The Right and Left Brain Blog

In 2007 I wrote:

Between the years 2001 and 2006, if you bought 100 shares each of the following large prestige leading companies : Coca-Cola, Citigroup, Dell, Exxon-Mobil, GM, GE, IBM, Disney, 3M,  Johnson & Johnson, Microsoft, Wal-Mart, Pfizer and Proctor & Gamble,  you would have invested about $50,000 and gained about $500.”

In contrast, if you invested equally a total of $50,000 in Cognizant, Ralph Lauren, Cheesecake Factory, Google, Hanes, Coach, VMware, Costco, Apple, and Amazon in 2002 or whenever they went public it would be worth about $ 200,000 or about a 30% annual return. The numbers today say you would have lost $12,000 in the large stocks and even in the market decline made $41,000 in the growth stocks.

Our financial experts, corporate leaders and government experts discuss the financial aspects of these results every day, but vastly underestimate other key impacts. In particular, they are ignoring the structural and competitive assumptions that are dooming these large companies.  The reality is the president of General Motors and a bunch of others deserve to get fired. As we are learning with the auto companies, forget the bailout money, bonus controversies, and regulation debates, etc. These companies need completely new structures and managements.

Why is this phenomenon so apparent when these large companies have so many resources to effectively compete? The obvious answer is that the economy and society are changing so quickly those major corporations lack the flexibility to respond and that:

Bigger is not Better.

I try look at the positive things that are happening in our country like Madoff going to jail, the market being up for a few days or CitiBank saying they may be profitable. However there are some really dumb things going on that I don’t understand.

• A few weeks ago, I wrote a blog about the 80-20 rule. This week Saks announces the following program: Saks Inc., which operates high-end retailer Saks Fifth Avenue, is on a campaign to get shoppers to pay full price again, working with designer brands to lower prices, boosting service at the stores and throwing more special events. It also hopes that stocking less of the items shoppers want will entice them to buy now. In other words, they are committed to having less of what the customer wants rather than figuring out people aren’t buying $1000 shoes and purses and that they should offer a little value.

• President Obama announced a new education plan to show how much change he can stimulate that focuses on teacher incentives and charter schools. However he completely ignored just expanding things that are a proven to work and don’t need new bureaucracies like Pre-K education, smaller class size and no student left behind.

• Everyone agreed last fall to reduce earmarks and then Democrats and Republicans passed a bill with over 9,000 earmarks. In addition, in order to avoid the criticism, they are reclassifying earmarks so they don’t show up as earmarks. That is simply not transparency.

• Employees at Goldman Sachs are complaining about the changes in traveling rules. They are now required to stay at The Embassy Suites instead of The Ritz-Carlton, according to an article in the March 12, Wall Street Journal. Hooray for Goldman and why aren’t these spoiled employees getting it.

What’s your take? Why is the world so topsy turvy right now?

Many operations experts have long promoted that 80% of sales are with 20% of your products. Yet, suppliers continue to proliferate styles, colors, sizes, models and features to presumably serve more customers and provide more features. There is even a book that promotes the concept of The Long Tail, which explains a theory that the internet provides a great opportunity to offer consumers almost unlimited variety and flexibility.

The flexibility rule is a myth. We are nearly drowning in a sea of choice, and it’s killing us and the economy.

The 80-20 rule rocks in business, marketing and our personal lives. A Harvard Business Review article analyzed numerous business examples and found that virtually all products seldom increased profits by increasing offerings with little real impact. We waste time, money, inventory dollars and frequently add confusion by adding complexity. Nowhere is this more evident than the opportunity to custom build a computer. You have to make 10-15 decisions with 2-6 options and usually have no clue what you are answering.

It’s not just computers. This tough economy offers a great opportunity to reduce proliferation of products that just aren’t producing. The selection of brands, products and colors in cosmetics is simply nuts and confuses the customer more than it helps. It took crises for GM to realize Pontiac sales have been declining for over 20 years and should be eliminated. However, the auto industry has still not figured out that it doesn’t need all the models, companies or dealers because it is easier to ask for government money than face the reality of making the tough decisions. Have we really lost anything in the last few months without the endless proliferation of credit card offerings that no one needed? No one wants to admit that much of the success of Wal-Mart is eliminating thousands of inefficient retailers.

