Brand Autopsy

The IDB Project | Chapter 12

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER TWELVE
The Strategic Drucker

“Defining the purpose and mission of the business is difficult, painful, and risky. But it alone enables a business to set objectives, to develop strategies, to concentrate its resources, and to go to work. It alone enables a business to be managed for performance.” — Peter Drucker source

Peter Drucker once said it was “irrational” for a business not to plan for growth. He stressed every businesses must have a growth goal. Good thing he outlined a "Business Growth Playbook," which includes the following strategies:

1. Customers Dictate Action
“It is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or a service, converts economic resources into wealth, things into goods.” (THE PRACTICE OF MANAGEMENT, 1954)

2. Plan for the Long-Term
Drucker warned companies to resist fire-fighting now-term issues rather than addressing fundamental long-term business issues. It is easy to become obsessed with delivering immediate results. However, doing-so may just jeopardize the long-term health of a business.

3. Resist the Urge to Please Wall Street
Jeffrey Krames summarizes Drucker’s advice this way, “He also urged managers to never manage their companies by that day’s Dow Jones average (meaning don’t let short-term price influence key management decisions).”

4. Not Deciding is Never the Right Decision
“It is better to make the wrong decision and carry it out than to shirk the job as unpleasant and painful, and, as a result, to allow the accidents of the business to set priorities by default.” (MANAGING FOR RESULTS, 1964)

5. Risk-Taking is with Worth-Taking
Drucker challenged businesses to adopt a risk-taking mentality. Without risks, no rewards are to be earned. Writing in MANAGING FOR RESULTS (1964), Drucker said, “The job is not to impose yesterday's normal on a changed today; but to change the business, its behavior, its attitudes, its expectations -- as well as its products, its markets, and its distributive channels -- to fit the new realities.”

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Next, Chapter THIRTEEN of the The IDB Project.

The IDB Project | Chapter 11

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER ELEVEN
Life-and-death Decisions

“Without a decision maker, you’ll never make a decision.” — Peter Drucker

Peter Drucker stressed the importance of leadership within an organization because, without leadership, too much dithering and not enough decision-making would happen. In Drucker’s words, not making a decision “is as long-lasting in its consequences or as difficult to unmake.”

A company has life-and-death decisions to make every day. These life-and-death decisions concern people and priorities.

People Decisions
Whom to hire, fire, and promote rank as the most important of all decisions a company can make. Courage, character, discipline, and confidence are some of the qualities Drucker believe great employees should possess. (For more qualities, re-read Ch. 9 of The IDB Project.)

Peter Drucker emphatically contended, “Any manager or individual who does not perform at a high level should be removed.” He had little patience for holding onto to under-delivering employees because ultimately, their under-delivering will negatively impact the long-term prosperity of the business.

Interestingly, Drucker has a unique take on whom to promote. “I would never promote a man into a top level job who had not made mistakes, and big ones at that. Otherwise he is sure to be mediocre.” (THE PRACTICE OF MANAGEMENT, 1954)

Priority Decisions
In MANAGING FOR RESULTS (1964), Drucker explained, “Economic results require that staff efforts be concentrated on the few activities that are capable of producing significant business results. Managers must minimize the amount of attention devoted to products which produce primarily costs.”

Drucker preached a business is more effective when it is more selective. While not a mantra of his, “Fewer. Bigger. Better.” sums up Drucker’s thinking. Meaning, it is critical for companies to focus on fewer priorities designed to have bigger impact to deliver better results.

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Next, Chapter TWELVE of the The IDB Project.

The IDB Project | Chapter 10

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER TEN
Drucker on Welch

"Jack Welch was, in many ways, a natural … Welch’s greatest strength is his ability to ask what needs to be done, to focus on priorities, and delegate everything else.” — Peter Drucker

Simply put ... Peter Drucker had a MAJOR man-crush on Jack Welch.

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Next, Chapter ELEVEN of the The IDB Project.

The IDB Project | Chapter 9

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER'S BRAIN (Jeffrey Krames)

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CHAPTER NINE
The Critical Factor

“Leadership is not magnetic personality … it is not ‘making friends and influencing people’—that is salesmanship.” — Peter Drucker

Peter Drucker clearly delineated the difference between being a leader and being a manager. He famously riffed, “Management is doing things right; leadership is doing the right things.” The right things for a leader to do, according to Drucker, include these ideals:

1. Courage with Character
It takes courage to practice “purposeful abandonment." It also takes character to make connections with people who are genuine and compassionate. Natural leaders do both.

2. Articulate a Clear Mission
“The foundation of effective leadership is thinking through the organization’s mission, defining it, and establishing it clearly and visibly. The leader sets the goals, sets the priorities, and sets and maintains the standards.” (THE ESSENTIAL DRUCKER, 2001)

3. Foster Loyalty
A leader must be worthy of receiving loyalty. To be so worthy, Drucker maintains leaders must set their standards high and always live by those high standards. When loyalty is fostered throughout a business, employee morale increases as does employee effectiveness.

4. Make Strengths Stronger
“Nothing destroys the spirit of an organization faster than focusing on people’s weaknesses rather than on their strengths, building on disabilities rather than on abilities. The focus must be on strength.” (THE PRACTICE OF MANAGEMENT, 1954)

5. Hire People Smarter than You
Ineffective leaders worry about their direct reports usurping them. Effective leaders don’t. Effective leaders encourage their direct reports to assume greater responsibility and to make more meaningful contributions to the business. Effective leaders measure their success by the success achieved of the people s/he hires, manages, and promotes.

6. Earn Trust
”To trust a leader is not to necessarily like him. Nor is it necessary to agree with him. Trust is the conviction a leader means what he says. It is a belief in something very old-fashioned, called ‘integrity.’” (THE ESSENTIAL DRUCKER, 2001)

7. Develop People
Peter Drucker understood no business will survive if it is lead by only one leader. A thriving organization needs leaders throughout and not just at the helm. According to Drucker, “The gravest indictment of a leader is for the organization to collapse as soon as he leaves or dies.”

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Next, Chapter TEN of the The IDB Project.

The IDB Project | Chapter 8

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER EIGHT
Auditing Strengths

“Most organizations take their employees’ strengths for granted and focus on minimizing their weaknesses. They [identify] ‘skill gaps’ or ‘areas of opportunity,’ and then pack them off to training classes so that weaknesses can be fixed. But this isn’t development, it is damage control. And by itself damage control is a poor strategy for elevating either the employee or the organization to world-class performance.” — Marcus Buckingham & Donald Clifton (2001)

Psst … decades before Marcus Buckingham became the poster child for “building upon strengths, not weakness,” Peter Drucker heralded the cause. In THE PRACTICE OF MANAGEMENT (1954), Drucker actually launched the strengths movement by writing:

“Nothing destroys the spirit of an organization faster than focusing on people’s weaknesses rather than on their strengths, building on disabilities rather than on abilities. The focus must be on strength.”

“One can only build on strength. One can achieve only by doing. Appraisal must therefore aim first and foremost on bringing out what a man can do … a man should never be appointed to a managerial position if his vision focuses on people’s weaknesses rather than on their strengths.”

“One cannot do anything with what one cannot do. Once cannot achieve anything with what one does not do … Appraisal must therefore aim first and foremost on bringing out what a man can do.”

Drucker revisited the concept of strengths-based development with a must-read Harvard Business Review article (MANAGING ONESELF, 1999). He updates his stance by writing:

“Most people think they know what they are good at. They are usually wrong. More often, people know what they are not good at - and even then more people are wrong than right. And yet, a person can perform only from strength. One cannot build performance on weaknesses, let alone on something one cannot do at all.

“Waste as little effort as possible on improving areas of low competence. It takes far more energy and far more work to improve from incompetence to low mediocrity than it takes to improve from first-rate performance to excellence.”

Also in MANAGING ONSELF, Drucker explains how “measuring feedback analysis” is the best way to discover your strengths. He encourages executives to, at the time they make a key decision, write down the expectations they hope come from that decision. Then after nine or twelve months, compare the actual results with the written-down expectations. It’s a process that worked for Drucker to identify areas he excelled and areas where he struggled to meet expectations.

From my experience, a more scientific way to identify one’s strengths is to use the StrengthsFinder test from Gallup. This online test formed the basis for NOW, DISCOVER YOUR STRENGTHS (2001) and for Tom Rath’s STRENGTHSFINDER 2.0 (2007).

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Next, Chapter NINE of the The IDB Project.

The IDB Project | Chapter 7

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER SEVEN
Abandon All But Tomorrow

“The first step in a growth policy is not to decide where and how to grow. It is to decide what to abandon. In order to grow, a business must have a systematic policy to get rid of the outgrown, the absolute, [and] the unproductive.” — Peter Drucker

Peter Drucker preached “purposeful abandonment.” He felt the best way for a company to grow is to first stop doing what’s not working. That is, abandon projects that fail to deliver results. Abandon products that fail to increase profit. And abandon people that fail to make worthwhile contributions to the company.

Drucker’s “purposeful abandonment” is very similar to Jim Collins’ “Stop Doing List” concept.

