Executives in middle-market companies we work with frequently model marketing, sales and even operating processes used by larger companies. More often than not, results do not meet expectations. My observation is because the solutions chosen do not suit the company's given objectives and require more resources than the organization has available. Furthermore, employees and teams are not trained sufficiently to execute the demands placed on them with such imported systems.

A basic truism is that middle-market businesses need to improvise, innovate with limited resources and inspire employees to find simple but elegant solutions to challenges. Specific business to business examples offer insights, but I find metaphors are more memorable in illustrating how unconventional solutions to problems, inspires new ways to think, and can be used to lead teams to achievements never before conceived.

That's where jumping cows comes in.

A German teenager,Regina Mayer, wanted a horse so she could jump, but her parents said no. Because the family apparently had cows on the family farm, Regina decided to teach one cow, Luna, to jump like a horse.

As Steve Hoffer reported: "Luna wasn't ready for cow-back riding right away, however. The transformation from stubborn farm animal to long rides in the German countryside was nearly a two-year process, gradually progressing from strolls through the woods to Mayer finally mounting her trusty steed." Here is a link to the story and video, a must see illustration how frustration can be turned into inspiration.

We see companies trying too many tactics without matching resources to activity. We see them looking big and smart rather than  achieving meaning and substance, and concentrating on doing things versus focusing on essential customer needs. Today, companies are advised to use social media, link video on Facebook to web pages, go viral with YouTube and stay in touch via Twitter. Lost in the conversation and analysis is a deep discussion about  who the customers are, how they acquire information, and compatibility between the essence of the message and trustworthiness of the medium.

Regina Mayer and Luna remind us to be centered on results, patient with process and indifferent to style as long as we are true to purpose and mission.

Perhaps someday we will all be jumping cows.

 

Recently my wife was diagnosed with cancer. We are stunned. She has had the best medical attention and followed all recommended health care protocols by multiple physicians. Yet, we did not catch the disease until it had metastasized.

So what does this have to do with business? The situation is a metaphor for how businesses die from within because management is relying on trusted but unchallenged measures of business health. Whether it is weakening cash flow due to declining profitability on existing businesses, new product or service launches that fail to meet their goals, or delays in business building activities that lower peak revenue realization, these events are rarely seen together by management as symptoms of failing corporate health.

Dun & Bradstreet studies show only 36% of businesses live longer than five years, and other studies suggest that 77 – 85% of middle market businesses fail to survive beyond twenty five years. The numbers are difficult to interpret, but evidence is clear that the vast majority of businesses fail, contrary to the myth in business school that corporations last forever.

To me these findings indicate that Management needs to consider using objective and seasoned outside advisors to a greater extent. The purpose is to gain independent and unconventional assessment of operations and business practices. Managers often argue that independent consultants without same-industry experience cannot offer meaningful insights and are too expensive. To the contrary, my belief is that by combining insights learned from many industries with deep scrutiny of any specific company is a formula for innovation.

Intense promotion wins quarters for the C-Suite, but innovation wins decades for shareholders. My colleague, Bill Donnelly, in the prior Oak & Apple Partners blog post speaks to “Why Good Companies Go Bad”. He identifies a loss of mission and leadership failure as key components for silent corporate disease.

Our other colleague, Ken Drossman, distinguishes in an interview  between key performance indicators (KPI’s) and typical financial metrics used by companies. Ken argues compellingly for scrutiny of business DNA for unconventional leading data that predict strengthening or weakening performance and provide a call to action.

Collectively, Oak and Apple Partners believes businesses can live and even thrive through the natural life cycle of success and failure. One prescription calls for involving outside advisors to take on the role of a forensic performance team not only in times of decline but also at times when business is robust.  Curing a company’s ills when it is strong is far easier than curing a weakened company.

For businesses as well as people, looking for unconventional insights to health is necessary in our complex and fast changing life.

 

Herman Melville’s Moby Dick opens with one of the most famous lines in American literature, “Call me Ishmael.”  The novel is also the inspiration for the logo of Howard Schultz’s Starbucks coffee empire. The siren acknowledges both the seafaring nature of the historic coffee business and the irresistible lure of Starbucks coffee.  Moreover, Starbuck was the first mate on the story’s legendary sailing ship Pequod.

To mark its 40th anniversary, Starbucks has redesigned the familiar logo, removing both the name “Starbucks” and the reference to “Coffee.” As a recent Knowledge@Wharton article asks: Logo Overhaul: Will Customers Still Answer the Siren Call of Starbucks? The simple answer is of course they will, because Starbucks is a loved brand that offers a social–coffee experience that few businesses have been able to develop or sustain.

My view is that redesigning logos is generally a poor investment and a distraction.  Logo redevelopment may be justified under the flag of re-branding, changing business mix or internal leadership; all are examples of over-intellectualization of what is needed to create and sustain a great brand.

To me, a brand is the bundle of attributes that a product or services promises and delivers every day to its customers. Add to that definition that it does so profitably, which in turn means the brand’s message is meaningful, clear, interruptive and memorable and its pricing is value-based.

The Wharton article is worth reading because it embodies a rich discussion of issues to be considered when engaging in any brand development or redevelopment initiative.  Some key considerations covered in the article include:  

  1. Significant shift in strategic business mix: Starbucks’ business mix has changed, and will continue to evolve, beyond coffee, so management apparently believed the “Starbucks Coffee” moniker was limiting.
  2. International growth: Global expansion made translating the Starbucks message into different cultures and languages challenging. The goal was to simplify. Apparently management argued that the symbolism of the name “Starbucks” would not translate well.
  3. Dilution of brand message: By not standing for what made a business great to begin with or what management believes will make a great business, customers will not understand why the product or service claims are uniquely the best choice and thus consider supporting competitive brands. Clearly, company management decided to accept this risk.
  4. Backlash by loyal brand fan. The article cites a study by Vikas Mittal from Rice University’s Jones School that supports this conclusion. Backlash to change is a risk that must be considered carefully as businesses expand geographically and culturally.

Strategically there are other options to logo redesign and the management distraction caused by this activity in managing brands. The first and most significant principle of branding is to engage current and prospective customers.  One must question whether there is a significant flaw in the existing bundle of communications and deliverables that limits growth and/or greater opportunity in a strategic shift of all brand-related elements.

In my experience, logo design is one of the most over-emphasized brand development elements and one of the least significant attributes of brand experience. My recommendation is to treat, and invest in, this activity with the limited weight it deserves in the total brand decision-building program.

 

Over the last several weeks executives from both Fortune 500 and mid-market companies, in talking about limits to top performance, said the big barrier to their personal and team success was not understanding where their company was going or what the Big Idea was. 

It’s the vision thing. 

Vision is often hard to define but starts with the leaders of organizations.  P&G’s vision states, in part: “We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers.” Its vision is anchored in improving the lives of its customers.  Similarly, Wal-Mart’s vision focuses on consumers:  “The values that guide our decisions and our leadership are the 3 Basic Beliefs: • Respect for the Individual • Service to our Customers • Striving for Excellence. “ 

Where is this going? Ideas create exponential value, up or down.  Ray Kurzweil, a well known inventor, futurist and author, argues that because technology is growing exponentially, the future we will experience is not linear. Just look at current events in Egypt if you want confirmation of exponential progression of ideas from thought to action.  Using the Internet, a small group of activists has quickly mobilized millions to protest. 

Management has to think in this new dimension. The rate of change has become exponential. Vision, translated into action, creates monumental change.  For example, Rupert Murdoch’s recent launch of “The Daily” promises a revolutionary new publication exclusively on the iPad.  My sense is that this project is going to change the publishing industry by disseminating news to consumers on a profitable basis. The Daily integrates text, video, audio and tactile experience into news. The vision is that the under-35 audience gets its media from the Internet, not print or TV. Hence, make news and information available where people look for it, in ways that consumers are willing to pay. Fifteen million iPad users will determine if the vision translates into reality. 

On the other hand, action without vision has the potential for disaster. The GM Volt electric car illustrates the idea. One can argue there is a dream of a green planet, but the Volt exercise is only possible to the extent that government subsidies prevent financial failure. 

Without a unifying vision of what “green” means, establishing the concept in consumers’ beliefs and enabling a process to build infrastructure are not possible; thus, individual projects are destined for economic failure.  If “green” is the real vision and not a day dream, it seems to me that government and companies would sponsor rapid development of technologies such as thorium-based nuclear energy because the technology is particularly well-suited for use in molten-salt reactors, or MSRs, eliminating the risk of meltdown. Simultaneously, leaders in the US would exploit the natural advantages our country has with coal and natural gas to facilitate a “green” vision that is economically viable. These are viable infrastructure-based energy sources that enable low cost electricity, which in turn would catalyze exponential innovation in battery design and manufacture, thus leading to rapid adoption of electric vehicles at the expense of petroleum-based fuels. 

We all dream of a better life, a stronger company and a fulfilling family. It’s the vision of making those dreams happen that translate thought to strategies, strategies to plans, and plans to action. Sharing those visions and plans inspires those around us to join, multiplying results exponentially.

 

Travelling home to New Jersey from California over the Christmas 2010 holiday, I and thousands of other travelers experienced a total failure by Continental Airlines management to lead in an obvious national crisis.   Like many others, my return home was delayed almost a week.  With over 4,000 passenger flights cancelled in the US alone due to weather and related events, there was no question that this was a crisis without a simple solution.  The absence of any leadership by Continental, however,  mocked and undermined its advertising slogan “Work Hard, Fly Right”®.

What occurred was an abdication of responsibility for the care, comfort and perhaps even safety of its customers. For starters, many flyers did not know their flights were cancelled after printing their online boarding passes. That signaled the start of interminable waits at airports or in planes sitting on runways. 

