Rediscover Your Inner Child This Thanksgiving

November 24th, 2015


I’m involved with the Julie Billiart School ( ), a very special place that helps kids with learning needs.  A highlight of my holiday season is receiving the cookbook the school’s 2nd graders create called, “How to Cook a Turkey.” Every year, each 2nd grader writes a recipe for cooking a turkey.  Their teachers create a recipe book.  Their innocence and creativity always make me smile.  This year, kids were cooking turkeys that ranged in size from 25 milligrams to 100 pounds.  I picked out a recipe I really enjoyed, particularly step 8.

How To Cook a Turkey

By Preston

  1. Go to a food store and get a turkey for 50 family members.
  2. Pop it in the oven for 350 degrees or 450 degrees for 5 or 10 minutes.
  3. Wait for the timer to buzz and pop it out of the oven.
  4. Let it cool for 5 minutes.
  5. Put seasoning on top of it.
  6. Put it on a large plate.
  7. Eat it with mashed potatoes. (I like chicken but we are not cooking chicken this year.)
  8. Eat pumpkin pie and spray a can of whipped cream in my mouth. (We’ve got dairy free whipped cream this year.)
  9. Drink apple cider and play after.

All of the kids’ recipes demonstrate innocence and honesty like this one.  I’m thankful to receive their card and get a reminder from them of how to really slow down and enjoy the simple things in life.  As you enjoy the Thanksgiving holiday, I hope you have the opportunity to think like a 2nd grader.  I hope time slows down for you. I hope you get to play.  Most importantly, I hope you pick up that can of whipped cream and spray it right in your mouth!

Consolidation in the Auto ID World

November 18th, 2015

Last week, TSC announced it was acquiring Printronix’s thermal printing business line.  TSC had been designing and building printers for Printronix over the last few years, so they are a logical acquirer.  After years manufacturing printers for others, TSC is making inroads with its brand.  This acquisition will further their goals to develop a major presence in the US thermal printing market.  This transaction continues the consolidation wave that Honeywell reinvigorated when it bought Intermec and Datamax.

Consolidation continues across the economy.  Not a week goes by without a major acquisition announcement.  This week, Marriott is purchasing Starwood Hotels.  As the general economy continues its consolidation, it will put further pressure on the label/commercial printer/distributor markets to consolidate.  Bigger customers want bigger suppliers who can service their needs better.  Scale does matter when dealing with large corporations.

I was talking to a print industry consultant yesterday.  He said something that resonated with me.  “If you’re not a buyer, you should be a seller in this market.  Your customers are consolidating.  Your suppliers are consolidating.  You don’t want to be left behind.”  I think he nailed the macro environment with that statement.  Organic growth is challenging due to low overall economic growth.  There is no rising tide to lift all the boats.  Operating cost pressures coupled with no pricing power put pressure on margins.  It’s a cliché but we all need to do more with less.  Scale helps accomplish that.  Oh, and our customers face the same pressures.  They’re making changes.  So should we.

In “Good to Great,” Jim Collins wrote about how good leaders confront the brutal reality of the situations they’re in.  The reality is consolidation is occurring all around us.  It’s happening in our industry but much slower than it should.  If consolidation doesn’t speed up, expect a wave of bankruptcies during the next recession.  If you don’t want to be a victim, confront the brutal reality and make a move from a position of strength.

Conquer Your Fears

November 10th, 2015

I was traveling recently and came home to my wife telling me, “Your son needs to talk with you.”  Whenever a spouse uses “your” in reference to a child, you instantly know there’s a problem or something quite funny about to occur.  I was a little concerned about their being a problem.  Fortunately, I was wrong.

After a cursory, “How was your trip?  Where were you?” conversation, he got down to business.

“Dad, I made a decision.”  (Every time someone says that, I can’t help but think of that old Cadillac commercial.  “He made a decision.”  “What?  Is he leaving the firm?”  “No, he’s getting a Cadillac.”  I was replaying that commercial in my head.  Marketing works!)  He said this with all the sternness a pre-pubescent little boy could muster.

“What’s that buddy?”

“Dad, I’m going to ask Susie out.”  (Name changed to protect the innocent.)

A little background: my son is not quite 10 years old in 4th grade.  I’d heard about this girl because both he and his buddy have a crush on her.  But I didn’t expect this conversation to be occurring at his age.

My first reaction was relief.  Remember – he’s “my” son according to my wife.  I envisioned a fight, a failing grade, talking back, something bad that was caused by my contribution to his genetic makeup.  This I could handle.  Or could I?  I had to think quickly.  I couldn’t leave him out there on that island. It was obvious he had been thinking about this a lot and it was important to him.  The five seconds of silence seemed like an eternity.

“OK, buddy.  Do you know what that means?”