In GOOD TO GREAT, Collins brought renewed relevance to “purposeful abandonment” by giving it a catchy name — Stop Doing List. Collins writes, “Take a look at your desk. If you're like most hard-charging leaders, you've got a well-articulated to-do list. Now take another look: Where's your stop-doing list?” [source]

Collins continues, “Those who built the good-to-great companies, however, made as much use of ‘stop doing’ lists as ‘to do’ lists. They displayed a remarkable discipline to unplug all sorts of extraneous junk.” [source]

For sound advice on what to include in a “Stop Doing” list, we look to Peter Drucker. In MANAGEMENT CHALLENGES FOR THE 21st CENTURY (1999), Drucker shared, “If what looks like an opportunity does not advance the strategic goal of the institution, it is not an opportunity. It is a distraction.” Both Drucker and Collins agree, distractions must be avoided.

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Next, Chapter Eight of the The IDB Project.

The IDB Project | Chapter 6

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER SIX
The Jeffersonian Ideal

“Everybody from the boss to the sweeper must be seen as equally necessary to the success of the common enterprise.” — Peter Drucker

Beginning with CONCEPT OF CORPORATION (1946) and continuing with THE PRACTICE OF MANAGEMENT (1954), Peter Drucker shared his belief in the Jeffersonian Ideal of equality and empowerment for all employees.

It’s hard for us to believe treating employees as valuable assets (not dehumanized cogs) and giving them the responsibility to make decisions are revolutionary business concepts. But they were when Drucker began writing about business management matters in the 1940s.

In MANAGEMENT: Tasks, Responsibilities, Practices (1973), Drucker shared how he learned lower-level employees were more knowledgeable and competent than senior-level management gave them credit. During World War II, Drucker was conducting research inside a corporation. He was unable to talk with many management-level employees because a lot of them were serving in World War II. Instead, Drucker had to rely on lower-level employees for information. He learned the average worker was smarter and better adjusted than previously thought.

For decades, Drucker trumpeted the importance of engaging and empowering the “knowledge worker.” He viewed corporations as social institutions, not nameless and soulless assembly lines. His writings routinely argued the needs, goals, and strengths of individual employees had to be addressed by corporations. And, corporations needed “to be organized so as to bring out the talents and capacities within the organization.”

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Next, Chapter Seven of the The IDB Project.

The IDB Project | Chapter 5

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER FIVE
When Naturals Run Out

“When you need large numbers of talented managers, you have to convert management into something that can be learned or taught.” — Peter Drucker

Peter Drucker used the word “natural” to signify a superstar manager. He shared an interesting story with Jeffrey Krames which explains why he used “natural” to mean star performer.

In an interview with Krames, Drucker talked about how, before corporations ruled business, family businesses were the leading businesses. And, family businesses were naturally managed by family members. Drucker said the best of these family managers were “naturals.”

However, at some point, the family business would run out of “naturals” and they would need to look outside the family for managers. A process was needed “… that could transform non-naturals into competent managers.” Thus, making the matter of finding, training, and developing managers a critical business discipline.

Throughout his career, Drucker shared lots of ideas on what makes someone a natural manager.

For example, people who can hire and fire employees without getting emotionally involved are “naturals.” Those who can effectively manage their time to focus supremely on just one or two priorities at a time are “naturals.” People who can make difficult decisions and ask difficult questions at the most opportune time are “naturals.” And, “Naturals” know it is their responsibility to foster a positive and welcoming corporate culture.

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Next, Chapter Six of the The IDB Project.

The IDB Project | Chapter 4

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER FOUR
Outside-In

“The executive is within an organization. Every executive … sees the inside—the organization—as close and immediate reality. He sees the outside only through thick and distorting lenses, if at all. What goes on outside is usually not even known firsthand. It is received through an organizational filter of reports, that is, in an already predigested and highly abstract form.” — Peter Drucker

Peter Drucker warned businesses about the dangers of developing an insular corporate culture. The business reality is, many executives lose perspective of what matters most and fall victim to fire-fighting inconsequential issues rather than addressing fundamental business issues that impact attracting, retaining, and growing customers.

In MANAGING FOR RESULTS (1964), Drucker outlined eight business realities managers must address to develop a customer-driven outside-in perspective.

1. Only Cost Centers Exist Within a Business
Employees do not create sales. Products do not create sales. Processes do not create sales. Only customers create sales. Every department inside a business is a cost center and not a profit center. Drucker says, “It is always somebody outside who decides whether the efforts of a business become economic results or whether they become so much waste and scrap.”

2. Solving Problems Solves Little
Jeffrey Krames summarizes Drucker’s wisdom by writing, “Solving problems can only return the organization to its prior status quo. To achieve results managers must exploit opportunities.” Constantly fire-fighting problems will never allow a company to grow. It is only by finding and taking advantage of opportunities that causes a company to grow.

3. Effectiveness is Better than Efficiency
Drucker once said, “Efficiency is doing things right; effectiveness is doing the right things.” And, Drucker also said, “Doing the right thing is more important than doing the thing right.” Enough said.

4. A Business that Fails to Lead Will Become Marginalized
Genuine market leaders, according to Drucker, must achieve their leadership results in an area that is meaningful to a customer or market. Such as, leadership in product development (think Apple), leadership in customer service (Container Store), leadership in distribution (Wal-Mart), or leadership in bringing ideas to market faster (Zara).

Achieving a leadership position is imperative for a business to stave off becoming marginalized or commoditized. Drucker argues a business “… may seem to be a leader, may supply a large share of the market, may have the full weight of momentum, history, and tradition behind it. But the marginal is incapable of survival in the long run, let alone of producing profits. It lives on borrowed time. It exists on sufferance and through the inertia of others. Sooner or later, whenever boom conditions abate, it will be squeezed out.”

5. Market Leadership is a Temporary Condition
The reality is simple: a business must not become secure in its leadership position. Customers change and markets change. Businesses that fail to adapt to the ever-evolving marketplace will lose their leadership position. Drucker says its normal for businesses “to drift from leadership to mediocrity.” Given this reality, Drucker urges executives to “reverse the normal drift” by focusing the business ”on opportunity and away from problems, to re-create leadership and counteract the trend toward mediocrity, to replace inertia and its momentum by new energy and new direction.” source

6. Decisions Age Quickly
Drucker once wrote, “Any human decision or action starts to get old the moment it has been made.” So true, and so very applicable to business. The job of a manager, then, is “not to impose yesterday’s normal on a changed today; but to change the business, its behavior, its attitudes, its expectations—as well as its products, its markets, and its distributive channels—to fit the new realities.”

7. Misallocation of Resources is Certain to Happen
Drucker contends too many employees are misallocated and required to work on “yesterday” projects and “yesterday” programs that will not result in helping a company achieve market leadership today. He claims executives, working under ”managerial vanity,” are so desperate to turnaround poor-performing products and programs that they allocate resources to solve problems rather than to find new opportunities.

To combat this misallocation reality, Drucker recommends “constant reappraisal and redirection” of resources to improve the effectiveness of a business.

8. A Business is More Effective When it is More Selective
Businesses try to accomplish far too much. They lose concentration and give in to the temptation of being all things to all people. Drucker asserts, “Economic results require that staff efforts be concentrated on the few activities that are capable of producing significant business results. Managers must minimize the amount of attention devoted to products which produce primarily costs.”

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Next, Chapter Five of the The IDB Project.

The IDB Project | Chapter 3

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER THREE
Broken Washroom Doors

“Every business has its ‘broken washroom doors,’ its misdirections, its policies, procedures, and methods that emphasize and reward wrong behavior, penalize or inhibit right behavior.” — Peter Drucker

No business is perfect. Every business has flaws. Peter Drucker calls these flaws “broken washroom doors.” Obviously, in order for a business to achieve sustained success, it must minimize flaws that “reward wrong behavior” and “inhibit right behavior.”

By 1990, Drucker had turned much of his attention to helping non-profit businesses succeed. He was disenchanted with for-profit businesses because he felt the compensation system had evolved into a broken washroom door.

Drucker strongly believed executives were being wrongly rewarded with excessive stock options and sky-high salaries. He reasoned stock options are inappropriate compensation because they gave executives the incentive to manage for immediate results and not for long-term results. Drucker also bemoaned the escalating pay rate for CEOs. In 2006, the average salary of CEO from an S&P 500 company was 364 times greater than the pay of an average employee [source]. Drucker felt CEO pay should not exceed 20 times the average employee.

According to Drucker, another broken washroom door are the mission statements that attempt to give companies focus. Drucker says, “Mission statements have to be operational; otherwise, it’s merely good intentions.” The more specific a company’s mission statement, the easier it will be to have employees focused on making a worthwhile contribution.

The tendency to burden employees with an array of priorities becomes another broken washroom door. Drucker long-advocated assigning managers no more than two priorities. From his experience, he learned no manager could expertly deliver upon more than two priorities at any given time.

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Next, Chapter Four of the The IDB Project.

The IDB Project | Chapter 2

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER TWO
Execution First and Always

“Management must always, in every decision and action, put economic performance first. It can only justify its existence and its authority by the economic results it produces.” — Peter Drucker

Larry Bossidy and Ram Charan wrote the best-selling business book, EXECUTION: The Discipline of Getting Things Done (2002). As Jeffrey Krames points out, “Execution” was a concept Peter Drucker wrote about extensively and much of the Bossidy/Charan book is a rehash of earlier Drucker writings.

