The Profit Prophet

Most business school programs focus on the financial aspects of an business endeavor, and most specifically tend to focus on one simple parameter: Return-on-Investment, or ROI. Specifically, ROI is determined by calculating the profit (or gain) from any investment or expenditure, subtracting the cost of that investment or expenditure, and dividing the difference by the cost of that investment or expenditure. While this is a great metric for determining actual expenditures’ returns, it does not really bode well when dealing with intangibles such as services, or activities such as sales, marketing, accounting, etc. A long time ago (30 years ago) I started measuring to a different metric, Return-on-Effort, which took into account how much time, energy, additional assets (such as people), and change any new project will cost and weighed those "costs" against how much easier, faster, or more efficiently you could perform the process by expending that additional effort, to

A Japanese company (Toyota) and an American company ( F ord Motors) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. On the big day, the Japanese won by a mile. The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 7 people steering and 2 people rowing. Feeling a deeper study was in order; American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing. Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team'

One of my colleagues, Patti Hill , former CEO of PR Firm Blabbermouth, and now PenmanPR, asked the question about the value of having "nano" inside. She points out that the consumer marketplace has become rich with nanotechnology-based or enhanced products from sunscreens to water repellent and stain-resistant clothing, gum, car wax, sporting equipment, heat-resistant windshields, consumer electronics, and nanoparticle-laden cosmetics. Do consumers really care? This goes to the heart of what I always talk about: technology v. benefits. Having "nano" means nothing unless there are concrete benefits of having nano technology. Also, nano has become so generic (like quality, value, etc.), that it really does not mean anything anymore. Now, if you are using nano-technology to improve something, or invent something new, it could be considered beneficial (ie. WiFi capable printers). The big mistake that technology companies always make is assuming peop

"Financing is the art of passing currency from hand to hand until it finally disappears." --Robert Sarnoff

Please forgive me, but this was written in November of 2008, but is still true today. It tells of how marketing can make the difference of failure and success in a presidential election. I hope you will head the lessons learned in your marketing plans. So, like it or not, marketing your message is really, really, important.   Now that I have had a little time to digest what just happened in this historic Presidential race, I cannot help but notice how much marketing and messaging played in selecting our 44th President. I am not saying that the organizational skills, enthusiasm, and funding did not help. They most certainly did. But what was the catalyst that got all that good stuff going for Barack Obama? It was marketing and messaging. Maybe the best candidate did not win. Maybe McCain was more qualified, had more experience, and was more centrist. But it was Obama who was better able to determine what Americans perceived of this abilities than McCain. The difference was that

While I was working in product marketing, I always heard people talking about “ time-to-market ,” and how important it was to get products to market as quickly as possible. Instinctively, this sounds good, but in reality what is important is “ timeliness to marke t.” What that means is that you need to get your product to the market just before the market starts to develop. I am reminded of a parable that was told to me by a great mentor while I was at Texas Instruments concerning timing. It was called Unfolding a Rose . A young student, whose wife had just bore him a baby girl, was walking with his wise Teacher in a garden, explaining his loss at understanding life, his daughter's purpose, and how was he, who knew nothing, expected to shape a new life. The old man simply plucked a rose bud from a large, very old vine. "Here, open this without tearing or damaging any petals." He tried as the Teacher had bid him; yet, but he could not unfold the rose wit

I am often asked how do you come back from a major setback, or how can you keep pursuing your dream of success. It is not always easy, but there is a Chinese story I like to reference when I tell people to keep going. I have listed it below. My advice, " Just be bigger. " " Become a Lake " - a Taoist-Chinese story An aging master grew tired of his apprentice complaining, and so, one morning, he sent him for some salt. When the apprentice returned, the master instructed the unhappy young man to put a handful of salt in a cup of water and then to drink it.   "How does it taste?" the master asked. "Bitter," spit the apprentice. The master chuckled and then asked the young man to take the same handful of salt and put it in the lake. The two walked in silence to the nearby lake, and once the apprentice swirled his handful of salt in the water, the old man said, "Now drink from the lake." As the water dripped down the young

