a. Of or relating to the foundation or base; elementary: the fundamental laws of the universe.
b. Forming or serving as an essential component of a system or structure; central: an example that was fundamental to the argument.
Earlier this year, I was enjoying a coffee with a close friend when the subject of business arose. His thoughts made it clear that in our new economic reality, companies in Sweden and around the world will have to get “Back to the Fundamentals”.
Fundamentals are important to embrace in numerous parts of life and the insight I gained from our conversation is that companies can no longer expose themselves to financial hardship by NOT relying on basic fundamentals.
From my business experience in Sweden and America, there are 5 basic areas that need improved fundamentals:
1) Hiring – Unnecessary, poorly researched or low quality employees shows bad fundamentals.
2) Excess - Keeping employees around that cannot or are not doing the job is fundamentally wrong.
3) Competence - Hiring experienced workers with sound judgement shows solid fundamentals.
4) Ethics – To NOT have all employees trained or at least talked to about company ethics shows poor fundamentals.
5) Strategy – A company should have a coherent and strategic mission; one that is based in reality and basic fundamentals in order to prosper and be profitable in good or bad times. The strategy should be adhered to throughout the company.
I was shocked as I read about the recent bonus’s given to top AIG employees after the US Government saved the company with billions in aid. President Obama was outraged and had this to say:
President Obama today blasted the plan of insurance giant AIG to pay millions of dollars in bonuses to traders who helped bring the company to the brink of ruin, calling the payments an "outrage" that violates "fundamental values" and underscores the need for financial regulatory reform.
AIG began as a solid and profitable insurance company although greed to increase profits substantially in the diverse financial world would be their downfall. The company was fortunate for the bailout funds and immediate plans for a fundamental recovery should have been put into action.
Instead, their lack of basic fundamentals was exposed even further when they decided to pay lavish bonus’s (1 million+) to the same executives that caused the destruction of the company! Such audacity is mind boggling.
We now know that AIG was not the only company to display such poor fundamentals as a plethora of US institutions and global companies are in the same position. What went wrong? Fundamentals, Fundamentals, Fundamentals………
Gordon Gekko said it best in one of my favorite movies, “Wall Street”, while giving corporate executives a terse reprimand as the largest shareholder. Despite his ruthlessness as an executive, Gekko's words about the fictitious Teldar paper’s prior performance and current strategy beautifully describes the current atmosphere in the 2009 global financial world:
“The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right, or you get eliminated”.
If companies are saved by government funds or purchased by other organizations, I hope they remember Gordon’s wise words.
I have no doubt that failed companies like AIG probably began with sound fundamentals yet later neglected them when money was flowing, particularly in the 90’s when most companies could do no wrong as the world economy was scorching hot. In my opinion, fundamentals should be thought of and practiced most often in the good times so that a company is well-quipped when the inevitable downturn occurs. Mindless hiring, non-strategic acquisitions, increased debt, etc is a true recipe for disaster and should be absent in any type of economy.
The world of sports can teach us a lesson about the importance of fundamentals.
In golf, one may view the success of the world’s # 1, Tiger Woods and think that he was born to golf or his innate talent made him successful. There may be an element of truth to that although in my view it is the hard work and intense command of the fundamentals that have propelled him to the top.
Is there a better swing in the game? No. Have you seen a purer putting stroke? His is one of the best. Is his short game amongst the best? Yes. Does he consistently out drive his peers? Yes. Is he mentally tougher than the competition. Yes. His game has been nearly flawless over the past decade and his brilliant fundamentals are a main reason why.
Tiger was bold enough to change (twice) his fundamental swing in order to become an even better player. He had some frustrating years while perfecting his new swing yet each time came back a stronger player. Is there anything more fundamental than that?
Larry Bird was one of the greats in professional basketball. He wasn’t the best jumper, quickest player or fastest man on the court yet he played the game expertly and became one of the 25 best players of all time. What made him so great? Fundamentals.
He worked tirelessly as a youngster to perfect a jump shot that was second to none. He rebounded well, moved swiftly without the ball and was a superb passer. Although not as quick as some on defense, he was clever in thinking and positioning himself thus becoming a solid defender. His success when the game was on the line was tremendous. He wanted that last shot and often dispirited players and teams with his “moment of truth” heroics. Magic Johnson, also one of the best and most fundamental players said that Larry was the toughest player he competed against.
