Perception IS Reality

May 23rd, 2017

Our eleven year old son had a “dance” this weekend.  He missed the first dance due to a scheduling conflict, so this was truly his first social event with girls.  He came home and told me how “awesome” it was.

I asked, “Did you dance with any girls?”

Response: “Heck no.  I hung out with my friends.”

The next day, we were at an event with friends who have a girl in our son’s class.  Her mother told us she had a miserable time.  “It was hot and boring,” was the girl’s take on the evening.  When we got home, we told our son what the girl had said.  His response, “Dad, that’s because she didn’t party hard enough!”  Now intrigued, I had to figure out what that meant.  He responded with, “Dad, my friends and I stood as close as we could to the speakers and jumped up and down.  We screamed in each other’s’ ears until we couldn’t hear.  It was AWESOME!  The girls just stood in a corner and looked at us.”  Maybe his response says something about the relative intelligence of males and females but I’ll avoid that topic for now.  Fortunately, “party hard enough” means something different to an eleven year than it does to his parents.

I thought about this situation in light of what is going on with a large customer of ours.  They have hired a consultant to assess their purchasing process.  Translation: they hired a consultant to beat down suppliers.  Last week, the consultant told our sales person, “Your prices are much higher than a competitor but all of the staff at our client wants you to be the vendor.  How can you cut your prices to match your competitor’s prices?”

The consultant, who is probably being paid a fee based on the savings he generates, wants us to cut our prices.  The staff, who has to deal with the everyday ramifications of this decision, perceives us to provide some value that is worth something to them.  Both perceptions, just as a boy’s perception and a girl’s perception of the same dance, are reality.  It is our job as a supplier to convince the consultant that we do indeed provide value above and beyond a price point.  As I’ve written in the past, that isn’t an easy task in today’s day and age.  People see a number and that’s what they focus on, especially when their compensation is directly tied to that number.  It’s easy for a competitor to give prices for “generic” labels as provided by the consultant.  It’s hard for us to explain the product specifications of products to a consultant that doesn’t know (or probably care) about specific items; all he wants is a number (lowest price).

Perhaps when robots can think for us, perceptions and realities will indeed align.  Unless and until that happens, we have to live in the world that we as humans create.  The better that the perceptions you create are, the better your reality will be.  It’s not easy but if you aren’t perceived as creating value, you will be replaced by a number.  Don’t let that happen.

A New, Old Era of Manufacturing is Upon Us

May 16th, 2017

A few weeks ago, we had dinner at the home of friends of ours.  Prominently displayed in their downstairs office was a 3D printer.  I had to ask about it.  Their 13 year old twins use the printer.  They currently produce fidget spinners and sell them to their friends.  If you don’t know what a fidget spinner is, go ask a preteen kid.  It’s the fad du jour.  I had a conversation with my buddy (who happens to own a manufacturing business) and he couldn’t contain his excitement about how great it is that his kids are interested in making things and how they have embraced the technology.  Plus, they’ve become capitalists, using their equipment to make money.  Inspired, I bought a similar printer for our house.  (We’ve had 3D printer “toys.”  This is a step above the ones my son has played with thus far.)

My son has learned a valuable lesson in the week or so we’ve had the 3D printer: manufacturing ain’t easy!  It took a while to set the equipment up.  Once we climbed that mountain, we had challenges getting our images to adhere to the platform, resulting in several failed attempts to create something.  We started searching the internet for solutions.  We weren’t the only ones having platform adherence issues.  We were able to move up the learning curve quite steeply because of the information other users shared online.   I got my son in touch with our friends’ kids and they’re giving him similar advice to what we discovered to solve our problems, so he’s on the path to making viable contraptions with the 3D printer.  Of course, he can’t wait to make fidget spinners.  I also  learned from my 11 year old son that I’m old and dumb.  I can’t wait for the real teenage years to start!

