No. 12 December 2007

Tom Reilly, an internationally recognized motivational speaker and expert in value added selling says: “There are two types of value you can provide your customers: perceived value and performance value.

“Perceived value is a promise that you make. It’s the sizzle on the steak. It’s the gift-wrap on the package. It’s everything you do to build customer anticipation and expectations for your solution. This includes packaging, brand name, expertise, reputation, knowledge, etc. These are qualitative examples of how you bring value to the customer, and they generally describe who you are.

“That your organization is a one-hundred-year-old company gives peace of mind to many buyers. They perceive great security in dealing with a centenarian organization. That’s the essence of perceived value—it gives your buyer a warm and fuzzy feeling when they buy from you. Perceived value is sensory: how things smell, taste, look, and feel.

“Performance value is the proof behind the promise. It’s the steak behind the sizzle. It’s the profit impact you have on the customer’s business. Performance value includes things like greater efficiency and effectiveness. Giving customers the opportunity to do something they have been unable to do is performance value. Performance value is what you do for the customer.

“When your solution helps the customer use their product more efficiently, manage their people more effectively, or chase a piece of business successfully, you are delivering quantifiable value.

“Perceived value may get you the business, but performance value brings the customer back. Perceived value serves a useful purpose in getting buyers excited. Performance value plays a bigger role in customer satisfaction and retention.”

Here’s a quote from Michael Bloomberg’s book, Bloomberg by Bloomberg, about planning versus acting quickly:

“While our competitors are still sucking their thumbs trying to make the design perfect, we're already on prototype version #5. By the time our rivals are ready with wires and screws, we are on version #10. It gets back to planning versus acting: We act from day one; others plan how to plan—for months.”

Bloomberg’s quote on action reminds me of a saying we hear around my business: “I’d rather have a good decision made quickly, than a perfect decision made slowly.” Think about that.

The Washington Post's Mensa Invitational asked readers to take any word from the dictionary, alter it by adding, subtracting, or changing one letter, and supply a new definition. Here are some of this year's winners, some of which are terrifically innovative:

1. Intaxication: Euphoria at getting a tax refund, which lasts until you realize it was your money to start with.

2. Reintarnation: Coming back to life as a hillbilly.

3. Bozone (n.): The substance surrounding stupid people, that stops bright ideas from penetrating. The Bozone layer, unfortunately, shows little sign of breaking down in the near future..

4. Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.

5. Giraffiti: Vandalism spray-painted very, very high.

6. Sarchasm: The gulf between the author of sarcastic wit and the person who doesn't get it.

7. Inoculatte: To take coffee intravenously when you are running late.

8. Hipatitis: Terminal coolness.

9. Osteopornosis: A degenerate disease. (This one got extra credit.)

10. Karmageddon: It's like, when everybody is sending off all these really bad vibes, right? And then, like, the Earth explodes and it's like, a serious bummer.

11. Decafalon (n.): The grueling event of getting through the day consuming only things that are good for you.

12. Glibido: All talk and no action.

13. Dopeler Effect: The tendency of stupid ideas to seem smarter when they come at you rapidly.

14. Arachnoleptic Fit (n.): The frantic dance performed just after you've accidentally walked through a spider web.

15. Beelzebug (n.): Satan in the form of a mosquito, that gets into your bedroom at three in the morning and cannot be cast out.

16. Caterpallor (n.): The color you turn after finding half a worm in the fruit you're eating.

No. 11 November 2007

I’d like to share a favorite story with you called Quantum Leap. It has some great lessons about the value of working harder versus working smarter and “outside the box.”

The author, Bhagwati Prasad, says that working harder only delivers incremental gains, not quantum leaps. But when you do something a totally different way, you have the opportunity to make a “quantum leap” and create entirely new possibilities. Here is Bhagwati Prasad’s story:

“I’m sitting in a quiet room at the Millcroft Inn, a peaceful little place hidden back among the pine trees about an hour out of Toronto. It’s just past noon, late July, and I’m listening to the desperate sounds of a life or death struggle going on a few feet away.

There’s a small fly burning out the last of its short life’s energies in a futile attempt to fly through the glass of the windowpane. The whining wings tell the poignant story of the fly’s strategy – try harder.

But it’s not working.

The frenzied effort offers no hope for survival. Ironically, the struggle is part of the trap. It is impossible for the fly to try hard enough to succeed at breaking through the glass. Nevertheless, this little insect has staked its life on reaching its goal through raw effort and determination.

This fly is doomed. It will die there on the windowsill. Across the room ten steps away, the door is open. Ten seconds of flying time and this small creature could reach the outside world it seeks. With only a fraction of the effort now being wasted, it could be free of this self-imposed trap. The breakthrough possibility is there. It would be so easy.

Why doesn’t this fly try another approach, something dramatically different? How did it get so locked in on the idea that this particular route and a determined effort offer the most promise for success? What logic is there in continuing, until death, to see a breakthrough with ‘more of the same?’

No doubt this approach makes sense to the fly. Regrettably it’s an idea that will kill.

‘Trying harder’ isn’t necessarily the solution to achieving more. It may not offer any real promise for getting what you want out of life. Sometimes, in fact, it’s a big part of the problem.

Self-discipline and persistence are true virtues. Over a lifetime they can make a powerful contribution to success and achievement. They are fundamental to the development of your talents. It’s extremely important to apply yourself diligently, and sometimes, staying power is what delivers a big win.

But ordinarily, you will find that trying harder produces only incremental gains, not quantum leaps. Also, keep in mind that sometimes trying harder (even a lot harder) offers little more than a straight path to burnout. Attempting to succeed through ‘more of the same,’ being resolute and relying on committed effort, can blind you to better pathways.

If you want to make a quantum leap, quit thinking about trying harder. More effort isn’t the answer. Get ruthless about trying something different. Abandon the status quo. Change your behavior. Look for a paradoxical move. If you’re trying to climb over the wall, open a door and walk through. If your pushing against the river, try going with the flow. Use finesse instead of effort. The tendency when you stall out or begin to level off in your performance is to go back to the basics and ‘do what you do best.’ But doing what you do best could be the worst thing you could do.

Quantum leaps come when you seek the elegant solution. So look for an approach characterized by simplicity, precision, and efficiency. Call for a fresh perspective, a deft move, and a path of less resistance.”

No. 10 October 2007

Here’s a great story I read on the Cernak Report Blog about a canoe race between two companies. It’s called A Modern Parable. At the end of the story, you will smile and shake your head knowingly as you realize there may be more truth to this story than not.

“A Japanese company (Toyota) and an American company (General Motors) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. On the big day, the Japanese won by a mile.

“The Americans, very discouraged and depressed, decided to investigate the rea­son for the crushing defeat. A management team composed of senior management was formed to investigate and recommend appropriate action. Their conclusion: The Japanese had eight people rowing and one person steering, while the American team had eight people steering and one person rowing.

“Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough peo­ple were rowing.

“Not sure of how to utilize that informa­tion, but wanting to prevent another loss to the Japanese, the rowing team’s manage­ment structure was totally reorganized to four steering supervisors, three area steering superintendents and one assistant superin­tendent steering manager.

