No. 7 July 2008

Harvey Mackay recently wrote that the fear of failure keeps many people from being more successful.

He said “refusing to try new ideas, methods or products because you’re afraid they might fail can prevent you from growing your business and your customer base. Fear can cloud your judgment and make calculated risks look like Mt. Everest.”

But then he went on to say that we should stop worrying and start learning from our experiences. Sometimes what looks like a mess can be fixed with a tweak or it might be that we have to toss the “mess” away and start all over. The goal is to take the opportunity, prosper from it or learn from it, and move on.

Karl Wallenda, the famous tightrope walker, fell many times in his life, but he always got up and tried again. At the age of 73, he was finally killed in a tragic fall from a tightrope.

His widow said, “All Karl thought about for three straight months prior to the accident was falling. It seemed to me that he put all his energy into (thinking about) not falling,” instead of putting all his energy in thinking about walking the tightrope.

Mackay sums up his feelings by saying, “Keep your eye on the prize, and understand that sometimes you don’t win. But you only lose if you stop trying.”

“The biggest failure of all is not trying again.” To read more of Harvey Mackay’s thoughts, visit http://www.harveymackay.com/

Gas is over $4.00 a gallon. I don’t know whether to laugh or cry. I can remember the gas crisis and the gas lines back in the 1970’s when there were “gas shortages.” The worst thing is that 30 years after those events, the United States still doesn’t have a comprehensive energy policy.

Are you still providing pickup and delivery or at-home service for products you sell? I hope you’ve raised your prices to help compensate for high gas prices. I don’t think you really have a choice.

As Matthew Borden of Ed & Matt Equipment Company said in the Dealer’s Domain section of the May issue of this magazine, “At the end of the year, it is not how much money passed through your business, it’s how much there was to keep that matters.”

Knowing what your exact costs of doing business are – and controlling and managing every penny of those costs - has never been more important than it is now for the good health and profitability of your business. Don’t forget.

Stanley Bing, my favorite Fortune magazine columnist, recently talked about relationships we have with friends. He lamented the fact that most “relationships we have in the world we work in are contextual.” In other words, most of the friends we have can be found in our businesses and in our personal business relationships.

He goes on to say that once the context is removed, as in when you retire, “…old pals have very little to talk about. Even golf and booze, after a while, are not enough” to sustain the relationship.

But he ends with this positive thought, “The good news is that some friendships, improbably and against the odds, do endure.” The lesson is to treasure your friends and their friendship. And to cherish even more the friendships that endure.

William Gladstone and Benjamin Disraeli were two of the fiercest political rivals of the 19th century. Ambitious, powerful, and politically astute, both men were spirited competitors and masterful politicians. Though each man achieved impressive accomplishments for Great Britain, the quality that separated them as leaders was their approach to people.

The difference is best illustrated by the account of a young woman who dined with the men on consecutive nights.

When asked about her impression of the rival statesmen, she said, "When I left the dining room after sitting next to Mr. Gladstone, I thought he was the cleverest man in England. But after sitting next to Mr. Disraeli, I thought I was the cleverest woman in England."

Benjamin Disraeli was a truly brilliant man. He knew the power of words and how to use them effectively. Do you?

No. 6 June 2008

In case you haven’t noticed, prices for food have been going up a lot lately, right in step with gasoline prices. I know you, like me, are amazed at what you pay today for your weekly grocery cart of food compared to a few months ago.

You may already be seeing or receiving supplier announcements of price increases for products and service items you sell or use everyday in your business. Many OPE manufacturers, if they haven’t already, will soon be announcing price increases for replacement parts and issuing new price lists that will take effect almost immediately. Many won’t be waiting as they usually do until fall or the end of the selling season for an annual price increase.

An article in the UK newspaper, The Guardian, on May 19, stated that global steel prices are up 40% since the beginning of 2008. While many companies had long-term contracts with raw materials suppliers that locked in prices through the first half of the year, they will soon be expiring and there will be a lot of pressure to pass on some of the increased costs to customers.