Those of us made aware of a flight cancellation before heading to the airport suffered an odyssey of three-hour waits on Continental’s telephone reservation system without ever reaching an agent, hours more online trying to book flights only to receive a “transaction could not be completed” message at the end of the booking process, and even more hours at airports trying to rebook.  In brief, there were failures on Continental’s part both to communicate and to act. 

While Continental could not fly its planes into the New York area, a banner could have been posted on its website that flights could not be booked due to overwhelmed logistics.  Management could have reassigned staff or contracted temporary staff to handle calls, or at a minimum, added a detailed message to the airline’s automated telephone attendant system that calls could not be handled for hours.  Both on and off line, management could have set realistic expectations for passengers and offered suggestions of the best means for re-booking as well as a check list of steps to take to get through the travel mess. 

Finally, additional employees could have been brought into airports to help stranded passengers re-route flights.  At a minimum, a portion of airline staff could have been allocated to handle stranded passengers while others attended to passengers with active flights; clear signs could have been posted to identify which lines were for current passengers and which were for stranded ones.  In our case, all employees were left without guidance so that they all handled active travelers, and no appropriate signage was displayed, resulting in added delays, confusion, frustration and alienation from the Continental brand. 

Here’s a suggested short list for a company’s crisis management:

  1. When in doubt, do something; lead.
  2. Focus on customers.
  3. Communicate – give guidance and frame expectations about solutions. 

In his October 1, 2010 letter to customers announcing the merger of Continental with United Airlines, Jeff Smisek, President and Chief Executive Officer of United Airlines, wrote, “As a loyal Continental customer, you might be wondering what this [merger] means for you. For now, it's business as usual.”  With respect to  future crises, let’s hope that he’s wrong.

 

Virtually all executives and entrepreneurs I talk with focus on clarity of objectives, strategic initiatives and tactics as they help energize their team environments. They / we are cognizant of building team rapport to advance collaboration, establishing appropriate financial and other incentives based on performance and even exploiting technology to facilitate communication. We share a heightened awareness of task focus while achieving benchmarks that are tied to ROI attainment.

I was recently involved with a large project that failed to reach or sustain any major objective despite the fact that each member of the group was a world class knowledge expert, motivated to succeed and for the most part, energized. What was overlooked in the process was the cultural (belief and value) system individuals within the team held. Those individual systems filtered the interpretation or meaning of verbal and non - verbal communication.

We spent zero time exploring interpersonal value system differences even though the men and women were from three different cultures, lived in five different states, grew up under different social systems and even different religions. All these factors influenced how timetable driven, ROI centered project leader's behaviors were felt and acted on by others.

The end result was a break down in TRUST. This experience, where two separate team members held their own self - esteem as the priority value, was clearly out of line with what the balance of the team held as number one - shared achievement. This known but unappreciated reality continuously sabotaged the project.

As a result, I am now personally, and recommend to client presidents and leaders, conscious of the role trust plays in performance. The basic three components of trust must simultaneously be balanced: a) formal trust i.e. title, contract, b) informal i.e. personal communication - friendship and c) trust built around performance competencies.

When there is a breech in trust, behavior is affected. People grow frustrated, productivity declines, fear and even hostility increase which results in team conflict. Inter-personal barriers evolve and individuals disengage, ultimately crashing projects.

I see an evolving role of leadership and management re-balancing the goal and task, timetable driven orientation to one where awareness of cultural and psychological underpinnings of trust are championed. As academic as it sounds, in our culturally diverse world, we need to foster agreement on the hierarchy of values as they relate to project objectives and ROI.

As advisor to mid-market company presidents, I often recommend the use of independent contractors to cover capacity shortfalls or to gain expertise in residence at their companies. That's why recent moves by the government to target employee classification as a revenue source caught my attention.

The US Department of Labor (DOL) and the IRS in their respective FY11 department budgets plan an intensive increase in targeting companies to assure compliance with Appendix D of the IRS Independent Contractor Test. That means DOL is hiring 17,800 full-time equivalent employees (FTE) tasked with this increased oversight.

The initiative is positioned by the Department as a top Administration priority as it seeks to spur growth in the U.S. economy, important to promote the creation of "good jobs" and protect workers. Parenthetically, the federal government predicts this new effort on employee misclassifications will reap at least $7 billion in federal revenue over the next ten years.

Consultants as independent contractors must review their own status with clients. Company owners retaining them along with other skilled workers are well served reviewing the new regulations. One change the administration made is to shift the proof of status burden onto the company and away from government. The caution here is that a DOL challenge to labor practices will be costly either by retaining outside counsel or using internal resources.

The IRS formerly used what was known as the "Twenty Factor" test. Under pressure from Congress  it has recently attempted to simplify and refine the test, consolidating the twenty factors into eleven  and organizing them into three main groups: behavioral control, financial control, and the type of relationship of the parties. This IRS publication is useful in assessing current practices and well worth the time for a quick read.

A recent Subaru ad clearly demonstrates the power of emotional selling. The ad which features a dad giving his car keys to his young daughter on her first solo drive is simple, interruptive and relevant which makes it memorable to the target market and likely to build sales for the brand.

But, I am not in the target market of young families, which emphasizes the point I often make that to be successful communicating and building a brand, focus must be on customers that companies sell to. Reaching customers not in the target audience is just "spill out" which increases the cost of touching likely buyers, a critical consideration but one rarely considered in budgeting.

In my last post I addressed the double blind trap of technology, specifically the need for companies to selectively exploit technology to be commercially competitive versus the legal risk of using technology, intended or not, to effectively abuse employees or customers. This might be applicable here.

Consider a recently published debate by Wired  about the death of the Internet, namely the end of open source and evolution to "semi-closed" platforms (think Apps) like Facebook, Twitter or Pandora. It is worth reading and thinking. Google and others are collecting massive amounts of data about how people use the web, shorthand for cognitive and emotive behavior. In turn, those data can be intrusive if abused or highly valuable services if applied "properly". That is the trap.

So what impact would the Subaru ad -- and what profit impact would happen -- if the company were able to target families down to the individual with girls pre - driving age, middle income with known behavior patterns that favor safety versus adventure, yet with kids that both respect those values and have a personal sense of self reliance? Algorithms analyzing keystrokes are giving clues to those conjoint behaviors which of course deliver messages to you, email, text or social.

Today, as never before, we have the ability to narrow focus the message with little "spill out" wasted on unlikely buyers. Now if the car ad was about Ferrari, it'd be a whole different story.

Is this a great time to be in brand marketing? Without a doubt.

Business publications are by and large optimistic about the contribution of emerging technologies to growing healthier companies, work environments and even countries. For example, McKinsey Quarterly published a stimulating discussion of how advancing technologies are changing business models from linear to multisided ones, in Clouds, big data, and smart assets: Ten tech-enabled business trends to watch . What is important for executives to realize is that technology not only shapes the character of business but also the behavior of its employees and legal consequences that follow.

 

The first technology the authors, Messrs. Bughin, Chui and Manyika, discuss is the mainstreaming of “distributed co-creation” which is essentially the ability of communities to organize on the Internet to develop, sell and support products and services. For example, they cite P&G’s Vocalpoint network of mothers to share experiences with selected products with their peers that enables P&G to significantly increase market share vs. markets without the Vocalpoint network.

 

The authors also examine “making the network the organization” in which the Web forces companies to open the boundaries of the business allowing non-employees to offer their expertise in novel ways. They envision future managements seizing on these flexible networks to help manage volatile demands on assets through peak and trough periods.

 

Again examples are given like Dow Chemical using its own social network to help managers find talent in other divisions, even to external talent pools such as retirees.  Amazon.com’s Mechanical Turk uses online labor markets external to the company to solve business problems. Thus, they conclude, that in the longer term, networked organizations will focus on harmonizing tasks to get things done versus focusing on the “ownership” of workers.

 

We arrive at the first trap new technologies sets:  New technologies need to be understood, analyzed and considered in business plans. To be competitive in an asymmetrical world (where physical boundaries or  historically unrelated businesses gave established companies a natural advantage) all top executives need to define strategies to identify where technology opens opportunities for them to create multifaceted revenues while creating threats that may not have existed before.

 

We get immediately to the second, blind, trap. Gene Killian , Esq. of The Killian Firm, P.C. found that new technology gives birth to new legal problems and, by extension, threats to the business.

 

In a cautionary newsletter (you may have to register to read), Gene questioned: “What happens, for example, if you have a restrictive covenant with a key employee? What if that employee is prohibited from "poaching" your current employees? What if that employee leaves your company? And what if that former employee becomes a "contact" of your current employees on LinkedIn? Or a friend on Facebook?”

 

He cites actual cases where the “what if” happened. Employees left one company for another and continued using social media based conversations to recruit past co-workers, clients and prospects from a prior employee. Digital networks, while a new technology, are also now indigenous to most relationships. Intentional or not, the use of these networks is a constant potential threat to business operations, from employment covenants, poaching employees, damaging brand good will, and publishing company secrets or plans.

 

Gene offers common sense pointers such as it is time to review employment manuals and standard agreements, giving clear rules when it comes to LinkedIn, FaceBook, Twitter and other social media. In the firm’s news letter he mentions Bayer Corp. having a 13-page policy that covers employee use of social media. It reminds employees about confidentiality and proper communication with customers or others online. The company also monitors its online reputation.

 

He says H.J. Heinz Co. has a written policy distributed to all employees. The policy specifically spells out that employees must be transparent when publishing material online that references the company or when speaking with bloggers, and reminds employees about not commenting on confidential company information.It is also important to state that post-termination restrictive covenants may be violated by contacting clients through social media "friend" or "link" requests.

 

So the double blind trap of fast emerging technology is that to stay competitive and grow, executives need to understand and selectively capitalize on technology.The second blind trap is forgetting to proactively manage the technology by understanding the unknown and unthinkable consequences on behavior these technologies create.

