Are You Playing Not to Lose or Are You Playing to Win?

September 18th, 2018

Even the casual sports fan knows the Cleveland Browns have struggled for the last 19 years.  (It pains me to write that.)  After losing every game last year, the Browns teased their incredibly loyal, blindly optimistic fan base by tying their archrival, the Pittsburgh Steelers, last week.  On Sunday, they lost to the New Orleans Saints, 21-18, after leading 12-3 entering the 4th quarter.  The Browns’ kicker missed two field goals and two extra points.  NFL kickers normally do not miss four kicks in a game.

In both games, the Browns had a chance to win.  The coaches had good game plans.  For the most part, the players executed well.  At crucial moments, however, things fell apart.  Missed assignments.  Missed tackles.  Crucial penalties.  And, of course, mixed kicks.  I have asked myself why these mistakes happen.  I submit that the Browns’ culture of losing has become the dominant belief by the team.  They know something will go wrong.  They expect something to go wrong.  To borrow a sports cliché, they play not to lose instead of playing to win.

Are you playing not to lose or are you playing to win?  If you are in sales, do you make the extra phone call?  If you’re in manufacturing, do you try something different?  It’s easy to get comfortable with the way things are.  If you get too comfortable, just remember, someone wants what you have.  They’ll work to take it from you.  Work harder.  Remember, whether you think you can or think you can’t, you’re right.

Postscript:  Eventually, the Browns win a game and hopefully that will turn them in the right direction.  Of course, most fans thought they couldn’t do worse than a 1 and 15 record two years ago and then they proceeded to go 0 and 16 last year…

Never Underestimate the Resilience of the US Economy

September 10th, 2018

It was an interesting week for the political class.  Bob Woodward’s book about Trump came out.  The New York Times published an “anonymous” op-ed from a Trump administration employee.  The Senate acted like petulant children in hearings for a new Supreme Court justice.  Bernie Sanders introduced the BEZOS act (Stop Bad Employers By Zeroing Out Subsidies), targeting large employers who do not pay “fair” wages.  Potential trade wars with Canada and China continue to be in the news.  I’m sure I missed a few of the circus acts that we, the citizens of this great country, finance.  Links to some of them are below.

Despite all that is going on in Washington D.C., the Labor Department announced the unemployment rate is at 3.9%.  Private employers added new jobs a record 95th straight month.  Wage growth accelerated by the fastest pace since 2009.  By all accounts, the US economy is performing well.  The US remains the world’s economic engine.   Reductions in regulations and reductions in tax rates are having a positive impact on the economy.  To paraphrase Winston Churchill, capitalism isn’t perfect, but it’s the best thing we’ve got.

We will certainly have an end to this economic cycle and it will probably be caused by the uncertainty that our government creates.  To anyone that thinks more government is the answer to economic cycles, please look at the data.

The Sideshow:

Our president attempts to say anonymous )

Stop Bad Employers By Zeroing Out Subsidies:

“Bernie Sanders introduces the BEZOS Act, slamming Amazon’s low wages”

“I am Part of the Resistance Inside the Trump Administration”

“Bob Woodward’s new book reveals a ‘nervous breakdown’ of Trump’s presidency”

The Personal Touch Wins

September 4th, 2018

I was reminded of one of my earliest and most important business lessons last week.

One of my first jobs was a paper boy.  I loved it.  I got up early, which I still like to do, and made a lot of money, which is also a fun thing.  Collecting payment was not a fun task.  I swear people pretended not to be home.  The “I want my $2” scene from the movie Better Off Dead could have been played by me or any other paper boy or girl. (

I was out collecting one day.  I screwed something up and ended up stopping at a prepaid customer’s house.  We weren’t supposed to collect from prepaid customers.  By the time I realized my mistake, the door was already open.  I swear the guy was six foot five and a chiseled two hundred and seventy-five pounds.  As I soiled myself, he sternly said, “What the *$() do you want?”  I gathered my composure and said, “Hi Mr. Jones, I’m Brian Gale.  I’m your paper boy.  I just wanted to make sure you were satisfied with my service.”  He had a startled look on his face, said, “Wait here,” and shut the door.

I had no idea what was going to happen next.  It seemed like I stood there for an eternity.  He came back, handed me a twenty dollar bill and said, “As long as you keep my paper on my porch and keep it dry, we’ll have a great relationship.”  I think I mumbled thank you and hurried on.  To an eleven year old boy, twenty bucks was a fortune!

I started stopping at every prepaid customer’s house.  I didn’t always have positive results, but I learned a lesson: check in on your customers.

Last week, I was in my car.  I had traded phone calls with a friend.  As background, my wife says I mumble quite a bit.  I activated the blue tooth in my car and asked to call my friend.  Again, not paying attention, before I knew it, I had dialed a customer.  His name is nothing like my friend’s name.  It was ringing before I could hang up.  I didn’t want to say I didn’t mean to call him, so I said I just wanted to check to see how he was doing and how our company was doing.  He was floored.  I don’t know if we’ll get additional business or not, but we had a great conversation and I learned a little about him and his business.

