Tag Archives: Business and Economy

By Any Standard

I have to admit it – I’m a sucker for the major award shows. Watching the Oscars last night made me think about some of the “awards” many companies give themselves. You can usually find them talking about them as they sell themselves. You know the drill:

    • We have world-class customer service
    • Our employee benefits are the best in our field
    • Our products are cutting-edge

And on and on. Now, having come from the sales world I’m not necessarily averse to a little hyperbole, but there is a line, one which is often crossed because there aren’t any standards. It’s an issue that affects businesses in a lot of ways, some small and some pretty egregious. It’s often the small ways – the little white lies we tell ourselves in planning or product meetings – that lead to the big ways – the hyperbole we broadcast in our marketing and set false expectations among customers, partners, vendors, and others.

Think about the differences between Consumer Reports and Amazon reviews. Consumer Reports has rigorous testing standards. It maintains editorial independence and accepts no advertising in the magazine. It buys the products it reviews and pays retail prices for them. While they’ve been sued over bad reviews they’ve never lost a case. Their reviews are objective and all products in a category are held to the same standards.

Compare that to Amazon or Yelp or Google reviews. The reviewer has no objective standards for the most part. They have no idea if common standards for a product category exist nor how to measure or apply them. The JD Power surveys try to aggregate the consumer point of view in a way that reduces personal bias which is better than pure subjective reviews. After all, who hasn’t felt like broadcasting a bad review of something to the world? Maybe the product was fine but you had a nasty experience with customer service so you trash the product as well on your review.

Many businesses do the same thing in their marketing. They don’t use objective standards and end up setting false expectations. I think many industries would do themselves a favor by objectively assessing how well individual brands meet reasonable performance expectations. I remember we used to take an annual survey of media buyers in the TV industry. On the face of it, we did a good job of assessing ourselves and our competitors objectively. The truth was many of the sales guys knew when the survey was being fielded and would wine and dine the buyers to make sure we got good reviews. Subjective standards don’t work.

How do you market yourself? Do you have enough information about your performance on an objective basis? Can you get some?

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Filed under Huh?, Thinking Aloud

A Second Opinion

This Foodie Friday, it was an old Rodney Dangerfield joke that got me thinking:

My psychiatrist told me I was crazy and I said I want a second opinion. He said okay, you’re ugly too.

OK, so what does that have to do with food and, of course, with business? These days, much like Rodney’s psychiatrist, everyone’s a critic. There is a huge problem with that since constructive criticism implies that the critic knows something about the subject. Unfortunately, with the internet offering everyone with an opinion a place to express that opinion, the assumption that the critic knows anything about the subject is often proven to be completely wrong.

Think about a professional restaurant critic. They dine out several times a week at a minimum. They are exposed to many different types of cuisine and usually many different chefs cooking each type of those cuisines. They can distinguish between types of pizza or BBQ and write knowledgeably about what makes one execution better than another. Before they write about a place they will usually dine there a few times both so they can sample more of the menu and to make sure that their impressions with respect to service and the dishes are correct.

Now take your typical Yelp reviewer. They may go to a place once. Their experience with many cuisines is limited and the examples that they’ve sampled might not actually be representative of a great execution (think someone who stumbles on to real Chinese food vs. the American Chinese food served nearly everywhere). Maybe they had to wait 10 minutes past their reservation time and got angry so they wrote a bad review. In short, they often criticize based on limited information and out of spite, exactly the opposite of what any constructive criticism should be.

As a reader trying to figure out where to go for dinner, I look for a second opinion. One thing I do is to only look at the 1- or 2-star reviews. Generally, they have very little in common with one another which tells me that they might have been posted out of anger or a single bad experience. Maybe everyone thinks the desserts are awful but since I don’t eat dessert that’s not relevant to me. When things are apparent across the bad reviews, I trust that information. Ignore the false criticism and get a second opinion.