If surges in the price of steel, energy and other commodities continue, we’ll be seeing multiple supplier price increases this year. Be vigilant. Don’t hesitate to pass on price increases to protect your margins and protect the viability of your business. Make sure your customer service and support makes you stand out from your competitors and justifies your pricing. Pay attention more than ever to the “details” of your business. “Working smarter” was never more important than it is today.

With commodity prices like copper, zinc and nickel going the roof, Congress will most likely soon give their approval to begin making pennies and nickels from steel. Steel is still nowhere as expensive as these other metals, so pennies and nickels will be clad in alloy to look the same, but won’t have copper and nickel in them anymore. Switching to steel will save the government about $100 million a year. How come I have this feeling that we won’t be benefiting from that extra $100 million that becomes available annually. Oh well. I suppose this also means we won’t be seeing a copper lawnmower anytime soon.

Over the years I’ve been fortunate to have heard Jeff Thredgold, an economic futurist, talk several times at association annual meetings. Jeff puts out a weekly economic newsletter called the “Tea Leaf,” which is free, to the point and easy to read plus it’s full of interesting and thought provoking economic opinion and information. Recently he had this comment about the value of education or lack thereof on employment statistics this year:

“As nearly always, education level is commensurate with employment. Those with a bachelor’s degree or higher had a jobless rate of 2.1% in April, while those with some college or an associate’s degree had a 3.9% jobless rate. High school graduates with no college had a jobless rate of 5.0%, while those with less than a high school diploma had a 7.8% jobless rate.”

As former Harvard President Derek Bok once stated, “If you think education is expensive…try ignorance.”

If you would like some regular insight into what’s going on in our economy, you can subscribe for free to the “Tea Leaf” at http://www.thredgold.com/html/leaf.html .

In a desperate attempt to stabilize a faltering economy, Zimbabwean authorities recently introduced a new $50 million bank note. The new note is worth roughly one American dollar and buys just three loaves of bread. Imagine the things you could buy here in the US with a $50 million dollar bill and the looks you would get when you pulled it out to pay for something. You could have a thin wallet or light pocketbook, but getting change back could be a real problem!

Italian manufacturer Pramac Industries just bought many of the assets of Powermate and the rights to use the name. They better be quick as many generator manufactures are trying to quickly fill the Powermate product void in the large national retailer marketplace.

A lot of smart people over the past several years have gotten into the portable generator business, mostly by importing product from China or buying or investing in domestic manufacturers. One would think that marketplace was getting rather crowded about now. I’m very glad it’s their money and not mine. The portable generator business can be very fickle and painful when consumers don’t have a reason to buy one.

No. 5 May 2008

After the May 21, 2007 announcement that Kioritz Corp. (Echo’s parent) and Shindaiwa were forming an alliance to seek operational and product synergies, I assumed that it would not be long before a more formal union was announced. Eleven months later, on April 14, 2008, Kioritz and Shindaiwa announced plans “to form a joint holding company which will own and operated the two companies (Echo and Shindaiwa.”)

The announcement went on to say that “Selective trading of existing products has already started and joint development and advanced engineering will commence soon. The companies have also begun cooperation on various operational matters including purchasing, production, computer systems, and logistics.”

“Existing shares of Kioritz and Shindaiwa common stock will be exchanged for shares of the newly formed holding company on or about December 1, 2008.”

So if it sounds like a merger, and looks like a merger, then I’m going to call it a merger of two strong companies with two strong brand names. And because of this merger, the support, the products and the strength of the brand names will only become stronger.

I hope we’ll be seeing more “strategic alliances,” “mergers” and “joint ventures” in the future that are crafted as carefully as this one appears to have been. If it strengthens the industry, it will receive my vote of support.

In Jim Citrin’s Blog “Leadership By Example,” he recently wrote about “the importance of having a small group of professional and personal relationships to serve as your sounding board, brain trust or personal board of directors.”

Citrin went on to say: “Students of leadership and history know that this advice isn't new. From Alexander the Great to Elizabeth I to Andrew Carnegie, many of the most successful people have created small circles of trusted people to help them think through important issues.”

