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Wednesday, October 31, 2007

The Spirit of Competition

My wife will be the first to admit that I have an internet problem. There are all sorts of junkies out there in this world and my addiction is the internet. I've always been an avid reader/news hound and the internet provides me the opportunity to read constantly about sports, business, Lindsey and Brittney - there is always something new to read (damn you ESPN and Perez Hilton!). Because of this, I have an attention span that provides me at the most 7 - 12 minutes of focus at any given time. This is not great for productivity but it great for coming up with ideas to blog about which fortunately for me is now part of my job.

What has caught my attention this week in news is not the overwhelming number of stories about my beloved Red Sox winning the World Series, interest rate cuts or surging oil prices. Rather, I've been intrigued by the clamor in the sport pages regarding the New England Patriots willful disregard for their opponents feelings. Last Sunday the Patriots beat the Redskins by 45 points which has continued a season long trend of domination. To date they have beat their opponents by an average of 25.5 points per game! Some of the opponents have begun speaking out as they consider this "classless" and "disrespectful to the game". These comments have led to many sportswriters questioning whether its right for the Patriots to show no mercy.

From a business perspective, I've found this to be a rather interesting point of view. Baseball and football each generate annual revenues of $6 billion so I think there is a universal agreement that sports are a business. Those writing about the sanctity of the game and the need to show respect to the game appear to live in an era that likely never existed. When it costs $200 to go to a game its probably fair to say that the romanticism of the game as a pursuit of sportsmanship should no longer be part of the sporting dialog. Yet, for some reason sports still has this stereotype and the press - defenders of all that is sacred still expect our sports teams to abide by a mythical unwritten code of conduct.

Isn't it time for the American public to recognize what games really are - another operational element of the strategic plan that this particular business executes (appropriate word for the way the Patriots are playing). After all, can you imagine what the reaction from Wall Street would be if it was perceived or confirmed that a company held back its performance because in the spirit of competition it didn't want to disrespect its competitors! Stock prices would drop, CEO's would be fired and the press would be writing article after article about how America is losing its killer instinct and will soon be a province of China. Fortunately, ass Apple has demonstrated with its domination of the music player business and Microsoft has demonstrated with its inability to extended its domination of the desktop into other businesses we live in a business environment where businesses are not only expected to destroy their competition, but are penalized for not doing so.

Given this reality, shouldn't twe be applauding and celebrating the Patriots domination and decimation of its competition? Shouldn't the press and the blogosphere be praising Belicheck and the Patriots for their ability to execute their business plan better than anybody else? Should we not begin to study the Patriots so we can learn what they do and apply their approach to other business sectors? Should we not recognize the Patriots for what they are - the best run sports business in America - a business that warrants to be mentioned in the same breath as other companies that have dominated their industry?

I believe its time to recognize the Patriots for what they are. Based on what I've seen of the season so far, I believe that the Patriots are now the model sports franchise because they understand completely that their job is not to embrace the spirit of competition but to crush it. We live in a world today where winning isn't good enough because a win likely means your competition lives to fight another day.

The Patriots provide a good lead in to our latest white paper topic which covers the concepts outlined in the book Blue Ocean Strategy. Those who embrace the book recognize that the goal is not to compete with your competition, but to make them irrelevant. We don't believe in spending time worrying about the competition because you can't control it and every moment spent worrying about what the competition is doing is a moment we are not focused on our business. Based on the results so far, it appears Belicheck and the Patriots agree. So, if you get the opportunity, read the white paper. And, if your interested in seeing how you can become more like the Patriots, give us a call and we'll help you build a plan to crush the spirit of competition!

Monday, October 22, 2007

In Praise of Jim

At the Vann Group we love Jim Collins. Some of our colleagues have gone so far as to call us "groupies" which makes us sound like we have pictures of the "Hedgehog Concept" in our lockers and send him our undergarments in the mail. We are not that crazy, but we are disciples of Collins and use both "Built to Last" and "Good to Great" as our Bible when it comes to building companies.

