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Imagination and Business

Imagination and Business

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Starting a business from the ground up is a daunting task. There are a multitude of different aspects to starting up a business that one needs to pay attention to. Just one serious fault in the business plan could destroy the entire strategy. Millions have succeeded in creating their businesses, yet millions have failed. Businesses fail when they do not make any money. They make money from the products or services they sell. So, in turn, businesses need to find out what they are selling and what price point to set their product in order to maximize profits. It is all about positioning oneself in the new market one is entering. The first couple quarters of the business are the most vital. They bring immediate light as to where the faults and flaws are in a company. Businesses need a strong foundation of a reliable market and profit in order to succeed and appeal to investors. The key to creating a solid foundation for a business is to possess human capital. In other words, the success of the company depends on the people in it. The people in the startup process of the company make the decisions on things like price points. Therefore, it is vital to have the right people involved in a business.

A business is like a baby. It does not come with instructions or specific obligations, but it does come with a mountain of responsibility and attention. It the founder’s responsibility to build it up into something investors are interested in. They have free reign as to how they are going to start up their business and what they are going to turn their business into. This brings in the concept of imagination and creativity. Entrepreneurs need to be creative in their development and remain consistent in their mission, values, and business promises and deliverables.

Creating a business requires a lot of thinking. This thinking is usually done by the CEO, CFO, upper-level management, advisors, or investors. At GFTD, the CEO (who is also a philosophy professor), Nina Guise Gerrity, gives the opportunity of generating ideas for the business to a group of all-female interns. These interns are currently enrolled at Loyola University Maryland working on their bachelor’s degrees. They come to meet once a week, fresh out of class, ready to use what they just learned and apply it to a startup business. Interns, as young tech-savvy adults who are ready to hit the ground running, are also included in the ideal demographic of GFTD. The interns at GFTD give a fresh pair of eyes and creative energy to the development of GFTD so that Nina Guise-Gerrity can make certain her strategy is going according to plan and is gearing towards success.

The Fed Makes Inflation Fighting Priority Number One

The Fed Makes Inflation Fighting Priority Number One

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The Fed raised its benchmark interest rate by 75 basis points yesterday, to a range between 1.50% and 1.75%, and signaled stronger inflation-fighting measures ahead. We think that policy path will eventually cool inflation—but at a greater cost to economic growth than the Fed expects. And financial markets will likely stay volatile for a while.

Fed Chair Jerome Powell had earlier indicated a likely 50 basis point June hike, but media reports had increasingly pointed to a 75-point hike—and markets priced in the more aggressive outcome. The central bank leader cited recent inflation numbers and rising inflation expectations as drivers of the bigger move. Powell noted that the size of future hikes would depend on incoming information, though he expects a hike of 50 or 75 basis points will likely be appropriate in July.

The Fed Is Serious About This Inflation Battle

The central bank’s actions and statements demonstrate an intensified focus on getting inflation under control. Based on the median forecast in its “dot plot,” the Federal Open Market Committee (FOMC) expects another 1.75% in rate hikes this year, raising the target rate to 3.25%–3.50%.

That’s 150 basis points higher than was expected based on the March dot plot. The committee also upgraded its median expected terminal rate to 3.75%–4.0%, 100 basis points above March’s forecast. The Fed is clearly rattled by the breadth, magnitude and persistence of inflation and expects to respond accordingly, pushing policy into restrictive territory to slow demand.

Powell emphasized that the Fed’s first priority is cooling inflation. He kicked off the post-meeting press conference by calling inflation “far too high,” observing that the FOMC had expected it to be moving sideways or lower by now. Because it isn’t, the policy moves were more aggressive. Inflation will be priority one until the Fed gathers “compelling evidence”—a series of data releases showing decelerating inflation. At that point, the Fed would likely pivot toward a more balanced focus on its dual growth-inflation mandate. Until then, the sights are on inflation.

