Commerce Matters: Review of Cheap: The High Cost of Discount Culture

27-May-2010Published in: Ladue News Author: Benjamin Ola. Akande

Who doesn't like a bargain? Saving money on everything from a pair of designer jeans slashed to half price to driving miles for gas a few pennies cheaper gives consumers a thrill and the sense of accomplishment. But what is the real cost of those bargains? That's the question posed by author Ellen Ruppel Shell in her book Cheap: The High Cost of Discount Culture. And according to Shell, we are all overpaying.

Cheap starts with our nation's celebration of getting a good deal, like buying Manhattan for a few dollars worth of beads. But unlike land in those early days, everything else that was bartered or bought was usually in short supply and cost too much for the average American. Then mass production exploded and our population shifted from farms to cities. People needed goods, and convenience came into play. Still our parents and grandparents, the author says, were able to find pretty good value at a pretty good price. It's this distinction that we've lost. Consumers now equate low price with value. And the return on that investment, the book explores, is a lifetime of disposable goods.

To exemplify this new disposable lifestyle, the author spotlights the furniture manufacturer Ikea, which she says designs to a price. The company sets a price for a table, has artisans design it, then squeezes suppliers to get their products at the lowest possible cost. Inevitably corners are cut in labor, in concern for environmental issues, and of course in quality. The end result is a stylish table for little money that will last just long enough for the next trendy table to be designed.

The author says this disposable mindset makes consumers 'deal-prone.' We shop for the lowest price no matter whether we are getting the best value. It doesn't make sense, she admits, when we think about it rationally. But when we see something on sale for half off, we are more likely to buy it even if it doesn't fit our needs. Deep down we know this. But more important, manufacturers and retailers know it and price accordingly. Now, more than 30 percent of all goods are sold at discount compared to 30 years ago because marketers know a deal will get our attention and could compel us to buy.

So what are we really getting in our search for the deepest discounts? From a social responsibility standpoint, the author pinpoints violations of human rights and the environment in the food industry, as well as child labor abuses in manufacturing. From a common sense position, the author argues we are not doing ourselves any favors by buying cheap then discarding poorly made or not needed goods.

The power to turning around our love of a great deal, the author writes, is in our own wallets. We must demand to know the true costs of what we want to buy and then muster the strength to walk away without a purchase. That may be easier said than done for a country still reeling from a recession and historically high unemployment. But according to the author, in the long run, "releasing our country's ties from the low-price imperative could be priceless."

Commerce Matters – Review of Love is the Killer App

25-November-2010Published in: Ladue News

I admit to being skeptical when receiving Tim Sander's book, Love Is A Killer App, from a friend. A lot has happened in the eight years since its publication, and I was sure that applying Sander's philosophy of then to our post-recession economy now was going to be dated. Then I read a few pages to find that what the author discovered in 2002 through experience is a universal truth: "Men and women across the country were all trying desperately to understand how to maintain their value as professionals in the face of rapidly changing times." Welcome to 2010, Mr. Sander. You got my attention.

It turns out this author's insight into business is timeless. In fact, you could say some of it dates back to the Golden Rule. In Love Is The Killer App, the author outlines the benefits in business of being a "lovecat" over a tiger, a sharer over a hoarder. What's a lovecat, you ask? According to Sander, it's "a businessperson known as a promoter of business growth." They are filled with great information, a network of contacts they have turned into relationships and a personal quality that a computer can never have: compassion. And what do they do with their knowledge, network and compassion? They pay it forward so the three values can drive their career to the top.

Before you start singing Kumbaya thinking this is just a "feel good" book urging us to go into our next business deal without a competitive edge, think again. The author argues this is our competitive edge. "My book really isn't about succumbing to the enemy or not competing," Sander said in an interview, "because I say in the book that bizlove is the sensible sharing of intangibles to promote other people's growth." That, he argues, is what separates the smart businessman or woman from the rest of the business pack.

