Thursday, December 18, 2014

Fear Should Never Be Our Compass

On the night that Sony cancelled their movie "The Interview" because of terrorist threats from North Korea I stumbled across an article from a website named the Under 30 CEO. The article is entitled "How to Use Fear As Your Compass and Fuel for Growth".

While the author makes some good points in the article about the negative impact of fear, the idea that you could use fear as a compass for business success is ridiculous. It is clear that Sony used fear as a compass the last few days culminating in their decision to pull the movie "The Interview" from theaters. Needless to say that didn't turn out well. In addition to the potential for massive losses on the movie they are suffering a blistering beat down in the court of public opinion.

How about replacing fear as our compass with things like courage, integrity or passion? No doubt you can use fear as a compass or to fuel your activities - but the consequences of doing so can lead you to a place with dysfunctional organizations, uninspired teams and poor performance.

America is better than this - we shouldn't be bullied and run from what we believe in. We also shouldn't be teaching our young business leaders to use fear as a compass. Whether in business or in life, having a deep and abiding sense of who you are when fear comes calling will keep you from making decisions that take you or your organization to the wrong places.

Wednesday, October 29, 2014

Apple Pay - A Lesson in Disruption

While Apple's recent roll-out of the iPhone 6 and 6+ garnered headlines for the latest iteration of its popular product - it was a software feature that may end up being the real disruptive force behind the most recent product iteration.

Apple Pay leverages the features of the iPhone, namely the Touch ID button that unlocks the phone, along with a new communications format called Near Field Communication or NFC to securely transmit payment information in a way that should virtually eliminate credit card ID theft.  It combines the three security elements of 'what you know' (typically passwords), 'what you have' (in this case your iPhone) and 'who you are' (your fingerprint through Touch ID) to create the safest electronic payment option on the market.

Not to mention it is extremely easy to use, requiring only that you hold your phone in near proximity to the card reader and press your Touch ID button.

While this technological innovation is a great example of a brave company approaching product design, the market reaction by competitors shows what happens when fear drives product development and leads to short-term decision making that harms long-term prospects.

This was chronicled in the New York Times discussion of CVS and Rite-Aid's decision to abandon Apple Pay after only a few days of use. While normally that would be a warning sign for a new technology's future - it is the reason these retailers dumped the payment approach that signals a bright future rather than dread.

As background, these retailers have been working on a payment technology since 2012 in an attempt to avoid paying the large payment card companies and banks fees that can range as much as 2-3% of the transaction total and in an attempt to collect purchasing date on their customers. From the beginning they approached the solution from the mindset of a company attempting to save 2-3% and add it to the bottom-line rather than a company that is focused on creating an easy to use consumer product that solves a problem.

This rival technology is known as Merchant Customer Exchange or MCX and is still months away from roll-out. And rather than a single touch of the cell phone would instead generate a QR code that is displayed on the merchant's checkout terminal. Customers who have already linked their bank accounts to the CurrentC system would scan the QR code from the terminal and the transaction would complete.

So CVS and Rite Aid have chosen to hitch their retail futures to a much more complicated system that is built to serve the merchant rather than the consumer, is still months away from rollout and will likely be irrelevant by the time it gets to market because of the adoption of Apple Pay by consumers.

Tim Cook, Apple's CEO, summed it up best during a discussion at a conference in California:
“In the long arc of time, you are only relevant as a merchant if your customers love you," Cook said, adding that early adoption of Apple Pay was “fantastic.”

Tuesday, August 19, 2014

Business Lessons from Ferguson

Lately I have found myself, like much of America, glued to the live feeds of the late night scenes of violence occurring in Ferguson, MO. The tragic events of Michael Brown’s death and the subsequent bouts of violence are at the heart of the story, but watching the scenes of violence play out between rioters and cops in Ferguson remind me of something closer to home for the Corporate Bravery audience.

The clashes between the police forces (city, highway patrol, etc) have been the subject of much debate over the past week and half for the emerging story line of increasing militarization of America’s police departments. This story line even prompted an Op Ed by emerging presidential candidate Rand Paul with his Libertarian take on the issue.

I am not writing today to continue that theme or add some new wrinkle to that conversation, rather to talk about this increasing militarization of all parts of our lives.

Corporate Bravery was started to bring light to the increasing levels of fear that are encroaching upon all corners of our lives, but specifically on how those aspects of fear prevent us from living bold lives in the marketplace.

Security barriers surrounding Wall Street
We have become surrounded by images everywhere that evoke fear responses and lead us to erect an ever growing menagerie of control and safety devices around us for protection. And the images of fatigues, large munitions and tanks to solve a community issue is no different than what we are doing to our business institutions - both literally and figuratively.

