https://www.eqjournal.org/?paged=21
Should Ottawa Allow Chickens in Residential Areas?
Posted on
Thursday 10 June 2010
To find out the answer to that question, I asked someone who
has experience in the matter—my son, Andrew, who lives in Canberra
(Australia).
I asked him how his neighbours reacted to his hen house in their
quiet suburban neighbourhood. Were they opposed? Here’s his answer:
“Quite the opposite the neighbours delighted in it. One neighbour
would trade me cucumbers/etc. for eggs and the other would bring their
daughter over to play with them because she loved animals and they
didn’t have any. I had 3-4 hens at any given moment and they make
terrific pets as well as productive members of our household.
Here’s how it worked for us:
1. Feed the chooks scraps and a bit of feed,
2. Eat their eggs,
3. Trade surplus eggs to neighbours for stuff they grow,
4. Put chook plop on the veggie patch,
5. Eat the veggies or trade them to still other neighbours,
6. Feed the chooks scraps…
= virtuous cycle.
Andrew Firestone, Department of Finance & Deregulation, Government of Australia, Canberra, Australia, June 2010.”
Prof Bruce
ps. since we are on the subject of chickens, here is a joke from Ving Rhames:
‘Why did the chicken kill itself? To get to the other side.‘
Prof Bruce @ 7:49 am
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Livable Cities and Neo-Urbanism
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Delivering Profitability—A Review of Zappos.com CEO Tony Hsieh’s New Book
Posted on
Monday 7 June 2010
For the first three quarters of my advance copy of the book Delivering Happiness (Hachette Books, June 2010, https://www.deliveringhappinessbook.com)
by Zappos.com CEO Tony Hsieh (pronounced ‘Shay’), I felt like this was
going to be the 3rd book I have ever read that, if I could have, I would
have been its author. The other two are: The Cryptonomicon (a rip
roaring WWII adventure story with a contemporary connection written by
Neal Stephenson) and Home from Nowhere (a journalist’s view of the poor
planning decisions made since WWII that have practically ruined our
urban spaces, by James Howard Kunstler). But alas, the last quarter of
the book changed my mind.
It was as if all the core values that Hsieh credits for the
extraordinary growth of Zappos.com, an online shoe retailer with
practically zero sales in 1999, $1.6 million in 2000, $8.6 million in
2001, $32 million in 2002 and > $1 billion by 2008, were just
shibboleths waiting to be tossed aside at the first sign of recession.
In November 2008, Zappos.com announced across the board HR cuts of
8%. Remember this is a company that had just crossed the $1 billion
threshold in sales and it was a point in time when the recession had
just been officially recognized and declared. Here you have a CEO and a
company that set out ten core values—1. providing WOW service, 2.
embracing change, 3. being a fun place to work and a little bit weird,
4. being creative, open minded and having a sense of adventure, 5.
promoting growth and learning amongst employees and as an organization,
6. having honest relationships not only between staff members but with
customers and suppliers too, 7. creating a positive team environment and
a family spirit, 8. doing more with less, 9. being passionate and 10.
being a bit humble—deciding to use the recession as political cover for
layoffs, just like a lot of other large companies were doing at the
time.
If the book has stopped at p. 190, I would have written about
Zappos.com’s marvelous corporate culture and how it was intrinsically
linked to their remarkable growth—with all ten of their core values
being ones that I believe could benefit most organizations—both
for-profit ones and not-for-profits alike. But on p. 191, Zappos.com
starts to behave like any other bottom-line driven corporation—trying to
maximize short term profits so they can get the highest price possible
in a sale of the company that would, in fact, take place the following
year— Zappos.com was sold to Amazon for $1.2 billion in 2009. I see the
(hard-hearted) hand of Sequoia Capital (a Menlo Park, California VC
firm) behind all this.
Most of these bottom-line focused VCs only want one thing—to maximize
their shareholders’ value. For other stakeholders like hard working,
passionate, laid-off Zappos.com employees—tough luck. (Just in case you
think this is an American phenomenon, it is not. CEOs of major Canadian
corporations like, say, a major telecommunications firm, have been known
to under-invest in their networks as well as lay off many employees to
goose short term profits and their stock price to (try to) get the best
price from a sale of the company and for their personal stock options.
If, as CEO, the only strategy you can come up with is to sell the
company, you need to resign and let someone else with more imagination
and guts take over.)
If you look at the typical Zappos.com employee, not surprisingly they
all look like they belong to Tony Hsieh’s age cohort. So having ‘fun
and being a little bit weird’ might be just the tonic for a startup but
as the company and the employees mature, it might all be a bit much to
maintain; it can get old, fast, so to speak.
Without question, Hsieh’s number one message in his book is that top
notch customer service (CS) is a core competency and a big part of
Zappos.com’s business model and success. I have argued for a long time
that CS is a profit centre not a cost centre. The cost of acquiring a
new customer is often so high that by far the more important task is to
retain your existing client base plus sell more to them.
Zappos.com does not outsource its high touch call centre operations.
They employ reps that have not only a high IQ but, more importantly,
they have a high EQ—Emotional Quotient. According to Daniel Goleman,
Emotional Intelligence (from his book of the same name) accounts for 75%
of the performance of an employee or manager with 25% explained by IQ
and everything else. For CEOs, the ratio is even higher.
Their call centre reps do not have a script that they must follow,
they get real training on how to think on their feet and they are
empowered to do whatever it takes to ensure total customer satisfaction.
Hsieh realizes that the telephone is a way to have at least one
meaningful interaction with a client and call centre reps are not
measured by how many calls they handle in a day which would lead them to
hustle each customer in a bid to get them off the phone and so to
incomplete solutions and unhappy clients.
A Zappos.com client is not looked at as a customer who is buying one
pair of shoes for $200 on this one occasion. She represents a lifetime
client who might buy shoes, handbags, work-out clothing and much
more—thousands of dollars worth of merchandise over a period of many
years.
So spending as much time as needed to WOW that client with, say,
overnight delivery at no extra charge, is a small investment with a
large ROI.
Compare that with my recent experience with a major credit card
company—I moved last year and wanted to change my home mailing address.
It took me five (!) calls over a period of one year to finally get my
address changed. The last call, I told the rep that this would be my
last call—if they simply couldn’t get the address changed, they would
never have to worry about it again. Despite being a member since 1985, I
would cancel the card.
They told me that their legacy computer systems were buggy, the
scripts that they were all forced to follow and the time limits placed
on their calls meant that some call centre reps put new addresses in
incorrectly but this time (!), it would be done right.
My last question to him was: “Am I the first customer of yours to ever move and have to change his address?”
It is amazing that it takes an upstart, online shoe store like
Zappos.com to show credit card companies, banks, cable companies, cell
phone firms, utilities, most government departments, the meaning of real
customer service and that this can be a core competency and a weapon to
use in the battle for corporate survival. But there it is.
Just like good product design, excellent customer service is hard to knock off or out source.
Tony Hsieh’s story gets even more interesting when he realizes in
2002/2003 his underlying business model for Zappos.com isn’t going to
work. They started the business using drop shipping as a key part of the
model. Drop shipping meant that they did not have to carry any
inventory which, of course, reduced the amount of capital required to
get Zappos.com off the ground. When an order came in for a pair of
shoes, the shoes were sent directly from one of their Vendors
(suppliers) directly to the customer.
There were two problems with this—first, they had no control over the
shipping of the product. If the wrong shoes shipped or they were
shipped late, Zappos.com got blamed. Second, the number of brands they
could offer was extremely limited because many Vendors didn’t want to
drop ship or they wouldn’t deal with any group that didn’t either stock
inventory or sell at retail or both.
Hsieh realized that in order to boost sales they would need to have a
much broader choice of product on their website and to do that they
would have to open at least one retail store plus their stock their own
warehouse. The only trouble was that this is a much more capital
intensive way to conduct business—funding for which they did not have at
that time.
So Tony did what all good poker players do at some point—he had to
decide to either go all in or fold. Fortunately (as it turned out), he
went all in, mortgaging or selling all his assets (including his prized
‘party loft’ condo in San Francisco) to put in the $2 million they
needed to either get Zappos.com across the chasm or fail.
After Hsieh’s all in bet, they opened a Kentucky warehouse near a
major UPS hub; their accuracy and on-time delivery shot up and, as more
Vendors came on board, the diversity of product on their website went
through the roof. The result was an explosion in sales—Hsieh had found
Zappos.com’s MMB (Magic Marketing Button).
In all enterprises, if you can not acquire clients and customers in a
cost effective way, your enterprise is doomed. Hsieh understood this
and solved the problem for Zappos.com. He also showed how important it
is to tweak your business model if something isn’t working; seemingly
small changes in his business model created a huge payoff which proves
that if you can GTBMR (Get the Business Model Right), the harder you
work the more money you’ll make. You might be surprised at how often the
reverse is true—lots of hard work but no pay off. As Sam Palmisano, CEO
of IBM has said:
“…with product innovation, it’s a certainty that your competition is
shortly going to copy what you have done. With business-model
innovation, though, if you can come up with a unique way of doing
things, it’s much tougher to react to.”
Turning to the acquisition of Zappos.com by Amazon, I actually found
Jeff Bezos’ YouTube video comments about that more authentic and perhaps
more important; I recommend you view it if you have 8 minutes and 10
seconds to spare: https://www.youtube.com/watch?v=-hxX_Q5CnaA.
Amazon CEO Bezos modestly tells us that he only knows five things:
1. Obsess over customers;
2. Invent on behalf of customers and clients;
3. Think long term (in the order of five to seven years: as long as a
new initiative benefits customers, it’s OK if the payoff is somewhat
down the road for your enterprise);
4. Develop a unique corporate culture;
5. It’s always Day 1 of your future: there’s always more you can do for
your customers, more invention and innovation to be done on their behalf
plus more ways to obsess over them.
These are the values that Jeff brings to Amazon plus the involvements
he has elsewhere and they create a value proposition and a business
model that are hard to knock off.
I think these five things that Bezos shares with us will have greater
longevity than the ten Zappos.com core values. Of course, my views may
be shaped by my Canadian values that stress peace, order and good
government over the American view that the pursuit of happiness is the
sine qua non of life.
Nevertheless, Delivering Happiness will go into the bibliography for
courses I teach including Entrepreneurialist Culture at the Telfer
School of Management. I just wish I didn’t feel let down by the creeping
notion that somewhere in the brilliant story of Zappos.com, there lies,
at its heart, a hidden hypocrisy.
