Lead Dhange Group
Posted on November 16, 2010 by Erin Schreyer
I spent most of last week with clients in New York City. Wow, does that city move!! There is always something going on; so much excitement to see and energy to feel!! It’s a melting pot of people, interests, food and shopping – something for everyone, if you can find it amidst the crowds and activity.
I feel like our world, in general, is in a big state of activity as well. So many political and economic changes are driving companies to make adjustments. Companies are reacting with changes in their workforce, service offerings and compensation…and employees are feeling the effects.
Don’t get me wrong, change can certainly be a good thing. Sometimes, it’s truly needed. That said, change isn’t always easy for people to digest. They tend to have an immediate and sometimes physical reaction to any announcement of change. But the best companies will always adjust…and so change will be part of the equation.
Leaders should be cognizant of the impact of change on their team and be ready to support people through the process. Because the basic human need of feeling secure and valued is innate in all of us, leaders should be prepared to help nurture these emotions as change is occurring.
I’ve started a list of things that leaders can be proactive in doing to help ensure a smooth transition for their employees. What would you add to the list?
Communicate the change effectively. This is critical to the success of any change. A clear expectation must be set with as many details as can be provided (and then followed-through on!) Leaders should be transparent…but that doesn’t mean they should disclose every single detail. It means they should be authentic and honest, while they share as much as they can at the right times.
Involve your team in change, when possible. Rosabeth Moss Kanter once said, “Change is a threat when done to me, but an opportunity when done by me.” People want to play a part on what’s happening to their future. Engage their expertise to guide the change and they will reward you by being more energized by it.
Remain consistent in your core values. While processes, procedures and services may be changing, your people need to see the stability of your core values. This will help them to remain confident in what’s happening, even if all the questions can’t be answered.
Share the vision and hope for the change. This is what I often refer to as the “power of why.” Most people are fairly purpose-driven. They want affect change and have an impact, so it’s important to share the value and benefit of the change, as well as to help each person understand their role in that bigger picture.
Be an obstacle-remover. In times of change, more than ever, a leader must provide the right tools for success and remove obstacles that are impeding progress. Leaders should encourage open communication and innovation. They should also allow for graceful failures. This is where great leadership will come through, as the true “rallying” of the team is what facilitate a smooth transition through change.
What’s been your leadership experience in the midst of change? Are you a great leader who has some additional ideas to share? Or have you been led by someone who inspired everyone through a difficult transition? Let’s all add to this list and develop a great resource we can all benefit from!!
Wednesday, November 17, 2010
Radio Stabilized, Newspapers Slammed In 3Q
Media Post's MediaDaily News
by Erik Sass, Friday, November 12, 2010, 6:31 PM
The results are in, and while the Newspaper Association of America and Radio Advertising Bureau are still adding the numbers, a quick glance over third-quarter results from big publishers and radio groups suggests their fortunes are diverging, following a long period of tandem decline.
In short, radio is perking up as the economy enters a slow, tentative recovery -- but newspapers are continuing to suffer losses.
Most big radio groups reported single-digit growth in revenues in the third quarter compared to last year -- modest, but noteworthy on the heels of two years of straight declines.
At Clear Channel Radio, the nation's largest radio group, total revenues increased 6% from $703.2 million to $743 million, buoyed by increases in local and national ad revenues across categories including automotive, political, financial services and health care.
CBS Radio's revenues grew 9%, although the company did not release specific revenue figures. Cumulus Media saw total revenues inch up 3.6% to $66.4 million, as Emmis radio revenues grew 4% to $51.7 million, and Entercom reported that third-quarter revenues increased 3% to $102.7 million.
Taking the average, the big radio groups enjoyed average revenue growth of 5% in the third quarter of 2010 compared to 2009.
Conversely, big newspaper publishers continued to struggle, with single-digit declines across the board -- also noteworthy, since they are compounding several years of losses. Luckily, many own substantial broadcast TV businesses, which are buoying their bottom line.
At the New York Times Co., total revenues slipped 2.7% to $554.3 million due to a 1% drop in ad revenues and a 4.8% drop in circulation. McClatchy saw total revenues decline 5.7% to $327.7 million in the third quarter, reflecting a 6.4% drop in ad revenues and a 3.8% drop in circulation.
At Gannett, publishing revenues slipped 4.8% to $969.4 million, mostly due to a 5.1% drop in advertising revenue at the division, but total revenues were flat at $1.31 billion thanks to its TV business. Almost alone among major publishers, The Washington Post enjoyed a 5% increase in newspaper revenues, to $163.4 million, due mostly to increases in general advertising and digital revenues.
The news was not much better at smaller publishers.
A.H. Belo saw total revenues slip 6.1% in the third quarter, to $119.1 million; Media General saw its publishing division revenues shrink 7.6%, offset by an 18% increase in TV revenues. E.W. Scripps' newspaper revenues fell 3.8% to $100 million, offset by a 31% increase in TV revenues, to $78.5 million.
Adding up all their growth rates, these companies saw newspaper revenues decline an average of 3.7% in the third quarter.
by Erik Sass, Friday, November 12, 2010, 6:31 PM
The results are in, and while the Newspaper Association of America and Radio Advertising Bureau are still adding the numbers, a quick glance over third-quarter results from big publishers and radio groups suggests their fortunes are diverging, following a long period of tandem decline.
In short, radio is perking up as the economy enters a slow, tentative recovery -- but newspapers are continuing to suffer losses.
Most big radio groups reported single-digit growth in revenues in the third quarter compared to last year -- modest, but noteworthy on the heels of two years of straight declines.
At Clear Channel Radio, the nation's largest radio group, total revenues increased 6% from $703.2 million to $743 million, buoyed by increases in local and national ad revenues across categories including automotive, political, financial services and health care.
CBS Radio's revenues grew 9%, although the company did not release specific revenue figures. Cumulus Media saw total revenues inch up 3.6% to $66.4 million, as Emmis radio revenues grew 4% to $51.7 million, and Entercom reported that third-quarter revenues increased 3% to $102.7 million.
Taking the average, the big radio groups enjoyed average revenue growth of 5% in the third quarter of 2010 compared to 2009.
Conversely, big newspaper publishers continued to struggle, with single-digit declines across the board -- also noteworthy, since they are compounding several years of losses. Luckily, many own substantial broadcast TV businesses, which are buoying their bottom line.
At the New York Times Co., total revenues slipped 2.7% to $554.3 million due to a 1% drop in ad revenues and a 4.8% drop in circulation. McClatchy saw total revenues decline 5.7% to $327.7 million in the third quarter, reflecting a 6.4% drop in ad revenues and a 3.8% drop in circulation.
At Gannett, publishing revenues slipped 4.8% to $969.4 million, mostly due to a 5.1% drop in advertising revenue at the division, but total revenues were flat at $1.31 billion thanks to its TV business. Almost alone among major publishers, The Washington Post enjoyed a 5% increase in newspaper revenues, to $163.4 million, due mostly to increases in general advertising and digital revenues.
