February 21st, 2017
I’ve been a Simpsons fan since the days of the Tracy Ullman show. Much to my wife’s chagrin, I sometimes watch reruns with our son. An episode we saw last week made us laugh hysterically. The retirement home Grandpa Simpson lives in has an issue that requires everyone to move out. Grandpa and two of his friends come to live with the Simpsons. Marge starts a conversation with Homer about preparing for the future. Homer, as only Homer can, makes gestures of eating, drinking beer, and having a heart attack. He then proudly proclaims, “My lifestyle is my retirement plan.” You can view the clip here: https://www.youtube.com/watch?v=61DEMMzOrEc
The timing of me seeing this episode hit home. Over the last few months, we’ve embarked on a strategic planning process at I.D. Images. We’ve done it before but this time we are making a more concerted effort to get input from throughout our organization. Hopefully, our choices won’t lead to a premature death of our company like Homer! On a more serious note, one of the observations this process has led me to is we make choices every day, consciously and unconsciously, that will dramatically impact our company’s future. Similarly, Homer makes choices every day. He is aware of how those choices will impact his future (or lack thereof). He knows his plan and is executing it well. He is comfortable sharing his plan with his main stakeholder. As part of our planning process, we are preparing to share our results with our key stakeholders, namely our employees.
As Yogi Berra quipped, “If you don’t know where you’re going, you’ll end up somewhere else.” Whether it’s your personal life or professional life, have a plan. Get input. Share it with others. And make contingent plans if your lifestyle is your retirement plan. Modern medicine can do amazing things.
February 14th, 2017
Since winter is almost over, I decided it’s finally time to fix the gap in our front door. We need a simple seal at the bottom of our door. I started my journey online. The closest large home improvement store to me that advertises, “You can do this. We can help,” claimed it had what I needed in the right color in stock. Their website even told me the exact location I could find it in. I stopped by after work to pick up my $1.98 corner seal. I confidently marched to the location, excited to solve a home improvement problem with only one trip to the store! I got to the location and looked. And looked. And looked. No corner seal in the color I need. They did have several boxes of white corner seals. I looked for someone to help me. I wandered around aimlessly and found two men sitting in the door and window section (yes, sitting) looking like they had nothing to do. I asked and got a response that made my blood boil, “That’s not our department.” Really? I’m not your store’s customer? “That’s not my job” or any equivalency is worthy of immediate termination in my book. They offered to call someone from the department in which I needed help. While they did that, I left the store. I got in my car, got on my phone, and ordered the part online from a competitor of the store I went to.
Technology, when used properly, is an incredible tool for increasing efficiency. In the perfect world, I would have ended my confident march into that store with my required door seal and some other stuff I didn’t plan on buying in my bag shortly after entering. In the store’s perfect world, I would not have interacted with a person, saving them money. Instead, I bought nothing and left with a bad taste in my mouth. It happened that way because someone entered the part number improperly. They probably got a shipment in with 2 colors of door seals on it and scanned in a box of the brown without scanning in white. The brown sold out but the system had bad data so it thinks it still has brown. (Inventory mishaps like that never happen at I.D. Images or with our customers. Never! If you believe that…) Mistakes happen. But the mistakes are amplified when you share data with your customers. If their online system hadn’t told me they had what I needed, I would have never gone to that store. I’d have no blog topic this week.
We all want more data and in general, more data is good. But the more data we have, the more likely it is to have mistakes in it. I can deal with mistakes. Apathy makes me sick. All the technology in the world won’t fix an apathetic workforce. In fact, if used improperly, technology contributes to apathy. The workforce gets concerned about losing jobs. The only way to solve that problem is to engage your workforce and train them on value add activities. Finding a part doesn’t really add value; that process can and should be automated. Helping a frustrated customer does add value. Had the apathetic worker offered to check inventory in other stores or simply walked me over to his colleague in the other department, I would have left with a smile on my face, even if they didn’t have the part I needed. That lost opportunity cost a lot more than $1.98.
February 7th, 2017
I was talking with a good friend about the trials and tribulations of parenting recently. I lamented how I mishandled the death of my son’s fish. (“Fish die. Get over it,” won’t win you any father of the year awards.) He was lamenting how his perfectionist daughter was obsessed over a comment on her overall excellent report card and his son could care less whether the comments were negative or positive. Of course, we brought out the cliché that handling those situations wasn’t in the manual that came with our children.
He segued that into a conversation he had with a client of his. His client told him, “I’ve got an M.B.A. from a prestigious school. I didn’t master anything and it took me 10 years of being called a manager to figure out what I was supposed to be doing.” (His client was not me and did not attend the same business school I did!) Of course, I quipped, “There’s no management manual that covers everything either.”