The front entrances to our office buildings look like grim fortresses that communicate anything but a welcoming appearance to visitors, business partners and employees. Our time and attendance procedures and policies tell our employees that we can't trust you and our lack of flexible work arrangements indicate a complete disregard for the real issues that we face on a daily basis.

Just listen to some of the recent quotes from law enforcement officials around the nation regarding the situation in Ferguson as published in various national media outlets over the past week:

Wednesday, June 11, 2014

The Future of Higher Education

While we usually profile companies, industries or people who are conducting business boldly and not buffeted by fear - I wanted to provide an example of an industry that is driving itself into extinction.  It exhibits many of the characteristics of fearful companies and organizations such as losing their sense of identity, chasing the competition and getting stuck in a business model that not only lacks a moat but is increasingly failing.

U of M's North Quad

I am re-posting a series of posts in its entirety that I previously wrote for the Epipheo Underground blog a few months ago.  I am motivated to do this because of a couple of new events this past week that only serve to reinforce my original premise - that higher education as we know it is dying and will look dramatically different within 10 - 15 years.

Those events include:
For those unfamiliar with the "Pay As You Earn" program, it offers loan forgiveness and capped monthly payments to graduates based on their actual earnings over the life of the loan.  While the program may be a well-meaning attempt to mute the impact of a swelling $1 Trillion student loan debt load, according to the article linked above, it could have unintended consequences:
Beth Akers, a fellow in the Brookings Institution's Brown Center on Education Policy, says the move could also unintentionally push college tuition prices higher. “The income piece is a necessary safety net for borrowers. It gives security to not be afraid to take on debt to go to college, but the forgiveness part isn’t always necessary. It induces people to borrow more than they need to, which can have a negative impact on college prices.”
With these two current events as the backdrop, I present to you the original post originally published on the Epipheo Underground on March 10, 2014:

I have three kids ages six and under, and I am not saving for college.
Sounds irresponsible doesn’t it? Probably sounds even more irresponsible considering that I have an undergraduate business degree, an MBA in Finance, and currently lead the Finance/Accounting team at Epipheo.

What if I also told you that I am not pushing my children into some type of AAU sports program in the hopes of driving them to an athletic scholarship? You might still call me crazy. But, before you stop reading, I have a logical and possibly even sane rationale for these financial choices.

The primary reason is that the return on a college education — for most people — stinks. In fact I might even say that it is fast becoming one of the worst investments you can make. I would even argue that, by the time my children are old enough to graduate college, it could be a worse investment than buying a brand new automobile — and we all know that you lose 40% of that investment as soon as you drive it off the lot.

Thursday, May 8, 2014

Fear of Failure is Hurting America's Entreprenuerial Standing

As Americans we are hard wired from generations dating back to Ellis Island to be a part of the opportunities that America created.  We were risk takers, crossing the Atlantic against all odds in the search of a better future.

But our sudden and startling transition to a market based on fear was driven home by a headline in the USA Today in December 2013 - “Is too little market fear something to fear?” Do you mean to tell me that we don't have enough to fear that we now have to worry about not having enough fear?

A recent study by the Brookings Institute shows that in 2008 for the first time in at least decades (but possibly in the nation’s history due to poor historical data) job destruction now outpaces job creation - see chart below.  It isn’t that companies are failing more on a percentage basis, but rather there is a drought of new business creation - and our own personal fears of failure or risking the safety of what we have today is a big reason for this trend.

Each year the Global Entrepreneurship Monitor (GEM) publishes an annual report on the environment for entrepreneurship around the world.  The GEM is a research program initiated
in 1997 as a joint venture between academics at London Business School in the UK and Babson College in the United States. From its first survey in 1999, GEM has grown into a consortium of more than 400 researchers from 99 economies over its 14 year history.  In the 2012 report it had this to say about the environment for new business creation around the world:

Risk-taking can pose considerable challenges for potential entrepreneurs. Universities and business schools around the world can generally teach the basics of entrepreneurship, boosting peoples’ abilities to perceive opportunities and their skills for starting businesses. A key stumbling block, however, is one’s inherent fear of failure. This can counteract the drive to start a business, even when the expected returns from entrepreneurship have better prospects than the next best alternative. People may have differing levels of fear of failure and conditions in the institutional environment, such as bankruptcy legislation, which could deter would-be entrepreneurs.

While obviously reflective of the economic environment in those countries the startling evidence in the report shows that those countries with the most to lose in terms of real economic value (meaning opportunity cost of leaving a high paying job, blowing through a savings or retirement account, etc) were the countries showing the most fear.

