Sunday, April 6, 2008

Artie and Walt

There was a story in today’s Los Angeles Times that struck me as a perfect example of someone doing it right. The story has not been confirmed by the principals involved, so we will have to treat it as a tall story or “shaggy dog” tale for the moment, but it still bears repeating…

According to a short item in the paper, last Friday night after the ballgame there were 30 or so fans hanging around the lobby of Anaheim Stadium when the owner of the Angels, Arte Moreno and his wife came down from their seats and started chatting with the fans. Acting on the spur of the moment, Mr. Moreno unlocked the nearby souvenir shop and had the staff provide every one of the group of fans a free tee shirt and a hat (which he signed for himself). Needless to say, it made a big impression on the fans, at least one of whom apparently knows someone in the news media, because less than 36 hours later we were reading about these events in the local paper.

Now, as public relations gestures go, this wasn’t a very involved one. The total cost to the Angels organization can’t be more than a dollar or two per fan involved, and Mr. Moreno could probably write that off on his taxes as a business development expense – we will assume that somebody that astute would have kept the receipt – assuming that a man of his means would even bother to do so. The impact on the fans in this little group, however, should last for years and even extend to some of those reading about this story second or third hand. It’s an excellent example of how to build a good relationship with your customers, and it demonstrates how important it is for every member of the organization to think in those terms. Even if those thirty to seventy dollars are not recoverable, the cost of two additional tickets on the field level will recoup the loss – and I would bet money that the Angels will realize more than two additional ticket sales as a result of this gesture.

It’s worth noting that one of the other major entertainment venues in Anaheim is in the middle of a promotion making use of the same principles – although in a much more formal way. For the past nine months or so, Disneyland has been celebrating a special anniversary year with small, random giveaways at the park, punctuated by the occasional much larger prize. Typical small examples would be the free Mickey Mouse ears they were giving away when we went last summer, with larger awards being a free night’s stay in the park or the chance to ride in one of the park’s various parades as “Grand Marshall.” Here again, nothing that would actually cost the company very much in absolute terms, but things that could have a lasting impact on the “winners” (imagine a small child getting to ride in the parade or getting their own pair of ears).

Of course, for Disneyland, this program is a part of their regular marketing efforts, and the centerpiece of their current television advertising, while Mr. Moreno and the Angels do not have pockets deep enough to make this type of gesture on a regular basis. Nor would it be wise to try; the demographics of a rowdy pack of sports fans at a baseball game is by definition completely different from those found at the family-friendly theme park, and there would almost inevitably be trouble. Still, it does not take much imagination to believe that somewhere, somehow, Walt Disney might have heard this same story this morning and smiled…

Saturday, April 5, 2008

A Growing Problem

Since today is Saturday we went to our favorite weekend breakfast joint instead of our weekday breakfast joint. Probably our favorite place to catch breakfast on the weekends is the Manhattan Bread & Bagel shop, on Sepulveda not that far from our house in Redondo. They’ve got the best bagels in the Los Angeles area; the old-school kind that are actually boiled before final baking, as well as absolutely excellent breads, cookies, sandwiches, and other products. They were also one of the first businesses I saw offering free wi-fi service to their customers – which is brilliant, as it adds value without actually costing anything. I’d advise anyone passing through the Beach Cities who really wants a great bagel experience to try them, and if you’re there on a Saturday, tell Lynn (the day manager) that I said “hi.”

Today, however, Lynn and her crew were facing one of the most difficult challenges to afflict any small business (and particularly those serving the public directly) in our lifetime. I refer, of course, to parents who insist on bringing their children to completely inappropriate destinations and then refusing to discipline them. The unfortunate fact is that while a bagel shop is a fine place to have some breakfast, read the paper, and watch the world go by, it doesn’t offer much that will keep a small child entertained. As I was trying to get in line to place my order, two small boys (about 7 and about 4, I’d guess) were running in circles in front of the counter, with the larger child holding something away from his brother, while their pre-teen sister yelled at them to stop. Their parents, seated less than ten feet away, were ignoring the entire spectacle.

