The Market Primer - Getting to Return on Disability

An open letter to the President of the United States

2009-03-24T04:47:00.000-07:00

Dear Mr. President:

I write to you today regarding your comments on the Jay Leno Show aired on March 19th, 2008. In particular, I reference the comparison of your less-than-quality bowling game to that of a Special Olympian. I am not writing to point out your error – you no doubt understand that – rather, I am writing you to ensure that you understand the broader implications of your words and the opportunity in front of you.

What is done is done, and what matters is what gets done in the future. You have the opportunity to use your misstep to shed light on the billions of people tied to disability around the world with a fire in their belly to work, pay taxes and bring their brand of innovation to society.

A private phone call to Tim Shriver and hiring an intern who happens to be a ‘Special Olympian’ - while a good start - is not enough. This reaches far beyond the Special Olympics, as your words hit home for hundreds of millions of people who do not identify with Special Olympics, and who in fact spend their lives combating the stereotype. I suggest three specific remedies:

1. Make an equally public apology to the Leno media reach;

2. Develop a demonstrated understanding of the issues surrounding people with disabilities, paying particular attention to economic empowerment; and

3. As CEO of the United States Government, drive a benchmarked mandate to hire qualified people with disabilities (double the current number, by 2012). Hold accountable those cabinet members who fail to attain benchmarks. Follow this up with a public challenge to CEOs of the world’s largest corporations to do the same.

The new frontier of disability is in the workplace and consumerism. Over the next five to ten years, people with disabilities will enter the workforce and become a powerful influence in the marketplace. The landscape of products and service offerings will change to include the 1.2 billion people globally who have a disability, and the 2.0 billion people globally who are friends and family of people with disabilities. Corporations and governments, whether they realize it or not, will need to adapt to these market forces; as these two groups combined represent 53% of the population.

As a successful business owner with an Ivy League education who happens to have a disability, I can’t tell you how frustrating it is to have to prove my intellect every day of my life because my speech is slurred. There are hundreds of millions of people around the world with disabilities just like me who battle perception to stand on their talents. The perception we fight is the same one perpetuated by a joke that you told to a national audience this week. As an African American who has dealt with stereotypes, I am certain you understand this frustration.

The biggest barrier to the goal of inclusion in the workforce is getting leaders and managers to take these efforts seriously. Historically, disability has been the realm of the ‘do-gooder’, without much heed to results. When a manager considers hiring a person with a disability, thought goes to a perceived burden rather than actual benefit. This is due to the fact that there is a perception that people with disabilities cannot deliver quality. Needless to say, your comments do not help.

If you, or your staff, need help to do this, please give me a call. I would be happy to lend a hand.

Mr. President, people with disabilities are well acquainted with turning perceived adversity into quality results. I urge you to do the same.

Sincerely,

Rich Donovan
Managing Partner, IPS

Dustin Longstreth
Managing Partner, IPS

Duncan Wyeth
Trustee-United Cerebral Palsy

Disability as a Defensive Asset Class

2008-10-06T13:57:00.000-07:00

In today’s turbulent financial environment the next horizon could bring gain or ruin. The concept of portfolio risk management means something very different today than it did six months ago. While the mind goes to stocks, one can look at a company as a whole as a portfolio of businesses, or assets, that generate returns for its owners. These assets generate a risk profile for the entity, with a diversified defense contractor carrying less risk than a focused tech firm. Let’s not even discuss financial firms.

As firms evaluate their asset mix in times of crisis, like today, they quickly realize that decisions made in good times either secure their future with lower risk, or jeopardize future viability by putting ‘too many eggs in one basket’. Usually it is too late to change the asset mix when the ‘stuff hits the fan’, and Monday morning quarterbacking becomes a gut-wrenching exercise that keeps senior leaders awake in the wee hours of the morning.

Defensive assets are traditionally defined as income bearing assets like bonds. They serve the purpose of reducing risk in a portfolio. When we look at the balance sheet of a company, essentially a firm’s portfolio, defensive assets are those that are not correlated to the other assets through which the company makes money. A good example of a defensive asset would be a sports car company that also manufactures military vehicles. In tough economic times, folks buy fewer sports cars, but the government always needs tanks. The military contractor represents a defensive asset as its sales are largely unrelated to sales of sports cars.

Disability can be seen as a defensive asset class. The most obvious defensive piece of this asset class is the $480B annually that pours into this space through government transfers in the US alone. For contextual purposes, this equals 87% of the defense budget. These dollars represent a stable revenue source to fulfill customer desires. A large proportion of these dollars are in areas such as health care, transportation and housing. Much of these dollars are heavy with bureaucratic fat, ripe for an innovator to competitively spin a better product with more efficiency. Great upside with a stable revenue source, the epitome of a defensive asset.

In a broader context, disability as a marketplace is untapped. As an untapped marketplace, the annual volatility tends to be lower than the market as a whole simply because initial contribution growth is higher and more stable. In layman’s terms, first movers are like the only gas station in town, business flows because it’s the only game to be played. This has the effect of lowering correlation to areas of the firm that are more mature, which tend to be more impacted by moves in the overall economy.

For most firms riding out this downturn, it’s too late to have any meaningful impact on their balance sheets . Good managers are now looking ahead to the next downturn to immunize their revenue sources. One way to do this is to find new sources of revenue that are material to top line growth. The true beauty of disability is that it represents a new segment that is embedded inside geographic/political markets that companies already serve. It does not require a massive re-tool or capital outlay, simply a shift in message and vision to get started. . A firm does not need to build new infrastructure as they would, say, to enter into an unknown environment like China or Africa. In fact, it should take less time than an economic cycle to have a material impact on a firm’s revenue profile.

When the economy gets ugly, firms take hard looks at their asset mixes. Those firms that fail look from a forensic lens, those that survive to thrive assess from a position of lessons learned. Warren Buffett, the world’s best-known value investor has proven that times of crisis are times to step into the breach and buy quality assets. Disability represents one of the best opportunities in today’s marketplace for material growth at a reasonable price that also works to reduce the volatility of revenue streams. Whether the firm is a retailer, an airline, a tech firm and, yes, even a bank, the opportunity in disability to diversify assets cannot be ignored.

As money managers seek to diversify their allocations, disability represents an asset class in-line with consumer staples, health care and defense contractors. It also represents an asset base whose upside is aligned with value investing, deep discounts that will tend to fair value over time. The major difference with disability as compared to other emerging asset classes(alternative energy, aerospace, high technology) is that the revenue models are robust and easily understood, while the cost side is fat and padded. Capital will flood this space soon.

Risk is always ignored as an issue in the media until something goes wrong. Upside does not sell newspapers(or attract web hits). In the real world, senior managers of revenue producing firms must be exceedingly good risk managers. We’ve seen the results when they are not. Shareholders are demanding that managers find the magic bullet; increased growth with lower risk. Disability represents exactly that.

Discussing Disclosure – A Two Way Mirror

2008-09-08T10:30:00.000-07:00

Imagine having a secret. A secret that you carry with you every day, wondering how folks would react if they knew. While the reality is that this secret is relatively immaterial in terms of impact on outcomes, perception of this secret brings unknowns and questions in the eyes of others. In the mind of the secret-holder, there is the need to not only manage for outcomes, there is also the need to manage perception. These dual mandates can be incredibly complex to deal with.

This is essentially the situation when carrying an undisclosed disability in the workplace. 74% of disabilities are invisible, meaning that one would not know that someone had a disability by interacting with that individual. Many times, those invisible disabilities can have an impact on productivity. When this disability is kept hidden, the employee takes it upon him/herself to work the extra hours to maintain the expected output. For most, this is simply standard operating procedure; they have been quietly compensating for their entire lives to attain the standards of performance that they find acceptable. Usually those standards are higher than most.

For an employer, having employees with undisclosed disabilities presents two concerns that can have positive spin-offs when solved. First is a morale issue. Numbers say that approximately 14% of your workforce has an undisclosed disability that either impacts productivity or causes employees to spend mind-share outside of the firm’s realm. The brand of disability is so negative, and so many poor perceptions come with disability, employees may be out-and-out terrified of the backlash that comes from disclosure. Well-run companies must address the fact that 14% of their workforce may be terrified of the firm’s reaction to who they are as people. This situation makes Hertzberg’s experiment with light levels in the workplace look somewhat trite.

The second concern for employers is an issue of productivity of great employees. These employees represent a large chuck of the earnings engine in the firm. To have them working at sub-optimal levels is simply unacceptable. It is impossible to provide assistance to these folks if they remain anonymous. Somehow the firm needs to turn around the ‘stigma’ that comes along with disability and coax these valuable assets to assist them in providing productivity enhancements. Easier said than done.

One hurdle firm’s face is liability and the legality of openness surrounding disability in the workplace. Advocates have historically used the courts to coerce firms via civil rights legislation to hire and accommodate. Not only has this approach failed statistically, it has poisoned the environment, scaring most firms into making legal defense the front line of disability. This is exactly backwards. Firms need the freedom to have honest conversations with their employees and Customers without the specter of lawyers entering the fray. Problem solving is at best sub-optimal when a gun is held to one’s head.

Once the lawyers are safely locked away in their closets, a firm must do three things to tackle disclosure. First, it must engage in an honest conversation with its employees. Find out why they choose not to disclose, and what the firm can do to entice them to a comfort zone surrounding their disability. This can happen through focus groups, anonymous surveys and one-off structured conversations with employees. Best practice can also be learned from other firms that do this well, but frankly not many of those exist. Knowledge is a key prior condition to action.

The second step is to become a visible player in disability. The rationale here is to signal to your entire workforce and Customer base that disability is important to the firm. Let’s be clear, do not go out and throw money at a charity. Find a high-profile vehicle that is aligned with your business goals. If you can’t find one that suits, create one. This will help change the brand of disability at your firm, showing those who are skeptical that they fit the mold and are main stream. The other way to align the firm with disability is to integrate it into your recruiting systems. By having butts in seats performing at the highest levels, the firm raises more awareness than the best conventional ‘teach-in’ could dream of. The only way to change brands is through results, rather than awareness programs that have proven pointless over the years.

The third and most crucial step is to provide a menu of solutions for employees to call upon. There are proven strategies that allow those with both visible and hidden disabilities to manage their issues. By providing a menu, in conjunction with steps one and two above, you provide a roadmap for someone struggling to be productive to take the steps to make their lives easier. Often the solution precedes the disclosure.

Disclosure is a tough issue to deal with. It runs to the core of how people define themselves and how they are perceived. This situation directly impacts 14% of a firm’s workforce, and as such any well-managed firm must be proactive in addressing it. The firm that does this right has happier employees who are more productive than their competition. No better reason exists to act.

Corporate Fuel for Ideas – Budgets

2008-08-25T11:23:00.000-07:00

Ideas come, and ideas go. Within corporate entities, divisions and groups drive their ideas through levels of management and filter the good ones (hopefully) through stated goals relative to the potential returns they create. Innovation is directly tied to current plans, and often viability is looked at through the lens of those plans. Plans are represented financially by budgets, and these budgets ‘roadmap’ how dollars get allocated. A key question to ask oneself is how to get innovation that does not fit an existing budget funded?

Disability does not have budget allocations in most firms today. Even in the firms that do have allocations, these budgets do not come anywhere near representing the potential revenue opportunity that exists in business/disability. Logic says that a market with disposable income north of $220B in the US would have at least an 8-figure budget associated with outreach, but firms have yet to get there. While this does represent tangible opportunity, how does one ‘grow’ a budget from a seed?

Well, first step is…you need the seed. Prove potential by looking at the objectives of the group/firm and putting a framework around the idea targeting those objectives. For most companies in relation to disability, this means translating the mammoth demographic into increased revenue. This happens in two distinct ways, as employees and as Customers. One may see employees as solely a cost center, but when it comes to diversity, reflecting your Customer internally attracts them to you and adds to the organizational knowledge in better serving them. At the end of the day, it’s very difficult to pay shareholders without happy paying customers.

