Updated: Apr 14
An open letter for entrepreneurs, business owners, CEOs, Presidents, and Key Executives.
UpLIFT Issue No. 3 Theme: “Vital Business Strategy Pivots and the Innovation Imperative”: Part 1
What do these two images have in common?
They are both business strategy pivots taken in days, not weeks, by innovative companies racing to find opportunity and make the world a little brighter, better, and more beautiful during our crisis. These and other innovative tales of companies moving swiftly to make better futures are in this issue of UpLift No.3, providing Leadership thinking in times of crisis: thoughts, support and encouragement, 5/15/20
The Innovation Imperative
Sometimes in life you must ‘bloom where you are planted’ and you must figure out how to make a living in your current environment. Realizing this, whenever I have the opportunity to travel, I frequently ask myself, if I lived here, what would I do for a living? What business would I start, and I invariably look at the community resources, geography, transportation, explore what’s selling, and consider the unique opportunities in a market to determine what candidates for a new business I might create. So in these past few months, with a new economic landscape due to Covid19, my mind now is focused on observing and pondering… where are the opportunities today? There will indeed be new winners, new business champions, and yes, new business start-up green shoots that will grow into sizable and fast moving unicorns that reach $1 billion in new revenue in record speed in this market. Whether you are seeking to create survival income, replacement income, retirement income, or aspire to be a champion of business… this UpLIFT issue is written for you.
The focus of his issue is how to observe needs and cultivate ideas for a new business, a new service, or product. How to choose between multiple opportunities? How to test the market, and lean into the new business opportunity to find a customer who will pay. And then when you find that paying customer, how to hold that early client closely, develop them into a champion, so that they will toot your brand more than any horn, and help you grow your business. That’s the focus of this letter.
In preparation of this issue of UpLIFT I have cataloged dozens of examples of how individuals and companies within the past 60-days are pivoting ‘quickly’ to find opportunity in this market. And the more successful entrepreneurs are moving at what seems to be light speed to develop their new products and services and bring them to market. Lastly, I will explore how one can make decisions on a business strategy pivot in this crisis. How to ideate and create that Minimally Viable Product (MVP) to find the rich veins of opportunity in your local market. And I continue to encourage individuals, entrepreneurs, and business owners to have a mindset of nimbleness, being agile, creative, and adaptive, demonstrating the responsiveness required to take action soon vs a long-term business strategy approach that might extend months or years of planning that we might advise during good economic times.
What's happening now
If the reader wants to skip directly to the feature topic below they may do so now. The nuance that I have titled these periodic letters as “uplift” while I also write about the economy, Covid19, and such heavy topics is not lost on me. In each issue I provide the context of where we are now statistically in each issue, so as to provide emphasis for business leaders to embrace the leadership imperative to take strategic and tactical actions to mitigate the crisis for their companies and employees to create a softer landing and brighter hope for a better future for all who are looking for direction in this crisis.
Sadly, yesterday was the day that the world population experiences its 300,000th reported death by Covid19, as reported cases overnight totaled 302,493 at this writing.[i] In the US, as of last night, 86,571 individuals have lost their lives to Covid19 in the past 75 days since the first case was reported by the DCD on 2/29/20. And there are substantially more people dying this year (for unknown reasons) that are not yet reported as Covid19 deaths.[ii] For some perspective, the number of US Covid19 deaths is the equivalent of 295 large commercial airliners crashing, or 33 World Trade Center Terrorism disaster death counts, and I feel numb as I consider these numbers, as the sheer magnitude seems unfathomable and not a statistic I want to watch or view daily.
Still I watch the mortality data as it is a daily reminder that we are not through the thorns yet, and we must be diligent to keep moving forward, thinking, planning, acting, and creating hope as a strategy. What is interesting to me and not widely reported are the massive number of ‘excess’ year over year deaths that are not detailed or define as Covid19? Whether you pick Spain, New York City, France, or Lombardy Italy, all have increasingly more deaths year-over-year than last year, and many of these deaths are not explained. What might be the cause of these unexplained deaths? Are people not going to the emergency room for fear of Covid19 and they are simply dying at home? Or is the Covid19 testing so low, and the incentive so great for political leaders to underreport Covid19 deaths so that we as a population feel better, and perhaps go out an shop more to keep the economy alive? Put in those terms it’s a vulgar comparison. However if the unexplained deaths are partially or wholly responsible by Covid19 then it means the mortality rate of Covid19 is much greater, and this would be significant if reported. It could cause those that are not complying with Covid19 state-at-home restrictions to ponder that the actual risks of disease and dying are greater, and it might garner more public attention.