“Not really.”

“Well, why do you want to ask her out?”

“Because she’s fun and she’s cute.”

OK, his logic did come from my contributions to his genetic makeup.  Very little forethought about what his actions really meant.  I could see his mind churning, thinking, “But it seems like the right thing to do!” The conversation continued with me asking, “What are you going to do if she says yes?”

“I don’t know.”

“What are you going to do if she says no?”

“I’ll probably be sad and cry.  I’ll definitely cry.”

The important decision he had made was to acknowledge the risk, accept the risk, and move forward.  He did ask her out (according to what he told us and what a few of his buddies have confirmed) and she was flummoxed.  She didn’t know how to respond so she didn’t.  He’s over it already.  The sun did indeed rise the day after he asked her out.  I’m proud of him and clearly this positive approach to life came from my wife’s contributions to his genes.  The next time you’re faced with a decision that involves some risk, I hope you think of this story.  We often have to make decisions without perfect information.  We can’t live our lives in fear of rejection or making mistakes.  Sometimes, we have to go with our gut and do what we think is right.  If it works, great.  If it doesn’t, the world will continue on.   As Teddy Roosevelt said in a quotation I have laminated on my desk, “It is not the critic who counts…The credit belongs to the man who is actually in the arena.”  Get in the arena!


Are You Prepared for Supply Chain Disruptions?

November 3rd, 2015

Last week, Cenveo announced it was closing the old Nashua plant in Merrimack, New Hampshire.  This plant coated direct thermal paper, produced heat seal products, and also produced dry gum products.  Essentially all the products it produced are related to labels and packaging.  With this plant closing, we’ll be down to three significant coaters of direct thermal material in North America and one of those only sells DT in laminate form.  (There are foreign players that play in the North American DT market which might help smooth out potential shortages.  They are subject to currency swings.  I don’t think any of us want our DT price indexed to the dollar.)

We’ve been very fortunate in our industry to have a stable supply chain over the last four years.  Other than a PET shortage that led to a thermal transfer ribbon (TTR) shortage a few years ago, things have been very stable across our supply chain.  At some point, that’s going to change.  Yes, I’ve said that for a few years.  But supplier consolidation has a strange way of creeping up on an industry.  It generally results in higher prices and/or supply shortages.  When that will happen no one knows.  As regular readers know, my record on price increases is similar to that of economists on recessions – I’ve predicted 10 of the last 2 accurately!  Just remember – if history is any guide, when increases come, it will be fast and furious.  For those of you that remember the TTR shortage, it doesn’t matter what the price is when someone doesn’t have a product.  Just in time inventory management doesn’t work well when the product isn’t available.

My major point is stability can lead to passive behavior.  Make sure you’re asking your partners about their contingency plans if there is a supply chain disruption.  Your real partners will have a plan.  Those that buy business on price won’t.  It’s good business to take advantage of low prices while you can.  It’s better business to position your company well before things change.  Waiting until the change occurs is too long.  Don’t miss the boat.

Redefining Your Business: It Takes Commitment

October 28th, 2015

I absolutely love talking to business owners and CEOs about how they position their businesses.  Most business leaders, especially in manufacturing, talk about transitioning their businesses from a product focus to a market focus or service focus.  Very few do it well.  A quick walk around a plant, a glance at marketing material, or a conversation with an employee will quickly separate the companies that have made a successful transition from being focused around ITS products to being focused around customers’ markets and needs.

I just toured a very successful company that has made the transition.  The owner told me, “We’re an analytics firm that also sells products.  If we have to, we’ll lead with products to get in the door of a customer – that’s still how a lot of people buy.  But we keep our customers because of the value our analytical capabilities bring.”  In talking with him and seeing his operation, it was clear that the staff understood the company’s mission and unique value proposition.  It was clear the operations had been set up with a focus on their customers’ markets.  In a nutshell, it was clear the company had put its money where its mouth was.

Many of us have great aspirations to do what this company has done.  But do we commit to those aspirations?  Do we set up our operations to be focused on the customers we want to serve?  Do we invest time and money to understand our customers’ markets?  Or do we optimize around what makes us the most efficient in making whatever we make?  As I wrote  last week, it’s a necessity to optimize our internal processes just to stay in the game.  But it’s not sufficient if you want to transform your business and not be just another product company.  Commit to your customers, not your products, if you want to transform your business.  To do it successfully, it requires a true commitment, not just lip service.

How Do You Allocate Your Capital?

October 21st, 2015

A learned friend gave me a copy of the book, “The Outsiders” by William Thorndike.  (  In a nutshell, Thorndike profiles eight “unconventional” CEOs that delivered extraordinary shareholder value.  I highly recommend it.

