MIXNER STRATEGY

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You work on a team to create a movie. The team does its best work. Things go wrong, yes. But things also go right. Who is to know whether it will all come together in the end?

Bonfire of the Vanities was a Tom Wolfe book about the breakdown of New York City during the eighties. If Wolfe is good at anything, he is good a portraying a time and the people in it.

They made the movie some years later. Salamon was able to watch closely as Brian DePalma tried to make his masterpiece under all sorts of constraints.

The book's big. It tells a lot about movie making. What about the strategy in it all?

Who does strategy? Let's assume it is senior management's job to put a team together, go away, and put a simple plan down on paper. Then they come back, articulate the strategy to their team (hopefully in a manner that everyone understands what they mean) and, then, sit back while other implement their plans.

The management team provides guidance, advice, critiques along the way, and, if it is normal, gets so involved in the day-to-day that they forget that a plan even exists.

The Bonfire team did the same thing. The constraints of the movie business are huge and the odds of success are not so huge. The management team watched, cajoled, screamed (especially over budget) and, when things were all done and they were shown the final cut, applauded - loudly - about the "masterpiece" (Salamon, 340) DePalma had created. 

The first weekend's revenues for Bonfire were $3.1 million (Salamon, 405), a bomb by anyone's standards.

First question: Is movie production art or business? If it is business, what do you do when things are going wrong?

There are points along the way when you have a feeling something is going wrong. It happens in your business. DePalma and his team certainly recognized things were going wrong when they couldn't find film locations, or their actors weren't performing up to expectations.

They never thought about pulling the plug on the production. Too many big names were involved, and, once things got started, to pull back would have wasted too much capital.

They had to absorb their losses and move forward. Sometimes you have to do that. You just wish that you had responded earlier when things just didn't feel right.

Reference

Salamon, Julie. The Devil's Candy. The Bonfire of the Vanities Goes to Hollywood. Houghton Mifflin Company. 1991.

Posted by jackmixner at 11:04 AM | Permalink

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The conglomerate's founder figured he would just name the firm after himself and be done with it. That would be all well and good, but for one crucial fact: his last name was Slick. Slick Corporation, with it's slight tinge of larceny in its name, epitomized the go-go years of the sixties when conglomerates were created, rose to huge wealth, and, sometimes, blew up - all in the same year, or certainly, five years (Brooks, 174). 

Larceny is a pretty crucial word in that last paragraph. Because of inappropriate or inadequate accounting systems, owners of single companies figured out that by buying other companies and combining them with their current companies a crucial thing happened, at least for one year: the price of their stock compared with the earnings generated by the combined firms, rose substantially. This gave them enough new capital (the stock rose on the reportedly higher P/E ratio) to buy another company to add to the two already owned. This became a shell game in a way. All the purchases were predicated on a higher P/E and a higher stock price. A pretty cool way to make money, all in all.

This all worked marvelously, until the market, and the government, figured out what was going on and changed the accounting rules. It also didn't help when a couple conglomerates fizzled out. When investors (namely, folks who could do only one thing in finance, namely, divide the price of a stock by its earnings to figure out if it was a good stock to buy) finally figured out that all was a house of cards, the cards, indeed, came tumbling down.

Brooks book reads like a crime thriller. You can't put it down, especially Chapter VII entitled "The Conglomerateurs."

Let's say you were a CEO considering selling your business and you wanted to increase its value poste haste. Forming a conglomerate might have been the way to go as the accounting methodology at the time allowed to to almost instantaneously increase your paper valuation with no effort at all.

Do it today? Now we're getting to the real meat of it all. Conglomerate was the word for the sixties and early seventies. Synergy might be the word of the nineties and maybe the early two thousands. It still might apply. If the merger has attributes of synergy - namely, things work better because they are combined - maybe it makes sense.

My read on all this is that synergy, just like conglomerate long ago, is a risky reason to combine two companies.

Yes, this might be a good strategy to increase the value of your company short term. Longer term, it makes less sense. Maybe an exiting CEO is interested in the very short term until he or she sells and retires. If you are going to do that, be very careful and make sure you get cash for your business, as the likelihood of success of two combined companies is not very good, especially if you remember what really happened in the sixties.

Reference

Brooks, John. The Go-Go Years. Weybright and Talley. 1973.

Posted by jackmixner at 09:40 AM | Permalink

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The battle was essentially complete. Eisner was out; Bob Iger was in. Disney was under new management at long last after an epic battle for control of the board. Eisner was a lame duck awaiting his final day a couple months down the road.

Among Iger's first jobs? Dismantle the strategic planning department (Stewart, 538).

If you go back to the beginning of strategy at Disney, you see why the department was created in the first place.

Eisner was a new hire, having come aboard in September 1984. He toured the parks (which he had never visited as a kid), heard about plans for new hotels at Disney World, and met Gary Wilson the Marriott Corporation's Chief Financial Officer. Marriott had been eyeing Disney as an acquisition candidate not so long before and was involved in designing the new hotels at Disney World. Wilson had been part of the team gathering information about Disney as they prepared their bid (Stewart, 62-66). Soon as he could, Eisner hired Wilson.

Wilson almost immediately hired a series of Marriott executives to establish a strategic planning department at Disney. They had five year plans for all the divisions and targeted 20/20 growth: twenty percent growth in earnings each year and 20 percent growth in stock price each year (Stewart, 66 and 200). Leverage their cash flow to buy companies in industries related to Disney became part of the planning, especially broadcast companies (Stewart 201).

You know things are going badly for the strategic planning department when everyone starts to call it's members the "goon squad," labeling them "arrogant and insensitive" (Stewart, 231).

So, what went wrong at Disney? Stewart's point of view is pretty clear. Strategic planning's "scrutiny" coupled with Eisner's willingness to "intrude" on all sorts of matters at all levels around the company caused "dismay" among the executives (Stewart, 231), enough so that many of them were thinking about leaving.

You're a CEO. You like to know what's happening. You even like to push things to happen along the lines you select. What's wrong with that? Nothing, as long as you're a relatively small company. When you get big, things change.

Risk is avoided, opportunities missed, finance acquires new strength, power shifts to corporate staff - simply, inertia reigns (Adizes, 88).

CEOs pretty much know what to do, but sometimes they are unwilling to.