 

Future sustainable competitive advantage and wealth comes from the hard work of combining an understanding and the strategic use of technology with leadership that reinforces the legal and ethical values of the company among all stakeholders.

 

 

 

 

 

 

 

 

E-mail and texting have killed the art of writing clearly and persuasively.

Yet, there are times when compelling written communication is key. For example buying or selling a company requires descriptive memorandum, creating a presentation where there are high stakes outcomes for success or failure demands engagement, or basically getting a team to achieve a common goal on time and on budget requires clear communication of complex ideas, required actions and budgets.

Thus, I offer these guidelines, a blend of structure and philosophy:

  1. Assume readers have little knowledge of the specific issue and provide what is essential for gaining critical agreement to recommendations.
  2. Clearly know the objective of the communication. If there is difficulty in writing about a thought, probably it is irrelevant to the central concept. Net, when in doubt, leave it out.
  3. Pursue simplicity. Be concise omitting needless words. Ben Franklin said: " Excuse the length of this letter. I did not have time to write a short one." Net, do not burden the reader or viewer with the responsibility of figuring out what you want to say. Spend time necessary to get the message aligned with the objective concisely.
  4. Hold objectives of communication to under three issues. Otherwise there are none. Think: 10% of 10 to dos is 0 % achieved, not 100% of anything.
  5. Keep big ideas in line of sight. Most sentences should be fewer than twenty words People over 40  especially have short term memory problems.
  6. Know your audience. If academic, use complex words to build rapport. In business, keep it simple.
  7. Minimize jargon. With clarity as the goal, define terms and assign acronyms, for example: gift with purchase (GWP), MacDuff Partners (MCD) thousand house holds (MHH), fiscal year (FY) etc.
  8. Plan how to communicate so as to achieve desired goals. Broadly, structure communication in terms of: 1) Objective, request for approval and top line basis for interest; 2) Background; 3) Findings, Conclusions and Recommendations; 4) Budgets and 5) Key Steps and Timing.
  9. Believe that decisions are emotional supported by fact. Focus on the values of your readers, support recommendations in factual exhibits.
  10. KISS (keep it simple stupid). Restrict fonts, text sizes, colors, underlines

Most executives look for ways to resolve conflict quietly, yet to me it is a fountain of innovation.

Let's be clear about what healthy conflict is and is not. What it is is a disagreement about issues aligned with a common objective. What is is not is a political or ulterior objective in a non - zero sum game or simply I win you lose scenario. Executives need to understand the difference in leading organizations. Once the nature of conflict is understood leaders are able to guide the energy to productive use or defeat bull shit.

In opposite order of interest value is the ulterior source of conflict. I advise clients and employees to clarify the game that is being played. If it outside the bound of real business performance, get it in the open. Light of day usually disintegrates ulterior games people play.

Conflict is a source of deep emotion. Tap into it for understanding true commitment to ideas. Conflict is a natural way to role play or sort out opposing thoughts, basis underpinning ideas, and emotional commitment to see the job done well. Frequently I assume the aggressive opposing view, challenging assumptions, analysis and facts. This helps understand levels of preparation and tests true beliefs.This verbal combat also inspires new solutions because people dedicated to common goals find common means of reaching them.

The essential idea is that conflict is wrapped in emotional beliefs and in business supported by fact based analysis. There are truly legitimate opposing views about how to reach objectives. Understanding this is hugely valuable and is why social, cultural and intellectual diversity and all the conflict with discomfort it brings along is worth leveraging conflict as a source of creative innovation.

The Marketing Executive Network Group (MENG) is a community of C level marketing and sales executives. It is a valuable resource for business leaders dedicated to building high performance careers and companies.

One of the outstanding characteristics of MENG is the unselfish volunteer-ism of professional support among thought leaders in the various disciplines that make up marketing and sales technologies.

In that context MENG launched a Social Media Counsel of Advisors. They collectively ran a (free for MENG members) webinar on business application of social media that focused on Twitter. The live program was insightful. However, one question I had concerning strategies small companies could deploy to deal with the probable damaging commentary from dissatisfied customers, competitors, former employees or even social activists. I Tweeted my frustration that this question was not answered and received a direct Tweet message from Lisa Petrilli a MENG member directing me to a terrific blog by another MENGer, Mack Collier on the subject.

That discussion focused on how companies strategically could use social media to redress real and substantial product or service issues, whereas my concern brought on by client presidents, was what to do with rogue comments.

This is when another conversation started with Amber Naslund founder of Altitude Branding switching from Twitter to e-mail due to the depth of the discussion. I want to share that conversation because it underscores the professional activism of MENG and the real ability of social media to sponsor meaningful conversations and healthy on line acquaintances:

Cal - Question 1:  Strategically, how do small businesses address inevitable spam messages about products / services that are inconsistent with the significant majority of facts and customer satisfaction ratings?

Amber - Reply: First of all, I'm glad to hear you say "inevitable" because they most certainly are something you cannot avoid, and can actually be valuable to you.  Here's a few notes on what I consider when evaluating negative comments:

1) Are they specific? Specific complaints can point to a shortcoming in product or service that needs to be addressed. If that comment comes directly from a customer using your service, you should treat it with the same timeliness, attentiveness, and seriousness you would if that person went through other customer support channels.

2) Are they owned? I'm not in support of allowing anonymous comments on things, mostly because if an attack is going to be mounted, someone should be accountable for that (except in the obvious cases of things much more serious than the online or business world, like being put in personal danger of harm). If you know who made the comment, find out some context about who they are, and address them directly and by name, providing full disclosure of your own identity as well.

3) Never feed a fire. Judgment prevails here. You have to be able to tell when comments are deliberately starting a war or trying to be inflammatory. In most cases, if those comments are being waged by someone identifiable, I simply respond and say something like "Thanks for sharing your concerns with us; I'd like very much to talk with you further and see how we can help. I'd be happy to reach out via an email address you provide, or you can reach me at amber@radian6.com anytime." This diffuses the situation a bit, takes the conversation to a more private channel, but demonstrates publicly that you're acknowledging it and addressing it.

Same goes for competitors. If the competition is openly making negative statements, you can choose to refute any factual inaccuracies, but do so with diplomacy and by taking the high road. Something like "Appreciate your comments, Jeff, but you have some misinformation about our product. In actuality, XXX...." If the comments are opinions rather than something you can address calmly and objectively, it's better to acknowledge with something like "Thanks for your feedback, Jeff. We appreciate having outspoken colleagues in our space and look forward to seeing your additional contributions to the industry." More flies with honey and all of that. The community can see who is acting like an adult, and who is slinging barbs for no good reason.

4) Have a comment policy on your own properties that allows for removal of comments that are defamatory, offensive, or otherwise libelous. Do NOT make the mistake of deleting all negative comments, but this gives some recourse if things are vulgar, personal attacks, or otherwise deliberately out of line.

5) When possible, for comments that actually have merit, round back with the individual in the forum where the comment was originally made, and let them know what you're doing to address it. Nothing impresses folks better than seeing not only that you heard their criticism, but that you took it to heart and are committed to doing something with it.

Cal - Question 2: How do small companies staff social media initiatives?

Amber - Reply: That all depends on what your social media effort entails. Are you just listening and gathering information or are you actively engaging and responding? Are you just centered around your brand or are you participating in industry discussion? Are you just conversing, or are you also creating content?

In general, your listening/monitoring efforts for an active brand should take a couple of hours per day. The amount of time you dedicate to engagement - say, conversing on Twitter or on your Facebook page or LinkedIn Group - is up to you, but I'm going to say that it'll take at least 2-4 hours a day of time, whether exclusive to one person or distributed. The more engaged you are, the more active your networks will be, and the more maintenance and cultivation they'll require.

You're definitely going to need at least one full time equivalent in terms of hours, maybe more, if you're serious about adding social media to the mix. I'd also recommend evaluating and auditing your current marketing and outreach efforts so that social media can be integrated, and not be a standalone element (they should all work together and in a complimentary fashion). And I would recommend that the people you delegate to handle this be mature business professionals with an understanding of your organizations goals, customer attitudes, brand presence, and the like. This is a business management role first, with a specialization or a focus in social media. But you definitely don't want to delegate this to your intern; it really demands a more mature, seasoned business person if it's ever going to become a well-oiled part of your business processes.

Social media is an ongoing commitment, like customer service. You're not "done" with it, you maintain your presence and adapt to how your networks and communities respond to you. That's why it's important to not only dedicate proper resources, but to be sure they're individuals that are personable, business savvy, and committed to the long-term health of your relationships with your customers, as that's what engaging through social media is all about.

Amber

Symbols powerfully communicate meaning quickly. To me one of the most significant is North on a compass. It symbolizes mission which implies knowledge of a person's goals which in turn infers a purposeful journey.

Thus, there is a compass rose on the MacDuff site inviting people, business owners and leaders to explore big ideas for the benefit of their customers, employees and themselves. Even if one goes off course, having awareness of true North, any person can always find his way home or to another destination.

A friend, Bob Ward, sent the following article by Charlie Reese who has been a journalist for forty nine years. Since I could not say it any better, I offer the following article by Mr. Reese, which I use without permission. To me he captures why, as a nation, we are lost and have been for quite awhile.The same applies to our corporations.

If Congress, or even boards of private companies, really understood the concept of true north, my best guess is we all would be on a different heading now of fiscal responsibility, personal accountability, and real concern for members of our community.

545 People

By Charlie Reese

Politicians are the only people in the world  who create problems and then campaign against them.

Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?

Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?

You and I don't propose a federal budget.  The president does.

You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does.

You and I don't write the tax code, Congress does.

You and I don't set fiscal policy, Congress does.

You and I don't control monetary policy, the Federal Reserve Bank does.

One hundred senators, 435 congressmen, one  president, and nine Supreme Court justices equates to 545 human  beings out of the 300 million are directly, legally, morally,  and individually responsible for the domestic problems that plague  this country.

