The biggest risk is not taking any risk…In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.· Mark Zuckerberg
Saturday, 24 January 2015
It is important to stretch ourselves both entrepreneurially and personally. This law actually comes via my High School Wrestling coach, Sam Scorda. I spent my senior year with a wrestling partner who was not nearly as good as was I. Coach told me time after time that if I didn’t practice against someone who was better than I was then I would never improve. It was so much easier wrestling against Collins. I won every drill in practice, but I didn't win every match in meets. I learned this lesson after high school. When I played soccer as an adult…I made it a point to always mark the best player on my team during practice. I got beat often, as some of my team mates were former collegiate soccer players. However, I improved my game…specifically my defensive skills. I wasn’t necessarily very good…but I did improve my game.
It is the same in business. Not only do we have to take business risks to find new opportunities, we have to take ‘skill risks’. This is where we try to learn something new or try something new. The reason is that we need to learn how to face disruption.
Many years ago, I taught a three-hour ‘Time Management’ workshop. The premise of my program was that poor time management practices came from poor habits in one of eight different areas. In order to change our time efficacy, we must determine which areas created the problems, and then consciously change our behaviour. Disrupting our habits was the only way to affect change.
In times of stress, we revert to habit. This is true in all aspects of our lives. Some habits are good…such as getting into the habit of exercising or reading for an hour every day. Even then, our good habits can become…habitual. I am very habit oriented when it comes to sports. When I ski…I usually ski the same runs every outing. I know the runs, I like the runs, and I know them well. I know where to hold back and where I can really let those skis run. The problem is that it is hard to improve when you are doing the same runs. Different runs, especially those with different terrains stretch our skills and abilities.
To bring this back to business, to change our business we must begin by changing ourselves. If we do not, we run the risk of missing potential opportunities. We also run the risk of becoming obsolete. (For those of us in our later fifties, this is especially difficult as we know our strengths and weaknesses and we know what we like and dislike.) To thrive is to change and to change we must grow, improve and disrupt ourselves.
Change is hard. The older we get, the harder it becomes. Lee Kun-hee of Samsung once famously said, "Change everything except your wife and kids". This is the kind of flexibility we need in today’s rapidly changing business world.
Tuesday, 13 January 2015
The 737, which is made up of 367,000 parts, is assembled at a factory in Renton, Wash., south of Seattle. Boeing delivered 372 of the single-aisle 737s last year — a little more than one a day.· NBC News
I was in the pub just the other day, when one of my fellow Old Goats (See the the importance of belonging), a former pilot, was talking about the importance of his profession. His son-in-law retorted, “If it wasn’t for the tool and die maker (his profession), you wouldn’t have a plane to fly!”
The conversation got me to thinking of the complexity of roles in modern businesses. There are a myriad of different tasks performed by a number of different people in a numerous of different roles. In our society, we often value one role over the person performing the role. In business this is incredibly stupid!
Think about your own organization. How many people does it take to get your product / service to your customers? How many people does it take to run your business? Each person, whether an employee or a sub-contractor, plays a role in your business. My business is simple…in fact when I started out I did everything. I sold myself, wrote the workshop materials, kept the books and, since I was still a proprietorship, I even did my own income taxes. The only sub-contractor I had was Staples Printing Centre.
For most businesses and organizations this is not the case. It amazes me how many people open, and subsequently close restaurants. On the surface, restaurants seem simple. By food, mark it up, prepare it and sell it. In reality a restaurant is a combination of custom manufacturing, high levels of customer care and a highly competitive industry. Staff turnover is also high. Successful restaurateurs are strong in marketing, manufacturing (cooking) and human resources. Restaurants are tough. Those who run successful restaurants are superb business managers. (There is an old saying in the restaurant business that 1/3rd of your revenue goes to food, 1/3rd goes to staff, 1/3rd goes to overheads and the rest is profit!)
The point, and there is a point, is to remember those in critical, yet traditionally undervalued positions in any organization. Doctors and nurses are important. So are ward clerks. Teachers and principals are important. So is the school custodian. We often respect highly paid roles more than those at the other end of the scale. Everyone deserves respect. If there is a position in your organization, commercial or non-commercial, that is unnecessary then it should not exist to begin with. When a position exists, that role contributes to the organization. So does the individual performing that role.
I once noticed that those who had the worst jobs were often the worst paid and the worst treated. (I have often thought that those with the worst jobs should get the higher pay... but that's never going to happen!) Sometimes, nasty jobs have to be done. Sometimes, pay is a function of ability to pay. I understand all of that. That said there is never an excuse to treat people badly. So to all of you retail clerks, security guards, dishwashers, janitors and cleaners… you are important. Your role is important and you deserve respect. To all you owners and managers out there… remember it!
Tuesday, 6 January 2015
Everything I learned about marketing I learned by watching infomercials and direct marketing ads.
The first law about pricing was about the importance of choice. The second speaks of urgency. Urgency forces the brain away from the timely rational and towards the impulsive emotional. This is an important part of all buying behaviour, and has a special effect on price sensitivity.
When we panic, our brain chemistry changes. This reaction, part of the fight of flight response, moves our brain into a reactive mode. This is crucial when confronted with say…a sabre toothed tiger. It is not so important when the announcer tells us that this is a ‘Limited time offer…quantities are limited…call that toll free number in the next five minutes. The same brain chemistry kicks in…all be it in a limited way. We react rather than acting rationally.
The twin of urgency is scarcity. The laws of supply and demand tell us that where there is high demand, and limited supply, prices begin to increase. In a great podcast from Planet Money, from National Public Radio in the US there was a great story on the reselling of Nike sneakers. Those who purchase limited edition shoes early can often double or triple their money at resale. (I have referenced the website below…check it out it is very interesting.)
During the 2010 Olympic Winter Games, tickets to the Gold Medal between Canada and the USA sold for thousands of dollars, due to the high demand (the host nation in the gold medal match) and limited supply.Sometimes, urgency and scarcity just happen. Sometimes we can work to make them happen. Limited editions of prints are an attempt to limit supply. Time limited availability creates urgency. You can use these techniques to influence demand or supply and therefore move your prices higher.
Trying to create scarcity can backfire. In anticipation of demand for the 2015 World Junior Hockey Championships, the Montreal organizers raised ticket prices to a rate much higher than the NHL Canadiens. The result was empty seats in the stands…taking away for the overall hockey experience.
Scarcity and urgency affect consumer behaviour and price sensitivity. Creating, or at least understanding these two pillars of your customers' mind will help you develop a more robust pricing policy.
Happy New Years. I look forward to more posts as the year progresses. This is a great time for forward planning, change and business development.