Secondly, one must find a ‘budget beachhead’ from which to project forward. This ‘beachhead’ is an umbrella from which to convene meetings, pay for travel/development and generally pull the levers within your organization. These umbrellas are typically Diversity, HR and/or Legal when it comes to getting a foothold for disability. Diversity is the best beachhead as disability has many parallels with traditional Diversity stomping grounds like women and racial markets. Much of their infrastructure can be grafted to fit and give a presence for disability sanctioned and minimally funded by the firm. Often, disability unofficially ‘lives’ in HR and/or Legal because it has historically been handled as a compliance issue. It is in a firm’s best interest to move disability out of the compliance mode into a Customer/Talent Acquisition mindset.

Living under the Diversity umbrella won’t drive this to its end goal, which is the full realization of the revenue potential in this market. In order to do this, disability must be included in main brand/business lines as part of standard operating procedure through talent acquisition/retention, marketing, product development, customer interaction and new revenue streams.

There are two parallel tracks to follow to do this, talent acquisition and market inclusion. The easier of the two is talent acquisition. With firms like Lime Connect working with large brands bringing talented people with disabilities to the workforce, the model is proven and repeatable. The budget tapped here is often a combination of Recruiting, Diversity and HR. This way, the risk is shared and the impact on one budget of an incremental expenditure is minimized. It is highly advisable not to seek budgets from Philanthropy or the internal foundation to fund outside relationships. This sends a message to all parties that there are no consequences to failure, and a message to PWDs that the firm does not take the efforts seriously. That said, if that is the only route available early on, pursue it with a plan to get away from it later.

The best way to get budget for a market inclusion initiative is to convince a senior business-line leader that the effort is key to the future of the firm. Disability lends itself nicely to this model, as the demographic is so large that it has a material impact on the future. Often these leaders have access to ‘innovation budgets’ that can bridge the effort from proof of value to the point where line budgets can integrate disability into their annual plans. For most consumer product firms, integration may have an initial ‘retrofit’ cost to alter messaging and product design, but once accomplished, the continuing marginal variable costs are de minimus.

One option to get away from the ‘switching cost’ effect, that can work against short-term financial goals, is to set up a corporate level fund to charge back outlays during the one-time retrofit. The message sent is that our firm sees disability as an imperative, and senior management does not want short-term budget choices to hinder forward motion in disability. Budgeting can be a political exercise, and providing a budget buffer can actually incent managers to ignite innovation in the disability space.

Budgets are nuts and bolts in corporate life. They define what exists, and what doesn’t. Disability does not yet reflect its potential in those budgets. In order best achieve the long-term goal of realizing return on disability, these budgets must be created as close to customer contact as possible. That process is a long one, which must prove returns to shareholders at every step. The only way that the idea of disability takes root in a corporate organization is through established budgets and the infrastructure that comes with them. Without that, this idea walks out the door…usually to your competition.

The Olympic Games – An Example of a Failed Parallel

2008-08-18T11:22:00.000-07:00

As China enters the final week of its ‘coming-out party’, it prepares for another few weeks of competition in the Paralympic Games. This event is meant to be a celebration and competition of the best sporting talent amongst those who have disabilities. These athletes are the best in their sport, incredibly talented and every bit as inspiring as Mikey Phelps or Eddie ‘the Eagle’ Edwards. So why, prey-tell, aren’t these sports combined into the Olympic Games?

Statements and messages aren’t always overt. In fact, most of the time they are spoken without saying a word. Men and women rarely compete together in sport, because they are physically different. Sport and bathrooms have a lot in common here, same function yet different paths. As our nation’s men and women compete on the track, in the pool, and on board vessels why do our athletes with disabilities have to wait until the closing ceremonies are done to begin? It makes no sense to this author, but then again, few international bodies do when disability is involved.

This year’s Olympics in Beijing are bringing 60 million sets of eyeballs to NBC and its website per day. Gross that up globally, and we’re looking at more than 500 million daily viewers of the Olympic Games. NBC paid $894mm for the US rights to broadcast the Games. It speaks volumes about the perceived value of the parallel and segregated system that is the Paralympics that this author could not find a US TV schedule for this event. It is safe to say that the public is not captured by the Paralympic story.

Looking at this parallel system in the ‘Paralympics’ is important for the global corporate community. Often in corporations, disability is funneled through a parallel system. Employees with some sort of strong attachment to disability (typically family members), carve out a niche for a handful of candidates who are brought into an environment that has different standards than the rest of the firm. These employees do not have the same unofficial supports as their ‘regular’ peers do, and are seen by the firm as charity cases. It is not surprising that these programs have an abysmal record on retention, as most employees with disabilities feel that they are not part of the team. These employees, their assessments correct, either leave or are terminated because they cannot compete (through no fault of their own).

In order to be taken seriously, one must compete on the same stage as one’s peers, whether one is a world-class athlete or a world-class employee. Parallel systems don’t work simply because those in the mainstream system question why the parallel is needed and quickly deduce that a lower bar is required, thus that system is shunned. The curious aspect of this is that often the lower bar is not needed. It is truly amazing what happens when talented people are left to compete.

There are 20 sport competitions in the Paralympic Games. Of these 20, 11 sports can be merged as an ‘adapted’ class into sports already in the Olympics. These 11 sports would have Men’s, Woman’s, Men’s adapted, and Woman’s adapted. Sound familiar, it’s called accommodations. The remaining 9 are added to the competition and must be opened to all. Can Kobe make a 3-point shot from a wheelchair? Let’s find out. There are more important things than ensuring an athlete with a disability gets to participate. This is not Little League, it is the Olympics.

The same must occur in global corporate entities in order to get a meaningful number of employees with disabilities into their workforces. Talent acquisition must be aligned with the ‘regular’ effort to bring new blood on board. Competition must be judged on the same scorecard, both to entice those with disabilities to come forward, and perhaps more importantly, to ensure their success and retention. When the organization sees all employees on an equal footing, the perceived value of those employees is also equal. Organizations are human organisms, and humans take signals as policy. If your organization signals that some individuals need a different set of rules, your employees simply won’t take those individuals seriously.

Integrating disability into all systems is the way to go. Your firm already does a good job reaching women and other minorities, expand that to disability. The first step is to take an inventory of where you are, what works and what does not. The next step builds on that, and involves research. Your firm needs to understand this market and actually needs to have a conversation with your Customer, a novel concept indeed. By following proven practice, and building an arsenal of knowledge, all you then need to do is deliver on those Customer desires.

This is where most Western firms fail. They assume that they understand their Customer, lock themselves in a room, and come up with a strategy that reflects executive knowledge. Western automotive firms and their share prices show how well this works. When developing a strategy, Customer is King, Queen, Jack and Ace. If someone argues against that, find them a different job. A strategy in disability that is based on the Customer is the difference between success and failure. By integrating disability into talent acquisition/retention, marketing, product development, R&D and IT your firm is unlocking the world’s largest market.

Parallel systems do one thing well, they highlight opportunity. They allow the masses to see the potential in something that might be a little bit different. If these systems continue for too long without integration into the whole, their legitimacy is questioned and they risk irrelevance. This is true of the Paralympics. The masses see talented athletes competing outside the norm and the results as shown in TV ratings speak for themselves. The Paralympics must be integrated into the Olympics, just as disability must be integrated into the mainstream of our global corporate entities. Anything less not only sends a questionable inclusion message, but leaves material opportunity on the table.

Pushing the Edge – Not Falling Off

2008-08-11T11:05:00.000-07:00

There is risk in entering new markets. Part of that risk lies in not understanding the ins-and-outs of that market, simply because it is new to you. Whether dealing with new technology or a new population, a learning curve exists and one must plan to adjust for it. Missteps happen, the key is to minimize those missteps while reacting in an honest manner to fix errors.

DreamWorks has learned this the hard way. http://www.washingtonpost.com/wp-dyn/content/article/2008/08/10/AR2008081001869.html Their new comedy, ‘Tropical Thunder’, opens this week. Part of the movie is dedicated to making fun of ethnic minorities and people with disabilities. On its own, this is not exactly high art, but hardly unheard of in today’s entertainment industry. The film overtly makes fun of people with disabilities as ‘retards’, going farther than any mainstream movie has in recent memory. Let’s be clear folks, ‘retard’ equals ‘nigger’ for people with disabilities in terms of the hate and discrimination that comes with the word. It causes a real passion in the 53% of the population who are touched by disability and emotional pain in those who struggle with discrimination on a daily basis.

Funny is good, and some may find this stuff funny, but for DreamWorks, it’s just bad business. It is just a bad business strategy that pushes a negative emotion button in half your customers. While ‘Tropical Thunder’ would never be a blockbuster, why would they risk audiences for properties like Shrek, Gladiator, Madagascar and any future blockbusters? It makes the Mouse House look even better.

There are learnings here. As one reaches out to a new market, one must understand where limits are. Communication with new markets is hard, because one simply does not know which messaging works and which messages fuel a mob mentality. General Motors has a classic story of a misstep in a new market. In the eighties, GM decided that it must increase its ex-North America share by increasing its marketing in Latin America. One model it decided to bring to Brazil was the Chevy Nova. One can picture a bunch of Detroit-based marketing guys sitting in a room plotting to bring a good, fuel-efficient compact to a huge market would explode share ‘down there’. One small problem, Nova translates to “Won’t go” in Spanish. Oops. It probably didn’t help that not many left the lot.

While the DreamWorks debacle is not a direct parallel to the Nova, it illustrates the power of the disability market from the negative side. Leaders in this market are starting to understand the economic power that they wield stemming from their mammoth 53% demographic. Op-ed in the Washington Post, coverage on TV news and entertainment outlets coupled with rational arguments why this film ‘misses the mark’ are doing their jobs to make DreamWorks look rather base in this case. While not relevant here, business needs to be prepared to work with disability groups to work through ‘touchy’ issues before they blow up in their face.

DreamWorks’ mistake here was in believing that they are a niche/edgy production house, forgetting where it makes its money, namely kids and ‘wholesome’ programming. The executive team failed to recognize that by offending 53% of their market to produce a small property in “Thunder”, they are hacking off their nose, despite their face.

There is an easy way to avoid something like this, ask someone! Whether it’s a movie, a commercial or any other interaction with the public there are ways to vet and find out how messaging is perceived by the mega-segment of people with disabilities. There is almost no primary research on people with disabilities as a consumer. There are opportunities for consumer based firms to go out and run focus groups/surveys to clearly understand what turns this powerful consumer on, and as DreamWorks learned the hard way, what turns this market’s stomach.

What the DreamWorks mistake does not do is increase the risk in this market. It merely defines it. It clearly demonstrates the cost of a misstep while also defining the upside. While positive efforts won’t translate into equivalent media, because negative sells papers, it does translate the passion into sales. It clearly demonstrates that Customers are watching and are ready to pounce. There are no large brands out there making disability a core Customer, yet. The blowback out of DreamWorks has a flipside, and that flipside is powerful for expanding margins.

Another learning here is that disability is a mainstream issue. The days of markets ignoring disability are gone. Had one done a negative movie about African Americans in the 60s, the reaction would not be as vitriolic as it would be today. Doing a ‘retard’ joke in the 80s was acceptable. Doing it now presents real risks to the deliverer and those who are associated with them. The brand of disability is starting to be owned by those it represents.

New markets are risky, and DreamWorks demonstrated that by stepping in a deep pothole. The good news is that a well-run business should have no problems avoiding these mistakes. Any competent manager of a diverse business will find it common sense to stickhandle around these obstacles. The only issue here is being aware of these issues. In that way, we can thank DreamWorks for bringing this forward and teaching its competitors what not to do while showing the rest of us the explosive upside.

Incentivizing Change – Providing the Spark

2008-08-04T12:20:00.000-07:00

The environmental movement has learned an important lesson in the last 6 months. One can host concerts, win Oscars and run ‘Public Service Announcements’ ad nausea, but until an activity hits people in the pocketbook, they are slow to change behavior. The price of gas has doubled in recent years, causing a dramatic shift in how folks buy cars. In June, sales of SUVs at Ford dropped 54% from a year ago, a result that Mr. Gore cannot lay claim to. It is simply because the cost of operation (gas) outstripped the benefits of driving an SUV. The rational consumer always votes with their wallet.