Now this space is dedicated to business and management issues, so I’m not going to start sermonizing about the decay of our civilization; I’m not even going to point out that some very good historical analysts have pointed out that the elimination of common civility has been the beginning of the end for every major civilization so afflicted. Nor will I start ranting about what a disservice these idiots are doing their children, how the complete lack of discipline is destroying our workforce and contributing to the destruction of our industry, or even about the long-term costs to our society.

Instead, I’m going to pose the question of what, exactly, you are supposed to do when you are the shift manager and your customers (and their children) are behaving in this manner. Asking the children to stop this behavior may not work, and may bring the wrath of the parents down on you; it will definitely leave you looking foolish if the kids ignore you or their parents tell them they can. You can appeal directly to the parents, but some folks will be offended that you would even suggest that they prevent their precious snowflakes from expressing their exuberance, and some may cause trouble in addition to leaving and never bringing you any more business. It’s probably illegal to have someone “accidentally” trip over one of the kids and drop a large pot of boiling water on the offending parents, but if I’m on the jury I’d never vote to convict, and if I’m on the jury at the civil trial I’d refuse to hold the business liable for anything – the idiot parents knew that letting the kids run amok in a public place was dangerous.

Ultimately, this question goes back to one of our early posts where I suggested that people who want you to destroy your business for their amusement aren’t really your customers. You can revisit that post here if you want to, but in general, what I’m suggesting in this case is that people who are really your customers will understand that your other customers and employees need to be able to walk without tripping over kids running amok, and will at least attempt to cooperate with you when you ask them to maintain some order over their brood. And the people who insist on annoying the rest of your customers, creating a huge mess (thus costing you money in both lost sales and increased maintenance) and driving your insurance premiums through the roof, all purely for their own amusement, aren’t really customers…

They Teach Leadership in Business School - Don't They?

Way back at the start of this blog I defined Leadership for anyone who might actually be reading it out there. For the record, no one actually complained about that post, and I later wrote another one about a manager I worked for once who appeared to have no grasp of leadership whatsoever, but was otherwise competent. Reaction to that story was a bit less subdued; I've had more than one person tell me that if a manager's duties include supervision of other personnel, then failing to lead them is as miserable a dereliction of duty as any other.

Part of the problem is that not enough of the people serving in management roles have ever received any formal training in management, and fewer still have studied the arcane art of leadership. The sad fact is that most business school programs do not emphasize managerial skills (e.g. MBA majors in Finance, Marketing, Information Technology, Economics, and so on), and even those students who major in Management will spent less than half of their time learning about this discipline -- and almost no time learning how to lead people. Too many experts in the field continue to underestimate the importance of leadership, simply because they feel that it's merely an "art" with no set rules or factors that can be quantified and mathematically modeled.

This is not quite true, however...

Leadership can be graphed as the compromise or balance between two competing drives: the need to be liked, and the need to accomplish work. A leader's style (and to some extent effectiveness) depends greatly on the balance struck between these two imperatives; so does their approach to conflict resolution. For example, a manager who places very little importance on either the effectiveness of his/her work group or on how well his subordinates like him is often called a "turtle" because of his or her habit of resolving conflicts by going into his or her office and pretending he or she isn't there. A manager who is committed to high performance but does not care about being liked (or even tolerated) by the workers will sometimes be called a "shark," while someone with the opposite priorities (obsessed with being liked to the extent of ignoring performance) will usually be called a "teddy bear."

A leader who attempts to maximize both concerns is usually called an "owl," although this term has drifted a bit from its original meaning. The name was originally applied because of the folklore that owls are highly intelligent (and would therefore be concerned with maximizing anything that can be maximized), but in recent times these people are called "owls" because you'll never see one (e.g. they work much too hard). The leader who instead finds the perfect balance between these two concerns is usually called a "fox" (in the sense of being clever or sly, not crazy).