Thursday, April 24, 2014

An Inside Look at Pixar's Bravery

Courtesy of Pixar Animation Studios
I was excited when I heard that Ed Catmull was releasing a book earlier this year.  It is not as though I knew a lot about Ed, but I had read about him in previous tomes on Steve Jobs and because of the perspective of those other accounts I had assumed that it was Jobs' magic touch that had given Pixar it's DNA.

However, when you consider that Ed has been a constant from the earliest days in Lucas Films to the Steve Jobs run standalone Pixar and now under the control of Disney - you start to realize that he has been a bigger part of the magic than perhaps people really understood.

As a result of this book the spotlight is being shown on Pixar as a business and there have been some great articles of late discussing the magic that is Pixar.  One of the more comprehensive reviews is the recent article in Fast Company.  If you don't have time for Ed's book in the short-term then you must read this article for a nice primer - chances are you'll be wanting more.

The article gives some amazing insights into not only the aspects of Pixar's culture but some of what created and continues to sustain that culture.  It is important to understand some of those aspects because they have been extremely successful.  Consider the following:
  • 14 consecutive #1 box office hits
  • Over $7 billion in world box office receipts
Some of the great quotes from the article that provide insights into a brave organization include....
"They threw you into a lot of different things to try and eliminate fear from the creative process," he says. This meant improv classes, drawing classes, learning from people who were the best in their field--all in the interest of attaining confidence in your own artistic ideas. “Fear is the biggest killer of creativity,” Schlumberger says. “In order to cultivate a strong creative environment, you need to make people comfortable in expressing their ideas."

Thursday, March 20, 2014

Book Recommendation - Overwhelmed by Brigid Schulte

I recently had an opportunity to interview Brigid Schulte, author of the new book Overwhelmed: Work, Love and Play When No One Has the Time.  Author Brigid Schulte, an award-winning journalist for the Washington Post -and harried mother of two - began the journey quite by accident, after a time-use researcher insisted that she, like all American women, had 30hours of leisure each week. Stunned, she accepted his challenge to keep time diary and began a journey that would take her from the depths of what she described as the Time Confetti of her days to a conference in Paris with time researchers from around the world, to North Dakota, of all places, where academics are studying the modern love affair with busyness, to Yale, where neuroscientists are finding that feeling overwhelmed is actually shrinking our brains, to exploring new lawsuits uncovering unconscious bias in the workplace, why the US has no real family policy, and where states and cities are filling the federal vacuum.

In our discussion we covered a few topics that you will likely find interesting - take a listen to the following excerpts of our conversion.

We talked about the current dysfunctions of corporate culture - specifically automatic assumptions about our roles in business that create this culture of becoming face time warriors.

In her book Brigid gives the example of what the Department of Defense did to change this face time warrior mentality.  She describes this in further detail:

Work has become a religion - that is the conclusion she comes to in this excerpt regarding poor leadership across the board and the role that fear has played in getting us to this place.

Our discussion about what men can learn from this book takes us to a place that concludes that "our workplaces are trapping us in lifestyles we don't want to live."

Wednesday, March 12, 2014

Protecting Broken Business Models

While Apple has been a disruptive force in multiple industries for the past decade, Tesla is poised to be the disruptive force for the next decade.  I have written on some of the reasons I believe that Tesla is disruptive in the past including the fact that it has innovative technology, their approach to the media and a pioneering leader who isn't afraid to invest everything he has into his ideas and convictions.

So when I read this recent article in Fast Company it re-affirmed my belief that Tesla isn't just a pioneering company but they are a disruptive force.  It might seem odd that this article would be the impetus for these impressions given that the headline has a general negative tone.  The phrase 'Tesla hits another speedbump" doesn't exactly scream 'disruptive force'.  However, when you dig a little deeper you begin to see how disruptive they are.

The nexus of the article is that as many as five states now have or are in the process of limiting Tesla's direct sales model.  No franchised middle men means they control the entire experience and the entire cost structure of the car.  The problem is that there are many people getting rich being the middle men in the car buying process and in 2013 new car dealers (excludes used cars) generated sales of $592 billion and employed nearly 1 million people.
 This despite evidence from the Department of Justice's antitrust research group, which found in 2009 that state bans on manufacturer direct sales of vehicles are unequivocally bad for fueling economic engines such as competition and innovation.
When you see governments stepping in to protect broken business models you know something powerful is happening.  And I think we can all agree that the current car dealer model is broken.  The constant haggling, salespeople who are seemingly un-empowered and need to check with their manager hiding in a backroom, large markups, hidden fees and limited options are all hallmarks of the current car buying process.

