Tag Archives: Strategic management

Making A Deal

If you spend any time in business, you end up in a negotiation of some sort. It might begin even before you start at a job as you negotiate your salary. More likely, it happens as you work on a deal and document that deal with a contract. You might think that the deal is done when you shake hands but my experience has been that the deal is never really done, even once you’ve both signed that contract.

Photo by rawpixel.com

To me, the contract is a reference point, something to which the parties can turn if there is a change in circumstances or confusion about expectations. As with any relationship, business deals tend to be fluid, but if the partners work in good faith, any problem is solvable. You should also remember that contracts generally last beyond the actual deal itself (check those clauses in the “survival” section).

Because agreements and partnerships are long-term, the negotiations have to be viewed in that long-term context as well. The odds are that success in the negotiation is not immediate. I have had a contract take longer to get done and signed than the term sheet that documents the general business points. It’s not because the former is done by lawyers and the latter generally by business people either. It really has more to do with the fact that others are getting involved. I’ve found that negotiating success is inversely proportionate to the number of people involved – two people can get something done that ten can’t, even though those ten can be helpful in surfacing new approaches when things bog down.

You need a couple of things to negotiate well. First, you need to know your bottom line – the boundaries you are unwilling or unable to move beyond no matter what the other side offers. You must be willing to walk away if those boundaries are crossed. You also have to be realistic about where to draw those boundaries and let the other side know when they’re asking you to cross them and why. It’s no place for dogma. If you don’t have a real reason and just want to “win,” you’ll lose.

Second, you need a vision of what the possible end result might be. You need to consider solutions with an open mind. Finally, you need to sit on the same side of the table as the person with whom you’re negotiating. I don’t mean physically. I mean you need to convey a positive message – if we work together, we might find some solution that addresses all of our concerns. We are partners in solving a problem.

I’ve had deals fall through during negotiation but they’re the exception. I’ve also had partners not live up to the contracts they signed for various reasons. That’s more common and generally because they weren’t thinking long-term when they signed the deal. What’s your experience been?

Advertisements

Leave a comment

Filed under Helpful Hints, Thinking Aloud

Back To The Bar

(Only cropped, no other editing.)

(Photo credit: Wikipedia)

It’s Foodie Friday and this week I’m inspired by something the folks at Bacardi are doing because it’s something every company ought to be doing in some form. In the case of Bacardi, they’ve called it “Back To The Bar” and the reason for what they’re doing is nicely explained by their CEO and reported by MediaPost:

“Back to the Bar is our version of ‘walking the factory floor,’” said Mahesh Madhavan, CEO of Bacardi Limited. “It puts our people in touch with what’s happening in our business in real life and real time — something you can’t truly understand behind a computer screen, sitting through a presentation, or dissecting a spreadsheet.”

What every employee is being encouraged to do is to go hang around bars. In fact, they’re shutting down the company to allow employees to do so. While they’re in those bars, they’re to connect with customers and encourage them to try cocktails made with Bacardi. I imagine they’ll also get a lot of feedback on the product, consumer approaches to drink selection and other information which, as the CEO says, you can’t get behind a computer screen. It’s a fantastic idea.

Think about your own business. First, I hope you’re eating your own dog food – that you’re a regular user of your own product or service. If not, why not? As an example, over the years I’ve worked in sports with a few people who didn’t really watch sports or know a heck of a lot about it. How they got hired baffled me. I also worked with a TV executive who said he didn’t ever watch some very popular shows because he “wasn’t the demo.” I get that but I think if your job entails marketing to a particular target you need to understand the target and that includes their likes and dislikes even if they don’t mirror your own.

Next, Barcardi is getting first-hand feedback. They’re talking to people who are in a relaxed environment, probably a cocktail or two down the road, and the chances of getting uncensored feedback are excellent. It’s not a written survey or a focus group. It’s way better than those. Most importantly, it’s first hand. I have always loved the old United Airlines commercial from the late 1980’s in which Ben, a senior executive whose company lost a long-term client that morning, is handing out airline tickets to his managers and tells them to go visit clients. Ben himself is going “to visit that old friend who fired us this morning.” It’s a spectacular reminder not to lose touch with people. Don’t rely solely on email and telephone. You probably see this issue even in how your own office works if you still work in one. People don’t visit – they communicate via email or Slack or some other messaging service, even with the person in the next cubicle.

People thrive when they connect with other people. Your business thrives when it really connects with customers. When was the last time you went back to the bar?

Leave a comment

Filed under Consulting, food, Helpful Hints

Building A Better Filter

I came across something this past week that I knew immediately would have to be our Foodie Friday topic because in a flash my reaction went from “duh” to “brilliant” to “life-changing.” It is a coffee filter. That’s right: the thing into which you put the coffee as you prepare your morning cup. It actually can remind us a lot about business.