This is a link to T. Boone Picken's dream of moving this great country off our addiction to oil. It all starts with wind (Lord knows the politicians have enough of it). View my page on PickensPlan

I have been fortunate to be helping two startups over the past few months. I think both of these startups have a great chance because they are combining two disparate things into a new service or product. One thing that I have noticed about successful companies (both startups and giants), is that those which tend to be successful employ the “Power of ‘AND’.” This means they take traditionally mutually exclusive characteristics and then combine them into a new and novel way. Examples include Southwest Airlines (low cost fares with on-time, high quality service), Wal-Mart (low prices with large selection), and Apple (high technology with high styling) to name a few. That is not to say that companies that do not use the 'power of and' are not successful, it just seems like the odds for success tend to tilt towards people and companies who can pull this feat off. Ronald Reagan was able to combine a forceful, “hawkish” leadership, with the everyman personal touch. So

Many business owners get stuck at times and feel the need to hire a consultant to supposedly turn the situation around. Here is a timeless lesson on how consultants can make a difference for an organization. Last week, we took some friends out to a new restaurant, and noticed that the waiter who took our order carried a spoon in his shirt pocket. It seemed a little strange. When the busboy brought our water and utensils, I noticed he also had a spoon in his shirt pocket. Then I looked around saw that all the staff had spoons in their pockets. When the waiter came back to serve our soup I asked, "Why the spoon?" "Well," he explained, "the restaurant's owners hired Andersen Consulting to revamp all our processes. After several months of analysis, they concluded that the spoon was the most frequently dropped utensil. It represents a drop frequency of approximately 3 spoons per table per hour. If our personnel are better prepared, we can reduce the number o

List of quotations that are insightful, thoughtful, and timeless. This web site has a listing of quotations I have found inspiring, intriguing, intuitive, and thought provoking. Hopefully, you will find them the same.  Search for Author in search bar at the top of the page, or by categories below.

You know, the BIG NEW thing nowadays is creativity in the workplace. Companies of all sizes are asking how can we come up with new ideas, or get our employees to be more creative, or somehow come up with more ideas on how to solve problems...And that's the rub! The more you try to FORCE creativity, the less creative you are..but have you ever noticed how children have NO PROBLEM with being creative? In any case, I thought this little story about how a father sees his kids seeing the world might shed a little light on the subject. Through Their Eyes - author unknown When I look at a patch of dandelions, I see a bunch of weeds that are going to take over my yard. My kids see flowers for Mom and blowing white fluff, you can wish on. When I look at an old drunk and he smiles at me, I see a smelly, dirty person who probably wants money and I look away. My kids see someone smiling at them and they smile back. When I hear music I love, I know I can't carry a tune and don

You know in business as in life in general, adversity hits. We are all met with adversity from time to time, but how we handle it makes us or breaks us. As Ben Johnson once said, "He knows not his own strength that has not met adversity." So in saying, I thought this little story about how some friends' adversity changed them might shed some light on how you might handle the next hurdle you come across. Four friends went fishing. They found a perfect campsite in a pine grove next to a river that shimmered with promise. As fast as they could, they set up their big tent, stowed belongings, and set off eagerly down the river with their rods and reels. When they returned to their campsite a few hours later, tired but happy, they stood open-mouthed in disbelief. There was a big empty space where their tent had stood. It was gone! A quick search showed that everything else was still there -- stove, tools, food, sleeping bags, etc. Their stunned confusion soon changed

Marketing is mostly about perception, and that perception, good or bad, is developed by the quality of a product, the company’s innovation, price and ability to serve its clientele. So when all things are considered equal quality, pricing, workmanship, etc. , a company’s image is enhanced essentially by how it treats its customers. Nordstrom’s is renowned for its customer service, often going far beyond expectations. A friend of mine reminded me recently about a scene in the movie Mr. Mom where Teri Garr proposed a give back from the tuna fish company. Yes, that was fictional Hollywood. Still, image a CEO of a large American oil company getting on TV and saying that 'we understand that America is hurting, and we have just recorded record profits, and to show our gratitude, we would like to rebate our loyal credit card customers who have been with us throughout the years with a 10% rebate?' Yes, this may cost a few hundred million dollars in cost, but as they say “the goodwill

My son sent this video clip to me some time ago. Even though I am an engineer, I do not why no one has picked up this opportunity to convert water into fuel? Maybe I am missing something here? Is it really expensive to convert an engine? Is it too volatile? Or is it just too simple to comprehend? In any case, I hope this guy gets his patents soon and starts bringing it to market. I sure as shoot will invest.