The news was not much better at smaller publishers.
A.H. Belo saw total revenues slip 6.1% in the third quarter, to $119.1 million; Media General saw its publishing division revenues shrink 7.6%, offset by an 18% increase in TV revenues. E.W. Scripps' newspaper revenues fell 3.8% to $100 million, offset by a 31% increase in TV revenues, to $78.5 million.
Adding up all their growth rates, these companies saw newspaper revenues decline an average of 3.7% in the third quarter.
Must-Stay TV: Longtime Viewers Remain Network Loyal
MediaPost's Media Daily News
by Wayne Friedman, Yesterday, 12:18 PM
Will TV viewers continue to be loyal to a network brand -- even when their favorite TV shows end?
In a study, Rentrak Corp. Factfinder analysis showed that viewers of popular-ending TV shows can remain with a network. The TV research company discovered these results after surveying viewers of ABC's "Lost" and Fox's "24" -- two longtime shows that ended their series runs last season.
Rentrak created a "Lost Viewer Index" and a "24 Viewer Index," comparing loyal levels of "Lost" and "24" viewers to television viewing of the total population today.
For the first two weeks of the new fall broadcast season, it found that "Lost" and "24" viewers remained loyal to ABC and Fox on Tuesday nights between 9 p.m. and 10 p.m., when those respective shows aired.
For example, viewers of "Lost" were 73% more likely than the general TV viewing population to watch ABC's "Dancing with the Stars," which also runs on Tuesday night. Former "24" viewers were 52% more likely to watch "Lone Star," Fox's short-lived series of this season, which ran on Tuesday night.
The data also cut across other time periods and competing networks. "Lost" viewers were 93% more likely to watch ABC's "Modern Family" and 89% more likely to watch ABC's "Grey's Anatomy."
"Lost" viewers were also 25% more likely to watch NBC's "Dateline NBC," 24% more likely to watch Fox's "Raising Hope" and 20% more likely to watch "Running Wilde."
Ex-"24" watchers were 64% more likely to watch CBS crime drama "NCIS: Los Angeles," 50% more likely also watch the network's "Criminal Minds" and 39% more likely to watch CBS' "CSI: Crime Scene Investigation."
Bruce Goerlich, chief research officer of Rentrak Corp., stated: "Viewer segment targets can be defined based on any combination of series or network viewers and allow for better promotion and counter programming to maintain or attract new viewers."
by Wayne Friedman, Yesterday, 12:18 PM
Will TV viewers continue to be loyal to a network brand -- even when their favorite TV shows end?
In a study, Rentrak Corp. Factfinder analysis showed that viewers of popular-ending TV shows can remain with a network. The TV research company discovered these results after surveying viewers of ABC's "Lost" and Fox's "24" -- two longtime shows that ended their series runs last season.
Rentrak created a "Lost Viewer Index" and a "24 Viewer Index," comparing loyal levels of "Lost" and "24" viewers to television viewing of the total population today.
For the first two weeks of the new fall broadcast season, it found that "Lost" and "24" viewers remained loyal to ABC and Fox on Tuesday nights between 9 p.m. and 10 p.m., when those respective shows aired.
For example, viewers of "Lost" were 73% more likely than the general TV viewing population to watch ABC's "Dancing with the Stars," which also runs on Tuesday night. Former "24" viewers were 52% more likely to watch "Lone Star," Fox's short-lived series of this season, which ran on Tuesday night.
The data also cut across other time periods and competing networks. "Lost" viewers were 93% more likely to watch ABC's "Modern Family" and 89% more likely to watch ABC's "Grey's Anatomy."
"Lost" viewers were also 25% more likely to watch NBC's "Dateline NBC," 24% more likely to watch Fox's "Raising Hope" and 20% more likely to watch "Running Wilde."
Ex-"24" watchers were 64% more likely to watch CBS crime drama "NCIS: Los Angeles," 50% more likely also watch the network's "Criminal Minds" and 39% more likely to watch CBS' "CSI: Crime Scene Investigation."
Bruce Goerlich, chief research officer of Rentrak Corp., stated: "Viewer segment targets can be defined based on any combination of series or network viewers and allow for better promotion and counter programming to maintain or attract new viewers."
Tuesday, November 16, 2010
TV Companies: Embrace Mobile Or Lose Revenue
MediaPost's On Media
By Diane Mermigas
Nov. 15, 2010
At a time when digital interactivity should be inspiring widespread innovation and out-of-box thinking, too many media companies continue to respond with blanket denial and complacency that will shatter their bottom line.
Tacit dismissals about pay TV cord cutting by consumers favoring cheaper, mobile on-demand streaming video have a familiar ring -- like broadcasters' early denials about the threat of cable, or content producers and distributors blowing off the economic impact of time-shifting devices, such as DVRs. Playing catch-up rather than moving proactively leaves millions on the table.
The more than half a million subscribers recently reported to have abandon pay TV subscriptions -- in response to lingering economic pressures or enticement to use less expensive over the top streaming services -- is just the beginning of a trend sure to gain momentum even in an improving economy. Consumers' newly minted frugality and mobile behaviors are not going away. Their expectations and the perceived value proposition of goods and services are being radically reshaped. Embrace those new economics -- or forfeit the opportunity to participate in new revenue creation.
Why, then, do major media executives continue to defend their status quo? The risk is in how long it takes before accelerating disconnections and other digital impact play havoc with retrans and content fees.
"There has been much ado about very little in terms of all the talk about cost-cutting," said Viacom chairman Philippe Dauman during the company's recent third-quarter earnings call. Like so many of his peers, Dauman refers to anything other than television as "incremental," as if digital interactivity isn't forcing a convergence play across all screens and platforms. He refers to tight consumer spending merely as a product of the recession.
Time Warner CEO Jeffrey Bewkes also referred to his company's domain in terms of "television" rather than as universal "video." TV Everywhere, its big digital play, denotes transporting the television viewing experience to mobile interactive devices on which video is viewed and managed differently. The popularity of the content is its ultimate protection.
"It's probably going to not lead to any cord-cutting -- not in the long run ... if you have to reach [viewers] through some other distribution than the one that we currently have, then that's how the content industry will evolve," Bewkes said.
Even Comcast, the dominant cable provider, is pursuing digital from their dug-in vantage point. Poised to become one of the largest global content producer/distributor by buying a majority managing owner of NBC Universal by early next year, Comcast should be more engaged in creating new content formats and features that begin with iPads and other mobile devices rather than simple transferring static TV and film from their set top box. Cable MSOs lack the operating connection to mobile devices enjoyed by their Telco competitors.
"There will be set top boxes for a long time, but the world is beginning to see technologies that can in some cases do away with the set top boxes," Comcast CEO Brian Roberts said during a recent earnings call. "The most exciting products we are working on allow you to have tremendous functionality right on the TV ... some customers will not want all that and will want a different model, so we are working on all."