Actually, that is why Eisner was so successful. He came into a bureaucratic organization and initially had great success at shaking things up. Most of what he did worked. Ultimately, however, he couldn't stay successful. He couldn't or wouldn't trust his team to manage, even after he had broken up some of the most dysfunctional bureaucracies. That was his undoing.

Oh, yes. And what to do about strategy at Disney - or your company? My advice is, when it feels like a bureaucracy, it is a bureaucracy. Ditch the bureaucracy, if you have it. If you don't, nurture what you have.

References

Adizes, Ichak. Corporate Lifecycles. How and Why Corporations Grow and Die and What to Do About It. Prentice Hall. 1988.

Stewart, James B. Disney War. Simon & Schuster Paperbacks. 2005.

Posted by jackmixner at 01:30 PM | Permalink

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I thought relationship marketing was all about people. Make more acquaintances, build more relationships, sell more. Maybe not.

Let's redefine relationships. Let's say you're selling something. People are interested in buying, but don't really know what to pay or even whether they should buy, or what to buy. You need to help the solve the problem. The first step? Figure out how to give them something - a related product or service - free.

We have been working on this with one of my clients. He sells granite counter tops. To make the hole for the sink, he simply cuts out a bit of the sheet of granite, and, basically, throws it away. We've been talking about something different. Instead of throwing it away, he gives it, after proper edging, free, to his customer. It becomes a freebie. Customer gets a wonderful granite counter top - and a free matching cutting board. The counter top is less likely to become scratched by carving knives, looks better, lasts longer.

Why do this? Well, people ask for a bunch of quotes on counter tops, from all sorts of suppliers. My client has found a way to differentiate himself from the other suppliers. The free cutting board is enough to tip things his way.

What happened here? All things being equal, my client has tipped things his way by making them unequal. Buy from him get not only the best countertop available (I'm convinced - you ought to see his work) but get a free cutting board that matches your kitchen exactly. Who else gives that? And for free, at that.

Customers have choices. They can buy the cheapest option, which, without options, they generally will do. They could buy the most expensive option, something they're less likely to do. But, give them something free, and, amazingly, they're more likely to buy from you.

There're lots of other examples in Ariely's book. Magazine subscriptions. Homes. Basically, he points out why people make choices. If you think about how those choices are made, you can help them buy more of your products or services. Very powerful ideas. 

References.

Ariely, Dan. Predictably Irrational. The Hidden Forces That Shape Our Decisions. Harper. 2008.

Posted by jackmixner at 03:18 PM | Permalink

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IBM was at a fork in the road in 1955. They had a choice between two possibilities, one "safer" than the other.

• They could grow rapidly by focusing their efforts on computers, a risky vision at best as the number of installed computers probably numbered in the tens or hundreds.
• Or, basically, they could retain the status quo by slowing things down and focusing on what they did best, manufacture punch cards and the related rental equipment, all very profitable (Watson, 253).

What to do?

Anyone who knows anything about the Watson's - the father/son duo who consecutively managed IBM for years - knows exactly what they did. They, meaning Tom Watson's son and Al Williams, a senior manager, bet the farm, but in a good way. Their plan? Transform the company.

• They professionalized management, by installing a "chain of command, large-scale decentralization, a planning process," and "formal business policies (Watson, 253)." 
• They created an organization chart and split up some of the responsibilities that had reported to the Tom Watson, the father.
• Headquarters worried about computers and punch-card equipment. All the other products like "military products, typewriters, punch cards, and time clocks" (Watson, 254) were spun out into new divisions under their own management.

Another key change occurred away. It was driven by the market in a way, but it required a risk-taking attribute that ensured that IBM would continue to grow. The strategy is pretty simple stated: Make stuff, but don't customize it. In the IBM case that meant, sell computers, but figure out how to sell the same configuration over and over again. Yes, the initial few down the production line were hugely expensive, but over time the costs of manufacturing came down and they were able to take advantage of the scaling up of the manufacturing lines to reduce costs.

The first product IBM scaled up in this manner was a general purpose scientific computer that they pre-sold to government laboratories (Watson, 205). Later, they found out that there was only one little flaw in their plans. Their initial computer, called the Defense Computer, was initially priced at $8,000 a month. When production began, they found that the correct price might be as much as $18,000 a month (Watson, 228), obviously a big difference. First amazing discovery in computers for IBM: the customers still wanted the computer. That changed a lot of minds at IBM about the future of computers (Watson, 228).

The real transformation of IBM into a computer company didn't occur until the introduction of the IBM System 360, a 360 degree machine meant to be sold to both the scientific and business markets in all sorts of configurations. The investment came to more that $5 billion dollars, certainly a "bet the farm" undertaking. Three big problems presented themselves: hardware design for all the different configuration, and software design totaling millions of lines of code, all at the same time IBM was trying to manufacture its own electronic parts (Watson, 346-349). The biggest decision of all was whether to announce the complete line piecemeal, or to show it all at once. They chose the later and, even though they had to use mockups in the original product showings, ultimately pulled it off.

Mission statements (What is or product or service? What marketplace do we sell to?) actually play a big part in the story. Early on, IBM was a punch card company. It almost stayed that way, thus missing, almost, the huge growth in data processing in all its myriad forms.

Joe Nocera, writing in the New York Times, calls this one of the ten best business books ever. An interesting read.

Reference

Novera, Joe. The Best Business Books Ever? New York Times. 17 July 2008. http://executivesuite.blogs.nytimes.com/2008/07/17/the-best-business-books-ever-index.html?hp

Watson, Thomas J., Jr. Father Son & Co. My Life at IBM and Beyond. Bantam Books.1990.

Posted by jackmixner at 02:50 PM | Permalink

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Lots has already been said about Pausch's inspiring story. A bit of luck certainly played a part, what with a Wall Street Journal reporter paying his own way to report on the story. Charisma did as well. Pausch took the time to re-order the priorities of such lectures by addressing not only the audience, but the three children he would ultimately leave behind.

