The (Dis)connect Between the Micro and Macro Economic Picture

Susan Hayes, the Positive Economist

“When do you think it’s going to get better?” is a familiar start to many Irish conversations these days and I often find myself wondering what is the signal people are looking for? What is “it” and how will they know when”it” really does get better?

In economic theory, a recession occurs when there are two consecutive periods of economic decline in terms of GDP. According to the most figures released by the CSO, 2011 was the first year that Irish GDP rose in four years. However, our economic growth has turned negative in the first quarter of the year. The thing is though, that according to this data, “it” got better last year. Yet, did our tone of conversation change? If it did, I didn’t notice any joyous outburst on the airwaves of Joe Duffy?

Perhaps, people are waiting for us to get back on the bond markets? Well, we sold €500 million of 3 month debt in July, are on course to be back fully back to the capital markets next year and are the only country to have locked in the bond yield fall since the EU Summit at the end of June. Maybe it’s the real estate market – we are waiting for properties to shift off the market. According to daft.ie, there are 16% less homes available for sale since last June and, across the media airwaves last month, commentators discussed the rise in the price of property. Could it be that we will all be happy when we know that others around us have enough confidence in the economy to set up enterprises relying on this green island for custom? According to vision-net, for every one company that closed last year, approximately 3.5 enterprises were born into life.

Of course, it would be easy to fall back on exports ( the IEA told us that “On the advantage of the weaker euro to the US Dollar .... the current rate is 7.9% below the monthly average across last year, and represents a €1.7 billion gain to Irish goods export companies” and in its half year review, the IDA reported that its “client companies announced in excess of 5,000 jobs in the first six months of 2012, continuing the strong flow of Foreign Direct Investment (FDI) which occurred in 2011”. They have been the silver lining throughout our economic cloud, so let’s not mention them.

Olwen Dawe, Irish Business Intelligence

Selectivity has not been applied in choosing the data; from the most painful indicators (business collapses and bond yields) as well as the perennial green shoots (exports and FDI). However, in each case, there is a reason to be optimistic. Is this down to a sunny disposition or because genuine recovery is taking place? That’s not for us to answer, but to question.

The thing is that macro-economic indicators tell us about exactly that... the MACRO economy. If somebody is unemployed and the employment figures go up, does that automatically mean they have better chances of getting a job? Maybe not. If domestic demand contracts further next year, does that mean that my company’s profitability will move in the same way? Why should it? I suggest to you to define your own “it”. What is your personal KPI (key performance indicator)? How will you know that your economic circumstances improve – is it a pay rise, an increase in your company’s bottom line or a stabilisation of your savings.

Unfortunately, many people aren’t thinking quantitatively, but qualitatively. They are letting the news, general negative conversation and a contagious feeling of “it’s all bad” blind the objectivity of their view. Indeed, there are some very cash-strapped households on this Emerald Isle and there is forced emigration, bitter unemployment as well as a host of other gut-wrenching elements of “the current climate”. It must also be acknowledged that there are also lots of people with money, job security and bright prospects ahead of them. However, they don’t see that as the country has been enveloped by an intangible fear which has tightened the spend power of the majority. If those who could spend and wanted to spend, went out and spent, it would help the entire economy and may even push us into a self-fulfilling prophecy.

Every day we have the choice of tuning in [or out] the background noise of our ‘current economic climate’. Though the content of today’s commentary is improving somewhat, the drone of negativity has had a profound impact on most business people – whether they’re surviving or thriving. While, on the one hand, emphasis is continually placed on the importance of micro-enterprises in job creation, they are also the ‘one-man-bands’ who fear increased taxation, a poor future for their children and financial insecurity. How does this affect the likelihood of their business developing in the short and long term? Critically.

Every day, each one of us has a choice: to connect with the background noise, or not.

Further, we have the choice to strive for the outcome we know is feasible, to research and understand the possibilities of change in the way we do business, to ask for help. A large percentage of the issues presented to executive and business coaches are simply accounted for by lack of research or vision. It’s true, not everyone is cut out for self-employment – if you’re not, you’ll find out very quickly. If you have developed a product or service which could make you the next Trump or Branson, your market may not be ready for it – what do you do? Go back to the drawing board.

The misconception for most entrepreneurs is that a business plan [and many shiver at the distinct notion of it] is a necessity for someone else. Wrong. It guides your business’s trajectory. In every sense. It contains the heart and soul of the business, acts as a roadmap, and maintains focus for the individuals at the helm of the business. It IS the drawing board.

It is yours to highlight, step-by-step, how you will achieve your business’s vision – key clients, positioning, markets, figures – and the one place you must start at when things don’t appear to be developing as you wish. It’s the point at which you can park your business concerns and understand why the ‘as is’ isn’t reaching the ‘to be’ in the time you had planned it to.