“They also implemented a new perfor­mance system that would give the one person rowing the boat greater incentive to work harder. It was called the ‘Rowing Team Quality First Program,’ with meetings, din­ners and free pens for the rower. The new change initiative also included plans for get­ting new paddles, canoes and other equipment, plus extra vacation days for practices and bonuses.

“The next year, the Japanese won by two miles.

“Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital invest­ments for new equipment. The money saved was distributed to the senior execu­tives as bonuses, and the next year’s racing team was outsourced to India.

“Sadly, The End.”

When it comes to business strategies, I’m a big believer in the power of doorway con­versations and the value of holding meetings off-site.

When business team members and their offices are isolated from each other and far apart, you lose the immediateness and spon­taneity of face-to-face conversations. Sharing ideas and finding solutions to business issues often occurs more effectively in an office doorway or group huddle in a hallway.

On the other hand, in formal meetings, many people will not open up and share their ideas and true feelings. But past experi­ence proves that moving a meeting to a location outside of your business environ­ment will help remove obstacles to being fully open and honest with each other. It’s amazing how much more effective the meeting will be.

In an article in the June 11 issue of Newsweek magazine, Stephen Levy wrote about the power of conversation: “In e-mail, people talk at you; in conversation, I can talk with subjects, and a casual remark can lead to a level of discussion that neither party anticipated from the beginning. I am more likely to learn from someone in a conversa­tion than in an e-mail exchange, which simply does not allow for serendipity, inten­sity, verbal clues, and give and take of real-time interaction.” Now that makes a lot of sense.

In my company, we continually warn our business team members not to rely on e-mails for carrying on a formal business conversation — internally or externally — because it is so easy to misinterpret the tone and intent of written words. Use e-mails to exchange facts; otherwise, get up from your desk, walk down the hall or across the build­ing, or call that person on the phone.You will find your conversations are shorter, more effective, and to the point. And you’ll reduce any possible misunderstanding about the points you’re trying to make.

Use the “Rule of Three.” After the third e-mail about the same subject with the same person, it’s time to pick up the phone and finish your conversation. In fact, why didn’t you just call that person to begin with?

Now re-read Stephen Levy’s com­ments in the first paragraph of this final brief and think about the power of face­to-face conversations.

No. 9 September 2007

I recently read an interesting story in a Blog about statistician Abraham Wald and the unique way he applied statistical reasoning to save lives during WWII.

“During the War, Wald tried to determine where to add extra armor to airplanes. Based on the patterns of bullet holes in returning airplanes, he suggested that the parts not hit should be protected with extra armor.”

Why would he suggest that?

Wald was looking at what is sometimes called ‘dead evidence.’ He reasoned, “If these planes are returning, we know that if they are hit in the spots they have been hit, they can still fly. The planes that did not return must have been hit in different places. So put the extra armor wherever the returning planes were not hit.”

“Most people would have a natural inclination to put the armor where the returning planes had been hit. The real answer is simple, but counterintuitive. It's called ‘dead evidence’ because it is what people ignore when they make these judgments.”

“How can you use this in your business? Think about the ‘dead evidence.’ Don't look just at winners, look at losers to see if they did the same things as the winners. Don't just look at what the top companies in your industry are doing, look at what all kinds of different companies are doing. Sometimes you can learn more by looking at failures than at successes.”

Michelle Nichols, a sales speaker, trainer, and consultant ( info@savvyselling.com ), wrote a terrific article, titled “Repeat: It Pays to Repeat Yourself,” in the May 17 issue of Business Week magazine. Her article described the following five ways to get your sales message across and close a sale using repetition.

Listen for repeated complaints from customers. If customers complain about something more than once, then it’s truly causing them pain. If your solution reduces the pain, then you have a strong benefit to close the sale.

Repeat your benefits. Explain your pain reduction solution several different ways so that you can be sure they understand it and that they can repeat it to others in ways they too will understand. More than three benefit solutions are too many.

Repeat your prospecting calls. It’s better to call repeatedly on a small targeted list of customers than to make only one sales call on a large potential customer list. Repetition of benefits creates familiarity with you and your solutions.

Ask for the order repeatedly. When the prospect says no, find out what’s holding them back, try to overcome the objection or compensate for it, and then ask for the order again. Repeat this process until the customer says yes or gives you a logical reason for a firm no.

Encourage repeat customers. While 60% of customers are quick decision makers, 40% find deciding so painful they put it off. That explains why customers have to be asked repeatedly to buy, even when the facts point clearly to buying from you.

In his excellent Blog Leadership By Example, Jim Citrin recently wrote about the legendary leadership of Sean Fitzpatrick, captain of New Zealand’s All Blacks rugby team from 1992 until his retirement in 1997. It was Fitzpatrick's leadership off the field that made him so highly regarded.

Fitzpatrick believed that the core leadership lesson that could translate from rugby to business is that excellence is achieved only when people relate not just intellectually, but also emotionally to their organization.

He believed that you couldn’t motivate people over the long term without “an emotional connection, a historical context, and a purpose larger than the self.”

Does your employee or management team have an emotional connection with the core values of your business? Do they know what your goals and aspirations are? Do they feel part of your team and understand how they contribute to the success of the business and in turn, to their own personal success?

If they don’t, it’s not too late to begin developing your own team of “connected” employees and managers. They will be the foundation of your future success.

No. 8 August 2007

Tom Peters says there are four principles that help create sustained business success: “(1) Hire Great People (Resilient, Passionate) (2) Try a Lot of Stuff (S.A.V.-Screw Around Vigorously/R.F.A.—Ready. Fire. Aim.) (3) All ‘Wow’ All the Time (Shoot for the moon—in every circumstance) (4) Enjoy It While It Lasts (And it ain't gonna last forever, so you might as well keep swinging.)” Think about these principles - any one of them will make a positive difference in the success of your business. And you'll have more fun too.

Participants in our industry have recognized that for many years we have had a shortage of trained engine and equipment technicians. And from that concern the Equipment and Engine Training Council (EETC) was created in 1996.

The EETC is comprised of manufacturers and their service and training personnel, technical school instructors, equipment distributors and their education and service personnel, equipment dealers, OPE associations, and other industry and educational associations and leaders. In this unique organization competitors leave their egos at the door and work together for the good of the entire OPE industry.

The EETC had accredited more than 80 schools and certified the competency of over 8000 technicians. While not perfect, the EETC has made a huge positive impact on this industry and its future success.

Yearly membership for dealers is only $50.00, $750.00 for distributors and $1,700 for manufacturers. There aren’t too many other organizations around that make such a positive impact on our industry and our businesses.

If you're not a member of the EETC, why not? For more information, visit the EETC's WEb site at www.eetc.org.

“Thanks to technology, people have never been more connected – or more alienated.” Thus began a recent Forbes magazine article entitled “Can You Hear Me Now?” whose premise was that we have created a communications culture that has decreased the time available for us to sit and think, uninterrupted.

The author states that “it’s a growing reality of our lives that we live in the presence of screens, whether on a laptop, palmtop, cell phone or BlackBerry. One female respondent had this to say about her BlackBerry: “I look at my watch to see the time. I look at my BlackBerry to get a sense of my life.”

The author posed the following questions: “Are we leaving enough time to focus on the things that matter? Are we willing to turn off our devices, and disengage from the always-on culture? What kind of people are we becoming as we develop very intimate relationships with our machines?”