More Hikes Ahead—with Inflation Expectations a Pressure Point

A July hike of 50 or 75 basis points would raise the policy rate roughly to the Fed’s neutral estimate—giving it more “optionality” on future moves.

Essentially, Powell suggested there will be less urgency to act once reaching the neutral rate even if inflation was still elevated. That tack sounds a bit dovish, since rates could be at neutral as soon as next month. However, the state of the dot plot and the Fed’s requirement for a series of favorable data releases make it less so. Optionality or no optionality, the Fed will keep hiking for the time being.

Powell hammered home that inflation expectations are a key pressure point for the Fed. He specifically referenced the University of Michigan’s inflation expectations gauge and the US Federal Reserve Board’s Index of Common Inflation Expectations as reasons for the more aggressive than expected June hikes. Powell made it clear that any upward drift in expectations will likely trigger even more tightening.

Economic Growth Will Show the Cost of Fighting Inflation

A steeper, more front-loaded tightening cycle makes economic growth likely to cool faster and more deeply than previously thought. The Fed’s median growth forecast for gross domestic product in both 2022 and 2023 (in Q4/Q4 terms) is 1.7%. That rate is 0.1% lower than the central bank’s estimate of the longer-run potential growth rate. And it comes with higher unemployment: up from the current 3.6% to 3.7% at year end, 3.9% for 2023 and 4.1% for 2024.

Powell described the Fed’s forecast path as a “soft landing”: growth barely below potential, inflation coming under control and the labor market remaining strong. He acknowledged that such an outcome has become harder to achieve—and he’s right. What’s more, a soft landing increasingly relies on outside help—if the supply side of the economy doesn’t heal shortly, a soft landing seems implausible, and the supply side is beyond the Fed’s control. Absent supply-side healing, and if inflation doesn’t fall soon, the Fed must keep tightening the screws on the US economy—even as it weakens.

We expect economic growth to slow by more than the Fed anticipates. Given the tightening path the Fed has laid out, combined with our view that inflation won’t come down enough to give the Fed comfort for a while, we see more policy tightening ahead. Those moves will help bring inflation under control over the Fed’s time horizon—though it will come at the cost of a deeper growth slowdown and more volatility in capital markets.

AUTHOR
Eric Winograd
Senior Economist—Fixed Income
Is Your Company Committed to Innovation? Seven Questions

Is Your Company Committed to Innovation? Seven Questions

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Innovation is the key to grow any businesses to a significant scale. Many businesses have started with innovative ideas and grown rapidly by disrupting incumbents in their markets. However, as they grow they have instituted management processes along the way which are designed for disciplined execution. They have unknowing migrated to a culture that values predictable outcomes rather than calculated risk taking. At some point, these companies start losing market share to the next innovators, and the cycle repeats. This innovation cycle is well described in the book “The Innovator’s Dilemma” by the late Harvard professor Chris Christensen. It is well understood by many business executives.

In normal times, the slow decline of market share for an incumbent can take many years. It could be hard to get the topic of innovation on the agenda of its senior executives. However, the COVID-19 pandemic has accelerated the innovation cycle. Most business executives believe the pandemic will force them to fundamentally change the way they do business in the next few years because their customers’ needs and wants have changed. In order to continue the growth trajectory businesses need to innovate. In some cases, innovation is no longer a luxury; it is a necessity. But few business executives believe they are well equipped for innovation. According to a McKinsey study, only 21% of executives believe they have the expertise, resources, and commitment to pursue new growth, and two thirds of executives believe now will be the most challenging moment in their executive career.

Behind every crisis is also opportunity. It is the time for business leaders to reflect on their commitment to innovation, diving deep into their own mindset and their company culture and being radically candor about it. In most companies, there are wall posters describing their core values, which often include the word “innovation”, but is it manifested in their day-to-day operations? Most companies will say no, and that’s why only 21% of executives believe they have the expertise, resources, and commitment to pursue new growth.