The rule even applies to government. Is more or less regulation really the issue? In contrast, it may be increasing the effectiveness and integration of the regulations we have. We added Sarbanes-Oxley in accounting, which costs billions of dollars in fees and clearly did nothing to prevent the recent financial fiascos. Imagine the savings of consolidating some of the local, county, township and state government activities rather than spending more money and more taxes.

Keep reading to learn how we can simplify the process.

“Most folks are about as happy as they make up their minds to be.”

Abraham Lincoln

“The individual who knows the score about life sees difficulties as opportunities.”

Norman Vincent Peale

“The desire not to be anything is the desire not to be.”
Ayn Rand

We are in a rut that seems to be self-defeating. Everyone I talk to is frustrated, scared, pessimistic and more afraid than confident. Madoff, bank bonuses, housing defaults have replaced the excitement of people like Buffet, Gates and Jobs. My argument is that until our attitudes improve, the personal, corporate and financial malaise will not subside. While there is a whole circular argument going on, we need positive thinking at all levels. This does not mean to ignore realities but it does mean to find the opportunities where the glass may be half full. Here are some examples of the potential for success:

Positive thinking can become self-fulfilling. We need to believe that we can overcome anything. Positive thinking is also enhanced by support. Successful organizations seem to breed success with their energy, openness, and resources to succeed. One concern today is that in today’s difficult situations, many leaders are reverting to pressure, privacy, and indecision rather than sharing, support and problem solving. This involves a balance between recognizing the need for change such as downsizing and also focusing on the things that are working.

I posted a note on Facebook requesting people to describe good things that are happening. Within about 10 minutes, I got three responses from people who are planning weddings. It is as important to get positive thinking in our personal lives as well as organizational. One positive outcome of the current period is that people are replacing superficial efforts with meaningful activities. A recent report of consumers by COMSCORE describes how people are spending more time with families, socializing and exercising than before. They are spending dramatically less time buying jewelry, expensive purses, eating out and attending expensive events. Unfortunately, they are also smoking and drinking more.

One key unintended positive consequence of the economy may be a restructuring of several industries to become better and more efficient. Poor and excess products and structures need to disappear. Pontiac, Home Depot Express, Linens and Things, Bear Sterns, Circuit City, Domino Magazine and others have been struggling for years and their demise should make other companies stronger in the long run. For example, Pontiac sales have been declining for 20 years. More companies need to eliminate unproductive products and efforts.

Breaking rules, tolerating what can be considered almost deviant behavior, allowing minor responsibilities to fall through the cracks are characteristic of what is needed. I am working with the apparel division of a search firm named SRI Search. They have packaged a group of resumes of their top applicants who are willing to face the realities of the job market. They are then successfully marketing them at reduced compensation to companies who need short term highly skilled staff and new innovative solutions.

A marketing firm named Egg Marketing has developed unique PR and social marketing programs for small companies. They have signed up two new clients in the last few weeks and get 1000 clicks per month on their sites through social marketing.

A project I have been involved in has experienced a withdrawal of emotional and financial support from management. This week we received three new leads and launched what appears to be a successful new product that has been in the works for a year. Frankly, I just ignored them and went on my own. They are back on the bandwagon on at least one project.

In short, we need to stop blaming anyone and everyone. We also need to stop waiting for miracles, government or everything to go back to the way it was 2-4 years ago. Rather what we need as Emerson says is “to believe your own thought, to believe that what is true for you in your private heart is true for all men.”

Please share your successes so others can get some ideas.

Discussions of the stimulus package are extremely frustrating regardless of political perspective… Everyone agrees we have a problem and need to do something significant. However among 535 independent Congressional members who are dedicated to doing the best thing for America, only three initially determined that they could cross party lines.