We do this first by gaining the knowledge others need. Comparing the brain to a piggy bank, the author insists we must feed it to accumulate anything. If we don't, we are stopping in the middle of a race, waiting for our competition to catch up. Veteran business leaders with enviable resumes and years of experience can find themselves in second place because they don't equate knowledge-added as value-added in the business world.

The author's promotion of the power of networking is one I've embraced for years. Those in your network can do almost anything for you, from finding your next job to making your current one more successful. But in addition to collecting networking members, the author encourages connecting them with others. Linking your contacts with each other can not only solve their immediate problems, it can also strengthen your business bond. Who doesn't want to go the extra mile for someone who has already helped them?

Of course this dovetails into the author's final value: compassion. Unlike the first two, everyone already has this resource at their disposal. They just need to use it. Showing appreciation to colleagues through words or actions, verbally supporting ideas and growth, even the simple act of eye contact shows commitment created by compassion. Being human doesn't make someone less business-like. It creates an experience people remember. And that's good for business.

Commerce Matters: Review of Money for Nothing

23-December-2010Published in: Ladue News Section: Commerce Matters 

What's the cost of not doing your job? A letter of reprimand? An unpaid leave? Dismissal? What, if by failing to do what's expected of you, you cost shareholders $60, $90 or more than $200 billion? That's just what happened to Merrill Lynch, Fannie Mae and Citigroup when their corporate boards dropped the ball. Unfortunately, according to the authors of Money for Nothing: How the Failure of Corporate Boards is Ruining American Business and Costing Us Trillions, unless we change our game plan, that ball is still loose.

Money for Nothing examines how company directors and their negligence played such a big part in the globe's recent economic meltdown. The book also argues that unless things change, the same is destined to happen again, costing consumers even more.

As authors John Gillespie and David Zweig explain, it starts at the core. Many who are entrusted to act for the benefit of the company are simply warming board meeting seats. And instead of monitoring risks, providing judgment and supervising managers, company directors (who can receive more than $500,000 for their time) serve only as 'yes' men and women for the CEO.

"Some CEOs want sports and entertainment celebrities with little or no relevant experience in the boardroom," Gillespie recently told Fortune magazine. "They add a kind of prestige, ask few questions and are especially prone to agreeing with management." And this, the authors say, is one of the biggest problems with the system. The lack of checks and balances of the board, and not necessarily from legal regulations, is what's causing carelessness.

In the end, the authors offer 24 ways they think boardroom culture could be changed for the better. They include imposing term limits for directors, limiting directors to serving on three or fewer boards, allowing the removal of directors through the call of an 'extraordinary general meeting' and vote, and banning CEOs from also serving as board chairs.

Right now, the authors say shame is the biggest thing controlling boards, and the release of embarrassing information is the only consistent way of getting something done. What if we started enforcing the rules of good business when it comes to our investments and demand more from the boards who influence the companies we put our money into? Fifty-seven million U.S. households own stock. The money lost by companies going bankrupt and going to CEOs in the form of outrageous pay packages should infuriate us all. The authors say we need to direct our anger at insisting on reform and making sure boards hired to protect our money do just that.

"Ignorance by many enables abuse by a few," they say. Yes, boards play the single most important role in making sure companies and the country's financial future remain bright. But they will only succeed if we make them.

Review of The E-Myth Revisited

A lot has happened in the 15 years since CEO and bestselling author Michael Gerber first published The E-Myth. More people are blazing an entrepreneurial trail and starting their own business. Some make the move with the belief they hold the business plans to the next Wal-Mart or Starbucks. Others yearn to be their own boss. And a few feel forced to hang out a company shingle due to the economy and their current employment outlook. The unfortunate truth is that this year alone, more than a million people in the U.S. will start a business. And in the end, according to the Department of Commerce, at least 40 percent of them will be forced to close shop within the first year.