Especially in times of turmoil, reach out to your customers.  Say hi.  Ask how they’re doing.  The personal touch will set you apart from your competition.

Thank You, Sir, May I Have Another (Price Increase)!

August 27th, 2018

Citing continuing “…increases in the cost of our raw materials, supply continuity on critical components and a sustained increase in transportation and logistics costs”, Avery Dennison announced a price increase last week.  This action represents the third price increase in the last 10 months.  The price increases announced (not including freight and surcharge increases by our pressure sensitive suppliers) total anywhere from 13 to 20% depending on the product line.   In the past, I have written about chemical shortages, decreases in liner supply, challenges with freight, and general commodity increases.  These challenges continue.

It is human nature to think things stay the same.  For the last several years, prices did not increase and in some cases, trended down.  We got lulled into believing things would stay that way.  Now that we’re going through a period of increases, we think prices will continue to go up forever.  They won’t but I don’t know if this period of inflation is over yet.  The US economy remains strong.  Supply dynamics specific to our industry (leuco dye shortage and liner supply) remain.  And think about this: over the last year, oil (WTI) is up about $20 a barrel, or 42%.  However, it is still $40, or 60%, below its 2013 price.  The price decrease over this time period is largely driven by the increase in US oil supply from fracking.  If I could figure out the equilibrium price for oil, I wouldn’t be selling labels…


WTI Price Chart

As with most things in life, this too shall pass.  Continue to focus on your value proposition and prices will take care of themselves.  The more value you provide, the easier it is to pass along price increases.


Where’s The Government Accountability Act?

August 21st, 2018

Elizabeth Warren announced she is introducing legislation titled “The Accountability Capitalism Act” that will create a government agency that will “spur a return to greater corporate responsibility.” According to Vox, the legislation “…would redistribute trillions of dollars from rich executives and shareholders to the middle class — without costing a dime.”  The thought of a government activity not costing a dime brought tears of laughter to my eyes.

(I briefly read the proposed legislation.  Senator Warren has one very good idea.  She wants to “curb corporate involvement in political activities.”  I am all for ending all lobbying activities by corporations and unions.  Free speech zealots will say I’m crazy.  Let any individual give whatever he wants as long as it is 100% disclosed, not hidden by some innocuous sounding PAC name.  Any legislation that curbs political donations is destined to die a quick death.  But I digress.)

When is the last time Congress passed a real budget?  Have our government officials ever explained the real liabilities of our federal government, including Medicare, Social Security, and all other promised welfare programs?  Are companies focusing on short term earnings really the problem?  If companies engaged in the budget shenanigans our esteemed Congress does, people would be in jail.

We live in a global economy.  Large US companies, who would be the focus of this legislation, compete with businesses from all over the world.  Those of us whose businesses supply large companies effectively compete world-wide as well.  Adding more regulatory burden leads to more crony-capitalism.  Instead of making it more difficult for US companies to compete internationally, make it easier.  And before you call out companies for not taking responsibility, take a look in the mirror regarding how our government operates.  A good place to start might be having all government employees (elected and unelected) participate in the same healthcare system those of us in the private sector participate in.  That would be a great start for government accountability!

The Infatuation with Socialism is Starting to Get Scary

August 14th, 2018

Gallup recently released a poll that concluded people who identify themselves as Democrats or Democrat leaning view socialism more positively than they view capitalism.  While there is some positive news in the polls (People still hold strong positive views of small business and entrepreneurs and the overall population remains positive on capitalism.), the attraction the Democratic Party has to socialism is frightening.

“Free” healthcare, college, housing and whatever else politicians can promise sounds great, until someone has to pay for it.  Milton Friedman famously quipped, “There’s no such thing as a free lunch.”  There’s no such thing as free healthcare, college, or housing either.  Someone has to pay for everything.  We have yet to find the proverbial money tree.  I do know that a growing economy helps pay for social services.  The county in which we live just reassessed home values for property tax purposes.  The average increase in valuation was 10%.  That means property taxes are increasing without a vote.  Support policies that increase economic growth if you want an increase in social services.

Millions of people (including my grandparents and great grandparents) left Europe to come to the US because socialism was not working.  Socialism still does not work.  See Venezuela.  Look at unemployment in Italy.  That’s what happens when socialism fails.

Capitalism is far from perfect.  But it’s the best thing we’ve got.

Understanding the Value of a Dollar

August 6th, 2018

Last week, my wife called me laughing hysterically about a situation that occurred with our son.  He wanted to go to the movies with his friends and asked for money.  After some back and forth about finishing his chores, the following exchange took place:

Mom: “It’s about time you learn the value of a dollar.  You should use your own money if you want to go to the movies.”

Son (without missing a beat): “Mom, I understand the value of a dollar.  That’s why I want to spend your money.”

He got some laughs for his witty comeback but still had to use his own money for the movie.  I’m confident the physical act of taking cash from his not-so-secret hiding spot and exchanging it for a movie ticket made him think twice about earning and spending money.