That schism between the lowly home television and trending mobile connected devices will begin translating into balance sheet gaps sooner than media moguls think. Just imagine the response if these same media moguls demonstrated their seriousness about digital by addressing it from outside the box -- be it television or set-top box. Here is three ways to make it happen:
*Create social, commerce and content features from the mobile connected vantage point and never look back. Netflix CEO Reed Hastings took his company from the mailbox to every device streaming video in less than two years, skipping right over television to add 6 million new subscribers to its 17 million base, more than 66% of whom stream content.
*Align with major social, cloud and mobile players moving from the fringe to the center. This could include leading companies such as Facebook, Netflix and Google to small-to-medium players such as GroupOn and Zynga whose niches can be used to springboard into mobile. The holiday fight between Google and Apple into the TV space is all about using interactive out-of-home functionality to intensify the convergence cycle. Facebook's foray into casual gaming and mobile access and check-ins facilitated by apps has driven partnership with blue-chip advertisers. More than 500 million Facebook users were once devoted TV fans.
*Innovation must begin outside the norm. The only way to generate new perspective and mind-set it to tear down the silo walls, bring together professionals from every discipline of your business; empower your best thinkers to collaborate without restraints. The ultimate goal is to layer interactivity into every level of your media business to heighten engagement and revenues.
One of my favorite visual guides to turning disruptive trends into revenue generators is the roll-up-your-sleeves workbook, "Business Model Generation" by Alexander Osterwalder and Yves Pigneur. It provides visual tools and techniques that give flight to the classic "Blue Ocean Strategy" by Chan Kim and Renee Mauborgne to enable a new competitive mind-set. It's a little like digital revolution unbound.
By Diane Mermigas
Nov. 15, 2010
At a time when digital interactivity should be inspiring widespread innovation and out-of-box thinking, too many media companies continue to respond with blanket denial and complacency that will shatter their bottom line.
Tacit dismissals about pay TV cord cutting by consumers favoring cheaper, mobile on-demand streaming video have a familiar ring -- like broadcasters' early denials about the threat of cable, or content producers and distributors blowing off the economic impact of time-shifting devices, such as DVRs. Playing catch-up rather than moving proactively leaves millions on the table.
The more than half a million subscribers recently reported to have abandon pay TV subscriptions -- in response to lingering economic pressures or enticement to use less expensive over the top streaming services -- is just the beginning of a trend sure to gain momentum even in an improving economy. Consumers' newly minted frugality and mobile behaviors are not going away. Their expectations and the perceived value proposition of goods and services are being radically reshaped. Embrace those new economics -- or forfeit the opportunity to participate in new revenue creation.
Why, then, do major media executives continue to defend their status quo? The risk is in how long it takes before accelerating disconnections and other digital impact play havoc with retrans and content fees.
"There has been much ado about very little in terms of all the talk about cost-cutting," said Viacom chairman Philippe Dauman during the company's recent third-quarter earnings call. Like so many of his peers, Dauman refers to anything other than television as "incremental," as if digital interactivity isn't forcing a convergence play across all screens and platforms. He refers to tight consumer spending merely as a product of the recession.
Time Warner CEO Jeffrey Bewkes also referred to his company's domain in terms of "television" rather than as universal "video." TV Everywhere, its big digital play, denotes transporting the television viewing experience to mobile interactive devices on which video is viewed and managed differently. The popularity of the content is its ultimate protection.
"It's probably going to not lead to any cord-cutting -- not in the long run ... if you have to reach [viewers] through some other distribution than the one that we currently have, then that's how the content industry will evolve," Bewkes said.
Even Comcast, the dominant cable provider, is pursuing digital from their dug-in vantage point. Poised to become one of the largest global content producer/distributor by buying a majority managing owner of NBC Universal by early next year, Comcast should be more engaged in creating new content formats and features that begin with iPads and other mobile devices rather than simple transferring static TV and film from their set top box. Cable MSOs lack the operating connection to mobile devices enjoyed by their Telco competitors.
"There will be set top boxes for a long time, but the world is beginning to see technologies that can in some cases do away with the set top boxes," Comcast CEO Brian Roberts said during a recent earnings call. "The most exciting products we are working on allow you to have tremendous functionality right on the TV ... some customers will not want all that and will want a different model, so we are working on all."
That schism between the lowly home television and trending mobile connected devices will begin translating into balance sheet gaps sooner than media moguls think. Just imagine the response if these same media moguls demonstrated their seriousness about digital by addressing it from outside the box -- be it television or set-top box. Here is three ways to make it happen:
*Create social, commerce and content features from the mobile connected vantage point and never look back. Netflix CEO Reed Hastings took his company from the mailbox to every device streaming video in less than two years, skipping right over television to add 6 million new subscribers to its 17 million base, more than 66% of whom stream content.
*Align with major social, cloud and mobile players moving from the fringe to the center. This could include leading companies such as Facebook, Netflix and Google to small-to-medium players such as GroupOn and Zynga whose niches can be used to springboard into mobile. The holiday fight between Google and Apple into the TV space is all about using interactive out-of-home functionality to intensify the convergence cycle. Facebook's foray into casual gaming and mobile access and check-ins facilitated by apps has driven partnership with blue-chip advertisers. More than 500 million Facebook users were once devoted TV fans.
*Innovation must begin outside the norm. The only way to generate new perspective and mind-set it to tear down the silo walls, bring together professionals from every discipline of your business; empower your best thinkers to collaborate without restraints. The ultimate goal is to layer interactivity into every level of your media business to heighten engagement and revenues.
One of my favorite visual guides to turning disruptive trends into revenue generators is the roll-up-your-sleeves workbook, "Business Model Generation" by Alexander Osterwalder and Yves Pigneur. It provides visual tools and techniques that give flight to the classic "Blue Ocean Strategy" by Chan Kim and Renee Mauborgne to enable a new competitive mind-set. It's a little like digital revolution unbound.
Small Business Picks Up, Preceding Fed's Easy Money
Bloomberg
By Shobhana Chandra and Anthony Feld - Nov 15, 2010 8:15 AM MT
SAP AG co-chief executive officer Bill McDermott said Germany-based SAP’s small- and medium-size enterprise business “performed quite well in the third quarter.” Photographer: Craig Ruttle
Ultimate Golf Seating in Elkhart, Indiana, has hired five workers to expand its staff to 10 as orders increase for its custom-made golf-cart seats, which start at $745.
“Demand is starting to improve,” co-owner David Vahala said. “We’re definitely making a turn this year.”
Small businesses are bouncing back as access to lending eases and consumers ramp up purchases. This would be welcome news for policy makers struggling to spur the world’s largest economy and bring down unemployment stalled near a 26-year high, because small companies account for 60 percent of job creation, according to Federal Reserve Chairman Ben S. Bernanke. The Fed said Nov. 3 it plans to buy another $600 billion of Treasuries, citing “disappointingly slow” progress in the recovery.
