Gas Guzzlers Top Selling Cars

2008 saw the $4 gallon of gasoline and the start of the current recession. Although car sales are down from last year, millions of vehicles were still sold.

What car do you think was most popular? A hybrid? A fuel efficient car? An ultra-inexpensive car?  A reliable import?

Interestingly, the two most popular cars were the Ford F150 (16 MPG) and Chevy Silverado (17MPG) pickup trucks with combined sales of nearly 1 million vehicles.

Why would people buy gas guzzlers when fuel prices are high and economic woes are running rampant?

According to Jeff Bartlett, deputy online editor of autos for Consumer Reports, when times are tough, “Buyers shift from what they want to what they need.” He continues to say that, “Pickups are a solution to a need” because they can be used for towing, off-roading, and cargo-hauling.

This is a fascinating point.

In a previous blog entry, I discussed how making your products/services more affordable and accessible is one way to beat the recession.

Focusing on what is needed versus what is wanted is another; sell the features that solve specific problems rather than the “nice to haves.” In the chart above, you can view the left part as the “needs” and the right part as “wants.”

This also plays nicely into my research on pains versus gains. The premise is that people take massive risks to eliminate their pains/losses yet will play it safe when it comes to increasing their gains. When times are tough, you must solve the pain first before the “extras” will be attractive.

What problem does your product solve? Can you provide a no-frills version of an existing product/service that focuses purely on eliminating a pain? In doing so, can you make it less expensive?

The Innovator’s Dilemma and the US Economy

Clayton Christensen, in his book The Innovator’s Dilemma, discusses how disruptive technologies will kill incumbent technologies. Basically it is about how the crappy and cheap will eventually take over the sophisticated and expensive.

The well-worn example is in the computing world.  The PC (which until recently cost thousands of dollars) killed the dominance of the mini-computer and mainframe (which then cost tens of thousands of dollars).  The new $300 netbooks may eventually become the dominant computing platform.  Or maybe a $100 mobile phones will eventually replace computers altogether.

The dilemma arises because most companies focus their innovation energies on building faster and more sophisticated technologies: becoming bigger and better.  That is, they move towards the right of the graphic above.  Unfortunately, the newer, cheaper developments – even if they are lower quality (in the beginning) and don’t perform as well – will ultimately be the winners.  Or in other words, the left part of the graphic above.

The US Economy Dilemma

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Listen to My Innovation Interview

Earlier this week, I was on “Riches in Niches” radio with Susan Friedmann. We discussed innovation and business success in today’s economy. The 30 minute interview (split into two parts) covers practical ways to survive this volatile marketplace.

You can download the both parts at Innovation Interview Part 1 and Innovation Interview Part 2.

Or, you can visit Susan’s page to access streaming audio or to listen to other interviews.

The basis of our interview was my article on “7 Ways Innovation Can Recession-Proof a Business.”

Déjà vu All Over Again

Here’s an excerpt from a magazine I have.  The title is: A Gloomy Feeling

Wall Street was baffled. The market’s 18-month slide had brutally bent the Dow-Jones graph, ending with one of the worst one-day drops. The dollar loss on paper was actually three times greater than that of the ’29 crash.

The market’s prolonged drop has reflected a growing conviction that the Administration has not coped with a troubled economy. Recession and increased unemployment has left people with less to spend on everything.

The Dow-Jones average has decreased 36% in stock values. The averages, like the Dow-Jones, tell only part of the story. Since they are based on the prices of the blue chip, they hardly hint at the depth of the crash.

This is a far cry from the from the bull market bedlam of just a few years ago.

What is interesting about this article is not its content, but rather the date of its publication. This is from a Life magazine dated June 5, 1970. At that time, stocks plummeted 36% from 985 to 631.

Markets go in cycles. Since 1970, we have had several other economic downturns. Of course, knowing this does not reduce the pain that so many are feeling now.

Economies are, in many respects, self-fulfilling prophecies. When people feel the economy is bad, they stop spending. They start to pull their money out of the stock market. As a result, company profits decrease. Companies then lay off employees, who in turn start spending even less. And the downward cycle continues.

Unfortunately, with things are bad as they are, people become quite pessimistic.

Stay Positive

In troubled times, it is useful therefore to reflect on a study done by Sonja Lyubomirsky, a psychologist at U Cal Riverside. She studied the relationship between happiness and success and observed that, “Happy people were not necessarily happier after their success than they were before, but they tended to be happier than others who were less successful.” She concluded that, “Success is related to happiness – but as a consequence, not a cause.”