Peter Drucker failed to give his concepts catchy names. Instead, he was more concerned about bringing new and worthwhile business concepts to light. Drucker wrote extensively about “execution” … he just didn’t call it that.

Krames summarizes Drucker’s thoughts on execution by sharing six ways managers fail to execute consistently.

1. Failure to Abandon Bad Projects
Drucker once said, “There is nothing so useless as doing efficiently that which should not be done at all.” He was a strong believer in having managers conduct regular performance reviews of products. And an even stronger believer in abandoning projects that fail to meet objectives.

2. Too Much Management Bureaucracy
Having to navigate through unnecessary corporate red tape will stifle the ability of any manager to execute upon good ideas.

3. Poorly Defined Objectives and Business Values
Effective and efficient execution is helped greatly when a business outlines clear project objectives and when the values of a business are not just articulated, but lived.

4. Inappropriate Management Structure
“The right [management] structure does not guarantee results. But the wrong structure aborts results and smothers even the best direct efforts.” (MANAGING FOR RESULTS (1964), Peter Drucker)

5. Poorly Communicated Strategies
If employees do not understand how their individual contributions fit into the overall company strategy, execution will suffer.

6. Not Embracing a Customer-First Point-of-View
In THE PRACTICE OF MANAGEMENT (1954), Drucker wrote, “There is only one valid definition of business purpose: to create a customer.” Companies that embrace and foster an insular corporate culture will result in having employees lose focus of what matters most — the customer.

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Next, Chapter Three of the The IDB Project.

The IDB Project | Chapter 1

The IDB Project is a series of posts sharing summaries, snippets, and takeaways from INSIDE DRUCKER’S BRAIN (Jeffrey Krames)

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CHAPTER ONE
Opportunity Favors the Prepared Mind

“Opportunity favors the prepared mind. If opportunity knocks at the door you have to open it. You have to be receptive to it and I was.” — Peter Drucker

Peter Drucker opened the door of opportunity in 1943 when he was asked by General Motors to conduct a study of the company’s management system. At the time, Drucker was a professor of politics and philosophy at Bennington College (Vermont).

He had come to the United States six years earlier from Austria after earning a doctorate degree in public/international law (University of Frankfurt, 1931) and spending a few years as newspaper reporter (The Austrian Economist and Daily Frankfurter). He wrote two books during this time, The End of Economic Man (1939) and The Future of Industrial Man (1942). Drucker’s business experience was limited to short stints as an investment banker and economist in Europe.

While at Bennington College, Drucker was interested in studying the inner-workings of a large corporation. However, no corporation was willing to allow Drucker internal access for such an in-depth study. That is, until the serendipitous phone call from General Motors.

Drucker was prepared for this opportunity and the resulting work, CONCEPT OF CORPORATION (1946), changed the game of business management.

The concept of managing a corporation had always been about top-down decision-making from senior-level executives. After studying General Motors, Drucker learned to believe decentralized decision-making was the recipe for sustained success. He argued employees needed to be viewed not as dehumanized costs, but rather as valuable assets. Drucker went further by writing that employees should be given more responsibility to make decisions in order to create a “self-governing plant community.”

The CONCEPT OF CORPORATION was written over 60-years ago, but its impact can still be felt today. It took a few decades, but by the 1980s, the majority of Fortune 500 companies had implemented some form of decentralized decision-making.

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Next, Chapter Two of the The IDB Project.

The IDB Project | in full detail

Jeffrey Krames has written a remarkable book titled, INSIDE DRUCKER'S BRAIN. In it, Krames shares Peter Drucker's best management ideas and updates the relevancy of these ideas for today's marketplace. Krames had a lot of material to work with — Peter Drucker, in his six decades career as a teacher, author, and consultant, wrote nearly 40 business books and countless articles.

The impact of Peter Drucker's influence cannot be understated. He's viewed as "The Man Who Invented Management" by the likes of Jack Welch, Tom Peters, and Jim Collins. But Collins has gone beyond just calling Drucker "the leading founder of the field of management." He has also said Drucker's "primary contribution is not a single idea, but rather an entire body of work that has one gigantic advantage: nearly all of it is essentially right." (Whoa.)

Long-time Brand Autopsy readers know I'm a business book junkie. My appetite for biz books stands on the verge of being insatiable. However, I've never been able to fully appreciate Peter Drucker's business writings. I've always found Drucker's books a touch too unapproachable. I get lost in the densely simple language and the dusty examples used in such classic Drucker books like: THE PRACTICE OF MANAGEMENT (1954), MANAGING FOR RESULTS (1964), and THE EFFECTIVE EXECUTIVE (1966).

The beauty of INSIDE DRUCKER'S BRAIN is Krames updates the language and adds modern context to provide clarity and acuity to Drucker's classic writings. (Krames did a brilliant job!)

For two weeks in December 2008, the Brand Autopsy blog shared summaries, snippets, and takeaways from INSIDE DRUCKER'S BRAIN in a series of posts called ... The IDB Project.

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Below is a jump list of each post:

CHAPTER ONE
Opportunity Favors the Prepared Mind (Dec. 9)

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CHAPTER TWO
Execution First and Always (Dec. 10)

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CHAPTER THREE
Broken Washroom Doors (Dec. 11)

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CHAPTER FOUR
Outside-In (Dec. 12)

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CHAPTER FIVE
When Naturals Run Out (Dec. 15)

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CHAPTER SIX
The Jeffersonian Ideal (Dec. 15)

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CHAPTER SEVEN
Abandon All But Tomorrow (Dec. 16)

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CHAPTER EIGHT
Auditing Strengths (Dec. 16)

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CHAPTER NINE
The Critical Factor (Dec. 17)

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CHAPTER TEN
Drucker on Welch (Dec. 17)

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CHAPTER ELEVEN
Life-and-death Decisions (Dec. 17)

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CHAPTER TWELVE
The Strategic Drucker (Dec. 18)

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CHAPTER THIRTEEN
The Fourth Information Revolution (Dec. 18)

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CHAPTER FOURTEEN
The Leader's Most Important Job (Dec. 18)

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CHAPTER FIFTEEN
A Short Course on Innovation (Dec. 19)

Marketing During this Dismal Economy

I couldn't agree more with Neal Stewart's advice, which includes ... "Find ways to engage in conversation with your heavy users and fanatical consumers. More than ever, your brand’s stalkers are going to help you spread the word."

As we marketers know, it is far less expensive to market to current customers than it is to acquire new customers ... especially during this dismal economy.

Eric Schmidt on Google being Frugal

Business at Google is healthy. However, in these uncertain times Google is watching its expenses and is getting downright frugal by tightening some of its famed employee perks (free food, free massages, etc.).

The New York Times ran an interesting interview with Eric Schmidt (Google CEO) where he comments on managing the company during this economic avalanche. He was asked if it is enjoyable to manage a company on a spending diet. His answer may surprise you...

SOURCE | Google at 10: Searching Its Own Soul

Great Advice for All of Us

SOURCE: The Cocktail Party Rule (Hugh MacLeod)

SNIPPET | Age of Conversation

The other day I shared some “Money Quotes” from the AGE OF CONVERSATION book. Today, I’m sharing a snippet from my essay in the book … THE MARKETING MATRIX: Ignore or Explore?

(Remember, there are 237 essays in the AGE OF CONVERSATION book. Here’s hoping you choose to explore all of them and not just this snippet.)

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A major shout-out goes to Kelsey Ruger for inspiring this essay. In a presentation at a GOT SOCIAL MEDIA event in Houston he referenced the red pill/blue pill idea.

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MONEY QUOTES | Age of Conversation

If you run in the same social media circles as I do, then you’re aware of the Age of Conversation collaborative book. For those unaware, the Age of Conversation is collection of essays from social media champions testifying and evangelizing the merits of businesses using social media tools to better connect with customers.

You can learn much more about this collaborative effort by visiting:

AgeOfConversation.com

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To entice you to order a hardcover copy or PDF copy of the book ... riffle through this short collection of “Money Quotes” from the Age of Conversation essays:

Red Rubber Ball at Work

I’m a Kevin Carroll fan—it’s not hard not to be one. His enthusiasm for unlocking the unbridled playfulness we once enjoyed as children is as contagious as it is important.

Kevin uses a symbol of our childhood—a red rubber ball—as a metaphor for us adults to rekindle our passion for playing.

As Kevin shared in his first book, the red rubber ball represents “play” and ‘play’ is “any activity, topic, or purpose that makes you excited about the day.” Everyone has a red rubber ball. Some of us just need a little inspirational prodding to find it. According to Kevin, “Your red rubber ball is what grabs you by the soul. It’s what captures your imagination. It’s what you do when no one tells you what to do.”

Recently, Kevin published a follow-up book profiling how “play” shaped the lives of notable business leaders. In THE RED RUBBER BALL AT WORK, we learn how the professional lives of well-known chefs, marketers, authors, surgeons, and engineers were influenced by the seemingly childhood games they played as children.

It’s a worthwhile read.

Take a few moments to riffle through some of the money quotes plucked from the introductory chapter to THE RED RUBBER BALL AT WORK. (Once done riffling, get to buying and reading the book.)