The first step toward innovation is to commit to doing it. Once the commitment is made, the company’s culture, organization and management processes need to support the commitment. How do you know a company is committed to innovation? Answers to the following questions will reveal a lot:

1. Are the employees feeling motivated and empowered to bring forth new ideas?

2. Do you value and reward employees’ strength in thinking critically and constantly finding new ways to improve?

3. Do you always encourage diversity of thoughts and opinions in meetings to surface hidden opportunities?

4. Do you make it feel safe for employees to experiment and test new ideas, knowing most of them will fail or die due to limited scalability?

5. Do you ask and support allocating dedicated days in a week for employees in technical development or product development areas to focus on innovative projects?

6. Do you make your senior management team accountable for quantifiable innovation results?

7. Do you consistently review your innovation portfolio, and manage resources to improve outcome?

Depending on the answers to these 7 questions, you may find that your company is well positioned to innovate. Congratulations on that! However, if you are being radically candor, you may find that your company is falling short. Then it’s time to ask the question, do you want to change that? Feel free to contact me for an innovation assessment. Jackie@techcomventures.com. Remember – “Unless commitment is made, there are only promises and hopes… but no plans.” – Peter F. Drucker

Why your customer health scores aren’t actionable for predicting retention

Why your customer health scores aren’t actionable for predicting retention

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Key considerations for companies seeking a more predictive model to assess customer health

Key takeaways

  • Customer success functions, and the account health scores they create, are in the spotlight.
  • Health scores often focus on what is easy to measure, not what provides actionable insight into accounts.
  • Tech companies looking to use health scores to guide their decisions need to build that data on a more solid foundation.

Health scores should be derived from a balance of qualitative and quantitative data

In a subscription economy, the revenue focus of many technology companies has shifted from closing new deals to renewing subscription contracts and expanding sales among existing customers in order to continually grow accounts. Understanding how likely an account is to renew has become a core focus of company financials, making customer retention a hot topic. As a result, customer success functions, and the account health scores they create, are in the spotlight.

As these customer health scores become increasingly strategic, many companies are realizing their current approach to calculating them leaves a lot to be desired—that was the topic of a recent Technology & Services Industry Association webinar sponsored by RSM US LLP. Health scores often focus on what is easy to measure, not what provides actionable insight into accounts, according to the TSIA, which has developed benchmarks to help tech companies more accurately measure customer health.

Read More Here

 

How to Give Before You Get Referrals – Come Network & Enjoy!

How to Give Before You Get Referrals – Come Network & Enjoy!

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Referrals are often the most revered and sought-after aspects of business development. This is unsurprising, considering that when someone refers you, you have a qualified lead on your doorstep—or rather, your inbox.

Last month, we discussed the difference between a referral and a lead. A referral is a personal introduction to a qualified lead. A qualified lead means they need your services. They know who you are and how you can help them. And the introduction comes with a stamp of approval from someone they presumably know, like, and trust. As a result, they are primed to become a client.

If you are looking to increase the number of referrals you receive and improve your referral relationships, this article is for you.

The Art of Giving

 I am a firm believer in the art of giving. I give freely and without expectations of return. This is partly because I find joy and gratification in helping others. I know that my greatest value is in connecting people to help solve problems and grow their businesses.

When someone expresses a need, I do my best to connect them with the right person. Please note that I also outrightly ask someone how I can help them or what they are working on that they need help with.

The effect of giving referrals freely is that, eventually, they will return the favor. Yes, you may not see the effects immediately. However, people naturally want to reciprocate. It is in our nature. If you consistently bring qualified leads to someone’s doorstep, you will be top of their mind when they know someone in need of your services.

The Caveats

There are a couple of caveats to the art of giving. First, you must give qualified leads. You need to vet and ensure the leads you are referring are an actual fit for the person’s ideal client and their services. Otherwise, you can give as many leads as you want—just don’t expect anyone to be grateful or send any referrals in return. In some cases, a bad lead is worse than no lead at all. It can reflect poorly on you and your ability to both listen and understand your network.

