We couldn’t claim that we weren’t warned. “You are not going to like what I have to say to you today,” offered keynote speaker Tim Costello on the closing day of last month’s excellent CEDIA Management Conference in San Diego. “But, I’ll try to say it very politely and respectfully, if that helps.”
In his address, “Embracing Creative Destruction in the ‘New Normal’ Economy,” Costello offered housing and demographic data that left many of us in the room feeling unsettled about our futures. Yet, the construction industry analyst from Builder Homesite Inc. also described how a process of “creative destruction” can be an effective way to keep any business “vibrant, fresh, and relevant” in today’s quickly changing market. A proactive company leader, Costello explained, can tear down and rebuild his or her business in response to environmental, economic, technological, or business changes.
His data showed that demand for new homes would gradually improve, but that “pricing pressure” would remain a challenge “for some time,” because of how long it will take consumers to regain confidence in the economy, to work through the country’s excessive housing inventory, and to rebound from unemployment. He also pointed out that this slow recovery would be “uneven geographically and economically,” depending on how high housing prices were inflated in some areas of the country over others.
From a demographic perspective, Costello said, there is a concern that the aging Baby Boomer population will stop spending money before their late-in-life offspring (the “Echo Boomers”) stepped up to take their place. In the meantime, however, he encouraged conference attendees to reach out to the 100-million-plus retiring Baby Boomers to start selling remote health monitoring technologies and other appropriate technologies for smaller “jewel box” style homes that they will inhabit. Even as this client base ages, he predicted, it will maintain its high standards of living and require specific product features and convenience…just in a smaller package.
Costello encouraged focusing on green home building and smart metering, and he pointed out that while Echo Boomers may be less affluent as a group than their parents, these “Generation Y” consumers love technology, are more educated than any previous generation, and spend money just as well as their parents.Looking ahead, he also encouraged selling to what will become the “majority minority” population and international clients, explaining the importance of understanding different cultures and languages, respecting differences, and learning how to serve them in a way that they want to be served. Costello also pointed to the growing independent freelance workforce for new business, and he noted that security technology will become even more important as a larger young population inevitably increases the crime rate.
In the end, however, Costello said that if you don’t run your company with operational excellence, then you won’t be able to take advantage of any of these opportunities. That was, in a nutshell, also the message of 2011 CEDIA Management Conference.
Costello concluded, “We can’t control the future, but we can take our businesses seriously.”