Professor Bruce M. Firestone, Entrepreneur-in-Residence, Telfer
School of Management, University of Ottawa, Founder, Ottawa Senators,
Executive Director, Exploriem.org, Broker, Partners Advantage GMAC.
www.EQJournal.org.
Postscript 1: I think Hsieh’s emphasis on making every phone
conversation between a Zappos.com employee and a customer (or supplier) a
meaningful one is a really important lesson. He mentions that only 5%
of their customers actually need to call the company before they place
an order. But what is likely happening is that most of their new clients
are calling at least once.
For anyone thinking of starting a website-based firm, your call
centre is a core competency, should not be outsourced and you could do
worse than spend some time at Zappos.com University (yes, Zappos.com
will give you a tour of their facilities (this is free) and you can now
take courses in the Zappos.com way of doing things (these are not
free)).
An online travel and tour agency I know, started out with the idea
that folks would always and only book online. They felt that by selling
direct to the public, flying direct to holiday destinations and using a
scalable Internet presence (front end and back end), they would undercut
their competition and their value proposition would be so obvious that
all they had to do was stand back and watch traffic on their website
zoom up. It was not a success until they finally broke down (i.e.,
tweaked their business model!) and staffed a call centre with people who
had no scripts and who had actually visited the places they were trying
to sell tours to.
Their sales took off—remember: people like to buy from people they
like and trust. Email, online forms, browser based apps, iPhone apps,
what have you, are not highly trusted forms of commerce. You need the
human touch first.
So instead, potential customers call in, get some reassurance and
then either hang up and book online themselves or, at least for their
first time, have the call centre reps walk them through booking their
trips online. The good news? Many of their clients, after the first
experience, did not need to use the call centre for their second, third,
… vacations. So you can convert clients to use a web-based service,
just not all at once and upfront.
Now let me tell you a funny story that Jeff Cavanagh from Thomas Cavanagh Construction related to me a few years ago.
“Hey, Jeff, do you have a Blackberry?” I asked.
“No, Bruce, I got me a Strawberry instead.”
“What’s a Strawberry? I haven’t heard of a smart phone called the ‘Strawberry’.”
“Well, it’s this here little black notebook of mine where I write down all the things I gotta do with this little pencil.”
“But don’t you miss not having email, your calendar and a bunch of apps on your cell phone?”
“Nope. Look at it this way. Let’s you and me suppose that Sir
Alexander Graham Bell had invented email instead of the telephone and
that his patent in 1876 was for email not voice communications. And
let’s further assume that voice did not become possible until Tim
Berners-Lee invented the Web in 1991. So we reverse the order of
invention, OK?”
“Sure.”
“Then imagine the conversation you and I might be having today. It
might go like this: ‘Did you see the new thing that just came out—it’s
called a telephone. You can get someone on the other end and you can
actually hear what they are saying. You can pick up nuances in their
voices, you can laugh together, you can plan together, you can negotiate
and you can do it all in real time. It’s almost as good as being there.
No more waiting, sometimes days, for someone to answer an email. No
more misunderstandings because you were trying to be funny and it fell
flat in written form. Say you want something done urgently, you can
actually get some action by impressing upon someone the importance of
what you are saying by raising or lowering your voice—people are good at
picking up tonality on this new fangled thing…’”
Tony Hsieh (and Jeff Cavanagh) understand that the next best thing to
a F2F with a customer or supplier or colleague is a phone call not an
email, a Tweet, a Facebook message, a fax or an IM… You should
understand that too.
Postscript 2: I think Tony Hsieh’s marketing strategy for his new
book is fabulous. Part of his marketing was to offer influential
bloggers a free, advance copy of his book. All they had to do was apply.
So I did. Then when the book arrived (as promised), I got a surprise,
I received two copies. This is part of the Zappos.com philosophy: WOW
the client by surprising him or her (on the upside).
So what did I do with my extra copy? I tweeted that I had an extra cc
and the first person to respond would get it, also for free. One of my
former students, JP Chartier, was on the ball and snapped it up in a few
seconds.
The only thing bloggers who received their free (two) copies had to
promise to do was to do a write up or review on the book on its official
launch date—June 7th, 2010. (I am posting this as we speak—it’s finally
June 7th.)
In addition to putting this review on my blog (www.EQJournal.org), I also did a review for OBJ, Ottawa Business Journal, (https://www.obj.ca/Opinion/Bruce-Firestone/2010-05-18/article-1120213/Zappos:-Core-values-or-no-values%3F/1) so Hsieh got his money’s worth of PR from me but, I must say, he earned it.
My prediction—Hsieh’s book will make the NYT Best Seller list and the
cost of the campaign will be so small compared to the payoff that it
can qualify as GM, Guerrilla Marketing. Let’s assume the cost of the 2 x
paperbacks + the cost of shipping to Prof Bruce = $30. Let’s further
assume that Hsieh has received 5,000 requests and Hachette Books has
sent out 10,000 copies at a total cost of $300,000.
Let’s further assume that each blogger can reach 3,000 people. That
means that Tony Hsieh’s book will be seen on June 7th by 5,000 x 3,000
or 15 million people. His CPM (Cost per Thousand Views) will turn out to
be: $300,000/15,000 or $20. But wait, he sent out a 2nd surprise copy.
Let’s assume the 2nd copy generates a third more CPMs. So now the total
number of people reached rises to 20 million and his CPM drops to $15.
This is right in the range of what you might expect to pay per thousand
pairs of eyeballs for a decent quality magazine or higher end newspaper.
Advertising rates tend to vary between a low of $5 per thousand for,
say, bus boards to a range of $15 to $20 for magazines and as high as
$60 or even $80 for highly targeted, highly desirable demographics on
the Internet. (For more about marketing and CPMs, see: https://www.eqjournalblog.com/?p=622.)
But hold your horses again, are a thousand pair of eyeballs in a
general interest magazine worth the same as my followers on Twitter or
Facebook, the people who read my blog, folks who read my column in OBJ
either in the newspaper or online or my students who see the book in a
bibliography for some of my courses? Not even close. So the quality of
those 20,000,000 views and the buzz he will get from it are probably
much higher than the $15 per thousand he appears to be paying for it. So
Hsieh will get more value for his $300,000 than anything else I could
think of doing in terms of marketing the book, that’s why he has
probably penned a (worthwhile) best seller and that’s why innovative,
clever 36-year old Tony Hsieh is a billionaire and I’m a Prof.
Prof Bruce @ 5:25 am
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Value Differentiation and ‘Pixie Dust’
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Differentiated Value: Boosting Sales Success, Gross Profit and Efficiency
Posted on
Sunday 6 June 2010
There is no doubt that if a business can not differentiate
itself from its competition, it is in trouble. Differentiated Value (DV)
together with quantity produced will result in more dollars for an
organization.
We could express this in an equation as follows:
DV x q ≡ $.
Let’s look at an example of how this might work. Say you are in the
promotional products industry. Lots of competition, right? Plus it’s an
easy industry to enter. Hard to differentiate yourself.
So there you are pitching promotional products to (say) a security
company providing home and business monitoring, let’s call it Acme
Security. Acme is in competition with others; their primary competitors
are Knight Security and Beta Security.
Each of these companies offers virtually the same product: a basic
installation for a homeowner at ~ $800 plus a $25 per month monitoring
charge for 24/7 coverage. How can Acme (your potential client)
differentiate itself?
Well, Knight Security tells their clients that they should buy from
them because they are locally owned and that they can get Knight’s owner
on the phone at any time.
Both Acme and Beta pitch the fact that they are not locally owned; they are both publicly listed and have strong financials; they will be around for the long term, or so they say.
How can a homeowner make a meaningful choice? So far the arguments (and differentiators) are pretty weak.
You decide to pitch your client (Acme Security) using a new approach:
each of Acme’s sales reps are going to give their new clients two
premiums (incentives) to sign up: a) a digital camera plus a few CD ROMS
and b) a pre-printed pad. Their pitch now is quite different: “We
care about you. We want you to take a digital inventory of everything
you own and record it on these CDs. Plus we want you to write down
everything you buy (at least the major stuff) so in the event of a loss
(Heaven forbid), you have a record. Don’t forget to store your CDs and
your written record off-site in case of a fire…”
Now that is differentiation. (Note, you got to this point not by
thinking about your clients but by thinking about your clients’ clients.
We call this 2-D modeling and it pays big dividends on both the sales
side of your organization and on the supply side. You can read more
about 2-D and 3-D Biz Modeling at: https://www.eqjournalblog.com/?p=581.)
There is, however, another aspect to the above equation; perhaps it should be written like this:
DV x Q ≡ $ (the ‘q’ is capitalized)
or
DV x (M x v) ≡ $.
By capitalizing ‘q’, we are implying that there are other atomic
‘particles’ within this variable: these are M (for Mass) and v (for
velocity).
In other words, if you want to boost sales and profitability, you
need to have not only Differentiated Value but also heftier contracts
(higher prices on each contract or bidding on more massive contracts)
and then you need to be able to move more of them through your pipeline
faster.
Higher prices based on significant product differentiation and
bidding on larger contracts or jobs and moving them speedily through the
pipeline is a triple whammy for your business; it implies faster
revenue growth, higher margins and greater profitability.
For many organizations, it takes just as much work to prepare a bid
for a $10,000 order as for a $50,000 order, so why not pitch more
$50,000 orders?
Many organizations seem to take forever to get a proposal out the
door; they need to re-engineer their internal processes to get the
proposal writing stage down to a few days or even a few hours. If you
can do all four (faster proposals, higher prices, more massive bids,
greater differentiation), you can really make a difference in year-end
results.
Now let’s go back to Acme Security. How can we use our equation to predict future revenues and future GP (Gross Profit)?
Well, say that the average sale is $800 worth of equipment and $25 of
monitoring a month for five years: this produces revenues of $2,300
from an average customer. This is our ‘Mass’ variable. Now what if we
could change the client profile by changing the way we differentiate
ourselves resulting in the addition of more commercial establishments
and more upscale homes? Let’s say because you were better able to
differentiate your products and services that your average Mass is now
$1,200 worth of equipment and $35 worth of monthly monitoring for an
average of six years; your Mass variable has thus jumped to $3,720.
Let’s further assume that by changing your DV, you have also
increased the probability that you will make a sale from one in three
(i.e., previously you were just one of three nearly identical security
companies) to a success rate of 0.400, which would be a pretty good long
term success rate for most sales organizations.
The last assumption we will make is that Acme has invested time and
money in equipping their sales agents with portable PCs, tablets or
smartphones that are wirelessly connected to their network. They also
have a handheld printer or they can use their touch screens to get a
client signature on a contract. They are now able to produce quotes on
the spot and get them signed by the client immediately instead of having
to take down all the details, go back to the office to prepare an
Agreement and then go back to the client’s home or place of business to
ask for and get the deal executed. So Acme reps are capable of doing 15
presentations a week instead of 10.
