Arise2Live Podcast

Transcript for Episode #171  ‘Get the Jump on Business Risks with d. Scott Smith’

 

Interviewed:  D. Scott Smith

Host: Scott Weaver

Date Oct 2, 2022

Intro:  Welcome to the Arise2Live Podcast, episode #171. We are back on track with a great interview with d. Scott Smith, co-author of “Freeze Inaction in the Face of a Business Crisis” There’s a lively discussion about how to identify and prepare for risks using the author’s Value Wheel tool.

Let’s dive in!

Scott Weaver:
Welcome, everyone. We have a wonderful interview with D. Scott Smith. For you, longtime listeners of Arise2Live, he is almost becoming a regular here. So, once again, just want to thank you, Scott, and he has some very, very exciting news. There is a book coming out, he’s a joint author, called “FREEZE” and that’s going to be the main, main topic.

Hopefully he’s not going to get too upset with me of drawing out too many of the details in it because he wants you to buy it. He wants you to buy the book. So we’ll just get into it. Let’s see, for you new listeners, D. Scott Smith, we have been working together for how many years, Scott?

D. Scott Smith:
You know, it’s a number of years. Scott, it’s great to be on the Arise2Live podcast. Great to hang out with you. Although we were living in the same community, we actually met down in Redwood City, California, the heart of Silicon Valley, when we were both coaching businesses through the Clean Tech Open, which is the world’s largest clean technology business accelerators.

And it was a lot of fun because we were down there in Redwood City and “Oh, hi! I’m Scott. I’m Scott. Nice to meet you.” Yeah, we’ve been….

Scott Weaver:
Where are you from?

D. Scott Smith:
Yeah. And it turns out we lived in the same place and so not only did we meet there, but we also then started collaborating on different projects together and all around supporting and encouraging businesses, coaching and consulting.

Scott R. Weaver:
Wow. That brings back memories. Okay. But we could talk about the past, but we got to talk about the future here. So, title of the book is “FREEZE: Inaction in the Face of a Business Crisis.” Title called, “Freeze.” It seems like, you know, you would call it like we’re going to conquer or something that. So how did you come up with the title?

D. Scott Smith:
You know, it’s really interesting. There’s the pandemic is kind of just in the everyone’s brain, right? So when that first happened and we’ll say the march of 2020 shutdown was really a trigger point because some businesses woke up one morning in the middle of March and were told they were nonessential and that they couldn’t do business.

Scott Weaver:
That’s pretty damaging.

D. Scott Smith:
Yeah, exactly that somebody determines that what your source of income the way that you support your family is nonessential and that you couldn’t do business. And what I saw going through some notes was that some of the businesses especially retail businesses, just put a sign up on their window that said, “We’ll see you in two weeks.”

So it was as if this shutdown, this beginning of the pandemic was really not the crisis that they were to experience later. They thought it was like a two week vacation. They were just going to take some time off.

Scott R. Weaver:
Either denial or escaping.

D. Scott Smith:
Exactly. And so we saw that as there was a threat to the business. You’re determined to be non-essential and then rather than taking action, they took no action. They just put a sign up in the window and shut down and literally took time off. And, you know, it’s funny because social media is in a way really distills down a thought.

And as we were going through that pandemic, I saw several different very clear themes in social media posts. And one of them was blame. People wanted to blame the government or someone because they did too much or they didn’t do enough. And that’s what led to the pandemic. There were other people that really took it as a as a vacation and turned completely to entertainment.

And so all their posts were really “Is this series worth binge watching on Netflix? Because I’ve watched everything else there is out there.” And then there were other people who were posting about the opportunities that this was taking that that the that they were able to implement because of the crisis of the pandemic.

Scott R. Weaver:
So two out of the three are bad responses: blaming or escapism. So this gets back to the book, right? You’re talking about not freezing. Not going to the inactions phase. But actually, take action for new opportunities. Is that right?