I was visiting my sister and went to make the morning coffee. As I opened up a filter to place it into the conical thing that holds the ground coffee, I saw something on the white paper of the filter that I’d never seen before: lines. That’s right – pre-measured markings to delineate the levels of ground coffee, much as you probably have on the coffee pot itself for water. I literally giggled with glee. No measuring spoon to wash nor losing track of how many scoops I’d counted out. Just hit the same line each day with the water in the pot and the coffee in the filter and get the same brew, no matter how sleepy I was as I made the pot.

What does this have to do with business? A few things. First, coffee filters are commodity items. Not much distinguishes one filter from another and anything which can do so will remove price as the only variable. In this case, I don’t see evidence that these filters even cost any more than those without lines.

Second, this is clearly a change made with the consumer in mind. After all, it must cost a little something extra to print the lines on the filters as well as to implement a step in manufacturing that wasn’t there before. Based on the filters without measure lines, I don’t think anything had ever been printed on them, so this might even have involved purchasing new equipment to provide a customer benefit. It would have been very easy to say let’s charge more to maintain our margins or to forget the “new” product altogether but some smart manager didn’t.

Finally, it shows us that even something as simple as a coffee filter – literally a folded piece of paper – can provide room for innovation and a better product. All that’s required is to keep the focus on customer benefit and to think outside of the box (or inside the filter!). Those are things any of can and should do.

Leave a comment

Filed under food, Helpful Hints

Deglazing

This Foodie Friday I want to talk about deglazing. It’s a very basic technique for sauce-making but it’s also a word that scares a lot of people when they see it in a recipe. As it turns out, it also has something to do with business.

For those of you who are unfamiliar with the term, deglazing is nothing more than using some sort of liquid to loosen the bits leftover in a pan (called fond) after you’ve cooked something in that pan. Say, for example, you’ve made a roast and after you pour out the accumulated fat and juices, you see a lot of crispy bits clinging to the pan. You would deglaze the pan by heating it and pouring in a liquid. It can be as basic as water but wine or stock is preferable because you’re going to use the resulting liquid as the foundation for a sauce or gravy. You’re doing yourself a great disservice if you don’t deglaze your pans!

I suspect some of you out there just toss the fond – you scrape the remnants into the trash. Well, as the saying goes, one man’s trash is another man’s treasure, and that’s where the business thought comes in. How many businesses have been built around taking what someone has discarded and finding a new or better use for it? The entire recycling industry is built around that notion. While we’ve been recycling things for centuries, especially during shortages of raw materials created by war, the modern industry is just about 50 years old and is a $500 billion enterprise.

The point today is to get you to ask yourself what might be incredibly useful and productive in your business that you might be discarding. It could be a person, it could be a product that’s underperforming because it’s not sexy and no one wants to work on it, or it could be an unexplored portion of the data you gather. These things might just be fond, and with a little deglazing they can be transformed. What do you think?

Leave a comment

Filed under food, Helpful Hints, Thinking Aloud

Want Fries With That?

Foodie Friday at last and this week the topic is, once again, fries. I see that Taco Bell has joined damn near every other quick-service restaurant and is now offering fries. Not just any fries, though. Nacho fries, which I gather are fries with a bit of Mexican seasoning and some nacho cheese on the side. Sounds good, right? Well, maybe, but not from a business perspective and let me tell you why (and how it might just apply to your business too!).

English: Taco Bell crunchy shell beef tacos

(Photo credit: Wikipedia)

When I think of Taco Bell (or any other taco chain), fries don’t enter into the equation. I realize that a few of Taco Bell’s direct competitors have fries (more on that in a second) as does every burger chain and chicken joint. Do you really think that diluting the brand is worth capturing those people who MUST have some fries with the burrito?

Moreover, Taco Bell has actually done a great job in positioning itself as having healthy alternatives and, in fact, has some of the best options for healthy eating in all of fast food. While they don’t tout themselves as being healthy (they respect that much of what’s on their menu isn’t and know it would be inauthentic to claim to be), the fact is that they can now offer “choice” while competing against Chipotle and other “healthier” alternatives.

The chain has also done a great job in coming up with weird menu items that are true to the brand. While I’m not rushing out to grab a naked egg taco or a firecracker burrito, those items are true to the brand identity. Even the California Loaded Fries burrito rings true while just plain fries don’t. A better idea? How about offering carne asada fries, which are common in Southern California and taking them nationally? Sort of a Mexican version of poutine, Taco Bell could have stayed true to their brand while offering something they believed was lacking in their menu. Del Taco, a SoCal competitor, offers chili fries. Here is a chance to one-up them and take a regional specialty into new areas.

Ask yourself this. Would you head to Burger King for a taco? Maybe for a breakfast burrito but I wouldn’t classify what is basically an egg sandwich wrap as “Mexican.” McDonald’s tried and failed with pizza, and it wasn’t just because of the product. If you’ve done a good job of branding, your customers have a focused expectation of your product. Diluting that image or causing cognitive dissonance with a new offering helps neither you nor them.

