Is “a Rising Tide Lifts All Boats” the right analogy for what we see happening in the economy right now?

By Steve Worth

I think not, because it implies everyone will benefit as the economy continues to improve incrementally.  But clearly we can all see that while some boats are being lifted others are sinking and still others are languishing where they are with no sense of movement up or down….. 

No, the boat analogy doesn’t hold water…. I suggest a train station analogy might be better.  Trains are leaving the station and taking some to their destinations.  Others are finding out they are on the wrong trains and going to God-knows-where… while still others are waiting, waiting, waiting, with no idea whether their train will be coming by or not.

We hear some in the consulting world saying that the rapidity of change and its unpredictability spells the death of strategic planning, but that is not entirely what I see.  We are indeed in uncharted waters in that all of us are living and having to compete in a flat, global market along with seven billion other human beings who are every bit as intelligent and hard working as we.  Never in the history of the world have we seen such a scenario.  But while some are freezing up in panic and uncertainty over this newly emerged competition, others are seeing opportunity in new markets and are going for it--and they are doing so in a transparent, open-minded, well-researched, and thoughtful manner.  

The planners are finding the resources they need to get to the destinations they have selected while the bewildered and fearful sit on what reserves they may have and hope to wait out the storm—either that or they take refuge with those who see themselves as victims of some blame-worthy person or thing.

This is the only explanation I can see for why the economic indicators are so confusing and why this “recession” seems to be so drawn out.  In fact, we are not in a recession nor even recovering from one.  We are in a new world and those who are researching and planning and using their brains to chart new paths are doing better than those who are following tradition. 

Implications of Big Data

By Dean Furst

The new millennium is barely a teenager, but has already developed an identity of its own, Cisco estimates “…by the end of this decade, the number of connected devices will grow from 9 billion today to over 50 billion.”[1] What’s even more staggering is the amount of data that’ll be transmitted, shared, and downloaded between them. Online information will be collected through social media sites, search engines, downloads, uploads, and real time security cameras in cars and buildings. There are algorithms to evaluate how drivers react to incoming traffic, how consumers conduct themselves in department stores, and even ones to predict customer’s next online click before they've made the previous one. All of these algorithms base their documentation off actions made by consumers.

The problem with ‘big data’ is that few corporations have the database management systems to process of sheer size of the information. Usually only governmental entities and organizations with advanced central computer processing power have the ability to make sense of, identify trends, and make conclusions from the data. It’s estimated from a recent IBM study that surveyed 1000 business professionals said that “63% of respondents indicated that the use of information (including big data) and analytics is creating a competitive advantage for their organizations–a 70% increase in the past two years alone.” [2] In the modern marketplace, the abilities stated above are creating a bigger inequality (or advantage, however you wish to view it) between the two sets of organizations, those who have the processing power to understand ‘big data’, and those who lack it.

Seeing as internet traffic will soon pass 100 billion terabytes in a few short years, Silicon Valley startups are banding together under the same banner; providing cost-sensitive way to collect and interpret data. Cloudera, one of these such companies, offers a package called Hadoop, which is basically a software package that is able to accommodate the overwhelming data. The price? $525,000, and that doesn't factor in the annual support costs or the installation fee.  Hadoop’s fees rank as some of the most affordable around. Recall a point earlier about smaller companies having trouble trying to afford the operating systems necessary to make sense of the data traffic. Smaller companies simply can’t stomach that kind of a cost, or don’t see it as a worthy investment in their current standing. The price alone is enough to create an inequality in the market, providing wealthier and more developed firms with the ability to gain a competitive advantage in evaluating the data faster and cheaper.

But data alone means little in the competitive market if you can’t find a way to offer its services to your customers. The majority of organizations that have the ability to fabricate conclusions from the data are able to better understand consumer trends in spending and demands. The companies that aren’t able to number-crunch to the same magnitude often outsource their analysis elsewhere. For example, McKinsey and Company employees thousands of algorithm analysts and tech geniuses to evaluate and pick over terabytes of data, coming up with meaningful conclusions for their clients. However, many organizations lack a comparable human supply of brain power, or rather, it would be too costly to employ the necessary people to have it done. This leads us to an interesting dynamic.  

A dynamic well put by Nielson, a global information company, which stated “…smaller players have historically relied more heavily on something their larger counterparts could only dream of—a personal relationship with their customers. Today, however, big data isn’t just for the big guys.”[3]  

Data is unique to a specific consumer type, and even to each consumer. Companies that can individualize their findings, predict future patterns for spending and investing, and offer strategic planning in real time will soon monopolize the market for client services. Nielson also stated in their recent poll of over 2000 small business owners that “even with new solutions tailored for small business, a large portion of owners still lack the expertise and the time to make good use of the information.”[4] This explains why the current businesses that are best adapted to analyze big data are usually government entities or specialty firms. But as always, companies evolve and adapt, and now that the amount of data transferred between devices nowadays is more than the entire amount of data transferred during the WWII years, it's a necessary evolution to stay competitive in the marketplace. Utilizing this advantage has become a pivotal point for many business owners and CEOs. In a recent survey of professionals, the software company SAS  found that “73 percent of survey respondents say their collection of data has increased ‘somewhat’ or ‘significantly.’”[5] For those organizations stated by the survey as “strategic data managers - those with a well-defined data management strategy that focuses on collecting and analyzing the most valuable data – tend to financially outperform their competition more than others  - 53 percent, compared with 36 percent.”[6]