“Napoleon Hill, the great-grandfather of the motivational movement, coined the term ‘Master Mind group’ to describe this strategy. After working closely with steel magnate Carnegie for over two decades, Hill wrote in his seminal work ‘Think and Grow Rich’ that one of the keys to Carnegie's success was relying on his personal network to challenge key assumptions, develop alternative courses of action, and support him in his strategy development and decision-making.”

“The benefits of building your own personal board of directors are both professional and psychological, as your advisors will not only help keep you on the right track but also become invested in your success. So how do you go about building your board, and how can it help?”

“It's advisable to build a group that consists of people both inside and outside your own organization. You can speak to them individually or host quarterly or annual dinners to bring them together.”

“Ask yourself these questions: Who are the mentors that have helped support you so far? Which friends or family members have been most consistently accurate and dispassionate with their advice over time? Who are the most respected analysts, journalists, or consultants that cover your industry? How can you be helpful to them so that they in turn are motivated to be helpful to you? Who are the few people you should inform of your recent successes?”

“The more you find these people and figure out how to be valuable to them, the more they'll become invaluable to you. Ask them to review an assessment of your own strengths, weaknesses, and action plans, imploring them to be honest and direct. Getting valuable advice can literally change the course of your career and life.”

Rodney Rom from Rom’s Reworks in Butler, MO, liked the quote in February’s AD column from Denzel Washington’s mother about what is truly important in our daily lives. Rom shared his father’s philosophy that Rodney still lives by today: “No matter how many material possessions you accumulate in your lifetime, the only thing you will ever truly own is your reputation.” Thanks for sharing your father’s words of wisdom, Rodney.

Is there a family philosophy or thought that guides how you live your life or run your business? Send it to my email address with your contact information and I’ll share some of the best with the rest of our OPE Magazine readers. Perhaps it will also be an inspiration to other readers.

No. 4 April 2008

Did you know Sears is considering selling some of it’s best known brands – Craftsman® , DieHard®, Kenmore® and Lands’ End® – through retailers beyond it’s nearly 3,800 US and Canadian stores?

Imagine walking into a Lowe’s or Home Depot and seeing Craftsman outdoor power equipment in the OPE section. Or going into your local Goodyear Tire store or even a Wal-Mart to buy a DieHard battery. Or visiting your local Best Buy store and buying a Kenmore refrigerator.

Here’s what Sears Chairman Eddie Lampert recently had to say about this new strategy.

“One of our most important resources is the great brands we own, in particular DieHard, Craftsman, Kenmore, and Lands’ End,” said Sears Chairman Edward S. Lampert in a letter to shareholders. “All four of these brands have significant equity with customers and provide tremendous opportunity for value creation.”

The move to sell Sears brands through other retailers “is an opportunity for us to rethink our brand distribution strategy to create value,” said Lampert.

Lampert went on to explain that DieHard “leads in customer recognition among car battery brands by a wide margin, but it lags dramatically in market share . . . due to fewer points of distribution.”

DieHard batteries are only sold today in Sears automotive departments, while competing batteries are sold at thousands of locations nationwide, many of which are more conveniently located for customers. Some analysts see this as an admission that Sears’ primary distribution channel, its stores, are hopelessly broken.

In 2007, Sears deployed $4.3 billion in capital: $3.5 billion went to share repurchases and debt reduction, while only $580 million was reinvested in the business.

On the other hand, Wal-Mart invested $14.9 billion into its stores and business in 2007.

Successful retailers start with a winning store operating model as the core to build from, and then follow with brand and channel extension.

This is not the Sears strategy and it shows. In 2007, Sears had dreadful sales performance and a 41% drop in earnings.

Sears does have lots of staying power and cash, however, so it will be interesting to follow how successful their brand extension strategy will be. And which retailers will end up selling one or more of these four strong Sears’ consumer brands.

I wanted to share a few of Warren Buffett’s comments from his annual Chairman’s Letter to the Shareholders of Berkshire Hathaway, Inc., found in the Berkshire Hathaway 2007 Annual Report. His annual letter is always enlightening and great fun to read.

