Saturday, July 25, 2015

The Game Is Changing….Demographics & Tipping Points

“The tipping point is that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire.”
― Malcolm Gladwell, The Tipping Point: How Little Things Can Make a Big Difference

Technology tends to change the game over a relatively short period of time. We can measure the changes in months and years. Demographic changes tend to be measured in decades and generations. However, the IMPACT of changing Demographics tends to hit quickly and significantly once those changes reach a tipping point. My sense is that we have reached “tipping points” on multiple fronts and these “tipping points” will have radical impact on how we produce, distribute and consume goods and services in the future. Technology may indeed be the great “enabler” when it comes to many of these changes, but the motivation is very much human.

So what are some of these changes or tipping points that are impacting transportation and logistics? One that clearly jumps to mind is the shortage of truck drivers. This is the result of a long cycle of changing trends, demographics and regulations. There are literally dozens of reasons why we do not have enough truck drivers. Some are unique to trucking and some are larger issues which also explain why we don’t have enough skilled tradesmen (or tradeswomen for that matter). They include things like fewer kids growing up on farms and having early exposure to equipment and manual labor; or the push for all kids to go to college and the devaluation of “blue collar” careers; or the perception of trucks being bad for the environment; or just considering the pay as being too low for the required time and effort. Tighter regulations which the society has chosen to impose for safety reasons have an impact. Lower birth rates within the traditional truck driver demographic have an impact. The list could go on forever. Bottom-line, there have a been a multitude of fundamental changes which have resulted in a critical shortage of truck drivers.

Another example of a major tipping point is the growth in e-commerce retail. What Amazon is doing to retail is a game-changer for transportation and logistics service providers. Products are suddenly purchased and distributed much differently. If your business is built around DC to store delivery, and if the product can be effectively sold and delivered via e-commerce, your business is in trouble. On the other hand, if you are in the final mile B to C delivery space, opportunity abounds. But so does risk depending on how you’ve built your business.

Changing demographics tend to drive changes in politics which in turn create major changes for businesses. For transportation companies, a political environment that tends to be pro-union and anti-independent contractor is bad news. If we continue down this path through a couple of more election cycles, the transportation system as we know it will be completely changed. We could well end up paying more money for poorer service. There will be winners and losers and if you are not prepared to play the “new game” you will lose.

And whatever your business model, you will need some people involved. Which again brings us back to changing demographics. I’ve commented about this before in discussing Millennials in the workforce. You simply cannot manage people the way you did twenty years ago. It doesn’t mean that this New Generation Employee is bad. In many ways, they are better and given all of the other changes going on in the world, very likely to be more productive over the long run. But they are different. They think about work-life balance differently. They think about employee-company loyalty differently. They think about rewards differently. They think about communication and feedback differently.

The game has changed. Learn to play the new game or cash in your chips.

Saturday, July 11, 2015

The Game Is Changing….Technology

Last week I wrote that we were entering a new and different world when it comes to doing business. There are fundamental changes occurring that are forcing transportation and logistics service providers to adapt or else. One of the most significant game changers is technology. For those of us old enough to remember what it was like doing business before computers and cell phones, today’s information and communication capabilities are truly amazing. I have been fortunate enough to sort of ride along on the wave of technological advancements and I cannot imagine doing business the way we used to.

Back in the mid-60’s, Gordon Moore, co-founder of Intel, wrote a paper stating that essentially computing power would double every 2 years. It became known as Moore’s Law and has turned out to be a fairly accurate prediction. Some even say that the “doubling cycle” is only 18 months. There are various opinions regarding how long this exponential explosion can go on. In theory, at some point, we reach diminishing returns. But certainly, in my adult lifetime, Moore’s Law seems to hold true. As a result, I think it’s fair to say that we humans are now trying to catch up to technology. What can be done with technology is way out there, just waiting for application and adaptation. If you can imagine it, it’s possible. In fact, it’s likely to become reality within your lifetime. At some point, the discussion turns to ethical considerations about the creation, development and maintenance of life forms. I’m not going there. Just read Mary Shelley’s Frankenstein.

Interestingly enough, the way technology is being used these days in managing the supply chain can be somewhat “Frankenstein-ish.” And when you hear the horror stories associated with “system conversions” or “new installs”, there is a tendency to step back and say maybe we’re trying to do too much with technology and let’s just get “back to the basics”. Sorry, you can’t go back. The basics are on the move and you better keep pace. As noted above, we humans are trying to catch up to technology. No question, sometimes application design is poor, training is lacking and implementation/execution fails. But it’s the human element that is failing here, not the technology.

I would say that most transportation and logistics companies would do well to stay close to the leading edge when it comes to technology. But, let other industries or companies with deep pockets do the pioneering. This is still a fragmented, low-margin business and the only thing worse than expensive new technology is expensive new technology that doesn’t deliver . The key is to constantly examine every function in your business and figure out how you can do it better. Don’t think technology first. Think process and improvement and how you can do it better. If it takes technology to get there, then determine if is it economically feasible and do you have the people who can and will use it? Technology is not the end all. But if you fail to take advantage of what’s out there, you will lose the game.

Friday, July 3, 2015

The Game Is Changing

“The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”- George Bernard Shaw

So we have reached the half way mark of 2015. As I speak with clients and candidates I keep getting the same question: “What are you seeing out there?” I think I get it more often when we are in a so-so economic environment. When things are really bad or really good, I don’t get that question as often. Everyone sort of knows what’s going on. For the past couple of years no one is sure what’s going on, so I get that question a lot. When we think things are getting better, they turn for the worse. Just about the time we think it’s all going in the tank, we see it turn the other way
I would say that one word describes how most of us feel about the economy…UNCOMFORTABLE. And more so than normal. I’ve been around a long-time and business is cyclical. There are short-term cycles and long-term cycles. So anyone who runs a business understands the phrase: “This too shall pass”. For the most part things are never as good or as bad as they seem to be at the moment. Every day is a battle, you win some and you lose some. Just showing up and surviving is not a bad thing. And if you’re really good at what you do, with a little luck or help from above, you might just prosper.

But it is never easy. What’s my competition up to? What do the customers think about us? What do our employees think about us? How can we become a better company? Answering those questions today is more challenging than ever. Experience can be a great teacher, but when the game changes your experience can work against you. And when your experience-driven answers to the hard questions turn out to be wrong, then what?

I think this is where we are in 2015. It’s true for the global economy. It certainly seems to be the case when it comes to political, social and environmental issues. And it is definitely where we find ourselves in the transportation/logistics business. What’s happening now is the result of more than just economic cycles and competitive pressures. The game is changing and changing rapidly. Advancements in technology and changing demographics are turning the world upside down. Business models that were highly successful only ten or fifteen years ago are now dinosaurs. 2000 doesn’t seem all that long ago. But, 2015 is a brand new world and if you are running your business a lot like you did in 2000, you are going out of business. You may not know it yet, but you are going out of business.

In the coming weeks, we’ll look closer at the “game-changers” which will determine the winners and the losers of the future. But back to the original question, when asked, “What are you seeing out there?” My answer has become, “It’s a whole different ball game.”