Consider the following research published this week by McKinsey & Company on the unexplained year-over-year dramatic increase in death rates.
Further when we consider the varying ‘observed case – fatality ratio’ disparities from country to country it we should take more time to pause and ponder the implications of this health crisis and figure out how to rationalize this news to the public so that they participate more broadly in solution making, and not rule breaking in this environment. Consider the following data from Johns Hopkins on the mortality rate differences of the 10 most infected population locations.[iii]
Moving forward, since my last issue on 5/23/20, several facts have become more clear to the public:
The Covid19 pandemic persists and appears not to be going away anytime soon especially with near-term re-openings and the resurgence of cases in opening markets;
On 4/30/2020, Bill Gates reported that as of 4/09 there are 115 different Covid19 vaccine candidates and eight to ten of these look promising; On 5/06/20, McKinsey reports on that there are now 150 vaccines in the pipeline, and 200 drug candidates; yet any hope of a miracle vaccine by Fall 2020 is increasingly unlikely; it’s going to take longer, and perhaps much longer;[iv],[v]
US unemployment is 22.4% for people who are underemployed and unemployed and out of work (U-6), and they are undoubtedly using up savings, scraping by where they can, are likely the lion-share of those not paying their monthly housing rent since April; disturbingly some 40% of US households making $40,000 annually have at least one member unemployed, and this crisis is particularly devastating to the poor;
The Federal Reserve Bank and Congressional intervention recent efforts to provide support for the economy, businesses and households (including stimulus interventions 1, 2, 3) are making their way into the economy such as the funding of $1,200 stimulus funding for tax payers, and CARES Act PPP program that supports small businesses, direct industry supports etc. While these massive measures are helpful to the economy, additional aid continues to be needed as this week Chairman Powell gave Congress a darker economic outlook is forecast with a lower for longer outlook, casting doubt on any near-term V-shaped economic recovery;
The mental health consequences of the crisis are increasing as anxiety, depression, fear, and hopelessness affect an increasing number and impede their self-ability to help themselves and be resilient.[vi] A poll by the Kaiser Family Foundation found that nearly half of Americans feel the Covid19 is negatively impacting their mental health and given these trends we should be on the lookout for likely increases in suicides, overdose deaths and substance use disorders.
So it has been quite a traumatic few weeks with new developments and issues since my last I wrote and there is increasing need to uplift, support, and raise the human spirit at this time.
SBA PPP Program Observations
As I look for ‘green shoots’ of economic growth and hope in this environment, I am mindful of the many grateful small businesses that recently received their SBA Paycheck Protection Program (PPP)[vii] loans and some businesses that are reporting some increases in sales, though nowhere near their pre-Pandemic levels. Many US based small businesses were able to access the CARES Act, Small Business Administration Payroll Protection Program (PPP). The PPP program provides small businesses, non-profit organizations, Veterans organizations, and Tribal businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities. The Paycheck Protection Program prioritizes millions of Americans employed by small businesses by authorizing up to $349 billion toward job retention and certain other expenses. Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
For my own company’s experience with the PPP is as follows. I intended to apply for PPP funds early-on as I knew that my own company was adversely impacted in this crisis with a near-lock up of market demand for my company’s executive search business services line; our firm has not received a single proposal request for new executive search engagement since 3/15/20, while at the same time we have received multiple stop-work orders pausing search engagement projects while several of our clients searched to figure out what demand remained for their services. Now in mid-May, multiple of these frozen projects have now thawed and work has restarted to fill these positions, though concerningly we still have not received any new requests for talent search projects, thus our own company is in need of a vital strategic strategy pivot… and not coincidentally finding your vital business strategy pivot is the topic of this issue of UpLIFT.
