Category Archives: Thinking Aloud

School’s In!

Today is the first day of school around here. If these kids are like many of the ones I’ve met over the years (and maybe even the two we raised), at some point the inevitable question pops up:

Why do I need to go to school?

As they get older, the question changes a bit (probably because they enjoy seeing their friends at school every day):

Why do I need to learn this stuff? 

That’s our topic today, and I think it’s something that applies to the business world as well. The answer to the first question is pretty obvious, and it’s not just because your parents are exhausted after driving you around all summer and need you gone for a bit. I’m a lot more interested in the second question because I think that most students, parents, and teachers get the answer wrong. You don’t need to learn “this stuff.” I can’t think of a single instance in my adult life where understanding differential equations or the structure of the carbon atom has been required.

So as a public service, I’m going to give you the answer to the second question which hopefully also answers the first. I’ve given it out before but hey, it’s the first day of school and the questions might come up again so you’re welcome.

You go to school to learn two things.

  1. How to locate and verify pieces of information (let’s call them facts) in order to formulate your thoughts.
  2. How to express the thoughts you formulate both orally and in writing to communicate your thinking.

That’s it. Learn those two things and you can pretty much do anything you choose to do in this world. Ask yourself how many business people you know who can do those two things successfully and I’ll bet you also have a list of the best business people you know. In an era when “fake news” is a term thrown around like beads at a Mardi Gras parade, understanding how to determine what news is really fake and what’s just being labeled as such to distract you from facts is critical. Not everything you read in your school books is accurate, but if you don’t have a well-developed BS detector as well as the skills to track down the truth, how will you create accurate thoughts from inaccurate information either in school or beyond?

Please feel free to print this off and hand it to your kids, large or small, who are wondering about school. Feel free to ask yourself if you managed to learn those things along the way as well. If not, maybe it’s back to school for you too?

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Filed under Helpful Hints, What's Going On, Thinking Aloud

Hot Dog! It’s Friday!

It’s Foodie Friday! I spent many years working in the sports business and because of that, I was privileged to attend hundreds of sporting events around the world. One of the best parts of those experiences was the food. Inevitably, there was some down time which allowed me to wander about the arena or stadium and sample the food. I am a big believer in what I consider the truism (as the late great Frank Deford wrote) that a hot dog tastes better at the ball park. I’m such a devotee of having a dog (or 3) at the game that I usually have one before I even get to my seat. But why is that, and, more importantly for our purposes here, what does that tell us about our business?

A cooked hot dog garnished with mustard.

(Photo credit: Wikipedia)

You might suppose that it’s the particular brand of dog served. I’ve purchased the identical brands served at various places and they never taste the same when I prepare them at home. I’ve boiled them, steamed them, grilled them, or some combination of methods and yet while the taste is similar, it’s not the same. It’s not the condiments or the bun (steamed, grilled, toasted, or right out of the bag – doesn’t matter!). No, dear readers, it’s the environment.

Many studies have demonstrated the effect that environmental elements have on our perception of food. Obvious things such as lighting and less obvious things such as the music playing have been proven to change how we perceive food tastes. One obvious example is food eaten on an airplane, where the pressure is lower and the noise is higher. Our taste buds don’t function as well at 35,000 feet so airline chefs overseason their dishes (the combination of dryness and low pressure reduces the sensitivity of your taste buds to sweet and salty foods by around 30%, according to a 2010 study conducted by Germany’s Fraunhofer Institute for Building Physics). What does this have to do with your business?

A lot. The environment we create in our offices or stores or even our digital presences can affect how workers and customers “taste” what we’re offering. If we demonstrate a commitment to openness and trust, we create an environment where everyone perceives that things are better than elsewhere even when they’re common events. We can yell and scream while we eat at the ballpark. The food tastes better because we’re having fun. Are you encouraging that kind of fun in your place of business? Most concession stands offer condiments so you can have your food the way you like it. Do you offer the same kind of personalization to your workers or customers? Do you take their personal lives into account and offer some flexibility in hours or remote work?

Think about why the same dog you prepare at home tastes way better at the stadium as you think about how you approach your customers and your business. You’ll be on the way to standing out from your competitors, even if they’re offering a similar product or service.

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Filed under food, Consulting, Thinking Aloud

Generically Speaking

This Foodie Friday, I’ve been thinking about store brands. Some of them – such as the Costco vodka really being Grey Goose at under half the price – are the stuff of legend. Other places – such as Trader Joe’s – have built entire enterprises on top of their own brands which are basically repackaged and rebranded versions of mainstream products. It’s well-known, for example, that TJ’s pita chips are made by Frito-Lay, who puts Stacy’s pita chips in TJ’s packages. Of course, you can buy a  6oz bag of Trader Joe’s Pita Chips for $1.99 whereas a 7.33oz bag of Stacy’s Simply Naked Pita Chips sells for $2.99 or more.

An example of a Trader Joe's storefront.