Interesting points from the section entitled "Enabling the Dreams of Others" (Pausch, 104):

• In order to help others, you have to have the time. Use time wisely.
• Pausch sees himself as a jerk growing up in that he knew all the answers and didn't listen very well. A professor befriended him and pointed out his problem. Luckily, Pausch listened - and passed it on. He shared with his students how they rated on the "Easy to get along with scale," (Pausch, 115). When they didn't listen, or chose not to understand, he intervened. They listened to what others were saying, sometimes painfully, but modified their behavior.
• Occasionally, people over-perform. What do you do? Applaud, yes. That's obvious. And what else? Assign a higher level task and see what happens.
• Start something that's bigger than you. Pausch helped create Alice, the Carnegie Mellon software teaching tool. The tool will never be complete, and that's good, say Pausch. The newer versions will get better and better (Pausch, 127) much like Disney's vision for Disneyland - it's never complete, it's always changing.

Randy Pausch can be pretty direct. He certainly lived his last months with different constraints than many of us. Practicing his time management skills became vitally important to him as he juggled his new-found glamour with the reality of a loving family who obviously will miss him.

Key points for me:

• When people over-perform, build a platform for them to shine, sometimes publicly. His classes were meant to be fun - and engaging.
• Teams are meant to work well together. Jostle them a bit when they don't, even if it means pointing out painful facts to members who are resisting. Working together is crucial. If you're failing at that, how can you fix it, now?
• Balancing work and family isn't as easy as some folks make it out to be. Keep trying.
• Finally, when thanks are in order, offer them up cheerfully.

Thank you, Dr. Pausch.

Reference

Pausch, Randy. The Last Lecture. Hyperion. 2008.

Posted by jackmixner at 02:52 AM | Permalink

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The servants always know when something is going wrong in their "master's" home, sometimes before their master. 

Speechwriters are the same way.

Peggy Noonan (she worked in the Reagan White House as a speech writer) tells of a late request to complete a Bush I State of the Union address - five days before the address (Noonan, 94). It was evidence of lack of something - leadership, perhaps. Her estimate was that things weren't well in the White House.

Speechwriters also know when something is going right in the White House. The evidence is how much access they have to the President to make sure that what they write reflects what the President is actually thinking.

All the Presidents had important lines that delineated what they were thinking. All along there has been someone in the background providing the lines. And there was a President who made the delivery of the lines his business. Reagan was called the great communicator. He worked as closely with his speech-writing team as any president. Such lines as "we could intercept and destroy strategic ballistic missiles before they reached our own soil ..." (Schlesinger, 331) came from Reagan himself. Everyone said "you can't say that", "it can't be done." Reagan said it, went down that path, and made the words and the thoughts behind them stick. He thought it (his thought went back at least to the fifties, if not the forties) and he said it. The words drove his initiatives for the rest of his presidency.

What about CEOs? I saw a Gateway CEO wing it in front of an audience about a year ago. If I am not mistaken he is gone now. His words didn't really say anything. I heard a Boeing executive, who ended up CEO, speak. His words reflected his status. They were exciting, provided a vision for the future, and were actionable. I heard a COO of a housing company speak. His words were specific, laden with actionable thoughts, and the internal crowd loved it.

Which brings us around to you, and your strategy, and what your say when people ask you to speak. I've been doing this long enough that I ought to have the specific answer for every case. There are models - Kennedy and Reagan certainly were inspiring - for success. There are models for how to construct what you're going to say. We say, "What's your product, what's your marketplace. Don't talk about anything but that when you're talking about your mission statement."

What's right for you? Values count, so I'd delineate my values - and the company values - pretty early in the process. You have to make a decision about hierarchies. Do customers go first, or employees? What about the environment? Green is big right now. Is it going to be a heartfelt problem at your company, or marketing hype? You get to decide. I continue to be sure that people are listening more than you might assume. If you are going to speak, spend time on what you are going to say. It is important.

References

Noonan, Peggy. Life, Liberty and the Pursuit of Happiness. Random House. 1994. 

Schlesinger, Robert. White House Ghosts. Presidents and Their Speechwriters. Simon & Schuster, Inc. 2008.

Posted by jackmixner at 07:05 AM | Permalink

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I can't decide, so you'll just have to do some thinking on your own.

Ferriss has some original thoughts about how to succeed. His topic is the four hour work week, or how to design a business that sheds a lot of cash flow without requiring much oversight.

One of his interesting concepts is focusing not on the happiness your lifestyle produces, but rather on the adventure you have enough time to persue. Two basicallly similar, but opposite, ideas, if you think about it. Ferriss says that it's not the amount of happiness you feel, but the amount of excitement you feel that measures real success (Ferriss, 51).

Heffernan isn't accepting any of it. She points out that Ferriss achieves some of his gains by cheating and skipping important steps (Heffernan). I agree.

And I'll also say I understand both sides in the discussion.

My read on the right way to go? This is tricky. I've mentioned in the past (Mixner) that innovating and succeeding in new areas requires a bit of stretch, or perhaps, even, a little bit of stress. Clearly Heffernan is stressed by Ferriss' ideas on ways to create enough cash flow to live indepently.

Somehow, I feel good about what Ferris has to say and might try a little bit of stress myself, especially if it allows me time for more adventure.

References

Ferriss, Timothy. The 4-Hour Workweek. Escapte 9-5, Live Anywhere, and Join the New Rich. Crown Publishers. 2007.

Heffernan, Virginia. Advice Squad. The New York Times. 20 July 2008. http://www.nytimes.com/2008/07/20/books/review/Heffernan-t.html?_r=2&oref=slogin&oref=slogin

Mixner, Jack. First Step to Innovation: Build New Habits. http://mixnerstrategy.com/blog/2008/05/first_step_to_innovation_build.html

Posted by jackmixner at 07:52 PM | Permalink

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There is a reason Barack Obama's campaign has been so successful at raising money. It's called Blue State Digital.

Their successes:

• $200 million raised online
• Two million phone calls made on the candidates behalf
• 850,000 social networkers
• 50,000 campaign events (Lowry, 56).

Blue State is eyeing AT&T and Stonyfield Farm for next big projects. They are also talking about working for the White House, eventually. Just gotta win the campaign. 

It is looking more and more like, if you have a good idea, having the right web folks on your side makes a big difference. If you have the right folks creating, you are able to test your ideas in days or weeks as opposed to the months and months it used to take to create a web site and test your ideas. Prices are going down, as well, allowing you to generate revenues AND profits, a tidy situation, especially if you need to approach venture capitalists.

If you have a high growth idea, give your software/website provider a lot of thought.