So, in going “back to the drawing board’, that’s an assumption that you have an honest, clear and strategic one to start with. Your drawing board is an organic item – it grows and develops – it’s got a sell-by date too, so make sure you keep an eye on it. It’s important to review it quarterly or more if you can... that way you can manage and investigate possibilities, review what isn’t working and why. For those of us who advise business-owners, our role is to examine, guide and provide insight – to avoid jargon and contribute effectively to the drawing board. Keep your drawing board fresh and alive by exploring new markets, examining your product ‘line’ or business model and always striving for excellence.

Staying competitive in today’s market means innovating. Another misconception amongst entrepreneurs is that ‘innovation’ always means technical, scientific advancements. Not true! It can, but these days, innovation often refers to executing an established concept in a new, more effective way – or taking a product or service and re-engineering how it is delivered. Identifying a ‘market in the gap’ is another successful way of innovating.

Strategic Plan Implementation - the What, How, Who & When...

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Following my last blog, I promised I'd talk 'nitty gritty' and the fun and games of implementation.

When we've finally wound our heads around the big vision and fully understood where it is we really want to be, we've got to look to the what, how, who and when of our implementation plan.

Implementation can be likened to a recipe; you've got to have the right ingredients, timing, direction and application to deliver the finished product [e.g. the plans' objectives].  What does this translate into for you, as Owners, CEOs, or whatever you refer to yourself as? Simply, a clear layout of the route your specific strategic objectives will need to travel in order to come to fruition.

Take, for example, the area of new market exploration - this is often an objective of a growing SME.  How do you feel you might approach this? A wise stance would be to:

1. Identify the specific market[s] we feel are most suitable - or the "what";
2. Understand the possible route to defining the markets [e.g. research, visits, meetings, stakeholder contact and so on] - the "how";
3. Decide on who the key people are - internally and externally - and their role in the objective, how they will be informed / instructed;
4. ... most importantly, the element of time is critical in strategic plan implementation, we're all fully versed in the notion of SMART objectives, right? Well, without timing in implementation, we're not likely to realise any real outcomes.  

Another key consideration in implementation? REVIEW. Yup, I'm a staunch advocate of "Plan, Do, Review", so make sure you do just that.  Remember, implementation of any plan is not worth a jot if you can't review its success.  

The Power of Social Enterprise... Harnessing the Social Profit Margin

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A common misconception in the business mindset betimes, is the sense that Social or Community enterprise initiatives are, in some way, less 'profitable' than businesses driven by commercial objectives.

The reality is quite different.

Obviously, it's important to be cognisant of the fact that not-for-profit organisations or ventures are not, in the main, driven by financial outcomes, however, their 'modus operandi' or operational style, should follow a similar rationale to those that are.  Why? Because an awareness of viability and sustainability is hugely important to the growth and development of any enterprise, whether it is generating social or financial profit.

Recent Government reporting has indicated the importance of social enterprise in contributing to a healthier economy in Ireland  -  not simply because social entrepreneurs are recognising the issues "on the ground", but that their awareness and understanding can tackle real problems, or better still,  provide real support to those in need.

As mentioned in the DJEI report, a taskforce and full reporting is set to illuminate the concerns and issues of those seeking to develop or grow a social enterprise.  From my perspective, one of the key cornerstones of social [and indeed creative] enterprise, is the need for clear, concise and non-jargonistic supports - often those starting out in these industries are focused solely on providing a solution, or pursuing a goal motivated by personal experience.  Reams of highly technical lingo or unmodified processes and approaches are not the route to go to support this industry.

That is not to infer that non-commercial entrepreneurs are not business thinkers - they almost certainly are - however their focus is different.  A social or creative profit margin is not motivated or propelled by financial outcomes, but by more focused societal ones - greater awareness, change and impact.

Undoubtedly, the Irish social profit margin will benefit our economy - however, the reality is, we must tailor supports to meet the needs of our social entrepeneurs in order to truly harness their potential.

Impact not intention... use your EQ!

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As you all know, in a previous life, I was an HR professional - and as a result, the importance of individual and collective capability, in business is something I feel strongly about.  During my time in the HR world, I trained [yes, many didn't know it was possible] in Emotional Intelligence, or EQi.

For those of you not entirely acquainted with the notion of Emotional Intelligence, put simply, it's an approach focused on understanding, more completely, ones own emotions and those of the people we come in contact with.  In my own experience, it helps organisations run more efficiently and also allows those in managerial or leadership positions conduct and manage their business relationships, and organisations in a more fluid and straightforward manner.

