Strategic Exchange - May 2011

By Kemp Harr

It’s hard for consumers to be optimistic enough to loosen their purse strings with the media continuing to hammer the rising price of fuel, the nation’s debt and the rising cost of groceries. All of these issues are real and need to be dealt with in a responsible manner, but there’s also some good news that we need to take into consideration. On the bright side, the national average for unemployment has dropped below 9%, car sales are up 17%, and the housing market is starting to show signs of life. In addition, corporations are making money and are starting to hire and invest in growth initiatives.

Granted, the first quarter has been soft for the flooring industry overall, but it looks as if we could still be on track for the housing market to improve in the second half of this year. Based on mortgage rates, property values and the median U.S. income, houses are more affordable now than they’ve been in four decades. The issue today for prospective homebuyers is whether or not owning a home is a sound investment. According to Zillow, a Seattle-based real estate tracking company, the median U.S. home price has fallen 32% since its peak in 2006. This is more than home prices fell during the first five years of the Great Depression of the early 1930s. Taken at face value, this is a startling statistic, but most people realize that the home prices of 2006 were over-inflated and therefore the decline appears more severe than the true reality. Many economists still predict that home sales will rise 4.1% to a 5.1 million unit annual pace.

When weighing one’s options between renting and owning a home, there’s no denying the fact that once your home is paid for, your annual expenses are drastically reduced. So, when thinking about eventual retirement, the benefits of ownership far outweigh the flexibility of renting.

Doing the right thing
This logic assumes that the average consumer can still think strategically. Are Americans still capable of reasoning through the options and making the right choice based on the long-term benefit and all encompassing ramifications? The more I travel and observe the rapid social shift we’re going through here in the U.S., the more I wonder if thoughtful people are quickly becoming a minority.

In early April, I sat down to watch the opening coverage of the Masters golf tournament and listened to the motivation behind Bobby Jones when he created Augusta National Golf Club in 1932. He sought to build a tradition that was focused on etiquette and decorum. In his mission statement, he addressed how fans should act and how people should be treated. Today, at the Masters, the tradition continues. Cell phones are banned and players “who are invited guests” are treated with courtesy and respect. And despite all the discipline and rules associated with this event, the Masters lanyard is a coveted ticket that fans will spend a small fortune to obtain.

There was a time when Americans recognized their place in the global society and acted responsibly for the rest of the world to take notice. Our ancestors came here to create a new world and as these daring people carved out their own traditions based on freedom and justice, prosperity blessed us and we thrived. Our currency became the global standard and since the 1870s we’ve had the world’s largest national economy. Today, our GDP at $14 trillion represents about a quarter of the world’s total output.

The question we must ask is: Are we being good stewards of these hard earned blessings? Does the rest of the world see us as the ambassadorial role model that they should follow? I’m reminded of the Chicago album that came out in the late ’60s with the cut called “Prologue” where you can hear protestors chanting, “the whole world is watching,” supposedly recorded outside the 1968 Democratic National Convention in Chicago.

It all goes back to four words: tradition, decorum, protocol and etiquette. It boils down to doing the right thing at the right place. If you get a cell phone call during a dinner engagement, either disregard it or get up and leave the room. If someone has gone out of their way to do something nice for you, sit down and write them a handwritten thank-you note. If you are going out in public, dress appropriately. And yes, this new mobile grid does allow us to stay connected to all our friends at anytime, but there’s no excuse for thumb typing when someone in the room has engaged us in conversation. As Bobby Jones knew all too well, the key to it all is courtesy and respect, a good strategy for life.

Starnet’s annual meeting
The Starnet group of commercial flooring contractors held its annual meeting in Phoenix in the middle of April and it was good to see that most of the co-op’s members were optimistic about business conditions. For many of them, business started to improve last November and has been steady through the first quarter of 2011. Granted, it’s still way down versus a few years ago, but at least it has stabilized. Several of the members have put more focus on the maintenance side of the business, which is less cyclical than the PI (product and installation) business, and helps build relationships with their client base.

New for this year was the Next Generation program, where members were encouraged to invite the future leadership of their individual companies for a unique workshop designed to build on their leadership skills. By adding this new group of 61 future leaders, the meeting attendance rose to a new high of well over 400 people (including the vendor partners). Rob Hailey with Howard’s Rug Company in San Diego is credited with suggesting that Starnet initiate the development program.

The keynote speaker selected a subject that by its very nature communicated optimistic recovery. For the past several years—during the lean parts of this recession—the speakers have been less entertaining and more tactical in nature, giving talks about the economy and other business facets. This year, however, Alison Levine, who led the first American Women’s Everest Expedition, was invited to speak as a purely motivational/entertaining speaker.

In her talk, she artfully wove lessons of leadership into her story of climbing Mt. Everest in her quest to achieve the Adventure Grand Slam by the age of 44. (The Adventure Grand Slam is reaching both poles and the seven highest summits on the seven continents.)

Toward the end of the meeting, the membership passed a new by-law that rewards each individual member company for growing their business with Starnet’s core group of vendor partners. These rewards are generated by penalties (fines) that are accumulated from members who fail to grow their business with their vendors.

Other highlights of the meeting included the 13th annual Starnet awards and the addition of Tandus as a new vendor partner. See more details on the design awards starting on page 68.

If you have any comments about this month’s column, you can email me at kemp@floorfocus.com.