Month: July 2009

What happens when 1+1= What ever you decide?

Numbers are a funny thing. We’re taught growing up that math is either right or wrong. Don’t try to imply some gray area in your answer or you’re going to fail the test. That is…unless you’re in politics.

Politics is a serious matter but some view it as a game. The game of President, Senator, Congressman, Mayor,et al. (You fill in what ever fits your fancy) to many is only to get their guy or gal elected to win the game. Numbers and statistics are looked on with the same reverence as fresh clay on a potters wheel to be molded and crafted into whatever vessel  desired. But, and this is a very big BUT, not all will hold water.

In the world of business 1+1=2…..period! You are either making a profit or you’re not…..period! Only in the world of politics can you lose money, but make it up on volume. So what does it all mean?

In politics….Mr. Politician can bloviate on how he has created this, saved that, told those dastardly businessmen to do this, and the crowds cheer him on. But as time goes on you find yourself unemployed. You’re told not to worry, but the Bank or Landlord doesn’t accept that as payment. You hear the stock market is up over 50% this year….you think.. Great I’m back to even!….Not so fast….You’re still down 25% ( Funny thing that math stuff.) You hear the price of housing rose this month making a short term bottom…Once again not so fast….It fell 17.3% as opposed to an estimated 17.8…That’s a whopping .5% less. If your counting on selling your home as a retirement asset that equates on a $250K home to around …Drum Roll Please!….$406.00. I feel richer already. Wait you say…They said a 3% rise!…Oh yes, that’s correct….but it was 3% in the rate of change…NOT, your total asset price. Once again, funny how that math stuff works.

Years back there was a great analogy made in all the marketing circles that always brought things in perspective. To some it maybe tired, but  some need to be reminded. It goes something like this…….

Company X calls an all hands on deck meeting to figure out why sales are in the hopper, and cash is bleeding from the coffers at an unsustainable rate. The CEO screams and demands answers. The best marketing has been put on TV, Radio, Print, and others. Huge amounts of money in free give a ways and product samples. Buyers and vendor liaisons have been wined and dined at some of the finest restaurants and venues to court sales. The finest research teams, and consultants to formulate and implement the sales strategy. But low and behold……No Takers…No Buyers…..Why?

As all the so called experts scratch their heads for an answer, a poor beleaguered average employee not invited to the original meeting of the minds says in a very low voice that resonates like the sound of thunder……..

The product tastes so bad…Even my dogs wont eat it….and they’ll eat anything!

Remember business and money is a 1+1=2 game. You have to break through the static to read the numbers. It’s up to you, and you alone to find information to back up the claims spewed everywhere throughout the media. Opinions are free…but more often than not…useless.

Relevant, reliable, actionable information is usually costly….but when used effectively……..It’s Priceless!

Mark

The “Free” debate heats up…..But who will “Pay” in the end?

This post also appears in Forbes.com……CEOnetwork (R)

The latest publication of the new book Free by Chris Anderson is causing quite a stir in the so called “Guru Community”.

CEO’s and business leaders alike have been been falling over themselves in trying to figure out who they believe has the right commentary on the subject. You would think that someone was trying to figure out how they could gain access to their bank accounts or something….Oh wait a minute…Maybe that’s what is actually happening!

I’ve read from Seth Godin, Malcom Gladwell, Mark Cuban, and others their take on the subject. It is quite interesting that even these experts on the subject are at odds with one and others views. Usually they’re ahead of the curve, and more often than not  they’ve been proven right for their prognostications, and usually from a similar point of view. ( Not on everything, but the general transformations of media.) I find this raging debate, and everything that it seems to have lit off …fascinating!

Free, and everything it implies is a death knell, or at least a massive coronary to everything profit, is it not?  But what if just maybe it’s not.
One of the main reasons why you, me, and others are listening and chiming into this debate with such an intense want of understanding is because we want just that….understanding. Everyone who owns a business or intends to own one, or is responsible to the bottom line to pay salaries, taxes, start up costs, and more looks at free as something that can’t be competed against. To some free makes an already nervousness feeling in their gut feel more like an ulcer in these economic times. One of the first things that you say to yourself is “I’ve just reduced the widget by 20%, what if someone now offers it for free?…Then what?…How can I compete with that?”  I believe those are exactly the wrong things to think and here’s why.

