Innovation

Truth is elephants are not afraid of mice and traditional media is still more effective than digital age newbies. 

As context for our story, an early stage B2B service client was determined to test a comprehensive marketing campaign with significant emphasis on social media.  The premise was we would be effective in using Internet marketing along with traditional vehicles to build relationships with prospects in advance of direct sales meetings. 

This core effort was further supported by a significant free downloadable books and business evaluation guides, along with direct mail effort.  Traditional networking continued as well.  The target audience was top executives of middle market companies within a defined geographic area. 

The yearlong test failed to generate any new business for the client and thus was abandoned. While any failure is a composite of several elements, we conclude these are the five primary reasons for the outcome: 

  • The target audience was very resistant to the media used i.e. LinkedIn and Twitter. e-Mail drives and direct mail proved equally ineffective. Generational shift of business ownership may change behavioral disuse or distrust of Internet based campaigns. Further, the vast majority of the target market companies did not participate on either LinkedIn or Twitter.
  • Copy strategy and execution across all messaging was judged strong, tested well in advance of actual campaign but clearly missed the mark of being compelling. We conclude the media was the message, thus the copy failed to initiate a trusting relationship with prospects as expected.
  • While true social media as an advertising medium exchanges high media costs for high human capital costs
    • Operationally, finding and developing social media management required more time than allocated and longer continuity of effort than the client’s test plan afforded;
    • The cost of actionable lists of private company executives was the client’s budget limitations.
  • The comprehensiveness of the marketing campaign exhausted the time limitations of the client’s executive pool to execute consistently. Less may be more.
  • Even thought the test market was well funded, the expected efficiencies of using social media to reach a difficult to reach audience never materialized. Net, the cost of Internet marketing in a B2B environment is equal to or higher than the costs of traditional media campaigns.

 Do you have different stories to tell? Please share.

 

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.

 

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.

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.

 

 

 

 

 

 

 

 

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!?
 

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.

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.

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.

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.