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What is a Good Idea?

I just read one of the more compelling definitions of what a “Good Idea” is. This definition is remarkable in its brevity and clarity. You might also agree …

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“A really good idea is simple, unexpected and relevant. And it unites extremes: it should risk a lot but nevertheless be easy to implement. Everyone should talk about it, but existing customers should not be irritated by it.”

Nadja Schnetzler
co-founder, BrainStore
source: THE IDEA MACHINE (Wiley, 2005, pg. 56)

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More Business Failure Commandments

Earlier, we shared takeaways from Donald Keough’s THE TEN COMMANDMENTS OF BUSINESS FAILURE.

Today, by way of Seth, we learn of Ed Welch’s list of 101 ways a business WILL destroy itself. Lots of chewy nuggets in Ed’s PDF — below are a few of the chewiest nuggets...

#1. When you have a great product that’s selling well - look for ways to make it cheaper – your customers won’t be able to tell the difference.

#5. Do everything you can to keep your customers from creating a community – you don’t want them talking to each other.

#16. Make sure your employees care more about procedures and rules than customers.

#22. Never try to build customer evangelists – mass advertising has always worked better!

#47. Make sure everyone in your company understands that people are loyal to products and brands – NOT other people and relationships.

SOURCE [.pdf]: 101 Ways to Destroy Your Tribe (Ed Welch)

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(Hint … to apply what Ed shares, DO THE OPPOSITE.)

ANSWERS | !!! Required Reading !!!

Homework was given. A quiz was taken. Now its time to grade your work.

Answers are below.

(And no, we will not be grading on a curve.)

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DOWNLOAD QUIZ ANSWERS (.pdf)

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Quiz | !!! Required Reading !!!

As assigned earlier, you were asked to read a conversation between Kip Tindell (The Container Store) and John Mackey (Whole Foods Market). You were also alerted to a “pop quiz.” This is the quiz.

Please answer the questions.

Correct answers to be posted on Mon, Sep. 8 on the Brand Autopsy blog.

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DOWNLOAD PDF of QUIZ

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!!! Required Reading !!!

In June, Time magazine ran a story about the business philosophies of Kip Tindell (ceo/co-founder of The Container Store) and John Mackey (ceo/co-founder of Whole Foods Market). Kip and John are kindred spirits because they hold fast to the belief “empowered employees beget happy customers.”

The article is interesting. However, the transcript of the CONVERSATION between Tindell and Mackey is FASCINATING.

This CONVERSATION is required reading for anyone remotely interested in building a business that matters.

I’m on vacation this week. But you can’t take a vacation until you READ THIS.

What are you still doing here? I ain’t kidding you. I am imploring you to READ THIS. (There will be a quiz.)

** Kudos to Lilly Rockwell of the Austin-American Statesman for the heads-up.

Talking Shop with Zane Safrit

I first met Zane Safrit at a Word of Mouth Marketing Association Conference in Orlando back in 2006. He was on a panel discussing how he, as then CEO of Conference Calls Unlimited, baked Word-of-Mouth into the corporate culture of his company. By far, he was the most lucid and approachable of the panelist. I was impressed.

These days, Zane is working on the next phase of this career. He's also blogging and hosting a weekly conversation on Blog Talk Radio with interesting businesspeople. And earlier today, we chatted.

We chatted about the Five Common Causes of Brand Demise [at 8:40], the business challenges Starbucks is facing [at 32:45], and lessons Whole Foods Market has learned from recent failures [at 71:45]. Some the advice I share about what Starbucks could do to regain vitality might surprise ya [at 53:00].

Listen in ...

Resuscitating Comatose Brands

Kudos to Karlene Lukovitz for her autopsy-esque article on reviving left-for-dead brands. Click here or below to read the interesting article...

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#3 -- Biz Book | Tweet by Tweet

My "Biz Book | Tweet by Tweet" experiment ends today. For those unaware, I’ve been sharing super-tight and ultra-pithy takeaways from a worthwhile book, THE TEN COMMANDMENTS OF BUSINESS FAILURE (Donald Keough). (If you need more backstory, go here.)

Below is the collection of nearly 30 knowledge nuggets from Keough’s book which were first shared on Twitter. Keep mind, I’ve shortened, paraphrased, and augmented Keough’s original lines. However, I did keep the quotes from notable people as is.

Enjoy the snippets and consider reading THE TEN COMMANDMENTS OF BUSINESS FAILURE. The book obviously has the Brand Autopsy seal of approval.

Nuggets from Business Failure Commandments

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Failed programs are necessary for the lessons they teach us. Part of the price of staying in business is failure.

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“The world belongs to the discontented.” – Oscar Wilde

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If a company has never failed, they are too complacent and not discontented enough to risk its current state to impact its future state.

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“I’m in favor of leaving the status quo the way it is.” — Yogi Berra

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Being inflexible and having an infallible belief in having THE formula for sustainable business success is a recipe for failure.

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“History is downstream – the future is upstream.” Meaning, it’s easy to go where history guides you.

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“History is downstream – the future is upstream.” Meaning, it’s difficult to fight the downstream waters to go upstream into the future.

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When managers/execs isolate themselves and build barriers between them and employees (as well as customers), failure is assured.

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“A desk is a dangerous place from which to view the world.” — John le Carre

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Execs that isolate and alienate themselves breed rumor and revolt. However, it’s a winning strategy for business failure.

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Success comes truer to businesses when managers/execs know the names of their employees and regularly break bread with employees.

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“It’s a rare person who wants to hear what he doesn’t want to hear.” — Dick Cavett

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“Whatever you do in life, surround yourself with smart people who’ll argue with you.” — John Wooden

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Failure in business is sure to occur when executives never admit to a problem or a mistake. Assuming infallibility is highly destructive.

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Fail faster by always cloaking the truth. Lie. Never shoot straight. Make it a point to fool people at every turn.

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Business failure will happen if you never stop to think.

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Taking time to think isn’t a luxury—it’s a necessity. If nobody stops think, a business will make the same mistakes time and time again.

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Business failure will occur if you avoid the responsibility to think strategically and instead, put all your faith in outside consultants.

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Besides suppressing employee creativity, adding layers of bureaucracy will make a smart company dumb.

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The more excitement behind a project will increase urgency and increase the chance bureaucratic blunders will bring about failure.

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Failure in business is sure to occur when execs allow administrative concerns to supersede all other day-to-day business activities.

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“The problem with communication is the illusion that it has been accomplished.” — George Bernard Shaw

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Sending mixed messages to employees and customers will result in business failure because it will destroy your competitive positioning.

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“Fear is that little darkroom where negatives are developed.” — Michael Pritchard

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“No pessimist ever discovered the secret of the stars or sailed to an uncharted land.” — Helen Keller

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Fearing business failure is paralyzing. Fearing the future of your business only guarantees its future will be a failure.

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The most serious risk to the success of a business is to not take any risks.

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To succeed in business, a business must sow the seeds of failure. Why? … because a company that has never failed, will never succeed.

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“To quit taking risks is a serious risk!” Donald Keough, author of THE TEN COMMANDMENTS OF BUSINESS FAILURE

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*** SNIPPET SOURCE ***

Two Buck ‘Bucks

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SOURCE: Associated Press article

Starbucks offers afternoon drink deal nationwide

Looking to bring more value-seeking consumers through its doors for a late afternoon caffeine fix, Starbucks Corp. said it will now offer its morning customers any iced grande beverage for $2 after 2 p.m.

The price is a big cut from the normal price of most grande-sized iced drinks. A grande iced latte, for example, costs about $4. To get the discount, customers must present a receipt from their morning Starbucks visit.

"I think we've kind of hit the nail on the head," said Brad Stevens, vice president of customer relationship management. "It's easy for baristas to implement and it's easy for customers to understand."

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Sadly, this is yet another decision the company has made which has “… lead to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand." [SOURCE]

As marketers, we know PRICING TELLS A STORY. All high-priced products must deliver an interesting story to justify its higher price. On the other end, low-priced products settle for telling an uninteresting story, beyond simply getting goods on the cheap.

Reading in-between the lines I’m picking up on something even more alarming than the company’s decision to become a priced-to-sell retailer. I’m picking up on a cataclysmic shift in company culture.

Re-read the quote from Brad Stevens. He says the Two Buck ‘Bucks promotion “is easy” for employees to implement and for customers to understand. True. HOWEVER, the Starbucks we’ve come to appreciate developing a relationship with never did anything “easy.”

The Starbucks company culture has never been about doing things the easy way.

The easy way is to size drinks Small, Medium, Large, and Extra-Large.
The easy way is to roast coffee less for a mass appeal taste profile.
The easy way is to have lucy-goosey espresso making standards.
The easy way is to not offer part-time employees full benefits.
The easy way is to treat customers as just a transaction.
The easy way is to compete on low prices.

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The hard way is to size drinks Short, Tall, Grande, and Venti.
The hard way is to roast coffee longer for a more polarizing taste profile.
The hard way is to have strict espresso making standards.
The hard way is to offer every employee full benefits.
The hard way is to have employees build relationships with customers.
The hard way is to compete on high prices.