D. Scott Smith:
Exactly. So now we go into the neuroscience of what happened and so when we have a threat to ourselves, to our family, to our business, it kicks in a part of our brain called the amygdala. And a lot of people will be familiar with this, is the part of our brain that triggers fight or flight. And so in the research, if you look, though, there’s actually three things.

My wife will love this because it’s an alliteration. It’s fight, flight, or freeze.

Scott R. Weaver:
So kind of like deer in the headlights.

D. Scott Smith:
Exactly. And so this is where we came up with “FREEZE: Inaction in the Face of Business Crisis” because it’s not what we want to do, but it’s a lot of what we saw happen.

Scott R. Weaver:
OK. Well, pandemics don’t come around that often. What it was about once a hundred years or something? So how does this this new book apply to, I guess, I don’t know, normal, maybe not be the right word, but more common crises that come up?

D. Scott Smith:
It’s interesting because it’s not that the pandemic was something that we were trying to address. It’s just that in a way, the whole COVID pandemic accelerated a lot of what was already happening. People were already working from home. People were already doing video conferencing. People were already doing hybrid or online events. But this just made it.

This just accelerated. It brought it into into the present faster. Well, in the same way, it really brought attention to this freeze response to crisis. So I can look back over say, the large crises such as the pandemic, the current economic situation that we have with supply chain issues, inflation, and some other things that are going on.

We can go back to the Great Recession, 2007, 2008. We can look to the dot com boom and bust. We can go back to the stagflation of the late seventies and into the eighties where this is crazy. Think about this. 1981 car loan rates were 25%.

Scott Weaver:
Oh, wow!

D. Scott Smith:
And mortgage rates were 13%. And we had double digit unemployment as well as the inflation.

So it was a crazy time but fortunes were made during them. We can go back to the Great Depression. Fortunes were made. Businesses and farms were lost. But also, fortunes were made. So what was that? Now, those are big crises, but there are small crises. They happen all the time on a local business as well local basis.

So it could be that you’re a business and your lease does not get renewed. So now what do you do? And these are things that we’ve seen in small businesses where you lose a key employee or a key business partner. Where you lose a major customer, there could be regulatory changes that prevent you from operating your business.

So how do you identify those and what do you do? Because when we were looking at that social media; fight, flight, or freeze; fight was really the people that were blaming the government or other organizations. Flee, these are the people who just went back into all the entertainment. But then there was the people that actually did take action.

Right. That actually found the opportunities in the business. So not only were those that were prepared, were they able to save their business in either a large or localized crisis, but they also were able to expand their business and find new opportunities.

Scott R. Weaver:
OK, let me follow up on and break down a little bit of what you just said. So, something happens, at least got denied and you can’t go on. But you mentioned the word prepare and then opportunity in the same sentence. So to me, they’re like two different things. But can you kind of expand because you tackle this in the book.

This is a major theme in the book, right?

D. Scott Smith:
Absolutely. Yeah. And I’ll just give you one very personal example and that is I have a partner that we’ve done a lot of work with. We’ve done business together, digital marketing and so forth with clients and when the pandemic came, when the shutdown happened, he had a client that made the most of its revenue from doing these many trade shows on university campuses.

So the risk to the business was that they wouldn’t be able to do these shows. So he called and said, Do I know anything about virtual tradeshows? Well, we took that as an opportunity and we actually created a partnership where we did virtual trade shows for four organizations and virtual fundraisers for nonprofit organizations. So we were able to find an opportunity in the midst of this crisis.

Scott Weaver:
Wow!

D. Scott Smith:
So we actually do business that we wouldn’t have.

Scott R. Weaver:
Right. OK. So the crisis was in the pandemic. No face to face meeting. The whole business model. Right, of meeting many, many conferences on universities. It’s just out the door, closed down. But rather than blaming or trying to fight or fleeing with escapes. You’re saying, it’s like, “Hey, there’s something! What does this make happen? What can we do?”

And went to online virtual meetings. Right? And I know you have mentioned this before, but we’ve talked privately and I remember this actually did very well.

D. Scott Smith:
Yeah, it was really good. We actually, you know, the shutdown was in March of 2020. And we jumped on to it right away and had our first signed contract before the end of April. 2020.