The second caveat is that you need to build a brand for yourself. You cannot expect referrals in return if your network has no idea what you do, who your ideal client is, and how you can best serve them. This begins with a solid elevator pitch and introduction during your first meeting with someone new. Then, you need to frequently offer examples of what you do or what you are currently working on, so they become more familiar with your services. If you want to take your brand to the next level, I highly encourage you to post on LinkedIn (or the social platforms most relevant to your referrals and target audiences) about what you do. The more people can understand your line of work, the more they can send qualified leads in your direction.

What do you think about giving before getting referrals in return? Do you practice the art of giving? I want to know. Comment here with your thoughts.

What’s the Difference Between Leads and Referrals?

What’s the Difference Between Leads and Referrals?

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In the business world, people tend to use the words “lead” and “referral” interchangeably. When, in fact, they are very different. Today, we are going to dive into the difference between a lead and a referral, and how they both can help grow your business.

Leads vs. Referrals

In simple terms, a lead has the potential to be a prospect. They may or may not need your services and are basically equivalent to cold calls. They are not expecting to hear from your organization, and no one gave you an introduction or a personal endorsement. Examples of leads include email subscribers, event registrants, membership lists, business directories, and emails collected through lead magnets and marketing funnels—like a website contact form.

As you can guess, leads require a lot of time and effort, often with little payout. However, for the right business with the right processes in place, leads can be very fruitful. For example, you may run a business with lots of sales professionals that sell a high volume of products or services. In this situation, leads that get funneled into a sales process can be quite powerful.

On the other hand, a referral is a personal introduction to a qualified lead. A qualified lead means they need your services. They know who you are and how you can help them. And the introduction comes with a stamp of approval from someone they presumably know, like, and trust. As a result, they are primed to become a client.

Referrals are typically much easier to close and often result in higher client satisfaction. Simply because the person is an ideal client, and you are the right fit for their needs. Just remember, a referral is not a guarantee of business. After the introduction is made, you are responsible for what happens next.

How to Convert a Lead into a Referral     

If you want to become a trusted referral partner, you need to learn how to qualify leads to give proper referrals. Before you begin this process, you need to first learn about the organization’s business, services, and ideal clients. Otherwise, you are just going to waste both the person in need and the organization’s time. Once you understand the organization, you can listen for when a person that fits the bill needs their services.

If you are not sure if a person fits the bill, then you need to run them through a filter. First, are they in need of the organization’s services? Second, do they fit the organization’s ideal client profile? If you answer yes to both questions, then you offer the person an introduction to the organization. If—and only if—they accept, you introduce them to the organization. A simple email introduction is usually best, just make sure to provide context for both the person and the organization. I like to sing my praises about the organization and provide a connection if they have something in common (like a client, friend, or hobby). And depending on the situation, I like to give the organization a heads up and some background information as well, in a separate call or email.

How to Give Great Referrals

Not all referrals are of the same caliber. If you follow the guidance on how to convert a lead into a referral, your referrals will become more effective and will result in better, more trusting relationships with your partners. The key is to do your homework on your partners, screen the leads, and provide thoughtful introductions. If you skip any one of these three steps—especially the first two—your referrals may fall flat. I also find that the last step, when you give a thoughtful introduction, is often neglected. In your haste and excitement, you may forget to take a few extra minutes to write a thorough email. And that haste can not only prolong the sales process for the organization but could cost them the referral altogether.

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Following a Flexible Work Model

Following a Flexible Work Model

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At the height of the Great Reshuffle, we’ve talked a lot about remote work and hybrid schedules. But a trying out a flexible model can be just as beneficial to the productivity of your company and employees. On the value of flexible work, Microsoft says, “Companies should envision a kind of fluidity that lets everyone integrate work more holistically into their lives. The trick is figuring out how to do this in a way that balances business outcomes with people and their wellbeing.”