“The winds are changing in favor of small businesses,” said Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “It is a gradual improvement, but they’re definitely more active than they were a few months ago. As these businesses re-engage, it’ll put the recovery on a more solid footing.”
The Russell 2000 Index, which tracks the small-cap segment of U.S. equity markets, has risen 19.6 percent since August 31, compared with a 14.4 percent gain in the Standard & Poor’s 500 Index. The outperformance signals investors’ rising confidence in smaller companies and those that cater to the sector, including Administaff Inc., which provides human-resource services to small and mid-size businesses.
Analysts Upgrade
The Kingwood, Texas-based company’s stock jumped 8.2 percent to $27.90 on Nov. 2 after Roth Capital analyst Jeff Martin in Newport Beach, California, upgraded the stock to buy from neutral and set a price target of $34 a share following third-quarter earnings that exceeded analysts’ estimates.
The shift is echoed in announcements by larger companies ranging from SAP AG, the world’s largest maker of business- management software, to Dell Inc., the world’s third-biggest personal-computer manufacturer. Charlotte, North Carolina-based Bank of America Corp., the largest U.S. bank by assets, last month said it plans to hire 1,000 employees in the next year to focus on companies with sales of $3 million or less.
Small-business sentiment also is healing, according to the optimism index of the National Federation of Independent Business in Nashville, Tennessee, which jumped in October to a five-month high.
‘Serious Improvement’
“This looks to us like the start of a serious improvement,” Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, said in a note to clients after the NFIB report on Nov. 9. “We have long argued that a proper recovery in the broad economy requires a sustained improvement in the small-firm sector, which employs half the workforce.”
A month earlier, Shepherdson had written that September NFIB data indicated “progress is slow and small firms remain deeply depressed.”
John Ryding and Conrad DeQuadros of RDQ Economics LLC in New York also were encouraged by the NFIB’s October report, which showed rising expectations for sales, better business conditions six months from now and improvement in hiring plans.
“Perhaps, at last, the small-business sector has a pulse, albeit a faint one,” the economists wrote in a Nov. 9 note to clients. “We expect small-business conditions to improve over the coming months.”
‘Performed Quite Well’
Walldorf, Germany-based SAP’s small- and medium-size enterprise business “performed quite well in the third quarter,” Bill McDermott, co-chief executive officer, said on an Oct. 27 conference call with analysts. Dell, in Round Rock, Texas, said Aug. 19 that sales to these customers grew 25 percent in the second quarter from a year ago, after a 19 percent gain the prior three months.
One source of relief for small companies is the thaw in lending, reinforced by the Fed’s quarterly survey of senior loan officers, released Nov. 8. Fed officials have held more than 40 meetings this year to try to reverse the drop in credit, and Bernanke said in an Oct. 15 speech that regulators have “seen some positive signs.”
Citigroup Inc. which claims 2,500 of the world’s 3,000 largest corporations as clients, says it also is targeting U.S. companies with less than $20 million of annual sales, and plans to hire about 200 bankers by the end of 2011 to court them. That would bring the number of small-business bankers to about 500, or one for every two North American branches.
Portfolio Revival
The revival in stock portfolios also helps by giving consumers the wherewithal to spend, said Ultimate Golf Seating’s Vahala, who is setting his sights on southern California, Arizona, Texas and the Carolinas after his first year of selling luxury seats in retirement communities such as The Villages in Florida.
“More retired customers are saying, ‘Now I can buy this seat; it’s been on my wish list for some time,’” said Vahala, 52. He sees the possibility of adding “one or two people through the end of this year and some more next year as the sales come in.”
He and his brother, Dan, also run Vahala Foam Inc., a 20- year-old company whose products go into car seats, recreational vehicles, boats and furniture. Their business, which cut staff to 65 in 2009 from about 120 before the recession, has 80 workers now and spent about $100,000 on new equipment this year. Hiring and investment would have been higher in normal years, Vahala said.
‘Coming Back Nicely’
Business is “coming back nicely,” he said, adding that workers have resumed 40-hour weeks after reduced shifts in 2009. “I’m still a little gun-shy. I wonder what’s going to happen this winter, but I feel we’ll come through it. Next year will be better.”
A pickup at small companies “could be pretty dramatic for stocks,” said Joseph Kremer, director of mid-, small- and micro-cap value strategies in Cleveland for Fifth Third Asset Management, which oversees about $20 billion.
“A renaissance in small, private businesses would ripple through the economy,” he said. Companies that sell to U.S. customers “would suddenly be seeing more growth,” while so far in the recovery, “most of what the market’s been hanging its hat on is industrial demand, a lot of it fed by foreign sales.”
Kremer said a general-merchandise discount retailer such as Dublin, Georgia-based Fred’s Inc. may do well because some consumer spending “would be ginned up at the lower end.” Companies like Consolidated Graphics Inc., a commercial printer in Houston, also might benefit from an increase in small- business demand for products such as mailers, business cards and catalogs, he said.
Jobs Turnaround
Data on employment show the turnaround has begun. Small companies have added jobs in every month since March, including a 21,000 gain in October, according to ADP Employer Services in Roseland, New Jersey, and St. Louis-based Macroeconomic Advisers LLC. Medium-sized businesses employing 50 to 499 people expanded by 24,000, and large companies with more than 499 workers cut staff by 2,000.
“The momentum in business activity is up again, and that probably reflects the improvement in small business as well,” said Jim O’Sullivan, chief economist at MF Global Ltd. in New York. “It increases the likelihood that a true, self-sustaining recovery is under way.”
More Active
The lack of an industrywide measure makes it hard to gauge progress at small, privately held companies. The Small Business Administration defines small companies as those with fewer than 500 employees. Another description, used by Fort Lauderdale, Florida-based SFN Group Inc., qualifies small customers as having annualized revenue of less than $5 million. The staffing and recruitment services provider, which changed its name from Spherion Corp. in February, said such clients are becoming more active.
“We did see some more engagement by the small accounts,” Roy Krause, chief executive officer, said Oct. 28 on SFN’s third-quarter earnings call. “That’s an issue everybody’s been talking about in the industry.”
Paychex Inc., which manages payrolls accounting for companies that employ fewer than 100 workers, said checks per client rose 1.2 percent from a year ago in the quarter ended Aug. 31, after a 1.1 percent gain in the previous quarter that broke a more than three-year-long string of declines.
“Small businesses are doing some hiring and have reduced their layoffs,” John Morphy, chief financial officer of the Rochester, New York-based company, said in a Nov. 11 interview. “Of the clients that have weathered the storm, the majority are doing well. We’re seeing stability in our sales.”