The reasons and issues are less relevant than the fact we are stuck in black and white perspectives. If you watch Rachel Maddow and Hannity & Colmes any night discussing the exact same issues, it is like they live on different planets. It is not just Congress and newscasters. Even before all the arguments and research are completed, one can usually predict individual votes of the Supreme Court. There was even an article in the New York Times Style Section about hostesses being afraid to invite Republicans and Democrats to the same party.

Similarly, any discussion of social media like Facebook and Twitter usually produces the same example of this enthusiasm versus resistance. While many adults don’t know about them, over one hundred millions people visit these sites every day. That and the fact that a majority of young people under 25 spend a significant amount of time on them make social media a factor in our society. Many of those young people find them a valuable places to interact, learn, meet people, express their true feelings, etc. In contrast many adults unsuccessfully try to block it and unknowingly think that everyone on the sites are deviants. In the middle are the marketers who are faced with declining media audiences in vehicles like T.V. and newspapers. These people, who could care less about the social values, are primarily concerned with the opportunity to sell something.

The result of this Black and White orientation dramatically affects our day to day lives. Instead of lively discussions of alternatives, we settle for developing solutions that we know the key decision makers will buy into. I am currently involved in negotiations on a project where the subordinates of each group spend most of their time developing solutions their superiors will accept rather than trying to develop innovative solutions that will fly with all parties. Similarly, even the bank executives acknowledge that they didn’t get it and have been working in an old reality. However the openness, looking at alternatives, and understanding others perspectives seem missing from most decisions.

There are some simple recommendations to reduce the black and white perspective:
1. First, get alternative approaches on the table then try to evaluate them objectively.
2. Take the time to understand the reasons and goals for different perspectives. Specifically, put yourself in the other person’s shoes instead of just rejecting the approach.
3. Be willing to consider new ideas and realities particularly when some of the old ones aren’t working.

Do you have other suggestions?

There is no question that there is more communication than ever today. In our daily lives, many of us receive a myriad of communications from multiple sources - emails, TV, podcasts, phone conversations, work meetings, the Internet… and we somehow still have time for our families. The problem, though, is that our sources of communications have clearly increased significantly, while our ability to “hear” has decreased. As the old saying goes, a good conversationalist is a good listener.

In the last week, several incidents have convinced me that we have a hearing crisis. We tend to communicate on the basis of “need to know,” rather than on a foundation of openness and participation. The most blatant example is corporate communication of layoffs. These decisions always seem to be arbitrary and made in a vacuum by consultants and HR staff that have no actual understanding of the business. This is of course the perception of the employees and to an extent, this is due to the lack of active engagement and conversation by management with staff.

We need to try new methods. For example, rather than simply laying people off, why not retain some at lower wages and let them join teams to develop new methods to reduce costs, generate new income and create new positions for themselves? Organizations that have an ongoing two-way conversation with employees will find that cutbacks, although certainly not welcomed, to not be as arduous since it will not be the first time that they have discussions with employees. Smart managers read the landscape and begin preparing employees as part of their regular communications. Even in a bad economy there is hiring, although limited. Transferring an employee to an open position in the company is a win-win situation.

A more revolutionary step is allowing employees to discuss cutbacks and recommend solutions. In other words, engage employees early on in the process to work towards a solution.
• Are there cost-saving measures that could be implemented that management is not aware of?
• Do the employees have any ideas on how to cut out costs outside of layoffs?
• Do employees have ideas about other revenue sources?

We continue to hear dreadful news about the economy, jobs, housing, and the auto industry and the need for change. While there is some hopeful news about the stimulus package, good deeds like the U.S. Airways miracle and continued profitability of some strong companies, there is a feeling that our country, organizations, and individuals are not responding enough.

I argue that we continue to discuss legal, political and economic solutions rather than the deep rooted philosophical issues. This is evidenced by some of the following:

• Executives are still into excess rather than change. The President and the press had to embarrass Citi into canceling the purchase of a $50 million plane and the President of Merrill Lynch remodeled his office for $1 million while the company was imploding. What is worse is they try to justify these abuses and lay workers off rather than understand the realities and needs.