I contend that we could possibly gain attributes that make us more machine-like and lose attributes that make us more human-like. And that my friends, is very, very scary.

Charlie Munger, the 84 year old business partner of Warren Buffet, told a story about Max Planck and his chauffeur in a commencement address that Munger delivered on May 13, 2007 at the USC Law School:

“After winning the Nobel Prize, Max Planck toured around Europe giving speeches. His chauffeur memorized the speech and asked if he could give it for him in Munich, pretending to be Planck, and Planck would pretend to be the chauffeur. Planck let him do it and after the speech someone asked a tough question.

“The real chauffeur replied that he couldn’t believe someone in such an advanced city like Munich would ask such an elementary question and as such, he was going to ask his chauffeur (Planck) to reply.”

Mr. Munger went on to say “In this world we have two kinds of knowledge. One is Planck knowledge, the people who really know. They’ve paid their dues, they have the aptitude. And then we’ve got chauffeur knowledge. They have learned the talk. They may have a big head of hair, they may have a fine temper in their voice, they’ll make a hell of an impression. But in the end, all they have is chauffeur knowledge. I think I’ve just described practically every politician in the United States.”

Survival of the Fittest - Facing Change

I wrote this piece about change in the OPE industry on January 15, 1995. I believe it is just as pertinent today as it was in 1995. What do you think?

Each morning, over your first cup of coffee, you cringe at the thought of what you will hear this day about more changes in an industry where change seems constant. You feel comfortable that you’re running your business fairly well. While there’s always room for improvement, you try to take care of your customers extremely well. You provide them a service or product that’s good enough for them to pay you a profit for providing it.

You also realize that nobody “owns their customers anymore. And that you are only as good as your last performance was. If it was lousy, your customer will simply turn to someone else. So you always try to exceed your customer’s expectations. Today you’re confident about your business abilities, but you have some fear about tomorrow and the changes that will most certainly affect you in the future. How should you respond to them?

In past years a strong and stable company was one that never changed. Today, a strong, stable company is one that constantly changes; that takes advantage of every opportunity that change presents; and uses every opportunity to move forward in a positive manner.

Alexander Graham Bell best stated what our normal reaction to change is, when he said: “When one door closes, another always opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.” You can’t keep your eyes shut, or have tunnel vision. You have to see and recognize the opportunities as they are presented to you. And that may take some work on your part.

You recognize opportunities by staying informed about what is going on in your industry. You read trade publications. You talk to informed, knowledgeable people. You attend industry meetings and trade shows. And you listen better than you ever have before. Informed knowledge gives you the opportunities; opportunities give you options; and options give you choices. Then it’s up to you.

Don’t worry, as you ponder your choices, that many may seem of little consequence, or too complex, or that you might make the wrong decision. One of the most important things in the world for you to know is not where you stand today, but in what direction you are moving for tomorrow.

See your opportunities and make your informed choices. Then with a passion you didn’t know you had, focus yourself and your associates on relentlessly pursuing your vision. Only you have the power to make it happen in your business. Don’t ever get caught looking so longingly and regretfully on the closed door, that you can’t see the opportunities presented by the new door that opened!

No. 7 July 2007

John Deere plans to acquire a Chinese tractor manufacturer, Ningbo Benye, later in 2007. Ningo Benye manufactures tractors in the 20- to 50-horsepower range, while Deere currently manufactures tractors in the 60- to 120-horsepower range at its joint venture factory in China.

Deere said that there is a growing demand in China for this smaller size tractor because of increasing mechanization by rice farmers. And that this product range can be leveraged for sales into other Asian and African markets.

I’m waiting for the coming headline that says a Chinese manufacturer did just the opposite of Deere and bought a U.S. manufacturer of farm and/or OPE equipment. I sure wouldn’t bet against it happening!

Jim Citrin, a business consultant with a terrific business Web Blog, recently wrote about how Sean Lannan, the treasurer of Polaroid Corporation, responded to criticism.

Lannan said, “When someone directs a personal attack at me, my first action is to withdraw consciously from the situation and think, ‘What is it that they’re really bringing up here? Do they have a genuine concern, or do they have an agenda?’ I try to...determine whether this is something that the person needs to vent or (is it) a legitimate issue to be addressed.”

If it’s just venting, Lannan just lets it come out and puts on his thick skin. But if it’s a legitimate concern about him, he moves into diplomacy mode and works to figure out what needs to change.

Not getting emotionally involved when someone criticizes you or your business is extremely hard to do. But by backing away emotionally from the situation and listening very carefully, you can do as Lannan and put on a thick skin. Or, if the criticism is legitimate, figure out what needs to change and then change it.

In a recent interview, Han Straberg, CEO of Electrolux (and Husqvarna before the spin-off), discussed the power of brand names. He stated, “We abandoned a multi-brand appliance strategy when we saw that even in the industries hit hardest by low-cost imports like TVs, a large majority of consumers would deliberately pay a premium for distinct global brands such as Sony or Philips.

We then committed ourselves to a master global brand strategy using ‘Electrolux,’ complemented by some well-defined sub-brands. Today, sales of the Electrolux brand account for one-half of total group appliance sales, up from only 10 percent in 2000."

Do you believe your customers will pay a premium for a brand they know and trust? Do they know and trust the brands you sell?

Speaking of Husqvarna, the company celebrated its one-year anniversary of being spun-off from Electrolux on June 13. And it is celebrating a rich history that goes back 318 years. In its 12 months as an independent company, Husqvarna has already made six acquisitions. Growing, growing, growing...

Since airlines were deregulated in 1978, nearly 100 airlines have come and gone. Yet, airlines continue to punish the very customers they depend on. Remember Jet Blue stranding passengers for 10 hours on the tarmac in February 2007 at New York's JFK International Airport?

Richard Branson, who founded Virgin Atlantic Airlines, once said that the best way to become a millionaire is to "start as a billionaire, and then buy an airline."

Flying today is definitely an adventure.

I used to read about how the Internet would eventually make TV watching fade away. But just the opposite has been happening. Nielsen Media Research recently reported that “the average U.S. household watched eight hours and 14 minutes of television a day last year,” and “the average individual American watched four hours and 35 minutes a day.” Both of these figures are the highest in Nielsen’s 50-plus years of tracking television viewership.

The conclusion: “As we spend more time on the Internet, we’re unlikely to take that time away from watching TV. Instead, we’re more likely to cut back on things we consider less important, like sleep.”

Wait a minute...sleep is less important? I don’t think so!

How Bad is the Drought of 2007?

More than a third of the United States is in the grip of a menacing drought that threatens to make it’s way into Illinois and other Midwestern states before the summer ends.

This has been the driest spring in the Southeast since record-keeping began in 1895, according to the National Climatic Data Center.

Parts of Alabama, Mississippi and Tennessee are experiencing a level D4 drought, the most extreme level charted and the worst in the nation.

Experts blame the Southeast’s drought on a persistent high-pressure system that has kept rain away from the area.

After nearly a decade of drought in parts of the West, the nation’s fastest growing region wrestles with rising water demands and declining supply.

The winter snowpack in the Sierra Nevada range was only 27% of normal this year.

Severe dryness across California and Arizona has spread into 11 other Western states.