Back to my own experience with the PPP application process. Knowing that I needed the funds and fully intended to apply, and that there was a stated shortage of funds with first-come, first served status, I waited up late at night to apply on the eve of 4/03/20, with intent to apply at midnight on Saturday morning April 4 when the program was to open. At the SBA there was initial confusion and lack of clarity on how the program was to be administered and final rules were not provided until late evening on Friday on April 3 before the program was to start. Several large banks were agile and primed to help their customers quickly and leapfrogged ahead of the pack. Namely, Bank of America and JPM Chase appeared to get out of the blocks early and both banks were accepting applications Saturday morning, and reportedly by Monday they had accepted and processed thousands of small business SBA applications.
Meanwhile, my (soon-to-be-former) bank, a major national bank that shall remain nameless, was found to be flat-footed, ill-prepared, and visibly not-wanting the PPP program, nor desiring to fully serve their small business customers in this time of crisis, as their PPP application portal remained closed through the weekend, and only opened on Monday to a waitlist portal. In an environment of announced scarcity and first-come, first-served, my national bank failed me in this application process much like the banks of the Great Depression failed to open to their customers, and there was a subsequent run on their banks. Today, I’m running from my bank to another… and I hear the same from other SMB owners who had similar experiences with their (former) banks. I have subsequently renamed my non-performing bank: WtF bank which provides some dark humor for an otherwise painful experience; needless to say I will be leaving that bank soon.
Thankfully at the time my bank was failing to perform, I learned on CNBC about Lendio and that they were working through the first weekend to help many small businesses nationwide apply for the PPP funding. I immediately applied with Lendio and was able to get my application submitted in one day, and though the process was not entirely seamless, it was successful, and I received an SBA PPP authorization in the first round two weeks later, though it was not funded until Monday of this week. Yet I am most grateful, as are so many other small business leaders I have spoken to recently who are equally grateful for the PPP loan as it provides some much needed capital support for payroll, health care insurance, rents, utilities, and if desired funds for re-openings and general operations.
The recent financial life support provided to individuals, industries, and small business through programs like the PPP have softened the potential blow of lost demand for goods and services. Small business attitudes and optimism have increased recently. Though I think this is more likely SMB paycheck optimism, and is not grounded in forward-looking reality. Large company CEOs and CFOs are much more pessimistic of the economic outlook and are focused on longer terms of sustainability.
What is concerning today is that nearly 3 million new initial claims for unemployment were reported in the US this morning on a seasonally adjusted basis, bringing the total to 36.5 million claims in the past 8 weeks. Dion Rabouin reports this morning in the well written and timely, “Axios Market” brief, “the record high unemployment rate, thousands of business closures and wave of bankruptcies, [have been considered in] new academic research estimates that 42% of recent layoffs will result in permanent job loss.”
As of 4/30/20, while the published unemployment rate was 14.7%, the US U-6 Unemployment Rate was 22.40%, compared to 8.90% in March and 6.90% last year. This is higher than the long term average of 10.34%.[viii] The US U-6 Unemployment Rate measures the total number of employees in the United States that are a part of the labor force, but are without a job. Unemployment rates can be a good gauge for how the economy is performing in a particular region. Historically, the US U-6 Unemployment Rate reached as high as 18% in 2010. The U-6 rate differs from the more commonly reported U-3 rate in that it also includes workers that are discouraged and underemployed. This provides a better view on how to US economy is functioning, since it captures a larger labor force.
On 5/13/20, Federal Reserve Chairman Powell reported that the US economic outlook was “both highly uncertain and subject to significant downside risks.”[ix] He added further, “The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II. We are seeing a severe decline in economic activity and in employment, and already the job gains of the past decade have been erased. Since the pandemic arrived in force just two months ago, more than 20 million people have lost their jobs. A Fed survey being released tomorrow reflects findings similar to many others: Among people who were working in February, almost 40 percent of those in households making less than $40,000 a year had lost a job in March.1 This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future.’
Further from Chairman Powell, “But the coronavirus crisis raises longer-term concerns as well. The record shows that deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy. Avoidable household and business insolvencies can weigh on growth for years to come. Long stretches of unemployment can damage or end workers' careers as their skills lose value and professional networks dry up, and leave families in greater debt. The loss of thousands of small- and medium-sized businesses across the country would destroy the life's work and family legacy of many business and community leaders and limit the strength of the recovery when it comes. These businesses are a principal source of job creation—something we will sorely need as people seek to return to work. A prolonged recession and weak recovery could also discourage business investment and expansion, further limiting the resurgence of jobs as well as the growth of capital stock and the pace of technological advancement. The result could be an extended period of low productivity growth and stagnant incomes.”