Some companies adopt the new trend of hiring new analysts and  data managers who specialize in the collection and understanding of data, others purchase the computing power to rival (or get as close to as legally possible) the computers at the NSA or other governmental entities. Business models are changing, evolving, and becoming more complex, and data analytics are the base from which to build on. It’s more advantageous to update your existing data metrics environment to accommodate the influx than try to run modern logistics on an outdated system. Bringing it full circle back to Cloudera, Intel just invested over $700M into the company for further research, but the problem exists where the managers and employees lack the skills necessary to make sense of the data. Intel Vice-President Jason Waxman stated in an article that the Hadoop system “isn’t a magic fix…companies are going to need people who understand what they’re looking for.”[7]

Many small businesses feel threatened by expensive operating systems, terabytes of information, and the unique language that data uses. But contrary to popular belief, smaller companies who are on par with the latest technological advances are able t bo access the services offered by these larger corporations. The key word is ‘services,’ they aren’t spending three quarters of a million dollars on software; they’re simply using pre-existing services to personalize their client relationships. There will be organizations similar to Cloudera and Hadoop that are made available to small businesses, because there exists an obvious market for the services. Smaller companies build their revenue on interpersonal client relationships, and understanding data is an added benefit that could maximize profits.

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[1] "Big Data for the Real World." VentureBeat. VentureBeat, 6 Feb. 2014. Web. 04 June 2014.

[2] “New Study Details How Enterprises Use Big Data | The Big Data Hub." New Study Details How Enterprises Use Big Data | The Big Data Hub. IBM Information Management, 17 Oct. 2012. Web. 04 June 2014.

[3] "Newswire ." How Small Businesses Can Scale the Big Data Barrier. Nielson, 18 Mar. 2014. Web. 05 June 2014.

[4] "Newswire ." How Small Businesses Can Scale the Big Data Barrier. Nielson, 18 Mar. 2014. Web. 05 June 2014.

[5] Troester, Mark. "Small Business, Big Data." Business Analytics and Business Intelligence Software. SAS, n.d. Web. 05 June 2014.

[6] Troester, Mark. "Small Business, Big Data." Business Analytics and Business Intelligence Software. SAS, n.d. Web. 05 June 2014.

[7] King, Ian. "Big Data Is Really About Small Things." Bloomberg Business Week. Bloomberg, 4 June 2014. Web. 05 June 2014.

Plexus Clients Achieved Growth far Above Market Norms

(Washington, DC—5 June 2014) During the three years immediately following the onset of the Great Recession from 2009 to 2011 thirty-nine nonprofit organizations that were already growing strongly increased their annual growth rates by an average of 4% after using the management consulting services of Washington, DC-based Plexus Consulting Group, LLC (Plexus).  Eleven other nonprofit organizations that had been shrinking in size, managed to reverse or reduce their losses and performed on an average 22% better than before they used the firm’s management consulting services.

The organizations included in this analysis are trade associations, professional societies and philanthropies in areas covering education, community development, financial, professional, manufacturing, and various aspects of healthcare.  Every nonprofit organization that used Plexus’s services during this three year timeframe experienced higher annual revenue growth rates than their respective sectors overall.

In order of frequency of use, the services were:  strategic planning; surveys and market research; marketing; international business services; organizational restructuring; and government and public relations.  The organizations using strategic marketing and strategic planning services registered the greatest growth increases of 45% and 26% respectively.   

“This is the first time we have done such a comprehensive analysis of the bottom line results of our work,” said Plexus President Steven Worth, “but we thought this would be important to know during these financially uncertain times when making a decision to spend badly needed cash on management consulting services can be controversial.  These figures show our firm’s services more than pay for themselves—even during a recession.”

More complete results of this study can be obtained by contacting:  dean.furst@plexusconsulting.com; or Lindsay@plexusconsulting.com .  The financial results used in this report come from publicly listed sources as is required by all tax exempt organizations.

Competing with the For-profits

By Steven Worth

These days, there is hardly a sector where for-profit organizations have not made in-roads into areas that were once the exclusive domain of nonprofit organizations. Whether it is in supplying blood to US hospitals or offering the public for-profit alternatives to nonprofit and government sponsored schools, for-profit organizations are often beating nonprofits at their own game by providing more creative, effective and efficient alternatives. If you don't see this happening then you should look again; it is not a pretty sight.

So what is a nonprofit organization to do?

As management consultants dedicated to helping nonprofit and public service organizations become more efficient and effective, it is bracing and encouraging to see increasing numbers of well-trained, dynamic managers of associations, professional societies and philanthropic organizations employing technology and management techniques that used to be the exclusive domain of for-profit companies. As a result, their organizations are becoming every bit as efficient and effective as the best practices in their respective sectors-even while they remain faithful to their mission-driven purposes upon which their nonprofit organizations were founded.