On the Colorado River, the water supply for 30 million people in seven states and Mexico, the Lake Powell and Lake Mead reservoirs are only half full and unlikely to recover for years.

Los Angeles County is on track for a record dry year with only 21% of normal rain downtown since last summer.

California ranchers are selling cattle or trucking them out of state as grazing grass dries up.

No. 6 June 2007

In a recent study of top sales achievers by Tom Reilly titled “Best Sales Practices,” he discovered that “Top salespeople spend 60 percent of the time on a sales call listening to customers.” That’s how they gain an in-depth understanding of their customers’ needs. Then, it’s easy to provide their customers products that meet their needs and solutions that ease their “pain.”

But he also said that listening is one of the toughest things for salespeople to do. He said, “Listening is tough because it means your focus must be on the other person, not on yourself. Listening means you’re having a conversation with your customers — a dialogue, not a monologue. And if the customer is talking more than you are talking, it means the conversation is focused on your customer’s world. And that’s good, because it means you don’t have to tell the customer everything you know about your product or company; you only have to tell him what’s relevant to meet his needs.”

Would listening more to your customers have a positive impact on your sales?

I just saw the announcement from Echo and Shindaiwa regarding their new business alliance. The alliance involves buying $2 million of each other’s shares (Echo’s parent company Kioritz and Shindaiwa are both listed on the Tokyo Stock Exchange). And they will work together to “develop and implement future mutually beneficial product and operational programs.”

Why would these two companies want to form an alliance? Chuck Kitazume, president and CEO of Kioritz, specifically mentioned “the rising cost of product development and the need to meet changing worldwide environmental standards.” Y. Asamato, president of Shindaiwa in Japan, mentioned “the entry of low-priced products from China and other developing countries.” He also said, “Substantial investment and advanced technology will be required to meet these new competitive challenges.”

It’s amazing how our world is changing and requiring big and small companies to make paradigm shifts in how they develop, source, and manufacture product. Although both presidents state that their companies “will retain their unique identities in the marketplace and remain autonomous companies,” I wouldn’t be surprised that at some point in the future an even closer alignment would make a lot of sense.

You’ve probably read a lot about the coming worker shortage in North America. Usually, it’s mentioned in an article about the large number of Baby Boomers — retiring over the next 20 years — taking their skills and knowledge with them. I just finished reading an article titled “It’s 2008 — Do You Know Where Your Talent Is?” by Deloitte Research, which touched on how we’ll be affected by skills’ shortages and presented some startling examples of what’s going on in our secondary education system.

For example, did you know that “between 1998 and 2008, U.S. colleges will graduate 198,000 students with degrees in science and engineering to fill the shoes of 2 million Baby Boomer engineers and scientists scheduled to retire?”

A disturbing fact about secondary education is that in “the United States, only 70 percent of high-school students graduate, and only 32 percent of those graduating qualified to attend a four-year college.”

“For African-Americans and Latinos, the graduation rate is only about 50 percent, and only 20 percent of these two groups leave high school with the qualifications to continue their education at the college level.”

Comforting news about our educational system is hard to find these days.

In a recent Manpower Inc. survey of 2,400 U.S. firms, 41 percent said they’re struggling to find qualified workers for at least one position.

The top-10 list was as follows: 1) Sales, 2) Teacher, 3) Mechanic, 4) Technician, 5) Management/Executive, 6) Truck Driver, 7) Driver/Delivery, 8) Accountant, 9) Laborer, 10) Machine Operator. Mechanics included a sub-category called small-engine mechanics. Manpower found that, overall, more mechanics are retiring than there are replacements available.

Generally, Manpower also found that many job seekers lack sought-after skills; there is an increasing number of retiring or soon-to-be-retired Baby Boomers; and lower birthrates are not keeping up with the number of retirees.

No. 5 May 2007

When was the last time you read or received a personal letter? It’s hard to remember, isn’t it. Here’s a letter you might want to read. It’s written annually by Warren Buffet, the world’s third richest person and Chairman of Berkshire Hathaway, to all his company’s shareholders.

It’s probably the longest letter you will ever see, much less read. You can find it here: http://www.berkshirehathaway.com/letters/2006ltr.pdf No one would expect you to read it all, but do take a few minutes to look through it to find Mr. Buffett’s gems of business wisdom. You’ll be enlightened for having done so.

Before you email me to tell me that Warren Buffet is the world’s second richest person, I just found out that Bill Gates is still the world’s richest person, but Carlos Slim from Mexico has now surpassed Warren Buffet as the world’s second richest person. Do you think any of them noticed the change when it happened? Probably not.

The EPA issued their “Proposed Emission Standards for New Non-road Spark-Ignition Engines, Equipment and Vessels” on April 17.

These proposed exhaust emission standards cover small land-based non-road engines. The standards also propose new evaporative emission standards for equipment and vessels using these engines.

The proposed standards would take effect in 2011 for riding mowers and 2012 for push mowers and apply only to new engines.

For an overview of the standards, go to this site: http://www.epa.gov/otaq/regs/nonroad/marinesi-equipld/420f07032.pdf . This four page document makes for quick and interesting reading.

If you¹d like to bookmark the EPA site for “Lawn and Garden (Small Gasoline) Equipment,” go to this site: http://www.epa.gov/otaq/equip-ld.htm . You will find links for related EPA documents going back to 1991.

You will also find links for the complete draft of the new proposed standards. The pre-publication Preamble is 280 pages, the pre-publication Regulations is 265 pages, and the Draft Regulatory Impact Analysis is 709 pages. Happy reading!

I recently received an issue of Executive Travel magazine in the mail at the office. The cover headline reads “Technology 2007 - This Issue Expires in Five Minutes.” What a great headline!

In the January, 2007 issue of Appliance magazine, there was an article by Bill Harley, Executive Director of OPEI, about the state of our industry for 2007. There was also a chart a few pages before Bill’s article that listed US manufacturer shipments of OPE equipment (excluding commercial categories.)

If you totaled all category OPE manufacturer shipments for each of the five years listed, you get the yearly grand totals in the chart below. Remember no commercial OPE equipment shipments are included.

2005 Actual shipments 22,005,200 units
2006 Projected shipments 20,073,851 units
2007 Forecasted shipments 19,357,045 units
2008 Forecasted shipments 18,715,406 units
2009 Forecasted shipments 20,121,989 units.

Is there a message for us in this data?

If you were in Vidin, Bulgaria on February 14, would you please let me know how attendance was at the Balkan Festival of Love and Wine and who won the Best Balkan Wine competition, the best Balkan home-made wine contest and the longest kiss contest. Yes, it is a real festival. And I think it would have been great fun to be there, especially with a festival name like that. What do you bet there were no language barriers?

Ever noticed how positive most customer reviews are on Internet sites like Amazon, Sears, Macy’s etc. A recent study mentioned in Kiplinger’s Smart Money magazine of 585,000 Amazon reviews noted that more than 80% of consumers award at least 4 stars, with the average of all Amazon consumer reviews being 4.2 stars out of a possible 5.

Apparently consumers review only those items they love or hate. There was a stapler on Amazon that 27 consumer reviews out of 42 awarded 5 stars, but five really hated their stapler and gave it 1 star. There was only one 3 star rating out of the 42 reviews. And the typical review read like this actual one: “It works very well and staples many papers together.” Don’t you love it! Makes you want to go read them all!