The problem, the author argues, revolves around the 'e,' or entrepreneurial myth. This falsehood is based on an assumption by those starting out that they will prosper with the formula Desire + $$$ = Success. Nothing, according to Gerber, is further from the truth. In reality, most businesses fail because the entrepreneur is not a visionary at all. Most businesses are started by the workers, the doers and the technicians behind a specific job. Without a true entrepreneurial outlook or 'wonder,' these business owners will find themselves not working for another, but instead working themselves to death in an attempt to start their new life. They don't ask and force an answer to the most important entrepreneurial question, I wonder what my business will be like?

If they do, then the independent business owner must prepare to face the phases of any business' life (infancy, adolescence, beyond the comfort zone, maturity and the entrepreneurial perspective). Gerber says successful business owners embrace these phases and establish a business development process, which gives them needed tools to face and sometimes pre-empt the world full of changes each business confronts. The real 'secret sauce' of success then comes in the operating system of the new business, which enables a company to differentiate itself from others. The standout brands who excel at this are McDonald's, Dell Computer and FedEx. Each has found that uniqueness and has moved fast forward. Rest assured, the author says, any business can do it, and do it well. According to Gerber, this turn-key system is nothing more than an organized methodology for "producing their result in their way for their reason" and solving a genuine problem with a genuine solution.

Every year at this time, I have the honor of addressing the outstanding graduates of Webster University's Walker School of Business. This year, I reminded the Class of 2011 that if they learned anything while at Webster, I hope they learned that learning is not a destination: It's a lifelong journey. Such is the lesson of The E-Myth Revisited and in the end, what we can learn from it is how to keep learning and wondering, so any of us can achieve the right business attitude needed to succeed.

Review of Indispensable and Unexpected Lessons from CEOs

6-Jul-2011 Do you have what it takes to occupy the corner office? Does residency require myriad academic degrees, a history of moneymaking successes or maybe a family friend on the board? The truth, according to author Adam Bryant in his new book, The Corner Office: Indispensable and Unexpected Lessons from CEOs, is that most leaders share some specific qualities or 'X factors' any of us could develop. And better yet, obtaining them will make anyone a great manager or better employee.

The author, a Sunday weekly featured columnist for The New York Times, compiles more than 70 interviews with CEOs, such as Alan Mulally of Ford Motor Company, Ursula Burns at Xerox, John Donahoe at eBay and Steve Ballmer at Microsoft. Bryant's book offers first-person accounts that resonate with lessons from leaders at all levels of industry-leading organizations. These leaders offer rich and entertaining lessons learned in the school of hard knocks.

All of Bryant's interviewees share five unique qualities: passionate curiosity, battle-hardened confidence, team smarts, simple mind-set and fearlessness. These characteristics, the author contends, make the difference between getting that corner office or being relegated to a room without a view.

As an educator, I love that the first quality of great CEOs is that they are the best students in the room. In front of employees, customers and shareholders, they exude self-reliance to spare. But behind the scenes, Bryant writes, all the CEOs admitted to an intense curiosity for how things work and what others know. Their ability to ask the right question was more important to them than being the smartest guy in the room. The inquisitiveness of being a lifelong learner is an important attribute of leading that is often overlooked. Every leader can learn from Bryant's assessment of a corner office holder's 'team smarts.' Who among us doesn't need the ability to know who has their back, who is a playmaker or who will make a great assist? Successful CEOs know how their employees will act and more importantly, they know how they will react. Team smarts, Bryant writes, is the skill of recognizing the players a team needs, then bringing them into the huddle around a common goal. But my favorite stories are those about fearlessness. Risk-takers are those who do more than they're told to do. They knock things off-kilter, not because they want to hurt a good thing, but just to see if 'good' can be made better. This is central to those in the corner office and it is what they look for in others. They eat change for breakfast and are still hungry.

Author Bryant admits that learning to lead is hard and although the title, perks and power might seem alluring, we all know the job is not for everyone. According to The Corner Office, getting to a company's top spot is not something out of reach for anyone. This is a great summer read and you are sure to find some pertinent takeaways to put to use when you get back into the office.