‘Organic’ societal change takes generations. Views and values take time to evolve and work their way through accepted wisdom. Over history, great periods of change have come about from some kind of catalyst. Technology in the industrial and internet revolutions drove change. Political change in the ‘New World’ was brought about by excessive taxation. The French Revolution and the fall of the Czars in Russia were caused by rational consumers wanting to better themselves. These catalysts can all draw roots back to incentives, whether self-interested or dovetailing with some perceived social agenda.

Organizations, made up of human animals, can be viewed as a subset of society. These firms turn, dip and rise on the actions of individuals and how those individuals are aligned with the whole. There is a large body of research on the alignment of managers and employees to organization. One theory goes that if compensation is directly linked to the overt goals of an organization, employees and managers will perform better simply because what is good for organization is good for the employee. This theory has proven time and time again to be spot on.

Alignment has been accomplished in organizations to date largely through financial incentives tied to profitability and share price. Profit sharing has because the norm from the machine shop floor to the board room by compensating employees and officers with share ownership. Over the last 20 years, pay in the form of equity ownership has become the method to drive all players in the same direction.

Share based alignment makes sense at the macro level, but how does a firm drive tactical change? Individual businesses that need a rework or at a nascent stage are not usually linked to the performance of the whole yet can be critical to the future of a firm. A plant, a new technology or the next game-changing service must be treated as an investment, typically back loaded with returns. Bonuses, directly tied to measurable benchmarks are commonly implemented in these situations to keep eyes on the prize.

One of the questions posed when speaking of diversity, of which disability is the largest subset, is the question from line managers, “Why am I doing this? I need to meet my business goals and this is a distraction.” This question is an indication of senior management’s failure to align staff with corporate goals. Simply put, employees do what managers pay them to do. If diversity is important to a firm, they will build it into their compensation structure, top to bottom. If a firm says diversity is important to them, and they do not pay for diversity performance, they should be deemed as either delusional or somewhat less than forthright.

Put your money where your mouth is. A rather large company in Seattle, the one that does not sell coffee, is doing just that. The American Bar Association reports that Microsoft will pay its preferred outside counsel a 2 percent bonus if they meet diversity goals. This says to Softy’s lawyers that if their firms reflect Microsoft’s diverse Customer base, they get paid more. Simple, no? It is this author’s bet that this will work, and work well. Microsoft deserves kudos for aligning their suppliers with tactical goals through compensation. The question now becomes, does the maker of Windows include Disability in their definition of diversity? This is not clear.

The need for alignment around diversity within an organization is only needed if diversity is critical to business success. Let’s be clear, for most firms it is. Demographics say so. If you sell coal to steel plants, and all the Customer wants is coal, diversity is not critical for you. Any other consumer or public facing entity needs to make diversity goals central to its compensation system. How central depends on how diverse your source of revenue is, from either the production side or the Customer side. As a rule of thumb, if your employee base is above 10,000 and/or your customer base is above 100,000 your firm needs to incent diversity to drive growth and shareholder value.

Organizational change happens when managers cause it. They cause change by altering their team’s behavior to bring about a different result. This change eats up time and resources that could be allocated to other activities. It is in the manager’s best interest to allocate the most resources to the area where her compensation gets maximized. Therefore, if an organization desires change resulting in a more diverse employee and customer base, managers must be incented to move resources to that end. It is up to senior management to decide how important that shift is to the firm and the team will react to those signals.

Oil at $60 means more carbon in the air, regardless of the outcry. If society deems oil consumption negative to the environment, it must tax it to keep prices high enough to encourage switching. Activist ‘hot air’ does nothing in the short- to medium-term but add to CO2 emissions. The same is true of diversity within an organization. Until incentives are aligned, change will be a slow generational grind. The rational manager always follows her wallet.

Innovation in Extreme Environments – A Roadmap

2008-07-28T12:25:00.000-07:00

It is fitting on the 50th anniversary of NASA, we talk about innovation. NASA represents one of the few examples of government where spin-off activities provide an objective net positive to society both from an economic and social perspective regardless of your political point of view. Technology and development for the harsh environs of space have worked their way through our society in forms too numerous to detail in this format. From Tang to laptops to automobiles, the extreme environment of space spurred innovation that trickled down to our kitchens, offices and highways.

Disability, in many contexts, can be seen as an extreme environment. Across the disability spectrum there is commonality in that there is one(or more) characteristic(s) that does not mesh with the typical way of doing things. One might call it an alternate path to a common goal. At its essence, that is what innovation is, finding a new way of doing something. Question is, how does a firm understand those alternate paths to not only serve the disability market, but also to roll those learnings into the broader marketplace as well?

The path through extreme environments to innovation is well worn. The auto industry, literally, has this down to a science. Auto racing is a mammoth sport on a global basis. Formula One, NASCAR and Indy Racing League are followed by hundreds of millions of fans on 6 continents. The real value of these series is technological development of cars that end up in your driveway. Seatbelts, radial tires, engine designs and better crash management systems are all innovations that came about through jostling cars two feet apart at 200 mph.

The military is another excellent example of an extreme environment that acts as an incubator. Bullets, bombs and frequent use have a way of breaking stuff. The military demands its products stand at a higher use threshold than everyday. New metal/synthetic alloys, purpose-built electronics and medical techniques are hallmarks of innovation through military research. It even extends to vehicles as the Hummer has been a roaring success, driving off base into suburban driveways. There are cell phones, laptops and GPS devices that trace their lineage directly from defense research, through the battlefield right to your local neighborhood Best Buy store. This is simply because if it works in Tora Bora, it will probably work in the most difficult consumer environments.

NASA has a history in disability-based innovation. Shortly after the moon landing, the founders of United Cerebral Palsy hosted a meeting with NASA scientists and engineers to figure out how space technology could be applied to disability, and vice-versa. These early efforts resulted in the development of a lightweight wheelchair, multi-directional conveyances which can climb stairs, remote control limbs and sensory devices to help the blind.

The key to ensuring viability in a competitive marketplace is to extend technology gleaned from innovations for people with disabilities to the broader market. Easy-use packaging not only assists people with disabilities, but aging boomers as well, even though most would never admit to it. Changing ad strategies to reach those with learning disabilities can hone and sharpen your message to improve your reach to all potential Customers. Designing your firm’s Customer touch-points to provide access to those who have different ways of getting around, opens your doors to not only wheelchair users, but boomers, families and those who carry a little extra weight.

Information technology is where this model is most robust. Software and hardware that makes people with disabilities more productive have a similar effect on all users. The ‘extreme’ of not being able to write translates into voice recognition and powerful multi-platform switches from phone-to-computer-to-control-devices. Scaled up, one could control anything chip-driven with words. Spread this technology across the population and various home/office platforms and you have a ‘killer app’, driven by disability. Any tech firm that does not make disability a key component of their R&D activities is missing a colossal opportunity and should be thought of as a laggard.

Start adding up the populations touched by viewing people with disabilities as a catalyst for innovation. It becomes a number that cannot be ignored. A firm, by finding ways to make their interface easier to use by people with disabilities, is making it easier for all its Customers to part ways with their dollars. As a firm evolves, it turns over plants, headquarters, brands and ideas. The market forces entities to constantly re-invent themselves through the cycle of obsolescence and innovation. Disability provides an excellent launching point from which to attack this cycle.

The best innovators put themselves in positions of extreme use and spin those extremities into salable product to their core Customer. Disability covers the bases in a mammoth market unto itself and an extreme use basis for broad innovation. As we move into the next cycle of change, disability plays an important role as global catalyst. Thought leaders pay close attention.

Creative Destruction – Ingredient for Change

2008-07-21T08:54:00.000-07:00

There exists within Western economies a relic of the Cold War. This is not a reference to defense policy, they’ve moved on, adapting to new realities. A parallel to trade policy may seem appropriate, but yet trade with former enemies flows and grows as barriers drop by the hour. One might even look to sport for a legacy, but we see our former rivals now as heroes to our children in hockey, basketball and soccer. Within our market democracy, there exists a centrally planned economy that follows a model that has been exhaustively proven to be a failure. Disability is a centrally planned economy, where its constituents face the same circumstances as those behind the Iron Curtain.

When the USSR fell, western economists were flabbergasted at the state of affairs in the Warsaw Pact countries. In his book, The Age of Turbulence, Alan Greenspan talks about the shock in the realization that East Germans had living standards equal to 35% of their West German countrymen when the wall fell. Economists’ best estimate prior to the opening of books was 75%-80%. Remembering that economists and weathermen can be estimation peers, what caused this gulf in estimates? Greenspan makes the point that while each nation produced millions of cars a year, the economists made no account of quality difference over time. Economists did not account for the difference between the 1950 Mercedes and 1991 Mercedes built in the West, while the East German Trabant is the same car built in 1991 as 1950. Central planning has no account for customer desire, productivity gain or non-scientific innovation, therefore no need to update design or alter production for efficiency. The East Germans maintained the status quo, because there was no perceived need to change. This is a microcosm of what happens when central planning occurs.

In 1942, Joseph Schumpeter brought the term ‘creative destruction’ into the arena of economics. "The opening up of new markets and the organizational development from the craft shop and factory to such concerns as US Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one ... [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull." (Quote from "The Process of Creative Destruction" by Joseph A. Schumpeter, 1942) Paraphrasing Schumpeter, for progress to be made, old systems must be replaced by new ones as thought and technology evolves.

In the former Soviet Union, after its fall, it was common to see tractors in fields that where built in 1910. Greenspan himself asked why they were in use, getting the reply that “It still works.” Cuba is famous for this. In the late 1970s, Castro purchased a number of buses from the city of Montreal, whose passengers and taxpayers demanded new and more efficient rides. They are still in service today on the island of Cuba. Not to bias the result, but you can guess what the results of a straw poll with Iowa farmers or Manhattan bus riders would be regarding this approach?

So why are we stuck in the same quagmire with disability in the developed nations of the world? Government programs dominate the field. In a previous blog, it was stated that government makes up 99.9% of the funding in disability. In politics, disability is bi-partisan, which is a euphemism for zero accountability. Let’s be honest, what pol in their right mind is going to give his/her opponent the sound bite of being against disability. With $480B of US tax expenditures on the line annually, and zero accountability, that gets us waltzing through Red Square fairly quickly.

As the experience in Poland, Hungary and Turkey has proven, disability must be privatized. The current systems for medical care, employment services and inclusion under the government umbrella are not performing to expectations. One way to fix this is to inject choice and competition into the mix. Through its elected officials, society deems it appropriate to fund these programs. A mechanism can be devised to pass through tax dollars to users via a simple voucher system. The key here is to drive quality with incentive. Government can regulate, as it does with the FDA and SEC to ensure quality and standard service, but government needs to get out of the disability business simply because its bureaucracy cannot execute creative destruction on a bi-partisan issue.

Experience tells us that this process is painful. Entire populations in Eastern Europe went through great upheaval in the years following the Berlin Wall’s collapse. Inflation, shortages and corruption all came with choice, innovation and freedom in these economies. The same is true for disability. As with the collapse of the Soviet Union, there is no choice. The lack of results for constituents means the system will collapse unto itself. Managed change trumps chaos any day.

Private industry has an advantage in disability. Most entities do not carry lagging legacies, simply because they have not gotten into the space before. Those firms that have mostly volunteer teams working on disability must embrace creative destruction to plan to have material impact on their firm’s profitability requisite with the demographic potential. The best firms accomplish this in everything they do.

Many say that Social Security is the third rail in American politics, causing pols to avoid changing the system like polar bears avoid Miami. The result is a dead program that nobody under the age of 40 expects to draw from. Disability is similar, as in their rush to one side, leaders overlook results. With the incentive to change, creative destruction occurs and innovation happens. These ingredients are what make results percolate.

Visioneering – The First Step on the Path

2008-07-16T08:54:00.000-07:00

Imagine a room with a round table. A table, rather large, with many seats around it. In those seats sit people with the power to generate ideas, and the ability to work towards a common objective. This group can solve the greatest challenges to mankind if given the right mix of direction and free hand. Innovation within organizations often starts this way. Different viewpoints come together to provide nuance and perspective, resulting in a new direction that evolves over time and consensus. This process, sometimes called Ideation, is the first step following the realization that change must occur.

