INSIGHTS: TRUTH AS A COMMODITY
Guest Columnist Gary Weber:
President at G.M. Weber and Associates LLC
I’ve spent nearly half my life working in and around Washington, DC. I began my career in 1987 and knew I would have to work hard to gain respect. I quickly realized there was an equally valuable commodity to capture. It is an elusive commodity yet valuable to all, the commodity, trust.
As a father, I consider the image of the trust of a young daughter as they cross a bridge. The father, scared says: “Sweetheart, please hold my hand so that you don’t fall into the river.” His daughter replied: “No, Dad. You hold my hand.” “What’s the difference?” “There’s a big difference,” she said. “If I hold your hand and something happens to me, chances are that I may let your hand go. But if you hold my hand, I know no matter what happens, you will never let my hand go.”
The anonymous author concludes: “In any relationship, the essence of trust is not in its bind, but in its bond. So hold the hand of the person whom you love rather than expecting them to hold yours.” Extrapolating this to business, you will be rewarded for having a bond with your customers, protect and value them and you gain their trust.
What is trust worth? Trust is a commodity worth millions to individuals, politicians and businesses; we are at risk if we forget this fact. Taking time to “monetize” trust in you, your business or product is worth the effort. Then you can invest appropriately in gaining and maintaining trust.
I would like to share some examples that I believe relate to the value of trust, how to achieve it and the cost of losing it.
1979: The First Turn-Around for Chrysler “If you can find a better car, buy it”
Lee Iacocco’s ability to save Chrysler is deeply rooted in the company’s decision for him to take on the role of the very public face of Chrysler. He thus became a central element of their marketing and communications strategy. It worked when he said “If you can find a better car, buy it.”
1996: The Beef Industry, Lobster of the 21st Century?
In 1979, a friend of mine said “look at the decline in beef demand, within 30 years it will be like lobster, tastes great but too expensive to eat often and then only in a fancy restaurant.”
I disagreed because cattle and other ruminants are the ultimate, sustainable contributors to our growing demand for animal protein products.
In 1996, after over 20 years of declining beef demand, the threat of Mad Cow Disease arrived in America on March 22, 1996 with the announcement that “Mad Cow Disease”, caused a new variant of Creutzfeldt Jacob disease, beef consumption in the United Kingdom dropped by nearly 50 percent.
In the United States, in 1996, every one percent change in beef consumption would equate to over $300 million in farm and ranch income alone, a 50 percent decline would have cost the beef industry over $1.5 billion.
Who would have thought Oprah Winfrey and the guy Oprah reportedly called “the boring beef guy,” Gary Weber, would end up, for a brief time, being the “faces” of the beef industry?
There were two Oprah Mad Cow Disease episodes, April 16, and 23rd 1996. In spite of all of the concern about BSE, consumer confidence data illustrated an increase in confidence in beef. Why, because the media was saturated by science based messages assuring consumers that beef was safe and Oprah’s last words on her second show; “Well, just keep on keepin’ on, we’re counting on you” (the beef industry) helped prevent a catastrophe.
2012: Lean Finely Textured Beef
Our social media driven society is a challenge. Recently, BPI’s lean finely textured beef (LTFB), aka, pink slime, was “attacked.” A damaging message got traction, a lack of trust in the product or company, failure to put a face on an industry or product were insurmountable.
Upon hearing about LTFB, it’s likely; consumers didn’t feel it fit their increasing interest in and demand for “natural” and organic products.
“Humpty Dumpty was pushed” in this case, all King’s men, (U.S. Secretary of Agriculture Tom Vilsack and Iowa Governor Terry Branstad became the faces of LTFB), left Humpty Dumpty in pieces.
This is an example of the impact of not having or losing public trust, in this case, it surely has cost BPI hundreds of millions of dollars.
2012: Biotechnology, Proposition 37
In the 1980’s the first commercially viable genetically altered products began to raise significant public concern. In 1993, the USDA funded a survey to ask consumers what their concerns might be with respect to food biotechnology.
The biotechnology industry chose a path of avoiding much public disclosure of these powerful technologies.
The recent Proposition 37 debate in California indicates there continues to be significant concern about biotechnology.
The biotechnology industry hasn’t measured up, who is saying “If you can find a better, safer food buy it.”
ON THE ECONOMY: 2013 JDA PREDICTIONS
By John Dunham:
Managing Partner, John Dunham & Associates
“Greetings, my friends. We are all interested in the future, for that is where you and I are going to spend the rest of our lives.”
So began one of the great cult movie classics of all time, Ed Wood’s Plan 9 From Outer Space.
The narrator of the film was a former radio announcer known as the Amazing Criswell. As we suggested last year, over time Criswell’s predictions became more and more bizarre, including a prediction Denver would be destroyed by a space ray, London would be destroyed by a meteor in 1988, and that Kansas (in one prediction) would become an uninhabitable dust bowl, or (in another prediction) would become the most important state in America and that Wichita would be the nation’s capital.
2012 was full of predictions that went wrong. Of course the Mayans were off, and the University of Colorado’s election forecasting model predicted a Romney landslide. Maury Harris, UBS’s Chief U.S. Economist, touted as the “most accurate” economist on Wall Street suggested this time last year that the American housing market would be booming by now; and of course Nouriel Roubini, who can always be counted on to predict calamity, suggested that there would be another global recession in 2012.
So how did JDA’s 2012 predictions fare? In general we were correct. We said that the basic machinery of the American economy was sound but that a serious lack of confidence in the country’s economic institutions locked the country into a kind of “stag-flation” where the inflation is less visible than it was back during the disco era. We suggested that asset prices will begin to stabilize.
JDA was not correct; however, in suggesting that inflation will be the key economic event of 2012, and that higher inflation will spur consumption and eventually force the Federal Reserve to abandon its artificially low interest rate loose monetary policies.
On the world front, JDA predicted that slow growth in Europe, continued net contraction in Japan, and slower growth in Russia and China due to political instability would keep overall growth in world economic activity in check.
Overall JDA predicted that US GDP would grow by just under 2.8 percent in 2012, and through the third quarter, it looks like GDP will grow by just 2.5 percent. This has helped keep a lid on the inflationary problem that we predicted. Our forecast was 3.8 percent, and the BLS is reporting inflation at just 1.8 percent through November. We were also way off on interest rates as the inflation prediction was so high.
Here is what JDA thinks will happen in 2013:
The world economy will continue to be weak – hovering just this side of expansion. The fiscal and monetary situation in Europe as well as in China will continue to be a headwind to world economic growth. The American economy will not go into recession; however, the problems with American tax, fiscal and monetary policies will not be addressed in at least the next two years. The massive tax increases scheduled to occur in January will remove at least 500 basis points from growth. In addition, the regulatory environment will continue to discourage business formation which will hamper hiring since only smaller businesses are net job producers.
JDA’s 2013 forecasts have tempered our inflation expectations reflecting continued slow growth in the world economy– although this is still the biggest long-term risk facing the American economy. We do not see any recovery in Europe and weaknesses in both the European and American economies will keep pressure on prices. The reelection of President Obama, and certain reappointment of a doctrinal Keynesian as the next Chairman of the Federal Reserve will also keep interest rates in the United States artificially low. These two factors, along with higher taxes, will keep US GDP growth in check – although we do see some pickup in 2013 – and unemployment artificially high.
Based on these general findings, most recent forecasts for 2013 are presented in the following chart.
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