Our conversation got me thinking. If you are blessed with children, there is no more important activity you do in your life than parenting. If you are a participant in our economy, your critical activity is managing, whether it’s yourself, physical assets, a process, or other people. Yet there’s no manual for parenting or managing. This weekend, our cable TV went out. I was able to go to the online manual and go through a step by step process to fix it. It was dumbed down enough so even I could follow the instructions and fix the problem. That manual doesn’t exist in life, at least not one that I know about. Certainly, a plethora of books about parenting and managing exist. Most of them mean well. But I’ve yet to find a chapter in any business or parenting book that addresses what really happens in the day to day trials and tribulations we encounter. I thought a little more. Do we already have the manual for parenting and managing?
Maybe there’s no manual because the answer is quite simple. We over complicate things. “Treat others as you’d like to be treated,” is called the golden rule for a reason. As I look back at my parenting failure(s) or the challenging times I’ve had as a manager, following the golden rule would have prevented a lot of problems. A 300 page book can’t possibly have all the answers. If I started with the golden rule, I would have been just fine. Of course, I certainly need to supplement my short manual with several 300 page books on controlling my emotions. But that’s a topic for another day.
January 31st, 2017
We’re less than two weeks into the Trump regime and he’s already got heads spinning. In one moment, he’s talking about jobs and bringing manufacturing back. In the next moment, he’s tweeting about the media is lying about how many people were at the inauguration. We’ve never seen anything quite like this come out of Pennsylvania Avenue. Liberals and many conservatives think he’s certifiably insane. Trumpsters (not conservatives) think he’s a master manipulator that will actually get stuff done. As I’ve written in the past, his approach will keep comedians busy for the next few years. The argument against his entertainment value is he’s dealing with serious issues and one of his off-the-wall comments could lead to a disaster.
Whether you love him or hate him, President Trump is here to stay. His style is quite outlandish but face reality, it works for him. He had success in business. He won the presidency. He’s not going to change. He definitely had some blow-ups in business. Certainly, he’ll have blow-ups as president, as every president does. I certainly hope and pray his blow-ups as president don’t lead to war. Given his track record of success, I think he deserves the benefit of the doubt when it comes to his ability to use discretion. He’s not doing anything he didn’t say along the campaign trail. I actually heard a talk show host say, “No politician does what he says he’ll do in a campaign. They say things to fire up their base.” Wake up! Trump appealed to voters who were sick and tired of politicians not delivering on campaign promises; that’s who voted for him. It is clear that Trump is not a conservative ideologue. He replaced a liberal ideologue. Over the last few decades, the ideologues took control of both parties. The reality is most of the country hovers around the center. Trump figured that out and is using it to his advantage right now. That irritates the media who generally take either far left or far right positions.
During World War II, the British government created posters saying, “Keep Calm and Carry On.” People were dying and bombs were landing in London. If you’re that upset about Trump, turn the TV off, stay off CNN.com and Foxnews.com, and heed the advice of the British Government. Focus on what you can control. My son had to do an oral presentation at school this week. One of the lines he read was, “If we all do little things to make the world a better and happier place, our little things will lead to bigger things.” I found that sentence appropriate not only for elementary school kids but for the rest of us as well. Spend less time worrying and more time doing. You’ll be better off.
January 24th, 2017
The other day, I took my wife on a romantic date to a large national retailer. We hadn’t been there in a while and were quite surprised at the store’s condition. Shelves were empty. The store was dirty. The store wasn’t very crowded. When we went to check out, 2 of the 16 checkout lanes were open. There were 4 or 5 people in each line. Behind the checkout lines in plain view of everyone in line were 5 employees of the retailer, apparently observing the customers in line. To the best of what we saw, they were doing absolutely nothing. No one bothered to open another line. A woman in front of us looked at them, looked at her cart, and walked out, buying nothing. After a short wait, it was our turn to check out. As the cashier was ringing up our items and trying to upsell us on a debit card that would save us 5% on our purchases, a manager walked over. She had been part of the 5 person group doing nothing. She interrupted the cashier, asking, “Could you change your hours and come in earlier tomorrow?” The cashier stopped ringing in our items and dealt with the manager. After the manager got her answer, she walked away and immediately started playing on her personal phone. The checkout experience stunned us. Last week, this same retailer announced it had a poor holiday season. Go figure!
It’s no secret that online shopping is hurting retailers. A physical store can’t compete with the convenience of items magically appearing at your doorstep and the selection of items available on line. But we are social creatures. We want interactions with people. Those interactions must be positive experiences, however. Negative experiences with retailers will drive more people to online shopping. That will create a death spiral: less sales per square foot will drive less investment leading to even less sales until the inevitable closing of physical stores.