Consequently, Kevin and I were pretty excited on Thursday when we had the opportunity to hear Collins speak in person for the first time at the Turnaround Management Association (TMA) conference. While the conference was a disappointment, Collins was not. A very dynamic speaker, he was engaging and was able to relate his research to the challenges of the TMA. Some interesting points from his talk:
  1. Many of the "Good to Great" companies went through a crisis which served as the turning point from bad or mediocre to good to eventually great. He likened this to a "freeze, unfreeze, freeze" moment where a crisis allows for great introspection/reflection and requires an organization to unfreeze from what it was doing in the past. With the new knowledge learned, it again freezes its frame of reference which serves as the foundation for its new approach. Interestingly enough, we've seen this with some of our clients who have started to make the leap.
  2. His research found no correlation between executive compensation and shareholder returns. Excessive executive pay tends to lead to one thing: even more excessive pay, not increased shareholder value.
  3. His team has argued quite a bit about the role of leadership in companies. His team proved that a certain type of leadership (Level 5) was prevalent in all the great companies. The myth of the celebrity CEO is shattered.
Overall, the talk was focused on the tenants of good to great and the need to put into practice its concepts of disciplined people, disciplined thought and disciplined actions. For those of you who haven't read and learned about Collins research I would urge you to do so. If you've already read him - read it again - I started this weekend.

Collins also began to discuss his current research, which hopefully will be published soon. He has two research projects underway and hopefully near completion. These are:
  1. Companies that went from startup to greatness in environments characterized by turbulent disruption.
  2. Companies that went from great to good. Why do some great companies fail and others do not.
As you can imagine, we are looking forward to reading about both as they are both extremely timely topics in todays world. Hurry up and publish Jim!

Lastly, as to the TMA conference, we were rather disappointed. First, we were surprised at how few had read Collins even though its been a bestseller for years. We were curious as to how these people could be in business and not have read the seminal business books of the last ten years? The only logic we could find is that turnaround people revel in the flip side. They seem to like it when the world or business has bad turns - guess its because that is how they make money!

We like to make money on th flip side as well, so we can fully appreciate that. However, we were also taken aback by the content of the conference. Each of the learning sessions were roundtable discussions and all seemed to be focused on the point of view of equity providers/financial lenders, etc rather than turnaround experts. We were hoping to hear about trends and new approaches to turnaround management. Instead we heard about the challenges of being in the second lien position when a company gets into trouble.

What we did learn was common sense. Apparently, its not good to be the lender when you are financing deals that are overvalued. But, its really bad to be in a position other than the first especially in the big deals that have been driving the private equity craze of late. It turns out that using creative types of financing, providing little in the way of covenants and then packaging the loans into smaller pieces is not a good way to ensure that a lender has influence over the direction of a company - especially when it hits a bump in the road. Fortunately, we already knew that. Maybe if these guys had read Collins they might have a little more insight into a company besides its credit rating.

Monday, October 15, 2007

Loonys, Euros & Pounds Oh My

The first time I traveled outside the US was to Ireland in 2000. At the time, Ireland was still on their own currency and overall it was reasonably affordable for an American to buy a pint or two of Guinness. Over the years, I noticed the cost of my trips to Ireland and then to other places on the map continued to increase, but it wasn't anything overwhelming. This year, as I've seen my international travel grow I have also seen the cost of that travel increase significantly. Unfortunately, it isn't because I'm staying in nicer hotels or drinking better wine (maybe a little bit better) - rather its been a change in the US & world attitude towards the dollar - its value is weakening.

There has been much hand wringing over this precipitous drop of the dollar against most major currencies. As a write this morning from Belgium the Euro has hit its all time high ($1.42) against the dollar. I don't have the ability or interest in preaching about the pros/cons of currency policy as I only understand currency impacts on their most basic level. When I'm home, imported goods are cheaper and when I'm overseas everything is more expensive - including Guinness!

However, what does intrigue me and what I am beginning to devote some time to is understanding what opportunities can be derived from a weak dollar.I know it sounds contrarian to find an opportunity in weakness, but I am of the opinion that the weak dollar has the potential to be a positive change that can lead to a favorable outcome. Like most others I claim that I have read most of Thomas Friedman's modern day challenge to War & Peace, i.e. "The World is Flat "
regarding the globalization of commerce and virtually everything else. As anyone who has attempted to complete the book will tell you - its long. However, six months after reading it, I still think about it often and quote its concepts to my customers - there must be something to it. The basic message I derived from Friedman and where I see the business opportunity for the American entrepreneur is the basic tenet that competition is no longer the guy down the street or in the next state. It's just as likely coming from the individual or company from the other side of the world. If you believe Friedman you'll concur that those companies and individuals who grasp this concept and embrace it will thrive - everyone else will be left behind.