By Shobhana Chandra and Anthony Feld - Nov 15, 2010 8:15 AM MT
SAP AG co-chief executive officer Bill McDermott said Germany-based SAP’s small- and medium-size enterprise business “performed quite well in the third quarter.” Photographer: Craig Ruttle
Ultimate Golf Seating in Elkhart, Indiana, has hired five workers to expand its staff to 10 as orders increase for its custom-made golf-cart seats, which start at $745.
“Demand is starting to improve,” co-owner David Vahala said. “We’re definitely making a turn this year.”
Small businesses are bouncing back as access to lending eases and consumers ramp up purchases. This would be welcome news for policy makers struggling to spur the world’s largest economy and bring down unemployment stalled near a 26-year high, because small companies account for 60 percent of job creation, according to Federal Reserve Chairman Ben S. Bernanke. The Fed said Nov. 3 it plans to buy another $600 billion of Treasuries, citing “disappointingly slow” progress in the recovery.
“The winds are changing in favor of small businesses,” said Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “It is a gradual improvement, but they’re definitely more active than they were a few months ago. As these businesses re-engage, it’ll put the recovery on a more solid footing.”
The Russell 2000 Index, which tracks the small-cap segment of U.S. equity markets, has risen 19.6 percent since August 31, compared with a 14.4 percent gain in the Standard & Poor’s 500 Index. The outperformance signals investors’ rising confidence in smaller companies and those that cater to the sector, including Administaff Inc., which provides human-resource services to small and mid-size businesses.
Analysts Upgrade
The Kingwood, Texas-based company’s stock jumped 8.2 percent to $27.90 on Nov. 2 after Roth Capital analyst Jeff Martin in Newport Beach, California, upgraded the stock to buy from neutral and set a price target of $34 a share following third-quarter earnings that exceeded analysts’ estimates.
The shift is echoed in announcements by larger companies ranging from SAP AG, the world’s largest maker of business- management software, to Dell Inc., the world’s third-biggest personal-computer manufacturer. Charlotte, North Carolina-based Bank of America Corp., the largest U.S. bank by assets, last month said it plans to hire 1,000 employees in the next year to focus on companies with sales of $3 million or less.
Small-business sentiment also is healing, according to the optimism index of the National Federation of Independent Business in Nashville, Tennessee, which jumped in October to a five-month high.
‘Serious Improvement’
“This looks to us like the start of a serious improvement,” Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, said in a note to clients after the NFIB report on Nov. 9. “We have long argued that a proper recovery in the broad economy requires a sustained improvement in the small-firm sector, which employs half the workforce.”
A month earlier, Shepherdson had written that September NFIB data indicated “progress is slow and small firms remain deeply depressed.”
John Ryding and Conrad DeQuadros of RDQ Economics LLC in New York also were encouraged by the NFIB’s October report, which showed rising expectations for sales, better business conditions six months from now and improvement in hiring plans.
“Perhaps, at last, the small-business sector has a pulse, albeit a faint one,” the economists wrote in a Nov. 9 note to clients. “We expect small-business conditions to improve over the coming months.”
‘Performed Quite Well’
Walldorf, Germany-based SAP’s small- and medium-size enterprise business “performed quite well in the third quarter,” Bill McDermott, co-chief executive officer, said on an Oct. 27 conference call with analysts. Dell, in Round Rock, Texas, said Aug. 19 that sales to these customers grew 25 percent in the second quarter from a year ago, after a 19 percent gain the prior three months.
One source of relief for small companies is the thaw in lending, reinforced by the Fed’s quarterly survey of senior loan officers, released Nov. 8. Fed officials have held more than 40 meetings this year to try to reverse the drop in credit, and Bernanke said in an Oct. 15 speech that regulators have “seen some positive signs.”
Citigroup Inc. which claims 2,500 of the world’s 3,000 largest corporations as clients, says it also is targeting U.S. companies with less than $20 million of annual sales, and plans to hire about 200 bankers by the end of 2011 to court them. That would bring the number of small-business bankers to about 500, or one for every two North American branches.
Portfolio Revival
The revival in stock portfolios also helps by giving consumers the wherewithal to spend, said Ultimate Golf Seating’s Vahala, who is setting his sights on southern California, Arizona, Texas and the Carolinas after his first year of selling luxury seats in retirement communities such as The Villages in Florida.
“More retired customers are saying, ‘Now I can buy this seat; it’s been on my wish list for some time,’” said Vahala, 52. He sees the possibility of adding “one or two people through the end of this year and some more next year as the sales come in.”
He and his brother, Dan, also run Vahala Foam Inc., a 20- year-old company whose products go into car seats, recreational vehicles, boats and furniture. Their business, which cut staff to 65 in 2009 from about 120 before the recession, has 80 workers now and spent about $100,000 on new equipment this year. Hiring and investment would have been higher in normal years, Vahala said.
‘Coming Back Nicely’
Business is “coming back nicely,” he said, adding that workers have resumed 40-hour weeks after reduced shifts in 2009. “I’m still a little gun-shy. I wonder what’s going to happen this winter, but I feel we’ll come through it. Next year will be better.”
A pickup at small companies “could be pretty dramatic for stocks,” said Joseph Kremer, director of mid-, small- and micro-cap value strategies in Cleveland for Fifth Third Asset Management, which oversees about $20 billion.
“A renaissance in small, private businesses would ripple through the economy,” he said. Companies that sell to U.S. customers “would suddenly be seeing more growth,” while so far in the recovery, “most of what the market’s been hanging its hat on is industrial demand, a lot of it fed by foreign sales.”
Kremer said a general-merchandise discount retailer such as Dublin, Georgia-based Fred’s Inc. may do well because some consumer spending “would be ginned up at the lower end.” Companies like Consolidated Graphics Inc., a commercial printer in Houston, also might benefit from an increase in small- business demand for products such as mailers, business cards and catalogs, he said.
Jobs Turnaround
Data on employment show the turnaround has begun. Small companies have added jobs in every month since March, including a 21,000 gain in October, according to ADP Employer Services in Roseland, New Jersey, and St. Louis-based Macroeconomic Advisers LLC. Medium-sized businesses employing 50 to 499 people expanded by 24,000, and large companies with more than 499 workers cut staff by 2,000.
“The momentum in business activity is up again, and that probably reflects the improvement in small business as well,” said Jim O’Sullivan, chief economist at MF Global Ltd. in New York. “It increases the likelihood that a true, self-sustaining recovery is under way.”
More Active
The lack of an industrywide measure makes it hard to gauge progress at small, privately held companies. The Small Business Administration defines small companies as those with fewer than 500 employees. Another description, used by Fort Lauderdale, Florida-based SFN Group Inc., qualifies small customers as having annualized revenue of less than $5 million. The staffing and recruitment services provider, which changed its name from Spherion Corp. in February, said such clients are becoming more active.
“We did see some more engagement by the small accounts,” Roy Krause, chief executive officer, said Oct. 28 on SFN’s third-quarter earnings call. “That’s an issue everybody’s been talking about in the industry.”
