Our natural tendency is to grow our operations.

Is it possible that we should be shrinking them?

ATTRACT Opportunities Instead of Pursuing Them…

…Using Counter-Intuitive Thinking

Our natural tendency is to grow our existing operations.  We operate under the notion that what has worked for us in the past is the best approach for the future.  Often what we’ll discover is that while what we’ve been doing may have worked, it may not have worked well.  Here’s an example.

Mr. Eggett cites a candy manufacturer who discovered that his real strength was in creating new candies, not in producing them.  The candy manufacturer outsourced the production, sold his production facilities and aligned himself with a food distributor that needed a candy product.  The result? He grew his regional company to a national brand while shrinking his company’s operations.

It’s counter-intuitive, but when considering growth for the future take a look at:

• What your company does better than anyone else.
• What you have the most fun doing.
• Which aspects of your operation consistently disappoint your customers.
• Which areas of the operation give you the most headaches from an operational standpoint.
• Which companies excel at the things your company struggles with;  Mr. Eggett suggests that it could be a competitor who could become an ally.
• Which companies have a gap in their offerings that you can fill with your expertise.

Bring ideas like this to the table vis-a-vis your eclectic education and you’ll have others regularly seeking your counsel, inviting you onto their teams and involving you in their initiatives.  It’s another way to become INVALUABLE.

Attracting opportunities is only the beginning.  Visit www.pricingforprofitbook.com to discover how to get compensated well for the value you provide.  Enjoy!

If you’d like to receive a weekly email reminder with a link to The Invaluable Leader blog, please enter your email address and name in the left sidebar.  You’ll also get a free copy of Step 1 of the 7 Steps to Becoming INVALUABLE.   If you’d like me to address specific topics, please send me an email at dale@furtwengler.com.  Please share your experience with our readers by posting a comment.

A reader shares a news piece…

…touting counter-intuitive thinking.

My thanks to Christy Beckmann for bringing this piece to my attention.  It’s a November 14, 2009 New York Times article entitled “At Bloomberg, Modest Strategy to Rule The World,” written by Stephanie Clifford and Julie Creswell.

Christy was intrigued by the following quote.  “We need a broader audience,” says Daniel L. Doctoroff, Bloomberg’s president.  “The history of this company is you do the counterintuitive , countercylical thing.  It’s part of our DNA.”

Indeed, Bloomberg’s success stems from it’s financial information systems software called terminals that offer the quick, reliable financial data and analysis to the trading desks of Wall Street firms in formats not available elsewhere.  Bloomberg built a better mouse trap and have maintained their competitive advantage for nearly three decades.  And they did it using counter-intuitive thinking – by looking at financial information in a new light.

Does their new strategy “to be the world’s most influential news organization”  fit their counter-intuitive, countercyclical DNA?  On the surface it doesn’t seem so.  If anything Bloomberg may be on a slippery slope of financial decline.  Why?  Here are the insights Clifford and Creswell provided:

• The vast majority of Bloomberg’s $6.3 billion in revenue and nearly all of it’s profit comes from its financial information systems.
• In 2009 Bloomberg will see a drop in the number of terminals in use.
• Bloomberg feels the need for “a broader audience.”

Let’s explore each of these insights in greater detail.

The fact that nearly all of Bloomberg’s profits come from it’s terminals suggests that its media expansion efforts aren’t producing much, if anything, in the way of profits.  If that’s true Bloomberg is adding a lot of infrastructure cost with little return on its investment.  That’s not a financially sustainable business model.

Bloomberg’s core business is declining as evidenced by a decline in number of terminals in use.  Their desire to expand into other new coverage indicates that they don’t know what to do to fix this problem.  That’s not intended as a criticism.  All companies that enjoy tremendous success eventually face this dilemma.  The intuitive (not counter-intuitive) solution is to look for new lines of business.

Bloomberg is utilizing the intuitive approach by seeking “a broader audience.”  The fact that it is doing so at a time when the world seems to be devaluing news coverage is counter-intuitive.  What’s missing is an indication that Bloomberg has found a formula that will once again entice consumers to pay for that coverage.

While it is my sincere wish that the Bloomberg organization continue to enjoy tremendous success, I have serious doubts that their new strategy will allow that to happen.

To view the rest of the New York Times article visit http://www.nytimes.com/2009/11/15/business/media/15bloom.html?_r=2&scp=1&sq=bloomberg%20rule%20the%20world&st=cse

The 7 Steps to Becoming INVALUABLE program is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 5, Contrarian Mindset, contrast Bloomberg’s previous counter-intuitive business strategy with its more intuitive new strategy.  For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/7steps.htm.

If you’d like to receive a weekly email reminder with a link to The Invaluable Leader blog or if you’d like me to address specific topics, please send me an email at dale@furtwengler.com.  Please share your experience with our readers by posting a comment.