• We lack a real understanding of the problems and the impact of potential solutions. For example, while there is lots of talk about cutbacks, there is little about lending, investment or innovation. For example, if every American household went out and spent an extra $500, it would generate over $50 billion of new spending, which gets multiplied throughout the economy and creates stronger companies and less unemployment.

• We tolerate the lack of respect by people like the Governors of New York and Illinois in making Senatorial appointments a mockery. This is exasperated by the press, who loves the news opportunity, rather than being embarrassed to support this trash. As an example, the press was rampant with totally unsubstantiated stories about Caroline Kennedy’s potential affairs.

• Everyone is disgusted with health care and it isn’t just money. Doctors hate the bureaucracy, patients hate being ignored, misinformed or not informed at all, and hospitals just seem lost in terms of keeping costs down and providing service. In the meantime, there seem to be no goals to improve efficiency, service and prevention, which could dramatically improve the whole system.

• Finally, we have an insane culture that creates circumstances where even kids’ sports coaches allow excess training rules where even one athlete dies or run up the score to 100-0 against a basketball team with only 8 players from a school with kids who all had some disability.

What we need are some drastic and quick philosophical and psychological changes:

• In our corporate, political, and individual decisions, we need to consider the human and cultural impacts of our society. The U.S. Airways rescue is an example of what is needed. It was successful mainly because people were trained, did their jobs, and recognized the roles of the team. They also communicated among jobs, agencies and passengers to focus on getting the rescue done. Communication and teamwork could go a long way in getting things done better.

• We need to rebel and change what we know is wrong. Don’t support companies that don’t practice constructive behavior. Repudiate the people who are raping our society and glorify all the great examples in organizations, groups and the country.

• On a personal level, fully analyze what needs to change and how it can be done. There are lots of ways to save money, be healthier, accept some realities of a less affluent society and be a better citizen, friend and family member.

I will end with a personal example of how we can change. We bought our family a Wii Fit for the holidays. I showed up as overweight and my 7 year old granddaughter offered to help me lose weight. Unfortunately one of her tactics was to do my exercises for me. However the example illustrates key components of any change process: Recognition, goal setting, action and support.

I have been a member of Facebook for a few months and have acquired over 100 friends through a variety of means. This blog is meant to provide the initial perceptions of a 64 year old novice learning about Facebook.

My first comment and recommendation is to learn with a mentor, which I did with Susan Payton at Egg Marketing & Public Relations. I joined Facebook to facilitate my business networking and to find additional outlets for my blog.

My first observation is that Facebook is very easy to use, invite friends, communicate, and meet lots of new people. Most of my friends are new relations that I invited through various searches. One of the interesting aspects is the variety of people you meet and learn a little about. While I find older, business orientated people more interesting to me, the exposure to younger people has been fantastic. Most profiles clearly differentiate people looking for partners, social advocacy, business and/or more intellectual interests.

Facebook is definitely easy and fun. I like the short messages and the ability to find pictures of friends and relatives and find out what people are doing. It also is a great source for what people think about what’s going on in the news, travel and in recreation. You can get instant reviews from people you respect about just about anything. It is simple to both add links and post longer messages.

There are some unexpected side benefits. The quotes are generally great and more members should include them. One example, which is extremely appropriate for the times is: “Never get used to anything.”

All kinds of interesting groups are available with lots of innovative content. There are some nice quick conversations that are both fascinating and fun. The speed and ease of Facebook cannot be underestimated in making the information easy to sort and read when appropriate.

The only real issue with Facebook is the potential conflict between fun and meeting specific goals. There is a lot of talk abut how great it and social networking are for making both personal and business relationships .However I have seen little in the way of goals, measurement and results to validate the rhetoric. In addition everyone portrays themselves as an expert but you read little documentation of results from all the potential consultants.

In summary, Facebook is a new tool capturing millions of new members and participants. The challenge is to continue to learn how to use it and not let it become another here and gone media device. In addition we need to understand the potential of the vehicle and utilize it effectively.