My local taco place doesn’t serve fries. It serves papas, and only as a side on the kiddie menu. Frankly, I was upset when they went to a menu in English because it hurt the authenticity of the place in my mind. Fortunately, the food spoke louder than the language change. See your brand from the consumer’s eyes and you won’t get too far out of bounds. You with me?

Leave a comment

Filed under Consulting, food, Huh?

Most Read Foodie Friday Post Of 2017

It’s only fitting that we end the week of most read posts published in 2017 with the food-themed post that was most read. After all, we end each week with something of that sort and I kind of like ending not just this week but this year with one. This post was published last October and was originally called “They Don’t Make It  Like That Anymore.”  Have a healthy and happy New Year and we’ll see you on the other side. Enjoy!

This Foodie Friday I am going to run the risk of sounding like the grumpy old man I’m slowly becoming. Rather than admonishing you all to get off my lawn, I want to share the sentiment I had a week or so ago as I fired up my smoker. My smoker, or as it’s lovingly known, “The Beast”, was made by the New Braunfels Smoker Company at least 20 years ago, How do I know that? Well, that’s today’s food and business thought.

The Beast is made of heavy steel that’s quite thick and it weighs well over 100 pounds even without my usual load of meats inside. As I was cleaning up the old Rancho Deluxe to get ready for its sale, the smoker was one of the very few things that I was adamant about saving for the move. Why was that, especially when I also gave away or junked a Caja China and two other grills? In a sentence:

Because they don’t make them like that anymore.

The New Braunfels Smoker Company was sold to Char-Broil 20 years ago. Almost immediately, the quality of the products went downhill, and this was especially noticeable on the gauge of the steel. The steel was thinner and didn’t hold heat as well. When a rust spot developed, it was difficult to sand and paint it without almost going through the area that has rusted. The products were similar in design and name, but that was about all that was the same. The bbq forums, home to serious meat smoking aficionados like me, were deluged with negative comments and, more importantly to the business, better alternatives to what had been a superior line of smokers.

This is something from which any business can learn. We’re always under pressure to improve our margins. Some folks look to cheaper materials, other to cheaper, less-skilled labor, and still others to cutting customer service. Sometimes we just skimp on quality control. While margins might improve, there is a strong chance that revenues will decline as the customer base figures out that “you’re not making it like that anymore.” As an Apple user, I recently switched to a Chromebook because my Mac OS isn’t as smooth and there are glitches that were never an issue before. For you cooks out there, Pyrex changed their formula and “new” Pyrex is not as good. Recent Craftsman tools, once the industry standard, are now made in China and aren’t nearly as good. I can go on and I’m sure you can as well.

If you’re successful, resist the temptation to cut corners. People notice (so does your staff). Don’t be part of a conversation that claims you don’t make it like that anymore.

Leave a comment

Filed under Consulting, food, Huh?

Most Read Of 2017 – #2

Here is not actually the second most read post that was written in 2017. Why not, you ask? Because the second most read was actually published last week. Called  “You’re On Your Own,” I didn’t think I should run it again so soon. You can read it again (or for the first time) here. This next post, actually the third most read, was published on May 24, the day after we sold our family home of the prior 32 years. It provided me with a chance to reflect on both the mixed feelings I had as well as something any of us in business can take away.  Originally called “A Little Bit Better,” I hope it makes your business life just that.

We closed on the sale of Rancho Deluxe yesterday. I lived in that house for 32 years (almost to the day) and it holds a lot of happy memories. The pictures you see are the view from the yard when we moved in and the day we moved out. As you can see, quite a bit changed. While the core of the house is pretty much how we found it, we added on a few times and changed the old kitchen into office space when we built the new kitchen/family room.

The core of the house itself is over 100 years old and, as with most older homes, wasn’t without issues. Over the years we replaced the furnace (twice!), the roof, fixed sills, removed asbestos, and landscaped. There were also hundreds of little fixes and improvements. We did all that without tearing down the original structure as so many in our town have done. We like to think we left it better than we found it.

That’s really the business point. We often get pulled into situations or projects where there is a lot of history that predates you. One approach that many people take is to just blow everything up and to start over. That ignores the good in what’s been done already. It can also cause a backlash from the people who invested their efforts to get things to where they are when you walk in. The challenge, both with old houses and old business situations, is to leave things at least a little bit better than you found them.

That’s not to say that some things are beyond saving. Sometimes a situation is in such disrepair that gutting it and starting over is the prudent and less expensive course of action. I think, however, that we often get more focused on a solution that may be more expedient and different as opposed to better.

Think about the things on which you’re working. Are you making them better or just patching things up so you can cross them off the list? Is the team happy with what’s being built or are you painting things a color that everyone hates but which was on sale at the store?

I’ll miss the old place while at the same time not missing the almost non-stop series of items on the “to-do” list. It protected us from hurricanes, blizzards, countless minor storms, withering heat, and freezing cold. I always felt that we had to protect it a little. I’m walking away knowing it’s better than I found it and hopefully in good hands for the next 32 years. Can you say the same about what you’re doing?

Leave a comment

Filed under Thinking Aloud, What's Going On