We had my in laws and mother over for Mother’s Day.  The dinner conversation turned to the contraption in our office.  My father in law spent a career in the automotive industry.  It took some convincing to get him out of the mass production mindset.  After some discussion, it clicked.  He restores old cars.  Parts are hard to come by.  A 3D printer can replicate the parts he needs.  Think about the customization that is upon us.  Do you want a custom designed car seat?  Done.  Do you want a custom designed piece of furniture?  Order it.  The possibilities are endless.

Mass production dominated the 20th century.  While it’s not going away, I think its growth has peaked.  Not that long ago, most items were custom made, either by a local craftsman or at home.  Improvements in communication and logistics, coupled with technological improvements like 3D printing, will bring back the age of customization.  Creative destruction is at work.  There will be economic winners and losers.  Start thinking about the impacts on your world or risk being an economic loser.

Is The Price Increase Fun Just Beginning?

May 9th, 2017

Over the last few weeks, we have received price increase letters from thermal transfer ribbon suppliers and a film supplier.  It has been five years, yes, five years, since a general increase in the pressure sensitive label industry.  After a long period of price stability (and even declining prices in some areas) in our industry, are these the warning signs of increases to come?

Regular readers know I’ve been wrong on raw material inflation for a while.  My judgement is clouded because I see operating costs rising but no opportunity to raise our prices without a raw material increase.  I’ve also underestimated the irrational mentality related to capacity utilization that exists in our world.  A good friend in the paper industry gave me this analogy.  He said, “It’s like we’re in a boxing match but there are really two fights going on.  I work for a company that wants to win; I only survive in my position if I win the fight before it goes all 15 rounds.  In other words, I need to make money.  Some of our competitors view the fight differently.  All they have to do is make it 15 rounds.  It doesn’t matter if they win or not; they just want to survive.  In other words, making money is a secondary goal for them; it’s my primary goal.”  He delivered this analogy a lot more colorfully in his New York accent and lingo, but this is a family friendly blog.  (My mother reads this.)

We live in a world with excess capacity.  Excess capacity gives the buyer power.   That’s happened in the label industry (and several others over the last several years) – buyers have gained power.  Transparency created by the internet has helped buyers more than sellers.   (His delivery methods are not very refined, but that’s President Trump’s basic message to our trading partners.)  For the pendulum to swing towards sellers, excess capacity either has to be taken out (via closures and/or consolidation) or utilized (via increased demand).  Unless something happens that drastically changes the supply side of our industry, we will get sporadic price increases related to increases in commodity prices.  If I could predict commodity prices, I’d be writing from my yacht in the Mediterranean right now.  I don’t own a yacht…But if I did, I’d prepare for choppy seas (price fluctuations) ahead.

A Day 1 Mentality Wins

May 2nd, 2017

Amazon’s founder, Jeff Bezos, has been writing about Day 1 at Amazon since his first annual letter to shareholders.  His recently released letter, like all of his letters, is worth reading.   (You can find them here: http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual).  In Bezos’ thinking, Day 1 is when a company is innovating and obsessed with figuring how to get better.  Day 2 symbolizes a company becoming content with its accomplishments.  If a company has a Day 2 mentality, it begins to decline.  The decline ultimately leads to irrelevance and going out of business.  Bezos has created a powerful message that has worked for Amazon and him for over 20 years.

For the last couple of years, one of our I.D. Images’ team members has had a running joke with me.  Like me, he played college football.  Like me, his career ended in college.  Like me, he still has dreams.  Every year, he calls or emails after the first day of the NFL Draft with the message, “Looks like we’re both Day 2 selections!”  (For those of you not obsessed with the NFL, the draft occurs over 3 days.)  After Day 2 comes and goes without our names called, we hold out hope for Day 3.  We’re both trying to eke out livings in the label industry, so you know how the NFL dream ends for both of us.