For examples of how counter-intuitive thinking can help your break the bonds of industry pricing visit my Pricing for Profit blog at www.pricingforprofitbook.com.  Enjoy!

This one comes under the heading…

…what were they thinking?

As I was scrambling from one appointment to another I realized I hadn’t eaten so I stopped at a fast-food franchise that will remain nameless.  I wanted something quick – a burger and small shake.  Here’s the exchange that took place at the counter.

• “I’d like a cheeseburger and small chocolate shake.”
• “Sir, if you add fries to your order you’ll save money.”
• “I don’t want fries; I’m clogging enough arteries with the cheeseburger and shake.”
• “Sir, if you add fries you’ll save $1.70.  You don’t have to eat them, just order them.”

I couldn’t believe what I was hearing.  They were lowering their price to give me something I didn’t want and increasing their costs to boot.  Ouch!  Ouch!

Apparently it’s counter-intuitive, but driving up costs and reducing your price at the same time isn’t an effective business model.   Giving customers a discount to take something they don’t even want is even more ludicrous.  It would seem that the intent was to help their customers feel that they were getting more for their dollar.  Even that’s a questionable goal if you’re already providing good value, which they were.  I, frankly, couldn’t find a worthwhile reason for this “pricing strategy.”

If you’re going to give up some of your price to entice a customer to try something, make sure it’s something they want or something they might not normally try.  Otherwise you’re flushing profits down the drain.  Then limit the savings to only the first order.  Once they’ve sampled your wares and like them, let them pay full price.

You’re probably wondering whether or not I took the fries.  I did and I left them on the table as the counterperson suggested.  Was that the right thing to do?  Economically, for me, only in the short-run.  Here are some other considerations?

I trained them to continue inappropriate and ineffective behavior by taking their offer.  I wasted resources (the fries, oil, energy, equipment, packaging and labor that went into preparing them).  Not to mention the costs of removing my garbage, taking it to the dump and the impact on the environment.  When I add all this up, did my actions cost me more in the long run than that immediate savings?  Probably.  Would I do it again?

Absolutely not.  I was obviously part of the problem, not the solution.

I’m not into self-flagellation.  My point in highlighting my failing is threefold.  One is to let you know that no matter how adept we get at counter-intuitive thinking, our humanity will trip us up occasionally.  Second, there are long-term gains to be realized when we evaluate our contributions to really bizarre experiences.  Finally, I hope that you’ll learn from my mistakes and avoid some of the long-term costs we’re all incurring for very small, short-run savings.

The 7 Steps to Becoming INVALUABLE program is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 7, Evaluate Opportunities, to show you how the absence of an effective approach to evaluating opportunities can lead to some ludicrous “pricing strategies.”  I also used Step 1, Contributory Negligence, to demonstrate my contribution to the problem – or at least it’s perpetuation.  Finally, I used Step 5, Contrarian Mindset, to help you see that short-term savings can be very expensive.  For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/7steps.htm.

If you’d like to receive a weekly email reminder with a link to The Invaluable Leader blog or if you’d like me to address specific topics, please send me an email at dale@furtwengler.com.  Please share your experience with our readers by posting a comment.

Good news – My latest book, Pricing for Profit, is going to be released 9.9.09 in the United States, Canada, U.K., Italy, France, Germany and the Netherlands.  Prepublication orders are being taken at amazon.com and barnesandnoble.com. Enjoy!

Dale is an internationally-acclaimed author whose work is recommended by the University of Glasgow, University of New South Wales and the Australian Institute of Management.

Are they appropriate?

If so, when? 

Recently President Obama set salary caps for executives in organizations getting bailout money.  I’m not a fan of salary caps.  My theory is that if I agree to allow caps on others’ salaries I have to be prepared to accept them myself.  I’m not willing to do that.

Having said that, sometimes it takes a slap upside the head to get peoples’ attention.  I think that’s where we are now.  It’s appropriate to send a reminder to business “leaders” who have lost sight of the fact that:

1. They contributed to the problems they and we face
2. They don’t have right to be exempt from the pain and suffering their actions cause
3. Economic rebounds and revenue growth rely heavily on large numbers of people being employed
4. That compassion is not only its own reward, it lays the groundwork for a brighter future for both those showing and receiving compassion

Salary caps are a way to send that message.  It’s not, and should not be, a permanent solution; but it is a powerful wake up call.

As managers and leaders our natural tendency is to set expectations for others and hold them accountable to those expectations, then forget to subject ourselves to those same standards and same scrutiny. 

It’s counter-intuitive, but each of us needs someone with authority or influence to remind us when we’ve lost sight of reality – when we’re applying different standards to those around us than we are to ourselves.  That’s what I believe President Obama is doing with the salary caps.  I applaud his action.

Invaluable Leader readers would love to hear your thoughts on this topic; please share your wisdom with us by posting a comment.  If there are topics you’d like me to address, send me an email at dale@furtwengler.com.