Types of flexible work

The main thing to remember about flexible work models is that no two are the same. What might work for one company, might not work for another. That’s the key to the flexibility. Some options include:

  • Compressed hours, where an employee might compress their 40 hour work week into four days, rather than five. Or simply working more hours in one day and less in the next, so long as the work gets done
  • Work from home opportunities and allowing employees to manage their own schedule throughout the week
  • Flextime: a new concept that allows employees to determine their start and end times of the work day. Autonomous says, “This flexible model is beneficial to individuals who have responsibilities prior to and after work begins. For example, the school run, or a long commute or any other types of engagements.” This model is specifically catered to those with kids or caretaker responsibilities.
  • Job sharing, which splits the full-time work of one job between two people and part-time schedules

Making it work

Establishing and maintaining a flexible work model can be difficult, especially for those who have worked the same way for a long time. The fact is, though, there is no longer one standard way to work. Professionals want to know they are trusted to get their work done. They want the opportunity to prove their productivity and skills, while also not being micromanaged.

Microsoft reiterates this, stating, “As technology evolves to help build flexibility into the flow of work, every organization will need to evolve its culture along with it, and getting there requires companies to rewire their thinking. That starts with listening and experimentation.”

In order to get there, managers need to remember to not only listen to their employees, but to set clear and realistic goal. Your employees should understand exactly what is expected from them in order for them to determine how they’ll get it done. Additionally, managers should continue open communication with their team, as well as check-in meetings to determine objective and allow room for questions and discussions.

The benefits

Though it comes with its challenges, a flexible work model has strong and noticeable benefits. In addition to increased productivity and better mental health for employees, it also reduces burnout, creates an environment of support, and broadens the pool for potential candidates. In the end, all flexible work models are working toward the same goal: to build a community on trust and fulfillment for both the employees and company.

How to Live a Cleaner, Greener Life!

How to Live a Cleaner, Greener Life!

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WGL Energy’s Senior Director Larry DePompei along with Directors Kevin Anderson and Jon Colpitts discuss the impact of climate change and the pandemic on the energy industry and what we all can do to preserve the world for future generations.

Listen to podcast here

On Mental Health and Hope: We cannot lose this generation.

On Mental Health and Hope: We cannot lose this generation.

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“We cannot lose this generation.” Dr. Kevin Churchwell, president and CEO of Boston Children’s Hospital recently spoke with McKinsey & Company on the pandemic’s impact on children’s health. At first glance, my stomach braced for the same uncomfortable lurch that occurs each time I see or hear “children” and “pandemic” in the same sentence.

In reading through Dr. Churchwell’s take on how we need a continuum of care built upon technology and improved communication for our children, “hope” comes to mind – something not mentioned but implied. I think we must keep “hope” as our guiding star for how we address the pandemic trauma we are presently experiencing-especially for our children. Trauma, like hope, is relevant only in the mind of the beholder. I am not an expert on either but have studied mental health and the brain’s dynamics for a couple of decades. I also have had the lived experience of both.

After 40 years in health care and health information technology (IT), my focus has turned to mental health or more specifically – “brain health” – a nod to the fact that our brain has “plasticity” or can be shaped by external factors. I dodge any reference to “comparable pain” but know I have experienced enough pain to change how my brain reacts to what it interprets to be “trauma”. This change in career focus is different somehow from past career pivots; it somehow feels like mental health– chose me.

In my mind, hope is not an emotion, a resource that can be stockpiled, nor a commodity that everyone has a specific amount of. I chose the best online definition from Miriam Webster:

“Hope is an optimistic state of mind that is based on an expectation of positive outcomes with respect to events and circumstances in one’s life or the world at large.”

After some thought, I realize that the dominance of “hope” in my life–flanked by calm and a certain amount of peace–arrived only after I had spent time examining and “working” on (via counseling, research, and specific therapy) my own perspectives, biases, pain, and expectations.