Ok, for you intellectuals here’s the sentence that sums up the study’s findings: “Whenever the pool of reviewers is self-selecting, you’ll get a positive bias.” Now you know that we really don’t live in a consumers’ paradise where everything merits 4 or 5 stars! Sorry I had to be the one to tell you!

No. 4 April 2007

In a recent article by Rick Johnson in Industrial Distribution magazine called “How to Survive in a Tough-Profit Market,” his first statement is one to remember: “It’s not the strongest of the species that survive; nor is it the smartest.” The survivors “are the ones most responsive to change.”

He goes on to say that we all need “to uncover some of the business sins that may have been covered by profitability in past years and correct them.”

I agree that if you’re not “sweating the details,” there are things going on in your business that are keeping you from being as successful as you could be. I guarantee it. Find them and fix them. And do it now!

It still amazes me when I read letters written to our industry trade publications and even an occasional dealer column in which that free forum is only used to complain about one thing or another. Many readers apparently think their life and their business are “going to hell in a hand basket.” I suspect they might be right if they’re only going to focus on complaining, and not about finding or offering solutions! I really believe that they do have great ideas and solutions for their business problems and that other readers would love to read them. Quite complaining so much and share what you do to overcome the obstacles in your business life. Readers will thank you for sharing your ideas. And you’ll feel more positive about yourself and the future of your own business!

There’s a new book out by Jason Ryan Dorsey for “twenty-somethings” entering the workforce titled My Reality Check Bounced! I don’t know whether to laugh or shake my head.

In the book The E-Myth Revisited, the author Michael Gerber tells the story about what Tom Watson, the founder of IBM, answered when asked what he attributed IBM’s success to. Tom Watson replied:

“IBM is what it is today for three special reasons. The first reason is that, at the very beginning, I had a very clear picture of what the company would look like when it was finally done. You might say I had a model in my mind of what it would look like when the dream—my vision—was in place.The second reason was that once I had that picture, I then asked myself how a company which looked like that would have to act. I then created a picture of how IBM would act when it was finally done.The third reason IBM has been so successful was that once I had a picture of how IBM would look when the dream was in place and how such a company would have to act, I then realized that, unless we began to act that way from the very beginning, we would never get there.In other words, I realized that for IBM to become a great company it would have to act like a great company long before it ever became one.From the very outset, IBM was fashioned after the template of my vision. And each and every day we attempted to model the company after that template. At the end of each day, we asked ourselves how well we did, discovered the disparity between where we are and where we had committed ourselves to be, and, at the start of the following day, set out to make up for the difference.Every day at IBM was a day devoted to business development, not doing business. We didn’t do business at IBM, we built one.”

Wow! Perhaps we should ask ourselves if we’re building a business or just running one.

A reader recently asked why he should bother reading the “Industry Forecasts” found in the January and February 2007 issues of OPE magazine. He was perceptive enough to distinguish PR from fact and opinion. And those opinions from people whose companies and jobs are dependent upon having a successful 2007 are the very reasons why we all should read them. Those OPE business leaders are informed and have up-to-date knowledge on issues affecting this entire industry, no matter what they do or the size of their businesses. I want to know what they’re concerned about, what actions they may take to respond to those concerns and challenges, and how they’re going to know in December whether it was a successful year or not.

How’s business? Drop me a few lines at anonymous.distributor@gmail.com.

A Few Notes From the Briggs & Stratton 3rd Quarter Report Webcast

Briggs and Stratton released their 3rd Quarter Earnings Report April 19, 2007. The entire report and a link to the recorded Webcast is available at this link: Briggs & Stratton Q3 2007 Earnings Report and Webcast.

Here are a few points that came out during the Webcast session that you may not find in the written report:

One big topic was the announced closing of Brigg’s Rolla, MO engine plant this year. The Rolla plant manufactured utility type engines and not produce high-quantity runs of lawnmower engines. Many different utility engines are produced with small production runs and higher inherent costs. Also mentioned as a contributing factor for closing the plant was the high cost of environmental regulations in the US. Briggs is currently rationalizing the existence of other US plants and decisions will be made regarding any other plant closings by year-end 2007.

Some analysts asked why more vertical engine production (for small lawnmowers) wasn’t being shifted to China. Briggs replied that for the time being the intense seasonality of vertical shaft engines for lawnmowers will mean that production will remain primarily in the US, at least for the next two or three years. Briggs suggested that US production and shipping logistics could respond much quicker if a mass merchant (OEM) needed 40,000 engines by next Thursday, than if production was in China or outside the US.

Other questions were focused on generators and the huge generator inventories “hanging over” the marketplace both at the retail level and at the OEM level. Briggs stated that a normal hurricane hitting land will create the retail sale of 35 to 40 thousand generators. The generator inventory level at retail is currently around 100,000 to 120,000, while the normal level at retail should be 60,000 or less. So Briggs believes it will take at least two hurricanes making landfall in 2007 to get retail inventory levels back to a normal level.

Europe is a 2 million engine sales area for Briggs. In 2006 they saw lower European engine sales due to increased Chinese engine usage by a major OEM. But with their Czech plant starting up with a capacity of 800,000 to 1,000,000 engines initially annually, Briggs believes they will be more competitive in 2007 and 2008. Labor costs will be lower than in the US and engine transportation costs will be lower to Europe from the Czech Republic than from the US or China.

Another analyst asked about the strength of Briggs & Stratton’s mower brands. Briggs responded that some years ago a poll was done that indicated that even though they were not producing any end-products at the time, Briggs & Stratton was in the top five brands of lawnmowers consumers were considering to purchase. Snapper also showed up as one of the top five considered brands. Briggs still considers Murray a viable brand in the mass market, viewed by consumers as a low-cost functional product. Simplicity is considered the aspiration brand and is very strong in the mid-west and the northeast. And Briggs particularly appreciates Simplicity’s excellent product development group. Ferris is considered one of the top tier high-quality commercial brands.

Briggs & Stratton continues to look for other equipment brands that may become available for purchase.

EPA Issues Proposed OPE Emission Standards

Today the EPA issued their “Proposed Emission Standards for New Non-road Spark-Ignition Engines, Equipment and Vessels."

These proposed standards include coverage of small land-based non-road engines and new evaporative emission standards for equipment using these engines.

The rule would take effect in 2011 for riding mowers and 2012 for push mowers and would apply only to new engines.

When fully implemented, the proposed standards would result in a 35% reduction in hydrocarbon and nitrogen-oxide emissions from the new engines’ exhaust.

Briggs & Stratton had said that adding catalytic converters to all its engines, which would have been required in California’s initial approach, would have been so costly that it would have resulted in the loss of US manufacturing jobs. Briggs now hopes to meet the new proposed standards without using catalytic converters.

One of the first changes by Briggs & Stratton would be improved fuel systems that reduce the amount of gasoline fumes leaked into the air. Other changes would come later, as new regulations are phased in.

The EPA suggests that the new rule could add up to $47 to the price of a lawn tractor, $280 to an outboard engine and $360 to a personal watercraft.

Briggs indicates that “there could be fairly significant price increases on (engines) that you see on riding lawn mowers and other large products. With other engines, the price increases could be slight.”

These proposed rules would have little, if any, effect on all-terrain vehicles and snowmobiles.