Reference

Lowry, Tom. Obama's Secret Digital Weapon. BusinessWeek. 7 Juy 2008. 56. http://www.businessweek.com/magazine/content/08_27/b4091000977488.htm?chan=magazine+channel_what%27s+next

Posted by jackmixner at 07:27 PM | Permalink

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Gallop polls have been around a long time. The beauty of their system, besides the obvious branding, is the depth of their data bases. 

Strengthsfinder 2.0 relies on those data bases to resolve personal questions I find useful.

In strategy, we sometimes perform a situation analysis - the classic SWOT - by asking four questions:

• What are our internal strengths?
• What are our internal weaknesses?
• What are our external opportunities?
• What are our external threats?

Most times, the strengths list is used to make sure that when we attack the external opportunities we have the strengths to make our strategies work.

SWOTs are really about opportunities. Getting to know your strengths - or your team's strengths - helps you address opportunities when they present themselves. Another useful point-of-view on the process says that if you focus on your strengths you're more likely to create real results. Continuous, incremental changes focusing on your strenths, drives those results (Rae-dupree).

References

Mixner, Jack. First Break All the Rules. Which Rules? http://mixnerstrategy.com/blog/2007/10/change_or_not_to_change.html [Another Gallop tool.]

Mixner, Jack. Think You're a Good Manager? http://mixnerstrategy.com/blog/2007/10/think_youre_a.html [Another Gallop tool.]

Rath, Tom. Strengthsfinder 2.0. Gallop Press. 2007.

Rae-Dupree, Janet. Can You Become a Creature of New Habits? New York Times. 3 July 2008. http://www.nytimes.com/2008/07/06/business/06unbox.html?_r=1&scp=1&sq=janet%20rae-dupree&st=cse&oref=slogin

Posted by jackmixner at 04:44 PM | Permalink

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Lincoln started the campaign for the presidency in 1859 unknown nationally. His competitors for the position gave him no credence. Seward went to Europe for the eight months of the campaign assuming he had already clinched the nomination. Chase couldn't align his own state senate behind his bid for the presidency (they did the electing of Senate members in those days). And Bates said he didn't really want the job.

Lincoln wanted it. Invited to speak in New York, he stunned the crowd with his oration. Then he went on to speaking engagements throughout the northeast.

Those speeches, and the fumbling of his competition, enabled Lincoln's election. Arriving in Washington, Lincoln, toured and talked in ways that were new to the town. He visited the hill and was greeted respectfully. Early on, he invited Seward to join his cabinet at State. Ultimately, he brought in Chase, along with Bates and Cameron, all unexpected appointments (Goodwin 317).

Seward made the assumption, as did most of the other members of the Lincoln administration, that Lincoln was incompetent. He assumed that he would dominate the cabinet and the government as an American prime minister. He realized early on the error of his ways and came to greatly respect Lincoln as leader (Goodwin, xvi). The others followed in their grudging respect.

In and of itself, the Goodwin story about Lincoln is a good one. It gets better when you compare it to the political situation today. It ends up that Barack Obama "admires" (Klein, 27) Lincoln as much as Seward ended up admiring him. In fact, Obama quotes Lincoln and is "intrigued" (Klein, 27) by the way Lincoln engaged his opponents.

The fun of all this leads us to a discussion about whether Obama might include Hillary Clinton in his cabinet if he is elected. Klein, thinking a little more realistically, perhaps, suggests that Obama should include Robert Gates, current Secretary of Defense, in his cabinet (Klein, 27). It'll be interesting to see if Obama ends up "walking his talk".

And McCain, what about him? Romney is now supporting the McCain campaign. In fact, McCain says Romney is doing a better job representing him than he did representing himself (Cooper).

Now we have two-way fun. When/if Obama or McCain is elected, we get to watch who they include in their government. It ought to be interesting.

One last comment: I haven't seen Jack Welch chime in on all this yet, but I'll bet he has an opinion. My bet is it matches Lincoln's: find the best folks you can for your company and figure out how to constructively engage them in your company's success.

References

Cooper, Michael and Michael Luo. Once Bitter Rivals, McCain and Romney Make Up. New York Times. 17 July 2008. http://www.nytimes.com/2008/07/18/us/politics/19romney.html?scp=1&sq=once%20bitter%20rivals,%20mccain%20and%20romney&st=cse

Goodwin, Doris Kearns. Team of Rivals. The Political Genius of Abraham Lincoln. Simon & Schuster. 2005.

Klein, Joe. In with the Old. Obama says he wants to hire a Team of Rivals for his Cabinet. He should start by keeping Robert Gates. Time. 30 June 2008. 27. http://www.time.com/time/politics/article/0,8599,1815849,00.html

Posted by jackmixner at 02:32 PM | Permalink

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As an investor, I have always marveled at the annual financial performance of the Harvard endowment. Lately, Harvard and a lot of other schools, have had to explain the use they put their huge endowments to, especially in light of the fact that they are allowed to accumulate their wealth tax-free.

Berea College in Kentucky is a little bit different. The college was founded 150 years ago to educate freed slaves and "poor white mountaineers" (Lewin). Currently it accepts only needy applicants (three member families have less than $47,000 annual income) (Berea). The interesting clincher? Every admitted student attends tuition free. Berea, because of its unique values system, has a $1.1 billion endowment, small by Harvard's $35 billion standard, but large when compared to the pool of American universities.

One last unique Berea attribute: every student has an on-campus job requiring at least ten hours per week engagement.

Certainly sounds interesting to me.

References

Berea College. http://www.berea.edu/prospectivestudents/admissioninfo/requirements.asp

Lewin, Tamar. With No Frills or Tuition, a College Draws Notice. New York Times. 21 Juy 2008. http://www.nytimes.com/2008/07/21/education/21endowments.html?_r=1&ref=education&oref=slogin

Posted by jackmixner at 01:32 PM | Permalink

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Toyota is adding joystick controls to their forklifts in order to entice young gamers to apply for jobs as material handlers (Wood).

Now Caterpillar is getting into the act, apparently for a different reason.

It so happens that the operators for road graders are retiring in record numbers (Brat). In order to keep them around, Caterpillar had to figure out a way make their job easier, without alienating them by creating something new - and unknown.