For Acme at time = 1,
Revenues per rep = .333 x $2,300 x 10 = $7,659 per week.
But at time = 2,
Revenues per rep = .400 x $3,720 x 15 = $22,320 per week.
This type of re-engineered company really sees big changes; they tend
to be the fastest growing and most profitable companies on the Planet.
They are also usually great places to work: training is superb, wages
are above average and their technology the best.
Note these changes are coming from three sources: one is technology,
two is differentiating yourself from your competition and the other is
from re-engineering the sales process. Too many managers think that just
asking employees to work harder will produce these types of results;
all that will do is produce higher staff turnover.
DV can also affect Gross Profit Margins. For many industries, the way they calculate their prices looks like this:
Price = Cost/(1 – GPM).
So let’s say that Acme buys its remote equipment at a cost of $460
and they want to make a Gross Profit Margin (GPM) of 42.5%, thus they
will retail their equipment for:
$460/(1 – .425) or $800.
Now let’s further assume that because of the greater differentiation
they obtain due to their use of branded promotional items (digital
cameras (or disposables if the client prefers) and pre-printed pads),
this allows them to increase their GPM on equipment to 47.5%.
We’ll assume the GPM on monitoring is 50% and that it doesn’t change in the before and after case.
So Gross Profit is determined this way:
GP = Price – Cost = Price – Price(1 – GPM) = Price x GPM.
GP(t1) = .333 x ($800 x .425 + $1,500 x .5) x 10 = $3,629.70 per rep per week.
GP(t2) = .400 x ($1,200 x .475 + $2,520 x .5) x 15 = $10,980.00 per rep per week.
So in this case, Revenues per rep have increased by a factor of 2.9
and Gross Profit per rep has gone up by a slightly higher factor of
3.03; this is because Gross Profit Margins have increased somewhat
because of greater service differentiation.
People in government and in the not-for-profit sector often ask how
they can find a ‘magic button’, a button they can press and hit a money
gusher. But unfortunately, there is no magic money spigot out there.
Fundraising for not-for-profits is tough; getting sales for your
business is a slog; raising taxes for government operations is almost
always unpopular. People everywhere want to feel that they are getting
value for their money.
In any case, it seems you can never do enough to differentiate
yourself from the competition, to give your client enough good reasons
to buy from you or to contribute to a good cause or to not grumble about
taxes. First, fix your value proposition; after that, it’s just hard
work.
Prof Bruce
Ps. you can find a spreadsheet at: https://www.eqjournalblog.com/DifferentiatedValueAndGrossProfitMargin.xls.
This will help you calculate Gross Profit per Customer Rep and
understand the interplay between GP, GPM, DV, Costs and Profits.
Prof Bruce @ 11:57 am
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Rules? There are no rules in entrepreneurship.
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Value Differentiation and ‘Pixie Dust’
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Posted on
Sunday 30 May 2010
“Those mundane and tedious little things that, when done
exactly right, with the right kind of attention and intention, form in
their aggregate a distinctive essence, an evanescent quality that
distinguishes every great business you’ve ever done business with from
its more mediocre counterparts whose owners are satisfied to simply get
through the day,” Michael E. Gerber, The E Myth Revisited: Why Most
Small Businesses Don’t Work and What to Do About It, HarperCollins, NY.
1995.
It is the aim of many great manufacturing companies (starting with
Motorola in the 1980s) to remove substantially all error from both their
fabrication and business processes—their goal is to achieve six sigmas;
that is, an error or defect rate that is equal to or less than: (1 –
99.99966%). Looked at another way, this implies that only one in every
294,118 things that a six sigma company does is defective and has to be
either discarded or done again.
Now most service businesses can not possibly come close to matching a
fabrication company. After all, the latter repeat the same process over
and over again—giving them a chance to implement TQM (Total Quality
Management) and constant improvement. Service businesses tend to be far
too variable for the same type of systems and processes to be as
effective as this. But still one has to wonder: first, at what level are
service businesses currently operating and, second, how far they can
push the limits of quality control.
Anecdotally, I can tell you that I miss on average 1.5 meetings per
year; that is, every two years I simply forget, am late for or somehow
miss three scheduled meetings. I have learned over the years to forgive
myself and I ask others to forgive me too. When it happens, I simply
call up that person, apologize and then tell them that they are in a
special group—a small contingent.
You see I work 50 weeks per year, 5.5 days per week and do an average
of ~ 3.75 meetings per day. That means my personal error rate is
.1454545% which works out to a defect rate of 1 in 687.5. So if I
schedule a meeting with you and don’t show up, you are that one special
person out of nearly 700.
More importantly, that equals a personal sigma rating of a bit less
than 0.999 which is not bad and, in any event, is the best that I seem
capable of.
I never fire anyone for making a mistake; if I did that, I would fire
everyone including myself. What I can’t tolerate and have practically
zero patience for is when people make the same mistake over and over
again. So I would suggest that an error rate for a service business
process that is 1 – 0.999 or less would be satisfactory. You can see I
have a ways to go.
I have a kind of international scale that I keep in my head, based
simply on my experience. I think that service businesses like Disney
operate at a pretty high level and can deliver their products and
services in an effective and consistent manner. I would give them a 9.6
on my (arbitrary) International 0-10 Scale. I would give the Ottawa
Senators (a group I founded) a score of 7.5 or about the maximum that an
Ottawa-based company that sells largely into the local community can
achieve. There are limits on local companies simply because they can
never focus the resources on their activities that international firms
like Disney can.
But I suspect that the great majority of the service businesses I
work with in Ottawa operate at a score of less than 1. Let me tell you
why I think that.
Recently, one of our REALTOR teams ordered signs from a local firm
(lets call them Acme) that has been doing signs for us for quite a
while. This REALTOR team is made up of two salespeople, a married couple
(lets name them Bill and Betty). Recently, their business has been
booming: they signed up three new listings and it looked like they were
going to soon have four more. So they ordered ten new “FOR SALE” signs
from Acme—each sign has to have Bill on one side and Betty on the other.
It takes three or four business days to order signs, approve the
artwork and have them delivered. Yet when the signs arrived, it turned
out that the sign company had produced five signs with Bill on both
sides and five with Betty on both sides. Now obviously this is an
atrocious waste—to cover off each of their clients, Bill and Betty would
have to post two signs per property. I mean part of the reason for
being part of a team is that if people can’t reach Betty they can try
Bill and vice versa.
The sign company was good about it; they showed up the next day, took
back the defective signs and promised to put a rush on things.
Two days later, sure enough, they showed up with ten new signs, Bill
on one side and Betty on the other. Only problem was: they forgot to put
the grommets in and the signs were useless. Betty and Bill couldn’t
hang them. So out they came again, took them back and the next day, the
signs were done properly.
Now I suppose one might say this is a trivial problem; but not to
Betty and Bill and not to their clients who depend on them to sell their
properties on a timely basis. There is a human story behind each of
these transactions—people are moving to find work, they are downsizing,
they can no longer afford their homes and need to sell before the Bank
puts a POS (Power of Sale) on their home, they are moving to a
retirement residence, they have bought a condo, … It may seem trivial
but not to the individuals involved.
And it is certainly not trivial when you repeat this type of error throughout the company.
It took Bill and Betty more than two weeks to simply install “FOR
SALE” signs on their new listings, completely unacceptable to their
clients, many of whom were frantic by that point. (Even in the Internet
Age, signs are still one of the most important marketing tools that
REALTORS use.)
I think if service businesses in Ottawa (and elsewhere) actually
started measuring these things, they might find that their defect rate
is as high as 1 – 0.31, which means they are achieving a one-sigma level
of proficiency with an error rate that is, basically, equivalent to two
out of every three things they do are wrong (actually, it is 2 in 2.899
but at that point who cares, it’s pathetic.)
Recently, we have started to use more checklists. It turns out that
simple, easy-to-follow checklists are one of the most effective and
affordable ways to improve performance. You would think, for example,
that a surgeon or OR nurse would not have to be reminded to wash their
hands before operating on you but it turns out they do. Implementing a
simple checklist in hospitals has been show to cut down post operative
infection rates from around 10% to zero. That is a meaningful change.
Imagine if the Acme Sign Company had a checklist that said (among other things): “INSTALL GROMMETS BEFORE DELIVERY”.
If you can’t get your firm to operate at six sigmas, try for three.
The impact on your customer satisfaction level and retention rate will
be fantastic, not to mention the improvement to your bottom (and top)
lines.
Prof Bruce
ps. Don’t think checklists are important? Be glad that every pilot
and co-pilot, no matter how experienced, go over their checklists
before every takeoff and landing. Also, when a plane gets into trouble
in-flight, a checklist that is relevant to that emergency may save the
lives of everyone on board. (Astronauts, who train for their missions
for years, use checklists for practically everything. For example,
before they fired up the engine on their lunar module, you can be sure
they would have gone through their checklist. They only had one shot at
getting it right. You could do worse than follow their lead.)
pps. here are my simple calcs:
Six Sigma Processes
Six Sigmas 0.9999966
Error Rate 0.0000034
1 in 294,118
One Sigma 0.31
Error Rate 0.69
1 in 1.45
2 in 2.898550725 2
3 in 4.347826087 3
Weeks Worked 50 per year
Days Worked 275 per year 5.5 days per week
No. of Meetings 1031.25 per year 3.75 meetings per day
No. of Meetings Missed 1.5 per year
Error Rate 0.001454545
1 in 687.5
Sigmas 0.999
Prof Bruce @ 3:01 pm
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A Humorous, Yet Apt Description of What a Human Being Actually Is
Posted on
Sunday 30 May 2010
Here is a description (by author Neal Stephenson from his novel, Cyrptonomicon,
pp. 315/316) of what the corpus erectus of a human being is actually
made of. It is one of my favorite, laugh-out-loud paragraphs from that
WWII adventure story (which has a contemporary theme mixed in as well).