For a quick easily readable overview, I would recommend you click on the first bullet below called “Fact Sheet” which should give you a short four page PDF document.

If you look at the other links, you will notice that this document’s pre-publication “Preamble” is 280 pages, the pre-publication “Regulations” is 265 pages, and the “Draft Regulatory Impact Analysis” is 709 pages long.

And you wondered why engine manufacturer employees all have gray hair!

Fact Sheet: Proposed Emission Standards for New Non-road Spark-ignition Engines, Equipment, and Vessels (Also available as a PDF file, 4 pp, 85K, EPA420-F-07-032)

Preamble (Pre-publication Version (PDF) (280 pp, 2.5MB)

Regulations (Pre-publication Version) (PDF) (265 pp, 1.9MB)

Draft Regulatory Impact Analysis (PDF) (709 pp, 6.3MB, EPA420-D-07-004) Instead of downloading the entire document, you can access The Individual Chapters Of The Draft Regulatory Impact Analysis.

Is Your Business Off to a Good Start This Spring?

Our grass is green and after a slow beginning in February, outdoor power equipment and service parts sales to our dealer customers have really picked up. And business continues to be strong in the early days of April. That tells me you're staying busy.

Let readers know how your business is doing this month. Did you have an early spring? Can you see a difference in your customer's attitudes from last year? Do you have some new types of equipment to sell this year that customers really seem to like?

You don't have to identify yourself but please be sure to mention the section of the country or the state you're doing business in.

And thanks.

Manpower Inc. Survey Confirms OPE Technician Shortage

I wanted to share some facts with you I read today in a Manpower Inc. press release about how employers are really beginning to struggle to find the skilled workers they need.

41% of the 2400 US firms Manpower Inc. surveyed recently said they’re struggling to find qualified workers for at least one position.

Sales representatives topped the list. That includes retail sales and business to business sales, but not telemarketers. The US Bureau of Labor Statistics projects that by 2014 an additional 736,000 retail sales people and an additional 187,000 sales representatives are going to be required.

Number two on the list was teachers. By 2014, the BLS projects an additional need for 524,000 post-secondary teachers and 265,000 elementary-school teachers.

Mechanics were third on the list, including automotive service technicians, diesel service technicians, small engine mechanics, aircraft and avionics equipment mechanics and industrial machinery repair. More mechanics are retiring than replacement workers are coming in and taking apprenticeships or getting the specialized training they need.

Many job seekers lack sought-after skills. Also there is an increasing number of retiring or soon to be retired baby-boomers. Plus lower birth rates are not keeping up with the numbers who are retiring.

The top ten list looked like this:

Sales representative
Teacher
Mechanic (include OPE and Small Engine)
Technician
Management/executive
Truck Driver
Driver/delivery
Accountant
Laborer
Machine operator

Tecumseh - A Soap Opera or an Opportunity Waiting?

Tecumseh has been having a rough time in all three of their business segments: compressor products for HVAC, electrical components, and especially in their engine and power train products.

I’m familiar with the engine and power train product division. It seems like over the years if something could go wrong for Tecumseh, it often did. My company considered Tecumseh a solid US engine manufacturer, although behind Briggs & Stratton and Kohler in reputation and design and production capabilities, and whose primary customers appeared to be Sears with Tecumseh-manufactured Craftsman-labeled engines, and specialized engines for snow removal equipment manufacturers. Today, US production has been mostly moved to Brazil, manufacturing start-up problems there were epic in proportion, and commodity prices have been painful. Tecumseh lost most of the Sears business several years ago. And I always thought their US marketing efforts were suspect and weak.

Once highly profitable, the nearly $2 billion-a-year manufacturer has struggled with substantial losses in recent quarters. That’s why AlixPartners was brought in, in August of 2005 to help turn around the company.

Tecumseh Products was founded in 1934 by Ray Herrick. His descendants, including his grandson Todd Herrick and his great-grandson Kent Herrick, control 44 percent of the voting stock through the nonprofit Herrick Foundation (25%) and family trusts (19%).

Todd Herrick was fired as CEO by the Board on January 19, 2007 and his son, Kent Herrick, was dismissed.

Todd Herrick remained Board Chairman, but responding to his move to replace three of five board members with his nominees at an upcoming shareholders meeting, other directors removed him as chairman February 28. In addition, the Board expanded Board membership by two from 5 to 7, thereby foiling his plan to gain a voting majority.

At that date the deadline had passed for Mr. Herrick and other shareholders to nominate board candidates in advance of voting connected to the meeting of shareholders April 25. This prevented Todd Herrick from regaining the upper hand by nominating a fourth candidate.

Todd Herrick filed a lawsuit on March 6 that seeks a court order overturning the Board’s decisions on February 28 that expanded the board to seven members from five and removed him as chairman. And if the court does not overturn the board’s actions, then Mr. Herrick has asked that he be allowed to nominate a fourth person. The suit also seeks a court order to stop the firm from hiring a new CEO and requiring the annual stockholders meeting to proceed as scheduled.

I think it’s easy to understand the emotions of these founding-family members who still own a large percentage of stock in this public company. But I wonder if it wouldn’t be better for the Herricks to let go of the company leadership and let others rebuild the company and in turn, its stock valuation. And there are other shareholders to consider whose investments are also at risk.

A friend of mine who leads one of the most respected and largest manufacturers in the OPE industy told me today that this situation is like a TV soap opera. Unfortunately it appears to be exactly that. But I believe the shareholders of Tecumseh and the OPE industry deserve better.

Tecumseh Products has suffered under the watch of these family descendents but most of us in the outdoor power equipment industry want it to survive and prosper - for many different reasons. Let's hope all these players find a way to make that happen.

Toro Goes Green

Toro has taken environmental responsibility to heart and has announced products that use economical alternatives to petroleum-based fuels.

First, they announced that all their diesel-powered golf course and sports fields and grounds equipment will be “Biodiesel Ready” by 2008. In addition, that they are creating upgrade kits available in June, 2007 to convert diesel models in production or in the field to be compatible with biodiesel fuel.

What is biodiesel fuel? It is an alternative fuel source derived from biological sources that are completely biodegradable and non-toxic. Toro diesel products will be able to use biodiesel fuel blends of up to B20. B20 biodiesel fuels represent a mixture of 80 percent petroleum and 20 percent bio-fuel.

The second Toro announcement involves a partnership with the State of New York. Toro will provide Niagara Falls State Park with three hydrogen-powered utility vehicles by mid-2007. (See picture of hydrogen fuel cell above)

The New York State Energy Research and Development Authority included hydrogen fuel cell vehicles in their project because they reduce noise pollution; increase machine efficiency over gasoline or diesel-powered equipment; allow rapid refueling versus slow recharging of battery-operated equipment; and have low emissions because hydrogen fuel cells emit water vapor as a byproduct.

Do you suppose this is a "bandwagon" with one industry player on board?

The real question is whether our customers are ready to pay a premium for alternative fueled OPE products? We know they will pay a premium for hybrid automobiles, with the extra cost spread out over multi-year payments. Perhaps in the commercial and higher-end product arena of the outdoor power equipment industry, today's customers will be willing to pay a premium for equipment that is more environmentally responsible. Time will tell.

www.biodiesel.org/

www.eere.energy.gov/hydrogenandfuelcells/

And You Thought You Had Snow Problems?