Scott Weaver:
Wow!

D. Scott Smith:
So the key is not just to find those risks to your business, but also be prepared to take advantage of the opportunities that are presented and the best ways to understand your business. And so we wanted to look at a model where you were able to take a quick overview of your business and there’s really four areas that we look at and from there do what is very commonly known as a SWOT analysis.

You look at your strengths, weaknesses, opportunities, and threats. And so strengths and weaknesses. Yeah.

Scott R. Weaver:
Yeah. I’ll just expand a little bit on the spot. That’s exactly why two square that goes through and there’s a box for the strengths, there’s a box for the weaknesses, there’s a box for the opportunities, and there’s a box for the threats. I’ll probably do a podcast on the basics of it, but I know in the book, man, you take this to the whole next level.

I mean, you really use this tool in a unique and special way.

D. Scott Smith:
What we wanted to do was people are familiar with SWOT, so strengths and weaknesses, those are the things that are internal to your organization. The opportunities and threats, those are things that are external. So some things we have control over, some things we don’t have control over, but if we identify them, then we know where we can take action.

Because again, when we’re faced with a risk, with a threat to ourselves and to our business, we can either fight, fight, run, or freeze at a time or be prepared to take action and so what we wanted to do was look at this model I call the value wheel. And there’s four component to that.

And that allows you to basically map your business onto one page. And now based on that, you can apply the SWOT analysis to each of those areas so you can identify what would be the potential risks to my business. And what might be the potential opportunities.

Scott R. Weaver:
OK, so if I understand right, you have this value wheel with four key elements in it and then you apply the tool, the SWOT analysis tool for each one of those four elements to really gain insight into your own business. And from there you can make good actions, good decisions, and I love to say succeed where people wouldn’t think that was possible.

D. Scott Smith:
Exactly. Yeah. And that’s really where the application of the concepts come in. So in the book, we lay out the structure for this, so what’s the need? And then what’s the structure? And then we’ve created a course and resources that people can access so they can be able to apply this directly to their business.

And it’s not a huge overwhelming process but if you just take the small steps and keep it up, that is review it periodically. And then when those threats and risks come to your business, you’re able to not only save your business, but you can also look to those opportunities to grow and expand your business.

Scott R. Weaver:
OK, so going back to what you talked about, this freeze to prepare to action. So this tool that’s in the book and you talked about, you know, once you’ve gone through the tool and stuff, that’s the preparation and you keep it up to date. And then if something happens, whether it’s a an opportunity or something that something bad happened, a key employee left or something like that, you already have a plan that you can pull off the shelf and then hit the road running.

When that happens. That’s really cool.

D. Scott Smith:
Yeah. Mm hmm. Yeah. We really like that when you know what your skills are, what your strengths are, but also where those weaknesses are, that if there’s a particular threat that arises or you can identify to what extent would this hurt my business? But also what would be the opportunity?

Scott R. Weaver:
Do you have an example of a company that, I don’t know, either did this or didn’t do this?

D. Scott Smith:
In the book, we talk about a camera company. So they were a local retail store that had been in existence for years selling camera equipment and doing photo processing.

Scott R. Weaver:
So this is when the old, when you say photo process and this is the old days when you had like film and you took it on the camera and then you took it out of the camera and you brought it someplace and then they developed and print it out, the pictures. Is that right?

D. Scott Smith:
Absolutely. Yeah. This is these are the old canisters of film that you would load in analog film and drop it off. You might drop it off at the one hour place or an overnight place, depending on where you were getting prints or slides made but yeah, you would have your camera and it would have 12 or 24, or 36 frames and you would drop it off and get those developed.

So, this was their business. They sold the equipment and they did the photo processing for analog film. Now then digital cameras started coming along and they actually were able to make the transition from analog to digital well.

Scott Weaver:
That’s good!

D. Scott Smith:
Yeah. Although it cut into their processing business, they started selling printers and paper and supplies for photographers to be able to take those digital pictures and make physical versions of them.