I excluded the members of the Federal Reserve Board because that problem was created by the Congress.  In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.

I excluded all the special interests and lobbyists for a sound reason.. They have no legal authority.  They have no ability to coerce a senator, a congressman, or a president to do one cotton-picking thing.  I don't care if they offer a politician $1 million dollars in cash.  The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator's responsibility to determine how he votes.

Those 545 human beings spend much of their energy convincing you that what they did is not their fault.   They cooperate in this common con regardless of party.
What separates a politician from a normal human being is an excessive amount of gall.  No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits.  The president can only propose a budget.   He cannot force the Congress to accept it.

The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes.  Who is the speaker of the House?   Nancy Pelosi.  She is the leader of the majority party.  She and fellow House members, not the president, can approve any budget they want.  If the president vetoes it, they can pass it over his veto if they agree to.

It seems inconceivable to me that a nation of 300 million can not replace 545 people who stand convicted -- by present facts -- of incompetence and irresponsibility.  I can't think of a single domestic problem that is not traceable directly to those 545 people.  When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist.

If the tax code is unfair, it's because they want it unfair.

If the budget is in the red, it's because they want it in the red.

If the Army &Marines are in  IRAQ ,  it's because they want them in IRAQ  

If they do not  receive social security but are on an elite retirement plan not available  to the people, it's because they want it that way.

There are no insoluble government problems.

Do not let these 545 people shift  the blame to bureaucrats, whom they hire and whose jobs they can  abolish; to lobbyists, whose gifts and advice they can reject; to  regulators, to whom they give the power to regulate and from whom they can  take this power.  Above all, do not let them con you into the belief that there exists disembodied mystical forces like "the economy," "inflation," or "politics" that prevent them from doing what they take an oath to do.

Those 545 people, and they alone, are responsible.

They, and they alone, have the power.

They, and they alone, should be held accountable by the people who are their bosses.

Provided the voters have the gumption to manage their own employees.

We should vote all of them out of office and clean up their mess!

Charlie Reese is a former columnist of the Orlando Sentinel Newspaper.

 
This might be funny if it weren't so darned true.
Be sure to read all the way to the end:
 
     Tax his land,
     Tax his bed,
     Tax the table
     At which he's fed.
 
     Tax his tractor,
     Tax his mule,
     Teach him taxes
     Are the rule.
 
     Tax his work,
     Tax his pay,
     He works for peanuts
     Anyway!
     Tax his cow,
     Tax his goat,
     Tax his pants,
     Tax his coat.
     Tax his ties,
     Tax his shirt,
     Tax his work,
     Tax his dirt.
 
     Tax his tobacco,
     Tax his drink,
     Tax him if he
     Tries to think.
 
     Tax his cigars,
     Tax his beers,
     If he cries
     Tax his tears.
 
     Tax his car,
     Tax his gas,
     Find other ways
     To tax his ass.
 
     Tax all he has
     Then let him know
     That you won't be done
     Till he has no dough.
 
     When he screams and hollers;
     Then tax him some more,
     Tax him till
     He's good and sore.
     Then tax his coffin,
     Tax his grave,
     Tax the sod in
     Which he's laid.
 
     Put these words
     Upon his tomb,
     Taxes drove me
     to my doom...'
 
     When he's gone,
     Do not relax,
     Its time to apply
     The inheritance tax.
 
     Accounts Receivable Tax
     Building Permit Tax
     CDL license Tax
     Cigarette Tax
     Corporate Income Tax
     Dog License Tax
     Excise Taxes
     Federal Income Tax
     Federal Unemployment Tax (FUTA)
     Fishing License Tax
     Food License Tax
     Fuel Permit Tax
     Gasoline Tax (currently 44.75 cents per gallon)
     Gross Receipts Tax
     Hunting License Tax
     Inheritance Tax
     Inventory Tax
     IRS Interest Charges IRS Penalties (tax on top of tax)
     Liquor Tax
     Luxury Taxes
     Marriage License Tax
     Medicare Tax
     Personal Property Tax
     Property Tax
     Real Estate Tax
     Service Charge Tax
     Social Security Tax
     Road Usage Tax
     Sales Tax
     Recreational Vehicle Tax
     School Tax
     State Income Tax
     State Unemployment Tax (SUTA)
     Telephone Federal Excise Tax
     Telephone Federal Universal Service Fee Tax
     Telephone Federal, State and Local Surcharge Taxes
     Telephone Minimum Usage Surcharge=2 0Tax
     Telephone Recurring and Non-recurring Charges Tax
     Telephone State and Local Tax
     Telephone Usage Charge Tax
     Utility Taxes
     Vehicle License Registration Tax
     Vehicle Sales Tax
     Watercraft Registration Tax
     Well Permit Tax
     Workers Compensation Tax
 
STILL THINK THIS IS FUNNY?


Not one of these taxes existed 100 years ago, and our nation was the most prosperous in the world.  We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids.
What in the hell happened?


Can you spell 'politicians?'


And I still have to 'press 1' for English!?
 

From compensation for my daughter who is a junior sales executive at a national company to chairmen - friends at global ones is a critical topic in the righting of the American economic ship.

In my daughter's case the answer was a corporate wide pay freeze due to "business weakness" despite her and few others' personal high achievement. In the case of top executive at publicly traded ones the issue of re-balance total compensation between cash and stock options to insure long term effectiveness of  decisions.

Lost in the conversation is the topic of making public employees or government accountable for decisions along with private company executives and the subject of integrity. We'll talk about government issues at the end of this piece.

I believe any of the three alternative approaches above, i.e. total lock down. cosmetic rebalancing or status quo, are solutions to the fundamental problem of self - serving focus of people in authority.

What I am helping several private company clients do is position their businesses for eventual sale or IPO, is restructuring executive roles to be more strategic than functional and linking total compensation to the long term performance of the organizations. We are doing this through a gradual re-alignment of the organization to fit the concurrent evolution of the businesses in complexity and adding a layer of non cash compensation.

Revised compensation structure, along with standard cash, tailored insurance vehicles and bonuses are warrants that are exercisable with change of ownership or longer term under special circumstances if the executive leaves the company in good standing. This is a work in progress with counsel, compensation consultants and business valuation advisers, but offers owners an ability to encourage and reinforce behavior that is in the optimizes the total performance of the company and not the individual income for selected employees. It further does not dilute owners' executive control or create unfunded tax obgligation to executives.

The current Administration is trying to foster regulations that require banks and others financial institutions (except Fannie Mae and Freddie Mac employees) to craft incentives along lines proposed by Professor Kane of Boston College. His idea is to bonus senior executives with a special class of stock that has claw back provisions require a return of capital if the company becomes insolvent. This seems like a smart but unworkable idea.

The second proposal is to establish a "West Point for regulators" according to Jason Zweig at the Wall Street Journal. The concept is to instill "a sense of honor and duty" with those charged with oversight. With these goings on in Washington, I wonder where all the adults, all the educators, all the parents have gone so that smart people think we need an institution to teach adults in responsible position about honor.

Integrity and honor, traditional concepts, are fundamental to motivation. Beyond that, compensation issues are central to behavior that potentially maximizes executive conduct that benefits all stake holders. Contemporary boards and managers have arranged compensation to optimize personal returns while sub-optimizing benefit to their cohorts. Under a capitalistic system it appears to me a straight forward; tie wealth creation to long term performance whether executives stay or leave organizations.

Jason Zweig, in is WSJ article, rhetorically notes: "It's probably too much to ask for Congress to abide by the sample principles (honor, duty and long term accountability even after leaving office), but we can dream. Could anyone possibly doubt this would wake up the watchdogs?"

Cal asked me to write a blog on leadership. So I’ll give it a try by briefly outlining the five key principles I believe lead to excellent leadership. I define excellent leadership as making employees want to come to work in the morning and voluntarily capturing their drive time and shower time thoughts. These five principles:

1. Leadership by example, a principle I first learned as an infantry platoon leader in the Army. The best leaders treat others as they want to be treated and they always treat the “little people” in a company with the same respect as those at the top of the company.

 2. The vision to look long-term but the discipline to deliver results short-term. True leaders set quantifiable objectives throughout the company, communicate them clearly and report on them regularly (to all employees, including every shift at the plants). Another blog will discuss the Objectives/Goals/Strategies/Measurements method of setting company-wide objectives that cascade from the top to the bottom in an organized, understandable method. It is obviously essential that the leader provide the resources (financial, technical and human) to be sure the objectives are achievable.

 3. The creation of an environment/culture where creativity and productivity can flow. Achieving the leadership position in a market or market segment is difficult. It usually means a company has differentiated itself/its products in a meaningful, consumer or customer focused way from its competition. It also usually means that the company is winning by obsoleting itself before the competition can do so. This usually happens when innovation is occurring to spur the company ahead. Innovation means risk-taking - which means a certain level of probability of failure. A true leader will share this risk of failure with his/her employees so that they are encouraged to come forth with the excellent ideas needed to drive for marketplace leadership as opposed to shrink from proposing meaningful action for fear of dismissal or demotion. Sharing occurs when the leader is aware of the initiative and encourages it. A true leader will also give all credit to the employee(s) when innovation succeeds, thus reinforcing the importance of risk-assumption and innovation.

 4. The recruitment and promotion of employees who share the following key characteristics:

 a.       Business people who have a background in a particular function as opposed to people who are only functionally (marketing or sales or finance) focused. Business people keep the whole company in mind when making key decisions.

 b.      People who have a desire to excel and are intelligent (street smarts count), entrepreneurial and honest. These characteristics can rarely be “taught”!

 c.       People who treat the company’s money as their own.

 d.      People who have pride of correctness, not pride of authorship.

 People are the most important asset of a company in the long run. Most large companies have access to essentially the same financial, informational and technical resources. It is the people managing these resources who make the difference between being number one and number two.