One thing I have found out is that your first idea about a product or service is usually not your best idea. As a general rule, be prepared to change your original idea in order to hit the moving target you planned on hitting. Some notables on this rule are Intel: It started out as a memory company, and its original numeric processor was made for factory automation, not the PC. Motorola: started out making radios receivers for automobiles. MCI: It started out as a radio network for truckers. Google: It started just looking up the number references to a particular thesis. Part of the reason why this happens is because when you start your product or company, you are only guessing what your potential customer might want or need, or how they will use a product. When you first release your product or service, you are trying to solve a problem or fill a need that you think needs to be solved or filled. Your perception of that need might not be totally accurate, or the need mig

Once, I was asked to help an existing company recruit some sales help by their VP of Sales and Marketing. They needed someone who could grow a new software product they were developing, and who had both a technical expertise and business savvy about them. We had narrowed down the field to two people. One guy was in his forties, and had a 15-year track record of substantial sales and marketing experience and success. He actually was an electrical engineer, who during his career had migrated into sales and marketing. He understood the product perfectly, and both the VP and I felt that he would be an excellent fit. He was driven, self-assured, personable, and hungry. The other candidate had just graduated from a pretty prestigious MBA B-School program, but did not have any direct selling experience. He did know all the latest buzzwords and jargon, and was very knowledgeable on all the latest strategies in selling. I felt that while this guy was personable and knowledgeable, h

I promised that I would try to give some practical advice on how to improve your business in simple to understand concepts and ideas. One of the most pressings issues for any company is how to increase sales profitably with the least amount of effort, or something I call 'Return on Effort.' Most people believe that the best way to grow a company is to either get your existing customers to purchase more or to get them to tell their friends and acquaintances to purchase from you. While repeat business is much easier the get than new business, and referrals can help you grow, you are at best looking at incremental gains. It is like fishing in the same pond trying to catch different fish. What most companies would like are macromental gains and in sales and profits. In order to get to the lofty goals, you are going to have to abandon some old held beliefs, and move far enough away from the safe harbor so as to no longer see the shore. First, I have to diagram what I am talki

It costs nothing, but creates much. It enriches those who receive, without impoverishing those who give. It happens in a flash and the memory of it sometimes lasts forever. None are so rich that they can get along without it, and none so poor but are richer for its benefits. It creates happiness in the home, fosters good will in business, and is the countersign of friends. It is a rest for the weary, daylight for the discouraged, sunshine for the oppressed, and Nature’s best antidote for trouble. It cannot be bought, begged, borrowed, stolen, or coerced for it has no earthly good to anybody until it is given away. And if you should meet someone who is too tired to give you one, can you please leave one of yours? For no one needs it as much as those who have none to give. Smile!

Someone once quipped that you can learn everything you need to know about marketing in a day, but it will take you a lifetime to master. I could not agree with this statement more. Most people see a portion of what they think marketing entails, and conclude that they understand how to market their product or service. Most people erroneously see marketing as either public relations, advertising, or product packaging or a combination of all of these. What they fail to realize is that marketing is some much more than anyone of this tactical objectives. Marketing’s real objectives include reducing the friction in sales, improving brand awareness, and maximize your return on effort of promoting your products or services. (look for another blog on what return on effort means). Marketing’s ultimate goal is to create a plan of action and to ACT on that plan. If conducting business is very much like warfare (see Sun Tzu's “ The Art of War ”), then marketing is res