Paychex Inc., which manages payrolls accounting for companies that employ fewer than 100 workers, said checks per client rose 1.2 percent from a year ago in the quarter ended Aug. 31, after a 1.1 percent gain in the previous quarter that broke a more than three-year-long string of declines.
“Small businesses are doing some hiring and have reduced their layoffs,” John Morphy, chief financial officer of the Rochester, New York-based company, said in a Nov. 11 interview. “Of the clients that have weathered the storm, the majority are doing well. We’re seeing stability in our sales.”
Monday, November 15, 2010
U.S. Retail Sales Post Biggest Gain in 7 Months in October
The New York Times
By CHRISTINE HAUSER
Published: November 15, 2010
Sales at the nation’s retailers and food service establishments rose in October compared with the previous month, according to government figures released on Monday, providing a glimmer of hope that consumer spending was set to improve in the fourth quarter.
The Commerce Department statistics, which also showed an improvement over October 2009, sales, were better than what economists had forecast, and were based on upward revisions in similar sales in September and August. Economists hope they indicate that consumer spending is gaining strength, although many households are still de-leveraging and dealing with uncertainties in employment.
With an expected slow recovery in the job market and therefore small gains in wages, growth in consumer spending will be “modest at best,” said Joshua Shapiro, the chief United States economist for MFR Inc.
The Commerce Department said retail sales in October were up 1.2 percent from September, a jump from economists’ predictions of 0.7 percent. The October sales were also 7.3 percent higher compared with October last year. The seasonally adjusted figure represents $373.1 billion in sales.
The rise in the October numbers was primarily attributed to a 14 percent gain in motor vehicles and parts sales, and in sales at gasoline stations. Still, the statistics, which were adjusted for seasonal and holiday variations, show that when those components are removed the retail sales were also better than expected, registering a 0.4 percent rise.
“With autos showing life in September and October, the consumer is doing somewhat better than we would have expected,” said Mr. Shapiro in a research note.
Clothing sales were up and building materials sales were also stronger, the Commerce Department said.
Consumer spending accounts for about 70 percent of the gross domestic product but a considerable portion of that spending is related to housing, medical care and food necessities.
There were declines in sales of furniture, appliances and department store sales, suggesting that some consumers were still hesitating before buying discretionary items. The figures are advance estimates, and subject to revisions.
The lower department store and electronics sales could reflect a decline in prices as stores try to attract consumers with discounts early in the holiday season, said Yelena Shulyatyeva, a United States economist with BNP Paribas.
Dan Greenhaus, the chief economic strategist for Miller Tabak & Company, said that based on the figures, it was likely that consumption in the fourth quarter could be revised upward, or up to 2.5 percent for fourth quarter GDP. But that is still well below what would be needed for GDP to bring down the unemployment rate of 9.6 percent.
“Generally speaking the report is quite good,” Mr. Greenhaus said. “It is coincident with stable levels of spending, although levels that remain well below that which would be needed to drive significant GDP growth.”
Consumer spending and employment are two of the closely watched sectors that economists use to gauge the pace of the economic recovery. Manufacturing has also been one of the key sectors of the economy, and generally thought to be a bright spot in hiring.
On Monday, the Federal Reserve provided a snapshot of regional New York manufacturing that showed November was considerable weaker than expected, with a decline of 11.14 compared with an expected reading of 15. New orders fell by over 37 points and the numbers of employees also fell, the survey said.
By CHRISTINE HAUSER
Published: November 15, 2010
Sales at the nation’s retailers and food service establishments rose in October compared with the previous month, according to government figures released on Monday, providing a glimmer of hope that consumer spending was set to improve in the fourth quarter.
The Commerce Department statistics, which also showed an improvement over October 2009, sales, were better than what economists had forecast, and were based on upward revisions in similar sales in September and August. Economists hope they indicate that consumer spending is gaining strength, although many households are still de-leveraging and dealing with uncertainties in employment.
With an expected slow recovery in the job market and therefore small gains in wages, growth in consumer spending will be “modest at best,” said Joshua Shapiro, the chief United States economist for MFR Inc.
The Commerce Department said retail sales in October were up 1.2 percent from September, a jump from economists’ predictions of 0.7 percent. The October sales were also 7.3 percent higher compared with October last year. The seasonally adjusted figure represents $373.1 billion in sales.
The rise in the October numbers was primarily attributed to a 14 percent gain in motor vehicles and parts sales, and in sales at gasoline stations. Still, the statistics, which were adjusted for seasonal and holiday variations, show that when those components are removed the retail sales were also better than expected, registering a 0.4 percent rise.
“With autos showing life in September and October, the consumer is doing somewhat better than we would have expected,” said Mr. Shapiro in a research note.
Clothing sales were up and building materials sales were also stronger, the Commerce Department said.
Consumer spending accounts for about 70 percent of the gross domestic product but a considerable portion of that spending is related to housing, medical care and food necessities.
There were declines in sales of furniture, appliances and department store sales, suggesting that some consumers were still hesitating before buying discretionary items. The figures are advance estimates, and subject to revisions.
The lower department store and electronics sales could reflect a decline in prices as stores try to attract consumers with discounts early in the holiday season, said Yelena Shulyatyeva, a United States economist with BNP Paribas.
Dan Greenhaus, the chief economic strategist for Miller Tabak & Company, said that based on the figures, it was likely that consumption in the fourth quarter could be revised upward, or up to 2.5 percent for fourth quarter GDP. But that is still well below what would be needed for GDP to bring down the unemployment rate of 9.6 percent.
“Generally speaking the report is quite good,” Mr. Greenhaus said. “It is coincident with stable levels of spending, although levels that remain well below that which would be needed to drive significant GDP growth.”
Consumer spending and employment are two of the closely watched sectors that economists use to gauge the pace of the economic recovery. Manufacturing has also been one of the key sectors of the economy, and generally thought to be a bright spot in hiring.
On Monday, the Federal Reserve provided a snapshot of regional New York manufacturing that showed November was considerable weaker than expected, with a decline of 11.14 compared with an expected reading of 15. New orders fell by over 37 points and the numbers of employees also fell, the survey said.
Monday, November 8, 2010
He Saw Trouble Coming. Now He Sees It Going.
By GRETCHEN MORGENSON
Published: November 6, 2010
Two data points from last week seemed to indicate an upswing ahead. October’s employment figures rose more than economists had expected, and the stock market clawed its way back to levels last reached just before the calamitous events of fall 2008.
But positive indicators can and do disappoint, so I decided to consult an expert on these matters: Ian Shepherdson, chief United States economist at High Frequency Economics. As a reader of economic tea leaves over the last five turbulent years, Mr. Shepherdson has a darn good record. For instance, unlike the throng of economists who failed to see the housing crisis coming, Mr. Shepherdson warned his clients in fall 2005 that real estate would crash and a recession would ensue.