 5. An incentive/reward system that is aligned with the company’s objectives and is objective in its payout. Such a system will reinforce the key principles that are making the company successful in the marketplace.

 Although there are many principles for great leadership, I believe a focus on the above five will lead to success in the marketplace. Good luck!!!!!

 

 

 

Many years ago an advertising icon, Jerry Della Femina, warned ad agencies about inflating the cost of producing commercials. He likened the inflated costs of advertising to the then bloated cost of movie production. His views, now called blogs, were published in 1969, lifetimes before the Internet.

He said: "The day is coming. When the man who foots the bill is going to revolt. When the manager is going to say ' Why?'. When all is said and done the $ 100,000 dollar commercial (with inflation $ 300,000) wasted commercial is going to disappear forever.

Jerry could not imagine social networking's interactive communication. He had no insight to social-mobile-e-commerce or impact of self-publishing on opinion driven endorsements.  Essentially,Jerry foresaw agencies loosing their ability to give high value to their customers because they were focused on their bottom lines rather than on their customers'. Highly produced commercials and media spending in support of them is disappearing. Lesson learned: Focus on your customer.

The biggest advertiser, P&G is announcing a "stunning new business strategy" to jump-start growth. They claim it is a startling, counter-intuitive way to innovation proposing brands develop values and sense of purpose to invoke the heart and care about human needs. Succeeding at that, so go the natural extension of that strategy, revenue and profit will follow. No duh.

We at MacDuff have long argued that businesses have to find and deliver emotional benefit of their product and services to customers to be successful. Product end benefits support the emotional value claims. This concept is tough for entrepreneurs to grab onto, but is essential to the creation of great companies.

The synopsis of P&G's strategy from Knowledge@Wharton follows, which is not only the way forward for entrepreneurs with tiny businesses in the grand scheme of things, but also the US Government:

  1. Inspire employees to add their hearts to their heads.
  2. Add a third P to performance measurement: potential for impact. (To those who follow MacDuff, this means "change the world".)
  3. If purpose-inspired opportunities and commercial considerations seem to conflict, find another way.

Once, a long time ago, I sat in my boss's office - a brand manager of a large consumer products company. It was Saturday, Christmas Eve, and the brand group joined the discussion. He extolled us to get a number of delayed projects done for review and approval January 1.

Right after the meeting, one member of the brand group (this was 6 PM) left for Christmas with family and our boss yelled "Get your priorities right, your family or your career!". (Parenthetically, the issues we work through on Christmas Eve were not reviewed with upper management until March of the next year.)

My immediate thought was our boss, the brand manager, was really messed up. The problem was the boss's priorities and his insecurity, which his subordinate's audacity of leaving work at 6 PM lit up like fireworks.

The brand's performance was not an issue with the rightness of the programs, but rather the inability of the manager to make timely decisions. Our boss was precise to a fault which got in the way of decision making. No matter how smart we are or become, information is never perfect.

As business owners, we need to make calculated risk judgments based on a high level of trust among out team. We need to honestly prioritize how our teams invest their time.

At another time and place I worked for the president of a company who was shrewd, in a good sense. He saw opportunities in weakness of competitors, loved learning ways to exploit those weaknesses, and had the political clout within the corporation to get resources to expose competitive weakness for market advantage. That game was fun, but at end of days failed to inspire his team to build to greatness, an idea sacrificed at the alter of short term short profits.

The point of all this is that there are bosses and company owners whose sense of life is low despite their technical acumen. They are able to distort the work life balance so they slowly and beautifully allow the dying of terrific businesses right before our eyes.

Seeing so many once vibrant businesses die, in part, is why I created MacDuff. I want to help company owners rewire their businesses for sustainable wealth (freedom in my terms) on the premise we can inspire achievement beyond our personal limited lines of sight.

Two of my bosses framed that big idea, John and Ben. John is collaborative, empowering, brilliant leader who taught me that we get there together or we don't get there at all. He helped simplify complex ideas so they could come alive. He embodies strength, fairness and morality that combine in an uncanny way to fuse together highly motivated, self-directed teams with records of uncompromising achievement.

Ben was inspiring in a different way. He was bold, flashy, had terrific imagination with a bias toward action. He was awesome and fun at his best.

When people whose careers we've touched think back on us, how will we be remembered? I sense that most of us never pause during our careers to question whether or not we inspire others to grow beyond the limits we see in ourselves.

Recently we have seen a significant increase in merger and acquisition interest in our client base. That activity prompted me to review business valuations for businesses sold several years ago. The first lesson from this review was the need to lose the emotional attachment to businesses and accept the agnostic reality of how businesses are valued. The second lesson from successfully closed deals was the need for clarity of objectives in buying or selling companies.

As background, we are talking about privately held companies with no empirical market value. That said, valuation is as much art as science. For private companies on both sides of the buy - sell transaction these are emotional events. Thus, knowing this and understanding in crystal clear detail the objectives of a deal allow shrewd buyers or sellers to effect trades that maximize the probability of realizing a successful deal beyond the transaction itself.

Published research suggests that 80% of all M&A transactions fail to meet their stated objectives. Consideration of any transaction, which also impacts valuation, must include post closing integration. To see our approach on maximizing probability of success, see our Basic M&A Checklist. (This MAP is read clockwise from 1 AM to Noon.)

Owners need to be aware there are many valuation models but all fall under broad families: a) Asset Driven b) Income Based and c) Market Comparison. Each model offers ranges of valuation metrics, which means company owners not experienced in corporate finance retain suitable counsel. Each merchant bank, PE capital or M&A specialist focuses on different industries, deal sizes even buy or sell side of transactions. (A short list of favorites follows.)

For example, a family valuing a company for an estate may want to obtain an independent valuation on a low end for estate tax purposes. Remember that a low base now may translate to significantly higher capital gains in a following sale transaction or may reduce the ability to collateralize future transactions. But we will settle on the low valuation objective for this discussion. A special note on this example: All states have different regulations that apply so local counsel is critical.

Here is an actual range of trading ratios for a consumer products company based on publicly traded like-company values several years ago:

Trading Ratios

Guideline Company Range

Selected Multiple

Bus. Enterprise / EBIT

5.7 - 11.5

5.7

Bus. Enterprise / EBIDA

5.1 - 10.0

5.5

Equity / EBT

5.5 - 13.2

9.0

Equity / Net Income

7.6 - 21.6

15.0

The various metrics relate to income statement entries; EBIT = earnings before income taxes, EBITDA = earnings before income taxes and depreciation, EBT = earnings before taxes and net income is revenue minus returns and product costs. The use of any of these ratios as benchmarks again depends upon the nature of the industry and objective of the business deal.

In fair value determination, premium or discount salaries to family members paid are normalized to industry standard, as are premium rent payments and other idiosyncratic expenses that benefit a family. This normalization may either inflate or deflate valuation depending upon the objectives of the parties to the transaction. Examples of other variables influencing valuation are:

  • Market or business category in terms of size, volatility, growth / decline
  • Competitive concentration and market share of target company
  • Nature and quality of inventory
  • Revenue composition i.e. few large customers with constant order streams or many small accounts with few repeat orders
  • Patents, trademarks or factors that give unique, sustainable competitive advantage.

Awareness of different fair market value methodologies is important for owners using their companies as a means of wealth creation versus current income production. All readers can understand that the range of ratios applied to whatever valuation metric is wide and the attending company value dramatically changes from the low to high end of the relevant range.

The key for me lies beyond the historic performance of a company. As a general rule, sellers are selling the past and buyers are buying the future. It is the potential a business has for future growth, a view I hold whether buying or selling companies. This gets back to the intangible but real value of brand strength and how to package a sale or conversely see extraordinary value in a purchase.

Regardless of turnaround or high growth going concern, I personally focus on the nature and strength of a company's perception in the collective minds of customers. Financial experts are essential in identifying and appraising fair monetary value and deal structure, yet real wealth is derived from grasping how to translate historic performance into ongoing profitable revenue while serving customers extraordinarily well.

Here are selected companies I know and their roles in ongoing transactions with us: AME Capital for client financing and acquisition of technology companies; Touchstone Capital for consumer product company acquisitions and business valuations; Millburn Capital for technology company acquisitions;Castle Island Partners for larger, consumer based business. By way of disclaimer, none of these company principals necessarily agree or disagree with views expressed here.

Many business owners (going concern or pre-revenue) are surprised that a key starting point for MacDuff Partners' engagements, after conducting a 360° business audit, is to begin defining a company's brand. We start with "brand" based on experience that strongly demonstrate branded companies and products lead to superior profitability.

Brand is the character of a business, along with the essence of what is promised and delivered to customers every day. As important to company owners, brand strategy provides the organizing concept, a theme, from which to lead an entire company. By extension, having a clearly articulated brand integrates the company's vision and mission and is the platform for sustainable wealth creation when the company is sold.

As small business owners struggle accepting brand as the core asset for a company, it appears management of Fortune ones do as well. A recent article in Advertising Age discussed a finding that on a global basis only P&G and Reckitt Benekiser communicate the importance of brand to the bottom line. The article summarizes a global survey by the Institute of Practitioners in Advertising in the UK covering the top 50 marketing spenders on all continents.

Ad Age gives an example of P&G as a thought leader in business communication based on their annual reports. The article pointed out that P&G's marketing strategy was integrated into the company's overall business commentary. A.G. Lafley, Chairman, explained throughout the report on a brand-to-brand basis how his company's focus on innovation and understanding customer needs delivers high value. (See our discussion of customer focus.)

An analyst, Seamus Gillen, concluded:"There's a correlation between how a company talks about its business and how it runs its business. The stronger the role played by brands in generating a company's revenues, the more important it is for there to be appropriate disclosure on the role of brands in developing and delivering the value proposition." Net, net, even for publically traded companies, strong brands translate to revenue, and revenue to value, thus value to wealth.