It should probably be noted that none of these leadership types is necessarily better than the others, although the fox is probably the most often successful. I've worked for sharks, and generally have no problem with them; they are results-oriented people who don't care if you like them or not, so long as you do your job well. Teddy bears can be hard to work with, since they will generally let everything else slide while they try to be everyone's friend, but in an industry where customer relations are critical (e.g. almost any service-sector company) they can be quite useful in the right role. I like working with owls (everyone does), although I've seen too many of them burn out much too young from working too hard. Even the humble turtle can be effective, if the work group can manage itself while the turtle gets out of the way and lets everyone else get on with things.

As you approach your own leadership challenges, you may want to consider what sort of animal you are -- and how that might be affecting your style (and your workgroup). If you're a shark, try to have a bit more consideration for people's feelings, and if you're a teddy bear, keep in mind that there's nothing wrong with asking people to actually do the work you're paying them to do. If you're a turtle, try coming out of your shell a little more often -- maybe there's a fox around who can help you to be a bit more effective. And if you're an owl please, for the sake of whatever's actually holy, GET SOME SLEEP ONCE IN A WHILE!

Friday, April 4, 2008

Got a Plan, Part II

So you’ve figured out your mission, or at least your new company’s mission, and the reason you’ve chosen this risky and usually nerve-wracking way of making a living, and you’ve managed to get your Mission Statement and Company Philosophy down on paper. It’s a good start; you’re well on your way to creating an actual business plan.

Next, you probably want to consider what it will take to get your company off the ground. How much will each dog biscuit cost to produce? How much can you reasonably expect to sell one for? If you subtract all of the costs from the sale price (don't forget the sales tax!) you should get the gross revenue from each biscuit; how many of them will you need to produce in order to make a living? Can you bake that many in your kitchen, or will you have to invest money in a bakery (incurring the additional costs of rent, utilities, equipment, and so on)? Can you produce enough product by yourself, or will you need to hire staff to help you? How will you sell the product, and to whom? And if you are busy selling dog biscuits, either to retailers who want to carry your product or directly to dog owners, who is going to be baking the biscuits?

Collectively, these questions will drive the operational design of your company. Once you have your costs and production volumes worked out, the next question is probably if there are enough people who will be willing to pay $1.50 per biscuit for your product when Milkbone will sell them a box of them for $2.99? Determining how many potential customers there are and figuring out how to tell them about your new product will become the core of your marketing plan. You will probably also want to know how many other companies make such products, and how they market their products; this will be the basis for your competitor analysis.

A close look at the market will also help you to determine who your customers will be, and what demographic groups they will fall into. In the case of the gourmet dog biscuit bakery, it seems clear that two defining factors will be #1. Dog Owners and #2. People who can afford to feed their dogs biscuits at $1.50 a piece. Where do especially well-healed dog owners look for information on their purchasing decisions? I don’t know, but one way to find out would be to follow your competition and see where they advertise. Another possibility would be to identify people who fall into your key market segment and see where they get information for their other purchasing decisions. This will enable you to select the advertising channels that go into your marketing plan, and explain how you are going to offer greater appeal than the competition in your competitor analysis.

Now, I will be the first to admit that it takes a bit of practice to write all of this up in the correct format, with the proper language and pretty graphs that show what you are planning to do, charts and tables that prove you can make money doing it, and a budget that proves that you will make money in the process. After all, I have made my living teaching people how to do these things, and occasionally by doing it for them. And perhaps that's why I find the idea of someone with no training, no experience, no guidance, no forethought, in fact no clue whatsoever attempting this process on the spur of the moment so completely appalling.

Because I do know what it takes to launch a new business – and how many otherwise worthwhile ventures will fail because they never had a plan, and never thought to write one…

Thursday, April 3, 2008

Got a Plan?

It's been said that when the only thing in your toolbox is a hammer, everything starts to look like a nail -- and perhaps we can go over that one in the next Aphorisms post. This particular saying definitely has a grain of truth to it, and I was reminded of it when I came across an "article" on the Onion website about someone trying to start a small business venture without anything resembling a business plan. Now everyone knows that I'm a planner; that I compulsively generate contingency plans for every occasion; that I deal with uncertainty and other stressors by working out what to do in advance. So perhaps it isn't all that surprising that I took one look at this piece and thought "What a cretin! Everyone needs a plan!" Or that I consider it relatively easy to begin writing one...

