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Archive for May 25th, 2011

Wall Street Journal Opinion Page May 21, 2011 – We Can Learn From RomneyCare, Romney Should, Too

Wednesday, May 25th, 2011

We Can Learn From RomneyCare; Romney Should, Too

by: Geoff Ficke

I, like the Wall Street Journal, am disappointed and vexed by the approach Mitt Romney has chosen to defend the indefensible relating to his authorship of RomneyCare during his term as Governor of Massachusetts. We agree that he should have long ago admitted the plan was a mistake. In addition, Mr. Romney should have positioned the failure of the program as a Test Market, the results of which were available for other states and the Federal Government to examine before going all in on a mandated, centralized bureaucratic boondoggle.
 
Every business, mine as well as Bain & Co.,  which Romney managed and is a major part of his attractiveness as an alternative candidate, utilizes Focus Groups and Test Markets to vet products or services before rolling out to broader markets. RomenyCare was a Test Marketed program that has not contained costs and has caused doctors to flee the system. This is the opposite of a successful outcome. His response should have been “we tried, we tested, it didn’t work, I have learned the lesson and here is Plan B”. Many Test Markets fail, or provide evidence that allows for changes in design or strategy before a small mistake becomes a tidal wave of loss. People instinctively understand this.
 
Mitt Romney is one of the most experienced, capable and attractive candidates for President in many years. However, his window of opportunity has been closed by his inability to relate the real legacy of RomenyCare through sound business principles that made him interesting and so different from career politicians in the first place. His tin ear, and limits as a candidate are disappointing.

What is exponentially more problematic, is that President Obama and his acolytes have not studied the Massachusets programs disastrous results and have blindly extended the mess to the nation.

You Can Only Succeed at Life or Business If You Keep Moving

Wednesday, May 25th, 2011

by: Geoff Ficke

You Can Only Succeed at Life or Business If You Keep Moving 

Robert Goizueta, the former Chief-Executive of Coca-Cola was once quoted in Fortune Magazine, saying: “The moment you let avoiding failure become your motivator, you are down the path of inactivity. You can stumble only if you are moving”. This simple declaration, while so true, is becoming less apparent in modern commercial life. Though opportunity for prosperity has never been greater, fewer of us are willing to leave the security cocoons that government and universities have erected and fully commit to a life of accomplishment. 

During a time of economic uncertainty such as we are enduring today the desire for security is heightened. The media is replete with tales of hordes of job seekers seeking few available positions. Businesses are pulling back from committing resources for expansion and hiring. Hoarding is commonplace. This is all understandable, normal human reactions to hard times. 

There are, however, some new trends that are troubling no matter the economic conditions. In most developed, industrialized nations, the population is splitting between two core groups: producers and non-producers. The drive to avoid the chance of failing is endemic in the non-productive portion of the population. Producers are risk tolerant, thrive on competition and do not fear failure. Good times or bad, they will continue to strive. 

The French seek a 35 hour work week and make it exceedingly difficult to start a business and prosper. In Greece, the country is bankrupt, workers want to continue to retire before reaching the age of 50 and there are daily demonstrations demanding continuation of policies and programs that others (principally Germans) must pay for. Large portions of the Portuguese and Spanish middle-class demonstrate and strike for government support payments that have bankrupted their countries. In America, for the first time in history, 50% of the population receives some form of government support. 

University professors often rail against capitalism, free markets and overwhelmingly support centralized economic planning. The very system that generates the taxes, donations, tuition and endowments that makes the cushy life of a college professor possible is decried. Students are filled with a vision of a future that demeans entrepreneurship, selling and marketing goods and services, corporate villainy and the unfairness of profit. 

Government as always crouching behind the dwarf shrub of fairness, want to tax the most productive at ever higher rates. Transfer payments balloon while illegal immigrants stream into developed countries to take jobs that natives will not consider.  The social safety net grows ever more burdensome, the recipients subjected to a stunted life of dependency and capital fleeing to more welcoming countries will be the end result of this producer/non-producer divide. 

