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The Business of Forgiveness?

4/18/2020

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The Business of Forgiveness?

by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

​“To err is human, to forgive is divine.”  Alexander Pope’s adage applies to every person who has overlooked another’s offense or asked for forgiveness of their own, yet organizations often seem immune to any such ‘mercy mandate.’  At a time when many people are showing others unusual grace, should companies also be forgiving others?
 
The COVID-19-induced economic slowdown has derailed demand in most industries, leaving some businesses on the brink of insolvency.  The U.S. Federal Reserve has promised $2.3 trillion in programs aimed at undergirding small and medium businesses; still, organizations of all sizes face immediate pressures to meet payroll, remit rent, and settle obligations with suppliers.
 
Many firms find themselves beholden to creditors like never before.  While simply dismissing others’ debt may sound nice, such kindness cuts against the very grain of capitalism:  Companies can’t remain competitive and profitable by giving away their goods and services.  It may sound callous, but isn’t it just good business to forgo forgiveness?
 
Among the many hats I wore while a partner in our family’s promotional products company, was that of debt collector.  At times, I would pick up the phone and call customers who had invoices that were 60, 90, or more days overdue.  It wasn’t a job I enjoyed, but if enough of that revenue remained outstanding, it would take a significant bite out of our small business’s bottom-line.  Although I worked to keep the conversations amicable, I wasn’t calling to offer forgiveness.
 
Fast forward a couple of decades—As I watched the April 9, 2020 installment of CNBC’s Squawk on the Street, the show’s often insightful and easily excitable Jim Cramer became uncharacteristically subdued while considering the pandemic’s unprecedented economic impact.  In order to battle through the shared struggle, he recommended that businesses offer each other financial “forbearance.”
 
How surreal to hear the former hedge fund manager of Mad Money fame, who aims to help ordinary people understand the stock market and invest profitably, offer business advice that appeared tantamount to fiscal heresy.  Had the Mad Money host gone mad?  Or, has a time come when companies should be extending financial forgiveness?
​
Jim Cramer, Squawk on the Street

To answer these questions, it’s important to differentiate forgiveness from forbearance.  These definitions of the two verb infinitives seem especially relevant:
  • Forgive:  to cancel an indebtedness or liability of
  • Forbear:  to be patient or self-controlled 
 
So, my earlier conflation of the two terms was somewhat misleading.  While any forgiveness naturally includes forbearance, forbearance does not necessarily involve forgiveness.  For example, a landlord can choose to forgive a month’s overdue rent, i.e., never collect it; or, he/she can forbear, i.e., give the tenant more time to pay. 
 
In the Squawk on the Street segment, Cramer did aptly apply forbearance, suggesting that firms should be patient with their debtors.  At the same time, he didn't preclude forgiveness, i.e., if a company can afford to reduce or cancel a specific debt, even better.    
 
Such recommendations prompt two more important questions:  Who exactly should forbear or forgive and why?  The following story may offer answers.
 
The owner of a small grocery store was many months overdue on a $1,000 invoice from a large produce supplier.  Unable to pay, the store owner begged his creditor for more time: “Please be patient and I’ll pay the bill.”  The produce company owner felt sorry for his customer, so he told him, “It’s okay; we’ll cancel this invoice.  You don’t owe us anything.”
 
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The same day, a regular customer, who was recently out of work, came into the grocery store and asked the owner.  “I’ve been shopping here for years and just lost my job.  Could I get $10 worth of food to feed my family tonight?  I can pay you tomorrow when my unemployment check comes.”
 
The store owner berated the customer: “Get out of here!  I’m not running a charity!”  When the produce supplier heard about the incident he was enraged.  He phoned the grocery store owner:  “I cancelled all of your debt.  Why couldn’t you show some grace to one of your customers?”
 
Some may recognize this story, which is a modern paraphrase of the biblical parable from Matthew 18:21-35.  Whether two thousand years ago or now, the moral is the same:  We all should show grace to others because others show grace to us.
 
Over the past month, that point has been ‘brought home’ for me literally, as the pandemic has moved virtually all of higher education online.  My house is somewhat unique in that in one upstairs room there’s me, sometimes asking my students for patience as I adapt to teaching college courses online.  Meanwhile, down the hallway our son is taking classes from a different college, and his instructors are dealing with similar challenges.
 
As a college professor and the parent of a college student, I’m both a supplier and a consumer of higher education services.  If I’m going to ask my ‘customers’ for forbearance, the least I can do is extend similar forbearance to our family’s ‘educational service provider.’
 
Life’s winding paths often lead to unexpected outcomes.  Earlier I mentioned the collection phone calls I made decades ago for our family business.  I can no longer remember any of the overdue accounts I called, except one:  A company I had never seen that was located about 80 miles to the south that sold/rented lawn and excavating equipment.
 
I recall this account because it took what seemed like forever until I finally got to talk with the owner and kindly implore him to pay several long-past-due invoices.  Significant interest charges had accrued, but I told him, “Just pay the original amounts, we’ll forgive the interest,” and he did.
 
I also remember this account because after we sold our family business and I entered higher education, our family happened to move within a few miles of where that business is still located.  Now, I’m occasionally one of its customers.
 