The best solution was joysticks, again. Operators go home more relaxed and less fatigued than before because joysticks are easier to use. Reducing the number of levers from fifteen to zero and eliminating the steering wheel, the new road graders are easier to use and give older workers a reason to stay around.

Toyota used joysticks to attract younger workers. Caterpillar used them to retain older workers. Two strategies end up having the same tactics.

Everybody wins, including Caterpillar. It ends up that the drive-by-wire road grader costs seven percent more. 

References

Brat, Ilan. A Joy(stick) to Behold. The Wall Street Journal. 23 June 2008. R5.

Wood, Brett. Grand Strategy - Product Development: Toyota Fork-Lifts - A Case Study. Presentation to the Orange County Chapter of the Association for Strategic Planning. 22 January 2008. http://mixnerstrategy.com/blog/2008/02/joysticks_arent_just_for_video.html

Posted by jackmixner at 10:11 AM | Permalink

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It was pitch black. I awoke from a sound sleep, right next to a dead tree by a lake. I was in my sleeping bag, inside my one-man tent, camped next to the lake, eleven miles from my car. All alone.

I couldn’t hear anything.

Then I heard it, again. One breath from something big, about a foot from my face, just outside my tent.

In that situation you have a choice. Do nothing. Or do something. Now, that breath was enough. Adrenaline was pumping – big time – so I really didn’t really even have a choice. I was out of my sleeping bag, indeed, out of my tent, in seconds.

Then, I realized what was happening. A bear was stealing my food, every bit of it. Now I had another choice. Same choice as before, really. Do nothing. Or do something. Maybe even run. I didn’t do that. That bear had my food, after all, and I wasn’t turning back from my trip. So, what to do?

Attack the bear, of course. They used to say, make a lot of noise. Yell a lot. Pound on pots and pans. I didn’t do any of that.

I attacked the bear. With rocks. In the dark. I was camped by an old fire ring with lots of nice-sized rocks, perfect for throwing at a bear you can’t see, in the dark. So that’s what I did. Throw rocks in the dark.

And it worked. The bear only ate half my food. The rest was scattered over about a hundred yards of forest where I was able to pick up in the early morning gloom.

It was still dark, remember, so I didn’t know I’d saved my food until later, at about the same time I saw the bear amble by with a smug look on its face. It was staying just out of rock-throwing range, as it didn’t want to get hit by those perfect sized rocks, again.

How do I know I connected with the bear? When you throw a rock, a pretty big one, even in the dark, it makes a nice thud sound when it hits the ground. Most of the rocks I threw were noisy. Some were silent. Those were the ones I am assuming connected with bear, and saved my bacon, so to speak.

So I learned some lessons. Since this was twenty-five years ago, those lessons have taken some time to sink in. I tried everything to protect my food. Some of the ideas were pretty silly, I’ll tell you.

The simplest solution was invented about five years ago, and it is the solution I recommend. Carry a bear canister, an impenetrable can that bears can’t break into.

Put your food in the canister. No more bears in the dark.

Simple strategies work best, even if they take some time to figure out.

I know from experience.

Posted by jackmixner at 09:43 AM | Permalink

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Developing world countries are at risk from diseases that are unprofitable for first world companies to address. Northwestern University is doing something about it. 

Faculty from three schools at Northwestern are collaborating with industry and non-profits to identify, develop new drugs or adapt existing drugs to markets that generally wouldn't be addressed (Gentile, 10). They're looking a intellectual property problems, market dynamics, governmental requirements, and distribution problems in new ways, all with the intent of actually distributing products big pharmaceutical companies may look askance at (Gentile, 11).

Sustainable companies theoretically have considered their effect on the environment and are mitigating those effects whenever possible.

Northwestern's program is taking it a step farther. Students learn that, yes, companies must be profitable, and, additionally, there are ways to be profitable that address the normal short term results oriented culture while at the same time remembering that there are long term consequences of their action.

Fuel prices and the carbon footprint problems we are all becoming aware of cause us to look for business solutions to the longer term problems of carbon management for reducing green-house gasses, for instance, or the problems of orphan drugs in third world countries with great needs and little to offer in the way of profits for pharmaceutical companies.

Northwestern it taking a swing at a solution, something we all might consider in the various classes we teach and R&D efforts we lead.

Reference

Gentile, Mary. C. The 21st-Century MBA. strategy+business. http://www.strategy-business.com/media/file/sb51_08209.pdf

Posted by jackmixner at 12:22 PM | Permalink

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Before 1800, the human population relied the "contemporaneous energy of the sun, mainly in the forms of food, fuel wood, fibers, and a modest capture of wind and water power (Sachs, 64). The energy sources were limiting on population growth.

After 1800, the limits were "surmounted by coal, oil, and natural gas (Sachs, 64)." Population began to explode.

Since I like to watch technology companies grow, I was heartened to realize, thanks to Sachs, that one invention, particularly, allowed the human population to soar. In fact, it wasn't just any old invention.

The Haber-Bosch process for synthesizing nitrogen-based chemical fertilizers allowed for 80 percent of the growth of cereal production in the twentieth century (Sachs, 65-66). That one chemical reaction was basically responsible for much of the green revolution, or certainly the "food" revolution, across the world.

One invention. Huge growth.

Of course, there is another story that goes along with this wonderful one, that of the growth of global warming from the burning of fossil fuels and the expansion of arable land by burning existing forests and grasslands. Sachs summarizes the effects of the global warming that has paralleled the growth in technology based agriculture and manufacturing. The expected results are just a scary as we have been led to believe by the media, perhaps worse.

Since about 1800 or so technology has allowed the expansion of the global economy and population. The results of that expansion will "come home to roost" over the next century. My optimistic nature believes that there will be technological mitigations for the forecasted problems, but they remain to be seen. Sachs says mitigating these areas may be enough (Sachs, 97):

• deforestation,
• emissions from electricity production and automobiles,
• clean up steel, cement, refineries and petrochemical production,
• economize electricity and
• replace furnaces with grid power.

That list looks more doable that the hand-wringing we are seeing in the press.

Reference

Sachs, Jeffrey D. Common Wealth. Economics for a Crowded Planet. The Penguin Press. New York. 2008.

Posted by jackmixner at 04:24 PM | Permalink

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I held off reading the Heath's book for some time, I guess because it was a best seller (no, I don't understand that logic either). Once you start, the book is one of those you can not put down.

