I recently gave a speech to a very large construction company. I had three meals with the owners and management. For two days, I thought they were a freedom-based company, and thought I could not add anything. Then, I started to see cracks. At the end, I discovered a huge flaw: The owners were not honest.
I saw occasions when they talked down to the staff, not up. But the real revelation came when I went to give my main address to the company at large. The thought leadership declared at the meeting that they had brought in a very expensive keynote speaker (me). In fact, compared to the market my speaking fee was low. And what’s more, I had asked them to donate it to a children’s cancer hospital. In private, I asked the owner if he knew my fee had been given to charity, and he told me that he wanted his employees to think that he had done something “big” for them by inviting a highly paid speaker to address them. He lied to manipulate his people. I looked back and saw other instances where the owners had lied. These owners were for themselves, not their people. No matter how they try to convince staff that what they do is for the staff, down deep the people know they are liars. I reversed my opinion: the company is not freedom-based. For that, you must trust your people enough to be honest with them. Hourglass While I was the head of engineering at IGT, its owner, Si Redd, would often press us to get our product to the market faster. “Si,” I asked him once, “do you know how many grains of sand can fit through the neck of an hourglass at once?” “One,” he replied. “Now, if you take the lid off an hourglass, put your hand in and press the sand, how many grains of sand will go through an hourglass?”, I asked. “None will,” he replied, “but why are you asking, boy?” “Because that’s what you are doing to us in engineering,” I told him. It took more persuasion but finally he let us do it our way. Idiots, Making Them Micromanagement sends the message to the people that they are idiots. And as long as you think they are idiots, they will be idiots. In fact, you’re making them idiots. The people who go out and make you money, you think they’re idiots. Why do you keep them if they’re idiots? Idiots, the Virtues Of Every time I started a business and the people told me I was an idiot, I ended up making a lot of money. Si Redd used to say me, “Boy, you gotta be where they ain’t.” What that means is that you find areas of low competition because high competition means lower margins, and lower margins mean less profit. So we were always looking for places where we could be unique. If the thinking is out-of-the-box, people may not understand because they have not seen it before. Therefore you are an idiot. When people have never seen anything like that before, they think there’s no precedent and hence, there’s no prospect of success. But the point is that since there’s no precedent, you have the opportunity for success. There also has to be risk: “No risk, no return.” That is because someone else is already doing it. The higher the risk, the higher the potential return. I was a design consultant selling my design time by the hour. At 20 hours/day, I ran out of inventory (time). I figured that I had to make money when I slept. That meant, build a product. I was designing great products for companies and they were making the big money from my ideas while I was selling hours. I learned risk/return ratio at Caltech; that filled in the missing piece. The companies I was designing for were taking the risk and making the money. In December 1987, I jumped on an airplane to Hong Kong to get my designs made for myself… What a risk! Ingredients and Inventory Number one, convince me you have a product. Second, convince me you have a customer. If you have a customer, show me how you rifleshot that customer and don’t tell me you’re going to use a shot-gun. I want you to tell me how your rifle will shoot that customer. Shotguns are good at scattering and bringing down small game; a well-placed rifle shot can bring down big game. If you have those things, then I want you to tell me what the profit margins are, and then I want you to tell me if those margins are significant enough to take this risk or should you put that money in your saving account. It takes all the ingredients to make a cake. You have to have the baking soda, the flour, the shortening, and the icing. You have to have all that stuff. And if you’re missing one ingredient, you don’t have a cake (or a business). In other words, will we make enough to make this effort worth the time/money? Will it make more than Treasury Bonds? I look at my life in terms of “business cycles.” If it takes 15 years to start and mature a business (a business cycle), then I may have as much as four cycles in my life. Is this “cake” (idea) worth a fourth of my business life? Time is our inventory; we must use it wisely to be profitable. Ink, Free You may need experts (see Outsiders) in getting name recognition for your brand. I do not believe in paying advertising money (not trackable), but I solicit “free ink” from editors of magazines in our trade. Instead of paying advertising, spend that money on improving your product and get your product into the hands of editors who have to fill media space. I made “press-kits” with photos and copy for them to use quickly. We did their job, they gave us media coverage—free.
0 Comments
Leave a Reply. |