As flawed people who work for imperfect organizations, we all need to extend and receive forbearance at times, especially during a crisis.  That doesn’t mean enabling those who take advantage of kindness, nor does it preclude going a step above and beyond to forgive an obligation entirely.  A healthy balance of forbearance and forgiveness is good for business and makes for “Mindful Marketing.”
​
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Pivoting in a Pandemic

4/4/2020

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Pivoting in a Pandemic

by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

“When life gives you lemons, make lemonade.”  Evaporating demand due to COVID-19 has caused many industries to sour, yet some innovative organizations continue to score in unexpected sweet spots.  Thanks to creative thinking and agile adjustments of their marketing plans, certain companies have rapidly repositioned themselves for productivity uninfected by the virus.
 
Serious fans of basketball are familiar with an offense skill, not often employed in the current era of three-point shooting: the pivot foot.  In order to move with the ball, a player must, of course, dribble.  Once he stops and holds the ball, he can’t dribble again; however, he can still move provided that one ‘pivot’ foot remains planted on the floor.
 
Few basketball players use their pivot foot to its full potential, but those who do can adeptly avoid defenders’ grasps by turning their bodies 180 degrees, or even in full circles.  Doing so, they can make what may have looked like a lost possession into an amazing pass or a spectacular shot.
 
The coronavirus has caused many organizations to ‘pick up their dribble,’ stopping them in their tracks.  Some companies, however, have realized that both feet don’t need to be bolted to the floor.  They can still pick up one foot and pivot, finding profitable new opportunities, sometimes in a direction opposite the one they were facing.
 
A few firms that have made very ‘hard pivots’ are those that have decided to manufacture products they never made before, including ones crucial for lessening the pandemic’s impact:
  • 3M, Ford, and GE are partnering to produce respirators desperately needed by those suffering from the harshest effects of COVID-19.  The companies are “repurposing existing parts and hundreds of workers in a wartime-like battle against the outbreak.”   
  • Leveraging its 3D printing capabilities, Ford is also expecting to produce 100,000 face shields per week, which frontline healthcare workers need to protect themselves from the dangerous droplets that coughing and sneezing patients propel.
  • Many companies have started manufacturing for the first time the smaller, lighter face masks that people increasing wear to avoid spreading the virus if  sick, or to avoid contracting it if healthy.  Some of the mask producers include Carhartt, Eclipse International, and Gap.  Even high-end fashion brands like Burberry, Dior, and Giorgio Armani have promised some of their production capacity. 
  • With Purell and its competitors unable to meet demand, several companies we wouldn’t expect also are now bottling hand sanitizer, including distilleries of Anheuser-Busch and Pernod Ricard, the maker of Absolut Vodka.  According to FoodDive, “Drinking alcohol and rubbing alcohol are not identical substances, but they can be used as substitutes for each other.”
 
The preceding pivots are in the spirit of President Trump’s invocation of the Defense Production Act, which allows a commander-in-chief to divert civilian manufacturing capacity and resources to the production of goods that promote national defense.
 
Meanwhile, other organizations have seen market disruption in their own industries and moved decisively to capitalize on the resulting opportunities.  Those pivots have often involved emphasizing specific goods and services that complement the ways many of us have been forced to adapt our daily lives, for instance:
  • Groupon is promoting cooking at home items like cookbooks, meal starter kits, and cookware.  
  • Giant Food Stores is highlighting “contactless ways to shop.”  
  • Best Buy is running sales on technology that helps people stay connected digitally.
  • Bed Bath and Beyond is promoting trash cans with voice- and motion-controlled lids. 
  • Warner Bros. is speeding up the release of movies to streaming services. 
 
All of the above are prudent pivots; however, one of the most significant ones I’ve seen comes from an organization you may not know, unless you have a child between the ages of two and eight who likes soccer.
 
“Driven by the belief that a positive experience with sports can make a lasting impact on a child’s life,” Soccer Shots teaches soccer skills and life skills in affirmational ways to the youngest of athletes.  Since opening its first franchises in 1997 in Charlotte, NC and Harrisburg, PA, the company has grown to nearly a half million enrollments in 37 states and Canada.
 
As one might expect, Soccer Shots’ business model is based on face-to-face interactions between coaches and kids in physical spaces.  So, how does an in-person organization respond when social distancing directives don’t just spread the field, they end the game?  The player pivots.
 
Soccer Shots on the Go

The company has swiftly created “Soccer Shots on the Go,” a virtual sports education program that allows young people to learn soccer skills with Soccer Shot coaches, in the safety of their homes.  Soccer Shots Franchising (SSF) describes the program:
 
Soccer Shots On The Go uses our expert-approved curriculum to help families get moving and have some fun…at home! Each week, you’ll receive an age-appropriate video packed with soccer skills, character development and creative ways to stay active. Soccer Shots On The Go also includes activities and resources for the entire family delivered directly to your email.
 
The notion that learning soccer ‘online’ can’t be quite the same as learning it on the field is not lost on Steve King, executive director of the company’s Harrisburg-York, PA region.  He readily acknowledges the difference and puts in perspective:
 
“Certainly there are some different or missing components compared to being in-person, including the child-coach interaction for which we are so well- known, but the quality of the video sessions is terrific, and our longtime experience with child development and curriculum-based programming is seen in both how the videos are produced and how the child is engaged with the coach who is on-screen.”
 
Helping others survive the devastating health and economic impacts of coronavirus comes first, then individuals and organizations should think how they can thrive amid the challenges.  In the face of unprecedented disruption, Soccer Shots co-founder Jason Webb cheers his team for making just that kind of “impressive pivot,” skillfully creating “a quality, professional-produced program alternative” for all those Soccer Shots serves.
 
Sometimes anguish is unavoidable, but pivoting in the face of pain is “Mindful Marketing.”


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