For many people this is a very disheartening realization. After all, we've all been inundated by the Cassandra's in the press overreacting to outsourcing (another topic to be covered later) of good American jobs (especially white collar jobs) to all these third world nations where the hourly wage doesn't buy a Jr. Whopper. But, what if the game changed and we as Americans had an opportunity to gain a pricing advantage because of the weakness of our currency? What if the goods that we still make here or our individual knowledge/skills suddenly were cheaper and more abundant than those available in Europe? Would we begin to look at outsourcing differently than we do today?

Consider the case of Magic Dave. Not too long ago, Dave was voted England's Children Entertainer of the Year - a very talented magician. Dave is a good friend of a very good friend so I've been blessed to have someone in the UK to call when I'm there. The last time I was in London I spoke to Dave and was complaining about the price of everything- after all a 2:1 ratio is not a good exchange rate; I couldn't afford the Jr. Whopper! It was during that conversation when Dave told me he was buying a lot of his magic props from the United States because the currency differences made it more economical to do so. Imagine - it was cheaper to buy and ship equipment from the US than to walk down the street to the local vendor in the UK!

At the time of my conversation the impact of this didn't register, but it did today when I spent $7 for a bottle of water. Then it occurred to me - what happens when you have the goods/services/talent to sell, the technology to do so efficiently/effectively and seamlessly regardless of location and a currency rate that is favorable enough to overcome the logistic costs of providing those goods & services in other parts of the world?
It appears that we have this situation today and to me that means an opportunity to take advantage of potentially exists. After all, if Dave is a typical small business owner in England (sans the magic duck & wand) who has found it more economical and practical to buy the materials he needs for his business over the internet from a US company rather than the magic shop down the street, I've got to assume that the opportunity exists for others to do the same. Dave could be your customer if you went looking for him.

This post has been a bit long, but what I want to get across to everyone - especially those who think their opportunity in their local markets is limited is that there is significant potential to grow your business if you are willing to expand your world view. Even if you live in a one stop-light town, understanding that your market is global will allow you to conduct business anywhere. Clearly the opportunity will vary for every company, but whether you are a graphic artist or a manufacturer, there is a good chance that somewhere in Europe there is a Magic Dave wanting to buy what you sell!

Its scary, but if we open our eyes, we may find that a flat world is a very exciting place for those of us who are prepared to embrace it. Its a brave new world - are you ready to up for it?
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As an FYI - those of you in Massachusetts may want to check out the Massachusetts Export Center at Holyoke Community College. Its a great resource for getting started in exporting.

Thursday, October 4, 2007

Dear Boss, Its All About Me

A couple of days late, but I finally got around to reading this past Sunday's issue of the Boston Globe Magazine. If you haven't read it yet, the cover story - "In Praise of Arrogance" should serve as an eye opener for any business owner who is having challenges hiring employees and will likely need to hire the crop of twenty-somethings entering the workforce.

The article covers the realities of "the entitlement generation' - those born after 1970 (although I would prefer they move that to at least 1974) and their impact on the country/workforce. This is the generation of "
upstarts at the office who put their feet on their desks, voice their opinions frequently and loudly at meetings, and always volunteer – nay, expect – to take charge of the most interesting projects. They are smart, brash, even arrogant, and endowed with a commanding sense of entitlement. These young people were raised on a daily regimen of praise and flattery from their baby boomer parents and from teachers who embraced a self-esteem-boosting curriculum."

What makes this article interesting is that it expresses the opinon that this type of behavior will breed a new generation of entrepeneurs and that narcissistic behavior is exactly what America needs to stay competitive. To a certain degree I can concur with that - some of the most successful entrepreneurs that i know have a pretty strong narcissistic streak to them. After all, you have to have a high degree of confidence in yourself to take these types of risks. Fortunately, America always seems to breed a the right number of entrepreneurs who can create game breaking innovations that lead to companies that employ the rest.