In an organizational context, it can be very challenging to get all team members working in the same direction. Human nature comes with individual agendas, personality differences and, yes, even egos can get in the way of progress towards change. One way around these common pitfalls, or at least make them manageable, is to clarify and itemize the joint need for change prior to diving into the process. This can be done through collaborative visioneering.

Vision is an intimidating word. When people talk of vision, they immediately go to pictures of Einstein, Hughes or Gates. In reality, vision represents a new state of the world, based on the facts in front of you. It can be deconstructed, and at its best involves a team of experts/leaders sharing thoughts rather than the single man waving a wand chanting ‘Abracadabra’. Vision is a process that steps from today into tomorrow, anchored by the bridge of assessments. Assessments are simply an opinion expressed by an individual. The more informed the individual, the better the assessment.

One of the prime benefits of visioneering is its collaborative nature. Getting a team of people to develop an idea that they own collectively is powerful for an organization. Not only does it harness the talents available, but with buy-in, it creates champions within the organization that can drive the change in their worlds. It is incredibly difficult to cause organic change within a large organization. Management cannot ‘memo’ change. It has to be taken to the ‘troops’ locally. The reality of most organizations, especially larger ones, is that they are a collection of sub-entities that spend the bulk of their time and resources driving their functional specialty for the better of the whole. By bringing together the Intrapreneurs in the different silos of the firm, the firm gives change its best chance of success.

Intrapreneurs are key to this equation. They are the innovators within a firm who take the risks to drive to the next level. They never ask ‘what’s next?’, instead they define it before anyone even knows it happens. They are comfortable with change, and will not be constrained by what they see in front of their eyes. By staffing the team with Intrapreneurs, the change leader gets an army who not only add to strategy, but go on to implement that strategy in the field.

Intrapreneurs also come armed with knowledge and data. Knowledge and data are critical to visioneering. In order to extract a vision that is relevant to your Customer, that vision must reflect the Customer. These team members are constantly striving to deliver to the Customer their desires, and are intimately aware of those desires. If they do not bring a quantifiable and objective arsenal of data from the Customer to the table, research needs to precede any attempt at visioneering. The old axiom stands center stage, Garbage In – Garbage Out.

Once the data is in, think big. The major mistake most planners make is that they give themselves an easy hurdle to clear. That may be nice at year-end, when your checklist boss benchmarks on targets, but you will never be great. The key to proper visioneering is to ‘break the known’. Put you and your team in an area where there is discomfort. Rather than starting with an ‘achievable goal’, start with the ‘right goal’. Visioneering is not about easy goals, nor is it about impossible goals. It is about desirable goals. A good test of your crew is the answer “I don’t know” to the question, “Is this doable?”. Once the team is outside its comfort zone, boundaries get stretched and real innovation starts to bubble.

This team then constructs a hypothesis for the future. The team must postulate, ‘Based on what our Customer tells us, this is what we need to deliver by this future point in time’. This hypothesis needs to be measurable, both in terms of content deliverables and time. Aggressive is the key when setting benchmarks. The idea of visioneering and planning is not to set up success, it is meant to chart a course. If this group finds at a later date that these goals need to be adjusted, a ‘breakdown’ is declared, and the team adjusts. If a quarterback lines up for a run play, and sees a defense ready for that run, an audible is called, rather than losing yards and risking injury. A plan is a tool, not a bible, and must evolve based on a dynamic environment.

At the end of the day, a vision is meant to change the game, not tweak the rules. If an organization is happy with results, and sees no reason for change, don’t. Most firms are not running on all cylinders, and need to look towards the next areas of growth. A prerequisite to wrangling that growth is defining what that opportunity looks like and how the firm captures it. Visioneering is a concrete process to do just that.

The Board of Directors – Building a Reflective Proxy

2008-07-07T13:04:00.000-07:00

A storm of controversy has been raging in the media and executive suites about corporate governance and the roles of boards of directors since the collapse of Enron and WorldCom. The bulk of this haranguing has been around legal and regulatory requirements as a reaction to glaring instances of malfeasance and fraud. The true mettle of a ‘good’ board has nothing to do with laws, statutes or lawyers, but how it functions as a representative body for shareholders in relation to a company’s mission. That means two things: 1) a board member must understand/reflect shareholder interests; 2) a board member must understand/reflect customer interests. Without these two bodies of knowledge, a board member is an empty chair at the table. When the board as a whole does not reflect these two toolkits, shareholders are not being appropriately represented, leading to a new board or a sale of stock.

In the last two decades, much has been made about corporate boards better reflecting society. Women, racial minorities and other under-represented demographics have made strides in gaining access to board seats. Most results are not stunning, with less than 20% of new independent directors being women according to Spencer Stuart. Now, the other 80% may perfectly understand shareholders, but probably don’t understand 51% of the population as well as a woman does. Do boards need to be 51% female? No. That said, there is a statistically significant knowledge gap between 19% and 51%. Shareholders have an incomplete picture of the market in their proxy of a board.

There is very little research surrounding disability and corporate boards. This author suggests that there is a very good reason for that. Board members that bring disability to the table don’t exist. If they do, it is in non-material numbers, or for branding reasons, they choose not to disclose. Disability in a corporate environment is so new, that it has yet to percolate to senior management levels, let alone board constituents. There is a real demographic rationale to have at least one board member with a disability. Between people with disabilities (19%) and their stakeholders (33%), this market is about the same size as women. Invoking the almighty concept of conservatism, let’s assume the demographics are off by a factor of 2, this population is still double the size of African Americans. With that kind of room for error, there is very little risk in adding this constituency from the customer standpoint.

This gets very interesting when one looks at the rationale for shareholders to demand disability as part of its proxy. The top 300 global money managers run approximately $55.5 trillion. These assets come to them from pension funds, mutual funds and other broadly invested institutional funds. Most of these pools have a mandate for returns, along with a loosely defined mandate for investments reflecting the communities they represent. Many efforts have been undertaken by these pools to change the way their investments operate to better serve/reflect their capital sources. Diversity suppliers, increased female representation on boards/senior management, environmental efforts and governance changes are examples of initiatives driven by these community mandates. Note that these changes also add to asset value in the medium- to long-term as well.

From a purely statistical/demographic standpoint, the assets impacted by disability amount to $27.3 trillion amongst these institutional investors. They represent teachers, labor, corporate pensions, and retail investors globally. Again, let’s assume this number is half wrong. That is $13.65 trillion in equity and debt instruments. That’s one hell of a mandate.

What needs to happen to fulfill this mandate? Spencer Stuart states that 70% of S&P 500 firms are seeking women directors, and that 93% of those boards have at least one female member. A good first step is to mirror the efforts for women in disability over the next ten years. Boards need to seek at least one great board member who happens to have(or understand) disability. By ‘understand disability’, this author in not talking about clinical knowledge. This author is referring to market inclusion. What makes this market buy from, identify with and work for an organization? How can a firm apply and extrapolate what it already does to this mammoth and tangible market in a manner that best serves shareholders?

There are some fantastic candidates out there to add real value to boards both cum- and ex-disability. Richard Branson(Virgin), John Chambers(Cisco), Steve Wynn(Wynn Resorts) and David Barger(JetBlue) are just four proven executives who would add to any board of directors. The temptation here is to find a person with a disability and slot them into a seat, without regard to what the individual brings to the room. This is the wrong approach. Dilution of talent for a specific characteristic is never a good path to follow.

Just as great firms are starting to attract talent to their ranks who happen to have a disability, the same must occur at the shareholder proxy level. Both investors and customers will benefit as new initiatives from the line and shareholder are better understood at the board level. Great ideas die if they are not understood. With the change coming around the massive market called disability in the next decade, leadership must be given board support and knowledge to have access to the requisite capital, both human and financial.

These changes won’t come out of governance and legal posturing. This kind of emerging market will only be tapped through expertise and understanding the opportunity from a shareholder prospective. By putting people with disabilities on corporate boards, firms and their management teams get explicit backing from the only reason for existence, their shareholders.

Change through the Lens of Inclusion

2008-06-30T13:11:00.000-07:00

Opportunities come along in business all the time. The success of a business is defined by which opportunities are acted upon, and the way in which they are executed. When we look large scale change, that is change that impacts 50% or more of what a business does, it can be difficult to get our arms around the first step. The first rule of change says that an organization actually has to do something, other than identifying the change itself, to cause change to occur. This is not a chicken-or-the-egg question, action always precedes change.

Inclusion is a word that gets batted around like a batting practice pitcher. In our context, it means opening the door to as many customers as possible, while increasing profit margins. Nothing more, nothing less. If you’ve been selling cars to women, between the ages of 55-65, and your firm is seeking to widen its customer base, opening your door to another segment will accomplish this goal. Pretty simple implied math, no?

Some may be asking, isn’t this just marketing common sense? Yes, it is…with a twist. Typically, if you look at a market demographic layout, it includes age, gender and income. Within those segments, there are some unique populations who have certain desires that may not mesh with the population as a whole. If the target segment is large enough to add to marginal profits, those desires must be accounted for and projected in the strategy and tactics of the firm, both internally and externally.

The easiest way to start is internally. Firms have proven, over and over, in order to serve a new market, one needs to understand it. Whether the firm hires external portable knowledge, or builds from within, it is critical to have expertise in a new market to serve it. That could be product expertise, cultural expertise or external credibility. This author is convinced that one could sell hockey pucks in the wilds of Nepal, but he has no Nepalese expertise. He would need to acquire it by hiring it, or living amongst the locals for some time. Again, common sense is striking.

One of the interesting initiatives and outgrowths of this effort to Include is the ‘diversity’ movements within corporate entities. This author has spoken to many corporate leaders who look at ‘diversity’ and scratch their heads. Where is the imperative to be diverse? Why is it in shareholder’s interest to get to x% of this and y% of that? Diversity for diversity’s sake is a dead-end. It introduces a social agenda, but without the compelling link to returns.

When the benchmark is changed to Include, and the metrics are growth and profitability, leaders change their tunes. It is very difficult for an intelligent business leader to shun a material opportunity to grow both bottom and top lines.

According to Michael Feiner, author and Professor at Columbia Business School, real change happens through hand to hand combat, that is, concrete steps that happen at eye level, day-in day-out. Given that statement, Inclusion causes change by acting on the demographic reality of a global marketplace that is highly connected to messaging via technology.

What does that look like? While in the past, it was impossible to reach multiple segments with one message, in the on-demand world, targeted multiple messaging is both feasible and economical. Markets today are ‘self-selecting’. Consumers find their message, and drive it for you rather than being spoon-fed in prime-time. They often tell you their desires without prompting. As a firm, you just need to be listening.

Does it make any sense that ‘diversity’ efforts are parallel corporate programs, outside the mainstream? Rather counter-intuitive to stated goals of these programs, no? For firms starting to look at this space, the word ‘Inclusion’ must guide all activities. ‘Diversity’ tends to be a central, corporate function where ‘Inclusion’ needs to live in the field, and in the line divisions that drive results of the firm. If your firm is looking to Include, skip the central/parallel model and embed this into your line functions now.

Are current ‘diversity’ efforts wrong-headed? No. They represent pioneering steps of visioneer firms to serve broader markets, or more cynically, comply with regulation. Either way, firms doing this now, are ahead of the curve. They won’t be there for long. Overwhelming demographics, measurement and concrete metrics make Inclusion the next great catalyst in today’s global marketplace. With various cultures and markets coming online every day, the only constant in tomorrow’s marketplace is difference. Building an Inclusion-based framework now delivers outsized returns then.

Globalization is not an ivory-tower theory anymore, it is de rigueur. Giant firms are facing new and legitimate competition from upstarts that open their door to all potential customers, resulting in declining share and threatening what was once a comfortable market position. With less than 50% of the world’s population involved in today’s economy, firms are asking the question of how to create and capture new share. Inclusion is the answer.

Innovation, Capitalization and Sunk Cost – Prior Conditions to Success

2008-06-23T10:42:00.000-07:00

Nuclear power plants are cheap to run. The expenses they generate on an operating basis are in the neighborhood of 60% of their conventional cousins. The major outlay of cash for nuclear power comes at the capital stage, building the reactors and such. Billions of dollars go out the door for investments in plant and equipment that subsequently land of the balance sheet as assets, simply because these assets will generate revenue over the life of the reactors. As time marches on, the assets are ‘expensed’ as the revenue pours in. If this is a smart investment, the revenue will be larger than cost over time and profit is made. The only reason this up-front investment is made is because it can be spread out across time. This is called capitalization, and it allows for constant innovation.