In other words, happy people attract success.

I am reminded of an old joke. What is the difference between a pessimist, an optimist, and an entrepreneur? The pessimist sees the glass as half empty. The optimist sees it as half full. The entrepreneur sees the glass as completely full; we just need to get rid of the excess glass. As an aside, a scientist would also say that the glass is completely full; it is half filled with water and half filled with air.

What do people value? It’s not the glass, it’s the water. The size of the glass is irrelevant. In fact, too much glass can be a detriment (as evidenced by the photo left).

Interestingly, I never thought of the stock market as an investment. I always viewed it as a gamble; a casino with (hopefully) better odds than Vegas. I can’t predict which products/services will be successful (neither can anyone else). And I have little say over what companies do with the money I invest.

My best investments are those that impact me directly – investments in my business, my education, my relationships, and my health. Those always pay dividends.

Now is the time to take control. Create your own self-fulfilling prophecy. Stay positive. Get rid of the “excess glass” in your life or business. And make the safest investment you can: invest in yourself.

Predicting the Next Meltdown

I just got back from over two weeks on the road. I was in and out of five airports. As you go through security, the routine is always the same…

- Take off your shoes
- Take out your liquids
- Take out your computer

Why are we put through these security gymnastics?

On December 22. 2001, Richard Reid was caught with plastic explosives in the soles of his shoes. That’s why we now have to walk barefoot through airports.

On August 9, 2006, two dozen people were arrested in the UK because they were plotting to bring liquid explosives on planes leaving Heathrow airport. Now we have to travel with miniature shampoos, shave creams and toothpastes.

Computers are scanned because, well, that’s the obvious place to look. I guess.

What do these have in common? For the most part, the security scans we now endure were due to cleverness on the part of terrorists. Rarely are we subjected to scans that are due to the cleverness of government agencies.

Are there ways to easily smuggle weapons on planes in spite of our increased security? Of course. Nearly every time I pass through a metal detector, I have metal collar stays in the dress shirt I am wearing. Although the detector never beeps, these could easily have been turned into razor sharp weapons.  Does this mean that next week I will have to travel topless through the airport?  Good thing I have been working out.

Give me 15 minutes and I could rattle off dozens of other, more sinister ways to smuggle weapons on board.

Reactionary Innovation

This is a reactionary approach to business.

The current financial situation also demonstrates a reactionary approach to business. Enron has a meltdown. What should we do? Implement ridiculously stringent rules like the Sarbanes-Oxley act. Our financial institutions start to falter. OK, let’s spend $700 billion of the tax payers’ money to sort out the mess.

I’m not saying that these rules and legislation are good or bad (or ugly). That’s a conversation for another time. But I do find it ironic that the “big ideas” always seem to come in response to some tragedy. They are rarely proactive.

What does this have to do with innovation? Everything.

Most organizations use creativity to help them determine what to do next. They brainstorm ideas, select the best solutions, and then implement the most promising ones. Creativity is used to determine what your company or organization will do next.

Predictive Innovation

But in these rapidly changing times, creativity can be equally (if not more) valuable for determining what the marketplace and your competitors will do next.  Or, if you are the government, it may help determine what your banks and terrorists will do next.

When is the last time you had a brainstorming session where you asked the following questions?

• What are we most afraid our competition will do to us?
• Who is not a competitor now, but might be in the future?
• What shift might happen in the buying habits of our customers that may make our product/service less appealing?
• How can the sagging economy help our business?
• What emerging products or services may make our business irrelevant?

The list of outside-in questions can be endless – and valuable.

In your next brainstorming session, try the following:

• Brainstorm your own list of questions, building on mine above.
• Determine which ones you want to tackle first.
• Brainstorm, using a variety of creativity techniques, to identify “possible” outcomes.
• For those which are deemed plausible, brainstorm a list of “triggers” for each. These are market conditions that tell you that the given scenario is moving from “possible” to “plausible.”
• Set up a corporate “radar” system to help monitor external conditions. Have everything in place such that you can implement critical ideas when market conditions dictate.

This approach blends creativity with scenario-based planning . It helps you move from reactive solutions to proactive solutions. And in today’s volatile world, this might just be the key to your long-term survival.

P.S.  If you want to see where airport security is heading, visit Ryanair’s website.  For adults only.

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