And theres the rub that the authors fail to address. As Judge Smails aptly put it in Caddyshack "
the world needs ditch diggers to". What happens when there is an entire generation that has no interest in digging ditches as a starting point but instead believes that they are entitled to the corner office and the big paycheck? If the whole is greater than the sum of the parts and the parts have the mentality that "it would be hard compromising with a lot of different people whom I might clash with," how exactly are we as a nation going to build companies that have the size, scope and talent to compete globally?

America has always celebrated the power and uniqueness of the individual as that is one of the defining characteristics that make us a successful country. But I can't help but wonder if this generations inability to overcome its sense of entitlement will tip the balance of the golden mean and set us back at the very time we need to leap ahead.

Philosophical ponderings aside, the concern for all of us today is how do we deal with this generation and integrate them into our current businesses. I don't know the exact answers but I do know that if any company is going to thrive in the near future its going to have to change its approach to work and management of its employees. At the very least its going to require a strong set of managers who have the skills to lead. Fortunately, we do know how to build leaders!

Tuesday, October 2, 2007

Welcome to Web 2.0!

Our first foray onto the World Wide Web was six years ago when we launched our initial site. It contained dozens of pages detailing the sixteen different services we offered, the numerous companies that comprised the Vann Group, our biographies and our business philosophies. It was an opportunity to provide a vast amount of information to virtually anybody in the world without killing thousands of trees and enriching the post office thirty two cents at a time.

Despite this potential the site went unchanged for five years. Our business transitioned - people came and went, addresses changed (twice) and our services evolved but our site never kept up with the times. The potential of delivering our message to the world went unrecognized as we used the site the same way most businesses have used the yellow pages; as a glorified way to provide contact information. Sadly, this was the fate of many of the early sites on the web.

What we didn’t realize then is that the web can be so much more. Over the past year you’ve likely heard terms such as blog, wiki, podcasts, RSS feeds and social networks but haven’t figured out what exactly they are. These are the tools of web 2.0, which allow a site to go from a static placeholder to a platform that serves as the centerpiece of a Company or individuals communication efforts. Some say they are revolutionary and others say its just an extension of what is already been done. Either way, their growth into the mainstream makes them tools to be reckoned with.

Over the past two years we’ve been pushing our clients to embrace innovation and to recognize the power of branding their business. In doing so we’ve advocated the need to utilize web 2.0 technologies as a key tool in these efforts. We’ve done this because we believe in their potential as a game changer for mid-market businesses. Then we looked at our website and our brand and realized we were not practicing what we preached.

Today I am pleased to announce that we are now practicing what we preach. We've just completed a brand new flagship piece (email me if you would like a copy). And, if you’ve come across this page it's likely because you just received an email announcing the launch of our new site. In addition to clarifying who we are and what we do, the site will now offer white papers, surveys, e-zines and a whole host of other downloadable resources that will allow us to provide business information that is timely and practical and focused on topics that matter today.

With the launch of this site we are also launching our first blog. The blog will allow us to communicate our thoughts and opinions and information in real time to our customers, referral sources and anyone else who stumbles upon us via a search engine. More importantly thanks to the interactive nature of the site it will enable you to communicate your thoughts and opinions easily with us as well. I have no idea what the topic of the blogs will be, but we plan on using our virtual soapbox as often as possible as we hope our insights into the world will generate some great dialog. At the very least it should be an interesting experiment.

We have no idea where this site will take us or whether or not it will be successful in serving as a communication platform. We hope that it will help grow and enhance the ever expanding Vann Group community. We also hope that it will provide a tangible benefit to our readers via the information we provide. With that being said, we know that regardless of the success or failure of this site in meeting the expectations we have set we must constantly try new things to improve our businesses. Otherwise our businesses will end up like our first web page - static and obsolete!

With that said, I invite you to take a look around our site. Please sign up for our monthly e-zine and also subscribe to this blog. You can do that by just clicking the RSS button at the top of the page. Clicking it will open you up to a whole new world of web 2.0 – just like Alice chasing the rabbit down the hole to Wonderland.