Scott R. Weaver:
Right at home. And so they don’t have to go the store anymore. They just do it at home.

D. Scott Smith:
Exactly. But they’d buy the supplies from the source. So they were able to make a transition from the analog to digital and from photo processing to providing printing equipment. And they also did take on the education part to teach people how to use the new digital equipment. So they did really good.

Scott R. Weaver:
Sounds like a good transition for them.

D. Scott Smith:
Yeah. So they understood what their skill was in being able to do the education and be able to provide photographic equipment, including turning those images into something that could be displayed right. So either processing them and printing them in the old days or in the modern world of digital printing. But that’s where they stopped. Unfortunately, they didn’t make the transition when customers became more comfortable with buying expensive equipment online.

So for those who remember the early days of the Internet and e-commerce and people were concerned yeah, they were concerned about putting their credit card into their computer and hitting this submit button, well, that changed over time. Instead of just buying a small dollar item, people were now buying large dollar equipment. They were buying thousands of dollars worth of camera equipment and having it sent to their home and buying it online as opposed to going to the camera store would save hundreds of dollars.

So unfortunately, what happened was people would go to the store, they would check out the different camera, the lenses and so forth, and then they would go home and buy it online. So the store owner wasn’t able to identify this risk and take an opportunity to make a transition in his business. So his only response was to put a sign up in the window that said, “Buy it where you try it.”

He was trying to shame his customers into spending hundreds of dollars more on this equipment just because he had it in stock now.

Scott Weaver:
So he froze.

D. Scott Smith:
He froze. He did not take action and he could have found ways to adapt to the online business world, to the people feeling comfortable with buying very expensive equipment, having it delivered to their home but he didn’t.

Then he went out of business. So they were effective at making the transition from analog to digital, but not from brick and mortar to online sales.

Scott R. Weaver:
OK, for the listeners, you listeners out there, there’s a really good story in it because it wasn’t like they buried their heads in the sand. They were doing a lot of right things. But the world kept changing, kept new technology was changing the way that customers bought things but didn’t continue to adapt.

And so I think this is what we’re getting into is just because you make one transition is not a guarantee that the next crisis won’t come and the next crisis won’t cause a lot of problems. And you still need to have the plan, still need to use the tools from the book to make sure that your business continues.

So this is good stuff.

D. Scott Smith:
Yeah. And another local example was two different restaurants, and one of them was a very successful restaurant and their lease did not get renewed. So they were given about a six month notice that the owner said, “We’re not going to renew your lease.” And they did not take any action. They simply closed their doors and went out of business.

Which was unfortunate. They had good clientele. They were a successful restaurant, but the location they deemed was just something they couldn’t deal with and they just shut down the business. Whereas another restaurant, they had created a food truck. So when they lost their location, they were able to continue to service their customers and have this mobile business until they were able to find a new location and then they continued with the food truck.

Scott R. Weaver:
All right. Well, I’m going to put you on the spot here, Scott. So a lot of listeners out there are owners that are business owners who build things, whether they’re in construction, building houses and condos and buildings, or they’re in some type of manufacturing. Let’s take one of your tools. And then the spot for, I would say, to suppliers bought up by another company.

And then overnight, they say we’re not selling you the materials anymore. So how would you approach this? You know, coming from the book? What would be some of the things that can be done to prepare and some things for an opportunity?

D. Scott Smith:
Yeah. So if you haven’t done any preparation and you just get that email that says a key component in your product or service is no longer available, it’s really hard to respond at that moment. However, if you have taken the time and if you’ve used the value wheel and again, there’s four components in there. There’s the value that you offer.

So what is the product or service? What’s the problem that you solve? And then we look at your customer and the different components there. And again, do the SWOT analysis to determine what the strengths, weaknesses, opportunities, and threats are. Then we have your business model, and the business model is how you make money. So do you sell services?

Do you sell products? And then what does it cost you to make that revenue? So that’s the financial model. And when you’re talking about a key supplier, key component, that’s really the delivery model. So how do you deliver your product or service? And it includes your key activities, the key suppliers, the key partners, and the key resources that you have.