Many NFL superstars have been picked on Day 2 or Day 3.  The most famous is Tom Brady of the New England Patriots.  He was picked in the 6th round of the 2000 NFL draft and is still going strong.   Brady continues to bring a Day 1 mentality to his team.  He continues to win.  His work ethic is legendary.

It’s not easy to maintain a Day 1 mentality, especially after you reach what you perceive to be success.  If you find yourself thinking you’re developing a Day 2 mentality, think of Jeff Bezos or Tom Brady.  And if anyone from the NFL is reading, Andy and I are ready for tryouts!  OK, not really.  A Day 1 mentality implies you live in reality.

My Wants or Your Wants: A Lesson in Communicating

April 25th, 2017

Regular readers know I’m often amazed at the pearls of wisdom I pick up from children.  (Shameless self-promotion: I wrote a book titled “Good Job, Airplane!” that explores the wisdom and comfort our son brought to us during a difficult time.)

The other day, I was in the grocery store.  It took a while, but grocery stores finally figured out that allowing people to eat and drink in the store is a great idea to sell more products.  A young boy was with his mother and he was walking around with an ice cream cone.  My guess is he was around five years old.  He had the cone in his hands and it was starting to drip everywhere.  His mother was a little frazzled and handing him napkins.  She sternly told him, “Watch those drips!  You don’t want to be a mess.”  He quickly corrected her.  “No, Mommy,” he said, “YOU don’t want me to be a mess.  I just want ice cream!”  I thought about offering him a sales job on the spot.  Anyone that can think that quickly on his feet has a bright future in sales!

As I walked away, I thought about that seemingly innocuous interaction.  Managers and leaders tell their staffs their desires.  Often times, they don’t explain why they want something.  Often times, their wants do not align with what their people want or think their managers want.  And then managers wonder why they  don’t get the result they were expecting.  They end up frazzled, with projects that are a mess.

It’s not easy to tell a little boy why he should stop his ice cream from dripping everywhere.  It’s not easy to manage people.  But those tasks do get a little easier with better communication.  Better upfront communication can save a lot of clean up on the back end.

The Power of Good (and Bad) Customer Service

April 17th, 2017

I decided not to write my annual plea listing all the jurisdictions in which I file tax returns and asking them for a thank you note.  I’ve yet to receive a thank you note for paying taxes from any jurisdiction, even the jurisdictions where I don’t live.  (We did fight a war over taxation without representation but that’s a topic for another day.)

Recently, I was talking to a colleague at work.  She recently purchased home appliances.  Something happened and delivery of her appliances was delayed.  The company proactively apologized and, without her asking, gave her a credit on her payment.  She was pleasantly surprised and is telling everyone the story about how great the store has been to work with.

Of course, my luck in home improvement hasn’t been as good.  Our house needs new garage doors.  We called a company that was referred to us to get an estimate.  We were told someone would call to set up an appointment in two business days or less.  A few days came and went, no call.  I called back.  They apologized and said someone would call within a day.  It’s been almost a week.  Nothing drives me crazier than when I’m trying to buy something and the company makes it difficult.  We’re moving on and will buy our garage doors elsewhere.  As enthusiastic as my colleague was about her experience, I’ve been the same telling people about my experience.  If you treat me poorly before I buy something from you, how will you treat me if I were an actual customer?  The thought frightens me.

We live in a viral world.  How you treat customers will instantly be available to the world via social media.  Every interaction matters.  People are forgiving if a mistake is acknowledged and dealt with promptly.  They’ll even become your free marketing department, as is the case above.

 Oh, and customers appreciate thank you notes.  If any taxing authorities are reading this,  I don’t even need a personalized note.  You’ve got my email – just send me a short note thanking me for my payment. 

“Kids Will Find A Way, Dad”

April 11th, 2017

When I’m in town, I often drive my son to school.  As he approaches his teenage years, the rides tend to be a little more moody.  Instead of conversations or good natured bantering, it’s often, “Leave me alone, I’m tired!”  Every now and then, however, a good conversation ensues.

