What is my ongoing or structured cost of doing business today and how can I best restructure it tomorrow?

If you ask yourself that question and act on the answers you may well discover just how much this financial meltdown could help you.  If you are able to reduce your labour costs and improve your business performance at the same time then you could really benefit from this financial mess. 

How so?

I sense that those of us who are able to restructure our cost of doing business are going to thrive in this deleveraging cycle.  Those who do not will struggle as their costs continue to rise because they are locked into their current revenue models.  

What has to be done?

Most businesses have to go digital with their processes.  First and foremost they have to sharply reduce their need for working capital.  They have to find ways to utilise the web to find new customer clusters and then prototype new ways to provide their current and future services or products to these clusters.  They have to restructure their cost platform and in the process adapt their business/revenue models  to better suit a digital world.

What needs to be done urgently?

The most urgent issue to tackle is your dependence on staff.  You have to lessen that dependence as you seek to utilise the talents of your customers to help you restructure your value proposition and your revenue models.  Digital revenue models are different to those used by mass production business models.  Your business must now be networked, agile, low cost, and have a marginal cost approaching zero.  Your revenue models need to be detached from your product or service to enable you to run passive income streams with minimal direct or broadcast marketing.  You need to look more like Google than Microsoft - that is to be inclusive in the way you contemplate and transact all your business dealings (Google) rather than exclusive and proprietory in the way you contemplate and transact your business dealings (Microsoft).....

Drifting towards an Economic Depression is where we all are....  How long it takes to arrive is a moot point.  Why it will happen is clear.  It will happen because the US is tanking.  The US economy is stretched by debt, rising costs, falling housing prices, and rising unemployment.  It is stretched by its big spend on the Iraq War.  It is stretched by the implosion of key investment banks.  It is stetched by falling house prices.  It is stretched by an adiction to oil.  It is stretched by public, private, and consumer debt.

Debt has built up within the US economy over the past decade to unbelievable levels.  Every crisis since 9/11 has seen an expansion of money supply.  This expansion put excess liquidity into the local and global economy.  This led to an expansion of credit to the US housing sector and thus an asset bubble.  This led to an expansion of consumer credit for household related expenditures.  In 2008 the expansion of credit slowed and then sharply contracted.  Suddenly the elephant in room - within the global economy - was US debt.Every time the elephant has appeared this year it has been restrained by a further expansion of US liquidity backed by taxpayers funds.  All the time the policy settings have let the US economy drift into an Economic Depression.  External debt is building due to the mounting cost of oil imports, products from China, etc.  The US economy is drifting towards a sticky end.  Are we all heading that way too??? 

The analogue economy is dead long live the digital economy.

People are about to change their behaviours to better fit the emerging digital economy.  The generation Y crowd will lead the way - the baby boomers will lag.

What will change?  Many things will change because the cost of goods and services is critical once again.  Generation Y consumers see no reason to pay extra for brands unless and until they are customised to meet their specific needs.  How does this play out in the marketplace?  Microsoft is a brand that is on the slide - it is big, bureaucratic, and not customised to consumers needs.  Apple is a brand that is on the rise - it is innovative, has an emphasis on usability and elegant design, and it is a good fit with consumer wants.

So the first change is brands are dead unless they accompany goods and services designed specifically for you.  The second change is that consumers will not spend on bling - they are more conservative with their purchases and they do not see the need to show off or display their wealth or compensate for a lack of it.

Consumers want 'use value' from every purchase.  If you are to survive in this digital economy you have to be clear about what 'use value' your goods and services offer your consumers.  The third change is digital consumers are informed and decisive when they shop online or face to face.  They make decision in a nanosecond - the trick for digital business is to facilitate their nanosecond decision making with nanosecond transaction efficiency.

Spectacular improvement need be made to every aspect of our business systems in the next 10 year if we are to cope well with the competitive pressures of global supply and distribution chains.

The biggest change perhaps will be the valuations placed on assets.  Networked assets will be valued much more highly than clustered assets.  Networked assets will be shared around the globe.  Clustered assets will be shared around the neighbourhood (the nation-state, region, municipality, or borough).  The leverage for assets that are networked around the globe will be a feature of the digital economy.  Those who can attach their clustered assets to a global network will also benefit from great leverage in the value of their assets - they will form their own asset bubble when compared to those clustered around them that not linked to a global network.

In essence, assets will be valued in a digital economy based on the leverage they enjoy due to their access or connection to global networks.  Those assets that rely solely on local value and leverage will command far less attention and thus be valued at much much lower exchange rates.  The new terms of trade favour those who operate within an open global economy not a protected local economy. 

Obama will win the White House - I have been predicting this for a long time now....  The upcoming election is locked in I have repeatedly told you all - well it was until Sarah Palin arrived to help John Mc Cain.

Governor Sarah Palin is a real person in a world of virtual celebrities like Barack Obama. She adds a new dimension to this contest. Senator Joe Biden (Democratic Nominee for Vice President) adds nothing to the Obama Camp except the illusion of age and experience.  Biden has never really done anything of note outside of the Sentate so he is there as window dressing.

Palin is a 'hands on' Governor of a small but tough State.  She is a mother with a large, and colourful, family.  She hails from Alaska where things are done a little differently.  She is a huge asset to Mc Cain.

So hold the phone just now and let's see if Sarah Palin can do the impossible and get John Mc Cain elected.  She could well do it. How so?  Well now Mc Cain (or more accurately Palin) will be the talk of the 'chattering clusters' . On the web and in real life Palin will be an inspiration to the deflated Republican voters who supported Bush.  She will ensure the  'chattering clans and tribes' re-think their long-held proposition that Obama is their next President. 

Palin is social networking gold for the Mc Cain campaign and she is already bullet proofed because she (or her family connections) have already provided more shocks than could have been imagined.  Thus she is just the type of person who makes Web 2.0 social networks glow with viral marketing traffic. Palin will ensure that Mc Cain get talked about.

I thought Obama had the web social networks all to himself but Palin could out do him in this arena.  If she does Mc Cain will win this election........

So forget what I said before Palin arrived on the stage....  Just hold the phone there might be an upset brewing in the US Presidential Election.... 

C20th management was all about internal matters - staff, systems, culture, etc.  That era is over.  Read the book by the head of Procter and Gamble on Game Changers and the need to have an innovative culture and the emphasis is on connecting with the consumer.  Connect with the consumer and innovate what you do to better suit them and you can be a Game Changer.  Restrict what you do for consumers to those products or services that you can match one to one with your best prospect be they Japanese, Chinese, European, American, or whatever....

Focus on your present and future consumers and then ensure you have the systems (automated processes, computer assisted delivery, web-based social networks, etc) you need to make you staff as innovative and productive as you possibly can.  You will discover that wonderful things happen within your business - your costs retreat, your relevance in the market soars, your carbon footprint shrinks, your marketing cost take a dive, your organic growth accelerates, your global reach becomes self-evident, etc, etc........