Last week, this author heard Newt Gingrich, former speaker of the US House of Representatives, give a speech on the future of health care in America. His basic premise was that it was difficult, if not impossible, to achieve change in health care without the notion of capitalization because the concept of investment in a future state of well being for the individual is not measured. He stated that the health care system was treating symptoms of the past, rather than ensuring the patients future well being. Whether you agree with Speaker Gingrich’s politics or not, his insight on this topic is dead on. It dawned on this author that there are stark parallels in the business/disability space.

The first principle that applies here is sunk cost. This is a concept that all accounting students learn on the first day of class, and it is incredibly powerful. A sunk cost is defined as a cost that has been incurred and which cannot be recovered to any significant degree. They are gone, their impact has already occurred, and unless one is in the time machine business, they cannot be applied to the future. Disability seems to focus on legacy and history which are essentially the same as sunk costs. There are bureaucracies and systems in place today whose sole purpose is to turn over ‘cases’ as they have for decades, focusing on outdated methodologies that show stunningly meager results. Following the rule of sunk cost, when an asset is bought and paid for, and its useful life is over, one needs a new asset, ignoring the past to look forward to future needs. Someone once said to this author that disability was not ‘broken’ it just needed some ‘tweaks’. Well, under the principle of sunk cost, it’s clear that the legacy asset value of old ideas and systems in disability is fast approaching zero, and something needs to change, in a big way.
Disability today is not generating the results implied by its fundamentals.

The solution to an asset whose useful life is approaching its end is innovation. Finding new ways of doing things is a well-worn path in mainstream business. The airplane replacing ships, hybrids replacing gas-fueled vehicles, steel frames replacing cement in high rise building are all examples of innovation that led to increased profitability. Disability must follow the same path.

As always, the key question is, how? There is a debate in disability over the concept of ‘incrementalism’ versus a hard look at large-scale change. Essentially, ‘incrementalism’ advocates taking ‘baby steps’ to add champions on at a time, that change will occur somewhere in the future. It is a risk avoidance strategy. Large-scale change involves turning the entire ship on a new course, or even better, inventing a plane to get to the goal. It is a risk seeking strategy, albeit rationally employed.

In business, baby steps are fine, only if you’re in the baby shoe industry. Reality is, things need to happen fast, and risk needs to be taken. Assess current performance versus where your benchmarks are.

If your firm is close (which no firm is), perhaps tweaks are rational. If your firm is not getting the result expected out of a demographic this size, you have two choices.

One, walk away. If your assessment is that you cannot reach your goals, you need to deploy elsewhere. Somebody will get this right, it just won’t be you.

Or two, research and retool your strategy. Put some great minds in a room and give them a problem to solve along with a framework to solve it. Most great ideas happen exactly that way.

Finally, back to Speaker Gingrich’s speech. Much like R&D, society/the economy must find a way to capitalize intangible assets that lead to tangible economic value in the marketplace. The Speaker refers to health status and outcomes as assets to be capitalized in the health care field, in order to incentivize preventative care and increase cash flow in that area. The same concept applies to disability. Find a way to pool intangible benefits to sit as assets, encouraging activity that creates real economic value.

Akin to building a power plant, business/disability must find a way to spread economic cost across benefit to see change occur. By this simple step, we focus on true value, and get past legacies/debates over how and when. Proven practice tells you how. Measurement tells your firm when innovation is required, and when to move on from a obsolete idea. The future requires ignoring legacies to focus on what tomorrow brings.

2008-06-09T14:15:00.001-07:00

Beyond products and infrastructure, an organization does not exist outside of its customers. They drive revenue, guide innovation and when they are unhappy, they can destroy real progress. Hundreds of billions of dollars are spent annually to develop processes to ensure that customers get exactly what they want. Demographics say that customers with disabilities should be a major part of any retailer’s Customer Relationship Management strategy, yet aside from a few token ad placements, retailers have yet to uncover this opportunity.

The question of ‘How?’ keeps rising again and again. How do we include this massive customer base in our CRM plans? Most firms first gravitate to physical access for wheelchair users as their first step. While many may see this as laudable, it is wrong as a first step. Going back to our numbers, we know that 74% of PWD have an invisible disability where physical access is not a barrier. The first step to inclusion in CRM activities is the realization that this segment is crucial to your business, and each of these customers represent an initial sale, followed by potential repeat business. This should sound familiar; it is how you look at all of your customers, every day. The day this stops, is the day you go bankrupt.

How? How do I help a blind woman find a dress? A deaf guy find a cell phone? A tween in a wheelchair buy running shoes? A woman with dyslexia buy the new best-selling fiction novel? The same damn way you do it with anyone else, follow proven CRM practice. These people are not in your establishment for counseling, they are there to part with some of their hard earned income. They know their deal, and will guide your staff in assisting them, if needed. Otherwise, just relax and SELL.

This author experiences this daily, having a disability that is readily apparent. Travelling a fair bit, I cannot tell you how endearing it is to be spoken to as if I were three years old, despite my education and receding hairline, having earned both. The TSA(airport security) is especially good at this. One would think that walking through a metal detector was tantamount to running a marathon by these reactions. Is this the fault of the front line employees? No. They just don’t have a process to follow to ensure that each customer is treated with the same approach. Without this process, they allow their own notions of care to enter their work craft, and quality CRM breaks down. Yes, they are there to stop terrorism, but also to ensure that passengers are respected. This is equivalent to ensuring a positive customer experience.

Private enterprise is very good at customer service yet too often are people with disabilities greeted with indifferent service, especially those with visible disabilities. Reputation is key to any organization that relies on customer service. By having two standards for those with and those without disabilities, the risk of angering 50% of your client base is real and close. Numbers say that 18.9% of your market has a disability; a further 33% has a direct connection to a person with a disability. Do the math.

There are many tools available to mitigate this risk. The first of these is an honest, market-based intent. Your firm recognizes the potential in this market, and is investigating ways to serve these consumers. Nobody expects immediate expertise, and if they do, they are irrational. Get your feet wet and start learning what you, as a firm, need to know.

Second, new infrastructure. When you add to or replace physical/web footprints, design for everyone. Retrofitting legacies is costly, and an unfair burden given the maturity of this market. In 10 years, retrofitting will make economic sense, but for now, keep costs manageable by utilizing Universal Design in new and economically viable construction. Don’t expect to throw a switch and get a level field, but you had better start adding to capacity and prepare for a medium term build-out if you want to stay with your competition.

Finally, and most importantly, train your staff to see lifetime customers, instead of a body taking up floor space. This does not only apply to disability, but all customers. The global nature of the world today means that the only abnormal customer trait is uniformity. The front line needs to be flexible in their interactions while understanding that increased sales come in all sorts of packages.

Retailers deal with razor-thin margin, where a shift in taste and style can crush or propel the bottom line. By changing the way retailers manage their customer relationships to explicitly include people with disabilities, these firms can dramatically increase traffic and turns, giving them a distinct advantage over their competition.

Technology – Unlocking your Productive Workforce & Beyond

2008-05-27T12:20:00.000-07:00

Over the past two decades, western economies have undergone a productivity revolution, due in most part to technological strides that have made modern workers hyper-efficient in relation to historical benchmarks. The same rationale can be applied today to up to 40% of the workforce who deal with some kind of alternate method of reaching their objectives within the firm. Technology, in the business/disability space, provides powerful tools that increase the output of not only PWD, but can be used to lever other workers output as well.

Technology in the business/disability space is often high-jacked by lawyers and is talked about in terms of accommodations and compliance. This tack seriously undermines technology’s role as a driver of margins and the purest lever for growth. For the average unit of labor in today’s workforce, technology has exploded their standard of living by multiples. Need evidence? Think of performing that Excel spreadsheet you did this morning with pencil and paper, oh, and your undo button was a rubber eraser. Think of how much more you can get accomplished today, as opposed to 1990.

Now, imagine doing that pencil and paper ‘ledger’ if you couldn’t read or write. There is a portion of your workforce, being highly skilled and talented, who are in that position right now. While they aren’t staring at the rubber eraser anymore, they are not using the tools on their desktop to their full extent, because of some type of disability. Whether it’s due to a learning disability, vision, hearing or some issue with dexterity, productivity is leaking from a material portion of your workforce because they cannot fully interact with the technology the firm puts into the field.

How material? This author estimates that 8%-10% of your workforce has some kind of learning disability that can be tactically neutralized with various pieces of software, and at a low enterprise cost. The measurement of productivity lost from this is tricky, but a 25% loss from 10% of your workforce seems reasonable, and should get any manager’s attention.

Vision and hearing issues have long been understood in the medical world, but not in corporate circles. Again, technology is there today to ramp productivity and maintain cost sanity. The beauty with sensory issues is economies of scale. The issues are very similar from person to person, and solutions can be rolled out on firm-wide level enjoying the cost savings that come with such a roll-out. Many of these technologies now come off the ‘rack’ like Instant Messaging, email and video-over-internet.

Dexterity issues with technology are a different animal. Solutions range from simple fixes like changing the settings on Windows to involved hardware that makes interfacing with a computer simple. The overwhelming majority of these are simple changes, costing nothing, or under $100. It is interesting that the expensive changes seem to get the most press, consistent with the theme of focusing on the ‘tails’ in business/disability. The overwhelming majority of these fixes carry tiny costs relative to the productivity gains they create. There are the occasional projects that end up under water, but this should be of no surprise as sometimes technology outlays are a loss-leader to open future doors in new markets. Business/disability is no exception to that rule.

Here is the magic of technology fixes in business/disability – they drive productivity gains across the entire firm. Everyone benefits from better interfaces with their PC. The keyboard and mouse are not the most efficient ways into the digital world. Voice, physicality and eventually thought will cause Logitech to drastically change its business models. Voice recognition was originally developed to assist those who could not use a keyboard effectively, yet it is now widely used in the workplace to compose emails, reports and other documents.

Baby boomers put this topic into over-drive. 78 million boomers in the US alone are aging, whether they like it or not. One of the defining characteristics of this segment is that they like to be in control of their own destiny, and they likely will remain in the workforce long after their vision, hearing and dexterity start to change. This is a good thing, as the firm benefits longer from their spirit, wisdom and creativity. They want to maintain, and even enhance their productivity as they have become accustomed to over the years.

Finally, your website. This is the storefront of the modern age. It is where most of your customers get to know your brand and many even transact right there. To attract the largest audience possible, design is important. As boomers age, they need bigger fonts to read text. Sound cues and asthetic design can make the site easier to browse, for all customers. Cluttered sites not only look horrible, but can be hard to navigate…for anyone. The reason to design an accessible site has nothing to do with Supreme Court decisions, it’s just good branding and good business.

A second(third?) wave of productivity gains is coming, and it is being driven by business/disability. Senior technology leaders at large firms looking to provide solutions to their entire populations can ‘kill two birds with one stone’ by providing solutions that give PWD the tools they need, while giving the whole team alternatives to speed up what they do day-in day-out. Whether the new hours are spent with family, or envisioning the next new widget, hours are the real deliverables of technology. New hours across the firm have direct consequences to shareholders – growth.

Reading Right to Left in Segmentation

2008-05-20T13:39:00.000-07:00

Doing things backwards rarely makes sense. Usually it means undergoing a task directly opposite to standard practice. There are many parallels in the scientific community that led to breakthroughs by turning conventional theory on its head. It often involves re-ordering an established stepped process, resulting in a markedly different outcome. The same concept can be applied when one looks at segmentation in the business/disability space.

Typically in marketing, one first buckets a population into homogeneous groups to speak to their common experience. Soccer moms, NASCAR dads and baby boomers are excellent examples as they all have a set of common experience that can be targeted. Marketers tend to drill down to the smallest segments, bundling these segments as appropriate to attain efficiencies along the way. When composing a message the first question one asks is, who is the audience, and how can I speak to them as directly as possible?