In mentioning the current problems affecting financial institutions, Mr. Buffet quoted John Stumpf, CEO of Wells Fargo, as aptly dissecting the recent behavior of many financial lenders: “It is interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine.”

In further comments about the current financial situation, Mr. Buffett said: “You may recall a 2003 Silicon Valley bumper sticker that implored ‘Please, God, Just One More Bubble.’ Unfortunately, this wish was promptly granted as just about all Americans came to believe that house prices would forever rise. That conviction made a borrower’s income and cash equity seem unimportant to lenders, who shoveled out money, confident that HPA – house price appreciation – would cure all problems. You can only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight.”

On acquisitions, Mr. Buffett said “To date, Dexter (a shoe company) is the worst deal that I’ve ever made. But I’ll make more mistakes in the future – you can bet on that. A line from Bobby Bare’s country song explains what too often happens with acquisitions: ‘I’ve never gone to bed with an ugly woman, but I’ve sure woke up with a few.’”

Leading into a section on his insurance companies, Mr. Buffett wrote about “the best anecdote I’ve heard during the current presidential campaign. Mitt Romney asked his wife Anne, ‘When we were young, did you ever in your wildest dreams think I might be president?’ To which she replied, ‘Honey, you weren’t in my wildest dreams.’” So there…

I highly recommend, as I did last year, that you read all of Mr. Buffett’s Letter to the Shareholders of Berkshire Hathaway in the 2007 Annual Report. You can read it here: www.berkshirehathaway.com/letters/2007ltr.pdf

No. 3 March 2008

During these tough economic times, motorcycle dealers aren’t selling the amount of product they once did. The author of a column in a motorcycle business journal recently stated that all the information and statistics we have at hand to help explain bad times doesn’t really help a dealer stay focused on a small business owner’s real challenge: “staying focused on the front door.”

He went on to say “the only real analysis a dealer needs to make is did you do everything you could to give that last customer a good experience, and did you make it easy for him/her to buy?”

What we can change in tough economic times is our attitude and our focus. Those are two attributes we can control in ourselves and in our employees that will provide us with the best chance to be successful, even when times are tough. A positive attitude and a focus “on the front door” can only help make a tough time better.

Cub Cadet Commercial just announced that they will introduce a new line of turf application equipment at the Golf Industry Show.

I don’t know much about the turf equipment industry, but I do know that Toro and John Deere have a huge market share in that business arena.

All three manufacturers produce high quality equipment, so it will be interesting to watch and see if Cub Commercial Turf Equipment can take market share away from Toro and Deere by providing golf course superintendents features and innovations that differentiate their products and overcome a superintendent’s current brand loyalty. Just another day in the OPE business.

I was just thinking about the Snapper brand being sold at Sears and what Snapper dealers’ reactions would be. Then it dawned on me “Does it really matter to a dealer any more where a product is sold?” Does it matter to you as much as it once did?

Sears is having their own problems and is just beginning to revamp the way they go to market, planning to rely more on “brand” stores for the future. Even with their strong brands like Diehard® and Craftsman® and Kenmore®, many wonder about the future of Sears. Things keep changing.

There was an article recently in a Florida newspaper with the title “Mowing Helmets Hot Items at Elder Fair.” Well, I thought I’d been around long enough to have heard of every product relating to lawn mowing, but this was a new one for me.

What they turned out to be were giveaways of bike-style helmets for elderly wheelchair, scooter and lawnmower users, plus bikers.

81 year old Ray Sears said he took a free helmet for lawn mowing because “…I fell off my riding mower once, and I’m always bumping my head on tree branches.” His wife Ruth Sears was thankful he accepted the gift. “The way the wind blows the palm fronds, it’s a smart thing to have,” said Ruth. “Now that he’s got the helmet, I’m going to next send him out to clean the back yard.”

See what happened to Ray when he accepted his safety helmet? More work! I think that in Ray’s case a seat belt would have been more useful. And its use would not have resulted in additional yard work for him.