Psychology Today has a well-stated take on hope:

“Research indicates that hope can help us manage stress and anxiety and cope with adversity. It contributes to our well-being and happiness and motivates positive action.

…. hopeful people do the other things that will help them move toward what they are hoping for.

Then, other positive emotions such as courage and confidence (self-efficacy), and happiness emerge. They become our coping strategy; the emotions crucial in helping us survive. They allow us to take a wider view, become more creative in our approach and problem solving, and retain our optimism.

It doesn’t ignore the trouble, or make excuses, or deny danger. It is not pretending. It is acknowledging the truth of the situation and working to find the best way to cope. It’s showing up and working through the hard stuff, believing that something better is possible. It’s resilient.”

Indeed. We all need that guiding star to convey hope, courage, and confidence to our children. There are reasons to be hopeful.

January 11, 2022|Brain Health, Children and Mental Health, Courage, COVID-19, Digital Mental Health, Hope, Mental Health, Mental Illness, Pandemic, Resilience

TRUIST Perspective: Rising yield and less Fed accommodation to inject volatility but history suggests primary market trend remains higher

TRUIST Perspective: Rising yield and less Fed accommodation to inject volatility but history suggests primary market trend remains higher

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January 6, 2022

What happened?

After a strong start to the year, volatility in markets has risen. Investors appear concerned that the Federal Reserve (Fed) may reduce policy accommodation at a faster rate than previously expected. At the same time, the 10-year U.S. Treasury yield has jumped from a low of 1.35% in late December to above 1.70% for the first time since April 2021.

Our take

A shift in Fed policy often injects volatility into markets. Indeed, this is one of the key points we discussed in our 2022 outlook and is a reason behind why we are looking for more moderate market returns and more normal pullbacks.

That said, stocks have generally had positive performance during periods where the Fed is raising short-term rates because this is normally paired with a healthy economy. A growing economy supports corporate profit growth, which supports the stock market.

Moreover, with U.S. GDP output above pre-pandemic levels, annual job gains in 2021 at a record level, and inflation well above average, it’s hard to justify maximum monetary policy accommodation when the economy is no longer in crisis.

However, it will be a long time before one could argue that Fed policy is restrictive, especially when one considers that yields after inflation, known as real yields, remain in deeply-negative territory. This stands in sharp contrast to 2018, when markets had a sharp selloff late in the year when real yields were slightly positive and investors were concerned the Fed was becoming too aggressive.

Notably, stocks have risen at an average annualized rate of 9% during the 12 Fed rate hike cycles since the 1950s and showed positive returns in 11 of those instances. The one exception was the 1972-1974 period, which coincided with the 1973-1975 recession. Our work suggests near-term recession risks remain low.

Likewise, stocks have generally risen during periods of rising 10-year U.S. Treasury yields. In a study of 15 periods where intermediate rates rose by at least 1.5 percentage points since 1950, stocks averaged an annualized gain of 12%. The exceptions have coincided with recessions or economic slowdowns.

Importantly, intermediate-term rates are only back to pre-pandemic levels. This is certainly justified in our view given the aforementioned economic and inflation backdrop. It’s also consistent with our fixed income team’s outlook for higher rates and higher volatility.

Even with the recent rise in 10-year yields and stocks, the equity risk premium, a metric that compares the valuation of stocks to bonds, remains at a level that has historically corresponded with stocks outperforming bonds on a 12-month basis by an average of almost 11%. Accordingly, we do not see the current level of the 10-year U.S. Treasury yield as a significant threat to the bull market.

To read the publication in its entirety, please Download PDF

Keith Lerner, CFA, CMT

Co-Chief Investment Officer
Chief Market Strategist
Truist Advisory Services, Inc.

Shelly Simpson, CFA, CAIA

Senior Investment Strategy Analyst
Portfolio & Market Strategy
Truist Advisory Services, Inc.