Disability is a little different. The typical approach is to segment based on medical diagnosis, which has been the bastion of charities and health-related businesses. As we have previously suggested, the ‘holy-grail’ in business/disability is to bond the entire disability market to a common lifestyle brand. Let’s envision the 1.1 billion person disability market at the core of three concentric circles, a bull’s eye if you will. Immediately surrounding that core, are the stakeholders in disability – family, friends, employers etc. This group understands disability and is swayed by things that marketers do to address the disability market. This group unto itself has a potential size of 2 billion people globally. Finally, in our outer ring of the ‘bull’s eye’, is the broader market. The broader market is made up of the 3+ billion people on the planet that define pop culture, societal norms and the general limits prior to which revolts take place.

Disability currently has a poor standing in the brand library of the broader market. The approach to date has been to target the center of the bull’s eye directly, speaking directly to specific conditions and only those conditions. The real hay to be made in business/disability is to start with the broader market by trotting out a positive brand/twist on disability. Taking the notion that most PWD don’t define themselves as disabled, going to them with a direct disability message falls flat on its face. A more subtle approach is required.

If you sell the broader market, the stakeholders and PWD will follow. This statement simply says that what is most important to Jane Q Public, is also important to PWD and Stakeholders. All one has to do is find a way to connect disability to it. By defining disability in terms of pop culture and mainstream desire, we start to relate to its context. How many people with disabilities (or anyone else) can relate to a one-legged skier hurdling down a mountain? Last time I checked, disabled sports weren’t anywhere near Nielson’s top ten rated shows. Yet this is the imagery used in the disability space. Now, if you put Simon Cowell’s butt in a wheelchair with Christina Aguilera on his lap belting out ‘Ain’t no other man’, you’re in the right ballpark.

You are telling your market base, “Hey, this is how we include our Customers with Disabilities. You should too”…without actually saying the words. It’s got to be bold, it’s got to be jarring and it’s got to be so positive that even Walt Disney himself would scratch his head. It must center on what everyone desires or denotes important, not just people with disabilities. If you are successful in getting the broader market to open a door to PWD, the other two parts of the ‘bull’s eye’ will follow.

Organizations have been approaching PWD and their stakeholders as a foreign market that has nothing in common with the rest of society, akin to how one would pitch Marvin the Martian. The average American male with a disability likes football, wants to date (at least) a Cowboys cheerleader and probably eats too much red meat. If your firm can put a disability twist on Peyton Manning hugging a cheerleader while eating a cheeseburger, you’ll sell more product to all three bands of the ‘bull’s eye’…at least amongst men.

Marketers currently message on disability using as sledge-hammer. That may work if you’re selling pills and canes, but some subtle scalpel dancing is needed in every other product/service group. Direct messaging is proven a turn-off to PWD, and is risky with their stakeholders. By integrating a disability message in the broader market, the target group follows. While backwards to convention, this approach propels your firm forward.

Musings on the Future of Disability

2008-05-12T11:00:00.000-07:00

Predicting the future is a mugs game. Unless your name is really Madame Zelda, and your crystal ball is set on vague to attract the after-bar crowd, future tellers should keep their thoughts to themselves. That said, educated forecasting is a critical element to charting a path forward. One must have a hypothesis, based in tested observation, to put in place smart goals that achieve continued success. As we look to what will be the future of disability, what changes and what will drive those changes.

Before we look at what is to come, let us first review where we are. Some will tell you that disability now follows a ‘civil rights’ model. This would denote that disability is seen amongst the population on par with economic, legal and PR efforts of the women’s and racial equality movements of the 60s and 70s. The folks that assert that this model is an appropriate description of where disability is today are too close to trying to make that happen; they are lawyers, politicians and non-profits working their tails off to make equality in society occur. The reality is, disability is firmly rooted in the ‘medical’ model, where doctors define language, desires and market wide goals. The ‘civil rights’ model came out of legitimate frustration with the ‘medical’ model where the overwhelming majority of people with disabilities did not want their futures defined by diagnosis or a medical file.

This has all taken place outside of the public eye. Evidence of this abounds. An excellent example of medical branding vs civil rights branding rests in recent Autism Awareness campaigns. Put bluntly, these campaigns are based in fear. They are designed to scare the crap out of expecting parents and the general public, in order to raise money and awareness. Their message is simple, you do not want your kid to get Autism, it’s akin to a death sentence. A medical definition of what is ‘normal’ guides this strategy at its core. This author makes a Joe Nameth guarantee that no people with disabilities were at that table when these campaigns were born. Can you imagine an ad campaign pointing out the downsides of being female or African-American? There would be riots in the streets. An accurate description of this effort is a scorched earth policy. You may reach your goal, but at what cost? The simple existence of these campaigns is telling; the ‘medical’ model still dominates.

To get to the next step, beyond mere awareness to inclusion, a new model is required. Given that government makes up a mere 20% of our society, as denoted by GDP involvement, let’s make the logical assertion that legislation will not do the trick. A ‘market’ model is the route that delivers on three core needs of all people; a) explicit inclusion in the workforce(and the requisite income/esteem that comes with it), b) explicit inclusion in the customer base(and the satisfaction of desires that come with that), and as a result of a) & b) a positive brand in the eyes of society.

Here is the fun part…this is easy to do. The business case is there. Economic entities who engage in a) & b) above will make outsized profits in the near term and grow markets to be harvested in the long-term. There is no need for the ‘Disability Fairy’ to wave her magic wand through legislation; all that’s needed is a sound plan and dogmatic execution. This is not a niche market. It’s 1.1 billion people globally, 74% of which have invisible disabilities. They use toasters, drive cars and take their families on vacation. She wears dresses above the knee, buys his deodorant, and follows Maslow’s hierarchy (http://en.wikipedia.org/wiki/Image:Maslow%27s_hierarchy_of_needs.svg) just like everyone else. While the government spends it’s time focusing on the bottom two rungs, this market is starving for a little belonging, esteem and self-actualization.

Author’s self-indulgent note – Apparently Abraham Maslow was quoted saying “the study of crippled, stunted, immature, and unhealthy specimens can yield only a cripple psychology and a cripple”. I’m really enjoying the irony here, on many levels. Yo,, Abe…kiss my butt, and thanks for proving my point in an eloquent, ivory tower manner.

The challenge before us is to refocus on the private sector, partnering with the allocators of economic factors to drive disability to its place in an inclusive marketplace. There is a predictable, measurable, and best of all, realistic path to achieving this goal. Working with corporations in executing an emerging market strategy over 5 to 10 years is a leap forward from the quick-sand quagmire that currently surrounds disability.

Seeing past tomorrow is a real challenge for most. They are understandably tied to what they see around them, tempted to tinker rather than build. By following other successes in the Inclusion space and shaking off the legacies of the ‘medical’ model, disability takes up the position that its demographics suggest. Relying on proven empty promises is no longer acceptable, and can be compared to following a palm reading strategy when you’re 12 years old, versus the proven path of education and hard work. Fancy illusions are no longer enough.

Market Coverage of Disability

2008-05-05T14:14:00.000-07:00

When a hungry man faces a feast, where does he start? Abundance, both in terms of types and volume of edibles, can cause some difficult decision making. A quick decision can lead to missing glaring opportunities. Taking one’s sweet time prolongs hunger and risks spoilage. A similar situation exists when one looks at the vast expanse that disability covers in terms of market desires. It isn’t just pills and wheelchairs, people with disabilities drive demand in every sector of the economy, and every firm within those sectors has a material growth opportunity within easy reach.

People with disabilities buy stuff, lots of stuff. This author estimates that annual global disposable income controlled by PWD is in excess of $1 trillion (based on US Census extrapolation). Consumer Goods companies need to pay attention to a market of that size. The big players in this sector are best positioned to access these consumers first. Beauty products, food/beverages, apparel, autos and home goods are included in this sector. Most of these areas are highly competitive with relatively low switching costs between different brands. Reaching out to a market like disability adds to a consumer base from the PWD segment specifically and the broader market in general.

As this market comes online in the next 10 to 20 years, it requires various types of infrastructures to be built. The financial sector has been focusing on the relatively small win in ‘Special Needs’ financial solutions, services like trusts and estates planning, driven mostly by stakeholders(care-takers) of PWD. The real opportunity ahead for firms in the financial sector is to play its historical role as the efficient arbiter of capital as entrepreneurs take positions to serve the PWD market. All industries will have significant capital needs as they strive to satiate business/disability demands. This author sees disability as the next environment/green movement, and financials will play a similar role in sorting winning allocations of capital vs. those destined for bankruptcy court.

Health Care. You may think this obvious, but this is this most mature area of the business/disability space. It is also where the ‘fat & happy’ reside. Government funding, patents, high barriers to entry make the health care sector disability’s equivalent to the domestic auto sector. Mature products and stable margins make this sector a target for unbridled innovation and the gumption of a true value investor, willing to toss out tired, established models, cut costs and extend maturing product cycles. It is the area in the most need of demolition, as poor models need serious turn-around actors to unravel and rebuild.

Let’s take a walk past the storefronts of Main Street, and look at the Services sector. First task…it costs you $200 in Quickcrete to eliminate the single step to your store. Simple, no? All you need is 4 new customers using a stroller, wheelchair or the inanely clumsy to pay off your investment. Oh, did I mention it can be counted against revenue, so it’s really only $150 to open your door to 250mm new customers with alternate ways of getting around the world. This industry can follow the same logic as the Consumer Goods sector by making one time investments to access 1 in 5 consumers and over $1 trillion in annual disposable income. The interface with the client is of prime interest here, and tools like the internet can not only reach out to PWD, but access the broader market as well. Media, travel conduits, hotels and restaurants have significant leverage to capitalize on here, as it does not take a large capital infusion to have significant impact on their top lines. That means that margin expanding activities are well within reach.

Technology, the great equalizer. Whether it’s hardware or software, technology is at the core of productivity gains, disability or no disability. This author can remember testing voice recognition software in the early eighties as it was developed for those of us who cannot write. That same technology is now used by my four-year-old niece as she belts out Hanna Montana into her Nintendo Wii. Productivity gains and their offshoots have direct marketing appeal to the PWD market, their stakeholders and the broader market. That puts tech firms at the head of the pack when it comes to the disability space being at the core of their business.

Industrial Goods, Utilities and Basic Materials have one thing in common, they sell commodities. As Jack Welch, former Chairman of GE likes to say, “Differentiation is a critical component of success”. Gas is gas, whether it’s Chevron or BP. BP is a good example of attempted differentiation by branding itself as the ‘green’ gas firm. The same can apply to the disability market. Texaco has a sign on their gas pumps in Maryland, requesting that PWD honk twice for assistance at their self-serve stations. Guess where this author fills his tanks now? This should be a no brainer for these firms starving for a way to change from a white spot on a white wall.

In this quick trip, one can see how, and where, disability plays a material role in every aspect of the economy. Warren Buffet, the world’s best known value investor, made buying rich opportunity cheap a movement and an art form. It’s called value investing. Even in Mr. Buffett’s wildest dreams he has not seen opportunity like this. Growth hungry firms need to step up to the feast before the table is bare.

Reflecting the Market in the Workforce

2008-04-28T13:16:00.000-07:00

Chicken or the egg? Yes, it is a children’s game meant to perplex. It pre-supposes that one preceded the other. The answer of course is simple, yet the question has become the inane focus. The same is true when we look at raising the involvement of people with disabilities in the workforce. The answer is simple, but there is a whole industry around studying the question. At the end of the day, an organization must reflect its market in order to understand it and deliver to it.

Let’s assume for a moment that a firm wants to count the 1.1 billion person disability market amongst its customers. Seems to be a rather robust assumption. How does that firm know what the market wants? Yes, the stop-gap method is to engage consultants who carry portable knowledge for hire. In the shorter term, this is a workable solution. In the longer term, firms need agents who have their best interests at heart, and agents who can build legacies through their careers. These employees build both intangible and tangible assets that allow the firm to embrace and serve the market better, while ensuring requisite returns for shareholders. Customers can also see when a firm’s employee base is a reflection of themselves by simple interaction. Is it any surprise that the percentage of female race fans raises when Danika Patrick wins?