Many books and programs are dedicated to methods and practices for developing brands. Look in the MacDuff "Resources" section from some tools to use. A terrific quick read on brand building was written by Allen Gorman, President of Brandspa, "Briefs for Building Better Brands".

All business owners must spend time re-thinking the value of their company's and product's brands. Despite day to day operating challenges, time conflicts and emotional hurdles we go through running our businesses, long term brand equity is the critical asset for wealth creation.

Earlier I discussed the need for business owners to reconsider government created markets as part of their strategic plans. McKinsey illustrates this point extremely well in an article called Electrifying cars: How three industries will evolve.

The essence of strategic thinking is understanding that there is enormous wealth and brand equity to be created due to the inherent volatility of government legislated or controlled markets. The issue for each entrepreneur is to identify the strategic entry point, develop a plan to exploit the opportunity and take action.

I am not taking a moral or political stance. This is about wealth creation (freedom) within government created economies. Pharmaceutical, oil, nuclear, tobacco, mortgage and even liquor industries experience the vicissitudes of political action. Scale of opportunity and threat of loss is beyond historical precedence in our current economic ecosystem.

Yet, it is impossible today to forecast where opportunities will lie. First, most of congress does not even read bills they pass (excerpt from healthcare discussion). Senator Hoyer from Maryland, for example, even derides the concept of reading them because it takes too much time.

Secondly. unexpected events may subvert a seemingly winning decisions. For example, unions stopped the building of solar panel plants and solar farms in California by issuing a 62 page data request with the California Energy Commission related to alleged environmental violations. (California mandated renewable energy use a a percent of total. Never-the-less politicians sided with unions to extend the reach of environmental laws originally intended for other purposes, and apply them to desert land being developed for solar farms.)

Despite uncertainty and volatility, my belief is entrepreneurial businesses must participate in legislated new markets. The entry point is likely to be in supporting core infrastructure companies. Through analysis, get to know target customer needs. Either building information or e-commerce web sites or coaching executives in high stakes presentations; whether advising gas station chains to install electric recharging units or junk yard facilities to convert from metal reprocessing to battery recycling, opportunity calls. Analyze market data. Anticipate and respond to the future politicians are creating.

Think deeply and act boldly now or prepare to reap the winds of inaction.

In a meeting last week, a business-owner client with about thirty full-time employees made a comment that the pending changes in health care would bankrupt him in several years despite reductions in his work force to control operating costs.

Later, I asked Scott Peloquin, CEO of benefEx, a leading New Jersey employee benefit consultancy for small and mid-market companies, how I should begin advising my clients to think about the upcoming changes in federal health insurance mandates.

Scott said: “First, I don’t think the reforms now being discussed could possibly go through.  Even if they do, the most efficient solution today is for employers to deploy a consumer driven program, rather than retaining more traditionally designed – and expensive - plans. This was innovative thinking to me about how to rebalanced risks and costs, so I rhetorically wondered how the program worked and what a representative cost impact could be.

“In a nutshell traditional plans charge about $4,000 monthly in premiums to insure about $3,000 of up-front risk, or ‘deductibles’ (think about this as though you were lowering your annual auto insurance premium by increasing your deductible from $ 500 to $ 1,000).  The current higher cost arrangement is profitable for the insurance company commission-based insurance brokers.  High-priced insurance also produces disproportionate revenue for state governments which further increases health insurance costs. 

This ‘dirty little secret’ rarely enters the discussion, that states embed a premium tax into insurance rates as a flat percentage of gross premiums.  New Jersey is so concerned by the potential loss of premium tax revenue as companies switch to consumer driven programs that it is requiring a “declaration of understanding” attestation – part of a effort to dissuade employers from offering these more efficiently designed health care financing programs.

For example,  a 7-employee company paying nearly $98,000 / year for their health care program, before proposed rate increases to more than $111,000 in 2010.  Working in conjunction with the company accountant and HR administrator, they were able to restructure the health care financing so the worst case scenario cost was under $75,000.

Employee contribution rates and out-of-pocket maximums were reduced, and – if the plan performs better than expected, the employer may recover as much as an additional $25,000, thanks to a federally approved ‘dividend’ structure  an important, recurring part of the plan’s architecture.

Though he did caution that each company situation is unique, he stressed “…the same principal applies whether an employer has seven, seven hundred, or seven thousand employees!”  He also pointed out that benefEx converted 85% of clients to some form of consumer-driven healthcare solution – as compared to an industry standard still hovering around 7%.  Not a single employer group has returned to a traditional plan, which speaks well to both the sustainability of consumer driven program, and their popularity with covered employees.”

This issue is of major interest to company owners.I believe significant tax increases targeting small businesses next year are inevitable, thus recommend that owners spend at full available. Invest specifically on building a rock solid team of employees, along with a strong brand.Companies that do so will be best positioned in their markets six – eight years from now (when tax policy reverts to a more rational structure) to gain profitable market share, or enter into a profitable merger / sell transaction.

Other insights Scott shared with me is that businesses must proactively assess their Family Medical Leave Act (FMLA) and COBRA compliance. Speculation is that federal regulatory actions positioned as worker protections may be launched as “revenue enhancement” initiatives. From a cost management standpoint, outsourcing the complex administration of these federal mandates is more effective than in-house administration and more efficient since outsourcing costs dropped by 50% over the last three years.

Business owners building a highly profitable company in this political and economic climate need consider implementing a thoughtfully designed disability program. Done smartly it could mitigate some risks associated with FMLA. Communicated properly, more than two thirds of employees may actually volunteer to pay these premiums rather than having employers pay, due to the adverse tax implications inherent in most employer-paid disability plans.

The lesson to be learned is that owners must ramp up innovation throughout their companies. Innovation is required not only for profitable new revenue production but also for ongoing cost management. Building a highly profitable company demands customer focus more than ever, supported by a cohesive employee team.

 


With the ongoing economic dislocation in 2009, many small - midsized enterprises (SME) lost significant revenue and profit. Business owners I talk to from car dealers to commodity traders have seen revenue and profits drop significantly and apparently see a slow return to pre-2009.

However, offsetting the decline in traditional markets, such as retail, consumer products manufacturing, or clothing as well as discretionary services from cosmetic surgery to luxury vacations.

Earlier I blogged about the pressing need for owners to offset revenue losses by assessing their company's strengths, weaknesses, opportunities and threats (SWOT) and then matching the strength and opportunity with government-legislated markets.

Yesterday I attended a NJBIA workshop "How to Get Government Contracts and Federal Stimulus Funding" focused on New Jersey simply to help client focus on new opportunities and how to get financial resources. Kick off understanding of NJ programs by exploring first the NJ state business site about available financing and then the NJ Recovery Site . Funding is available in NJ specifically opened up by the 2009 Recovery Act . (A broad starting point would be at Federal Grant Opportunity Resources.).

  • infrastructure primarily roads, pavement, bridges and light rail tunnel to Manhattan
    1. see Port Authority of NY & NJ Procurement Guide. Port Authority has separate and distinct protocols from balance of government agencies.
    2. see NJ Department of Transportation. There is a 10 year statewide capital investment strategy (SCIS) which will open markets from engineering through machinery cleaning
  • green or renewable energy of a special kind (solar, wind or geothermal)
    1. see Workforce for green job training support and funding
  • hiring and training new workers primarily in areas of high unemployment
    1. see Grant Opportunities for customized and literacy
    2. to apply see Training Grants
  • environmental infrastructure
    1. see 2009 Stimulus Loans - NJ Infrastructure
    2. see NJ Projects by area
  • new funding available through government agencies
    1. NJ Regional SBA (William Boone Assistant District Director)
    2. Economic Development Authority Fast Start for new business funding

I urge owners to critically think through strategic ways to fit current core business competencies into these new, well funded markets. Whether it is technology to create web sites as a vendor to government - private partnerships, sub contractors for major infrastructure vendors or a printer to support all the new forms government requires, there is opportunity in this new vertical called "recovery" and a new venue for wealth creation.

Always, but especially, in tough times, character matters. Life's journey is not so much about what is accomplished but how. My view is that all company presidents, owners, heck everyone, looking in a mirror in the morning has to love the reflection he or she sees.

I am astounded by the Madoffs, Helmsleys or Stanfords of the world. They have had financial wealth but no character. Just because we can is no excuse to do. A close friend (Jack) and I talked today about our top sales  executives in totally different companies shipping container loads of products at fiscal year end so they could make bonus for themselves and their teams. Unfortunately, they shipped against  non-existent purchase orders. Bonuses paid, shipments returned, companies in a hole.

Congress, by the way, is not different. Congress passes unfunded mandates, and push costs downstream. Downstream are companies, states or municipalities. Congress is clean, all the others pay. If they can't pay, well, welcome to hell.

Entrepreneurs and leaders have to stand clear of this behavior and not tolerate duplicity. This is tough when your money, your family, your life is on the line. My view is that if you, owner, leader and visionary, do not set the example, true North, no one else can or will.

One of our clients, Peter Ladka of Parse3 exemplifies this idea of standing true. He is the last to win and the first to lose. He never forgets it is his family and the people in his company that create his wealth. It is not how many 0000000000 are in front of the decimal point in his checking account that measures his wealth. It is his character.

Lead. Lead from strength of principle that you believe in.

My wife and I had tough times in our family company, but never forgot the idea that we get there together or not at all. My mission. My men. (PC is people but readers will get the idea.) At the end of the day, character matters.

 

We are working with colleagues to construct new wealth creating business strategies in the wake of unprecedented growth in federal government control over free markets.

The first strategy is to actively pursue markets congress and the administration legislate into existence.The second is to pursue innovation and nimbleness to accelerate go to market efforts. The third is to investment spend on people and brand so as to minimize taxes while creating a strongly branded company with an up-beat, can-do team of employees. We believe those ideas, executed soundly, create a company the is ultimately more salable in any environment and is the platform for wealth creation and freedom.