The concept of creative destruction is what makes capitalism special. We had a milkman when I was a kid. My mom filled out a form, put it in the box on our front porch and he delivered dairy products once a week. That business was destroyed by super markets. Online retailers, with subsidized freight costs helping, are now destroying the super markets/large retailers by essentially modernizing the milkman. All businesses face competition. If a business does not adapt, it will perish. Retail stores have advantages – Amazon and other “etailers” are beginning to open retail stores because of these advantages (and freight subsidization won’t happen forever!). If your business isn’t adapting, it will be adapted by its competitors. That won’t end well.
January 17th, 2017
I subscribe to a very well-regarded business publication affiliated with a very prestigious business school. Shame on me, my subscription had lapsed by four days when I finally got around to renewing it. I tried to renew online but got caught in a circular pattern. I clicked renew, it told me to login. When I logged in, clicking renew took me to the new subscriber page. I couldn’t become a new subscriber because my email account was already associated with a subscription! After unsuccessfully trying to get out of this pattern, I tried online chat. The chat representative put me in the same circular pattern. She finally told me she could not solve the problem and I needed to call customer service. It only took 2 transfers for me to successfully give them money and renew my subscription.
I found it quite humorous that one of their leading articles for this month’s issue is titled “Kick-Ass Customer Service.” (It made the cover!) I felt like I got kicked after that experience! My head hurts just thinking about what happened. My head hurt worse when I thought about what happens in our business when we make it hard to work with us. If we make it difficult to do business with us, customers will just call someone else. In this situation, I wanted a specific publication; there wasn’t a ready substitute. Most of us don’t have that barrier to entry. We just lose business.
In my first job after college, a salty senior investment banker was notorious for starting every conversation with, “What did you do to make us money today?” I have a very vivid memory of him asking me that question the first time I met him. He followed it up with, “Who the $&&#*(@) are you?” All of this took place in the restroom. I think that first question should be replaced with, “How have you made your customers’ lives easier today?” If you do that, the money will follow. If you don’t make it easy to do business with you, someone else will. That will make more than your head hurt.
January 10th, 2017
I won’t bore you with all the legal gibberish, but here’s a business summary of the fun involved with a customer filing bankruptcy. If someone files bankruptcy, any unsecured creditor (someone who sold them something) that got paid in the 90 days before the bankruptcy was filed is subject to a preferential treatment. That means the bankruptcy trustee can demand a return of any money a supplier received in the 90 days before the bankruptcy filing. So, let’s say someone is behind in payment. Let’s say they owe you $5,000. You have them on credit hold. They agree to pay you $1,000 in cash for a $500 order. You ship the order and they now owe you $4,500. If they file bankruptcy within 90 days, the trustee can demand the $1,000 back. The intent is to prevent someone who is going to file bankruptcy from paying money to preferred people (think brother in law). The reality is unsecured creditors who try to work with a struggling customer often take a bath.
We have a customer that filed bankruptcy a while ago. Not only is the trustee asking for preferential claims as described above, he is also claiming the parent company got stuck with the debts of the subsidiaries but received no benefit. They are claiming the parent paid us but actually should not have paid because of the legal wording of the purchase orders (even though the parent’s name is on the PO’s). He wants any money we were paid in the last 4 years! Isn’t that lovely? Any rationale person would agree that a secured creditor, such as a bank, should have more knowledge about the legal structure of a client than a supplier, such as me, selling labels to said client. Yet the secured creditor, through the bankruptcy trustee, is trying this tactic. Even if it doesn’t work, I’m out legal dollars with no hope of recovery. Isn’t that special?
Bankruptcy happens. It’s part of the creative destruction in capitalism. But let’s level the playing field a little. I have a simple change that would be powerful: if the bankruptcy trustee asserts claims that are denied in court, that trustee must personally pay the other side’s legal bills. Don’t take it out of the bankruptcy estate; make the firm who is asserting the claims personally responsible for legal fees for the other side. From a bigger picture perspective, I think we should look long and hard at having losers pay the other side’s legal fees in any lawsuit.
If Donald Trump really wants to create a business friendly climate in the US, he should start by examining the bankruptcy laws. He’s very familiar with them and is in a perfect position to make substantial changes that would improve the economy. It is situations like this that make me question if it’s really worth owning and growing a business in today’s environment.
January 4th, 2017
Dear House Republicans,
As your first gesture with control of the House, you decided to make changes to the ethics office. After a public outcry and your incompetence allowing Nancy Pelosi to take the high road, you changed your mind. Did you really need to start off with these rule changes? In case you missed it, the American public thinks most, if not all, politicians are lying and cheating scumbags. Your first maneuver lends credence to that belief. Did you miss Trump’s “drain the swamp” line? In case you don’t understand what I’m saying, let me be clear (I can’t stand that phrase; I’m being condescending just like politicians and professional pundits are when they use that phrase.): you just flipped a giant middle finger to the American public. Great start!