He was early, of course, and now acknowledges that he was not nearly emphatic enough in his warnings. But he was fundamentally right back then and has been consistently on target since. So, I am happy to report that he sees the beginnings of a turn in the economy that could translate to a rise in gross domestic product growth and an improving employment picture in the second half of 2011.
The basis for his view is a shift, albeit nascent, in commercial and industrial bank lending. The trend is real, he said, and as it gains steam, small businesses should receive more credit, for which they have been starved. And because these companies employ half of the nation’s work force, this credit expansion will translate into real employment gains.
“The depression in small businesses explains pretty much everything in the weakness of this cycle,” Mr. Shepherdson said. “I reckon in the last cycle they accounted for two-thirds of all new job creation. Not only are they big, they are better job-creation engines than big companies, which are more inclined to do their new hiring offshore.”
HERE are the data that have caught his eye. At this time last year, the total stock of commercial and industrial bank credit was $1.32 trillion; it was contracting at a blistering pace — about $7 billion a week. Indeed, between the peak of such lending in October 2008 and the trough in June of this year, total commercial and industrial bank credit fell by one-quarter.
Now, this contraction has stopped. The data have recently turned positive and should continue climbing, albeit slowly. “Getting to zero is not bullish at the moment,” Mr. Shepherdson said. “I would want to see commercial and industrial credit growing reasonably strongly to an outright positive four, five or six billion dollars a week. The story is really that the credit contraction seems to be coming to an end.”
One problem for economists and investors, he said, is that our current economic cycle does not have the typical recession-recovery characteristics or timeline. Those who thought it would be similar to recent recessions were trying to fit a square peg into a round hole; there was nothing normal or routine about the events we have just lived through.
But Mr. Shepherdson says he does find parallels in our experience and that of Sweden in the early 1990s. The expansion of bank credit before the peak was similar in both countries. Furthermore, Sweden’s boom, like ours, resulted in rocketing real estate prices and overleveraged consumers.
When the bubble burst, both countries experienced similarly awful contractions. Gross domestic product declined 5.1 percent in Sweden at the trough, compared with 4.1 percent in the United States.
Mr. Shepherdson hopes that the Swedish experience on the upside also repeats itself in the United States. After Sweden’s output bottomed out in early 1993, the country began an upswing that soon became supercharged. The initial growth was at an annualized rate of 2.5 percent, but by the second year of the rebound, G.D.P. growth was 5.3 percent, annualized.
We may not end up with a recovery that hot, Mr. Shepherdson said. But if the credit expansion he is expecting does transpire, he said, we could achieve annualized growth of between 3 percent and 4 percent in the second half of 2011. And the year after that looks even more promising, he said, because “credit conditions will be back to something like normal.”
He expects that in the meantime, we will bump along at around 2 percent in economic growth, with no double-dip recession.
As commercial and industrial credit eases up a bit, Mr. Shepherdson said, it will unleash a pent-up demand among smaller companies for capital equipment, software, vehicles and other goods.
“We have seen strong capital spending in the gross domestic product accounts, but that’s all been big companies,” he said. “The next step is for small companies to pick up their buying and start hiring people.”
This lag in small-company spending is all about the tight credit conditions in that sector. The divergence between the amount of credit extended to big and small companies, he said, shows up in the distressingly wide gap between two closely watched sentiment surveys: the reports from the Institute for Supply Management, which reflects manufacturing activity of larger enterprises, and from the National Federation of Independent Business, representing smaller companies. While the I.S.M. figure is in recovery mode, the N.F.I.B. statistic remains squarely in recession territory.
Obviously, a growth in lending to small businesses is not yet being felt across the board, Mr. Shepherdson said. But as the credit expansion trickles down to these companies, the gap will start to close and employment will begin to ramp upward.
“My overwhelming condition for things to get better in the small-business sector is credit, so the positive data are a hugely exciting development,” he said. “I don’t think we will see all these gaps close by December, but over the next 12 months I think we will see a transition out of a sluggish 2 percent economy to a real, properly growing recovery. And the second half of 2011 may be the true turning point for unemployment.”
THERE’S no denying that our long economic despond has hurt vast numbers of people nationwide. And Mr. Shepherdson cautions that good times aren’t likely to roll immediately. “I wish it would be one of those situations that fixes itself in three months, which would be a normal cyclical rebound,” he said. “But by August of next year there is a very good chance that we will be on a recovery path.”
Let’s hope he is right again. And let the countdown begin.
Published: November 6, 2010
Two data points from last week seemed to indicate an upswing ahead. October’s employment figures rose more than economists had expected, and the stock market clawed its way back to levels last reached just before the calamitous events of fall 2008.
But positive indicators can and do disappoint, so I decided to consult an expert on these matters: Ian Shepherdson, chief United States economist at High Frequency Economics. As a reader of economic tea leaves over the last five turbulent years, Mr. Shepherdson has a darn good record. For instance, unlike the throng of economists who failed to see the housing crisis coming, Mr. Shepherdson warned his clients in fall 2005 that real estate would crash and a recession would ensue.
He was early, of course, and now acknowledges that he was not nearly emphatic enough in his warnings. But he was fundamentally right back then and has been consistently on target since. So, I am happy to report that he sees the beginnings of a turn in the economy that could translate to a rise in gross domestic product growth and an improving employment picture in the second half of 2011.
The basis for his view is a shift, albeit nascent, in commercial and industrial bank lending. The trend is real, he said, and as it gains steam, small businesses should receive more credit, for which they have been starved. And because these companies employ half of the nation’s work force, this credit expansion will translate into real employment gains.
“The depression in small businesses explains pretty much everything in the weakness of this cycle,” Mr. Shepherdson said. “I reckon in the last cycle they accounted for two-thirds of all new job creation. Not only are they big, they are better job-creation engines than big companies, which are more inclined to do their new hiring offshore.”
HERE are the data that have caught his eye. At this time last year, the total stock of commercial and industrial bank credit was $1.32 trillion; it was contracting at a blistering pace — about $7 billion a week. Indeed, between the peak of such lending in October 2008 and the trough in June of this year, total commercial and industrial bank credit fell by one-quarter.
Now, this contraction has stopped. The data have recently turned positive and should continue climbing, albeit slowly. “Getting to zero is not bullish at the moment,” Mr. Shepherdson said. “I would want to see commercial and industrial credit growing reasonably strongly to an outright positive four, five or six billion dollars a week. The story is really that the credit contraction seems to be coming to an end.”
One problem for economists and investors, he said, is that our current economic cycle does not have the typical recession-recovery characteristics or timeline. Those who thought it would be similar to recent recessions were trying to fit a square peg into a round hole; there was nothing normal or routine about the events we have just lived through.
But Mr. Shepherdson says he does find parallels in our experience and that of Sweden in the early 1990s. The expansion of bank credit before the peak was similar in both countries. Furthermore, Sweden’s boom, like ours, resulted in rocketing real estate prices and overleveraged consumers.