It’s the same in business. You can’t just listen to the praise directed at you, of course. You need to hear the criticism so you can grow. That said, you need a second opinion much of the time. Don’t take it personally, don’t listen to the tone but only to the words, and ask yourself what you can learn. Then go ask someone you trust – someone with enough experience both with you and your work – about the validity of the bad review.

Yes, opinions are like asses in that everyone has one. But they’re not all created equal. Get second opinions before you make changes, just as a smart restaurateur does. Value the informed critics and ignore the trolls. Can you do that?

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Filed under food, Helpful Hints

Fending For Yourself On Facebook

We used to be awfully smug when I was working for network television. After all, if an advertiser wanted immediate national reach there were no other options. If they didn’t want to go through the hassle of buying dozens or maybe tens of dozens of individual markets in spot television, then they had to come to one of the big networks. Over time, cable TV cut into that dominance but adding a few broad reach cable networks into the mix didn’t hurt us too badly. Until it did.

Today, the audiences for network TV are big but they certainly have been bigger. More importantly, there are many others with comparable audiences and advertisers have a lot of choices. More often than not, when the channel of choice is digital, the medium of choice is Facebook. They bill themselves as a content platform but that’s not really true. They’re a publisher. They curate content from others and control the content that appears, just the way the TV networks used to do before they started creating many of the shows themselves. Slowly, they’re learning that they are responsible for the content that appears on their platform since they’re picking and choosing. Publishers (think the Times or Journal) are responsible when their publications (platforms?) are used to spread lies or infringe on copyright. There is one area, however, in which they claim no responsibility at all.

This is from an Ad Age article:

When Facebook’s Campbell Brown addressed an auditorium full of magazine executives in New York Tuesday, she did not mince words: The social network is not here to save their businesses…It was a sobering and frank message for an industry looking for answers. Facebook has endured criticism from media companies for encouraging them to invest resources into its distribution platform. Facebook has persuaded publishers to push into live video, fast-loading Instant Articles, longer Watch videos and other offerings, for example, but none have reaped significant returns.

In other words, while we encouraged you to invest in our platform and grow our engagement with audiences using your content, you’re on your own when it comes to reaping the rewards. In fact, it’s worse than that since Facebook now demands that publishers pay for any significant visibility. Facebook is in a position analogous to where we were at the TV networks 30 years ago. We didn’t realize at the time how tenuous our grasp on our audiences was nor did we do a good job of working in a balanced partnership with our advertisers. Facebook manages to piss off the marketing community almost as often as they do privacy advocates. As one analyst note said, “Facebook is at risk of being massively unfriended by its 7 million advertisers.”

Personally, I’m wondering why they have as many as they do, given their attitude to their audiences, to content providers, and to marketers. Yes, I get the numbers but I also know that there are many other choices in marketing today. Maybe the digital platforms of the TV networks? Remember them?

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Grinding Your Own

It’s Foodie Friday and the topic is ground beef. I try, whenever possible, to grind my own beef and the thinking behind that is also thinking that can be used in business decision-making.

You can walk into any supermarket and purchase ground beef. In fact, you can be very specific about chuck vs. sirloin, the percentage of fat in the mix and often grass-fed vs. non. That’s great in my mind when you are making chili or meatballs or some other dish requiring that the beef cooks for quite a while. For burgers, however, I’m grinding my own. I’ll generally grind a mix of chuck, brisket, and short rib and I’ll usually grind some parboiled bacon into the meat both for fat and for flavor. The biggest reason I take the time to do this, however, isn’t the flavor. It’s food safety. I like to eat my burgers on the rare side and ground beef from a store is generally not safe to eat unless it’s cooked more than I like it to be. I know what’s in my mix and that it’s safe to eat when cooked to less than 165 degrees.

Is it a pain to clean the grinder? Yes. Does it take more time than just opening a package from the store? Of course. But the results are much better and exactly what I want even if it costs a bit more and take more time. That’s exactly the process any business goes through when making a “build vs. buy” decision. Let me run you through the steps.