The rhetorical question is this:"Is wealth, by definition, the new social quicksand?". In a period when local governments claim eminent domain to confiscate one taxpayer's property and deliver it to another for "common good", in a period when Government deems one company's bonus policy (AIG) unconscionable and another's  (Fannie Mae) acceptable,  one company too important to fail (GM) and another not (Lehman Brothers), we lose the connection between market performance and customers and enter one where bureaucrats decide winners and losers. 

Coincidentally, I have been re-reading "Civil Disobedience" written by Henry Thoreau, published in 1849. The US at that time was struggling with the political and moral "correctness" of slavery and the war with Mexico. His reflections are as relevant today when we face different problems, 160 years after he published them.

Thoreau speculated on individual responsibility in democracy and cynically observed:

All voting is a sort of gaming, like checkers or  backgammon, with a slight moral tinge to it, a playing  with right and wrong, with moral questions; and  betting naturally accompanies it. The character of the  voters is not staked.  I cast my vote, perchance, as I think right; but I am not  vitally concerned that that right should prevail. I am  willing to leave it to the majority. Its obligation,  therefore, never exceeds that of expediency. Even voting for the right is doing nothing for it.

Simply, voting is an essential part of a democracy, but generally is only a feel good exercise in personal responsibility. Elected officials do what they want, not necessarily what they were voted into office to do.

As a capitalist, I am shocked by the government's egregious seizure of power and consequential loss of our economic and personal freedom that directly and proportionately evolves. By simple ukase, industries are born like the one for ethanol, and others killed like domestic oil and gas exploration.

I stand in wonder over the seismic change we face. Thoreau made a statement that goes to explain the paradox private citizens encounter with government citizens:

There will never be a really free and enlightened State until the State [sic. politicians, my translation]comes to recognize the individual as a higher and independent power, from which all its own power and authority are derived, and treats him accordingly.

While Thoreau was talking about slavery and citizens' behavior / association with it he said:

...All men recognize the right of revolution; that is,  the right to refuse allegiance to, and to resist, the  government, when its tyranny or its inefficiency are  great and unendurable.

His solution was to stop paying taxes. A tax revolt to him was a non violent revolution. To me that is a naive but elegant solution that is not workable today but becomes a strategic element of a business practice. Together we may force government citizens to think hard about real solutions to our common problems.

In an prescient statement, Thoreau's conclusion about politicians is more apt today than probably it was 160 years ago:

There are  orators, politicians, and eloquent men, by the  thousand; but the speaker has not yet opened his  mouth to speak who is capable of settling the  much-vexed questions of the day.  We love eloquence for its own sake, and not for any  truth which it may utter, or any heroism it may  inspire. Our legislators have not yet learned the  comparative value of free trade and of freedom, of  union, and of rectitude, to a nation. They have no  genius or talent for comparatively humble questions of  taxation and finance, commerce and manufactures  and agriculture. If we were left solely to the wordy wit  of legislators in Congress for our guidance,  uncorrected by the seasonable experience and the  effectual complaints of the people, America would not  long retain her rank among the nations.

Quicksand is the footing we are in now. There is no action certain, but know that "when in doubt, do something". Something to me is reinvesting in our businesses, our employees and our customers in terms of service and experience to build solid greatness in real terms and not simply with words.

Businesses continuously seek operational improvements, often pursuing the latest strategic options. Larger organizations emphasize quantitative analysis, smaller ones drive by gut, but in the end a company's strategy, big or small, is defined by what it does versus what it says.

The big take away from this discussion is for business owners to think in another dimension about how to inspire teams to attain high performance within the context of rapidly changing environments. While specific reference to another company and people is made, they are used as concrete examples of advisers that can help SME businesses.

Over the past couple of decades, lean manufacturing and Sigma Six performance programs have defined solution paths for both manufacturing and service companies. Even in our family business and now in clients', we try to inject the philosophy of those disciplines if not the formal processes. From manufacturing to branding, from customer relations to administration, we have attempted to implement "lean".

In my experience, technical or mid-level management had been charged with designing and implementing process and profit improvement programs. This pattern underestimated the level of top management involvement and dedication to create change. All the players were skilled in their respective fields but lacked the formal or informal authority, capabilities or clarity of mission to accomplish the goal of making productive change permanent. Let's say that the changes envisioned rarely looked like the change that happened.

During the last several years I have been working with a talented group at SoundBoard Consulting. There I became more cognizant how the "soft" side of management, such as leadership skills, peer group collaboration and conflict resolution actually strengthens the "hard" operational skills. Those skills that I and my colleagues learned as MBAs and in other academic programs, ongoing promotions in large companies and their related training events and even in political roles appear more in background thinking than in day in and day out application.

The essence of this discussion is for small business owners to focus as much on the soft side as the hard. Making operational change is difficult but even more critical in 2009 and ongoing economy. We most frequently emphasize the technical or strategic aspects of management over the organizational ones. Richard Magid, founder of Soundboard, redirected my thinking to underscore that it is the softer side that matters most in delivering potential performance improvements.

Clarifying values, purpose, achieving alignment, receiving perpetual feedback are key in making sure the team is on the same page with the same high levels of commitment. Resolving the inevitable conflict created by high stress tasks begins with candid trust by all team members and facilitated ability to work out ways to gain key alignment.

My experience also teaches that there is initiative fatigue, which occurs due to the uneven progress virtually all programs encounter over the long pull. While technical teams may believe there is constant gain, company top management often looses energy and focus in making programs work. Net, there is a failure in leadership. Jay Wolf, also from SoundBoard, has created a leadership program that helps inculcate leadership skills and techniques to more accurately read employee behaviors and influence them in ways that realize intended outcomes.

I encourage presidents and owners to investigate resources like those found at SoundBoard if they aspire to create durable wealth.

Small companies generally have a significant advantage over global ones in terms of flexibility, innovation and speed to market but suffer a big disadvantage in available capital. The capital I'm talking about is not so much financial variety but intellectual. Crowdsourcing can help in a variety of disciplines to offset lack of human capital, from product innovation to leadership skills to sales. When the subject turns to comprehensive approaches to optimizing profitability, the specific uniqueness of an individual company's internal structure makes the crowdsourcing option less viable.

Virtually every accountant and CPA I've met see profitability through standard cost accounting approaches. For small businesses especially those standards fall short.

In larger corporations there is a budgeting concept sometimes called "fully burdened". Simply, costs carry not only physical costs (direct product, labor and freight).but also fiscal ones (direct and indirect overhead, loads to offset underperforming brands or divisions, etc.). Margin (M) calculations are based on selling price (sp) minus cost (c) divided by selling price or M = sp-c/sp. Thus getting accurate cost information is key to margins and profitability management.

A former client developed a sophisticated yet simple program available online called "Your Cost Center" at www.yourcostcenter.com. I preferred 'your profit center" but that didn't fly.

It forces business owners, especially those driven by hourly productivity, as in service businesses such as health care, construction, accounting, legal and consulting, to build into costs paid vacations, sick days, owner income goals (for wealth creation), taxes, insurance and related intangibles not often included in costs. The program helps owners determine how many more jobs (units) the company needs to sell to meet profit goals, analyze pricing alternatives and helps guide other strategic decisions.

This is not a promotion for the service but a recommendation that business owners rethink how they envision product / service cost and pricing.

Last week an entrepreneur discussed pricing a new product to be sold initially on the Internet. We talked about product costs and his guess what he thought the retail price should be. My comment after listening was his estimate or retail was far below numbers that would support a 45% Gross Margin.

He was surprised by the answer, so decided to share my thoughts here. Take landed component costs and multiply by 6. This gives realistic expected retail during earliest stage development sessions.

Fifty percent 50% is the retailer margin, the balance manufacturer costs, overhead and available for spending and profit. Specifically, product cost is 33% of revenue, SG&A 67%. Further ball park figures I use are sales costs 12% net revenue, G&A 40% and Available for Profit 15%. Clearly the multiple can be changed to reflect competitive realities or a higher internal rate of return on cash that is in the detailed example.

The second recommendation is to price anticipating retail distribution down the road. Various Internet promotions such as free shipping and other option features could be bundled into the initial offering prices to lower the effective price during the test launch period. It is far easier to reduce prices once in the market than increase them.


Compasses are critical navigation tools and powerful metaphors. We use them at MacDuff to remind us to work hard at getting our life values straight, prioritized and reflected in our personal as well as business decisions.

We identity a person's single most important value as "true north". During our life and business journeys we can fully explore possibilities, take risks, wander and always find our way home. The benefit of true north thinking is it keeps things simple, direct and focused on what is important.

My true north is ethics-based behavior. (Sometimes my compass points to magnetic north and I go off course just in case there's a question.) From a business standpoint, for me, ethics driven decisions keep decisions less cluttered with extraneous nonsense, simplify clear communication in high stress environments and help create self-directed teams whose members respect each other. In other words, this sets a leadership tone that builds and reinforces camaraderie, builds a strong company and a strong brand.

Ironically, this behavior based "north" plays a role in strategic planning, or more specifically in the flaws inherent in strategic planning. In a very thoughtful article written in 2003 by Charles Roxburgh for McKinsey Quartlerly http://tinyurl.com/npvgov Roxburgh looks at why so many terrific executives and owners implement non-workable strategies. The answer is the wiring of the human brain:

  • Overconfidence - intuitively obvious what this is
  • Mental accounting - we value the sources of money differently (ours, theirs, government's banks') thus discount or put a premium value on risks
  • Status Quo bias - doing what we are doing because it is comfortable
  • Anchoring - the tendency to judge future outcomes based on most resent results
  • Sunk cost thinking - the belief that if we keep doing what we have been doing unsuccessfully longer we will eventually get the results we want.