Key points: learn how to spot stories about your key message. Then, and this is probably harder than it seems, write them down and tell them to others.

Stories win hand down in the fight for retelling over and over. Don't recite all the facts about your product or service. Tell a story about someone using it.

Subway marketers turned downe the story about the Subway afeciando who lost a lot of weight by dining exclusively at Subway repeatedly because they didn't think the story would work. It took a franchisee to recognize it's utility and to pay for the first television spots about Jared (Heath, 219). Only then - and it took some time - did Subway national take notice and begin to use the story.

Stories work better than facts, especially in the battle for space in people's minds. And, to make things easier, sometimes it is just as easy to spot stories as it is to create them (Heath, 240). Making up stories, it seems, is just as hard (or easy, according to your viewpoint) as finding stories in your day to day experience.

Me, I prefer finding them to making them up.

Reference

Heath, Chip and Dan Heath. Made to Stick. Why Some Ideas Survive and Others Die. Random House. 2007.

Posted by jackmixner at 01:02 PM | Permalink

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Herbie happened to be the slowest Boy Scout on a crucial hike. He also carried too much. The point of the hike - and Goldratt's book - is how to speed things up and still make money (the goal).

I noticed that Goldratts's book was still on the best-sellers list years after publication and decided to re-read it to understand why. Business novels don't normally make much sense.

Using analogies, Goldratt's characters figure out their own problems and solutions for each of them. There's even a love interest under-current.

Two key questions for your operation: what is the goal of any manufacturing operation? What effect do bottle-necks have on a manufacturing operation?

I mentioned that I had read this book to a strategist for a bank. She had never heard of it. Let's just say that service operations have bottlenecks, and that sometimes they, too, forget why they are in business. 

Reference

Goldratt, Eliyahu M. and Jeff Cox. The Goal. A Process of On-going Improvement. North River Press, Inc. 1984.

Posted by jackmixner at 12:41 PM | Permalink

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Great Britain, France, Russia and the United States had decided far in advance that Berlin would be divided into four sectors after the end of World War II. The Russians were advancing toward Berlin more quickly that the western allies, so, from Eisenhower's point of view, it made sense for the Russians to go ahead and occupy Berlin first. But Eisenhower had an alternative, Lübeck, located at the base of the Danish peninsula. His goal was to prevent the Germans from fleeing up Denmark to Norway and, thus, to prevent the establishment of a German redoubt - or new front, basically - outside of Germany (Stafford, 131-132). The strategy also prevented the Russians from occupying Denmark and Norway.

Why tell the story? The best part is the sales process Eisenhower, Supreme Allied Commander in Europe at the time, had to go through in order to slow progress toward Berlin in order to address Lubeck. He flew first to Great Britain to meet with Churchill to ensure that he had backing for his strategy. Only then did he direct the British forces in Europe to attack Berlin at the same time attacks on Lübeck began One last parel of information. In his meeting with Churchill, Eisenhower got support to occupy the German atomic research facilities near Stuttgart, far to the southwest (Stafford, 131-132). 

Eisenhower had to play politics in order to make sure his campaign in Germany was successful. He worked in advance to verify support before he spent time with local commanders.

No question, politics slowed things down, much as they do with business functions. But, in this case, at least, playing politics was the most logical thing for Eisenhower to do. 

Reference

Stafford, David. Endgame, 1945. The Missing Final Chapter of World War II. Little, Brown and Company. 2007.

Posted by jackmixner at 12:12 PM | Permalink

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Emerson Electric had a choice: go after ground-breaking "new-to-the-world" products, or, nominally, "make a third of sales from products released in the past five years (Hindo, 46)." Their decision? Focus in large measure on new-to-the-world (Hindo, 46).

Today, we're waiting feverously to see what Steven Jobs announces for new innovations for the iPhone. Apple has made billions on i-Pods. Neither is a particularly new innovation, although the Apple design process certainly produces enticing products everyone wants.

Who has it right, Apple or Emerson?

By applying design to an older product, Apple resurrected (or should I say, invigorated) the MP3 market. Emerson sees lots of wasted time on incremental change when they are missing the bigger picture.

Gold-plating the product you've had for years doesn't make sense. However, an incremental change in a new market certainly has helped Apple.

Emerson is taking a risk, suspecting that they've been wasting money in incrementalism (Hindo, 46). We'll have to wait a bit to see how their strategy plays out.

Reference

Hindo, Brian. Insight. Far-flung Emerson Electric generates loads of ideas. Now it has a way to sort out the really novel ones. BusinessWeek. 16 June 2008. 46. http://www.businessweek.com/magazine/content/08_24/b4088046119515.htm?chan=search

Posted by jackmixner at 10:54 AM | Permalink

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We have learned in a past posting that Toyota looks externally for product innovation, specifically to design, green and safety for its lift truck business (Wood). Now lets look internally.

If we look to Toyota's internal focus we might look at characteristics of senior managers. They have:

• Willingness to listen and learn from others
• Enthusiasm for constantly making improvements
• Comfort with working in teams
• Ability to take action quickly to solve a problem
• Interest in coaching other employees
• Modesty (Takeuchi, 102).

How's this work? To grow a business, Toyota is willing to look outside for niche products and the effects of design, green initiatives and safety. To maintain a business, personal skills like listening and team work are important.

Many times, a company is technologically adept. That adeptness has to be matched with an outside focus - and an inside focus.

References

Takeuchi, Hirotaka, Emi Osono, and Norihiko Shimizu. The Contradictions That Drive Toyota's Success. Harvard Business Review. June 2008. 96.

Wood, Brett. Grand Strategy - Product Development: Toyota Fork-Lifts - A Case Study. Presentation to the Orange County Chapter of the Association for Strategic Planning. 22 January 2008.

Posted by jackmixner at 10:20 AM | Permalink

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Edward Jones, the investment company, says it's strategy is " ... convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions ... (Collis, 90)."

That strategy has caused Jones to do some special things, especially for the financial services industry. They have lots and lots of individual offices. You've probably noticed them on Main Street in your town. You get to know your broker because he or she probably knocked on your door to get to know you in the first place. They focus on financial advice and make money only by selling investment products. They sell to conservative investors who buy what they need and hold on to it. And finally, Jones' investors let someone else decide what to invest in - they delegate what they do.