Many moons ago, while working at Harris Semi- conductors and a marketing manager, I had a disagreement with my boss about who ultimately paid our salaries. When I told him, “Our customers pay our paychecks; and actually it is our customers’ customers who paid our paychecks,” his retort was that he paid my salary. My boss felt that is was marketing’s job to convince our customers of what they wanted, preferably that it would be what we were trying to sell. Hard to believe that this guy got his MBA from the Sloan Business School! I knew it then, and it has been proven to me over and over again that my boss was wrong (although I did get sacked for not only this disagreement but many others). What is important then is still important now. In sales, it is NOT what you are selling, what is important is the problems you are solving for your customer. The number one problem customers will face is what should they make to satisfy the needs and desires of their existing and potential customer

Nothing in the world can take the place of Persistence. Talent will not; Nothing is more common than unsuccessful men with talent. Genius will not; Unrewarded genius is almost a proverb. Education will not; The world is full of educated derelicts. Persistence, grit, and determination alone are omnipotent. The desire and ability to press on has and always will solve the problems of the human race and divide those who achieve from those who might have been.

During my early business life I was always struck by the fact that “expensive” hotels charged extra for everything, local calls, internet, movies, newspapers, breakfast, etc.; at the same time, more affordable hotels included everything. Although these less pricey hotels did not have marble foyers or linen tables, they did offer things that a very young, weary, traveler wanted: a clean room, safe & quiet environment, and some perks. For the exorbitant prices you paid at the high-end hotels, everything should have been included. What they should have done is given rebates back for things you did not use instead of nickel and diming us to death. I read an article in INC Magazine about a judge who was invited to a very expensive restaurant in the Washington, D.C. area. Even though it was a long drive, the ambiance was top notch, the food excellent, and the service superb. Still there was something that ruined the whole experience: He was charged $1 for ice in his $7 mixed dri

Recently, I returned from a trip to Washington D.C. with my 15 year old son Jordan. It was amazing to see how many incredible individuals have gone before us to make this the greatest country in the world. As I was able to take in all of these individuals, a repeating pattern began to emerge. What really made these individuals great was the central fact that they believed with all their being extending freedom and choice to ALL individuals. After this eureka moment, I then started to realize that these are the same two reasons why some companies are successful in good times and bad. Two cases in point: Southwest Airlines and JetBlue. Southwest’s motto is “ Your are free to move about the country ,” and they have always tried to be the no frills people centric airline. Yes, they did not have first class, but they gave the customers what they wanted (freedom) and choice of low cost fares. JetBlue also realized that Southwest was leaving open the “high-end” choice segment, so they

When you think of great brands what comes to mind? Starbucks? Apple? Nike? Coke? Mercedes? Hermes? Everybody talks about wanting a great brand, but so few people understand what actually makes a good brand.   First, what is a brand? A brand is what speaks to a consumer when there is no one there to speak for it. Essentially, a good brand is your ever-present salesman. It is the voice inside a customer’s head that tells it that is a good / valuable / well built / sporty / classy / etc. product or service. A poor brand will do nothing but make your potential customers look for your competition. It is an absolute fallacy to think that all you need for a great brand is a cool or catchy name, or that endorsements “make” your brand, or that technology can sell your brand. First and foremost, you have to have either a product or service that delivers on the promise of your brand. And now the hard part, what is your brand’s promise? What is the story behind whatever it is you are tryi

Wow, this is a question we all ask, but are not sure why we do it. I am starting this blog for two reasons: 1) Is to impart some (albeit small) amount of wisdom that I learned during my 20 odd years as an engineer, marketeer, salesman, in operations, and business development; 2) To attract other liked-minded individuals to this blog to ask questions on how to improve their business by eliminating the friction most companies have in selling their products or services. This friction is caused mostly by a total lack of strategy. As the saying goes, "In the land of the blind, the one-eyed man is king." Hopefully, my one eye can help some people out there. OK, why the profit prophet? Back when I first stared out at Texas Instruments some 25 years ago, I got the reputation of only looking at deals that involved profit margins, not gross revenues. This was so contrary to the prevailing mindset at TI, that people soon thought I would be terminated. But my boss (Jim Watson