(Photo credit: Wikipedia)

Many of Walmart‘s Great Value branded products are just name brands rebranded. Most people can’t tell the difference between the name brand and the store brand, although in fairness, every so often the store will have the manufacturer make a minor change (a little less lemon, a little more salt) so they’re not identical products. Still, In 2012, Consumer Reports did a test. They found:

In comparing store-brand and name-brand versions of 19 products, our savings ranged from 5 percent (frozen lasagna) to 60 percent (ice cream). Many of those store brands were also as tasty as the alternative. Our sensory experts found that the store brand and name brand tied in 10 cases, the name brand won in eight cases, and the store brand won once.

So why do people continue to pay more for the same product? The easy answer is marketing. Name brands spend an awful lot of money each year to influence consumers’ perception of their products. Some of it is mistrust, particularly when it comes to store-branded drugs. Even though the law says that generic medication contains the same active ingredient as the name brand (yes, I know generic brands may have different inactive ingredients that can make them behave differently), people spend more for branded pain relievers, antacids, and other types of drugs. It’s interesting that studies show that chefs and pharmacists tend to buy generic food and drugs, respectively.

I think a good chunk of why people tend to spend the extra money has to do with experience. They expect that a brand name will provide a quality, consistent product experience. In instances where others are seeing what products are being used (guests in your home, coworkers in an office), the brand name is more socially acceptable. Finally, over time, brand names build loyalty. Once again, we end up at the cost/value equation, but we always need to remember that value isn’t just measured in dollars and cents.

I buy a lot of generics or store brands. There are, however, some things for which I pay extra because I do perceive a difference. Still, knowing that most of what’s at Trader Joe’s or Walmart or Costco is the same as what’s at the supermarket (but less expensive!) lets me splurge on those things with a clear conscience. The question for those of us that market is how we get consumers to see the value that goes along with our brand.

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Filed under Consulting, food, Thinking Aloud

Intellectual Laziness

I’m sure your Twitter and/or Facebook feeds are filled with articles and discussions from and among your friends. Mine certainly are, and what strikes me about many of them is how intellectually lazy they’ve become. That’s odd, since most of my friends are anything but. They tend to be smart and able to see nuance, yet my feeds are filled with blanket generalizations and narrow perspectives, not to mention the unchallenged fake news.

I think that laziness is becoming more pervasive in business too. Maybe it’s that our brains have been taken over by the manner in which we think in the social media space or maybe it’s just easier to paint with broad strokes since there is so much information coming at us every single day. I think that’s a rationalization. More importantly, it’s dangerous.

When we make use of generalizations and blanket statements we negate things that don’t fit into the underlying assumptions, schemas, and stereotypes of our business. This intellectual laziness is also used to maintain the status quo.

Think about how often a good idea has been crushed by someone using the words “always” or “never.” Those terms are overly broad and prevent new thinking about old problems. instead, we’d all be better served by maintaining a beginner’s mind and listening more than we speak.  It’s pretty much truism that you’ll learn more from listening than you will from talking. Taking what we hear and synthesizing new ideas in the context of the business environment is how we move forward. More importantly, it’s the antithesis of being intellectually lazy.

I think people who are intellectually lazy are toxic both in business and in the world at large. I’m making more use of lists in my social feeds to weed out those toxic folks so I can enjoy the critical thinking of others and make myself a little smarter each day. You?

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Eclipsing Our Sun

By now you’ve probably heard that there will be a total solar eclipse in two weeks (August 21).  This will be the first total solar eclipse (when the moon moves directly between Earth and the sun) visible in the United States in nearly four decades.

English: Total Solar eclipse 1999 in France. *...

(Wikipedia)

During the eclipse, the 70-mile-wide shadow cast by the moon will darken the skies from Oregon to South Carolina, according to Space.com. What makes this eclipse notable is how accessible it will be to many people since the path of most total eclipses falls over water or unpopulated regions of the planet. This event will go down as the first total solar eclipse whose path of totality stays completely in the United States since 1776. Too bad it didn’t happen on July 4!

Total solar eclipses supposedly have happened at notable times in history. Jesus’ crucifixion, Mohammed‘s birth, and King Henry I‘s death all coincided with a total eclipse. I’m not here to speculate on why those or other events happened simultaneously with a disruption in the Sun’s presence. Instead, I want to focus on a business thought that came to me as I thought about other effects an eclipse has.

When we fall into the moon’s shadow, birds think it’s night and stop chirping, the temperature falls, and things not usually visible become clear. The Sun’s corona, which is the Sun’s upper atmosphere, is clearly visible, as are many stars and planets often obscured at night by moonlight or all the lights turned on automatically on the ground. If you look around you, you might even see a 360-degree sunset as well. What does this have to do with business?

We all have our business “sun.” It might be our process, it might be our boss or coworkers, it might be the favorite customers that illuminate our days, provide warmth, and make survival possible, Every once in a while, however, it’s not a bad idea to precipitate an eclipse of some sort. As with the upcoming event, doing so will often make things visible that your business sun obscures. Maybe your reliance on that sun or suns is stopping you from seeing things about them or opportunities beyond them. What do you think?

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Filed under What's Going On, Thinking Aloud

Is The End Near For Sports?