And importantly, there is great debate in the US today as to the proper role of government, how and where to spend any stimulus and support, and the individual pain of citizens is likely to be prolonged by indecision until the country’s pain index, or misery index in economic terms becomes more grave. So while our political leaders figure this out, it is vital that every individual, family, and business do what they can today to help themselves and be resilient as waiting for the government to act or come to your rescue may end in peril for many. Much of this peril and severity of the financial crisis could be greatly softened or avoided if we individually get moving to create new sources of revenue now for our own lives and businesses.
Feature Topic: Vital Business Strategy Pivots and the Innovation Imperative
At the outset, I recognize that as a serial entrepreneur my mind operates differently than most others as I’m always looking at life situations with an economic opportunity filter; it’s just the way I’m wired. For example, when my wife and I attended an outdoor concert in Chicago where we had VIP seats to hear Train, The Script, and Gavin McGraw perform their great music. During the concert my wife enjoyed the music and was swaying to the beats (like most who attended), while I found my mind was preoccupied with estimating the population attending concert and figuring out the potential revenue from the event. Odd I know.
I have always been entrepreneurial looking for business opportunities wherever I go. I find that many times the opportunity is right in front of you and the secret is how to find and test it to see if it’s a real opportunity. So how do we see market worthy needs for individuals and small business right in front of us? Often it’s the simple unfulfilled need or opportunity right in front of you. For example, as a youngster in California I did not have a lemonade stand, however we had an avocado tree in our yard so I sold avocados on our curbside to passersby for nickels and dimes, reportedly making my first $40. Our family next moved to Utah, and the pattern of looking for opportunity where you are planted started all over again. What does Utah have in abundance? Snow, and when it snows it can be heavy for people to lift. So seeing this need, as an 11-year-old, I went door-to-door hustling snow shoveling jobs from my neighbors, and I organized several of my elementary school friends to shovel show for me (i.e., my first de facto business employing others as an entrepreneurial “Tom Sawyer”). Fast forward, when I was a Sophomore in college, I commuted to school, and I noticed that there was a mobile home neighborhood in our community that had small yards with lawns that were too big to mow by hand, and too small to rationalize the purchase of a lawn mower. So I went door to door in that neighborhood, selling my not-yet-launched lawn mowing services, giving the first job away for free as an inducement to get someone to be my ‘champion client’, and subsequently I booked 31 lawn mowing accounts ranging from $4 to $6 per mow, and I later organized the youth in my neighborhood to join me weekly in mowing those lawns. Mowing lawns taught me another lesson about business; it gave me my first view of recurring revenue for when it rained, the lawns grew, and I was invited back to mow the lawns again earning more money. Since that early date I have grown to love and embrace products and services that have recurring sales and revenue.
So the first thing I want you to consider is what are the needs right in front of you today? Your goal is to find a paying customer. You know it’s a marketable need when someone pays you for your product or service. For example, consider this ‘just in’ story. On “Friday the 13th” of May, the day normally reserved for release of scary movies, associate editor Angely Mercado was laid-off work and suddenly unemployed. Fortunately, last month, she helped a family write an obituary for a NYPD officer who died and was paid $200; this sparked an idea. I wonder if others have this need? It turns out that many more families needed the same service. So with the green shoots of first revenue, now Angely has this personal pivot strategy to write obituaries, edit, and write copy as a gig economy worker until a full-time position opens back up; or perhaps this will become a new business for her? It’s all up to her, just like it is all up to you what you do in this crisis. You can read more about Angely and her story here.[x] Now Angely’s market opportunity started with responding to a need… somebody was in crisis and had an urgent need for service, and she wrote the first obituary and has subsequently turned it into a small stream of revenue for her. And you can find local demand in your area too.