In this race to be competitive it seems to me that it is critical nonprofits not lose sight of their innate competitive advantages over for-profit corporations:

* Energized members and customers: Mission-driven nonprofit organizations are successful in attracting armies of dedicated volunteer talent from recent graduates to recent retirees (and everyone in between) precisely because they do appeal to the human need to serve a purpose greater than ourselves.

* Doing Good: Corporations too are buying into the idea that it is good business to do good. While advertising and sponsorships have been in decline since the beginning of the Great Recession, Corporate Social Responsibility (CSR) has taken off. Many times these CSR projects are in partnership with nonprofit organizations whose missions and visions (not to mention their credibility and credentials) dovetail with what these corporations want to do.

* Sense of Community: Communities of people sharing common interest--for-profit companies don't provide this; nonprofits do. We are social animals and like to share our time and talents and thoughts with people who share our interests and concerns on-line or in-person. This is the trait or characteristic that always finishes at the top of the list when membership organizations poll their members about what they value most. This is the sticky soft power of nonprofit organizations that no for profit can match.

We love seeing nonprofits producing fact-based business plans that provide measurable performance indexes and bottom line impact analyses.... But don't forget your heart, your energized members and customers, your goal for doing good and your important sense of community.

The four strategic uses of research

By Steve Worth

On more than one occasion I have heard association executives say that they saw no need to do market research because their membership included the who’s who of their sector. 

It seems to me this is a dangerously myopic mindset; but at the very least it misses four key uses for market research:

1.      Achieving consensus—Any association executive will tell you that one of the hardest aspects of their job is to harness the many strong personalities represented on their board of directors and various leadership bodies.  It can be as hard as herding cats; but facts have a way of focusing attention on what is important while minimizing personality differences and/or the differences among membership factions.

2.      Bringing stakeholders’ voices to the table—Every organization has important stakeholders who cannot always be present when and where decisions are being made.  Stakeholder research can help compensate for that and make for a more inclusive and transparent decision making process.

3.      Benchmarking progress against goals—It is a truism that people and organizations achieve what they measure.  Start tracking your progress on key goals and see for yourself how obstacles magically melt away.

4.      Trend analysis—One of the key legal advantages nonprofit organizations have over for-profit companies lies in their ability to collect and analyze competitive data.  It is also one of the most valued benefits as measured by surveys in virtually every membership organization.

There is nothing to compare with the strategic value of good market research—no matter who the members of your association might be!

BRICS, MINT--or what do you feel is the most promising place to invest?

By Steven Worth

What is your acronym of choice—BRICS (Brazil, Russia (well, let’s keep the “R” just as a place holder for now because the acronym sounds better with it), India, China, and South Africa); or MINT (Mexico, Indonesia, Nigeria, and Turkey)?  While these are neat acronyms and many of these countries do seem to be hot markets for international investors, there is growing evidence global businesses and investors in all sectors are looking at another acronym of a market that may not be ready to fade into the past just yet—USA.

I know, I know this sounds jingoistic but let’s look at the facts.

·         US demographics are sound when compared to the aging demographics of every other developed economy.  There will be no implosion of an overly burdened workforce trying to care for a much larger aging and retired population.

·         The comparative cost of labor along with productivity levels is so favorable now that manufacturers are bringing jobs back to the US after decades of offshoring.

·         The basic infrastructure that a national economy relies on are all in abundance: 

o   An educated workforce

o   Communications and transportation infrastructure

o   A culture in which the rule of law has unquestioned dominance and where political institutions despite all their flaws are stable and the envy of most developing economies

o   A sound currency with an ample supply of investment capital

o   Near self-sufficiency in all critical natural resources

o   Cutting edge technology and a market whose thought leaders regularly win the most Nobel Prizes

o   The largest and most sophisticated purchasing power of any market in the world

o   A middle class with enviable social mobility that attracts the best brains and talent from around the world

·         A secure geopolitical position by virtue of being located on a continent and in a hemisphere with friendly neighbors and with soft and hard power second to none

Our country’s weaknesses are perhaps more obvious to us sometimes in an election year than our strengths, but in light of these strengths our weaknesses should rather appear as opportunities.  If our education, healthcare, and transportation systems need to be repaired—those are opportunities that are right here in our own backyard where the grass is pretty darn green.   

Four assumptions—are we on the same page?

Steve Worth, President of Plexus Consulting, LLC

Fast growing associations of all kinds share these four leadership assumptions:

• Growth is good—growth is part of the definition of life.  If you are not growing you are dying.

• All business-related organizations should be market-focused—and markets change, that is what markets do; so strategies and tactics need to be assessed frequently in order to remain relevant.

• Decisions should be based on solidly researched facts—fact-based decision making beats any of the alternatives!

• Form follows function—once you have determined what needs to be done your organization’s operational and governance structures should be adapted to help achieve that end objective.

So simple yet so complicated for so many organizations.