This isn't the first time that a company has entered a market dominated by middlemen with a direct sales model and bested everyone in market share.  You need to look no further than Geico in the insurance market to see how this game plays out.  In the mid-90's they went all-in on a direct model that included a massive advertising blitz and they tripled their market share during that period to become the third largest car insurance company, taking a significant chunk of the market share from leaders State Farm and Allstate.

Thursday, February 13, 2014

Jeter's Example

Picture from the Derek Jeter Facebook page

On February 12, 2014 Derek Jeter announced his retirement after the coming season via a Facebook message that read almost as a love story between a great baseball player and the team, city and sport that gave him so much.  The well written announcement received accolades across the media landscape for its truly representative expression of who Derek Jeter is - its true authentic voice.  It was a rare gem in a world that has carefully crafted PR spun messages that have been written by PR firms and reviewed by 13 attorneys prior to submitting to the world.  It was a real breath of fresh air.  There was no fear behind the message.  No concerns about legacy and trying to shape, with a final message, about how history should view Derek Jeter.  Just a heartfelt expression of a full career and a desire to grow in different ways as a person.

Read the full statement here:

Tuesday, February 11, 2014

We Need Your Help...

With a brief survey.  We would be incredibly grateful if you could please take 2 minutes to answer a few questions and provide some valuable input into our book project.

Monday, January 6, 2014

This is One Way to be Brave

A friend who is reviewing my book proposal read one of my chapters and it made him think of this classic Monty Python skit.

I suppose this is one way to be brave, although I don't advocate physical violence.

Thursday, January 2, 2014

Vita-mix's Identity Leads to a Brave Future

Today I talk about a brand that I have some recent personal experience with - Vita-mix.  This experience started after my wife brought home a blender that I later found out cost hundreds of dollars (the Montel Williams version).  I'll admit I wasn't aware of Vita-mix prior to that and since that time it seems the buzz has only grown louder among our friends and acquaintances.

While the technology behind the blender are impressive (blades spinning at 240mph and the conical shape of the container that creates a vortex that emulsifies food), it was another innovation started by its founder, William Grover "Papa" Barnard, that impacts how we buy and sell today.  According to a recent BusinessWeek article,
"It took some fast talking to convince customers that turning solid foods into liquids was a good idea. But Barnard was a skilled salesman and found that people were more likely to buy his blender if they could see it demonstrated. So one evening in 1949, he donned a pinstriped, double-breasted suit and headed to the downtown Cleveland studios of WEWS, where he showed off the “home miracles of the Vita-Mix machine” on live television in what became the first infomercial."
Barnard must have been brave at the time to sell the way he did.  No one had ever bought significant air time with a specific pitch to sell a product and many of the aspects of his pitch can be found in infomercials today.

The most impressive thing about Vitamix is how it stuck to an identity over decades, when growth was stagnant, when only hippies were its customers (Ads from this period suggest its blenders were marketed mainly in fringe publications to mystical, earth-worshiping hippies.), when people had never heard of blenders or turning solid food into liquids.  They could have been impatient, and if they were chasing fast growth or being driven by shareholder interests they might have.  Instead they stuck with who they are...
“We never gave up,” Berg says. “We were doing research, publications, explaining how a high-performance blender can improve your health. The Internet had a big impact. We, as an organization, have stayed with our same vision, but all these different trends have made it easier for people to realize how big an impact a Vitamix can have.”
It wasn't without a moment of weakness that led Vita-mix to experiment with products that, while still serving is primary purpose of healthy lifestyles, were outside the primary thrust of the product categories they were known for.
"The decades of focusing on health, even as most Americans were not, produced some lean years and curious choices. During the ’70s and ’80s, Vitamix experimented with selling exercise bikes, trampolines, and juicers."
But at the end they are still the company that Barnard founded.  Jodi Berg, Barnard's great granddaughter, runs the company as CEO today.  Each of the five company CEOs including Berg and Barnard were family members and it is still family owned today.  Jodi sums up this unwavering identity best in this quote from the magazine,
“As you can imagine, we endured decades of the whole world going through phases of convenience, fast food, pieces and parts, extract the nutrients and give it to me in a pill, stick it in my cereal, the Atkins diet, and all the rest. But we never lost sight of that vision of helping people eat healthier.”
So why is knowing who you are as an organization and staying true to that identity so important in a business context, and more importantly in the context of being brave?  Because being brave starts with having a clear and concise idea of the organizational identity that answers questions such as; what markets do we serve, who are our customers, how do we compete best for those customers, what kind of skills and people are necessary to accomplish our goals, what is our financial philosophy, and what work environment allows our people to be their best?  Vita-mix can answer these questions clearly and it shows.

To learn more about their full company history, visit the Vita-mix company history page.