THE NEW COMPETITORS: THE CHALLENGE OF CHANGE

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Dear Friends:

Two cliches come immediately to mind. The first one, "Those who fail to learn from history are condemned to repeat it," is axiomatic. The second one, which is somewhat more obscure (likely because I invented it myself at dinner last evening), but equally powerful in its gravitas and significance, is "Those who fail to acknowledge and adapt to change are doomed to become fossils." While I have an appreciation for nostalgia, I understand that it is merely a celebration of the past, an embracing of pleasant memories, and a diversion from the stress associated with the accelerating rate of change in a high-technology, increasingly global society. It is not, however a way to conduct business.

It takes courage to face a rapidly-changing geopolitical and economic landscape. If you are to survive as a business, you must have the courage to lead, and you cannot effectively charge ahead with your head turned behind you.

I have listed several attributes which I believe will be essential to any organization whose leadership and stakeholders are serious about thriving in the new economy. How many of them characterize your philosophy and strategy?

1. You must scan international markets as well as domestic markets for sources of products and services, as well as for new customers;


2. You must have a presence on the internet, and you must constantly update and upgrade your company's information -- prospective customers and co-venturers are increasingly "turned off" to low-cost, outdated website material. It indicates that you either don't take pride in your appearance, that you are not "state-of-the-art", or that you do not conduct sufficient business to warrant the relatively small expenditure required to make a good appearance. By way of example, I no longer wear my cherished polyester leisure suits to social gatherings;


3. You must constantly network within your industry and outside of your industry. The Internet has made the development of new international relationships and continuing dialogue very simple, and irresistibly inexpensive. A trusted business acquaintance recently told me that he used to spend one day out of his six-day business week networking -- now he spends three days weekly networking;


4. You must maintain a good dialogue with your competitors, to the greatest extent reasonably possible. You can learn from them without poaching their customer base. In fact, collusion, consolidation and co-venturing are becoming more the norm than old-school ("Art Of War") hostile competition. It simply makes more economic sense in terms of eliminating expense redundances, and leveraging resources;


5. You must aggressively incorporate customer and vendor feedback in every aspect of your business. Whether this is done through blogs, wikis, surveys, or through some other communications medium, it must be obvious to customers and vendors that they have a say in your business, and that you are paying attention to them. Customers and vendors are easier to retain if they feel a sense of authorship and ownership in your company. Pride and a sense of belonging are basic human needs that are being increasingly exploited by enterprising and progressive organizations.


6. Your business must be open every hour of every day, ready to process orders and provide support services. Whether it is by email autoresponder, telephone helpdesk, emergency voicemail access...it does not matter. If your lights are out, your customers will simply find one of your competitors whose lights are on;


7. Co-venture with local partners (even if the co-venture is merely via computer weblink) in each of the other countries in which you are doing business. They are valuable sensory organs, as well as as source of comfort and support for your international customers.


8. Be prepared to use the services of interpreters and translation services to honor your customers and make them feel accommodated.


9. Your computer search engine rankings are critical "evidence" (spurious or otherwise) or your size, stability and success. You will eventually need to retain the services of a high-quality SEO (Search Engine Optimization expert).


10. You must differentiate yourself from the myriad of competitors who are likely to invade your market. Remember: with the advent of the Internet, and with cyberspace rapidly supplanting real estate, there are fewer physical and financial barriers to entry into virtually every industry. Your competition is watching you and learning from you. You must do the same.

The challenge of accelerating change is not to be taken likely. Futurism is no longer an intellectual sport of highbrow conjecture -- it is an integral daily activity for the sustenance and growth of every business. No exceptions.

Faithfully,

Douglas Castle, Internationalist

GOOD NEWS/ BAD NEWS: EURO vs DOLLAR.

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Dear Friends (and I use this latter term with cautious optimism):

In my last post, I discussed the far-reaching implications associated with shifts in the pattern of Inbound Foreign Direct Investment (FDI). In brief, I stated my belief that the implications may be negative (barring any brilliant and immediate course correction initiated by enlightened leaders and legislators) for U.S. world economic leadership. It is disturbing for any fan of the United States' original brand of entrepreneurial innovation and capitalism to watch as U.S. investors, both individual and institutional, give portfolio preference to foreign markets over domestic markets.


The solution, as I had stated then, does not lie in trade restrictions, investment restrictions, foreign stock ownership restrictions and other xenophobically-driven intrusive sanctions and controls which merely delay and intensify the inevitable -- the answer has to do more with our being more innovative, more price-competitive, more supportive of our exporters and home-grown small businesses, as well as to our applying more honey than vinegar to our international public relations effort. Revisiting such once-successful ideas as the Investment Tax Credit, the R & D Tax Credit and incentives to businesses for creating and supporting domestic employment and contract awards to other domestic enterprises may well be helpful. Although human nature tells us that people are driven primarily by fear of loss or the threat of pain and only secondarily by the opportunity for enrichment, domestic enterprises are offered pitifully little in terms of governmental and regulatory support or opportunities for enrichment at all.


In keeping with this theme, many have noticed that the Euro has been rising significantly against the USD (the Dollar) during these last few years. While there are fluctutions in the rate of exchange from day to day, the macroscopic trend over time is obvious: The Euro is rising against the Dollar. If you are heavily invested in Dollars, or in Dollar-denominated contracts, or in future payments from customers in Dollars (especially if you have to make payments to your suppliers or contractors in Euros). A possible way to hedge against this trend is to request payments inward in Euros, while paying your suppliers and contractors outward in Dollars...there are also different insurance products available to hedge against adverse foreign exchange risk in longer-term contracts and installment payment scenarios.


For holders and receivers of Dollars, the preceeding paragraph was esentially the Bad News, with some suggestions as to strategies for mitigating the impending loss, e.g., "damage control," as they are increasingly fond of calling it in the White House. What follows, however, is the Good News...and along with it, an opportunity for U.S.- domiciled firms to garner profits and reacquire consumers.

As the Euro increases in value against the Dollar, the purchasing power of overseas consumers rises considerably in terms of their ability to buy increasing amounts of U.S. goods and services. This provides U.S. exporters with a pricing advantage against equivalent goods and services being offered for sale by Euro-pegged nations. Savvy overseas buyers are not focused on the implications of a decline in the value of the dollar against the Euro -- they are interested, as well they should be, in buying bargains. Such U.S. staples as recurring exports, bank instruments, securities, and even real estate are becoming increasingly attractive. If properly publicized, the United States is fast becoming a house of great bargains, and a terrific place for internationalists to go shopping. It presents an opportunity for us to attract international consumers back to the U.S. marketplace, and to hopefully recapture their faith, loyalty and business. The challenge to the various trade-related agencies of the United States, such as the Department Of Commerce and the Small Business Administration, to name just two, to get the word out internationally, and positively. This could indeed be marketed as Good News. Possibly.

As my late father would have likely said, though, "Don't get too happy yet, son!" (he often called me that, as he frequently forgot my first name). His admonition would be most appropriate here because...information is just noise unless it is acknowledged and acted upon.

AMEN.

Faithfully,

Douglas Castle, Internationalist*

*And for this post only, Eurologist.