There are some existing programs out there, both external and internal, that strive to increase flow of PWD into the workforce. Results can be described as minimal at its charitable best. Even various governments have lost thousands of employees with disabilities over the last few years. So why are they failing? In a word, ghettoization. A few firms have parallel programs by which they go out to source people with disabilities, train them, and actually hire them in quasi-material numbers. They work alongside one another, attend separate social events, and report to supervisors who are outside the business line hierarchy. The only champions the employees have in these firms are the program leaders. This author was even told that each candidate was a “labor of love” by a program leader. A ‘labor of love’? This was one of the largest tech firms in the S&P 500, not the Peace Corps!

This same program leader went on to say that the firm could not retain these employees for even one year because managers ‘didn’t know what to do with them’. Of course they didn’t. The managers were not involved hiring, developing or championing these employees. These programs often seem to follow the ‘Special Ed’ model; segregate, attend to special needs, hit upon basic curriculum, and repeat as needed. This model is deader, and more irrelevant than Carl Marx.

Let’s be clear, these parallel programs are not the same as Diversity & Inclusion recruiting. D&I efforts reach out to talent pools that the firm is not otherwise capturing. Once a candidate is sourced, they are injected into the ‘normal’ recruiting stream. A good comparison would be baseball teams scouting in Japan or the Caribbean. Once the player is found, they enter the farm system to compete for a shot at the Big Leagues. Without the global feeders, these teams would miss out on world-class talent. The ill-fated parallel systems may get the players into minor league line-ups, but they play in Alaska and the coaches never see them hit.

To be successful in building an inclusive workforce that reflects your desired customer base, candidate ownership by line management is the key. For any career to progress, PWD or not, one must be recognized by one’s peers as a leader, or at least competent. In a parallel system, this information does not get disseminated to peers. Disability cannot be a ‘hobby’ for hiring firms, it must be critical to the growth of the firm. Would a hiring manager be thrilled about any ‘parachute candidate’ on her team? Reality is, no. Yet parallel systems for hiring PWD advocate just that.

In the short-term, a firm may need to open a separate door to gain entrance to the process, but once inside, these candidates need to be integrated into the ‘normal’ hiring system. Both HR and the line need to treat PWD hires as any other inclusion hire, knowing that there are some characteristics that are outside the ‘norm’. They also need to understand that these characteristics do not, in any way, preclude success. By focusing on the firm’s everyday hiring practice, and tweaking it slightly to account for PWD, managers own candidates. When a manager owns a candidate, the prospect is more likely to succeed.

This is not difficult to accomplish. Firms are already adept at feeding other segments through their recruiting process. Women, racial minorities and GBLT already have effective feeder systems into firm’s umbrella recruiting efforts. All firms need to do is refocus on PWD and tap talent pools using proven practice. Start small, and then scale it up.

Oh, some of you may be wondering what the answer to the question posed at the top of this article is. Simple, either way you get the same result. It is how you manage the result that denotes whether you are in the chicken business or the egg business. Ignore the question and get on with managing the answer.

The Role of Regulation in the Business/Disability Space

2008-04-21T15:15:00.000-07:00

Tension as a creative force can be powerful. Opposing methodologies, when based in fact, cause parties to critically analyze their and other points of view as well as alternative avenues of innovation. Governments around the globe have struggled mightily to unlock the potential in the 1.1 billion person market of people with disabilities. Almost $480B of government funds go into disability annually in the US. Regardless of the results seen, that financial stake makes government a player in the business/disability space.

Business is used to regulation. Whether you are producing nuclear power, or towing trucks to generate revenue, society’s proxy is telling you, to some degree, where, when and how. On a global scale, the same is true in business/disability. While we will avoid debating the merits (or the lack thereof) surrounding various pieces of legislation, we will take a high-level look at how regulation impacts the business/disability space and the potential for innovation.

It is useful to acknowledge the difference in government involvement in various western economies when assessing disability regulation. Staying within the developed world, we see nations in Scandinavia (Sweden at 69%) with the highest levels of government involvement in national accounts moving along the spectrum to the United States (20%). Putting aside value judgments for a moment, large government involvement in an economy theoretically gives society a bigger ax to cause change. Put strong emphasis on the theoretical.

Given the above, it is no surprise that there is greater regulation surrounding disability in Europe, South America and Canada. In these regions, there are long established laws surrounding employment, access, and supports. These laws put in place hiring quotas, physical plant requirements and ‘incentives’ for education and training. The results of this are spurious at best, with the only meaningful difference being that measurement systems seem more pervasive as firms are required by law to keep records around statutory compliance.

One interesting offshoot to higher regulation is a greater public awareness of disability. Government funded groups channel those public monies into public awareness campaigns, giving these issues a taxpayer-funded voice. Objectively, the added ‘benefits’ of higher regulations are marginal, and far from the stated goals of their authors. The added benefits of awareness are barely marginal, but worth mentioning. The upside result for profit-seeking firms is a customer base that is more open to disability. The down-side result is a more challenging environment from a legal perspective, as lawyers may warn against potentially profitable ventures given the added regulatory risk. We won’t even begin to address how tax dollars are spent.

In the United States, there is practically zero regulation surrounding disability. The much vaunted Americans with Disabilities Act (ADA) is only real to some in Washington D.C, and a few niche lawyers outside the Beltway. It is very difficult to assign any weight to this law, as very few know it even exists outside disability, unless a) they’ve been sued under its auspices, b) they have an uncanny knack at remembering the third story on the nightly news once a year. Given the government’s relatively small role in the US economy, the impact of this law is congruent.

One should be aware of efforts in the US to strengthen regulation of the ADA. While not having the structure of foreign regulatory regimes that set quotas, there have, and will be rulings that make regulation marginally material for firms in the business/disability space. Brands are often a firm’s most valuable asset. While a negative ruling in this space may not be financially material, the potential fall-out of a Supreme Court ruling can have unwelcome impact on reaching out to the globe’s third largest market segment in people with disabilities.

This author has made one revealing observation surrounding both heavy and light regulation. The constituents of both regulatory regimes each think that the other has a better regime. This is curious, as convention says that both constituencies would prefer more ‘protection’, yet each says the other does a better job. That denotes one of three things, a) both regimes miss the mark, b) there is a lack of empirical global knowledge around disability regulation, or c) both a) and b).

What regulation does do is flag disability as important on society’s agenda. Looking back at the civil-rights laws of the sixty’s, we did not see an immediate shift away from discrimination, but a slow realization that the norm was no longer acceptable to the customer. Innovative marketers began to identify and consolidate previously ignored markets. Only then did material change occur.

What started with laws was finished by markets in the experience of women’s and multi-cultural markets in developed economies. Whether one is a Kennedy or a free-marketeer, regulation is a reality to accept. Understanding its impact on one’s business, and marketplace, is critical to success. With business/disability, regulation is not a tier 1(or tier 2) issue, but it is worth addressing for just that fact. To begin your foray into business/disability with a legal/compliance focus will lead to wasted time and give your competition an edge you cannot afford.

The Global Nature of Disability

2008-04-14T14:45:00.000-07:00

A mega-segment. That is what disability can be termed in marketing parlance. At 1.1 billion people, it is third in size behind the segments of men and women. Its prevalence is not subject to historical migration patterns, it has no state affiliations, no celebrated religion and recognizes no income/societal status. Governments and cultures may deny its existence, but from a business standpoint, the demographic is real. At the end of the day, when asked the question, “Do you consider yourself to have a disability?” one fifth of the world answers “Yes.”

So why is disability quietest 1.1 billion people ever to walk the earth? The easy answer is rooted in difference. Our society has historically felt comfort around ‘sameness’. In cultures around the world, the tolerance for difference varies from mere observance, to a cause for the end of one’s life. The tolerance for difference to has evolved as information creeps across the globe more readily. As this tolerance evolves, disability starts to make material noise. This is now reaching a tipping point.

In the West, most elements of diversity is now entering the mainstream. The evolution to equality has taken root in western societies over the course of the 20th century. Whether it is gender, race or disability, statutes have been enacted to theoretically denote equality under the law. While these laws set floors from which to stand, a lawyer’s pen has never changed society, alone. Markets change society by practice. For women’s and ethnic markets, the best firms have recognized significant profit opportunities by both opening doors to employees and serving the unique desires of these markets. Leaving aside political struggles (as this author strives to remain outside that realm), the realization of market development for women and ethnic markets occurred over the span of thirty years. Following the logic of Moore’s law(albeit extrapolated) one can assume as firms get better at serving ‘different’ markets, the time it will take to identify and execute will be slashed dramatically. If it took 30 years to figure out the women’s market, it’ll take 5 to 10 years for firms to see results in disability. For a market this size, that means action needs to start last Tuesday.

In Asia, the Middle East and South America a different picture is painted. The key concept here is leverage. In these emerging markets, they are building the fundamental building blocks of a 21st century market democracy. Yes, even in China. While these markets have a lot on their hands, and disability is not high on their to-do lists, the population will play a material role in development and is not going away. As witnessed in countries like Lebanon and Jordan, as information moves more freely, populations become engaged and play larger roles in society. Disability will be one of these populations. How quickly this happens is nothing more than a guess, but 20 years seems a stretch.(shorter rather than longer) The firms that hone their model in developed markets first, adapting that model to emerging markets later, will reap the massive rewards of leverage. Leading begets leading in this case.

Africa is a different reality. There exists a whirlwind of cultures that range from respect to outright fear of disability. Demographically, the population is as prevalent as the rest of the world, but as in mainstream emerging market investing, the volatility in Africa makes assessing risk opaque at best. This win will come at a later time.

The magic of disability is that what is true in one part of the world is largely true in other parts. Disability is a rare phenomenon, a global homogeneous market. While there are some cultural differences in disclosing one’s disability, the core reasons are similar, only amplified. Strategy can be ported from one successful application to another with minor local twists, leveraging prior local success. This makes disability a scalable global market for both multinational corporations and international agencies, with the ability to capture share of wallet/mind without the added costs of local process replication.

Peering into the not too distant future, the global disability market will be a part of doing business no matter where business gets done. Its size, pervasiveness and potential means that it cannot be ignored. There is a path of least resistance, flowing from developed economies, into the emerging world and finally resting in the developing nations. At this flow’s culmination is a base of power, both market and political, that equals the largest groups on the planet. Those who move now will lead this mega-segment into the latter half of the 21st century.

The Myth of Awareness – The Eroding Beachhead

2008-04-07T12:32:00.000-07:00

Rarely in military history is a successful campaign made on spontaneous charge. Marshalling, an understanding of the battlefield and coordinated action are hallmarks to gained ground. A beachhead allows for deeper progress and a point from which to launch new action. The strongest beachhead, however, is a means to an end, and has never won a war by its mere existence. There is a common practice in the business/disability space loosely termed ‘Awareness’. It is often seen as a game-changer. In reality, it is nothing more than a temporary beachhead, and a weak one at that.

The firms and governmental bodies who have played in the business/disability space over the last 20 years have hung their hat on this notion of ‘Disability Awareness’. The thinking goes that enlightened individuals understand the hidden value in the business/disability space, and once a bright light is shone, all will fall into place. A noble goal, and at its eventual end, a correct one. In a corporate environment, cases are made and acted upon, sometimes without permission, to quickly prove value. The theory goes that it’s tougher to say no if results are already shown. This is called intrapreneurship, taking initiative on innovation. If ‘awareness’ is not followed with promised results, it languishes on the sand, and will be looked upon as a losing horse in the future.

Awareness programs to date have consisted of lunch-and-learns, poster campaigns, web-based tutorials (often regulatory in nature) and a drone of bogus statistics that highlight silly notions like employee loyalty. Decision makers and those who the programs are ‘aimed’ at do not take these efforts seriously and mentally toss them into the fringes(at best) or a pile of things that have no impact on life what-so-ever(at worst).

These programs fall into the category of ‘preaching to the choir’, as those who pay attention already understand the message. The people who are not aware, and need to become aware, only respond to quantifiable results and actions that will make them look better to their boss, whether their boss is a middle-manager or a major shareholder. Tugging at the heart-strings and appealing to one’s sense of building a ‘better world’ may make a great sound bite, but it carries no real currency.