First, you need to validate that you actually need the technology you’re considering. In burger terms, I’m hungry so I need food. I have a legitimate need. In considering tech, you need to figure out if you’re finding a solution without a problem existing. Next, you need to pull together core business requirements. My burger must be safe to eat when rare, it must hold together on a grill, etc. You need to involve anyone whose business is affected by the proposed tech to be sure all constituents weigh in on requirements.

The technical architecture requirements come next. If you’re looking outside, can the product fit in with your existing infrastructure? Does it meet whatever standards your business has already? It’s only after the above steps have been taken that you can start to evaluate build vs. buy. In my case, I have a need, my requirements are clear, I’ve asked my dinner guests if they like burgers, how they want them cooked, and what they put on them. I figured out I’m building the beef but buying the rolls, mayo, pickles, onions, and tomatoes even though I could also build them.

The final steps in the evaluation concern costs and support but you get the point. Some managers start evaluation solutions before they pull together requirements and the overview of the environment in which the solution will live. While it was an easy decision for me to grind my own beef, few business decisions are as easy and require planning and forethought. Make sense?

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Filed under Consulting, food

Break Up Facebook

I’m a capitalist. I’m a big believer that the free enterprise system should be left to work pretty much without outside interference. We can have a lively discussion as to whether that really ever happens (I don’t think it does) but I think we can agree that where the free enterprise system needs to have some controls imposed are when the system results in anticompetitive and/or anticonsumer behavior. Historically, the government takes action at that point, as it did with Standard Oil and with original AT&T. I think we’re at that point again with Facebook and I think the company needs to be broken up.

Many of you don’t remember the old AT&T. It controlled local phones, long-distance services, and the manufacture of most telephone equipment. You can read a detailed explanation of the hows and whys of the breakup here but the net result was that phone services got more competitive, equipment improved, and the number of wireless services and broadband providers we have now is a result. AT&T was a  monopoly, and when its monopoly power was removed, it struggled.

Facebook is a monopoly. They’ve become so massive that you can’t escape their data collection system. They’ve bought any company that seems as if it might become competitive. They aren’t “winning” because they have a better product; they’re doing so because we don’t really have a choice or because they’ve cheated. Facebook bases its business model on anti-consumer behavior and, frankly, lying. They lied to publishers. They lied to video creators.  They lied to the government about data collection and the role they played in spreading misinformation and propaganda while accepting money to do so. They’ve lied to you. Think about the number of times you’ve read about some horrible thing the company has done only to promise it won’t happen again and they’ll be better. Until the next time.

Germany just did something that could show us the way. Germany’s antitrust regulator has told Facebook it must stop forcing users to allow it to collect and combine their data from sources outside Facebook. Among such sources are Facebook-owned apps like WhatsApp and Instagram as well as third-party websites that include Facebook features like the “share” button. Since Facebook derives 99% of its revenue from advertising based on that data collection, this is a great first step.

The last straw from me was the realization that Facebook is monetizing data from people who don’t even have a Facebook account. When people navigate around the internet, sites that use Facebook’s advertising pixel or other social APIs linking back to Facebook (like the “Like” button) send data about those site visits back to Facebook. Facebook collects that data on everyone who visits these sites, whether they’re a registered user or not. You might not be on Facebook but that doesn’t stop them from selling your data. It’s also why any ad-based digital publishing business is probably going to have to survive on crumbs since Facebook scarfs up most of the ad dollars since they have most of the data. Yes, I know Google grabs just as much but it’s a different business model. Search isn’t display.

Break up Facebook. The digital world needs its walls to crumble so that new businesses – better and more ethical businesses – can survive. Start by breaking off Instagram and What’s App. Don’t let them make any new acquisitions of competitors. That’s where I’d begin. You?