As we move more and more towards a cashless society, I fear people will forget how hard it is to earn and save money.  Our company doesn’t even issue paychecks anymore; we require direct deposits.  I’ve written about it before but I wonder how people would feel about their taxes if they actually had to write checks to all of the government entities that collect them versus having them automatically taken out of their paychecks, added on to the purchase price of items, and added to monthly mortgage payments.

A good friend of mine with whom I often have inspired political debates is in an occupation that requires him to pay estimated taxes each quarter.  He admits, “I’m a Republican four days a year, the days I have to write those tax checks!”  I have a feeling many more people would feel like him if they had to write checks for their taxes.

Be Wary of Relying on the Government to Increase Your Profitability

July 30th, 2018

With much fanfare, Whirlpool filed a case with the U.S. International Trade Commission, claiming foreign companies unfairly subsidized washing machines sold in the US.  In October 2017, the Commission ruled in Whirlpool’s favor, recommending the U.S. use tariffs and quotas to limit foreign companies’ roles in the U.S. market.  (For more on the case:

Whirlpool claimed the ruling was a victory for “American manufactures and American workers.”  LG Electronics and Samsung claimed U.S. consumers would be hurt.  In January, the U.S. put tariffs on imported washing machines.  (  According to the U.S. Department of Labor, consumers have paid 20% more for washing machines through June of this year than they did in the comparable period last year.

More recently, the U.S. has imposed tariffs on steel and resins, two major costs of Whirlpool’s washing machines.  Whirlpool is now saying the tariffs, along with increases in freight costs, have dramatically decreased its profits.  (  It appears that Whirlpool liked tariffs when they “helped” the company but is against tariffs that increase its costs.  Funny how their views changed.

Since the trade decision was announced in October, Whirlpool’s stock is down over 29% and the company announced layoffs in January.  If that’s a win for American manufacturers and workers, I’d hate to see what a loss looks like.   Focusing and investing on improving your business might be a better strategy than relying on the government for increasing profitability.


Creating Division Will Work Until It Doesn’t

July 23rd, 2018

Last week, President Twitter set his sights on the Federal Reserve.  He said that raising interest rates “…hurts all we have done.”  This is the latest attack on a government entity to come from the executive branch.  Intelligence agencies, his own justice department, the Post Office, and Congress, among others, have all been criticized by Trump.

A major criticism of the Obama administration by Trump and Republicans was that the administration practiced “politics of division.”  Critics harped about identity politics contributing to social unrest and reducing unity in the country.  Trump is taking the politics of division to a new level, blurring the lines between the separation of powers that have served our country well for centuries.

Traditionally, presidents like loose monetary policy.  As I wrote about a few weeks ago, rising prices (inflation) create the appearance of economic growth even if there is none.   Trump’s background in real estate also contributes to his desire for low interest rates.   President Trump is not the first president to complain about the Federal Reserve raising rates.  George H.W. Bush in part blamed the Fed for his loss in 1992.  But Trump’s track record of creating divisiveness makes me wonder who is next.

Politicians run negative ads and attack campaigns because they work.  At some point, however, they seem to cross the line and forget we’re all on the same team.  It’s time for the pendulum to swing back to unification.  If someone or a political party can deliver that message, he/she/they will stand a good chance of winning elections.

How Long will Technology’s Planned Obsolescence Game Work?

July 17th, 2018

Last week, my phone stopped connecting to its cellular network.  I contacted the carrier who told me it’s a known problem with that phone model.  He sent me a link to a page concerning the problem and told me to take it to the phone manufacturer’s store.

I made an appointment with their self-proclaimed “Genius Bar.”  I got there and explained the problem.  The man who checked me in said, “We love when the carrier blames us.  It’s usually not us.”  I knew I was in for a fun time.

I got called by the technician.  I explained my problem again.  The woman was nice and said, “Even though your phone is out of warranty, we will fix the phone for free as a courtesy.  You need to leave the phone here.  We’ll give you a loaner.  We’ll send your phone out and when it’s back, we’ll let you know and you can swap the loaner for your phone.”

As you might imagine, she lost me with “as a courtesy”.  I didn’t break the phone.  They admit it’s a known problem.  I wasn’t too thrilled with setting up a loaner phone and then having to set my phone up again either.  I also wasn’t excited about returning to the store.   So, I went to the carrier’s store and got a new phone.  Their planned obsolescence scheme worked.  (They claimed that’s not their strategy but it sure seems a little fishy to me.)

But will it work forever?  The PC market did a great job of forcing upgrades when it was the dominant connectivity device.  The smart phone market has followed the PC market’s playbook with great success to date.  What happens when faster wireless networks roll out?  Do phones get “dumb” again and the true computing power will rest in the cloud?  Only time will tell.

In the meantime, expect “more known problems” on your devices.  The “geniuses” are going to take advantage of us for as long as they can.  Every technology eventually gets replaced.