The real danger in these ‘awareness campaigns’ is that they send the wrong message, both to their internal constituencies and to people with disabilities who are potential employees and consumers. Go take a look at the images in these campaigns. They contain people with visible disabilities, who represent less than 25% of the market, in poses holding mail, in a call center or playing the ‘empty hero’ role. Even various governmental/charitable bodies fall into this trap. These campaigns create awareness, but they also reinforce tired stereotypes that move the needle in the wrong direction.

Awareness is a product of value creation, not the other way around. A wise person would look at these campaigns and quote the famous burger ad, asking “Where’s the beef?” An organization that wants to create positive awareness of people with disabilities needs to put talented butts in seats, allowing them to show value to colleagues, or churn out projects that add to the bottom line in a material manner. Awareness inside a profit-seeking organization is a direct result of success.

The days of being a leader in the business/disability space by trotting out an awareness campaign backed by one employee and a low six-figure budget are fast coming to an end. Those firms who have had this space to themselves with little (or no) effort are about to be crushed by their competition. There are a handful of firms who are ramping up with annual 8-figure budgets, C-suite level support and an understanding of the market that is both quantified and is in-line with their mainstream efforts. The old way was to attend a dinner in Washington, collect an award, perhaps write a tax-deductable check and pen an empty article for the firm’s intranet home page. Sound familiar?

The new way is to build a rigorous strategy around talent acquisition, market research, product development and profitability measurement. Take that strategy and execute it in an emerging market the size of China over 5 to 10 years and watch the firm’s share price start to tick up. While the ‘experts’ are collecting their awards after another rubber chicken dinner, your customers and shareholders are collecting their returns, and have a product that better serves their desires. Nothing creates awareness like a profit upgrade attributed to penetration in the business/disability market on the front page of the Wall Street Journal.

Awareness needs to be part of the battle plan to make material impact in the business/disability space. It is not the silver bullet, nor is it the endgame. It is part of the rationale for being a leader and nothing more. It is proving to leadership the demographics support further research and development, while constructing a path to growth. Used briefly, it can open doors. Used without the proper support and strategic direction, it looks weak and can cause serious blowback. A beachhead without waves of support is destined to be over-run.

Get outside the space – How to reach the market

2008-03-31T12:44:00.000-07:00

Mathematics. Some have called it the universal language, spoken the same in Wichita, Kansas as in Agra, India. Yet there is a phenomenon in disability that continues to defy a central subset of math, the normal curve. The normal curve simply says that most people (in this case) rest around the average, with a small minority existing at both extremes. This central axis of math is applied daily in business, science and many other spaces without second thought. So the question bears asking, why does it not apply to marketing to people with disabilities?

There exists a paradox in disability today when it comes to branding. When one thinks of disability, one immediately goes to images of ‘the blue wheelchair', white canes, sign language and parking spaces. The reason for this is that charities and governments have been branding these physical disabilities exclusively, as historically, society has deemed these populations in ‘need of care’. Yet when one steps back to view the 1.1 billion person global marketplace of people with disabilities, visible disabilities make up less than 10% of this market. Close to 1 billion people have a disability, and you would never know it by looking at them.

The legacy of these charity/government approaches has two primary consequences. First, as we’ve previously discussed, the brand of disability does not reflect the quality available from it. Second, and perhaps more importantly, the bulk of the market does not identify with the brand. By catering to the visible segment of the disability market, one is concentrating efforts on a small portion of the potential market. The ‘meat’ of the curve, those who do not identify with the ‘blue wheelchair’, is both ignored and repelled. If polled, it can be wagered that even those portrayed in legacy approaches do not relate to how they are depicted.

The critical concept of marketing to people with disabilities is to ‘get outside the space’. The vast majority of people with disabilities live their lives in mainstream society, without carrying a banner announcing their status to the world. They are your doctor, baker and candlestick maker. They deal with their disability as they do, without a parade down the canyon of heroes. In order to reach them, one must avoid the stereotypes that this market sees as non-representative. Put your product first, and then find a way to connect the market to it.

Recently, there has been a lot of buzz about people with visible disabilities in ads, TV shows and movies. Big deal. This is not a feat. It is the realization that this is a mammoth market, and firms must reflect their markets publicly. This will grow, and the few actors with disabilities will get more work. This is simply because it’s the low hanging fruit, easy to write into scripts and ad campaigns. All it takes is firms’ understanding the market. This will be the norm in 3 years, but that won’t be enough to capture meaningful share in this market.

Truly innovative firms will research this market as they do any emerging market. Women, Latinos, African-American and gay/lesbian markets have already created a rich case history. The best firms will realize that digging deep and understanding what makes customers with disabilities tick (then buy) will reap early and sustained rewards.

The key success factor is to fuse this diverse market to one common bond. Firms successfully tapping this pool must recognize that the Holy Grail in the disability market is to de-segment. Disability is to become the largest lifestyle brand on the planet. The numbers are there, the branding experts just don’t know it yet.

The days of cheering the hero with dyslexia who teaches her child to read Mark Twain are over. The days of reaching that hero to convince her to buy a cheeseburger and a new hybrid hatchback have started. The real challenge is to bond that potential customer to the rest of the market who has a different path to a common goal. One just can’t argue the math.

Risk - Before success occurs, failure has to hurt

2008-03-24T13:07:00.000-07:00

We all prioritize. It’s part of being human. We go through the internal calculations of what actions lead to what consequences, deciding which consequences we desire most, and which we desire least. Then we act. As rational decision makers, we look at the potential upside versus the potential downside, and if we value the upside over the downside, we commit resources to that goal. There is uncertainty in the outcome, but good managers measure it, analyze it and move forward. In a business context, this uncertainty is called risk.

Risk is the single largest variable when making decisions. Making decisions without understanding the uncertain aspects of that decision is speculation. The vast majority of good investments are outside speculation simply because uncertainty is measured, understood and explicitly accepted by all interested parties. While understanding risk is not a sufficient condition for success, it is necessary for repeatable success. In order for those in the business/disability space to effectively convince allocators of capital to fund their endeavors, they must speak the language of risk.

In the business/disability space, the concept of risk does not currently exist. In North America, less than 0.10% of funding in disability is from the private sector. The public and philanthropic sectors are built by budget mandates, where accountability tied to returns is non-existent. This creates a massive imbalance relative to the make-up of the economy where profit seeking entities make up roughly 80% of US GDP according to the CIA. If you consider government investment as risk free, which taxpayers would argue against, these numbers denote a massive void of risk taking in business/disability.

The key question to answer is: why? Why do profit seekers choose to allocate capital elsewhere? The answer is simple, and has many models in economic history. Allocators of capital do not have enough information to understand the potential in the business disability space. Akin to entering an emerging market, managers must have at least a basic understanding of the landscape. Until today, disability has been a bastion of caretakers, providing no upside incentive for risk-takers, and therefore no incentive to engage in due diligence. The typical manager asks “How does this activity effect my upside/downside calculations?” The answer to date in the business/disability space has been chirping crickets.

Within private-sector organizations, risk is measured in profit and loss. More specifically, risk is tied to departmental/area budgets. If one wants to know what a firm believes is important, look at where it allocates capital. A global firm like a General Electric allocates more capital to businesses in China than to Lichtenstein because GE has assessed a larger opportunity in China. GE can back that assessment up through numbers like population size/scope, infrastructure spends, and aggregate incomes. The information in both markets is known, and the risks, both upside and downside can be measured in repeatable ways.

In the business/disability space, there are no processes, measures, or practices to assess risk. The upside/downside calculation amounts to an educated guess. In risk parlance this is called speculation. Shareholders of most corporations place their investment dollars understanding that the GEs, IBMs and Wal-Marts of the world are not speculative investment. The management of those firms must mirror that behavior, in order to keep shareholders happy and keep their jobs. Therefore, in order for disability to be treated as the large opportunity its demographics suggest, it must exit the realm of speculation and have its risk measured in comparison to alternative uses of capital.

Make no mistake, somebody with get this right. The market is so massive, at least one of your competitors will accept the higher risk to get involved for the returns later on. Experience in emerging markets proves this case. Investments in Brazil paid off for John Deere, where the world’s largest Ag economy is booming. Investment in China made Wal-Mart the lowest cost retailer. Entry into Chile made billions for copper and zinc miners. The list of successful risk-takers in emerging markets is long, and provides a solid case history for those charting a path in business/disability.

The benchmark in the business/disability space is to successfully pitch a project/product/service based solely on its economic merits to an allocator of capital who knows nothing about disability. The case must be made relative to the other potential uses of capital and must be superior. The ‘pitcher’ must speak the allocator’s language of risk so the allocator can compare apples to apples and assess the opportunities. Does this guarantee success? No. The idea must still be the best use of capital, a relative winner amongst other opportunities.

If you spent your career measuring the taste, texture and benefits of apples, and someone asked you to assess a kiwi, how would you react? The first step to show value to the allocators of capital is to speak their language. Their language is risk. The key to getting to the ‘next bite’ is to structure metrics around risk and deliver them a win they can clearly identity. That will ensure another kiwi does not end up in the compost.

Quality - Getting to First Principles

2008-03-16T15:57:00.000-07:00

Quality. A buzzword that gets tossed around like a small boat in a hurricane. Without a rigorous plan, it results in lots of motion, not much direction and usually ends in real structural damage. Let's remove ourselves from consultant speak for a moment and take a top down view of the role quality plays in the world of business/disability and how focusing on quality can help both business and individuals with disabilities leap forward in their journey towards productivity and measurable success.

Let's first put some parameters around quality in a business context. Quality is defined as the 'degree to which a set of inherent characteristics fulfill requirements', according to the International Standards Organization. In layman's terms, to what degree does a product/service/process do what it promised to do?

Business is beginning to understand the massive potential that lies in the disability space. In a market that boasts 1.1 billion potential consumers globally; first movers will find a gold rush. An estimated 90% of that 1.1 billion have invisible disabilities, meaning no wheelchair, white cane or hearing aid. The macro-level demographics are stunning. At minimum, there is $1 trillion in annual income put to work by people with disabilities in the US economy alone. Those of us with a global perspective can do the math on the market potential.

So how does quality impact the business/disability space? To be quite blunt, it doesn't. The typical approach by most in this space is to quote the above paragraph and wait for investment to come running. That's akin to standing on your local beach holding a paper cup, waiting to catch a tsunami that may or may not come. The consequences of this approach are obvious, you will probably be dry for a very long time, and if the wave does hit, well...I hope you can swim.

Quality dictates a different approach. In a strategic context, quality demands that one must step back, assess the market, and determine what the market wants before one jumps into the fray. After all, how is one to assess whether or not one has 'fulfilled the requirements' if one neither understands what those requirements are, nor how to measure them?

Within global corporations, disability is ad hoc, meaning it is not part of an ongoing process that is viewed internally as material to the bottom line. Let's be clear, that legacy is ok. Historically, corporate disability activity has been driven by parents of people with disabilities and has been funded through firm's philanthropic activities. It has, until now, been 'a nice thing to do'. This legacy approach will never lead to material marginal growth for shareholders. Ergo, change is required.

Disability is the largest emerging market on the planet, bigger than China. Once that becomes rule, senior corporate leaders are incented to put disability into a context of quality, the framework in which most things get done within a well-run organization. They are incented simply because is it in their interest to grow their company. An untapped market of this size means material opportunity for most, if not all, profit seeking entities.

The path to quality begins by clearly outlining the market and its desires. Once the customer is understood, successful businesses are very good at developing process that walks from a stated goal to a realized goal. Along the way to that goal, a business measures its progress to a quality benchmark over time.

This is not happening in the business/disability space...yet. A few firms are just starting to understand the opportunity. These firms are wrestling with how to deconstruct ad hoc legacies, replacing them with robust process and benchmarked outcomes. This process is integrated within the organization, owned by line managers who are rewarded based on measured results. This is a roadmap most senior managers should be familiar with...it’s how business works.

In order to access the massive potential in the business/disability space, organizations must put disability on an economic footing. Essential to this, is getting away from grandiose macro statements and getting down to the day-to-day blocking-and-tackling that drives business to provide its shareholder returns.

Speeches and one-off, non-core programs rarely lead to results. An opportunity this size demands vision, quality and measurement in order to be realized. A skilled helmswoman wins a race by following a plotted course, reacting to the changing conditions and leveraging the skills of her talented crew. A first mover in the business/disability space will do just that.