What we are now experiencing in this economic climate is what I call ” Paradigm Upheaval” Everything that we thought was so, is no longer , but that doesn’t mean it’s bad. Take radio, and television for instance. Radio screamed they would not be able to compete with television. Radio was free, but they didn’t have moving pictures! Business leaders said they would be dead in a year. Sorry to say, but radio is probably stronger now than it ever was. Why? It now needed to find what it was truly better at than TV, and make itself even better. Take the flip side of that argument on another level. Who was that crazy masked man who had to propose that…… “Not only are we going to compete with free TV,  we’re going to charge for it! Not only are we going to charge a minimum just to watch TV, but were going to compete so well we’ll charge extra! Can you imagine the poor guy pitching that idea at the boardroom. The poor schmuck probably ended his presentation with having to tell a panel who wanted everything to be wireless, and over the airwaves …….Clearing a lump in his throat as he said…..”and we’ll call it Cable TV!…..Oh how foolish he must have seemed….Yes… tongue and cheek, but I think you get my point.

Free will become part of the equation to increase profits. Yes…I didn’t make a mistake…It will be a very intricate part of making profits, just where it fits in the marketing dynamic is right now unclear. But that’s a good thing because that also means no one…and I mean No One, is yet late for the party in figuring it out and then monopolizing, or monetizing it into their own business. Matter of fact the party is probably just starting, and when it gets going, the ones who are actively involved in looking to see how “Free” can work for their bottom line will find they didn’t need to be invited. They’ll have already found a seat and be enjoying the music, while others are waiting and wondering why they didn’t receive an invitation.

Mark

They’re on TV so they must be smart…Part 2

I wrote a column on the above subject a while ago, but I felt compelled to add a Part 2 because of the lunacy I’m not only watching on television, but what is also in the newspapers.

Just when one thinks it can’t get worse, the so called “Intelligentsia” elite seem to weigh in on subjects that any true business person or entrepreneur find their views…well should I say it?……”NUTS!”

I read in a prominent newspaper by a prominent economist/columnist the following..( I have intentionally withheld both names to reduce further embarrassment to both, some will instantly recognize the quotes.) ” The Climate Change Bill is Awful” ” is a “pathetic” and “appalling” bill that totally fails to respond to the urgency of climate change-and it should be passed by the Senate and signed into law straight away” and ” will usher in a new mind-set among consumers, investors and entrepreneurs that in time will make a big difference.”

Holy Moly!….could you just imagine yourself walking into the boardroom of any company you want to imagine….Whip out your laser pointer….turn on your projector …fire up the computer and yell out…..”I have NO IDEA what this might do to the company..It might just Bankrupt us and even some of our competitors, but I’m pretty sure that if we try this…It’ll make us all feel really good…..even though we might no longer exist as a company any longer…but we’ll be “Special” because we took the first jump OVER THE CLIFF!…What do you say?…Are you with me?”

After you served your first mandatory leave of absence…you call another meeting to echo the statements of the well known economist/columnist to bolster your argument…You quote things he wrote in his own follow up…( I’m going to para phrase so it’ll fit the context..but it’s true in spirit to the original text.)…”Let our competitors operate as cheap as they want, let them not hold themselves to our standards…They’ll produce the same widgets as us..You wont be able to tell the difference between them…Yes ours will cost more than Twice as much…Maybe Triple..maybe more…Who knows?…but when they realize that just because No One will buy our widget because it’s so expensive….and we had to lay off most of our staff, and close down some of our factories…They’ll come running to us to find out how we were able to make such bold moves…and they’ll then see the errors of their ways, and ask us how they can do the same…It will be Glorious….What do you say…Are you with me?”

After you collected your final unemployment check, and your benefits were about to run out, I would imagine you’ve used that time constructively to reflect on how “Stupid and Foolish” they all were for not listening to you. Ah…what a joyous time it will be..Hmmmmm!

I wish I could laugh about all this and say it’s all fiction, and no one would ever think this way or worse yet, profess it. But I can’t. Even worse, there are many more who have NO IDEA of what it takes to run a business, or be an entrepreneur. They believe this dribble, and think money comes from some swell place where “Everything is always beautiful” resides.  However..those of us in the real world, who have run a business, been responsible for employees, been responsible for profits, and losses see such trite as harmful.

If there’s anything to take away from this, I hope when you watch TV, read a newspaper, or listen to the radio you remember this……

You know what the difference is between an Economist/Analyst…and a Businessman………When a Businessman makes a prediction on his business and predicts wrong……The business could wind up in Bankruptcy……..When the Economist/Analyst makes a wrong prediction…..They just make another prediction.

I predict in the end Business people will prove their smarter by not listening to the so called ” Smart Crowd.”

Mark