No. 3 March 2007

I recently read that Wal-Mart wants to use a computerized employee scheduling system to ensure that employees are in the stores when consumers are shopping. They would use historical data to create employee work schedules that would increase customer satisfaction and improve productivity. Can you believe employees are objecting to this?

There are distributors I know in our industry that are already using software that looks at historical phone traffic hour by hour over the past week, month, or year; incorporates vacations, meal time and breaks, and creates schedules for call center employees that have them on the job when customers normally call. The results are more satisfied customers and call center employees with pre-planned schedules, a win-win situation if there ever was one.

Even in the warehouse, a flexible work schedule that has people working when there is work to do results in warehouse efficiencies and ultimately increased customer satisfaction.

Having people on the job when there is work to be done and customers to be helped? Gee, what a neat concept!

Briggs & Stratton says that its engine sales were down 30% for the first half of its fiscal year and engine units were down 33% year over year. Besides the obvious lack of hurricanes hitting the US and early snow, Briggs stated that “manufacturers of lawn equipment have chosen to assemble closer to the spring selling season.” It appears that retailer focus on managing tighter inventories and delaying orders closer to the selling season is affecting both engine and equipment manufacturers.

Mass retailers are a “900-hundred pound gorilla” affecting our entire industry daily. Never doubt for a minute that what affects one OPE industry participant won’t ultimately affect us all.

Make sure you read the industry forecasts in the January and February 2007 issues of OPE magazine. Here's a few thoughts that caught my attention In the January issue. The suggestion that dealers focus on maximizing cash flow in 2007 is a good one. There are even a few ideas on how to get started planning your cash flow. The new combined Green Industry and Equipment EXPO (GIEE) in Louisville is generally seen as very positive, but there is still an underlying sentiment that, like the former Green Industry Expo (GIE), the show should move around the country and eliminate the perception that dealer attendance is predominately regional. 2007 will be flat, but there is an expectation that consumers cannot delay OPE purchases indefinitely. Also the ongoing debate continues about whether a dealer should only offer a single product line exclusively, or be able to offer their customers a choice of brands and service multiple product lines. Grab the January and February issues of OPE and read these forecasts. Then, create a plan to help you to be better prepared to react quickly to developing industry, marketplace and weather conditions in 2007.

Globalization continues to affect the our industry and US manufacturing in particular. Briggs & Stratton is “evaluating the future direction of (their) Rolla, Missouri (engine) plant.” Briggs cites the success of their China engine operations, the continued cost pressures from the market (competition), and cost increases brought about by government regulations as the reasons it is evaluating the future role of this engine plant. They’ll announce a decision in about 6 months. At the same time they are putting a new plant in Newbern, TN, to produce products for their Power Products segment. And in December, 2006, Briggs began assembly of engines for walk behind mowers in the Czech Republic for the European market.

Major companies in our industry are always planning ahead and reacting quickly to a rapidly changing business environment. You should too.

When you have a free minute, email a few comments to anonymous.distributor@gmail.com about how your business is doing this spring and include where you’re located. Or go to the Anonymous Distributor Blog at http://anonymousdistributor.blogspot.com/ and leave a comment at the question “How’s Business?” I’d like to hear from you.

How's Business This Spring?

Daylight Savings Time begins on March 11 this year. And warmer weather is on the way, at least according to a knowledgeable groundhog or two.

I know many readers would love to read about how your business is doing this spring.

You can leave a few comments anonymously if you wish, but I would ask that you indicate what state you're in and what kinds of products you sell or service.

Your answer of "I'm in a state of confusion," isn't acceptable - even if it's true!

OPEESA's Annual Meeting - Feb 25-28, 2007

The Outdoor Power Equipment and Engine Service Association (OPEESA) held their annual meeting February 25-28, 2007 at the Fairmont Southampton in Southampton, Bermuda. The weather was chilly and very windy. But our speakers were excellent and gave us lots of good ideas to think about. Let me share a few with you.


Jeff Thredgold, President, Thredgold Economic Associates’ (http://www.thredgold.com/) topic was “Your Money, Your World, You Family – The Future.”

“One half of the world population has never made a phone call and less than 2% are college graduates.”
“Seven out of every eight people entering the US labor pool over the next 30 years will be minorities.”
“One out of every three US college students today is over 40.”
“In 1980 the average college graduate made 25% more than a high school grad.”
“Today, the average college graduate makes 90% more than a high school grad.”
“US labor markets will get extremely tight over the next 10 to 20 years. And you will be scrambling for workers like you never thought possible.”
“By mid-year 2007, the long term interest rate will be in the high 5 to low 6 % range.”
“Where will the new jobs be in the US in the coming years: health care, financial planning, and leisure and recreation.”


Nancy Friedman, President, The Telephone Doctor (http://www.telephonedoctor.com/) spoke on “Sales & Customer Service from a Management Point of View.”

FIVE FORBIDDEN PHRASES IN THE CALL CENTER
(1) “I don’t know.”
When you answer “I don’t know” there is no safety net.
And you never want to use negative words at the beginning of a conversation.
The Best Answer to a question you don’t know the answer to is to say “Gee, that is a very good question, let me find out for you. When do you need that information?” You may find out there is not real hurry to supply the answer anyway.
(2) “I can’t…….”
When you say “I’m sorry, I can’t do that,” you are injecting negativity.
Don’t ever tell them what can’t be done. Provide a positive alternative. Reject gently.
The Best Answer is “Let me see what I can do.”
If it is absolutely an impossible situation, you would say “I wish we could do that. Unfortunately that is not an option I have.”
(3) “Hang on a second, I’ll be right back.”
Ask if they are able to hold, then wait for a response.
The Best Answer is “If you’re able to hold, I’ll get you that information. If you cannot hold, I’ll be glad to call you back.”
(4) “You have to…………….”
Don’t ever say what the “have” to do. Always tell them what they “need” to do.
(5) “No.”
Never, ever start a sentence for any reason with the word “no.”

What consumers hate most when calling a business – 1st the use of an automated attendant, 2nd rude employees, and 3rd being put on hold.

SWITCHBOARD
Answer first with a buffer – “Good Morning. Thanks for calling. This is Marsha.” You don’t have to identify the business
DO NOT ever say “How can I help you?”

VOICE MAIL
An automated attendant should always zero out to a person
Never Use the following terms on voice mail:
“I’m not at my desk right now.”
“Your call is very important to me.”
“I’m sorry I missed your call.”
“I’ll call you back as soon as possible.”
The Best Answer is “This is ____. Please leave a message and I will return your call.”
Your teeth must always be visible when you are recording your message (i.e. smile.)
When you leave your name and number on a voicemail, always say your name and the phone number twice, clearly and distinctly.

YOUR ON-HOLD MUSIC OR?
Ask you customers what they want to hear on hold. Then follow their advice.


Michael Workman, President, Michael E. Workman Associates, (http://www.mworkman.com/) spoke on “Profit-Enhancing Collaboration.”