Now, if that critical component goes away and you’ve prepared for it, you say, “Oh, look, we’re single sourced on this particular component for the product that we make money on.” What happens? And that’s a threat. That’s a threat to your business. So you identify, first. So that’s you’re single sourced on it. And what would you do if that went away?

And so this is where the preparation comes in. So they send you an email and they say, yeah, we’re no longer going to be selling this component to you. It’s not a new threat. Then ideally.

Scott R. Weaver:
They’re not blindsided.

D. Scott Smith:
Exactly. Ideally, you may have a stockpile build, some sort of resources where you can make a transition to a new supplier or you’ve been developing another supplier or alternative every business is unique, and that’s what’s fun. And that’s why I really recommend that if you’re a business owner, large or small, whether you are a solo entrepreneur, whether you have employees a few or a lot, make sure that you’re working with key advisors who will help you step back and look at your business from that larger scale, because so many business owners get tied up in the tasks of the day.

Scott R. Weaver:
Yeah, the day to day stuff.

D. Scott Smith:
Exactly. And they haven’t taken that step back into the strategic and really determine what are the opportunities and threats. What are our strengths, what are the weaknesses that we have and create contingency plans for that and again, it’s opportunities. Let’s say that you were a printer in the market and you’re printing shirts and signs and all these kinds of things, and you have a competitor in the market that could be a threat and it could also be an opportunity.

So what if their business lease got not renewed, you might come in and buy them and that could be a rescue for them and an opportunity for you. So these are ways that you look exactly. But you’re prepared for it because you just said, “Oh, well, what if they do this or what if this happens?” And now you’re prepared.

Scott R. Weaver:
Well, there’s been a lot here probably wind down the interview. Oh, man. I’m still processing. There’s a lot of good stuff in this book, you know, Scott has teamed up with this Veronica Jeans.

D. Scott Smith:
So Veronica Jeans and I decided to write this book. So she is has written a number of books, primarily on Shopify, but she has a pretty broad business experience herself and has experienced the loss of businesses because of external threats and risks that happened. And so she has a very personal experience as to why you would want to do this.

Now, I also have a process to write a book, to publish a book online course and webinar in 12 weeks or less. And Veronica’s in that course, she’s working on a book. And then through that we decided to collaborate on this one because we saw a need, especially because as we were coming through the tail end of the pandemic and yet going right into some large scale economic impacts on a global basis, and we said, yeah.

Scott Weaver:
Inflation.

D. Scott Smith:
And so yes, we really wanted to give businesses a tool that we could get to them quickly. And this is why we wanted to get the book out in short order. And so we use this, this 12 week process.

Scott R. Weaver:
So where can we find this book?

D. Scott Smith:
Yeah, so the book is on Amazon, so “Freeze: Inaction in the Face of Business Crisis” is available on Amazon. And then there’s also the website Stopinaction.com. There we have resources, information, and a practical application for being able to take the concepts and apply them to your business so that you’re prepared whether that big crisis like a pandemic comes in or the small crisis comes in, the loss of a key employee, non-renewal of the lease or so forth.

Scott R. Weaver:
So definitely check out this book. There’s a lot of good stuff. I’ve seen some the behind the scenes of it. This is going to be a powerful impact book for a lot of people. Any final words before we sign off.

D. Scott Smith:
Scott again, thank you for the opportunity to be here on the Arise2live podcast and always great to spend time with you. And I’m really grateful to be able to share this because businesses large and small and really we’re focused on those small businesses, the large businesses when the pandemic and the shutdowns come, they usually have the resources to be able to weather them out.

But small businesses have the ability to make changes quickly and find those opportunities. That’s where we really, really wanted to do was to give businesses the tools to identify the threats and risks to their business and prepare to not only save their business, but to find the opportunities and grow and expand.

Scott R. Weaver:
All right. Well, thank you so much for being on again. You’re a wonderful guest with that. Will sign off.

D. Scott Smith:
All right. Thanks, Scott.

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