Getting away from the source of your troubles often gains you a new perspective. I was chatting with a older friend of mine we began recounting the problems with our current state of affairs in business. The topic of thinking out side of the box came up. I told him of a sales management class I took back in school, in which a professor posed the following problem. How does one increase the use of women's make up in a finite field of users. The answer is to get men to wear make up. I know you are laughing, but this was a class I took 30 years ago. Before Men's hair coloring..and the Metro-sexual revolution. When men didn't get facials or go to spas. But that was the answer..create a new market when the one you are in has reached saturation. My friend (who has an MBA from Northeastern) told me of a similar tale. While a substitute from the Harvard business school was teaching a class to mostly adult males (around 1962)..he found he was in a class of guys with engineering, accounting, marketing and various other degrees. When the teacher asked the group (a study by Proctor & Gamble) to come up with a way to increase the use and thereby sale of tooth paste. The Marketing people came up with an ad campaign to convince the public to brush after lunch (for better dental hygiene). The accounting people decided to decrease costs by eliminating the packaging altogether (there by making more money with no increase in sales). But the winner of the test was an Engineer, whose approach was from a different angle all together. He suggested the tooth paste company should increase the size of the tube opening by 25%. He reasoned most people would cover the bush with the same amount of squeeze but since the volume would be greater they would go through the tubes faster.
Here is my follow up question. Are we better off pumping billions of dollars into a stagnant economy? Or creating a voucher (of some value) that can only be used for one of three things: A Car, A house or A_____. insert #3 as you wish. If you gave me $1,000 I would put it in the bank to save for later, If you gave $1,000 to an unemployed head of house-hold he would buy what he needed and not worry about saving much if any. But If the coupon had to be spent on one of three things and expired in X-amount of time, every red blooded American would find a way to spend it on the industry (earmarked) it helped the Most. What do you think Am I naive to think in terms of a funnel rather than a broad spray.
Second Follow up question, Rather than handing out Government Money, How would people feel about one of the possible proposals; Have Fannie Mae, make all new 30 year fixed loans at 4% and allow all qualified owners to refinance at 4% (a 30 year fixed rate with no points). With somewhat higher rates for the less credit worthy. No need to wait to buy, no need to wait for better rates. Give first time buyers the right to accept seller contributions to cover all buyers closing costs. This would allow no actual new money to be required to make this rescue work. Second thought, the Government owns the Mortgage giant why not use them to repair the issues they had a large part in creating.
Can we widen the tube and funnel it in the right direction?