In accepting a Golden Globes Award in 2009, Stephen Spielberg made a comment that has been echoed by many creative geniuses in a variety of ways. It was that with every project he challenges himself to push the envelope by asking “am I going to get away with this?” Similar perspectives are as follows:

• Ryan Mathews and Watts Wacker write in The Deviant’s Advantage “Let’s recap our thesis: Innovation-all innovation, positive and negative-begins as a deviant idea germinating in the mind of a person dwelling on the fringe of society.”
• W. Edwards Demming is quoted in a great line about leadership: “It is the ability to drive fear out of the organization so that employees will feel comfortable to make decisions on their own.”
• Billy Joel at a commencement address: “If you love what you do, you’ll always do what you love. And if you’re doing what you love, you’re going to become very good at it.” And this is a country that rewards excellence.
• Emerson: “to believe your own thought, to believe that what is true for you in your private heart is true for all men - that is genius.”
• The statement by John F. Kennedy, “some people see things as they are and I see them as they could be.”
• Bill Gates and Warren Buffet were in a televised seminar with college students. They were asked about the biggest mistakes they made. Both responded that the opportunities they missed, like Warren Buffet not investing more in Microsoft, were their key mistakes. The openness and seeking out opportunities rather than worrying about making mistakes is what was so impressive.
• In a magazine article about Google an incident was related about a subordinate relating a several million mistake to the president. What was important was that the president was more pleased that the environment encouraged openness about acknowledging mistakes which also resulted in tremendous breakthroughs than the consequences of the mistakes.

These examples illustrate how we are afraid of failure and avoid great ideas that are not slam dunks. It is well known that we are less willing to take risks even if the probability of success says we should in many cases. Think of how many reorganizations and thousands of firings are occurring because companies refuse to face the realities of the current environment. The auto and banking businesses are probably the best examples of not having the guts to make inevitable changes. Google, Facebook, Amazon and other internet companies except Yahoo are examples of companies that have the vision to look forward.

My colleague, Susan Payton of Egg Marketing & Public Relations, blogs about internet marketing. While it certainly has its relevance and place for businesses, I believe there are other elements of a business that can do as much, if not more than internet marketing to grow a business.

Internet marketing experts provide seminars, webinars, online conferences, etc., which are designed to improve response rates, inquires, and conversions at lower costs. If we believe much of what they argue, our profitability would virtually increase in leaps and bounds every month. We sometimes get so excited about web marketing tools that we forget some of the basic marketing tools, particularly for smaller businesses. My experience is that there are some general realities about our marketing efforts that need to be integrated with our internet ideas to achieve better results:

1. The characteristics of your brand, product, price, and marketing are the most important aspect of a great website. Great marketing or web design is hard to overcome a lousy product.
2. Price, value and competitiveness are underestimated in their importance. Consumers frequently use the internet to compare and look at multiple sites. Lowering price and offering free shipping are the easiest and most effective way to increase sales.
3. Better, not fancier, customer service can dramatically affect sales. Responding quickly, empowering customer service, liberal return policies, and operators who are knowledgeable and speak English are more important than gimmicks like 24-7 responses from representatives in foreign countries that have no clue.
4. Being in stock and shipping quickly is a requirement and not an advantage.
5. Clear, concise explanations can have a dramatic impact. Customers want clear information on the characteristics of the products. Understandable text, sizes, specs, dimensions are all critical elements of a product description.
6. Excellent photography is more important than multiple views that are unattractive or redundant.
7. Improving web design with exotic characteristics like flash, videos, long openings etc. can be counter productive in terms of conveying a simple message. For example, if you have a “skip intro” option on the website, it probably shouldn’t be there.
8. Google and its reporting tools are incredible products and do not need supplements if you are a small to moderate user.
9. Great products and excellent brands are more important than SEO in generating clicks.
10. In general, expensive custom products or totally generic efforts are equally disappointing. There are great models and templates out there to purchase inexpensively. However, they need to be tempered with individual analysis and decision making.

In short, basic management and marketing is a fundamental that must be developed before one tacks on exotic internet marketing tools. In addition they may show much better results than all the dog and pony shows of your competitors.