John Shiely, chairman, president and CEO of Briggs & Stratton, recently wrote an op-ed column in the Milwaukee Journal Sentinel Online on “Somehow, We Have to Put an End to Milwaukee’s Zero-Sum Culture.”

Specifically he was talking about Milwaukee’s (and Wisconsin’s) business environment and how that impacted Brigg’s decision-making about where to put their new plants. He mentioned that Briggs & Stratton has no plants in Mexico and that China accounts for less than 10% of Brigg’s total output. In addition, he stated that “90% of our production occurs in the United States.”

As Shiely discussed the positive economic business climate in Kentucky, he mentioned this interesting fact: “Our Kentucky plant is so productive it turns out a completed engine with only one half -hour of labor (at essentially the same cost as shipping an engine from China to the U.S.).”

Read all of Shiely’s interesting column elsewhere in this Blog.

"Somehow, We Have To Put An End To Milwaukee's Zero-Sum Culture" by John Shiely

An Op-Ed Piece By John S. Shiely, Chairman, President And Chief Executive Officer Of Briggs & Stratton Corp. in the January 26, 2008 Milwaukee Journal Sentinel Online

"At a recent Public Policy Forum discussion aimed at getting insights from local CEOs on economic development in Milwaukee, I made the point that, in general, the No. 1 factor CEOs consider in choosing a site for a new office or plant is the tone of the local political economy.

Absent a positive tone toward capital providers, the potentially attractive aspects of a region (many of which I mentioned in regard to Milwaukee) will not be given a hearing. I suggested that the most important thing Milwaukee community leaders could do to improve our prospects for economic development in this region was to bury the vestiges of the old Milwaukee socialist ethic by abandoning the local zero-sum culture that views all wealth creation as coming at someone's expense and embrace an integrative, pie-expanding view.

Predictably, Michael Rosen, in a breathtaking neosocialist rant in a Crossroads op-ed, proved my point. Rosen has described himself as chairman of the Economics Department at Milwaukee Area Technical College and is frequently sought out by the local media for "objective" comment. He writes that CEO "demands for lower taxes, deregulation, privatization . . . have resulted in increased poverty, unemployment and growing inequality" ("Milwaukee businesses leaders seem to want a return to the 19th century," Jan. 20).

According to Rosen, prosperity only comes to a political economy when it increases taxes, promulgates more burdensome regulations and nationalizes various industries. If this Hugo Chavez brand of "economics" is what MATC is teaching the next generation work force, it's no wonder we have a problem. This is the same MATC that runs two taxpayer-financed business incubators that a recent Journal Sentinel report revealed as hopeless failures.

For the record, Rosen is the brother of Laura Drake, a former leader at Briggs & Stratton's union, an architect of the mindlessly confrontational "corporate campaign" against her company in the mid-1990s, which was designed to insult and harass Briggs' executives, banks, directors, customers and other constituents. Drake's strategies produced substantial local job loss, and Briggs management is supposed to accept responsibility for that?

If this mind-set was limited to an economics teacher and a radical unionist, the harm would be limited, but the campaign against Briggs was supported by Milwaukee community leaders at the highest levels. The mayor excoriated Fred Stratton by name on Labor Day. Milwaukee's religious community ran a negative campaign against our company, including a vicious stealth attack by our local Catholic archbishop that was well chronicled in an article I wrote, which was published in The Wall Street Journal. These counterproductive initiatives just don't happen anywhere else we do business.

Where did these jobs go?

Rosen would have you believe they're in Mexico and China. First of all, we have no operations in Mexico, and our Chinese factory accounts for well under 10% of our output. Over 90% of our production occurs in the United States.

I was recently interviewed by Time magazine for an article on companies that still operate competitively in the U.S. I described our cost-effective, high-productivity, focus factory model, which has withstood competitive onslaughts from the Japanese and Chinese. Our Kentucky plant is so productive it turns out a completed engine with only one half -hour of labor (at essentially the same cost as shipping an engine from China to the U.S.).