When the bubble burst, both countries experienced similarly awful contractions. Gross domestic product declined 5.1 percent in Sweden at the trough, compared with 4.1 percent in the United States.
Mr. Shepherdson hopes that the Swedish experience on the upside also repeats itself in the United States. After Sweden’s output bottomed out in early 1993, the country began an upswing that soon became supercharged. The initial growth was at an annualized rate of 2.5 percent, but by the second year of the rebound, G.D.P. growth was 5.3 percent, annualized.
We may not end up with a recovery that hot, Mr. Shepherdson said. But if the credit expansion he is expecting does transpire, he said, we could achieve annualized growth of between 3 percent and 4 percent in the second half of 2011. And the year after that looks even more promising, he said, because “credit conditions will be back to something like normal.”
He expects that in the meantime, we will bump along at around 2 percent in economic growth, with no double-dip recession.
As commercial and industrial credit eases up a bit, Mr. Shepherdson said, it will unleash a pent-up demand among smaller companies for capital equipment, software, vehicles and other goods.
“We have seen strong capital spending in the gross domestic product accounts, but that’s all been big companies,” he said. “The next step is for small companies to pick up their buying and start hiring people.”
This lag in small-company spending is all about the tight credit conditions in that sector. The divergence between the amount of credit extended to big and small companies, he said, shows up in the distressingly wide gap between two closely watched sentiment surveys: the reports from the Institute for Supply Management, which reflects manufacturing activity of larger enterprises, and from the National Federation of Independent Business, representing smaller companies. While the I.S.M. figure is in recovery mode, the N.F.I.B. statistic remains squarely in recession territory.
Obviously, a growth in lending to small businesses is not yet being felt across the board, Mr. Shepherdson said. But as the credit expansion trickles down to these companies, the gap will start to close and employment will begin to ramp upward.
“My overwhelming condition for things to get better in the small-business sector is credit, so the positive data are a hugely exciting development,” he said. “I don’t think we will see all these gaps close by December, but over the next 12 months I think we will see a transition out of a sluggish 2 percent economy to a real, properly growing recovery. And the second half of 2011 may be the true turning point for unemployment.”
THERE’S no denying that our long economic despond has hurt vast numbers of people nationwide. And Mr. Shepherdson cautions that good times aren’t likely to roll immediately. “I wish it would be one of those situations that fixes itself in three months, which would be a normal cyclical rebound,” he said. “But by August of next year there is a very good chance that we will be on a recovery path.”
Let’s hope he is right again. And let the countdown begin.
Thursday, November 4, 2010
Under Pressure: Learning to be a "Clutch" Leader
Home / Leadership / The View from Harvard Business
By Sean Silverthorne | November 3, 2010
In the sports world, a “clutch” player performs best when the pressure is on, backs are to the wall, and all eyes turned their way. Think Michael Jordan, Joe Montana, Martina Navratilova. When it was all on the line, they not only didn’t wilt, they got better.
Is there such a thing as a clutch leader? Do you know managers or CEOs who rise above when everything is on the line? A bigger question: Can you learn to be clutch?
The latest issue of Harvard Business Review is spun around the topic of military leadership, and there is an interesting blog post on HBR.org about how military cadets learn what it takes to be clutch. New York Times business writer Paul Sullivan, author of Clutch: Why Some People Excel Under Pressure and Others Don’t recounts a talk he gave at West Point on the subject.
All clutch leaders display five traits, he said: focus, discipline, adaptability, being present, and fear and desire. Read his post for more depth on each of these.
Sullivan’s good news for the rest of us is that organizations can train their performers to respond well to pressure. Sullivan says there are three things business leaders can learn from cadets:
1.Focused on a goal. “When they graduate they will be deployed to lead a platoon, probably in Afghanistan or Iraq. They know the responsibilities and the risks. And everything they are doing is preparing them for that moment. Do you know what your primary mission is at work?”
2.Continuous improvement. “They work in an organization that is continually striving to be better. When a mistake happens, the Army tries not to let it happen a second time. Are you aligned with the right organization? Or if you’re leading that organization, are you prepared to change things that aren’t working, even if change could be hard or even a reversal of something you implemented?”
3.Practice for success. “These cadets are given the physical and mental training that will help them do their jobs at the highest level. They know you have to be able to perform a task perfectly under normal conditions before you can expect to do it in a stressful situation. Can you say the same thing? Are you able to do your job at a high level every day? If not, then you should not be surprised when you make the wrong decisions under pressure.”
Will following this advice make you the Michael Jordan of your business? Well, maybe not–some people are just hard-coded for success in tough situations. But working at focusing on the objective, adaptability to the environment and improvement of skills sure puts whatever natural abilities you have in the best position to succeed when the going gets tough.
Looking through history, who were the greatest clutch leaders? Churchill? Lincoln? Alexander the Great?
By Sean Silverthorne | November 3, 2010
In the sports world, a “clutch” player performs best when the pressure is on, backs are to the wall, and all eyes turned their way. Think Michael Jordan, Joe Montana, Martina Navratilova. When it was all on the line, they not only didn’t wilt, they got better.
Is there such a thing as a clutch leader? Do you know managers or CEOs who rise above when everything is on the line? A bigger question: Can you learn to be clutch?
The latest issue of Harvard Business Review is spun around the topic of military leadership, and there is an interesting blog post on HBR.org about how military cadets learn what it takes to be clutch. New York Times business writer Paul Sullivan, author of Clutch: Why Some People Excel Under Pressure and Others Don’t recounts a talk he gave at West Point on the subject.
All clutch leaders display five traits, he said: focus, discipline, adaptability, being present, and fear and desire. Read his post for more depth on each of these.
Sullivan’s good news for the rest of us is that organizations can train their performers to respond well to pressure. Sullivan says there are three things business leaders can learn from cadets:
1.Focused on a goal. “When they graduate they will be deployed to lead a platoon, probably in Afghanistan or Iraq. They know the responsibilities and the risks. And everything they are doing is preparing them for that moment. Do you know what your primary mission is at work?”
2.Continuous improvement. “They work in an organization that is continually striving to be better. When a mistake happens, the Army tries not to let it happen a second time. Are you aligned with the right organization? Or if you’re leading that organization, are you prepared to change things that aren’t working, even if change could be hard or even a reversal of something you implemented?”
3.Practice for success. “These cadets are given the physical and mental training that will help them do their jobs at the highest level. They know you have to be able to perform a task perfectly under normal conditions before you can expect to do it in a stressful situation. Can you say the same thing? Are you able to do your job at a high level every day? If not, then you should not be surprised when you make the wrong decisions under pressure.”
Will following this advice make you the Michael Jordan of your business? Well, maybe not–some people are just hard-coded for success in tough situations. But working at focusing on the objective, adaptability to the environment and improvement of skills sure puts whatever natural abilities you have in the best position to succeed when the going gets tough.
Looking through history, who were the greatest clutch leaders? Churchill? Lincoln? Alexander the Great?
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