Next time you are in an important meeting and, if you are feeling a
bit intimidated by the attendees, think back to this blog post and
realize that folks are all put together pretty much the same way, have
the same feelings and worries and put their ‘pants on one leg at a time’
just like you do. It is also a reminder of what a miracle life is and
how powerful the human brain is:
“ The room contains a few dozen living human bodies, each one a big
sack of guts and fluids so highly compressed that it will squirt for a
few yards when pierced. Each one is built around an armature of 206
bones connected to each other by notoriously fault-prone joints that are
given to obnoxious creaking, grinding, and popping noises when they are
in other than pristine condition. This structure is draped with
throbbing steak, inflated with clenching air sacks, and pierced by a
Gordian sewer filled with burbling acid and compressed gas and asquirt
with vile enzymes and solvents produced by many dark, gamy nuggets of
genetically programmed meat strung along its length. Slugs of dissolving
food are forced down this sloppy labyrinth by serialized convulsions,
decaying into gas, liquid, and solid matter which must be regularly
vented to the outside lest the owner go toxic and drop dead. Spherical,
gel-packed cameras swivel in mucus-greased ball joints. Infinite
phalanxes of cilia beat back invading particles, encapsulate them in goo
for later disposal. In each body a centrally located muscle flails away
at an eternal circulating torrent of pressurized gravy. And yet,
despite all of this, not one of these bodies makes a single sound at any
time during the Sultan’s speech. It is a marvel that can only be
explained by the power of brain over body, and, in turn, by the power of
cultural conditioning over the brain.”
General George Patten, “Old Blood and Guts” (from: sfcmac.files.wordpress.com/2008/11/patton-field-commander.jpg)
Prof Bruce
Prof Bruce @ 7:35 am
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2017 Celebration—National Boardwalk
Posted on
Thursday 27 May 2010
A Proposal
Canada will celebrate its 150th Anniversary in 2017. As part of the
celebration of that historic event, Canada could construct a National
Boardwalk to link together the marvelous institutions that dot the
shoreline of the Ottawa River such as the Canadian War Museum, the
Canadian Museum of Civilization, the Parliamentary Precinct, National
Gallery of Canada, the Royal Canadian Mint along with other attractions
such as the Byward Market, Rideau Falls, Rideau Canal, University of
Ottawa and much more.
Here is a look at what, if constructed, would become the largest boardwalk in the world:
(The National Boardwalk is shown in brown above.)
The current world record holder for the longest boardwalk opened on
June 26, 1870 in Atlantic City, New Jersey and currently runs 4 ½ miles
in length. The new, longest Boardwalk in the world would link the
cities of Ottawa and Gatineau, the Provinces of Ontario and Quebec and
open in 2017, the 150th Anniversary of Canada’s founding.
Points Connected:
Ottawa River
CDN War Museum
Lebreton Flats
Chaudierre Island
Victoria Island
Supreme Court of Canada
Library and Archives Canada
Garden of the Provinces and Territories
Ottawa River Bicycle Path
CDN Museum of Civilization
Parliament Hill
Fairmont Chateau Laurier
Ottawa Rowing Club
The Royal CDN Mint
Rideau Falls
Rockcliffe Pavilion
Rideau Canal
University of Ottawa
Major’s Hill Park
Nepean Point
Notre-Dame Cathedral Basilica
Aga Khan Foundation
National Gallery of Canada
Royal CDN Mint
Byward Market
National Arts Centre
Green Island
Governor General’s Residence/Rideau Hall
Alexandria Bridge
Casino du Lac Leamy
Hilton Hotel
Plage du Lac Leamy
Gatineau River
Potential Length:
10 km +/-
Approximate Cost:
$2 million per mile (2007 est. for Milford, CT.)
~ $1.65 million per km (2010 est.)
~ $16.5 million + soft costs (30%) for a total of $21.45 million for the boardwalk (est.)
Other Opportunities:
The National Boardwalk would be built at public cost but proposals
from other parties to develop sites along the National Boardwalk might
be expected.
Possibilities exist to develop 3-season Pavilions. Pavilions could be
focused on (for example)—CDN arts, dance, concerts, film, festivals,
history, wine and foods, green and other tech, education, Provinces,
Territories, food and beverage, entertainment, etc.
Possible Season:
May Day to Thanksgiving Weekend
Spring—Summer—Fall (Closed in Winter)
Potential Transit:
In addition to pedestrian traffic, OC Transpo could be solicited to
operate a small electric trolley system along or next to the Boardwalk.
Lasting Legacy:
A National Boardwalk celebrating Canada and its people would be an
impressive and lasting legacy meandering along three of the most scenic
rivers in North America and connecting points of historic and national
importance. The National Boardwalk could last (as in the case of
Atlantic City and subject to regular maintenance) 150 years—until the
300th Anniversary of this nation.
Author:
Dr. Bruce M. Firestone, B. Eng. (Civil), M. Eng.-Sci., PhD.
Founder, Ottawa Senators
Entrepreneur-in-Residence, Telfer School of Management, University of Ottawa
Executive Director, Exploriem.org
Real Estate Broker and Mortgage Broker
Century 21 Explorer Realty Inc., Brokerage
Email: bruce.firestone @ century21.ca
Internet: www.OttawaRealEstateNews.com, www.century21.ca/bruce.firestone and www.Exploriem.org
Blog: https://www.eqjournalblog.com/
Twitter: https://twitter.com/ProfBruce
Date: May 27, 2010
Prof Bruce @ 11:10 am
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Data Backup and Storage—Paper Based Storage the Answer?
Posted on
Sunday 16 May 2010
Bokodes from MIT Media Labs Might Help
Introduction
Many people think that the late 20th Century and perhaps all of the
21st Century will be known some day in the future as the big
void—because this era will leave the fewest records of any humans to
live on the planet in the last 10,000 years of (mostly) recorded
history. Even our great ancestors from the Paleolithic era have left
behind cave paintings that, 30,000 years later, are still readable.
The e-media we rely on today to host most of our data, our art,
music, video and now film too, is inherently unstable; it can be fried
by the sun, magnetic or electrical fields, microwaves, heat sources and
so forth. Even without external disruption, they degrade anyway (despite
what Hard Drive, CD and DVD manufacturers say, their life useful
expectancy is probably in the order of ten years without significant
degradation or outright failure).
And then there is the problem of legacy systems. Imagine if you had
stored all your data on 8 track cassettes? It would be pretty hard to
find an 8 track reader today or perhaps the software you used to encode
the data is no longer viable.
It turns out that acid free paper stored in a humidity controlled
environment, away from the sun and the elements, lasts longest. For
example, the Dead Sea Scrolls are more than 2,000 years old and still
readable. Written on parchment (with some written on papyrus), they are
the oldest known surviving biblical documents.
Try to achieve that with a Flash memory chip.
Even analog media like film stock or microfilm, some of it less than
40 years old, suffers significant degradation in terms of its sound,
colour and visual acuity and requires extensive and expensive reworking
to preserve it. The best way to preserve classic films and other
important data is probably on paper in some type of digital form.
This is where a new product from MIT Media Lab, Bokodes, might prove useful.
A smartphone camera (plus some decoding software on your computer)
are all that is needed to capture the data stored in a Bokode chip. The
photo can be taken from a few feet away.
The Bokode is just 3 millimetres in diameter and can contain over 10
MB of data. It uses the angle of reflected light to encode an amazing
amount of information in a tiny piece of real estate.
Intended to replace barcodes, the Bokode might do a great deal more
than simply convey the price, origin and best before date of a product.
It could contain assembly instructions, a user manual, the chemistry of a
product, its ingredients and much more.
Another advantage of MIT Bokodes—they can be decoded using a
smartphone camera and some downloaded software so the infrastructure for
a rollout of the product and its widespread use are either already in
place or could be without much difficulty.
And the Bokode might be useful in at least two other ways: firstly,
to store information in a way that is stable and long term and,
secondly, to permit people to efficiently transmit large amounts of data
electronically, a replacement for or adjunct to ZIP files perhaps.
Bokode Analysis
Assuming that each Bokode contains 10 MB of data and that they can be
tightly packed on a single 8 and ½ by 11 (inch) piece of paper (losing
only 30% of the page to spacing and margins), you could store 59.7 GB of
data per page. That’s enough room for nearly 15,000 songs, 3 complete
films (films worth preserving) or more than 10,000 (typical) books.
Put another way, you could store all 18 million books in the Library of Congress on just 1,754 Bokode pages.
Current MIT estimates of the cost to produce each Bokode chip is
about 5 cents (on a volume basis). So each Bokode page might cost about
$300. Now for that price these days, you could store a TB of data on a
Hard Drive or nearly 17 times as much as a single Bokode page but again
you have the problem of long term viability. A piece of acid free paper
with Bokode optical chips on it might last a great deal longer. What
value do you put on a viable copy of the Wizard of Oz, 500 years from
now?
What makes the Bokode potentially attractive for longterm data
storage is the assumption that as long as you can see them, you can
strip the data from them; they rely solely on image processing and
require no power themselves. If Bokode chips are physically stable for
long periods, they should still be readable far into the future. Perhaps
if you coat each chip with amber, you could preserve them (in the right
environment) for as long as mosquitoes have been coated with amber and
preserved that way (as much as 150 million years.)
Mosquito in Amber
The calculations for the above can be downloaded from: https://www.eqjournalblog.com/BokodeMITMediaLabsDataStorage.xlsx. They are also reproduced below at the end of this essay.
Another interesting side effect of Bokodes is that a page of them in
image format with a decent resolution might only be .7 MB. Thus, if the
limit on attachment size for most email programs is say 10 MB, then you
could attach 14 Bokode pages to a single email. That means you are
transmitting more than 850 GB of data as an attachment to a single
email—which would be quite an efficient way to circulate data on the
Internet.
It would also be more secure since the data is in an image format.
MIT Media Lab could create a Bokode ecosystem much as Adobe did for
its PDF Writer and Reader. The Bokode Reader would be free for everyone
to download while MIT might charge a royalty on each Bokode Writer. So
you could perhaps write your entire data stream into Bokode images,
store them safely and efficiently and move them around (electronically)
quite effectively as well.
Conclusion
So maybe we need to reconsider what we are doing and relearn how to
create more permanent records of important work. Perhaps we should be
digging up historical artifacts, photographing them (as Bokodes of
course) and recording salient features and then putting them back in the
ground from which they came instead of in museums, no matter how
carefully stored.
Earthquakes, fires, a breakdown in civilization, an airplane or truck
crash carrying valuable artifacts, all manner of causes could scatter
or destroy the historical and geological record for all time.
We can not even solve a problem such as how to accurately communicate
with future generations over a geologically brief period of time such
as 10,000 years; all human languages evolve far too quickly to reliably
communicate over periods that are far shorter than this. We can not warn
future persons or beings that danger lurks within (for example that
they are approaching a nuclear waste depot) over this kind of time
period.
It’s been just 400 years since the death of William Shakespeare but
think of the change in the English language in that time. In another 400
years, no one except scholars will be able to read and understand
Bill’s plays and sonnets as written by the Bard. This is an intractable
problem.
