Monthly Archives: July 2008

• Companies are making money in this economy. Why aren’t you?

  Tuesday, July 29th, 2008 by Wes Ball

  Lot’s of companies are doing quite well, thank you, even in this economy.  So why am I reading daily about how “bad” things are for most companies?

  I just read an article in the Wall Street Journal that once again noted the continuing sales strength of “high-end” goods despite all the fear about an economic downturn.  And we aren’t talking about “millionaire” products.  This particular article was talking about Coach leather goods, which are just barely above mainstream.  

  I’ve noted before that Mercedes dealers (at least the ones who were doing well before the economy started heading south) have been doing at least as well as last year and many cases better.  And their sales strength is not at the high-end of their line where you would think those immune to the economy might be, but rather at the low-end, catching trade-ups from “lesser” vehicles.  Every other auto brand I’ve looked at is hurting badly.

  Apple is making money, and it’s not because of their technology.  (Their technology only supports the real reason.)  There are also thousands of small companies out there who are creating double-digit growth in this economy, because they are focusing upon what is really important to customers.

  So why aren’t you enjoying this same kind of strength? Could it be that you’ve been discounting your product whenever you received any pressure, so now customers know your product isn’t worth what you claim it is?  Could it be that you’ve fooled yourself into believing that customers only want to consider price, so you’ve under-engineered your product to appeal to the most fearful and financially-vulnerable people in our economy? Could it be that you have lost yourself in the battle to add features, functional performance, and “quality” to your products, while missing the most important aspects of emotional fulfillment that I discovered to be the real secret behind Alpha companies?  Could it be that you still believe that you can’t predictably manage and control the revenue side, so you’re lost in the cost-side management trap that is destroying American businesses?

  Stop it.  Start making money now.  Forget the economy; it’s all in people’s minds anyway. (And I meant that literally: it’s all in their fear and the resulting lack of spending.) The secret is to change their minds by giving people a vision for what they can enjoy and who they will be perceived to be.  That’s how every Alpha company has gained the control they have over their competitors and over customer buying decisions.  End-users, competitors, retailers, and distributors follow their lead, because they “own” the decision process.

  Since this is my blog, I will be direct.  If you don’t already own and have not already read “The Alpha Factor,” then do it this week.  It has the secret to creating more wealth than you have ever thought possible in as little as six months, even if you have not been able to grow your business in years.

  As one Alpha has said it so poignantly, “Just Do It.”  Stop the whining and do something about it.  

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• Does Wall Street have to be the enemy of an Alpha?

  Friday, July 25th, 2008 by Wes Ball

  Privately-held companies have a much greater potential today of becoming an Alpha and maintaining Alpha status than do publicly-owned companies, if they can get the financing needed to drive growth.  The reason is fairly simple:  CEOs of publicly-owned companies almost always fall into the trap of allowing shareholders and stock analysts to run the strategic decisions of their company.

  CEOs of such publicly-owned companies are given incentives to drive up stock price quickly and predictably, which only asks them to drive that growth through cost-side management.  And, as was discovered throughout the Alpha Factor Project, using cost-side management to drive strategic decisions is death.  It always undermines the very things that created success in the first place.

  Sam Walton made no bones about it.  He did not want to lose control of Wal-Mart to the stock market.  Even after they started selling stock over the counter, Sam’s vision and charisma enabled him to maintain control over the strategic direction of Wal-Mart right up to his death in 1992.

  Compare that with the life of most CEOs today: shareholders and stock analysts really run their company, because stock price is the measurement of their success.  Their bonuses are based upon it and their future employment is based upon it.  CEOs who have to answer to the whims of the stock market cannot be leaders, because they have already defined themselves as followers.  Without exception, what killed the great Alphas was that they lost focus upon what really drove their success and instead allowed shareholders and stock analysts (or other outsiders) to drive strategic decisions.

  Is it possible for a CEO of a publicly owned company to maintain Alpha leadership?  Certainly, but it takes top leadership that is focused upon the Alpha Innovation Pyramid (page 63 of The Alpha Factor) for driving new growth and will not compromise that focus to address the short-term, destructive demands of the stock market.
  A leader either innovates to drive long-term sustainable success, or he is just managing the slow death of his company.

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• Starbucks’ customers prove it’s an Alpha

  Monday, July 21st, 2008 by Wes Ball

  If there was any doubt that Starbucks had attained Alpha status, it’s certain now.  With all the talk of downsizing and closing of stores due to “over-expansion,” many pundits have thought that perhaps Starbucks is just another one of those sad stories of poor management caught in an economic downturn.  The truth, however, is being displayed clearly through their customers.

  An article in The Wall Street Journal today by Janet Adamy and Anna Prior discussed the customer response to store closings.  Reminiscent of the customer outrage that saved Coca-Cola, when it made the terrible mistake with “New Coke,” we are seeing one of the strengths of an Alpha at work again through Starbucks.

  One of the key benefits of becoming an Alpha company is that you can weather difficult times and even bad management decisions better than “normal” companies can.  That extends to the point that an Alpha’s customers will often save it from really bad mistakes.  We are witnessing this at work right now.   By having made themselves the customer expectation leader so that every other coffee shop wants to either emulate or overcome it, Starbucks has made itself a part of American life that people don’t want to have to do without.

  According to the WSJ article, all across America — from major metropolises like Manhattan to small towns in Mississippi and Nebraska — Starbucks customers ranging from local neighbors to business owners and managers to city mayors are contacting Starbucks headquarters to lobby for their local stores.  Starbucks has made itself a draw for attracting people and businesses into a community and for attracting employees to businesses near a Starbucks store.

  None of this would be happening, if Starbucks had simply managed its business to be a top moneymaking machine, as business schools teach us to do.  It has only been due to Starbucks’ focus upon fulfilling high-level customer emotional needs (self-satisfaction and personal significance) that it is enjoying this level of customer support.  Customer expectations from a coffee shop have changed significantly all across America due to Starbucks.  No cost-side management could ever have created this phenomenon.  Only by understanding and fulfilling these revenue-side customer needs has Starbucks made itself anything more than one more pretty good coffee shop.

  Hopefully, Starbucks’ management will recognize that the reason behind their slowdown is not just “over expansion,” but also (and probably more importantly) a loss of focus upon continuing to raise customer expectations by driving them into higher and higher emotional fulfillment (again refer back to The Alpha Factor for a discussion on the core concepts of self-satisfaction and personal significance in driving purchase decisions).  There has been a noticeable decline in customer experience in Starbucks stores wherever I travel.  When I talk with store people, this focus seems to have been replaced with more focus upon new equipment.

  Bad move.  Luckily, being an Alpha, they have time to get back to the focus that got them where they are.

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