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Taking The Beaten Path

One of the questions that has come up often in my newish role as a franchise consultant has been why one should look to invest in a franchise to begin with rather than starting a business from scratch. After all, there are generally fairly substantial franchise fees associated with a franchise along with the other expenses one might expect when starting a business plus you usually have on-going royalties. You’ll still have to pay to incorporate, you still often need insurance, licenses, equipment, space, and people. Why incur the extra fees on top of the ordinary expenses? It’s a good question and I have what I think are some good answers. If you’re thinking of starting a business or maybe changing the nature of the business you’re running, here are my thoughts.

First, the biggest advantage of buying into a franchise is that it’s a business in a box. It’s a proven business model, one that comes with built-in support. Almost every franchise I work with has some form of training and on-going mentoring. I think about that in terms of the businesses that have hired me to consult in the past. Much of what I did would have been covered by that sort of support, negating the need for an outside consultant. The franchise will have research and the business results of all the other franchisees. That’s invaluable and beats the heck out of going it alone.

Another consequence of that is you’ll probably experience much faster growth. You won’t be spending time formulating a business plan. Instead, you’ll be getting trained and executing one that has been time-tested. Something as simple as logo design, which can take time and several iterations, is not really a concern. You’ll generally be presented with operations manuals and marketing materials. Your time to market is greatly decreased.

One thing that is much easier is financing your business. Franchises are less risky in lenders’ minds since they’re known brands and proven businesses. While banks aren’t the best source for franchise ending, there are many lenders who specialize in that (I work with 6 of them) and SBA loans are easier to come by as well. Finally, your potential customers will already know who you are. Most franchises have good brand recognition, and even those that don’t have a current local presence can often benefit from being seen as part of a bigger entity.

The Bureau of Labor Statistics says that roughly 1 in 5 of all businesses in the U.S. close after the first two years of operation and a little over a third shut their doors after four years. You can beat those odds by taking the beaten path and investing the franchise fee to gain the above benefits. In my mind, and why I added this to my consulting portfolio, that investment yields as good or better returns than blazing your own new trail. What do you think?

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Filed under Consulting

Stew

It’s nearly 80 degrees here on this Foodie Friday and one might think that winter is gone. Not so fast – it will be in the mid-40’s tomorrow so we’re not yet past stew weather. Stews are a winter staple and since there are endless variations of them, one can’t really get bored with making them.

Some folks think of stews as a thick soup but I think that vastly underrates the dish. I wouldn’t serve soup over noodles or mashed potatoes, would you? As it turns out, they teach us a bit about managing too.

One thing that’s great about stews is that the longer they sit, the better they get as long as you don’t raise the temperature too far. You need to choose your protein – generally meat – wisely. You want the inexpensive cuts that really aren’t good for much else since they contain a lot of connective tissue. They require lengthy cooking (pressure cooking excepted) so that tissue can break down and the meat can transform into tender loveliness.

The meat needs to be seared properly. That means you can’t overload your pan or the meat with steam and not brown. You don’t want to put too much flour on the meat or into the stew to help thicken it or you end up with a gloppy mess. Let the collagen from the meat do its job. If you need more thickening, use gelatin (look it up!) which does the job without changing the flavor or adding lumps.

So why is this appropriate for our business blog? Your team is your stew. You need to find the right ingredients, which are often the overlooked cuts. The best stew meat comes from the muscles that do a lot of work but need help in transforming into dinner greatness. Dig deeper for people, especially the ones who’ve been working hard but maybe not getting the recognition they deserve. You need a sturdy pot that can hold the heat. That, dear readers, is often you, the leader of the team. Great stews have lots of individual components, each of which needs to be added at the right time or it will get mushy. This speaks to the need to pay attention to the individuals on your team to bring out the best in each of them. Pull things together, apply some gentle heat, and give it time. Your team is a magnificent stew!

Here is a list of stews. It is quite varied, but the dishes have a lot in common while still being quite distinctive. Your stew – your team – will be too. Go out and pull it together.

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Filed under Consulting, Thinking Aloud