Our civilization depends for its survival on the reliable, accurate
communication of human knowledge from one generation to the next. Humans
are uniquely unsuited to survive without these passed-along skills so
this is not a trivial issue. (See for example, TEAMWORK IN 10TH
MILLENNIUM BC, https://www.eqjournalblog.com/?p=862.)
So perhaps just as important as burying nuclear waste in deep salt
mines to manage that problem for 100,000 years or more, we should be
looking for places to safely store human records for the longterm using
various technologies and locations.
Prof Bruce
Ps. Yes, we try to make paper copy backups of most of the material we feel important enough to preserve.
Pps. Another thought: Bokodes could be used for jewelry. Imagine
giving your girlfriend or wife an amber encased Bokode on a pendant with
all your most important shared photos, letters, music and thoughts that
could stay in the family for 500 years and still be readable then.
Ppps. Divers recently found 230 year old, drinkable champagne. Where?
In your basement? No chance. 30 bottles from the Court of King Louis
XVI were discovered at the bottom of the Baltic where frigid and dark
waters preserved their contents. This demonstrates again that
preservation of human artifacts is almost certainly best done by Mother
Nature and not by human intervention. (See: https://news.discovery.com/history/shipwreck-230-year-old-champagne-discovered.html for the full story.)
Sources: Bloomberg Businessweek, May 16, 2010 and https://web.mit.edu/newsoffice/2009/barcodes-0724.html.
Bokode Spreadsheet:
Prof Bruce @ 7:30 am
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Entrepreneurship and Intrapreneurship in the Not-For-Profit Sector
Posted on
Monday 3 May 2010
(Speech to the Canadian Society of Association Executives, Ottawa, Canada. January 2008.)
I have been teaching Entrepreneurship and Intrapreneurship, first at
the Sprott School of Business and now at the Telfer School of Management
for eight years. I have also helped over 72 businesses get started in
that time of which 66 are still operating.
There are some common elements:
1. They have sound business models.
2. They have great people who work well in teams.
3. They set and achieve goals.
4. They use smart marketing (guerrilla marketing (and, today, social
media, ed.)) to obtain earned media and capture market share and mind
share.
5. They self capitalize (use bootstrap capital).
6. They acquire customers in a cost effective manner.
7. They are efficient users of capital.
8. They have strong differentiated value in their business model.
9. They often have strong (sometimes unconventional) mentors who really understand the above principles.
How many of these attributes are needed in the not-for-profit sector? I would argue that all of them are required.
Let’s start with people: humans are uniquely dependent on
each other. If you look at how human welfare has changed over the last
10,000 years, you can track an amazing increase from the first
formation of villages. Initially humans formed villages for mutual
protection but it wasn’t long before a group of people who were now
living together in close proximity realized that some were better at
hunting and some were better at flint knife carving. Pretty soon the
village was specializing: hunters were hunting and flint knife carvers
were spending most of their work time working with flint knives.
As a result, there was an explosion of GDP; so much so
that soon this primitive village had extra goods to trade so they did:
extra meat and flint knives (used for butchering, defense and starting a
fire) were being traded for textiles (clothing) with a neighboring
village that specialized in that. As a result, regional trading group
formed and human welfare took a quantum leap forward. (To read more
about team work, refer to: https://www.eqjournalblog.com/?p=862.)
To run a good business or Not-For-Profit Organization
today, you need to: a) get people working in teams, b) get the right
people doing what they are best at and c) give people the feeling that
they are part of something special.
I always find it sad that most middle aged people, when
you ask them what their favorite time of their lives was, almost always
refer to: “When I was on the High School Volley Ball team and we were
down by two sets to one and we came back to win the Provincial Finals…”
Why not feel that way, every day?
Now let’s look at goal setting. I am not a big believe in
plansà plans change as things change everyday. But goals do not. Set
your goals monthly, quarterly, yearly. Put up signs everywhere like:
N = ?
So let everyone in your organization know what your goals
are and visualize them. ‘N’ can be the number of sponsors, number of
persons helped…etc.
Humans are amazing at visualizing and achieving goals.
If you are a competitive skier, do you want to race 1st or 2ndà before
or after your competitor? After.
Humans are so good at this that they can beat the split times of a downhill race competitor by 1/100th of a second!
When I served as Vice Chair of the Canadian Internet
Registry Authority I set a goal for Canada to raise its share of the
Internet to 1,000,000 dot-CA domain names by 2006. Canada beat that goal
by one year. I wanted to set up “Doomsday” clocks in Ottawa, Montreal,
Toronto, Vancouver…etc. So people would see how many dot-CAs were
registered. I also wanted folks to be able to download a utility to
their websites that showed how many dot-CAs were registered in real
time—this provides a feedback loop. The more Canadians that could be
persuaded to use a dot-CA (as opposed to, say, a US-based dot-COM), the
more would choose to do so—a virtuous cycle. Let all of Canada share in
the goal of expanding Canada’s presence in cyberspace, the next
frontier.
Some members of the CIRA Board considered the number of
registered dot-CAs to be a ‘secret’ but goals that are secret are not
goals, they are secrets and you lose all of the power of human
aspiration, inspiration and visualization.
What is a business model and why should you have one?
A business model is not a business plan. Rather, it is
the engine of your organization; it describes the ecology of your
organization; who are your customers, and your customers’ customers and
who are your suppliers and you suppliers’ suppliers. It depicts
information flows in all directions and money flows in all directions
and it has an orthogonal dimension which is a marketing dimension: how
you connect with customers (hopefully in a cost effective manner).
One organization that I know a little about is Christie Lake Kids. This is how a business model for CLK might look:
Christie Lake Camp for Kids Sample Biz Model
Out of the $910 or so it takes to send a kid to Christie
Lake Kids Camp for ten days each summer, approximately $890 comes from
sponsorship and fundraising and just $20 from the parent or guardian.
Now these are kids who really need assistance. The only
way for the kids to get into the six year program (from ages 9 to 15) is
to be referred in by either the Police or by a social agency. But for
ten days a year they learn, social skills, wilderness skills and are
well fed. The CLK program has evolved and now continues year-round with
activities for the kids back in the city.
By examining the business model, you can see that CLK’s
suppliers are not homogeneous; they are socially concerned corporations
and enthusiastic individuals/ CEO’s, hockey fans even. You can begin to
see new relationships and new ways to market to your target audience
and ways to improve efficiency. No one wants to lend their support to
organizations that burn more than 50% of their funding in administration
or in acquiring that funding. You have to set a goal, let’s aim for,
say, 80% efficiency.
Now how do you reach your audience effectively? First of
all, you have to know who they are. Speaking for myself, if I have to go
to one more charity dinner, well, that is one more than I want to go
to. On the other hand, I participated in dragonboat racing for ten
years, which supported some good causes, was good fitness training and a
lot of fun in teams of 22 to 24 people!
So we know that people want to help, but they also want
to have fun. When CLK wanted to get CEO’s involved, they created a CEO
stone skipping challenge. To reach CEO’s they used lumpy mailà they
snail-mailed personal invitations with skipping stones in them. Almost
all of them got opened.
Everyone knows how to skip a stone and when you get CEO’s
to CLK camp and they see the incredible work being done for the kids,
that’s it, they are hooked and their wallets open. If you have ever
seen a CLK video, you would want to help them too.
We also take one of my suite-nights at Scotiabank Place
for a Sens game every year, print 1,000 tickets and raffle them off for
$10 per ticket. We can raise up to $10,000 for one hockey game for the
Kids and we do this using the network that CLK has in place—its
graduates, its friends, its sponsors, its suppliers, etc. If we give 100
people 10 tickets each to sell, it will get done!
You also have to know how to use earned media; Ryan
Anderson who now works at Fuel Industries was an amazing publicist for
Third Wall Theatre Troup. Third Wall is a professional theater group but
Ryan’s typical budget for each run was less than $500. But Third Wall
regularly sold out.
Let me give you an example, Ryan once sent out a media
release which went something like this: “CEO stabbed 11 times in board
room coop”. This release got widely picked up by radio, TV and print
media in Ottawa. What was Ryan publicizing? Well, Julius Caesar, of
course.
Now let’s look at self capitalization. You’ve all heard
the statement: “God only helps those who help themselves.” I teach my
entrepreneur students to use bootstrap capital. For Third Wall, presales
are a form of self capitalization. For CLK, completed entry forms with
cheques attached or credit card information appended for the canoe for
kids event is a form or bootstrap capital.
I am not a big believer in over reliance on governmental
funding. I had to laugh when, as a former founding director of the
Ottawa Art Gallery, I had to go before a City of Ottawa Committee
together with Mila Constantinidi, the Executive Director of the OAG, and
beg councillors not to cut the OAG”s grant, in five minutes or less.
With Ottawa facing a $90 million budget short fall, cutting the OAG by
$5,000 or some other Festival or worthy cause by $15,000 would do
practically nothing to solve the City’s budget woes, in fact it could
make it worseà noted urbanist Richard Florida has shown that cities that
cut their funding for the arts and for festivals and cities that don’t
tolerate or even celebrate diversity are cities that are not doing well
economicallyà they fail to attract top knowledge workers, and it is
those enterprises created by those knowledge workers that pay far more
in realty taxes to the city than they demand in services. Cities don’t
build schools and libraries or run social services or even collect
garbage for businesses! Also, the business mill rate is four times as
much as what residential taxpayers pay so the fiscal impact of
businesses is positive. By cutting funding for the arts, you probably
damage City revenues!
Self reliance and being creative on the fundraising side
of your business model is important but to really make any organization
work, you need great people. One of the things I stress is that people
who bring the skill set of an entrepreneur to an established
organization are very useful to have around. No one has the time to
baby-sit anyone anymore. We are all too busy for that. People who are
self starters; who can make 95-97% of the decisions themselves and know
which 3-5% of the decisions that they can’t or shouldn’t make themselves
are very valuable. Having said this, many organizations reject these
folks because they take initiative and because they don’t exactly fit a
mould. In my view, they do this much to their own detriment.
Make room for this new generation of intrapreneur in your
organization. As the baby boomers retire, bring in these people and let
them be part of the solution. And let them create new ideas, new ways
of doing things. My 18 year old son, Matthew, started working with me
around six months ago. The number of times he has said; “Gee Dad, if you
did “X” this way, maybe it would be better.” I can tell you that
successful organizations are never too proud to change if someone else
has found a better way to do things. Adopt best practices wherever they
are found, even if it is within your own organization and coming from
the younger members of your staff. Make them feel they are part of
something more important than themselves.