Not everyone will, or wants to be a financial and commercial success. That is fine. However, the ability to succeed, create and start a business, launch a new product, patent an idea and enjoy the harvest that is derived from commercial accomplishment is so fulfilling that I am always amazed that people regularly choose not to get into the game. The longing for security precludes the opportunity that comes only from assuming certain levels of risk. This is a recipe for mediocrity and a slow, flaccid life of minimum interest. 

You cannot be a success in any endeavor if you do not enter the fray. In order to confront and overcome competition you will have to strive and move ahead. A carpenter can work for a wage, or start a small cabinet or furniture making business. A truck driver can work for a logistics company for a wage or become an owner operator and build his own small fleet. A consumer of government program benefits can live on the reduced stage that this handout allows, or work to educate and become employable. Failure is an essential element in a system that greatly rewards risk takers and does not value inaction.

People are complaining that they want jobs. Jobs are created by people that take risks and start commercial enterprises. Every government job is created by depriving the productive private sector of wealth creation by consuming tax dollars and diverting those funds to non-productive uses. The store clerk that opens a small clothing boutique is exponentially more beneficial than the most subsidized government worker. An auto mechanic that opens a service garage and employ’s three other mechanics is a job creator. The entrepreneur who opens a restaurant, becomes a consultant, markets a barbecue sauce or creates a pet product is moving, striving and enhancing all of the rest of us. These are fine examples of the “movers” so aptly described by Robert Goizueta.

The Challenge for Big Companies Is Not to Be Slow! That Is the Opportunity for Entrepreneurs

Wednesday, May 25th, 2011

by: Geoff Ficke

The Challenge for Big Companies Is Not to Be Slow! That Is the Opportunity for Entrepreneurs

Louis B. Gerstner, the famous business executive who ran International Business Machines (IBM) once famously quipped, “I’ve never seen a small company that did not want to be a big one. The challenge is being big without being slow”. Mr. Gerstner identified the biggest obstacle that confronts large institutions in their effort to stay on top. Inadvertently he also identifies the opportunity that all inventors, entrepreneurs and small businesses enjoy as they attempt to steal market share and grow into more substantial commercial entities. 

Huge businesses tend to be slower to innovate, take risks, consider outside ideas and think beyond the successful boxes they have created to shroud their enterprises than do start-up companies. As they grow larger they often become more concerned with protecting their space and market share than accelerating growth. All forms of bureaucracies confront this dilemma. 

An obvious success at overcoming this tendency is the hugely successful Procter & Gamble, the consumer product, cosmetic and fragrance behemoth. For decades Procter & Gamble operated under a strict brand management system that did not encourage outside innovation. The Company began to stagnate and evolved into a hodge-podge of slow growth, lower margin food and commodity product brands. 

15 years ago new management took over the famed Cincinnati-based P&G. The business model was redesigned to encourage the acquisition and licensing of outside ideas and products with a stated goal of 40% projected growth to come from new initiatives that originated outside the Company. The Spin Brush toothbrush was purchased and re-energized the Crest Oral Care brand. The acquisition of Cover Girl boosted the cosmetic division. Hugo Boss, The Art of Shaving and Giorgio pumped up the prestige beauty product category. Gillette Shaving and Wella hair care stoked the mass market health and beauty aid group. 

By any measure 150 year old P&G and tech giant IBM are successful and great size has been an asset. Consider, however, how many other formerly great brands have fallen, often expiring as smaller, more nimble competitors have entered the scene. The formerly dominant cosmetic and fragrance colossus Revlon is a shell of its mid-20th century greatness. Estee Lauder has greatly eclipsed Revlon after facing and overcoming the stiff headwinds that all startups must confront. The world’s first mega-retailer Sears Roebuck is now but an echo of its former self and has been surpassed by much younger Wal-Mart, Kohl’s and The Limited Stores. The first national supermarket chain The Great Atlantic & Pacific Tea Company (A&P) is no more while Kroger has become the prototype of a successful national purveyor of food and general merchandise. 