 At dinner last night, he explained the “black market” for mechanical pens and pencils that exists at his school.  A 0.7mm pencil is worth more than an 1mm pencil.  The holy grail is an erasable, retractable blue pen that has a comfort grip.  The kids trade these writing utensils like currencies.  In the car this morning, he told me, “The school might ban mechanical pens and pencils.”  I sensed that opening meant he wanted to ask or tell me something.  My spider sense was right.

 I said, “Really, what will happen?”

  He told me, “Nothing.  We’ll still trade them.  We can use sheets of paper at school to identify what we have and trade on the buses.”

 “Why?  Won’t you get in trouble?”

 “Kids will find a way, Dad.  They can make all the rules they want.  If we want to do something, we will.  Plus, it makes it more fun if we have to do it in secret.”

 Those teenage years are coming at me like a freight train!  On the one hand, I was somewhat proud of his and his classmates’ creativity and entrepreneurism.  On the other hand, the wry smile that came across his face when he was thinking about how to skirt the rules scared me to death.  My wife and I are in for an interesting ride over the next several years.  Please keep us in your thoughts and prayers!

 Why am I telling this story?  Hopefully, you folks with older kids have sympathy on me.  Maybe you smile about the dumb things you did when you were a kid.  But the real lesson here is people are naturally creative.  If they want to do something, they’ll figure out a way to do it.  Your colleagues and employees are no different.  Give them the opportunity to unleash their ideas.  Some might be crazy.  Some might be against the rules.  But some will have value.  It’s your responsibility to unlock that value.     

Don’t Forget Who Got You Here

April 4th, 2017

My wife and I went to dinner a few days ago.  To say we’re regulars at the place we went to would be an overstatement but we had been there recently so a few members of the staff recognized us.  The restaurant wasn’t that crowded.  A few minutes after we arrived, a large crowd of what clearly was soccer moms came in.  They were easily identified by the pictures of their children they all had proudly pinned to their jackets.  It was also obvious by their clothing they weren’t locals.

They chose a table near us.  They moved tables around, clearly expecting a large group.  The amalgamation of tables grew closer to where we were sitting.  We had ordered our entrees and were waiting for our food to arrive.  We were in a meaningful conversation, which as my wife pointed out given travel schedules and parenting duties, happens about once a quarter.  As we continued our conversation, a person who appeared to be the manager came over to us.  She said (verbatim), “This is going to sound like a strange question but would you mind moving so we can accommodate that large party?”  There was no offer of a complimentary drink or any such accommodation.  My wife’s translation was, “You’re less important than that large group that will never come here again.  We’re changing your table.”  After getting over the shock of being asked that question, we did not move and the rest of their party never materialized.  Oh, and our meaningful conversation vanished into the night air.  We have not returned to that restaurant.

The siren of new customers is always calling us.  Businesses need new customers.  But existing customers are a business’s life blood.  If you don’t treat them right, they’ll become someone else’s new customer.  Cherish your existing customers.

The Swamp is Alive and Well

March 27th, 2017

Along with industry colleagues, I spent a few days last week in Washington D.C.  I took part in a “fly in.”  A fly in is DC lingo for hiring a lobbying firm to set up meetings with congressional staffers to discuss issues pertinent to your cause.  We participated with a direct mail group, who has a vested interest in Post Office reform legislation that is currently going through committees in the House.  We also discussed tax reform and trade.  Of course, our visit coincided with what turned out to be a non-vote regarding the repeal of Obamacare.