In ten words or so, Jones spells out what they do.

Can you do the same for your business? If you can, can your sales team? Are you sure?

Reference

Collis, David J. and Michael G. Rukstad. Can You Say What Your Strategy Is? Harvard Business Review. April 2008. 82.

Posted by jackmixner at 08:28 AM | Permalink

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Harry Truman didn't really have an easy row to hoe. Vice President to FDR, he was basically ignored for most of his term. On FDR's death things sped up - quickly. The war was ended on both fronts. The peace brought internal and external confrontations. Returning soldiers wanted normalcy. Europe needed re-building, as did Asia. Russia was expanding ominously. What to do wasn't always very obvious for Truman. Sometimes he didn't look like a very good leader.

One of the reasons Truman was Roosevelt's nominee for VP was his leadership in the Senate. When he needed to, Truman studied a subject until he was the expert on it. Truman began to impress the other Senators with his preparation and passion. His second big speech to Congress was on greed, attacking Wall Street with a New Deal slant. He had a position on civil rights before others were willing to recognize it as a problem (McCullough. 235-245). Other Senators proved their regard for Truman by appearing at fund raisers and campaign stops in a hard fought primary.

As President, Truman had his ups and downs. Finally, however, the downs were in complete control, what with the rail road strike on top of a coal strike. The union leaders weren't going to give, in fact didn't give, until Truman made up his mind to act.

Clark Clifford showed up at the White House as a speech writer (McCullough, 502), having never met Truman before or visited the White House at all. His job? Draft a speech to Congress announcing he would call out the Army and do whatever it took to break the strike. He would control the workers before he would allow them to control America. Truman had a speech all ready to go, a speech everyone said couldn't be presented. Truman was too angry. Clifford had to craft a deliverable speech that got the support of the Congress, and the workers back to work.

Ultimately, the speech was immaterial. Truman announced that the trains were going to run and coal was going to be mined. Period. The unions realized they had better get on board with the President or things would get really ugly. So they did. Everything was fine. (Full disclosure: the Senate finally decided not to support the federalization of the rail system. It was too late. The workers were back to work (McCullough, 506).)

Without Truman's willingness to be a confrontational leader, nothing would have happened. An interesting by-product of the process: Clark Clifford began a long careen in government, playing a large role early-on in the creation of the Marshall Plan (McCullough, 564).

And what are the attributes of a Truman-like leader? Listening abilities, greed averse, a knowledge of history, and, finally, the ability to conduct yourself according to your own high standards (Harvard Business Review, 48).

Reference

McCullough, David. Truman. Simon & Schuster. 1992.

Harvard Business Review. Timeless Leadership. The great leadership lessons don't change. A conversation with David McCullough. March 2008. 45.

Posted by jackmixner at 01:11 PM | Permalink

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Buchanan reminds us of Washington's first commandmant of U.S. foreign policy: "The great rule of conduct for us, in regard to foreign nations, is in extending our commercial relations to have with them as little political connection as possible (Buchanan, 112).

Why forego the advantages of so peculiar a situation (namely, the distance to Europe)? Why quit our own to stand upon foreign ground? Why, by interweaving our destiny with that of any part of Europe, entangle our peace and prosperity in the toild of European Ambition, Rivalship, Interest, Humour, or Caprice?" 

Washington knew his nation had the potential to be the greatest on earth. He also knew America needed generations of peace to grow to her natural size and strength. The father of his country deemed it essential that young America stay ourt of old Europe's wars."

Buchanan and I don't see eye-to-eye on many topics. This stance, is interesting, however, and worth remembering.

Reference

Buchanan, Patrick J. Day of Reckoning. How Hubris, Ideology, and Greed Are Tearing America Apart. Thomas Dunne Books. 2007.

Posted by jackmixner at 12:46 PM | Permalink

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Understand yourself better, innovate better. That's the premise (Rai-Dupree) for change, especially when you realize that you are:

1. set in your ways,
2. habits already formed, and that
3. innovation requires you to look at things differently than you normally do.

How to do it? We train ourselves to believe we can do anything. It's not really so. The simple solution is to do more of what you're good at, not just anything.

We're all used to stretch goals, those a bit beyond comfortable goals and less demanding than stress goals. Stress yourself a bit by learning things about what you are already good in order to increase your innovation results (Rae-Dupree). Kaizen - continuous improvement - is part of the solution. Continuallly improving a simple processes leads to incremental innovation and new solutions.

So, know yourself better, continuously improve, innovate better. Where to start? Markova sets out a process starting with understanding how you process information. She suggests that first you understand how you process information, then understand how your teammates do the same thing, and then try to increase communication - and innovation - by incrementally focusing on change and improvement on the projects you are working on.

The key point in all this was the realization that we all can not be the best at everything and that better results (change and innovation, as well) comes from leveraging what you are good at while playing of your skills and those of your team.

There is a best seller in this space right now that will help us in deciding what to focus on (Buckingham). His three myths (Buckingham. 69.) about strengths are useful:

1. As you grow, your personality changes. Nope: you become more of who you already are.
2. You will grow in your areas of greatest weakness. Nope: you grow in your areas of greatest strength.
3. A good team member does whatever it takes to help the team. Nope: a good team member volunteers for those task she is best at, not what the team needs.

The point? Know yourself. Know your team. Focus on strengths. Focus on incremental change. Innovate better.

Reference

Buckingham, Marcus. Go. Put Your Strengths to Work. 6 Powerful Steps to Achieve Outstanding Performance. Free Press. 2007. 

Markova, Dawna. The Open Mind. Exploring the 6 Patterns of Natural Intelligence. Conari Press. 1996.

Rae-Dupree, Janet. Unboxed:Can You Become a Creature of New Habits? New York Times. 4 May 2008. http://www.nytimes.com/2008/05/04/business/04unbox.html?_r=1&scp=1&sq=janet+rae-dupree&st=nyt&oref=slogin

Posted by jackmixner at 11:34 AM | Permalink

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While no printer ever came out and said it to me directly, I always realized that when I bought printing services I could have any two out of the three deliverables of quality, delivery time or price. I'd plan ahead so the printer could gang my work with someone else's (while giving me a longer delivery time) in order to have the quality I wanted at the price I was willing to pay.