The first step in writing a business plan for a new start-up venture is to determine what, exactly, you are trying to do. In the example given in the Onion's fiction news story, the protagonist wants to launch her own line of gourmet dog biscuits. These will be better than existing products in both taste and nutritional content, and are intended to appeal to both dogs and their owners on this basis. In business terms, this is called a Mission Statement. It's really the answer to a question, and the question is, simply, "What are we doing?" In this case, the answer might be "We are making dog biscuits that are superior in taste and nutritional content." Some of you will have encountered much longer and more elaborate Mission Statements, particularly if you've spent time in an industry that has been overrun by high-priced management consultants who need to justify their large fees. But a mission statement does not need to be several pages of jargon, and it fact will probably work best if you can quickly and clearly articulate it.

The next logical question is probably "Why are we doing this?" Or, if you prefer, "Why, out of all of the millions of pursuits to which we could dedicate our lives and our fortunes, are we attempting to produce a better snack food for animals that will cheerfully eat decaying roadkill?" The answer to this question should probably cover the fact that dog biscuits contain ash, preservatives, and chemicals that are not good for the animals' health, and at least suggest that just because dogs will eat garbage that doesn't mean they should have to. It might also explain why the founder or founders of the company want to produce a better product, and what they hope to accomplish by starting the company. These comments, collectively, make up what is usually called an "Operating Philosophy" or "Business Concept" statement. These should also be easy to understand and quick to write; if you are not clear on what you are trying to do, and why you intend to do it, you probably need to think things through a little better before you go borrowing money or committing time and resources to the project...

Now, I know it might seem obvious that you would need to consider what you want to do and why you want to do it before launching any project, let alone a new business venture into which you are going to pour your hopes, your dreams, and quite probably your life’s savings. Yet one of the most common questions I was asked while I was teaching business plan writing was “Do I really have to write a Mission Statement (and an Operating Philosophy) for my business plan?”

To which I would always reply, “You don’t have to put any of this in the business plan, if you don’t want to. But you do need to know what the answers are before you go any further…

Wednesday, April 2, 2008

April Fool's Day

I suppose I like a good joke as much as the next guy, unless the next guy is one of those hyper-cheery, totally off-the-wall types who appears to be on uppers even when attending a funeral under heavy sedation. Those of you who have stuck with me through all of these posts already know that I write humor whenever possible, and perhaps a bit more often than that besides. But I must say that upon reading through some of the "Top 100 April Fool’s Hoaxes" list from the Museum of Hoaxes I found myself wondering: "Just what sort of an idiot plays April Fools jokes on paying customers?"

I'm not referring to the completely harmless here, like the "Left-Handed Whopper" joke in 1998, or the "Taco Liberty Bell" hoax in 1996 that may have inspired the Whopper joke. Anybody who can't figure out that the Liberty Bell is part of a National Historical Park and could not be sold to a private company without several Acts of Congress and the attendant media coverage is probably also dumb enough to fail to grasp that a hamburger like the Whopper is ROUND (and therefore inherently symmetrical), and can't have its components "rotated" 180 degrees in either direction (or indeed, at all). I have to believe that anyone who could actually believe in the existence of a special "Left-handed Whopper" probably spends a lot of their time being fooled by various things, and is unlikely to be seriously inconvenienced by one more occasion.

Some of these "jokes" have real consequences, however. For example, the 1972 stunt by the London Times claiming that a well-known travel agency was selling a trip around the world package for only 210 pounds (about $575 US at the time) because that's how much the trip cost in the book "Around the World in 80 Days" and 1972 was the 100th anniversary of the publication resulted in legal action by the travel agency, thousands of angry customers who waited in line for the limited tickets, and the firing of the reporter who wrote the story. Trouble also came when a San Diego (CA) radio station reported that the Space Shuttle was going to be diverted to (and land at) a small local general aviation airport. Despite the fact that there wasn't even a shuttle in orbit at the time, thousands of people drove out to have a look, and the resulting traffic jam tied up half of the local police force and much of the available Highway Patrol as well. The station was fined heavily and the DJ who read the announcement was fired.