Now a “side hustle” is not necessarily a business, but it can become a business if there is market demand and discipline on the part of the entrepreneur to nurture and grow the business. Entrepreneur magazine published an article titled, “50 Ideas for a Lucrative Side Hustle”[xi] and the ideas are a plenty. Selling, recycling, driving, renting, delivering, managing, organizing, writing, tending, mending, fixing, answering, creating, drawing, drafting, tutoring, software development, click-funnel writing, workflow planning, shopping, cleaning, teaching, training, and you get the picture. Almost anything you can think of that people will pay you to accomplish. Some of these needs are ‘one-off’s’ or one-time events, and others could become the green shoots of a new business.
Fiver and Upwork are locations where many individuals offer their services for a fee to others who will pay, and they are mainstream talent locations for the gig-economy. Cory Stieg[xii] writes on CNBC’s website this week that what is selling now on gig-economy work exchanges are numerous blogging, website development, and social media campaign assistance. Building a website make gross $395 to $4,095 according to Fiverr. Video editors can charge between $100 to $3,200 to edit videos and event footage. Mobile app development is huge and projects range between $300 to $3,000 for those with the knowledge how to write the content. Graphic designers charge between $185 to $6,300 for their work on apps. Many other tasks such as virtual assistant services and training services of many types can be found on these sites. So there are exchanges where demand is already organized and ready to serve.
Necessity does everything well. In a crisis, when luxury goods may have less market viability, we need to dive into the essential, the needed, the current pain points to find economic opportunity. Plato said that ‘necessity is the mother of our invention’ and indeed in these times necessity is causing us to pivot and redirect. Consider the work of Luly Yang, a high end haute couture design, uniform, and wedding dress shop in this crisis. Uniform sales for hotels and restaurants have nose-dived; what’s selling today? PPE. So what did Luly Yang do, she pivoted to the possible, and found a revenue stream that has buyers wanting more. People want beauty, fashion, style, and Luly Yang delivers.[xiv]
And you might ask, is there a real demand for beautiful masks? Absolutely yes. You can’t buy these versions and many others as they are all sold out! Now for evidence of demand of variety, beauty, and art visit any Costco or other shopping area and look at the variety of art and design on masks and you will see demonstrated market need for creativity, individuality, and coping strategies to make the best of this challenging Covid19 situation. Lily Yang has created a fabulous example of leaning into the possible. And she has not stopped there, she and her company are also making uniforms for companies what want style. Bravo! This is ingenuity and it started with a simple ‘what if’ statement. CNN covered a story titled “masks aren’t just for protection, they’re being used to make a statement,” to learn more about this trend.[xiii]
Break it down to 1-2-3
The PPE example of creating beautiful masks is a teaching moment on how you might spot an opportunity, make your own basic version, improve on it, improve again, and through repeat re-iteration and invention you create a more powerful economic engine. I am aware of another company in the hotel and restaurant uniform design and sewing business that faced great challenges; sales dropped off significantly in March coming to a standstill. With designers and seamstresses they decided to do something positive and sew masks to help others, and like Luly Lang above, they found there was a market. So they put some design effort into designing a better mask, and it sold. So then they decided to innovate further and put logos from companies on their masks and PPE and they sold too. They have now added additional PPE including designing and sewing gowns, and have put logos on them, and they are selling too. And thankfully the revenue from their efforts has created jobs and income for their company, when their core business was on ice and frozen.
So the teaching moment is this: they did not create their full blown version first; they started simply. Step 1: create a minimally viable product, a mask, and sell the mask; Step 2, if step one was successful and there is demand, then make a better mask adding design, texture, color, feature benefits, and sell that mask; Step 3, if step 2 was successful, invest more energy and resources and increase production capacity of what’s selling, and move into close adjacencies such as the gowns, etc.
Here’s another example of recent entrepreneurial innovation from the past 60 days. An auto parts assembly line inspection company named Emitted Energy Corporation came to a near complete standstill in March 2020, when the automotive sector demand collapsed and the number of new cars selling fell dramatically. The company needed new revenue, and quickly, and they observed that one of their core technologies in their production line could be repurposed to solve a hard problem that Covid19 had presented to companies. The problem solved: how to allow many people to safely come to work more quickly?
The company had specialized knowledge of thermal imaging cameras and were previously using that technology to spot minute defects in auto parts on a moving assembly line. This posited that this same technology could be used to measure a workers inner core temperature and detect a fever at a distance even while people were moving. The company put a skunkworks team together to immediately work on this concept and in 4 days created an MVP software app to tie their thermal imager to software, and it worked.