If we wanted “easy,” we would have never interrupted our old daily ritual to make Starbucks part of our new daily ritual. If Starbucks had always done things the EASY WAY, they wouldn’t have changed the game for how to build an endearing and enduring brand.

As for the decision to compete on low prices to drive traffic in the afternoon daypart with Treat Receipts … I’m troubled by this. Just as I was troubled when the company experimented earlier this year with selling a One-Dollar Cup o’ Joe.

Biz Book | Tweet by Tweet

I’ve highlighted Donald Keough’s Ten Commandments for Business Failure in a recent post. It’s a worthwhile read because Keough points out tried and true pathways for any business venture to fail. If we follow Keough’s advice of not following his advice, then business success is sure to follow. (Follow me?)

If you do follow my thinking, then follow me this week on Twitter as I will share over 25 knowledge nuggets from Keough’s book.

Since Twitter limits posts to 140 characters or less, these tweets will be nugget-sized. Meaty though — just super-tight and ultra-pithy. Here are the initial tweets:

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To follow along … hop on Twitter and follow me.

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NOTE: If you have no desire to wander over to Twitter, that's cool. I'll be sharing my Biz Book tweets on Wednesday and Friday ... right here on the Brand Autopsy blog.

Business Failure Commandments

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What you just read is a money quote from Donald Keough’s recently published, THE TEN COMMANDMENTS FOR BUSINESS FAILURE. For years Keough, a former long-time Coca-Cola executive, has been flipping the script by giving presentations on How to Fail in Business. Keough rightly reasons, by learning why companies fail, we can learn what NOT TO DO in order to achieve business success. Now these fail-trap lessons on business failure are available for us to read and learn from.

Keough, like his good friend Warren Buffet, is a smart businessman who doesn’t try to overcomplicate business theory and uses plain everyday language to share smart advice. Thus, THE TEN COMMANDMENTS FOR BUSINESS FAILURE appeals to big business execs, small business owners, and aspiring entrepreneurs.

I was hooked early on when reading the first commandment leading to business failure: QUIT TAKING RISKS. Keough writes...

“Over time, many, many successful companies have failed to take important risks at critical points, and they have paid a price. Some have merely stumbled and found later redemption, but quite a few have not only fallen but disappeared. In the 1980s alone, 230 companies disappeared from the FORTUNE 500. In fact, only 16 of the 100 largest companies that were around in the early 1900s are still with us.”

To support this commandment, Keough gives us a history lesson by retelling classic failure stories from Xerox and Coca-Cola as well as mixing in new lessons in failure such as this one about Apple …

“In business, you can make a good argument for mistakes like Steve Job’s Lisa or Power MacCube because the highly creative Apple environment that spawned them also produced big winners like iPod and iPhone.”

“As Peter Drucker pointed out nearly fifty years agao, it is management’s major task to prudently risk a company’s present assets in order to ensure its future existence. In fact, if a company never has a failure, I submit that their management is probably not discontented enough to justify their salaries.”

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Go ahead, chew on that last line cause its worth thinking about “… if a company never has a failure, I submit that their management is probably not discontented enough to justify their salaries.”

Now that it is going away, we’re devastated.

As many of you know, I will occasionally ask if you would miss a specific company if it went out-of-business tomorrow. (It’s part of my Would You Miss series inspired by the book, MAVERICKS AT WORK.) The question is totally hypothetical, but the answers you’ve given are highly emotional.

This “Would You Miss” question is a great one to ask of any business because it tells us how well we have formed relationships with our customers. If a business has formed unfailing relationships with its customers, then customers would truly care if that company went out of business. On the other hand, if a business hasn’t formed meaningful bonds with customers, then customers wouldn’t care if that business ceased to exist.

With the recent announcement of Starbucks Coffee closing 600 under-performing locations, we get to witness this “Would You Miss” question in action. If the SaveOurStarbucks.com website is any indication, lots of people will miss Starbucks when their location is closed.

Now that Starbucks Corp. has disclosed the 600 locations it wants to shutter, a phenomenon is taking hold: the Save Our Starbucks campaign.

In towns as small as Bloomfield, N.M., and metropolises as large as New York, customers and city officials are starting to write letters, place phone calls, circulate petitions and otherwise plead with the coffee company to change its mind.

"Now that it's going away, we're devastated," said Kate Walker, a facilities manager for software company SunGard Financial Systems who recently learned of a store closing in New York City. [SOURCE: Wall Street Journal article]

Wow! “Now that it is going away, we’re devastated.” That’s the best thing a company could hope to hear from customers when it is dealing with severe business issues. Hmm ... would your customers be DEVASTATED if your business closed up shop?

Pete Blackshaw on Credibility

Just finished reading Pete Blackshaw's book about "running a business in today's consumer-driven world." Those of you deep into word-of-mouth marketing and social media will already know much of what Pete shares. However, most of your business buddies will learn a lot from Pete's book. (And some of you could use a refresher course on why transparency and credibility matter immensely when citizen marketers are in control.) It's a worthy read.

One of the most worthwhile sections in the book deals with CREDIBILITY. Pete says credibility isn't on a company's balance sheet, but it should be because it is the only true resource a company has when the marketplace conversation is controlled by consumers. Pete continues by saying ...

“I would argue that today companies don’t just need to tell good stories; they also need to tell credible ones.

Credibility rules the day, and if a company’s story doesn’t foster trust, if it doesn’t convey transparency and authenticity, if it isn’t informed by listening and responding to customers, and it isn’t positively affirmed by what consumers are saying to one another, then it’s just another phony story. And consumers will see right through it.” [“TELL 3,000” | pg. 39]

Right-on. Smart stuff.

Jay Ehret on Losing Focus

Take a few minutes today to read Jay Ehret's cautionary tale on how he lost focus by trying to run two businesses ... only to run himself into the ground. An important lesson for us all.

Advertising Age recommends NOT ADVERTISING

Yep, you read that header right — Advertising Age recommends NOT ADVERTISING. A recent editorial in Ad Age shared HMOs (hot marketing opinions) about JetBlue’s current advertising campaign. The gist is this …

“JetBlue is missing the point with its recent ad push. What it needs is to get back to what made it a media and consumer darling: customer service and good internal and external communication.”

“… convincing more people to fly doesn't seem like a smart move for an airline that has trouble handling the passengers it already has. It won't fool new passengers, and it will only upset current passengers. JetBlue achieved its success by being unlike the other airlines. Its good name spread -- via word-of-mouth and smart marketing -- because great customer service gave it a compelling story to tell.”

“Priority No. 1 should be getting back to a place where consumers want to share good stories. Take the money being wasted on that campaign and plow it into customer service.”

Let’s take this a step further. BEFORE any company spends gobs of money on an advertising campaign, it should first spend money on improving the performance of a product/service and on ratcheting up the customer experience. ‘Nuff said! Errrahh!

Zappos $1,000 Offer

Ever heard of a “Quit-Now” bonus for new employees? We’ve all heard of severance packages where long-standing employees are essentially paid a bonus to quit now. But a “Quit-Now” bonus for new employees to voluntarily leave after a week on the job … that’s novel.

Bill Taylor, of Mavericks at Work fame, writes how Zappos , a fast-growing online shoe retailer, will offer one-week old employees a “Quit-Now” bonus of $1,000. Zappos will ask new employees this question … “If you quit today, we will pay you for the amount of time you’ve worked, plus we will offer you a $1,000 bonus.”

Why does Zappos do this? The reasoning, as Bill Taylor put it, is …

“Because if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are looking for. It’s hard to describe the level of energy in the Zappos culture—which means, by definition, it’s not for everybody. Zappos wants to learn if there’s a bad fit between what makes the organization tick and what makes individual employees tick—and it’s willing to pay to learn sooner rather than later. (About ten percent of new call-center employees take the money and run.)” READ MORE

Brilliant! Bloody brilliant!!

Thanks to someone’s blog for the hook-up. (Sorry, I forget who clued me in.)

Advice from Eddie Lampert

Fortune’s latest issue shares “The Best Advice I Ever Got” from a cadre of business muckety-mucks. Lots of good advice from the likes of Michael Bloomberg, Nelson Peltz. Craig Newmark, Tina Fey, and Indra Nooyi. I especially liked the advice from Eddie Lampert, hedge fund head man and Sears chairman ...

"Almost every weekend when I was 7, 8, 9, 10 years old, my father and I would toss a football in the yard or play basketball in the driveway. When we played football, he'd say, "Go out ten steps. Turn to your right." The ball would reach me just before I turned, and it would hit me right in the chest. Why would my dad do this? He told me, "If I waited for you to turn, you and the defensive player would have an equal chance to get the ball. Your opportunity is gone."

This idea of anticipation is key to investing and to business generally. You can't wait for an opportunity to become obvious. You have to think, "Here's what other people and companies have done under certain circumstances. Now, under these new circumstances, how is this management likely to behave?" The plays my father designed for me helped me learn to think ahead." -- Eddie Lampert [source]

New Guru Review

Four years ago I linked to an article titled, GURU NATION. The article shed light on the Business Guru Scene from the egos to the economics of it all. Interesting read.

The Wall Street Journal has revisited the Guru Scene for 2008. This updated look reflects a change where more non-traditional business experts are in greater demand. Journalists like Thomas Friedman (#2) and Malcolm Gladwell (#4) rank high as does education professor, Howard Gardner (#5). According to the article, the most popular topics for these business gurus include: globalization, motivation ,and innovation. Here's the list...

