but if we want to manage traffic congestion more effectively the key is to use those “road” dollars to make our transit systems more accessible, more reliable and capable of handling greater volumes of passengers.

What implications does this have for your business?  If you’re goal is to increase sales don’t focus on increasing the number of customers you serve.  You often have to offer incentives to attract those customers.  Instead find ways to serve existing customers better so that you can command premium prices.  Both approaches increase revenues; the latter is more cost effective.

Similarly, avoid adding staff because “everyone’s busy.”  Instead, spend a few minutes determining what your staff is working on and how valuable it really is.  One of the reasons for organizational bloat is that, during high growth periods, leadership assumes that everyone in the organization is busy doing valuable work.  That’s not been my experience.  Indeed, usually 20% of the work being performed has little if any value.

If you have read any books that really knocked your socks off, please share them with The Invaluable Leader readers by posting the information in a comment.  If there’s a topic you’d like me to address, send your request to me at dale@furtwengler.com.

Why absolute zero will never be attained …

…and what it means for your business.

PBS Channel 9 recently ran a NOVA special entitled, Absolute Zero, which talks about the progress physicists have made in reaching a temperature of -273 degrees Celsius, absolute zero.  They’re currently within one billionth (yes, that’s nine zeros) of a degree of achieving their goal.

What is absolute zero?  It’s the temperature at which atoms cease to move.  The closer physicists can get to absolute zero the easier it is for them to observe atomic activity and discern patterns of behavior.

Why don’t I think that they’ll ever achieve their goal?  More importantly, why should you care?  The answer to the first question is that we experience the infinite nature of things every day in our lives.  Regardless of what progress we make in understanding any concept we never achieve complete understanding.  Just when we think we’ve got things figured out, we learn something new that contradicts what we believe.  That’s why that I doubt that the physicists will ever attain absolute zero.

What does that mean to you and your business?  First, it means that regardless of how good you get at what you do, no matter how good your products/services are, you’ll never achieve perfection.  So don’t ever quit striving to improve yourself and your offerings.

Second, the closer you get to perfection the more costly improvements become and the more difficult it is for your customers to see value in those enhancements.  As you get to the point where your customers no longer value improvements, you need to change direction.  Just as the discovery of quantum physics challenged Einstein’s work on relativity, your customers will challenge you to come up with something completely different than you’re currently offering.

It’s counter-intuitive, but we need to strive for perfection while keeping in mind that it’s unattainable.  At the same time we need to be pragmatic about improvement; we need to learn when to stop because further improvement no longer adds value to the markets we serve.

If you see other ways to apply the concept of absolute zero to business, or other aspects of your life, please share your insights with our readers.  Simply post your comment.  If there are topics you’d like me to address, send me an email at dale@furtwengler.com.

When offering your customers a choice…

…be careful how you structure the choice.

My wife and I recently received two offers, one from GE Financial and the other from Bank of America.

GE Financial sent us a notice with our credit card bill saying that they would be calling our cell phone numbers with offers and that these calls might result in our incurring costs.  They went on to say that if we didn’t want to receive these calls we’d have to call a toll-free number to opt out.  Fortunately the opt-out process was automated and didn’t take a great deal of time.  Still, it was time we would have preferred to use in other ways.

Bank of America sent a notice saying that we were being rewarded as good customers with a new card that provided additional benefits.  Then we were told that the new card would have a new account number and that we’d have to notify all of the vendors that we use of the account number change.  The additional “benefits” weren’t adequate to make us want to contact vendors so we decided to opt out.

Bank of America didn’t provide any opt out options in the notice.  When we called customer service and spent the requisite 15 minutes holding, we were told that we needed to call another number if we wanted to opt out.  That resulted in another 15 minute hold.  When we finally got through, the BOA rep said that he’d “try” to get it stopped.  Three times during the conversation he stated that his records showed that we’d received the notice a month earlier.  The implication being that we should have contacted them earlier if we didn’t want the upgraded card.  We’ll see what happens with this one.  I suspect we’ll be using a different bank’s credit card soon.

I would not have thought this concept to be counter-intuitive, but apparently it is.  When changing your offers, allow your customers to opt in instead of forcing them to opt out.  Showing respect for their time and their right to choose will go a long way to solidifying your relationship. 

I realize that there are times when a product or service is being used by too few customers to make it cost effective to continue that offering.  At that point you should notify customers of the planned discontinuance of your offering and the reason for it.  Then allow them to choose to upgrade or find an alternative to what you’re providing.  The keys here are an explanation for the discontinuance and adequate notice for them to adjust to the change.   

If you have similar experiences with forced choices and techniques for dealing with them, please post a comment.  In the meantime, if there are topics you’d like me to address send me an email at dale@furtwengler.com

What’s the key to increasing sales in a slow economy?

It’s the opposite of what most businesses are doing today.

On December 17, 2008 ABC World News Tonight presented a fascinating piece entitled “Dissecting Deflation.”  Robert Krulwich, the author, explained why lowering prices in a slowing economy exacerbates the problem.  To view this piece, simply click on this link:

http://abcnews.go.com/Video/playerIndex?id=6484348

(Note: The opening to this piece is an ad for a Barbara Walters’ interview with Patrick Swayze)

Mr. Krulwich’s entertaining animated clip does a phenomenal job of explaining why lowering prices, not only slows sales, but increases unemployment.  It’s counter-intuitive, but if you want to help the economy in 2009 hold your prices.  It’s the opposite of what most businesses are doing today. 

When you lower your prices, you not only add uncertainty to an already uncertain market, you send a message that you’re desperate.  Conversely, if you hold or raise your prices when everyone else is lowering theirs, you communicate an air of confidence in yourself, your offerings and the future.  That confidence is going to make your offerings very attractive in these challenging times. 

Let’s blow the doors off 2009.  Make it a much better year than the naysayers envision.  Hold your prices. 

May your 2009 be filled with good health for you and your family, the confidence and creativity to outperform economic predictions, the compassion to help others succeed and the joy of family and friends.  Happy New Year!

If you have tips for dealing with a slow economy or if there are topics you’d like me to address, please post a comment or email me at dale@furtwengler.com.