Specialty drinks brands such as Red Bull, Vitamin Water and Snapple have stolen huge market share from lumbering Coca-Cola and Pepsi. Small Japanese automakers arose from the destruction of their home country in World War II to pierce and conquer the North American vehicle market while Detroit fell asleep and squandered a century’s head start. Southwest Airlines, Frontier, Jet-Blue and Ryan Air have reinvented the aviation industry while legacy carriers such as Iberia, Pan Am, TWA and Eastern have either gone the way of the dodo bird or been relegated to obscurity.

The opportunity for entrepreneurs to join Herb Kelleher (Southwest Airlines founder), Leslie Wexner (The Limited Stores founder), Estee and Joe Lauder, and hundreds of other successful innovators is limited solely by a lack of courage. Taking an idea and turning it into a successful enterprise is not easy, but it is not impossible. The difference maker is vision. Seeing an opportunity and having the drive to execute toward a successful conclusion is what separates the successful from the conformist. You cannot get into the game, and can never be successful if you are slow. The bigger the competitor, the slower they will be to innovate and that is always the visionary’s trump card.

A “Stormonter” Will Always Be Obviated by Companies That Deal Strictly in the Truth

Wednesday, May 25th, 2011

by: Geoff Ficke

A “Stormonter” Will Always Be Obviated by Companies That Deal Strictly in the Truth 

Benjamin Franklin is remembered fondly as a Founding Father of the United States, a diplomat, scientist, inventor and founder of the United States Postal Service, among his many other successes. He is also credited with coining a number of words which found their way into wide use around the time of the Revolutionary War. This is a story that also displays the humor, quickness and twinkle that came to always be identified with Franklin and is useful to consider in today’s business world. 

During the Revolutionary War the British Ambassador in Paris was a Lord Stormont. He was a gossip, and took every opportunity to spread tales spun out of whole cloth that served to enhance British prestige and diminish the revolting young Americans. His goal, of course, was to discourage other European countries from aiding the Americans in their quest for freedom from the Crown and King George III. 

Stormont had begun to spread a rumor that six battalions of American soldiers had laid down their weapons and surrendered or run away in the face of a small British platoon. This was a lie made up from whole cloth. Nevertheless, the French were concerned enough to approach Ben Franklin and ask if this supposed act of cowardice had really occurred. 

“Oh no”, replied Franklin in his gravest tone of voice. “It is not the truth, it is merely a Stormont”. Almost instantly the wry, witty response had been whispered throughout the diplomat circles in Paris and the term “stormonter” became a popularly used synonym for lying. 

Stormonters (although the term is virtually unknown in modern English usage) are common in every area of life, especially in commerce. Marketers embellish their products features and benefits while often attempting to subtly, or directly, diminish their competition. I cannot count the number of times that I have experienced salesmen put down their competition by mouthing false statements. 

We all know that once a lie or untruth is spoken, it is ever more difficult to extricate yourself from the damage caused by such misplacement of truth. In sales and marketing, the principal components of every successful business, truth is paramount. Never put your product or business in a compromising position by even skirting facts as they truly are. 

Here are a few tips in how to position and defend your business against an untruth: 

  • Whenever confronted with a distortion of fact regarding your product, always, always compliment the competitor as having a fine product. Kindness kills.
  • Know your competition. When you know direct competitors it is easy to positively point out the difference in features and benefits your product offers, without slamming the competition.
  • Never be negative about another Company, product or management.
  • It is fair to ask for a performance test, market test, or blind consumer test versus another product. Proposed properly this will convey openness and confidence.
  • If you market a service you can gain trust by counseling a prospective to call several of your competitors and pick their brains. This always conveys superior confidence in a positive, reinforcing way.
  • Whenever someone tells you they are an honest person, put your hand on your wallet and run. Honest people carry an aura of trust that they do not need to shout. 

Ben Franklin turned Lord Stormont’s lies to his and his young country’s  advantage. In business we do the same things in many ways. Marketing consumer goods and services is a bit like an arms race. It is rough and competitive. But it should always be conducted truthfully. The chickens always come home to roost.