Donald Trump and I both learned something last week: the swamp is here to stay.  The president learned how hard it is to get a bill passed, even with his own party in power.  I was and still am astounded at the machine that is Washington D.C.  There are literally millions of square feet of office space for congressional staffers.  I tried to find data on how many people work for Congress.  After seeing a lot of data, my blood pressure was getting too high.  As a result, I decided to end that search.  My best estimate (from a few years ago) is between 7,000 and 8,000 people work for Congress.  I know some of those work at offices in their home districts/states, but a lot of them are “on the hill.”  And they’re all on the federal payroll.  That’s a lot of money out of the pockets of the good ol’ American taxpayer.  Most of those staffers eventually graduate and guess what they do?  They become lobbyists!   Who do you think they listen to?  You don’t have a voice in Washington unless you’ve got a pocketbook!  There are over 12,500 registered federal lobbyists in the US.  That’s a large army figuring out how our tax dollars are spent and what regulations are good and bad.

(My source: https://sunlightfoundation.com/policy/documents/keeping_congress_competent/.  Note the data is from 2010!

Unless some real reform is done regarding lobbying, nothing will change.  The machine is too entrenched and too large.  Destroying it is the only solution.  No one who participates has an interest in doing that.  Those that pay lobbyists get their voices heard.  They don’t want that changed.  Lobbyists have a pretty good gig.  They don’t want that changed.  Congressional offices do not have the resources to understand what bills really mean (and I think many of them have no clue about business).  They need someone to educate them.  They don’t want that changed.

Money makes the world go around.  That is a gross understatement when it comes to our federal government. Trump motivated voters with his “drain the swamp” mantra.  Based on what I saw last week, there isn’t a siphon large enough to make that happen.

The Way Technology Should Work in Customer Service

March 21st, 2017

 

I had a customer service experience that demonstrates how technology can improve customer service.  First, a little background:

Shortly before Christmas, I took my son shopping.  He needed to get a present for his mother.  We walked into the store and he saw Roomba, the robot vacuum, and exclaimed, “Dad, Mom NEEDS this!”  I turned white and had never felt like a bigger failure in my life.  “What’s wrong, Dad?” he asked.  After my heart started beating again, I calmly said, “Logan, haven’t I taught you anything?  Under no circumstances do you ever, EVER get a woman an appliance or cleaning apparatus and call it a present.  It doesn’t matter if she’s a friend, girlfriend, wife, mother, grandmother, aunt – anyone.”  He was unfazed by my plea.  “Dad, Mom’s always vacuuming.  She’ll LOVE this.”

We bought it.  I had to think quickly to keep Logan (and more importantly me) out of trouble.  I decided we wouldn’t wrap it and give it to her immediately.  I would throw him under the bus and make it very clear that it was his idea.  He was thrilled, still not comprehending the danger he put us in with his choice.  We got it home and the initial reaction was as expected. “A vacuum as a present?  Really?  The dog will attack it.  I don’t want that thing.”  Using the power young sons have over mothers and men have while dating someone but  lose when they put a wedding ring on, Logan calmly explained, “Mom, this will help you.  I’ll even vacuum with Roomba.”  The effect was immediate.  She became excited about Roomba.

Roomba became a hit in our house.  The dog even tolerates it.  (I think he knows his hair is the reason we have it.)  The other day, my wife told me Roomba was making a weird noise.  I turned it over and realized one of the rollers (“extractors” in Roomba lingo) was torn.  I got online and did a chat session with a representative from the company.  I had logged in to my account.  Unlike many other experiences I’ve had, she actually had all my information available – no double entry required and I didn’t have to introduce myself to her.  I explained the situation.  She quickly diagnosed the problem and apologized.  She told me the company would send me a replacement part.  As I was explaining this to my wife, she said, “You better get her name and make sure that happens.”  Not that we’ve had bad experiences and been lied to before by customer service people.  I didn’t have to – I got an email indicating a replacement part was on its way before my chat session ended.  After our call ended, I received a transcript of our communication via email.  The part came on the promised date.  I put it in and Roomba is back in business.

As I’ve written in the past, technology is not a cure for apathy.  But if used properly, technology can help solve a customer’s problem quickly and efficiently.  If only technology could explain how women think…