This list was compiled by two Babson College professors and is based upon the number of online mentions, academic citations, and LexisNexis media mentions. It’s not a truly scientific list, but it is an interesting list.

Adding to the interest is the absence of women in the top 20 rankings. Wendy Bounds, from the Wall Street Journal, asked readers for their take on why women are absent from the list … the conversation is worth reading.

Knowledge Nuggets from Steve Jobs

The March 17th issue of Fortune magazine has a "Good Steve | Bad Steve" take on Steve Jobs. The Good Steve article has chewy knowledge nuggets from him on being innovative, connecting with consumers, staying focused, managing people, and hiring talented people. Good stuff.

on being innovative…
"You can't ask people what they want if it's around the next corner," says Steve Jobs, Apple's CEO and cofounder. At Apple, new-product development starts in the gut and gets hatched in rolling conversations that go something like this: What do we hate? (Our cellphones.) What do we have the technology to make? (A cellphone with a Mac inside.) What would we like to own? (You guessed it, an iPhone.) "One of the keys to Apple is that we build products that really turn us on," says Jobs.

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on connecting with consumers…
"It's not about pop culture, and it's not about fooling people, and it's not about convincing people that they want something they don't. We figure out what we want. And I think we're pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That's what we get paid to do.” [MORE]

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on staying focused…
”People think focus means saying yes to the thing you’ve go to focus on. But that’s not what it means at all. It means saying no to the 100 other good ideas that there are. You have to pick carefully.” [MORE]

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on managing people…
“We've got 25,000 people at Apple. About 10,000 of them are in the stores. And my job is to work with sort of the top 100 people, that's what I do. So when a good idea comes … part of my job is to move it around, just see what different people think, get people talking about it, argue with people about it, get ideas moving among that group of 100 people.” [MORE]

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on hiring talented people…
"When I hire somebody really senior, competence is the ante. They have to be really smart. But the real issue for me is, Are they going to fall in love with Apple? Because if they fall in love with Apple, everything else will take care of itself. They'll want to do what's best for Apple, not what's best for them.” [MORE]

Borders Reducing its Borders

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Bookstores merchandise most books with the spine facing out. Only new releases and best-sellers get the front-face treatment. Merchandising books with the spine facing out allows the retailer to stock more books. However, front-facing books gives a book greater visibility and results in higher sales.

Borders recently tested a front-facing display strategy where more books were stocked with their covers, not spines, facing customers. Sales increased by 9.0%. The strategy was so successful, all Borders bookstores will be switching to the front-facing strategy in the next couple of weeks.

The drawback to a front-facing strategy is Borders will have to reduce its inventory by 5%-10%. This means the typical Borders store will reduce its inventory anywhere from 4,700 books to 9,300 books. Execs at Borders aren’t too concerned about the loss of inventory since many of the books they stock only sell one copy per year.

On the other hand, Barnes & Noble has no intentions of reducing its inventory of books. (The typical Barnes & Noble stocks 125,000 to 150,000 at its stores.)

Borders did some customer research at its front-facing prototype store and learned customers perceived Borders as having more books, not fewer, with this new display strategy. (Interesting.)

Bold move by Borders. We’ll have to see if this works in the short-term AND the long-term.

FOR MORE: Read this Wall Street Journal article.

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FOR EVEN MORE: Seth Godin riffs on how Borders strategy is counter to the Long Tail. Joe Wikert, an executive at book publisher Wiley, fears customers will leave empty-handed because of the reduced inventory.

Starbucks should do more of this…

No I’m not talking about the re-training of its front-line employees on how to make the perfect coffee drink. I am talking about a video ditty I spied on YouTube. It’s a two-minute documentary of Young Han, a Starbucks barista, talking about his “Got Milk” photo shoot and his appreciation for the Starbucks Coffee Company.

It works great as a recruitment video. Not slick. Not scripted. Just genuine moments and reflections. Have a look…

RSS readers ... click here to watch the video

As we’ve discussed, Starbucks is doing very little to tap into the Third Space communities people are forming online. (Big miss in my book.)

While Howard Schultz may never blog, Starbucks should STRONGLY CONSIDER encouraging its young and talented workforce to post videos of why they feel a connection to Starbucks. They could turn it into a contest similar to Deloitte & Touche’s brilliant Film Fest idea where Starbucks baristas would submit short videos showcasing “What Starbucks Means to Me.” The best 10 videos would be posted on the barren Starbucks YouTube page for all to see.

Each of these top 10 videos would serve as a great recruitment tool for Starbucks. And the creators of these videos could be rewarded in some way, perhaps stock options. A simple idea to execute with potentially big results of attracting a better front-line employee to deliver better customer experiences.

(This is yet another in a series of free ideas from Brand Autopsy and the readers of this blog that Starbucks would be smart to use.)

Howard Schultz Must Blog

As we know, Howard Schultz has returned as CEO at Starbucks.  He’s committed to fixing the “unintended consequences” caused by growing its store footprint at a rapid pace.  Such unintended consequences have included losing the company’s identity and the dilution of the unique customer experience Starbucks once delivered.  Howard has also pledged to refocus the company on growing its relationships with customers.

Writing in the Huffington Post, Jesse Kornbluth raises a valid point,

“It's interesting that Schultz professes to love Starbucks customers but has no apparent interest in hearing from us. How's that, Howard? You're going to thrill us without getting our input? Do you really think focus groups, consumer research and executive offsites will tell you what you need to know? What, exactly, do you think the Starbucks website is for?”

Jesse is onto something when he writes, “Schultz professes to love Starbucks customers but has no apparent interest in hearing from us.”

As evidence by their lack of participation, we know Starbucks, as a company, has refused to blog and refuses to participate in online conversations.  The Starbucks Gossip blog is all the proof the company needs to know that people want Starbucks to join the online conversation.  Yet, the company refuses to have a conversation with its customers (and employees) online.

Clearly, Starbucks was ahead of the curve with tapping into satisfying the consumer need of a Third Place—a place besides home and work where people could form community.  But consumers have evolved from needing a Third Place to needing a Third Space.  This Third Space includes social media spaces like blogs, vlogs, podcasts, Twitter, and many more. These are spaces where meaningful online communities are forming.

Now that the company recognizes it needs to improve its relationships with customers to improve the health of its business, maybe Starbucks will consider blogging.

Better yet, given Howard Schultz’s pledge to growing the company's relationships with customers, he should blog.  He should give us, the 50+ million Starbucks customers who visit his stores weekly, updates on how his company is making the necessarily changes to follow his vision for reclaiming the Starbucks luster. 

Howard recently told Wall Street analysts that, since returning as CEO, he has received thousands of emails from customers and employees who share his enthusiasm for reigniting the emotional attachment people have with the Starbucks brand.  With a blog, just imagine how many more messages Howard would receive from adoring customers and employees who want to see the company succeed.

Howard has always talked about growing his company to get bigger by acting smaller.  And a blog, or some other social media avenue, is the perfect tool to help big companies get smaller in customer’s eyes.  Other CEO blogs like Jonathan Schwartz’s blog and Bob Lutz’s blog have helped to make Sun Microsystems and General Motors, both goliath companies, get smaller in the eyes of customers.  And thanks to encouraging its employees to blog, companies like Microsoft look less pervasive and less evil in the eyes of customers. 

Can you imagine the conversations that would occur if Howard Schultz used the Starbucks website to regularly share updates on how his company is bringing back the old Starbucks juju?  I’m sure many of the Starbucks faithful would be thrilled to read impassioned updates from Howard.  I'm also sure Howard would receive pointed feedback (and yes, un-pointed feedback too) on activities the company should stop doing, start doing, and/or continue doing.

Unfortunately, the Starbucks corporate culture doesn’t sync with social media.  My experience of working deep inside the company tells me Starbucks is extremely careful in how they are portrayed in the traditional media.  They want to be in control of the conversation in the media as much as possible.  Since Starbucks is cautious about how traditional media portrays the company, then no way will Starbucks be comfortable playing in the non-traditional untamed waters of social media.  Do I think this is right?  Absolutely not!

Starbucks helped to popularize the “New Marketing” ethos of spending marketing dollars on making better customer experiences and not on making extravagant advertising campaigns.  In essence, Starbucks baked marketing inside its business.  It didn’t have to advertise because everything about the in-store Starbucks experience was the advertising.

Starbucks still operates under this “New Marketing” ethos but the game has evolved dramatically.  A “NOW MARKETING” movement has emerged and Starbucks hasn’t kept up.  This “NOW MARKETING” ethos is the realization of the prophetic Cluetrain Manifesto where the Internet has changed how customers expect to interact with businesses.  As the Cluetrain writers explain:

"A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies."

In growing its business, Starbucks has always operated under the guidance of “Be everywhere its customers expect them to be.”  This is the rationale for why the company began serving its coffee on United Airlines, expanding Internationally, operating licensed concept locations in airports, selling cold bottled coffee in convenience stores, selling whole bean coffee in grocery stores, etc.

Customers today have a new expectation. 