“The purpose of a business is to create and maintain a customer.”
“Profit is only a test of management decision-making ability.”
“Leadership is much stronger than management skills in a small business.”
“In relationships between a manufacturer and a distributor, if a common goal is shared, communication is never a problem.”
“Manufacturers say “ I cannot pay you for your effort. I can only pay you for your performance.”
“If sales go up while margins are declining and people costs are going up, the business is in trouble.”
“Where there is no accountability, there is no change.”
“When the salesman owns the customer, your business is in trouble.”
“The less information I know and have about my customer, the more inventory I must have to serve him.”
“In a 2003 National Association of Wholesalers (NAW) sponsored study, there was no correlation found between how the type of compensation a sales person received and their sales results.”
“You can’t take a C player and make him an A player by paying him more.”
“An A player is always an A player no matter how you pay them.”
“The only true motivator proven to work is: setting goals.”
“You can’t pay a sales person the same for maintenance that you pay him for growth. You always pay a lot less for maintenance.”
“Know why your customers buy from you.”
“Never let your customers decide how they will measure your value to them. Your sales people should show them what the value is you provide and how they should measure it.”
“Never let your accountants make your strategic decisions.”
“Good – Cheap – Fast. You can only excel at any two of these with a profitable customer.”
“Manufacturers are always driven by ‘share,’ distributors are driven by profitability, dealers always want ‘all of it,’ and consumers always want a better deal.”
“Self-selecting teams are always much more effective than teams with members selected by management. Your people know better than you who belongs on their team.”
“Outside sales is becoming the training ground for inside sales. And inside sales is always much more profitable.”
“Ask your customer how they want to be served and then do it. You may find that many don’t need or want outside sales personnel calling on them.”
“The Chinese are building manufacturing plants in Mexico to reduce delivery time to North America to a max of six days. It’s happening now and is the wave of the future.”
“Jim Collins said ‘Great companies focus on profit maximization, not growing market share.’”

No. 2 February 2007

When retailers get really big and sales begin to level, they go off into new directions or they eventually disappear or even become irrelevant. Wal-Mart discovered groceries. Home Depot created HD Supply by buying up industrial distributors who sell to industrial and commercial builders. Today, HD Supply is a $12-billion business - 13 percent of Home Depot's total revenue - and this past third quarter, was 90 percent of Home Depot's growth. Apparently, even when you disdain doing business with distributors, it's okay to become one. Oh, the irony of it all...

Wonder if Home Depot noticed that the margins for HD Supply are just a "bit lower" than for its retail business? The shareholders certainly have.

Have you noticed an item in our industry that's becoming disposable? Good for you! You are paying attention! So how do you feel about it? Probably like I do - all kinds of mixed emotions. Just like the low-costs, disposable razor, low-cost lawn mowers, trimmers and even chain saws are making it economically logical for consumers to throw them away when they're "used up" rather than pay to have them serviced and restored to a "like-new" condition. What is the effect of this trend on our industry? We can be assured of fewer parts sales and fewer service opportunities. And more and more low-cost products will continue to be sold, and the cycle will continue. So, if we agree on these conclusions about the increasing availability of disposable equipment, what should you and I be doing differently in our businesses in response, if anything? Tell me what your think.

The U.S. unemployment rate for December 2006 remained unchanged at 4.5 percent. In 2006, payroll employment increased by 1.8 million, or an average of 153,000 per month. Meanwhile, service jobs kept increasing, while the number of manufacturing jobs continued to trend down. No surprises here.

Speaking of Home Depot, its innovation center in Atlanta still has lawn equipment in it. Thus, you could surmise that Home Depot's future still includes selling outdoor power equipment. But what about service?

Today, Home Depot's equipment sales have created enough service business for both Altaquip and independent service centers. There was speculation at one time that Home Depot might include OPE service in its in-store tool rental sections. But I wouldn't bet on that happening. Why not? My opinion is that whenever a mass merchant rationalized other reasons for having in-store service and put it in place, it discovered that at the end of the day those reasons were simply not as compelling and important as revenue and profit derived from its real business - retailing.

Big or small, multiple-store retailers have a huge impact on our industry, our country and our lives. I think that it's important to know what they're doing, how they're doing it, and how they are changing their business models, because I believe that it will most certainly affect our businesses and our lives sooner than later. And we can learn a lot from them, both good and bad.

If you are the only person left in North America who still hasn't read "The World is Flat - A Brief History of the Twenty-First Century" by Thomas L. Friedman and you want to understand why it seems like any business news we read or discuss has global implication, read this book - as soon as you finish Jim Collins' two books mentioned last month. This book is a great read and deserves your attention because today, the world is truly "connected" and "flat." And we are all affected whether we want to be or not.

Friedman also writes a foreign affairs column for The New York Times, and it is a weekly must read if you want a clear understanding and logical solutions for what's going on around us in the world. You can find his columns on the Internet.

No. 1 January 2007

I think it's service school season again. I know it always precedes and follows Christmas, and generally lasts at least 11 months, or so it seems. Know the difference between teaching and learning? Teaching is conveying information. Learning requires some kind of engagement of the students while they are receiving the information - understanding it, if you will. Some teachers think, "If I taught you this, then you must have learned it." But that never works. Teach students to understand, not merely to pass a test, and the proof will always be if they can teach it back. That being said, thank goodness this industry is blessed with some terrific trainers and teachers who really care about whether you understand what they're teaching.

Here are a couple of facts that you might not know about your customers from the book "Satisfaction - How Every Great Company Listens to the Voices of its Customers" by Denove and Power:
(1) Customers who run into problems but whose problems are handled swiftly and politely actually wind up being more loyal than customers who never encounter a problem.
(2) Exceeding your customers' expectations matters much more than performing at a consistently high or even an extremely high level.

2006 has to be the most unusual year that I've ever seen in the OPE (Outdoor Power Equipment) industry. But wait a minute, sow was 1996. And come to think of it, so was 1992 and 1987 and 2003 and 1984 and 1971 and ...

Jim Collins wrote two of the best business books of all time, "Good to Great" and "Built to Last." If you haven't read both of them, stop what you're doing and read them NOW! They are that good and quite readable. And both will forever change how you think about and run your business.

"People are not your most important asset. The right people are." -- Jim Collins, "Good to Great"

Tecumseh finally released its third-quarter financials. The company has been having a rough time in all three of its business segments: compressor products for HVAC, electrical components, and especially in its engine and power train products. Tecumseh brought in AlixPartners in August 2005 to help turn around the engine division. Now, with the guidance of AlixPartners and with the hard work of Tecumseh management and employees, it appears that the engine division is now stabilized and better days lie ahead in 2007. It's still not getting any easier for most engine manufacturers. Lack of hurricanes in 2006 depressed generator sales, and lack of snow and customer aggressive inventory management policies this winter has depressed snowthrower sales. One important sign for Tecumseh in 2007 will be how much snowthrower engine market share it can retain against other domestic and import engine manufacturers' renewed interest in that engine category. We know many good people at Tecumseh, and we wish them much success as they continue their journey into better times.

Recently, I've been thinking about LESCO and the effects it felt when it eliminated and later reinstated its direct sales force. Not only did direct sales decline, as LESCO expected, when it eliminated its sales force, but same-store sales declined too, which was unexpected. LESCO very quickly re-established its direct sales force. How important are the relationships between your direct sales force and your customers? What would the impact be on your business if you eliminated your direct sales force and the relationships it had with your customers. LESCO discovered the hard way that it was a whole lot more important than it thought.