I know you might be thinking that my headline is just some outrageous form of click bait and that I can’t seriously think that big time professional sports are heading down the same path as traditional big media. Let me throw a few recent articles at you and maybe you’ll come to a different conclusion (which I do hope you’ll post in the comments).

The sports business is based on a few large revenue streams. One is income from the games themselves: ticket sales, concessions, merchandise, etc. What makes many of those things possible is a nice facility – an arena or stadium. We’ve seen franchises move (and piss off their fans) over the stadium issue, sometimes even before the bonds on the last stadium built for the team are paid off. I urge you to watch the John Oliver piece on the relationship between teams and towns but here is why I suddenly think there is an issue. As reported by Mondaq:

bill has been introduced that would eliminate the availability of federal tax-exempt bonds for stadium financing… The bill would amend the Internal Revenue Code to treat bonds used to finance a “professional sports stadium” as automatically meeting the “private security or payment” test, thus rendering any such bonds taxable irrespective of the source of payment.

In other words, it will make public spending on a private facility way more difficult. That will lead to fewer new facilities and a much harder path to growing that revenue stream. Strike 1.

Then there is the largest revenue stream for most big leagues: TV. Kagen recently reported that the U.S.pay-TV industry will lose 10.8 million subscribers through 2021, according to their latest forecast. You might already know that ESPN has been losing subscribers – May 2017 estimates were 3.3% lower than the year before. For every million subs lost, ESPN takes in roughly $7.75 million less PER MONTH – or $93 million a year, and they have already lost multiple millions of subscribers. Yes, some are being replaced via the sale of OTT services, but that requires spending to sign customers, something ESPN hasn’t had to do before. The same subscriber loss issue is true of every other sports network albeit to a lesser degree since their monthly fees are less than ESPN’s. Smaller subscriber fees mean a diminished ability to pay those large rights fees. Sure, other channels (some would say suckers) will step up – Facebook, Twitter, YouTube, and others. But my guess is that the outrageous increases many entities have secured over the last few rights cycles are gone for good. Strike 2.

Finally, costs are not going to go down, at least not without major disruptions such as the two recent NHL lockouts. Players aren’t going to make less (the downside of the salary cap), team personnel probably won’t, at least not without a lot of turnover, and many of the other costs are either already low (minimum wages) or difficult to cut (food costs in the concessions, etc.).  In an effort to mitigate some of the lower revenue and growing costs, some of the entities involved in sports are beginning to do what the airlines have done and make what was once part of the deal (in-flight meals, free bag check) part of an a la carte menu to grow revenue. Specifically, look, for example, at what NBC has done with their Premier League package. They are doing away in part with their NBC Sports Live streaming coverage in favor of a new premium streaming service called “Premier League Pass” that will be in addition to the matches that are already broadcast on live TV. The stand-alone streaming service will cost $50 in addition to whatever you’re paying for your cable subscription. That will bring in more dough but it will also anger fans. Strike 3?

Don’t misunderstand me. I think interest in sports generally has never been higher, and I think any sports entity that doesn’t rely on a big TV contract and employs athletes as independent contractors (I’m looking at you, LPGA) will be in good shape. I just think there is a major disruption coming in the next few years as we’ve seen in the TV and music businesses. Watch out as the next cycle of TV deals begins and if this bill is passed. It’s going to be a bumpy ride, don’t you think?

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Filed under Thinking Aloud, sports business

No Water, No Friction

Foodie Friday, and today we’re going to have a think about what microwave ovens can tell us about our business. I don’t know about you, but I use my microwave all the time. I tend to have a fair amount of leftovers around and it seems that my morning coffee gets cold before I can finish it. Both get a quick warm-up in the microwave. But let’s think for a moment about how a microwave actually works.

A microwave is less of an oven than it is a radio transmitter. The thing heats food by causing water molecules in whatever is being heated to vibrate as it sends out electromagnetic radiation. As they vibrate, the molecules rub against one another and it’s the friction that causes heat. If the thing being hit with the radiation contains no water (glass, ceramic, etc.), there is nothing to vibrate and, therefore, no heat created. That’s why the part of the bowl or plate you’re heating up that’s above/outside the thing being heated stays cool (at least until the heat from the food spreads outward). No friction means no heat.

I like to think of a business that way. A big part of what we want to do as businesspeople is to eliminate friction. We often talk about “frictionless” transactions. Business, after all, is built upon transactions between two parties, usually a buyer and a seller. It takes something – marketing of some sort, generally – to get some momentum going towards the conclusion of the transaction, but once that’s happened our job is to remove any impediments that create friction as the deal moves towards a conclusion. It can be a long line a the checkout, it can be unknowledgeable salespeople, it can be a lack of inventory. In short, we want to keep everyone “dry”, since no water means no friction, right?

Ask yourself what “dampens” your process. Where are the friction points? When the deal microwave is switched on, what begins to vibrate and create the heat that too often accompanies a deal?

Microwave ovens aren’t ideal for all forms of cooking but they excel when they’re used properly. Understanding how they work helps us use them appropriately, and we can take advantage of their speed and efficiency. Applying the “no water, no friction” thinking that makes a microwave work to our businesses can help us do the same thing there.

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Filed under food, Thinking Aloud