Customers now expect Starbucks, and other businesses, to engage in conversations with them wherever and whenever.  Be it in the Third Place or the Third Space, customers want to interact with businesses they love.  By being active in the Third Space online, companies show their love for customers by being open to having a conversation with them. 

If Howard Schultz really loves his 50+million weekly customers, he would show it by evolving his company’s culture to adopt the “NOW MARKETING” movement.  If Howard Schultz really loves Starbucks customers, he must blog.  He must carry on a conversation with us.

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UPDATE:  This blog post has been simmering within me for a few weeks.  After hitting the publish button, I ventured over to the Starbucks.com site and hidden in the bottom right-hand corner is a "Howard Schultz Partner Update" link.  This particular update is titled. "What I Know to Be True."  Interesting.  Seems like Howard is using the company website to share his impassioned updates with customers and employees.

Also posted are are transcripts of voicemails to stores regarding the work ahead of the company. 

Of course, it would be better if Starbucks were to open up the conversation, allow comments from readers, and commit to making this an on-going feature.  That way, Starbucks would be embracing the "NOW MARKETING" movement we have come to expect from businesses we adore.

The Makings of a Strong Brand

Brand-building is an exercise we businesspeople get excited about. I’m very much devoted to helping businesses build their brand. But in doing so, I focus less on implementing "Branding Strategies" for businesses and instead, focus more on amplifying Being Strategies of businesses.

I truly believe that you cannot create a brand before you create a business—the process is simultaneous. As you build your business, you create your brand. Your brand never makes your business possible. It’s your business that makes your brand possible.

When I talk with businesses wanting to improve their branding, I ask them three questions:

a | How do you make a profit?
b | How do you make employees happy?
c | How do you make customers happy?

I ask these questions because a funny thing happens when a company (a) makes money, (b) makes employees happy, and (c) makes customers happy … it makes a strong brand. Being Strategies for a company find avenues to making a profit, enchanting employees, and pleasing customers. The result being, a strong brand.

Is it simple? Yeah, I think so.

Name a company that (a) fails to make money, (b) fails to make employees happy, and (c) fails to make customers happy … yet, is recognized as an endearing and enduring brand.

Comments are open, so go ahead and debunk this assertion.

Ideaicide Prevention is Everybody’s Business

"Ideas are usually rejected out of turn for being too 'something' — too fast, too unproven, too far beyond the corporate image. 'Too something' is a reactionary description used to take the edge off ideas that are strong, bold, and a little scary at first sight. Your challenge is to help people discover a means, harmonious with the culture, to accept your concept."

Alan Parr & Karen Ansbaugh Ideaicide: How To Avoid It And Get What You Want * ChangeThis Manifesto *

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Be smarter. Be better. Read this.

The Pirate’s Dilemma | REMIXED

“Remixing is about taking something that already exists and redefining it in your own personal creative space, reinterpreting someone else’s work your way. [It’s about] taking an idea and making it suitable for a whole new audience.” — Matt Mason, THE PIRATE’S DILEMMA

Consider the following post a remix of Matt Mason’s THE PIRATE’S DILEMMA. The twist I’m adding is whittling down the gist of Matt’s message into a WHAT — SO WHAT — WHAT NOW structure. The WHAT is the core of Matt’s idea. The SO WHAT explains why the WHAT matters. And the WHAT NOW is advice on how to action upon the WHAT.

NOTE: All direct samples lifted from Mason’s original work, THE PIRATE’S DILEMMA, are quoted in italics.

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WHAT:
“Entrepreneurs look for gaps in the market. Pirates look for gaps outside of the market. By thinking like pirates, people grow niche audiences to a critical mass and change the mainstream from the bottom-up.”

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SO WHAT:
Matt Mason reasons today’s capitalism is influenced by Pirate entrepreneurs who are rocking the boat by “doing things differently and working out new ways to share information, intellectual property, and public space.”

American Apparel is a company run by a Pirate entrepreneur in Don Charney. Influenced by the punk capitalism ideal of “putting purpose next to profit,” Charney is reinventing the apparel industry in America. All of American Apparel clothes are produced in a sweatshop-free factory in downtown Los Angeles. American Apparel factory workers earn an average of $13/hr, plus they receive benefits like subsidized lunches, bus passes, free bicycles, and health insurance. 20% of the cotton used by American Apparel is organic, 20% of the power used at their factory comes from their rooftop solar panels, and all fabric scraps are recycled. By selling both substance and style, Charney is making a healthy profit and upending the market in the process.

Tomoaki Nagao is a Pirate entrepreneur impacting the sneaker trade. Nagao remixed Nike’s Air Force One basketball shoe in garish colors and high-gloss patent leather. The result of this remixed shoe is the sought-after and super-expensive BapeSta shoe line (known as Bapes). Thanks to the success of Bapes, Nike has reintroduced the Air Force One shoe in similar garish colors. Not a surprising move for Nike given that its co-founder and leader, Phil Knight, is an O.P. (Original Pirate) having rocked the sneaker trade in the early 70s.

“Finding a space to get your idea across is as important as having the idea itself. If the idea is good, growing an audience won’t be difficult. It’s the audience that gives pirates their power.” Shawn Fanning’s Pirate prowess was boosted when his idea went viral. At one point, 70-million people were freely sharing MP3s using Fanning’s ultimate pirate creation—Napster.

The entire music industry business model has been rocked by Napster and other peer-to-peer music sharing programs. However, “as quickly as society figures out new ways to share ideas that advance the common good, private interests move in to stop this from happening, to maintain the old systems that benefit only the elite.” The music industry levied a litany of legal charges against Napster, forcing this Pirate business to reform its rock-the-boat ways and go from a free service to a paid service.

The music industry is still waging legal battles against free download sites. But the irrevocable damage has been down. Pirates have forever changed how people view the accessibility, portability, and usability of music. The music industry is facing the “PIRATE’S DILEMMA” of how to respond when an outside force finds new ways to “share information, intellectual property, and public space” that bypasses the capitalistic models of the old guard.

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WHAT NOW:
Responding to the PIRATE’S DILEMMA is a dilemma for companies competing a marketplace that has been rocked by Pirate entrepreneurs. Do you steadfastly cling to how you’ve always done business and choose not to compete in the Pirate-created market? Or do you compete with the Pirates in the market they’ve rocked?

In Matt Mason’s words, do you “fight these pirates, or accept that there is some value in what they are doing, and compete with them?” That’s the dilemma facing businesses in all types of industries.

Mason believes “resistance if futile” and if you choose to ignore the Pirate-created market or choose not to adapt to the changing marketplace … you will lose. The solution to THE PIRATE’S DILEMMA, according to Mason, is to act like a Pirate by “recognizing the pirate within” and to view disrupted markets not as problems, but as opportunities.

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Further Mixes:
>> THE PIRATE’S DILEMMA | website and blog
>> THE PIRATE’S DILEMMA | review
>> Matt Mason presentation| video
>> Matt Mason presentation | slides

Bad Apple?

Fascinating post from Jens Alfke, a just-resigned Apple employee — read it here. (Thanks to Steve Chazin for the hook-up.)

In this post, Jens reveals his dissatisfaction with Apple’s reluctance to embrace the open source/social software culture. Other "creative differences" causing this 16-year Apple veteran to leave include the lack of individual expression and celebration within the company.

For us outsiders, this post gives us an illuminating (and incriminating) look into the closed cultural ethos at Apple. Here’s a tasty snippet…

“It’s deeply ironic: For a company that famously celebrates individuality and Thinking Different, Apple has in the past decade kept its image remarkably impersonal. Other than the trinity who go onstage at press events — Steve Jobs, Jonathan Ive, Phil Schiller — how many people can you name who work for Apple? How many engineers?

It wasn’t always this way. Apple was very open in the beginning, and treated the members of the original Mac team like rock stars, complete with photo layouts in Rolling Stone. Their signatures were engraved in the inside of the computer’s case. Even in my early years there, applications’ “about boxes” proudly listed the names of the people who worked on them. The OS itself had semi-secret easter eggs that listed everyone’s name. The developer Tech Notes were bylined with the names of the individual engineers who wrote them.

Nowadays, unless you’re a vice president, the only time Apple consents to show your name is if you give a talk at the Worldwide Developers’ Conference, a rather pricey annual event.”

SOURCE: Jens Alfke |GONE INDIE

Leaders Are Rarely the Best Performers

I’m re:visiting Tom Peters’ Re:imagine! and stumbled upon this chewy management ditty on leadership…

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Leaders Are Rarely the Best Performers

A symphony conductor is usually a good musician, but seldom a world-class performer. The most effective university deans are often not the best professors. The ability to lead … to Engage Others and to Turn Them On … rarely coincides with being at the tip-top of the … Individual Performance Heap.

Which is not to say that leaders shouldn’t have a fingertip familiarity with their particular line of business. But the factors that make you good at the “people stuff” and the “inspirational stuff” and the “profit-making stuff” are quite distinct from the factors that vault you to the Pinnacle of Individual Mastery.

In business, alas, it’s all too common to promote the “best” practitioner to the job of leading other practitioners. The best trainer becomes head of the training department. The best account manager becomes head of the sales department. And so on. Tellingly, that’s not how things work in … True Talent Enterprises.