One point stressed throughout the book is many executives operate under the premise that bigger is always better in business.  Thorndike challenges that assumption and uses many examples that illustrate his point.  Perhaps the best example he uses comes from Warren Buffett.  Buffett asks a question of himself and his CEOs: For every dollar retained by the company, did we create at least a dollar in value for our shareholders?  If we didn’t, we should have returned that dollar to our shareholders in some way.  Buffett submits most CEOs are bad investors – they grow revenues and assets but don’t grow the returns of the business.  In other words, their growth has led to reduced returns and shareholders would have been better off if earnings were returned to them and they could have invested elsewhere.  While this example is written in reference to public companies and the allocation of investment capital, I think its message is applicable for any organization and really to any individual, especially when it is used to look at the human capital side.

We all become obsessed with growth this time of year.  The 2016 budgeting season is here in full force.  Of course, we all want to grow revenues.  But more importantly, we should strive to grow our profits.  We generally think they go hand in hand and for the most part in our industry (and most industries), they do.  But I would submit we spend way too much time on the revenue growth front and not enough time on the profit optimization front.  Profit optimization is not just cost cutting.  It’s using our time (human capital) more effectively.  It’s figuring out what we’re not good at and letting someone else do it (that someone might be internal or external to your organization).  For managers, spend time figuring out whom on your team is good at what.  Think about a sales team – some are the proverbial hunters, some are better farmers.  Do we think about using their skills that way or assign them accounts based on geography?  As an individual, your value increases as you profit-maximize your time.  Most of us have routines that we get comfortable with.  If you want to improve the allocation of your human capital, look at your routine.  My guess is a few relatively painless tweaks will help you maximize the value of your time.  If you want to improve your value to your organization and/or boss, do it before being told what to do.

When it’s all said on done, we allocate two critical items: capital (money) and human capital (people’s time).  We tend to think of both in terms of more being better.  Thorndike proves that’s definitely not the case when it comes to investing money for most management teams.  The amount of time we all have is finite.  Focus on how to use it better.

Raise the Bar

October 12th, 2015

I had dinner with a great group from our industry the other night.  I sat at one end of the table with a wise friend.  As we shared good food, great wine, and fantastic company, the conversation went from perfunctory small talk to a little philosophical.  It might have been the wine.  We talked about what happiness means and where to find joy in life.  He said, “After many years, I’ve figured it out.  Every year, I raise the bar.”  I was expecting him to launch into a soliloquy on improving his business, improving his golf game, or some other “I challenge myself to do better every year” type of metric.  He did but in a way that caught me off guard.  He continued, “I raise the bar on what bothers me.  Think about it.  Every year, I get a little better at understanding what’s important and what’s not as important.  Every year, I raise the bar on what is truly important in my life and what makes me happy or unhappy.”

He related his comments to his business.  He talked about how he’s figured out what’s important in business and not letting little things ruin his day.  As he’s done that, not only is he happier but his business has gotten better.  His people have gotten better.  It’s amazing how people respond when you (a) let them make mistakes without the fear of being crucified and (b) how much more they care about you and your business when they know you trust them.  Raising the bar requires not complaining about minor mistakes.  Your people will know you trust them, raising their confidence and raising their performance.  It’s really pretty simple – surround yourself with smart people and stay out of the way as much as you can.

Before you know it, 2016 will be here.  Think about raising your bar and focusing your energy on what really matters.  Stop wasting your time on the little stuff.  “Raising the bar” is a more positive approach than “Don’t Sweat The Small Stuff.”  Stay positive.  And Joel – thanks for the wise counsel.  I always enjoy your company.

A Fuel Surcharge Increase?  A Fancy Name for a Price Increase

October 6th, 2015

FedEx, following the lead of UPS, announced an increase in its fuel surcharge effective November 2.  It’s not a coincidence that the increase comes just in time for the holiday season.  Customers who noticed the announcement are up in arms, as fuel prices have fallen quite dramatically over the last few months.  For companies that ship a lot, it’s going to be a lot of fun to explain to customers their costs went up because of a fuel surcharge when fuel prices have fallen.

Three things stand out about this action.  First, FedEx admits the fuel surcharge is related to shipping heavier packages and the increase in residential deliveries, saying both cause their vehicles to use more fuel.  Then why not raise the prices on heavier packages and residential deliveries?  That leads to point 2.  Both large parcel carriers have separated their fuel surcharge increases from general rate increases.  By doing this, they’re able to get a broader increase in their revenue, meaning even big shippers pay the higher fuel surcharge just like the rest of us.  I’m sure a few large shippers have more leverage but using surcharges allows FedEx and UPS to get a bigger increase than if it were just a price increase.  Third, and most important, surcharges are harder for customers to pick up on.  Price increase letters get passed around and put purchasing managers in a panic, causing them to shop around.  Surcharges are often perceived as temporary and something purchasing people have to live with.  Freight costs are rising – get used to it.