Down the road I will talk about ways to defeat these biases. In the meantime, read the reference article. If your time permits, please share how you define your true north.

Now is a time of change. President Obama has said so and it evident in everyday news.

It is also a seminal time when the recent historic momentum was toward big companies and big governments is cresting and the impetus to devolution is emerging. The question is two fold: 1) Is this observation true and 2) What does this have to do with realizing sustainable wealth from a family business as its cornerstone?

I think so and the fact that Washington is still amassing power and centralizing the apogee of this era. But as of September 2008 the era of huge corporations with power to enjoy economic autonomy from national governments began falling apart. GM, Chrysler, Citi and other institutions began breaking apart in order to survive We are discovering the diseconomies of scale and the evolution of greater opportunities for innovative, fast moving smaller companies.

That's where the Dandelion effect comes in.  In a highly provocative article in WIRED, "Waste is Good", Chris Anderson talked about the power of waste:" When scarce resources become abundant, smart people treat them differently, exploiting them rather than conserving them. It feels wrong, but done right it can change the world".

In our blog "Innovation Basics for Presidents" we talked about quantity leads to quality (of new ideas) and looking to nature as a catalyst to innovation. The dandelion effect - named by writer Cory Doctrow - reprises the basic notion that nature is wasteful in search of better life. It is wasteful because scattershot strategies are the best way to explore uncharted territory. The dandelion tries to fill every crack in every rock with dandelions and does not try to get a perfect copy of itself. That way it finds the best growth environment. So too with business ideas.

For business owners the time is now to instill a culture of innovation and pursue new opportunities during these watershed years. Just as cost control is a key discipline or supply chain management, so is innovation in terms of wealth creation.

Returning to centralization of power in Washington, in a  compelling essay by Paul Starobin in WSJ "Divided We Stand" http://online.wsj.com/article /SB10001424052970204482304574219813708759806.html forcefully argues that the devolution of USA is an incipient trend: "Devolved America is a vision faithful both to certain postindustrial realities as well as to the pluralistic heart of the American political tradition...a tradition betrayed by  creeping centralization of power in Washington...".

He asks us to "...Picture an America that is run not, as now, by a top-heavy Washington autocracy, but in freewheeling style, by an asemblage of largely autonomous regional replublcs reflecting the eclectic economic and cultural character of the society."

I believe these are mega trends business owners need to think about. I think we need to be prepared to ride the wave of change by fostering innovative, highly adaptable customer focused companies. This is the platform to create and sustain wealth during the 21st Century.

Too small to be saved is in a perverse way is a building block for future personal wealth. To achieve prosperity, now more than ever and in the New Jersey more than other places, taxes and political considerations are more significant in the business decision mix than it has been since the 1950’s.

We do not know specifically where Congress is going, but it is generally moving into more regulations and penalties for company owners that violate these regs.. An essential exercise for all business owners is to pay more in depth attention than ever before to political developments.


On the other hand, government is creating new markets through massive spending increases. Taking advantage of opportunities opened by current (June 2009) political decisions is imperative. Owners must be sensitive to political – market risks of emerging regulation and oversight. These factors significantly rebalance weighing competitive market variables versus political ones in decision making.

From an operations standpoint, product and innovation remain key to customer satisfaction and top line revenue growth as before. However, legal tax - minimization efforts weigh more heavily in the decision process that a year ago in terms of long term wealth creation. We will explain later.

Pricing is always both a strategic and practical issue, of course. We ask clients not to change price structures that reflect their brand value proposition. Rather, we recommend adjusting to near term economic turmoil by structuring trade, distribution channel and end user pricing with short term promotions. Longer term value perception will be based on how company sets its product line valuations now. Seek and get professional counsel on these strategies.

We also characterize all customers in categories such as triers, loyal buyers and heavy users. As budgets allow, we recommend rotating promotional activity through each customer cohort or category based on an understanding of the business cycle. What this means is grasping customer behavior and develop programs specific to their needs.

In terms of debt, my bias is to use short term working capital loans to help liquidity and long term debt only for well positioned asset purchases that have demonstrable payout. Revenue volatility and inflation will be issues forefront on our radars; negative leverage can be catastrophic.

Back to the wealth creation strategy –we suggest investment spending in relationship building, even in terms of lost revenue now which means both trade and end user brand equity. Spend to achieve deep employee relationships and strong teams. Taxes on profits do not increase brand value.  Investment spending on brand, inside and out, does. In future years capitalism will return, as will a premium value on strongly branded companies based on a committed team, strong trade and end user brand.


When asked, most business owners I have talked to define customers by geography, household size, SIC code, or simple demographics like age and income or heritage.

Those metrics are important but miss the point about understanding customers’ behaviors. Those data further miss the critical top of mind awareness that businesses relate to families of customers. Namely, there are distributors – regardless the industry – influencers and end users. Whether a service distributed entirely over the Internet or toys sold primarily through big box retailers, the triad of customers exist.

My view is all businesses start and end with satisfied customers. So to know what satisfaction means, owners need to know, really know who their customers are what aspects of the service or product is valuable. Said another way, all strategic plans and business efforts begin and end with the customer.

To develop a powerful brand, I believe the brand message needs to be integrated across the entire customer base. If this view is accepted, management will proactively lead the entire company team to deliver the relevant experience. Interestingly, once grasped, this concept frames strategic planning and annual budgeting, topics which will be addressed in the future.

By way of simple example, a toy company must sell kids on how cool and fun it is to have and play with friends. The same messages must be delivered to parents with added compelling support that the play value inherently reinforces appropriate family values. In turn, Sales uses those concepts to convince retailers that the toy line will increase profitability, increase the market, enjoy high sell through and extend the experience to being a company easy to deal with after the selling season.

When I discuss behavior, for small businesses I mean is qualitative terms, not more esoteric psychodynamics large ones study. For example, when had a physician or accountant or lawyer asked you at the end of an appointment about the best / worst aspects of dealing with the practice was? How often do restaurant owners ask you how they could make the experience better rather than how was the food? When was the last time you called your customers – think entire channel – and asked why they buy from you or how you are doing, the good, the bad the ugly?

These impressions need sharing with the entire company team from finance through administration and of course sales and marketing. Then any action to correct course is clearly identified. In this way the concept of brand is brought to life, taken off a written text and created into a physical experience both for customers and employees.

In working on complex projects several clients introduced me to the concept of idea mapping as a means of collaborating on and presenting the inter-relationship of ideas. Most company owners and entrepreneurs learn and gain understanding visually rather than by listening, so we found this is a preferred way to examine and vet decision options. Net, idea mapping is a preferred way to collaborate, clarify and agree on and achieve greater effective productivity.Simply, these maps visually connect thoughts.

The software I use to present complex projects is MindJet®http://www.mindjet.com/. If you look at some of the engagement samples shown on the MacDuff site you will get a sense of our approach from developing and launching new businesses, to annual budgeting processes and executing sales campaigns.

The engagements are shown in PDF versions. View the map from 1 pm clockwise to see the sequence of events as they occur, with branches that indicate action and decision pathways. You may need to expand the file to see individual elements. One advantage of the software is that it allows users to imbed comments as well as source files (not available on the PDF versions). Net, project organization is dramatically improved over linear methods.

If you are curious about this concept, I suggest you read “Idea Mapping” by Jamie Nast.

If you talk to one hundred marketing executives you’ll get one hundred and ten definitions of brand. Those definitions range from logos and graphic design to page long definitions about consumer insight and essence.

To me a brand is the bundle of benefits, both emotional and physical, that customers buy from a company every day, profitably.  In the section “resources” you will find some approaches to how this process is created and managed.

At the end of the day, it is the sum of the experience every customer has with a company or even an individual entertainment personality. So company leaders either work hard at defining how they want to be perceived by customers, vendors and employees or they will define their experiences. All together, it is those impressions that form product’s or company’s brand. The pillar of this belief is my consistent experience that 90% of purchasing is emotional, 10% rational, even for hardened engineers.

 At one end of the brand spectrum company automated answering systems describe how a call is important to them, provide ten key options, keep the caller on hold forever and then have a semi – fluent person try to address issues. Net, net, my opinion is those specific companies do not get branding because they are not customer focused.

On the other hand, I visited a company one of my friends led. After checking into the building, one of the administrators was taking me to Jack’s office and said; “I love my job. This is the best company in the world to work for.”  Wow.  They go it and lived it. The company was all about good health, good health for consumers, good health for employees, good financial health.

From my perspective, a company owner’s wealth is derived from establishing a strong brand. If nurtured over time that strength translates to sustainable profitability through economic cycles. It also enables that experience to be translated into the financial community or to executives in companies that are potential buyers of the business when the time comes to transition away from the business.

Thus, strongly branded companies are the platform for sustainable wealth creation.

MacDuff Partners was created to help entrepreneurs and small business owners build highly branded, highly profitable companies that are ultimately more salable. Whether or not those companies are sold to a third party or not, we guide clients to use their businesses as platforms for sustainable wealth.

MacDuff itself is a result of our family’s inability to make the transition from a highly successful and profitable company into durable wealth.  We decided to share our stories with clients in a way that helps bring to life innovation to improve the odds of our clients’ ultimate success.

So what is wealth? To me it is freedom and independence. To our clients it is whatever they think it is.

We dig deeply into basic beliefs, behaviors, rituals or taboos that either accelerate or inhibit performance. We help to develop leadership behaviors that perpetuate high performance and adapt to changes in market and competitive actions. Finally, we bring a stable of proven business practices, developed at Fortune level companies but smartened up to be practical and affordable to small and mid – market ones.

The last point is we believe in healthy conflict. It is a source of creative tension that enables true leadership, real innovation and commitment to goals.

We hope others join this discussion, in agreement or not with our positions, so we  share stories of our journeys, learn anew and do something every day that moves us to our business and life goals.