'Who Moved my Cheese?'
May 12, 2010
The book, "Who Moved My Cheese?" by Spencer Johnson, MD, has sold more than 24 million copies worldwide. It's the must-read story of four characters living in a maze who face unexpected change when they discover their cheese has disappeared. Sniff and Scurry, who are mice, and Hem and Haw, little people the size of mice, each adapt to change in their maze differently. In fact, one doesn't adapt at all...
If you have been in the contracting industry more than two years you are well aware your "cheese" has moved. Like Sniff, Scurry, Hem and Haw we have responded in different ways. Let's look at some different reactions to the current changes in the contracting world and see which one fits you.
Prepared for Change and Prospering
A few weeks ago I presented a full day seminar on labor pricing to about 50 of the top contractors in the HVAC industry. My initial question was "How many of you have grown and increased profit over the past year?" My intention was to lay the groundwork for the need to change, especially in the area of labor pricing. To my surprise, about a dozen hands went up indicating this was actually one of the best years they had ever had.
I talked with several of them individually throughout the day and they all had several things in common. Each constantly evaluated their businesses, department-by-department. They also created business plans for coming years and each constantly tweaked their future plans based on what was happening around them.
Adapted to Change and Prospering
Other companies have not been as quick to see the handwriting on the wall, but when they did see it they changed.
When new construction suddenly disappeared they didn't sit around like our mouse friend waiting for it to "return to normal." These companies cut overhead, including personnel, to lower costs while moving more fully into the residential retrofit and service side of the industry where cash flow is better and profits are higher.
The really wise contractors realized that cutting overhead was not enough in most cases. The basic overhead was still high but they now found themselves with fewer hours to spread it over. The bottom line was pretty plain; pricing had to go up if the ship was going to stay afloat.
Those with foresight had been on flat rate pricing for service for many years which made the job easy. They simply reran their numbers, realized their service rates had to go up $X/hour and they had their books reprinted to reflect the new rate. Bottom line, the customers never saw the change and profits were maintained or increased.
Other companies, after running their true numbers, realized the need to move forward with flat rate pricing and quickly moved that direction. These companies saw the need to change and they changed.
Afraid of Change and Dying
Unfortunately, the vast majority of contractors across the country are simply afraid to change. As a matter of fact, many continue to simply cut their pricing to hopefully get the job. That works, sort of. These contractors are getting the jobs, at the lower prices. The net result, however, is that they were already underpriced and now the bad situation is getting worse. Lowering pricing to get the job has simply accelerated the process of going out of business! We have all heard the phrase "If you don't change, you die." It's true!
Won't Acknowledge Change and Out of Business
The last group probably isn't reading this article. When things began to change they stuck their heads in the sand, therefore coming to the conclusion that nothing had changed. Since nothing had changed in their minds, no change was needed and no changes were made. The vast majority of those companies are now out of business. If you want to grow and prosper you will need to evolve into a new company with a new direction. Few enjoy change but when it is embraced the individual normally looks back years later to realize that the situation they embraced was the catalyst to helping their company become what it is today.