In business or sports, fundamentals will be the difference between good and great. In addition, keeping a level head along with consistently maintaining or improving fundamentals can lift a company or person to even higher levels.
In this tough economic climate, companies and individuals should get “Back to the Fundamentals" if they want to maintain success in the upstream of current financial difficulties and be prepared to thrive when the inevitable downstream of consumer consumption returns.
Here are 10 areas where individuals can improve their fundamentals:
Let’s get “Back to the Fundamentals with:
1) Health – Is there anything more fundamental for longevity than being in good health? Eating quality food in moderation, lowering sugar, embracing fruits and vegetables, lowering stress, and exercising (cardio and strength training) are just a few of the ways in which we can help improve the obesity in children and adults in many parts of the world.
2) Family – I understand that some family members should not be in your life due to their own agenda and treating the family with disrespect. If that is not the case, we need to embrace and love our family despite the petty resentment we may feel or insignificant reasons we choose to use as a barrier. Pettiness was the cause of my mother and her sisters not speaking for many years which was a shame. I am happy to report that they have embraced sisterhood once again and are enjoying each other immensely! When times are tough or tragedy strikes, is there anything more precious, important or fundamental than having a solid family behind you?
3) Finances – Save money every month, Monitor your investments closely, Change investments when needed and Grow your money. That formula is fundamental and straight forward in order to manage one’s finances in a positive direction. The key is to save money whether you are in a first time job or making over a million dollars. Even if it is only $25.00 per month, it is important to have those savings as they may be needed when difficult times arise.
In addition, learn from people you trust (advisor or family member) about how to manage and grow your money. I have been advising people for years about monitoring their retirement plans (i.e. 401k) as some could have avoided the massive losses from 2008 if they had simply been watching their investments. Instead, they thought the rising stock prices would last forever until the financial tsunami hit last year and snapped them back into reality. Some will never recover. Remember, SAVE, MONITOR, CHANGE (when needed) and GROW.
4) Children – There are a variety of ways to raise a positive, happy and productive child yet if the fundamentals of love, discipline, values, routines, time together and exercise along with quality food are not consistent, the road is much tougher. I have been shocked at the lack of routines (i.e. 2 year old in bed at 9pm one night and after midnight the next) and poor feeding habits (i.e. chips given to a 1 year old for dinner) I have seen. Our children deserve the best opportunity for a safe and healthy upbringing.
5) Spouse/Partner – What happened to holding hands in public? When I witness that scene with a couple, it usually brings a smile to my face. What about kissing every day for at least 10 seconds? Try it as you will be surprised at the results. How about writing a loving note for your spouse to read when you are away on a business trip? Sending flowers for no special reason other than to show your love? Telling a loved one how much they are appreciated? These are basic and fundamental areas that can help to improve a relationship.
6) Giving – In my book, one cannot be successful without lending a helping hand to those in need or less fortunate. It is especially vital if life has given you an abundance of blessings. You can find my article about giving on the following link:
7) Values/Ethics – One should be or work to become a loving, honest, compassionate and productive citizen of your community. Our basic values have been pushed to the side in business (failed companies) and with marriages (high divorce rate in numerous countries). If values and ethics don’t return, the road back to sunny days might remain cloudy.
8) Work/Passion – Hard work, being positive, discipline, enthusiasm, and “putting in the time” are just a few core fundamentals needed to perform well in one’s work or indulge brightly in one’s passion. Why do it if the maximum effort for success is not included?
9) Benefits – As I wrote earlier this year, “Life is (and should be) all about the Benefits”. If there is no benefit, why do it? You can read my 2009 kick-off article at the link below:
10) YOU – All of the aforementioned elements above could be wasted without making sure to put YOU and your well being at the top of your list. Take the time to improve yourself if life is not progressing as planned or make that long overdue massage appointment to relieve the negative forces of stress. Without a healthy, happy and stable YOU, other important areas of your life will undoubtedly take a back seat.
I am sure you can think of one or two areas in your life where fundamentals are sorely lacking or missing. I know I can. Let’s attack at least one of those areas and strive to improve the fundamentals so that we can become better people, improve our communities and help to change the world in a positive way.
One easy and fundamental way to enhance one’s life is by smiling more or giving someone you know a hug. I have improved my hugging immensely in the past 6 months and it started with a hug from a 5 year old. I see her most days and we never fail to embrace each other with a heartfelt hug. It always brightens my day!
Happy Gswede Sunday!