So, what am I on about EQ for? Well - because I am continually amazed by the seeming lack of it in business - and business relationships.  Sure, we all find ourselves 'stretched' betimes, and there is often a point at which, in stressful situations, we may find it difficult to self-regulate. HOWEVER, do we think of our reactions in terms of how they might impact us, or potentially, those we work with? Not always.

Another one of my pet subjects is mindfulness, and it sits, very nicely, alongside EQ.  Adopting a stance of being in business as opposed to doing business provides a focus which can undoubtedly add great value to ones working life, as well as fueling more centred, EQ-friendly business relationships with colleagues, staff and clients.

Dovetailing with this blog posts' title - impact not intention... in adopting a more mindful approach to being in business, you're facilitating yourself to think about the impact of the way you behave, communicate and deal with others.

Think back over your recent interactions - any specific one you wish had gone better or more smoothly? A client or customer who you wish had given you a different answer? Staff or colleagues who really 'wound you up'? If you could rewind and change how it played out, would you?

Change your direction and remember: impact not intention.

Growing Pains... and how to manage them...

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As per normal, there was a moment of inspiration for this post... it came about following a series of conversations with SME clients, all juggling the many 'hats' involved in running a developing business.  Operational demands, client and sales development, personnel management, cashflow - the list goes on - and the biggest difficulty? All these various 'hats' draw attention away from the one thing that will guide their way out of 'multi-hat' management... the business strategy.


The undeniable truth of growth in business, is that at times, it can be quite 'painful' - or at least - uncomfortable for those leading it.  Owners, principals, managers, founders all have to change their tack, and become directors or leaders of an evolving organism, which can at times be unruly and challenging as it advances.


There are realities which must be employed in order to harness your SME's growth, and ensure it is on the right track.  They can be difficult to implement, but are necessary nonetheless.


My advice? Make time to step back [hard but absolutely required]. Observe the growth to date in a detached and realistic manner; compare it to that of competitors, colleagues and those you aspire to.  Where do you sit, by comparison? Examine your future plans in line with the current position of the business - what is working, what isn't, what's needed next?


Don't underestimate the efficacy of the SWOT analysis - at every level in your organisation.  Why? Because it will provide you with clarity and insight, as well as an informed viewpoint.  


Undoubtedly, the time needed to build strong scaffolding for your business growth plan is time well-spent, so don't put your growth strategy on hold.  Meeting clients experiencing the discomfort of growth regularly, I know only too well how difficult it may seem to take time 'out' to do the labour-intensive work of planning.  The reality? If it doesn't happen, you risk your business turning into a walking sticky-plastered-leaning-tower-of-Pisa... e.g. functioning, not at an optimum level, and leaning in a hugely questionable direction.


As I regularly say to clients - the one thing that will undermine stress and anxiety in business change - is planning and action.  Why? Because it provides the individuals involved with a real sense of tangible outcomes, instead of merely feeling as if they're simply 'treading water'.  


Next step... implementation... my next blog post!

Share the Vision!

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Talking with a client yesterday, we stumbled across a subject which lead us into the whole issue of 'sharing the vision'.  Not just with clients, stakeholders and the media - but [and most importantly] with your people.

As you all know, in a previous life, I worked in HR, and can state unequivocally, that I am passionate about staff buy-in.  Why? Because, to utilise the often over-used term, "bringing your people with you" can change the way you do business in a very meaningful way.  Think of what your people bring to your business - in terms of delivery to customers, operational efficiency, management of the organisation - clearly communicating your vision can influence how every role and responsibility is delivered.  How? Through commitment.

Commitment comes in the form of consideration, connection to and full comprehension of a vision.  It means that your people SEE, KNOW and AGREE with your vision.  Your people become followers, advocates, collaborators and supporters of your vision.  Imagine how powerful your business could be, if you shared your vision?

Another Consonant, Carol... Cs, Ps and USPs!

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I found myself driven to write about this following a course I delivered to some start-ups on Market Research.  To contextualise the training, it was a prescribed course [and a valuable one, in fairness] for individuals about to set up a business.  What was my problem, then?  The jargon.

As I continued, with gusto, through the merits of Market Research – how it is a must for your business – on to the jargon of Cs, Ps and USPs, I found my head spinning involuntarily in a sea of pointless consonants. 

These motivated business people didn’t need to listen to the jargon... they wanted simple, clear advice and guidance on how they could de-risk their business idea.

What’s the point of this rant? To be precise; it’s the importance of understanding your market... who’s the competition and most importantly, who’s the customer [and that you have enough of them].  You don’t need Cs and Ps.  You need information, and market research.  Facts, detail and validation is key.  An understanding of why and how you can offer a better, more novel, or effective solution to the customer’s problem. 

More of the same? Check it out here.