Thank you,
Dr. Bruce M. Firestone, B. Eng. (Civil), M. Eng.-Sci., PhD.,
Founder, Ottawa Senators
Entrepreneur-in-Residence, Telfer School of Management, University of Ottawa
Prof Bruce @ 7:09 am
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Rules? There are no rules in entrepreneurship.
and
Posted on
Sunday 2 May 2010
I found Amazon CEO Jeff Bezos’ insights (which he shares
with us on YouTube) about their recent acquisition of online shoe store
Zappos.com to be highly valuable advice for new enterprises.
In fact, I found his five points to be more authentic and perhaps
more important than the ten core values of the company he was acquiring,
which have garnered far more media attention.
I recommend you view Bezos’ video if you have 8 minutes and 10 seconds to spare: https://www.youtube.com/watch?v=-hxX_Q5CnaA.
If you don’t have the time, here is what Jeff (modestly) tells us are the only five things he knows:
1. Obsess over customers;
2. Invent on behalf of customers and clients;
3. Think long term (on the order of five to seven years: as long as a
new initiative benefits customers, it’s OK if the payoff is somewhat
down the road for your enterprise);
4. Develop a unique corporate culture;
5. It’s always Day 1 of your future: there’s always more you can do for
your customers, more invention and innovation to be done on their behalf
plus more ways to obsess over them.
Authentic, Modest Amazon CEO Jeff Bezos
These are the values that Bezos brings to Amazon plus the
involvements he has elsewhere and they create a value proposition and a
business model that are hard to knock off.
I think these five things that Bezos shares with us will have greater
longevity than the ten Zappos.com core values as enunciated by their
CEO Tony Hsieh, which I summarize below.
Zappos.com believes in:
1. providing WOW service,
2. embracing change,
3. being a fun place to work and a little bit weird,
4. being creative, open minded and having a sense of adventure,
5. promoting growth and learning amongst employees and as an organization,
6. having honest relationships not only between staff members but with customers and suppliers too,
7. creating a positive team environment and a family spirit,
8. doing more with less,
9. being passionate,
10. and, lastly, being a bit humble.
Innovative, Gutsy Zappos.com CEO Tony Hsieh
Not that these ten core corporate values are wrong or bad, it’s just
that some of them might be a bit gimmicky and could get old, fast*.
Of course, my views may be shaped by my Canadian values that stress peace, order and good government over the American view that the pursuit of happiness is the sine qua non of life.
Prof Bruce
* I wrote an article for OBJ on Zappos: Core values or no values? You can read that at: https://www.obj.ca/Opinion/Bruce-Firestone/2010-05-18/article-1120213/Zappos:-Core-values-or-no-values%3F/1.
Prof Bruce @ 9:42 am
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Rules? There are no rules in entrepreneurship.
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Go Green! Live Closer to Where You Work!
Posted on
Saturday 1 May 2010
A while ago, I was watching TV with my eldest daughter,
Rachel, and we caught a Rick Mercer commercial called the “One Tonne
Challenge”. Rachel turned to me after the commercial and asked: “How do I personally go about reducing my carbon footprint, Dad?”
That is one of the problems with well-meaning initiatives like
this—they get folks worked up about environmental issues but offer no
solutions. So I told Rachel I would think on the problem and come up
with an answer for her and her cohort.
It might have been more effective for Rick and his writing team to
give this some thought too before launching these commercials—history
shows that people who are alarmed about an issue but given no means of
addressing it become inured to cries for help or change. They give up
and treat each new entreaty as if it was coming from the ‘little boy who
cried wolf’.
The answer I gave Rachel—live close to where you work. If there is
one thing we can each do to lower our carbon footprint in a significant
way, this is it. It’s simple, easy to understand and, today, many cities
and towns are promoting this idea along with significant changes in
their urban planning and design principles. Cities like Ottawa make
densification (more people per sq. km.) and intensification (more mixing
together of different uses like CO (Commercial Office), CC (Community
Commercial, i.e., retail), I (Institutional) and R (Residential)) a
local priority. In fact, Ottawa has embedded this philosophy in its most
recent Official Plan (the document that guides the overall development
of the City).
By moving closer to where you work, you can reduce your greenhouse
gas emissions by more than 1.25 tonnes per annum, assuming you drive a
car with an engine size of ~ 1,500 cc and are currently driving 30 km,
one-way to work while your new residence is just 5 km. from your
workplace.
Plus GOING GREEN is not only friendly for the environment, it can
also be good for your wallet. By moving closer to where you work, not
only are you spending less money and time on transportation, but the
move itself could qualify you for a number of tax return deductions,
thus keeping more of your hard earned money in YOUR pocket.
These deductions apply to those who are employees, self employed and
even full time students (in the event that, say, you moved closer to
school).
Many of your moving expenses that are eligible for special tax
treatment include transportation and storage costs for household
effects, traveling expenses, meals, and temporary accommodation. You may
even qualify for deductions relating to the cost of canceling a lease,
legal fees, transfer taxes and even the cost of selling the home!
Furthermore, you save money from less wear and tear on your vehicle,
time savings from lower trip times plus increased productivity at work.
You also, of course, get to spend more time at home with your family. I
calculated these costs and balanced them against higher housing costs in
the inner city (as is the case in most Canadian cities (but not
necessarily US cities with their higher crime rates)). You can read that
analysis at: Urban Versus Suburban—https://www.eqjournalblog.com/?p=467.
(I wrote that article after selling our large 7-bedroom home in a
west end suburb of Ottawa in 2009 for a measly amount of money which
turned out to be less than our cost for the thing. That 7-bedroom home
and others like it on a golf course with a nanny suite, four outdoor
sheds, professionally designed gardens, in-ground pool, cedar closet,
gym, large, industrial-scale laundry room, multiple decks plus beaucoup
other features coupled with very high property taxes are practically
worthless in outer suburbia—no one wants these locations or monster
homes any more. A beat up, old bungalow or crappy split level in an
inner city location has more value. That article explains in economic
terms, why.)
With all the benefits of GOING GREEN (help the environment, save more
time for you and your family, save wear and tear on your vehicle,
reduce probability of a collision, improve your productivity and enjoy
greater flexibility in your schedule, and now tax incentives—to name a
few), moving closer to where you work has never made more sense.
You can determine the moving expenses you can claim (in Canada) by going here: https://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/219/menu-eng.html.
You can do good things for the Earth, your family, your job, your health and now your wallet by GOING GREEN!
Download our spreadsheet in .XLS format to calculate the approximate
amount of CO (2) you generate per annum by driving to and from work and
then figure out how much of a decrease you can cause by moving closer to
work. The spreadsheet will do most of the work for you: just select the
type of car you drive (or one that is closest to it in terms of engine
size), fill in your current (one-way) trip distance, then your proposed
new one-way trip distance, et voila, you can see how much your CO (2)
has decreased by each year.
Go get the spreadsheet here: https://www.old.dramatispersonae.org/images/GoGreenLiveCloserToWhereYouWorkb.xls
If you prefer to work with the spreadsheet in your browser, go here instead: https://public.sheet.zoho.com/public/profbruce/gogreenliveclosertowhereyouworkb
Now one of the quirks of the spreadsheet is that the larger your
engine, the more you save in terms of CO (2) emissions by moving closer
to where you work. If you drive a Bentley Brooklands, for example, you
can save 6 (!) tonnes of CO (2) per year by moving to within 5 km of
where you work (down from 30 km.) If you drive a Ford Fiesta, you only
save 1.27 tonnes. This is not an argument for buying larger cars. Think
about it this way—if you trade your Bentley for a Fiesta and move closer
to where you work, you can save 7 tonnes of CO (2) per year instead of 6
tonnes!
So Mr. Mercer, here is my challenge to you. Next time, give people
practical solutions, one or two examples of what they can do plus some
hope for a better future—that is what leaders do.
Prof Bruce
Postscript: full disclosure. Now it so happens, we help run a team of
REALTORS and there is no doubt that if everyone decided, say, in the
next couple of years to relocate closer to where they work, our group
would be a heck of a lot busier!
Prof Bruce @ 7:41 am
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Moon Shot Redux—A Thought Experiment
Posted on
Friday 30 April 2010
The Value of Lunar Real Estate, Revealed
Q. What is the one planetoid or planet in the solar system that
shares the Earth’s nice, comfortable, warm niche in the Solar System?
A. The Moon.
Introduction
“The moon is officially ranked as the Earth’s satellite, but
since it is relatively large and massive with a diameter of 3476 km and a
mass of 0.012 that of the Earth, it may better be regarded as a
companion planet,” Moore, Patrick and Tirion, Wil. Cambridge Guide
to Stars and Planets. United Kingdom: Reed International Books Limited,
1993: 23.
I recently wrote that for a space exploration program to be
scientifically sustainable, it must also be economically sustainable: https://www.eqjournalblog.com/?p=829.
I believe that President Obama missed a great opportunity recently to
redefine US policy for space and this will undoubtedly encourage other
nations, specifically the Chinese, to fill that gap. It is my opinion
that the first person likely to set foot on Mars will be Chinese. The
Americans have lost their guts.
But it is also my view that the first destination for a permanent outpost off-planet (after the ISS) is the Moon not Mars.
The Colors of the Moon
Some time ago, I asked the question: “What would make a Lunar colony
economically sustainable?” Somewhat tongue-in-cheek, I answered the
question with another question: “What if 1/6th gravity allowed elders to
leave 25 years longer, constrained chronic diseases and let folks
boogie like teenagers again?”
What if you could tell folks, 75 and over, that you had discovered
the Fountain of Youth … on the Moon where people could live to be 125.
What would people pay to have a happy, healthy lifestyle from 75 to 125?
How’s that for a value proposition?
I suspect that if you set up a retirement colony on the Moon, you
might get a lot of folks interested in that (under these assumptions).
This lead to a corollary question: “How could we arrive at an estimate
of the value of Lunar real estate?” Well, the old industry adage is:
Location, Location, Location or Location 3.
Fountain of Youth
What would the value of lunar real estate be under these circumstances and how would you go about realizing that value?
[KNOXVILLE, Tenn., Jan. 15 (UPI) – A U.S. astronomer says a newLarry Taylor, director of the Planetary Geosciences Institute at the
University of Tennessee, told National Geographic News the findings add
weight to the theory the moon formed from debris thrown off when a
Mars-size object collided with a young Earth.
“This is the most positive evidence so far that the moon contains a
core,” said Taylor. “It’s looking more like a planet every day.”
Taylor says the Earth’s moon is too big to be a moon.
