Tag Archives: business thinking

June 13, 2013 · 10:12 am

Appearances Matter

I made myself a note to write about a common business situation that can cause a lot of grief if not handled in a smart manner.  Unfortunately, what prompted the note was a situation which was not handled the right way.  I’m talking about conflict of interest and how appearances really do matter.Dunce_cap_from_LOC_3c04163u

When I was in my corporate jobs from time to time I was offered “insider” pricing on some pending IPO‘s.  I was also invited to serve on advisory boards.  These offers came from start-up companies that were looking to do business with my employer and I was under no delusion that the offers were being extended because of my wit and charm or youthful good looks.  I hesitate to use the word “bribe” but I understood that it was possible someone looking at this might think that my loyalty might be by divided – business interest vs. self-interest.

What raises this is a report on a major ad agency CEO being granted stock options in a company that is a vendor to her agency.  These options might be worth as much at $3,000,000 if a planned IPO goes through.  Digiday makes the exact point:

In its S-1 filing, Tremor says any conflicts of interest related to Desmond are and will continue to be avoided because she’s “recused herself from all negotiations” with the company. While it’s unlikely Desmond regularly writes media plans for SMG’s clients, the fact remains she oversees a business that spends millions of dollars with a company she has a financial interest in.

I know from personal experience that even when your boss tells you to ignore his relationships with a vendor it’s hard when you know there’s a friendship or familial relationship.  When those relationships are more than personal friendships and extend into financial dealings, it’s impossible.

Appearances matter.  In this age, one can assume any relationship will come out and be widely known.  Any competitive vendor losing some of the agency’s business will have grounds to cry foul.  Tremor (the vendor involved) will have grounds to scream if the CEO (and now board member) doesn’t live up to her fiduciary responsibilities  It’s a bad, easily avoidable situation for everyone.  Hopefully you’re smarter than this.  Right?

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June 12, 2013 · 8:54 am

Hitting The Line

If you’ve ever played  or watched tennis, one thing you know is that the players seem to approach each point with a plan.

tennis

(Photo credit: Marc Di Luzio)

To a certain extent they play the points backward – what shot do I want to set up, which positioning and speed of the serve will let me do that, and where do I want to hit it?  Part of the equation involves moving the opponent around, far away from your intended target.  Ideally, you can hit it just next to a sideline or the baseline depending on your plan.  The nearer to the line the shot lands, the more likely it is to be a winner.  There’s also an increased chance you lose the point by hitting it out.

Often when one watches high-speed Motorsports, the “high line” is the one that many drivers choose on an oval course.  Generally, the racing groove nearest the wall allows the cars to go faster even if they’re travelling a slightly longer distance (think of concentric circles – low vs. high).  It’s better to go faster and generally the high line is way to do that.  It’s also the line closest to the wall.  Hit the wall – go over the line – and you’re done.

There are similar analogies in golf (aiming for a target along a preferred line with a hazard line along the same flight path) and baseball (bunting very near a base line almost always works better for a hit than closer to the pitcher but it’s just as likely to be a strike for a foul ball).  What each of the athletes involved needs to do is to develop a plan that revolves around their tolerance for risk and the availability of a reward.  You might get spectacular results and you just might cross the line, crash, and burn.

Think of those athletes as you approach your business.  What’s your tolerance for risk?  Is the value of the reward worth going over the line?  I think most great athletes hit those lines – the places where very few can put themselves consistently and win.  To me, that sounds like a pretty good business plan if you can tolerate the risk.  You?

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June 7, 2013 · 9:03 am

Bad Golf And Worse Food

It’s Foodie Friday and I know you’ve been wondering where I’ve been. Sorry about the infrequent posts this week.  I’ve written before about the golf outing I go on every year and I’m in Myrtle Beach with the crew celebrating our friendship and playing an awful lot of (bad) golf. CalabashWe come to Myrtle for the golf and fellowship – we definitely don’t come for the food. In 19 years of visiting we’ve found a few (and only a few) decent restaurants and so we’ve taken to cooking for ourselves a lot. While our food definitely tops out at the “advanced amateur” level, it beats most of what we’d pay for here. That said, the restaurants – a mixture of national chains, Calabash seafood joints, and sports bars – don’t make it worth the effort of money we’d spend on dinner for 12.

Why I bring this up is that they seem to do a good business which raised the question in my mind of standards. We’re not food snobs – most of us enjoy simple food prepared well using high quality ingredients and we’re not looking for fancy sauces or molecular gastronomy techniques.  The standard to which we hold professionals is very different (apparently) from the one most of the folks visiting here seem to have.

The business question is this.  I don’t think the cooks are less skilled nor the service staff any less capable.  I do think that they’re playing to the bar set by their clientele and that’s a trap for any business.  We need to be focused on “best” and not on”this will get us by.”  Many folks like fried seafood buffets (a specialty around here) but using old oil for frying or frozen, imported fish rather than changing the oil regularly and fresh local catch is meeting the low expectations that come either from not knowing any better (McDonald’s is fine until you taste Fatburger or In & Out) or from a business that doesn’t focus on repeat customers.  Very few businesses are afforded that luxury.

Since golf is delayed by a tropical storm passing through (good planning  I know), we’ll be cooking another meal here.  That’s some restaurant’s loss (and given this group it’s a substantial loss).  Our job in business is to make eating out at our place a more attractive proposition than staying home.  The higher we set our own bars the more likely we are to do that.

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