I know you quickly backtracked on implementing this ignorant idea, but the damage was done. The older, excuse me, I’ll be politically correct, more experienced, I get, the more I realize how much optics and perceptions matter. It’s a cliché but perceptions truly are reality. Your first actions as leaders matter. As the old commercial said, you never get a second chance to make a first impression. Forget dandruff; you’re covered in lice right now.
I certainly hope this isn’t a sign of things to come. Don’t get drunk on your power. You were elected to represent the people, not yourselves. Start acting that way.
A Disappointed American
December 30th, 2016
It seems like every year goes faster than the year before. That’s one of the realities of getting older. As I tell my soon to be 11 year old son, a year is a much smaller percentage of my life than his. That’s why I can’t remember what I did yesterday and the years all seem to run together.
We turn the calendar yet again in a few days. Are you ready? Some not so scientific predictions and recommendations for the year:
1. Economic growth will surprise to the upside. I don’t think we’ll have the 4 or 5% GDP growth the Trump team is touting but the US will surpass the 1.5 to 2.2% growth we’ve seen the last few years. This will apply to 2017 only. See #2 and 3.
2. Prepare for a mild recession in 2018/2019 caused by saber rattling over trade and monetary tightening.
3. A big portion of our nominal GDP growth in 2017 will be related to an uptick in inflation. We haven’t seen inflation in our industry in 5 years. We’ll see price increases in 2017, as will a vast majority of our economy. Wages are already starting to accelerate
4. The M&A trend in labels/packaging as well as other industries will continue. The big will get bigger.
5. Expect bankruptcies to increase in late 2017/sometime in 2018. Be careful with credit!
For fun, I copied my blog from December 27, 2015. #2 happened! Make your year great!
My New Year’s Wishes
We’re about to turn the calendar over to a new year. Every year, I realize how true it is that time goes faster as you get a little older. Here are 3 wishes for 2016:
1. None of the current candidates for president is elected. Every day, I cringe in dismay that these candidates are the best we have to offer as a country. I wish someone emerges that’s not in the race right now. He/she can be from either party. No candidate excites me right now.
2. One of my beloved Cleveland teams finally wins a championship. 1964 was the last major sports championship in Cleveland. Sad. I have confidence in LeBron and his crew but Golden State and San Antonio sure are tough.
3. The US federal government finally admits we can’t deficit spend forever. The public understands that borrowing for today’s consumption must be paid back by future generations. AARP actually runs a commercial explaining this to everyone.
Remember, I titled this “My New Year’s Wishes.” Earlier this year, a friend told me, “You can wish, want, and hope all day long. It’s what you do that makes things happen and causes change.” May you do what you need to do to accomplish your goals in 2016! Happy New Year!
December 20th, 2016
I was already to write a blog with some Christmas and year end platitudes. That all changed with yesterday’s announcement that CCL Industries was buying Innovia Films. After doing what I could to prove to myself it wasn’t fake news, I decided to hold off on the Christmas wishes for now. M&A news is near and dear to my heart, especially M&A news that shows how a large player is trying to change the game in the label/packaging space. The bullet points below are taken from CCL’s press release (http://www.marketwired.com/press-release/ccl-industries-to-acquire-innovia-for-113-billion-tsx-ccl.a-2184404.htm ):
Highly strategic opportunity
- Leading, specialty, global producer of co-extruded, Bi-axially Oriented Polypropylene (“BOPP”) films for labels, packaging & security applications
- Unique capability for polymer banknotes significantly expands CCL’s security products, customers, markets and technologies
- Proprietary technology and strong intellectual property portfolio based on scale in R&D drives margin profile
Not every label converter has $1.1 billion Canadian dollars to buy a fill extruder. (I did find 82 cents in my winter coat this morning. I just need the US dollar to keep appreciating.) Scale is changing the game. When this acquisition goes through, CCL will further expand its capabilities to extrude its own face and liner stocks, laminate them, print on them, and convert them. Innovia also sells to many of CCL’s traditional suppliers. Imagine those meetings! I’m sure a lot of people in the label/packaging value chain just feel like they got a lump of coal for Christmas with this announcement!
The label/packaging world will continue to consolidate, both horizontally and vertically. CCL has been leading the charge in capturing more of the value chain. Over the last few years, they’ve bought film extruders, Avery’s office supplies business, and too many other label converters for me to count. In 2011, CCL’s revenue was approximately $1.3 billion Canadian. Next year, it will surpass $5 billion Canadian. More importantly, they’ve grown their earnings faster than they’ve grown sales. As us mere mortals fight over a piece of the pie in what we perceive as a mature industry, they’re focusing on baking a different pie for which they control the ingredients, ovens, and customers for. Don’t bet against them.