“It’s huge compared to the moons we see around other planets, so it
has always been suspected that there was something strange in its
origin.”
The leading moon-creation theory is known as the “giant impact” or
“big whack” theory, NGN reported. It posits an object about the size of
Mars slammed into our planet very early in its formation, with some of
the debris aggregating into the moon.
The study involving rock samples from the Apollo 15 and Apollo 17
moon missions of the early 1970s appears in the journal Science.
Copyright 2007 by United Press International. All Rights Reserved.]
Calculating the Value of Lunar Real Estate
Here is how I might go about giving an approximate value to Lunar real estate:
Jan. 19, 2008 Lunar Colonization– “Live Forever” Valuation
Life Expectancy
On Earth 75 years Males
82 years Females
On Moon 125 years Males
132 years Females
Trip Cost $750,000 One way
Monthly Living Cost $15,000 Per month
Number of Elders 100,000,000
Monthly Revenue $1,500,000,000,000 Net, net, net rent
Annual Revenues $18,000,000,000,000
Capitalization rate 5.75%
Value of Lunar Real Estate $313,043,478,260,870.00
USA GDP Q3 2006 $13,322,600,000,000.00 (US Bureau of Commerce)
Value of Lunar Real Estate/USA GDP 23.50
Annual Revenues/USA GDP 1.35
(To download the spreadsheet in .xls format, go to: https://www.old.dramatispersonae.org/images/MoonShotReduxLunarColonizationLiveForever.xls)
So under these assumptions, transporting 100,000,000 elders and
others to the Moon and having them live there with a rent of $15,000 per
person per month triple net (that is net of all operating costs,
utilities and property taxes) would yield a value for all lunar real
estate of more than $300 trillion dollars. It would produce net rent of
$18 trillion dollars per annum or about 1.35 times the size of the US
economy (as measured in Q3 2006).
Now that’s big.
In addition, you, the owner of this Lunar playground for elders would
make money running the concessions: places for elders to eat and play.
Plus of course, there would be additional fees for travel back and forth
to Earth although, one would soon find that prolonged stays in a low
gravity environment would make it tough or impossible to return: the
skeletal structure would adapt to the Moon’s gravity; presumably your
spine would lengthen, you would have an extra spring in your step, you
could fly under your own (wing) power but, on Earth, you probably
couldn’t get up off the deck.
Children born on the Moon might all be the height of Shaquille O’Neill but they would be bean poles in comparison.
Lunar Day
The Lunar day is the time it would take the Moon to complete one full
rotation with respect to the Sun. Since one side of the Moon always
faces the Earth and the Moon rotates about the Earth in (approximately)
28 days, the lunar day is around four weeks. That means that daylight
will last for 14 consecutive earth-days followed by 14 consecutive
earth-days of night.
Earth Rise on the Moon
Since the Earth is moving about the Sun, the actual day/night periods
are a bit longer: around 14 and a half days. So people would have
plenty of time for work, play and sleep. A new cycle would arise for
human circadian rhythms.
The Terminator Line on the Moon
Real Estate and Energy Production
The diameter of the Moon is around 3,476 kilometers. That gives it a
surface area of approximately 37.8 million sq. kilometers about the size
of the US, Canada and Russia.
The nearside of the Moon (the side that always faces the Earth) has
most of the seas (mare) which are areas of lower elevation. There are
several basaltic mountain ranges presumably formed through impacts on
the Lunar surface or perhaps by earlier volcanic action. The far side of
the Moon is much smoother: only 2% of the far side is covered by maria
versus 31% of the nearside.
The dark side of the Moon should not be confused with the far side of
the Moon (i.e., the side that is never seen from earth.) The dark side
is simply the night side.
Areas at the Moon’s North pole appear to be continually illuminated
by the Sun at least during the northern hemisphere’s summer. There also
appear to be mountains that get eternal light because of the low axial
tilt of the Moon with respect to the Sun. These would presumably make
good locations for solar plants producing electricity for the colony.
Biosphere
Water* may be present on the Moon, brought there by comets and
meteoroids. It may remain frozen in deep craters that never receive any
direct light from the Sun.
(* Recent NASA estimates put the amount of water ice on the Moon at a minimum of 600 million metric tons. See: https://t.co/OgzTYv2. If we use that for the total
amount of available water ice and using a specific gravity of .92, we
could then support 500,000 men and women (185 lbs and 135 lbs each on
average, respectively, and doing 40 minutes of exercise per day in a
relatively cool environment) for 1,361 earth-years. If we had a
population of 100,000,000 instead, lunar water ice would only last for
6.8 years. See the spreadsheet: https://t.co/p5PcjQp. Ed, July 2011.)
Water is obviously important for its hydrogen and oxygen as well as its life giving properties.
Most Lunar colonization ideas suggest living in domes but why not put
a ‘Mylar’ bag around the Moon and create its own biosphere?
The biosphere on Earth is around 120,000 feet high (the distance to
near space) but given the smaller diameter of the Moon, perhaps a viable
biosphere could be created using a ceiling height to near space of
1/6th or 20,000 feet. This would require wrapping the Moon in a Mylar
balloon with a surface area of 38,041,889 sq. km.
Now one thing we know is that machines fail. So probably the only way
to have a sustainable Lunar colony is to have a sustainable biosphere.
Life has probably existed on Earth for 3.5 to 4 billion years: think about how unimaginably long that is.
Make it even easier: think about a pump, say a pump that you use at
your cottage to pump water out of your well. Let’s say it is a
submersible pump and it only gets used for a few months each year and
then is only turned on when you are washing the dishes, taking a shower,
flushing the toilet, what have you. What is the life expectancy of that
pump? Well, if you get 10 years out of it, you have done well.
The human pump (aka, the heart) pumps continuously (or you better
hope it does) for say 75 years at say 60 bps or 2,365,200,000 or more
than 2 billion times. For most people, it does so with very little
maintenance and a lot of abuse from stress, lack of exercise, too much
exercise, drinking, smoking, too much eating, eating the wrong stuff,
what have you.
Without question, biological agents are much more reliable than
mechanical ones. Nothing humans could create would rival a biosphere
that can keep organisms alive for 4 billion years: that is 2.92 trillion
sunrises and sunsets and it never failed. If it had, if the chain of
life had failed once, you and I wouldn’t be here.
Now how could one go about creating a biosphere that is self sustaining in the new colony?
One could support the Mylar bag surrounding the Moon with space
elevators which would also serve as transportation on and off the
surface.
The Space Elevator
Moon to Near Moon Orbit
You would need to compartmentalize the bio sphere in case one part of
the bag failed. It would also require multiple layers for redundancy in
the vertical dimension as well.
Then you would have to fill it up with gas (oxygen and nitrogen would be nice) probably imported from the asteroid belt.
Next you would have to see if you could coax the Lunar regolith to support plants, insects an animals.
Somehow, plants would have to adapt to a circadian rhythm of 14 days
of sunlight and then 14 days of darkness. And the heat balance has to
somehow work: between 14 day nights and 14 day days, this will take some
doing.
You would need to use the mare for seas and lakes: heat sinks. This
would also remove 33% of the surface of the planetoid from human
habitation.
Next you would have to contain humans in cities so the balance of the
lands could be wilderness and natural ecology zones with possibly some
farming (although that more than likely would be industrialized0. This
would absorb, (one would guess), 95% of the balance of the lands leaving
1,266,300 sq. km. for cities, towns, spaceports, parks and other human
activities.
The consolidated metropolitan area of NYC excluding its inland
waterways is around 10,500 sq. km. So the Moon could have 121 New York’s
according to this calculation. That would mean a total maximum
population of 969,736,100 or about 1/6th of the Earth’s current
population.
You would need to protect the biosphere from solar winds and since
the Moon does not have an appreciable magnetic field (probably lacking
the earth’s internal magneto generator to do that), the Mylar balloon
wrapping the planetoid would have to be coated to deflect harmful solar
irradiation.
Conclusion
Well, we can dream, can’t we? Did you know that pretty much every
square foot of the planet Earth is owned by someone? A few thousand
years ago, if you didn’t like your tribe anymore, you could collect your
family and move on. Now you can’t go anywhere without armed guards
asking for your passport and does that tube of toothpaste have
explosives in it?
We are trapped animals on a shrinking planet with fewer freedoms
every day. Bureaucrats keep themselves employed every day by thinking up
new laws and new rules and new legislation to ‘protect you’ and, of
course, to control you. You know, if you scratch the surface, most
people don’t really like their lives and are secretly hoping for a
change, maybe even a massive change.
Ever Feel Like Going Somewhere Else?
Planet Earth is ruled by the elites: big business, big media and big politics (see my essay on that at: https://www.old.dramatispersonae.org/PoliticsMediaBusiness.htm) and they use rules (enforced by Vogon-like entities, aka bureaucrats) to enforce them. Vogons look like this:
What Vogon Bureaucrats Really Look Like
But they cleverly disguise themselves to look more like this:
What Vogons Look Like on Earth
Only Antarctica is supposedly not owned by anyone but the signatories
of the Antarctic Treaty (12 countries: Argentina, Australia, Belgium,
Chile, France, Japan, New Zealand, Norway, South Africa, the USSR, the
United Kingdom and the United States) would show you the door pretty
quickly if you tried to move there and start your own tribe and build
your own nation. They would use armed force if necessary I am sure. They
are holding it in trust for all humanity but in reality, they are
probably holding it ‘in trust’ for their own use some day.
So really, there just isn’t anywhere to go except maybe up.
The first to get to the Moon will own a 313 trillion dollar real
estate asset which can grow to more than 3 quadrillion asset at full
maturity (i.e., when the population reaches its limit). May the best
person, win.
“Freedom, that is the worship word of the Yangs,” Original Star trek Episode.
Prof Bruce
Postscript 1: I put together a slideshow on this which you can download as a PPT file from: https://www.old.dramatispersonae.org/images/MoonShotRedux.ppt.
Postscript 2: We also have a YouTube video up at: https://www.youtube.com/watch?v=9crQK3ReJHY.
Prof Bruce @ 7:23 am
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Teamwork in the 10th Millennium B.C.
Posted on
Sunday 18 April 2010
(and the 20th Century)
Synergy is a fancy word for teamwork. According to Jane Jacobs all
human economic development stems from the development of villages, towns
and cities. It is by proximate co-habitation that we learn about each
others strengths and weaknesses and learn to share and divide tasks
according to individual skill sets.
This is what leaders do—they make sure that their teams are at their
best by placing individuals in a position where they can thrive and
succeed. You can not run a successful business larger than a one or two
person show that doesn’t have HR at or near the top of your priorities.