Gary Jaquess made the same point recently when he described the negotiations he had to go through with the Japanese parent of an American manufacturer in order to construct a new manufacturing facility on time, on budget - and with the quality the parent demanded. In Japan, their mass transit system is so good they don't need parking spaces around any of their facilities. They're mandated by law here, something that had to be carefully communicated to the home office, causing a delay. The Japanese think in "tsubo's" not square feet. A tsubo is a two dimensional measure based upon the size of a tatami mat in a typical Japanese home. It took a while for everyone to become conversant in just what a tsubo was, and how to quickly make the conversion to understand price per square foot.

Most interestingly, recognizing that lots of analysis is done by the parent organization before the final decision is made results in the ability to immediately begin implementation, a process that is different from the American method of making a decision and then modifying to to fit new discoveries found later.

It all still comes back to quality, delivery and price. If you want all three - and who doesn't - then you'd better design a process that takes all three topics into account. Over a series of projects constructing manufacturing facilities in the northwest, Jaquess perfected the ability to communicate in advance to ascertain real intent, decide just what quality was required, and, finally, plan together so things went smoothly during a long prcess of agreement, construction and manufacturing.

Reference

Jaquess, Garrison, W. Value Is In the Eyes of the Receiver. Productive Workplace Resources. 2004. [Handout for a presentation to the Orange County chapter of the Association for Strategic Planning.]

Posted by jackmixner at 10:37 AM | Permalink

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Family businesses have a group of central problems that will continue to play themselves out in the years ahead (Welch, 82):

1. Wealth preservation vs. accumulation
2. Succession
3. Passing control to unqualified progeny.

Protecting wealth is a whole lot different than accumulating wealth. To protect it, reduce risk. To accumulate it, increase risk. Your ability to accept risk - and your management team's - may effect your company for years to come.

Wait too long to hand off your company to your daughter and you may lose her entirely. You're still healthy? Not a good enough reason to hold on too long.

Only one reason might be good enough to hold off on passing on the company: your daughter isn't qualified to run things. Deciding who is qualified is a tricky question. Delay answering it at your peril.

Reference

Welch, Jack and Suzy. Red Flags for the Decade Ahead. On our list: family businesses under stress, dearth of managers, and corruption. BusinessWeek. 19 May 2008. 82. http://www.businessweek.com/magazine/content/08_20/b4084082575201.htm?chan=search

Posted by jackmixner at 01:00 PM | Permalink

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In the end, the ride the astronauts took to the moon was designed to reduce costs. How to do that? Reduce weight.

Reducing weight meant designing the orbital path around both the earth and the moon in such a way that a big booster wasn't required to land on - and leave - the moon. Light weight required a rendezvous above the moon with the orbiting command and service module, something that wasn't assured initially.

Somehow having a space craft that you could put your foot through if, by chance, you stumbled seems a bit Rube Goldberg. That was the case. The lunar module descent stage was wrapped in Mylar wrapping. During construction, a dropped screwdriver went right through the floor (Hardesty, 217). It was lightweight, that's for sure.

Why bother? We probably wouldn't have gotten there at all unless everyone teamed up to reduce costs.

I like the team aspects of the process. I like the reduce costs part, as well, not only as a taxpayer, but aesthetically, as well. Simple seems always to be better. Designing the orbits took almost all the computing power we could marshall, so the analytical steps weren't ignored. The emphasis was on getting the job done, safely and successfully, nothing more.

Reference

Hardesty, Von and Gene Eisman. Epic Rivalry. The Inside Story of the Soviet and American Space Race. National Geographic. 2007.

Posted by jackmixner at 10:37 AM | Permalink

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If you are like me you will find this methodology of presenting intricate information interesting:

http://www.nytimes.com/interactive/2008/05/03/business/20080403_SPENDING_GRAPHIC.html

The process is available here, from a sub-set of IBM: 

http://services.alphaworks.ibm.com/manyeyes/home

Harvard Business Review says there are ways to experiment (looks like they will work with you to present your information) with the technology here:

http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?_requestid=91130&ml_subscriber=true&ml_action=get-article&ml_issueid=BR0805&articleID=F0805K&pageNumber=1

Might want to check it out.

Posted by jackmixner at 08:54 AM | Permalink

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Us planners like to plunge right in. Values goes first, then Vision, Mission, Objectives, Strategies, and, finally, tactics.

Yes - and, no. That's a pretty good scheme for planning. But it doesn't go first. Collins (41) makes the best case. Pick your team - very carefully - before you embark on growing your company, or beginning your planning process. You have some duds. Cull them. You have some stars. Make sure they are team players. If they are, nurture them. What if you need new team members?

First point: it takes longer than you think. Wells Fargo began building a team in the early 70s. The growth occurred starting in 1983 (Collins, 42). They hired the best they were able and kept them around long enough to see if they were keepers.

Lots of HR managers claim that employee screening is the key. Use some sort of test like the Meyers Briggs, and you are able to predict behavior. Some people swear by it. I'm still looking for the perfect bullet.

Lewis writes about a professional baseball team. The whole book is about how to get the right folks on board. His key? It's all in the statistics. Everybody says it is batting percentage that is the best predictor. Lewis says nuts to that. It's on-base percentage and slugging percentage he watches. And, oh, yes, college players are better to draft than high school players because you have more statistics on them (Lewis, 101).

There's only one flaw to his work. It takes statistics to know how your team members are going to perform. If you don't have performance statistics - and who has performance statistics for new hires - you don't really know how things are going to work out.

The message? Start keeping statistics. All the tactical statistics make sense. Cold calls. Closed calls. Proposals delivered. You name it. Probably only one or two of the statistics make sense to your organization. Start keeping lots of different statistics, whittle them down to the crucial few and track the results. It works in sales. It works in operations. It works at the C-level as well.

One last comment. Bill Belichick got the right people on the field at the right time, yes. He also trained them far in advance of the need. For him, training included strength and endurance training, team work training, and strategizing for each opponent. Try it out.

Reference

Collins, Jim. Good to Great. Why Some Companies Make the Leap ... and Others Don't. Harper Business. 2001.

Halberstam, David. The Education of a Coach. Wheeler Publishing. 2005.

Lewis, Michael. Moneyball. The Art of Winning an Unfair Game. W. W. Norton & Company. 2003.

Posted by jackmixner at 07:52 PM | Permalink