So why do we go that route in business? Beats me. Gross stupidity? Maybe. But more likely: a refusal to see that leadership is … a discrete, limited, special quality.

SOURCE: Re-Imagine! (2003), pg. 321 | Tom Peters

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What’s a Troubadour to Do?

Mega-selling recording artist Natalie Merchant doesn’t have a recording contract with a major label these days. The digital download era has rendered many top-selling artists, like Ms. Merchant, unattractive and irrelevant as it relates major labels releasing newly recorded CDs.

Writing in the New York Times, John Pareles tells us, “Ms. Merchant is back to the age-old economic model of the troubadour. People who want to hear her latest songs will have to see her perform them.”

The free market has decided it likes its recorded music more or less free and not from buying a music CD. But the free market has also decided it will pay to see a musician perform live, like Natalie Merchant. Her week-long residency at Hiro’s sold-out within hours of being announced and a sixth show was added to meet demand.

Yes, the game has changed, but has it changed as much as Natalie Merchant suggests? Only those few artists in the thick end of the long tail ever made significant money from CD sales. But those musicians in the long tail have made their money from touring and not from CD sales.

Generally speaking, a recording artist on a major label can expect to make $1.00 per CD sold. When an artist (or band) signs with a music label they are given an advance to produce a CD. Out of that advance, the artist must pay for studio time, pay the band, pay a producer, pay most marketing and promotion expenses (which includes the making of any music video), and pay for a slew of miscellaneous expenses. Most musicians exhaust their entire advance to release a major-label CD.

In order to make substantial money from a major label-issued CD, the artist needs to sell A LOT of copies. Those artists in the thick end of the long tail make money from CD sales, while those in the long tail don’t. Artists working in the long tail must tour from city-to-city and earn money from ticket sales, percentage take from drinks sales at the venue, merchandise sales, etc. Essentially, CDs (or MP3s) for long tail artists are marketing collateral pieces to get someone to buy a ticket to see them perform live. This way, the artist makes money.

Knowing all this, what's a troubadour to do?

My advice for Natalie Merchant is to not deprive her adoring fans of hearing new, recorded music. At the least, she should record live shows and sell them to her devoted fans on her website and at her live shows. She should also consider giving away her recorded music for free.

Why give away her recorded music for free? As mentioned, a CD or an MP3 file is essentially a direct mail piece to get someone to buy a concert ticket. If indeed a musician can make more money from selling tickets to a live show, shouldn’t they market themselves to sell tickets and not CDs?

Hmm … maybe that’s what a troubadour should do.

Making Customers Happy

When the 2007 year-end tallies are calculated, Amazon is expected to have grown revenues to $15 billion, an increase of 35.0% from the year prior. The company counts 72-million active customers who spent, on average, $184 on Amazon.com last year. Profit margins, which have been as low as 3.0%, have increased to 6.0%. Amazon is making money.

Amazon is also making customers happy. Ed Nocera, writing in the New York Times, thinks profit and sales-growth at Amazon is a by-product of making customers happy.

Ed purchased a PlayStation 3 as a gift from Amazon this Holiday. Concerned the package hadn’t arrived yet, Ed tracked the shipment from Amazon’s website. He learned the package had arrived and a neighbor had signed for it. Ed asked his neighbor about the package and learned she put the package in the hallway after signing for it.

Ed knew his PS3 was MIA so he managed to find Amazon’s customer service phone number and explained his situation to the customer service rep. Amazon shipped out a replacement PlayStation3 and on Christmas Day, Ed’s son was happy. And so was Ed.

Curious about Amazon’s stock performance, Ed looked it up and saw it had risen about 140% in the past year. Wall Street types credit the Amazon run-up to improved margins, international expansion, its web services business, and to increased sales with its reseller merchant market affiliates.

Ed has a different take,

I couldn’t help wondering if maybe there wasn’t something else at play here, something Wall Street never seems to take very seriously. Maybe, just maybe, taking care of customers is something worth doing when you are trying to create a lasting company. Maybe, in fact, it’s the best way to build a real business — even if it comes at the expense of short-term results.

Jeff Bezos, Amazon CEO and Founder, appeared recently on The Charlie Rose Show and had this to say about his obsession with customers,

“They [Aamzon customers] care about having the lowest prices, having vast selection, so they have choice, and getting the products to customers fast. And the reason I’m so obsessed with these drivers of the customer experience is that I believe that the success we have had over the past 12 years has been driven exclusively by that customer experience. We are not great advertisers. So we start with customers, figure out what they want, and figure out how to get it to them.”

Ed Nocera closes his article with this gem,

There is simply no question that Mr. Bezos’s obsession with his customers — and the long term — has paid off, even if he had to take some hits to the stock price along the way. Surely, it was worth it. As for me, the $500 favor the company did for me this Christmas will surely rebound in additional business down the line. Why would I ever shop anywhere else online? Then again, there may be another reason good customer service makes sense.

“Jeff used to say that if you did something good for one customer, they would tell 100 customers,” said Suresh Kotha, a management professor at the University of Washington business school.

I guess that’s what I just did.

SOURCE | Put Buyers First? What a Concept (Ed Nocera) | NY Times (Jan. 5, 2007)

Dilbert's Marketing Wisdom

In STICK TO DRAWING COMICS MONKEY BRAIN, Dilbert creator, Scott Adams, shared the above sharp and snappy business advice on how to predict success. He continues by saying, "The only thing that predicts success is passion, even if only 10 percent of the consumers have it."

When the Dilbert comic strip first started in late 80s, Adams remembers most people didn't love it. However, about 10 percent of its readers did love it and many of them clipped-out the comic from the newspaper and shared it with their friends. These people were passionate about the humorous look at dysfunctional office life portrayed in Dilbert. They decorated their cubicles with Dilbert cartoons. Some even put together homemade books of Dilbert cartoons long before the first Dilbert book was sold. They loved Dilbert.

Scott Adams didn't worry about trying to make the Dilbert cartoon successful by making the indifferent reader passionate about Dilbert. Instead, he relied on Dilbert succeeding by fueling the passions of those most passionate about all things Dilbert.

A greater predictor of successful product introductions is to gain a passionate and loyal customer base, no matter how small in numbers they are.

This isn't an absolute predictor as the abandoned product graveyard is littered with products that failed despite attracting a small, passionate customer base. However, if your product only attracts indifferent customers and fails to attract passionate customers ... chances are, that product will not succeed.

No Photos Allowed

It’s common practice for retailers to discourage and or outright prohibit photography inside their stores. Doesn’t make it a best practice though. As Seth Godin says, “In an experience economy, where a bear workshop or furniture superstore is a form of tourism, photography is part of the deal.”

Seth smartly points out a paradox of pictures exists with retailers that deliver remarkable in-store experiences. Retailers want you to remark about your shopping experiences but not with actual pictures, only with words written and/or spoken.

My friend Conrad Hametner is a foodie. He has a passion for seeking out exotic foods with exotic names. The names get so exotic he likes to use his cellphone camera to snap photos of the foods he would never be able to remember. But recently, HE GOT CAUGHT.

While perusing the cheese section at Whole Foods Market, Conrad sampled a few cheeses and found a new favorite—Gabietou. To help him remember this cheese, he snapped a photo. But a Whole Foods Team Member (employee) sternly told him company policy says absolutely no photos are allowed to be taken in the store.

Conrad went online to find Whole Foods “No Photos” policy. Couldn’t find one. He rightfully argues that this “No Photos Allowed” policy is outdated in today’s networked world.

As a former marketer for two retailers that have helped to popularize the “experience economy,” I understand the irony that exists with creating a store experience customers want to photograph but then, prohibiting it.

Why do retailers prohibit/discourage customers from taking photos? Two major reasons: Competitive Intent and Criminal Intent.

Competitive Intent
When Starbucks began its hyper-growth spurt in the early 90s, they had more than just customers in their stores—they also had curious businesspeople. The businesspeople would come huddled in small groups and everyone in the group would be clutching a pen and a pad. They would stay for hours noting everything from the store décor to menu boards to employee uniforms to operational procedures to customer counts to everything. They also took photos.

Starbucks policy prohibited photos because they didn’t want competitors mimicking their style. (As if a “no photos policy” was really going to stop competitors from learning how to replicate the Starbucks experience.) Today places like Whole Foods Market, Chipotle, Urban Outfitters, Cereality, Which Wich, and American Apparel are attracting curious businesspeople wanting to learn what they do that makes them worth mimicking.

This “No Photos Allowed” policy is still in place at Starbucks but not for the original reasons of dissuading copycat competitors.

Criminal Intent
Another major reason why Starbucks and other retailers prohibit customers from taking pictures is to protect them from the unsavory types casing the joint. Theft for any retail business is a big issue and having front-line employees on the lookout for people snapping photos could help to reduce theft.

However, it can get silly and seemingly ridiculous when retailers confront well-meaning customers (like Conrad) from taking photos. It happens a lot … like here, here, and here. I especially love the irony of the Apple store that told an in-store customer he wasn’t allowed to take a photo using his iPhone.

As Seth said … customers taking photos is part of the deal when you deliver remarkable customer experiences. So its about time for retailers to learn this lesson and solve for dissuading potential thieves with policies and activities other than prohibiting customers from taking photos.