With the growth in e-commerce, the critical challenge remains the “last mile” – getting products to people’s homes.  It’s simple math: it costs more to deliver 100 packages of a product to 100 homes versus delivering 1 pallet of 100 items to a retailer who then distributes the product to consumers.  Consumers have benefited from freight being subsidized by upstarts and major retailers.  Many attempts have been made to solve the problem: Amazon lockers, having the Post Office deliver packages, pick up at your local retailer.  Some bright entrepreneur will figure something out.  In the meantime, we’ll all be paying more for freight.


Always Remember the Core

September 30th, 2015

A summary of the dinner conversation at the Gale household last night:

“Dad, what music was popular when you were my age?  What did you like to listen to?”

“Let me think.  I liked U2 and Bruce Springsteen.  Michael Jackson was really popular.  So was his sister, Janet.  I liked Toto too.”

“What about the Rolling Rocks?”

“Rolling Rocks?”

“You know – the guy that Jimmy Fallon impersonates.”

“Oh, you mean the Rolling Stones and Mick Jagger.”

“Yeah – whatever.  Rocks, Stones – aren’t they the same?”  (I almost digressed into talking about the beer that was popular in my younger days but I didn’t think that would endear me to my wife.)

“Well, I like the Rolling Stones but I don’t think I listened to them much when I was your age.”

Curiosity got the better of me so I started looking at songs that were popular when I was around 10 years old.  One of the biggest hits was “99 Luftballoons” by Nena.  The song still gets some play on oldies stations now (ugh).  Yes, I sing along and despite a year of college German, I still mumble through the German lyrics.  I don’t think Nena had another hit song after her mega hit.  The Rolling Stones just finished a North American Tour – 53 years after the band started.  Wow.

I’ve written about short term and long term thinking before and the need to balance them in order to be successful in business (and life).  But our light-hearted dinner conversation got me thinking about something else.  The Rolling Stones have had members come and go (unfortunately in some cases) but the core band has stayed the same.  Mick Jagger still struts and belts out lyrics.  Keith Richards still strums that guitar.  Charlie Watts is still keeping the beat on the drums.  People still pay to see them perform.  Sure, part of that is people trying to relive their youth but they’re also cultivating new generations of fans.  The Stones continue to prosper because they figured out that their core competency and advantage is touring.  They maintained a strong relationship with their core fan base and have added fans along the way.  They haven’t released a studio album since 2005.  They know what works and stick to it.

Every business has a core competency.  Focus on yours and with a little luck, your business might still be going strong after 52 years.

Don’t Fear the Pessimists

September 22nd, 2015

In case you missed it, the Federal Open Market Committee (FOMC) did not raise interest rates last week, saying, “ Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.”  (  As the financial markets continue to gyrate, more and more talking heads tell us to be concerned about a recession or, even worse, deflation.  Fear not, neither is happening in the US anytime soon.  (A small mathematical note:  the talking heads love to talk about the large daily point drops in the Dow Jones Industrial Average.  There have been some large point drops lately.  Not one of the large recent fluctuations comes close to being in the top 20 of daily percentage losses in the index’s history.  (  Remember: there are lies, damn lies, and statistics.)

Look around.  I’ve been in five US different cities in the last two weeks and four of the five had at least one construction crane in the air.  We recently signed a “take it or leave it” lease for a new location (more news coming soon).  If we didn’t sign, there were at least three potential tenants lined up after us.  Most importantly, check out the unemployment rate.  Yes, the government adjusts the formula and creates incentives for people to drop out of the workforce.  Yes, the cash economy continues to grow, keeping people from getting jobs in which they pay taxes.  But talk to anyone hiring on any level and they will tell you it’s tough to find people.  There are unfilled jobs everywhere.  Wage inflation doesn’t start with a minimum wage increase or raising salaries for entry level jobs.  It starts when employers raise wages to protect their valuable employees from someone else.  That’s coming soon.

Is China a concern?  Yes.  But maybe there’s a silver lining.  Maybe, just maybe, people will realize planned economies don’t work.  (Are you listening Bernie Sanders?)  Wasn’t Japan supposed to take over the world 30 years ago?  Even just a few years ago, remember the BRIC (Brazil, Russia, India, China) mania?  Three out of four have major problems.  But talk to people who do business in Europe.  The economy there is improving.  The US is doing fine.  Could things be better?  Of course – things can always be better.  And they will get better.

It’s important to live in reality.  But as the old saw goes, people view the glass as half full or half empty.  Technically, both groups are correct.  But I’d rather count on the people whom view the glass as half full than a group of pessimists every day.  The choice is yours.