I've got to ask why nobody realizes that these stunts are almost always going to constitute massive violations of the Second Law, annoying your customers and possibly many other people taken in by the hoax -- or just inconvenienced by the hoards of people who have been! Then there's the case of Esquire magazine, which in 2000 inadvertently published an April Fools story (about a company giving away free automobiles that functioned as mobile billboards) which almost exactly duplicated the actual business models of not one, but several companies then in the development or launch phases. It was all a joke, of course, but the company that owns the magazine was lucky to avoid ruining any number of investors, throwing dozens of people out of work, and worst of all, being sued down to their undershorts.

I've actually seen even stupider things done at a local level, including some stunts that have cost anything from a day's worth of receipts to several years of lawsuits. What continues to confound me is not that people do these things (people are inherent practical jokers and will do incredibly stupid things for a laugh), but that they fail to grasp that the potential consequences may go right on being fun long after April Fool's Day has slid beneath the horizon for another year. Which leads me to urge any readers who are still reading this post to think very carefully before they decide to stage that wonderful prank which will hazard their job, their company, their livelihood, or their lives.

Because we've still got nine more months filled with life-threatening holiday traditions left in this year alone...

Tuesday, April 1, 2008

The Ethics of Spam

We should probably begin by conceding that a perfectly innocent (if rather dull) potted meat product does not actually entail a great amount of ethical uncertainty, although I suppose one might find the inherent health issues (e.g. excessive sodium, use of preservatives, high fat content) of Spam a bit controversial, and a Vegan might condemn it on the grounds that it represents food harvested from the murdered bodies of our fellow living creatures. Those extremist positions notwithstanding, the title of this post refers to the Internet slang usage of the term "Spam": unsolicited advertising emails, often considered the scourge of all free email systems...

All sarcasm aside, these email messages can be quite annoying, and probably would be even if the majority of them weren't attempts to steal the identity (or at least the money) of the recipient through various forms of Internet fraud. That most of them actually are actively criminal, as well as insulting the recipient's intelligence, just makes the whole thing worse. Most large companies and institutions now use dedicated software to intercept and destroy such emails, and even people on unmonitored email systems will often set their preferences to divert these messages to a "Spam folder" or destroy them outright. Meanwhile, many Internet providers will terminate the contract of anyone they even suspect is using them to generate these emails.

Clearly, no one like getting Spam. The ethical issue arises when you are the one sending it...

There is little doubt that email is the cheapest advertising method ever developed. For no effective cost beyond the salary of the person sending it, one can send form letters (or even personalized messages!) to millions of people at the touch of a button. Even if you are unwilling to spend the money on dedicated Spam software and mailing lists, you can easily develop your own lists from public directories, and create quite nice advertising pieces to send to them using your word processing software. Any email system will probably allow you to send large volumes of email out each day, particularly if you have your own domain and a high bandwidth connection to the Internet. For a small company without a lot of working capital, this may well be your only feasible way to reach a wide audience...

Moreover, the products or services you are offering through your Spam broadcasts might be quite worthwhile, even praiseworthy enterprises. Perhaps you are offering a service that will enable other companies to get the capital they need, or a product that will improve the health of millions of people, or courses that will enable people to obtain better jobs with better salaries and dramatically improve their standard of living. However much people hate receiving unsolicited advertising over their email, surely THESE messages will be an exception to that?

Which, unfortunately, is nothing more than a slippery slope argument. If people hate getting Spam, but your particular Spam is valuable or useful, then it begs the question of just HOW valuable or useful does a piece of Spam have to be before it is okay to send it? Does the advantage realized by society as a whole (e.g. increased sales, resulting in a stronger economy, and whatever business and/or personal advantage is realized by people or companies responding to the Spam, resulting in better living conditions AND a stronger economy) outweigh the inconvenience experience by the rest of the people who get the Spam? And who should be empowered to make that decision? And who's even mentioned Freedom of Speech vs. Privacy issues yet?

It's worth thinking about...