But many people have the view: “More pie for you means less for me.”
People fighting on Canada’s east coast at Burnt Church over lobster
quotas in the 1990s clearly believed this old economy saw and, maybe
they are right.
But it is possible that they aren’t.
Economic growth derives from a multiplying of options, from
specialization, from comparative advantage, from the development of
standards and, in the new economy, from network effects,
disintermediation and scalability.
Now let us go back in time to the land of Ugh, Nnn and Zll.
Ugh and Nnn in the 10th Millenium BC
In the land before time, the family of Ugh lived by themselves in the
savannas. Ugh was an expert antelope hunter providing his family with
four antelopes a month. His carving skills, however, were poor,
producing only one set of flint knives per month. A mile away, the
family of Nnn is hungrier; Nnn is a good flint knife producer, producing
three sets of flint knives per month but only bagging one antelope.
The families of Ugh and Nnn decide to co-locate to form a village, at
first, for the protection of both. By co-locating and forming the first
primitive village, they also open up the possibility of observing each
other and co-operating and trading between the families. Of course, they
don’t know this at first.
The result is that, after a few months, they decide that Nnn should
concentrate all his time on producing flint knives while Ugh will focus
on hunting. The GDP of the two families before co-location is five
antelopes and four sets of flint knives. After co-location and
specialization, the GDP has increased to seven antelopes and six sets of
flint knives each month. Here is their proto economy:
Ugh and Nnn Village Economy 10th Millenium BC
The formation of the new village has resulted in a phenomenal
increase in the well being of the two families. So much so that this
first village is producing goods surplus to their needs, which sets up
the possibility of trading with a third family, the family of Zll, who
are expert in producing textiles (animal skins) resulting in a further
substantial increase in value for the emerging regional economy.
This simple example demonstrates why the ‘more pie for me’ doesn’t
necessarily mean less for you. You will note too that this primitive
economy works because information about Ugh’s hunting prowess is flowing
from Ugh to Nnn and information about Nnn’s skill with flint knives is
flowing from Nnn to Ugh. What this means is that it is the beginning of
an information economy and it shows how improved communications even in
the 10th Millennium B.C. causes economic growth through the
multiplication of options and opportunities. It was the 1994
introduction of the Mosaic Browser which turned the PC into a mass
communications tool that caused productivity to take off—the long
promised payoff from huge investments in computers and IT finally
arrived.
People need people like no other animal on the planet—we are uniquely
co-dependent on each other. Skill sharing is the most fundamental
reason for the improvement in the human condition.
What we seem to be missing in many of our communities today is the
feeling of belonging to a ‘tribe’; that feeling of belonging to ‘Team
Ottawa’ or ‘Team New York’. We only seem to get that feeling during
times of great stress like the September 11th, 2001 bombings of the
World Trade Center Towers.
I have given a lot of thought about how to engender more of this type
of fellowship in our cities and towns. It is about more than just
feeling good about yourself and your team. It’s about improving living
conditions and productivity too. Sports teams, festivals, artist
colonies, the performing arts, entrepreneurs, researchers, all those
people involved in creative pursuits seem to add to the feeling of
belonging which leads to higher team spirit. And people working in teams
can create far more than the individual working alone.
City-State Team Spirit = Festivals + Performing Arts +
Universities + Entrepreneurs + Researchers + Artists + Sports Teams =
Creativity + Productivity
The Tulip Festival of Ottawa celebrated its 50th anniversary in 2002.
They created a five foot high tulip (partly in answer to the wildly
popular Toronto Moose)—two of these sculptures were given to each of
Ottawa’s 21 Councilors to take into their wards to get local artists
there to paint them. The Mayor then declared the Tulip as the official
flower of the City and the 42 ‘originals’ were auctioned off. Visitors
at that time saw these enormous tulips everywhere. It was a sign of hope
and friendship (the Tulip Festival started because Canada gave refuge
to Queen Julianna and her children in WWII and Canadian fighting men
liberated the Netherlands from the Nazis.) The gift of tulips from
Holland represented everlasting friendship between the two nations. City
building is essentially an optimistic endeavour and the sense that we
are all in it together helps.
Building a successful new enterprise is a lot like this—employees,
clients, customers, suppliers want to be inspired as well as paid or
served.
Cities and towns all over vie to have the biggest something-or-other: hockey stick or whatever.
Some towns have BIG slogans like Biggar, Alberta: “New York is big,
but this is Biggar.” {Just a little bit better than Ottawa’s $200,000
(now retired) slogan: “Technically Beautiful”, don’t you think?}
Ideas are not limited. They are for all intents and purposes
infinite. There are no limits to human ingenuity. But you need a great
team to make these ideas actually work for you.
Business Team Spirit = Sense of Mission + Leadership + Camaraderie + Opportunity + Learning + Challenge + GTBR*
(* Get The Business Model Right so that the harder you work, the more money you make.)
In every business, there are ‘secrets’ to success. Things that the
experts do that may never be verbalized or written down but are
essential for success in that industry. The Business Model should help
you find out what those ‘secrets’ are.
In Dell’s business model, their secrets are deceptively simple-
Dell’s Business Model is: a) make-to-order, b) cash arrives (i.e., they
are paid) before the product is build or delivered.
This is the ‘pixie dust’ that makes their business model work so that
a college drop-out (Michael Dell) can build the biggest PC manufacturer
on the planet. The differentiator is the pixie dust. We need an
algorithm that will show where the pixie dust is!
Part of Amazon’s pixie dust is their use of their relational data base:
“Do you want to see what others who bought this book are also buying?”
Obviously that is an upsell pitch for Amazon but also an incredibly
useful research tool for harried university professors who can put the
millions of smart Amazon customers to work for them doing research and
stitching together a bibliography.
A Canadian University’s pixie dust is its monopoly power to confer degrees.
For most people, their ‘pixie dust’ is simply having a J.O.B. that pays them every two weeks.
Walmart’s pixie dust is automated and integrated inventory management
(integrated with POS (Point of Sale) systems): having suppliers send
(directly) more basketballs to Nashville and hockey skates to Kanata in
the right quantities and at the right times.
Cisco’s pixie dust is outsource everything.
The NHL’s pixie dust or the NFL’s is the right to grant local hockey or football monopolies.
Scotiabank Place (and the Sens) is outsource everything except for
key customer (i.e., season ticket holder) and sponsor relationships and
hockey management (i.e., how to put a winning product on the ice).
There is something ‘magical’ in most businesses that allows them to really make money.
If you get the Business Model right, the harder you work, the more
money you make. If you get it wrong, no matter how hard you work, you
just end up losing more and more money. And the ‘pixie dust’ is what
differentiates your business and gives you leverage in the marketplace.
Pixie Dust = Advantage x Cash Engine x Passion
where:
Advantage = What is the organization the best in the world at?
Cash Engine = What is the price/cost equation that drives the organization’s
cash position?
Passion = What are the organization’s core people deeply passionate about?
Example: if Advantage is 0, your business model has no pixie dust.
You have a model, but it will not work. Same if Passion = 0 or Economic
Engine = 0.
Your business model generates lots of pixie dust when Advantage is high, Cash Engine is high and Passion is high.
You know you never want to get too high or too low. Life is full of up and down cycles.
I still remember an Ottawa Citizen headline a few days before we got
the Ottawa Senators franchise: “And the winners are … Seattle,
Milwaukee.” That hurts.
Actually, it was Ottawa and Tampa.
The night before we won the franchise, one of the voters (i.e., a
member of the Board of Governors) told me (at a NHL dinner thrown for
the nine bidders) with his face just centimeters from mine: “You’ll
never, ever get a franchise for Ottawa.”
I can remember Norm Green, then Owner of the Minnesota North Stars
(now the Dallas Stars), coming over to my table and asking: “What’s
wrong.” “Nothing,” I said. “Well, get that smucky look off your face,
kid, and get out there and hustle!”
Good advice.
Lydia Leeder, in Ottawa, on hearing that comment from Cyril later
that night said: “You can’t stop now! It’s just like the Canada/Russia
series of 1972. Canadians never quit. Everyone is running to their
radios every half hour for an update … We’re counting on you.” Now
that’s pressure!
We did just that and in fact the last thing the Board of Governors
saw before they shut the door to consider the matter the next day at
8:00 am was my nose and the faces of my whole team.
We never stopped.
At about noon that day, the pressure was enormous and frankly getting
to me; so I went for a run along the beach (this was Palm Beach in
December; actually December 6, 1990). I returned at about ten to one and
saw some of my team members waving frantically to me. “What’s up,” I
asked. “The NHL has asked all bidders to be in their suites at one for
an announcement,” said Connie Cochran. “What announcement?” “They didn’t
say.”
Without a shower, I changed into a suit. At one, NHL security took us
down to the basement of the Breakers Hotel, a huge antique of a hotel.
Next to rotting garbage and standing under dripping pipes, I turned to
my colleagues to say: “Fellows. This doesn’t look too good. You have
done everything that you could do. I am proud of you. If we have lost,
we are going to thank the NHL for allowing us to join this process, we
are going to congratulate the winners and then we’re going to have a
press conference to announce: ‘We’ll be back’.”
Then NHL security took us up to the meeting room. Marcel Aubut (of
the Quebec Nordiques) gave Randy Sexton, a big hug: “Felicitation, mon
ami,” he said. We thought he was congratulating us on a good try!
When I went up to the front of the room and sat next to John Ziegler,
I saw the words: ‘The NHL is proud to welcome, as conditional Members
under the Plan of Sixth expansion, the cities of Ottawa … and Tampa.” It
was a magic moment.
Winners never quit and quitters never win.
(Footnote: about six weeks later, I did call the Governor who had
told us that we would never get a franchise. He told me that his comment
was part of a plan hatched that night by a few members of the Board of
Governors. They told each bidder the same thing; it was a character test
designed to see how each bidder would react. Two of the bidders stormed
out; they weren’t successful.)
The Ottawa Senators formally returned to the National Hockey League
on October 8, 1992 after a 58 year absence; it was another great day for
Ottawa. I was at ice level at the old Ottawa Civic Centre when the team
was introduced. The people in that arena applauded those players—they
gave them a standing ovation—for six minutes. I realized that they
weren’t really applauding the players, they were applauding themselves.
This City came of age that day—there was a feeling that ‘we did it, we
did it together’. It was that special feeling that only comes from being
part of something greater than ourselves. Professional sports can do
that sometimes. But surely, we can add more days like that to our cities
and towns and to our enterptises. It is a challenge for you to take up.
Carpe diem.
Prof Bruce
Prof Bruce @ 3:21 pm
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