Journal Sentinel columnist Patrick McIlheran properly noted that the community in Kentucky works with us to develop a college student work force to meet seasonal demands and develop a talent pool. I can think of reasons this "win-win" program would not be possible in Milwaukee's zero-sum culture.

Milwaukee needs to understand that all economic value is created through unique, economically positive relationships with value-creating constituencies. This is a process where capital is brought in to support the firm's special relationship with customers, employees, suppliers and the communities in which they do business. We call this the firm's "value discipline."

The calculus is very simple: no special relationship, no value creation, nobody brings capital.

Another example of Milwaukee's zero-sum culture is seen in local attitudes toward wage disparity. When the media performs its annual survey of executive compensation, does it solicit the comments of a truly insightful expert on pay-for-performance? No, it dredges up the grandson of one of our former socialist mayors who remarks that these CEOs are overpaid in that they make "200 times what the lowest-paid worker on the shop floor makes."

Whether it's entertainers, players, coaches or executives, talent has a market price, and you have to pay for it. Some time ago, a couple of Milwaukee columnists criticized our company for providing products free to our directors so they could test them. Their beef was that directors could afford their own lawnmowers. I was ashamed how parochial and small-bore this made Milwaukee look to executives from around the country.

I've heard criticism that CEOs do not promote business development in this region. Local CEOs should, and do, promote the region. For example, I will host the annual board meeting and retreat for the corporate boards of the Rock and Roll Hall of Fame to promote Milwaukee to a national business community. But, as with any marketing program, we've got to have an attractive product. CEOs cannot force a change in the tone of the local community toward business.

Here's my prescription for changing the tone in Milwaukee so that the positive aspects of doing business here will get a fair hearing:

• Keep it simple. Most prospects don't view targeted tax cuts, uneconomic transportation initiatives and special subsidies positively over the long term. They are generally inefficient. Create a broadly positive business climate.

• Choose the right model to emulate. Rosen suggests Germany, but Germany is a welfare state with chronic unemployment and is exporting an alarming number of jobs to Eastern Europe, despite having academic achievement far superior to Milwaukee. We do not want to be Germany. Maybe we should look at Kentucky, Georgia, Missouri or Alabama. These regions admire capital providers, bend over backward to help local companies achieve a superior value proposition, keep taxes low and rarely use "two Americas" rhetoric.

• Educate for success. Initiatives should support the education, skills and work ethic desired by national businesses. Not many people can make a living carving driftwood (an MATC incubator). Want a model? Take a look at Ireland.

• Attract jobs to match skills. Rosen suggests we should pay high-skilled wages to low-skilled workers - a prescription for business failure. High-tech and innovation is great, but who's going to employ the more than 50% of MPS students who do not earn a diploma on time?

• Show support in the media. Milwaukee media seem to think their mission largely is watchdog and scold. That may be part of it, but, believe it or not, media in regions with healthy business climates are supportive of business.

• Support existing CEOs. While it may be emotionally satisfying to beat up the current crop of CEOs, the potential CEOs are watching. Communities with vigorous business development would not dream of alienating CEOs and scaring away the people who decide where to put the next plant.

• Understand the customer. CEOs don't want red carpets and motorcades. These are merely symbols of a customer-friendly approach. We do need to believe the community supports our mission of creating value.

• Encourage integrative political culture. Politicians must resist the zero-sum temptation to look at attracting businesses as simply a new source of revenue for government. A classic example: the recent proposed state law to force companies to disclose their strategies for minimizing corporate taxes.

• Embrace wealth creation. This is hard for some in Milwaukee to grasp, but the folks with money are the capital providers, and there is no prosperity without capital formation. These are the people who fund charitable and cultural initiatives that are generally more effective than government.

• Ditch the zero-sum work force mentality. If you fight initiatives that will improve productivity, you will lose factories.

• It's easier to keep 'em than to get 'em. Remember Allis-Chalmers, Master Lock, Tower Automotive, Heil, Koehring, Schlitz, Pabst, Cutler-Hammer, Nordberg, Oster, Louis Allis, Kearney & Trecker?

A journalist at the Public Policy Forum asked about the progress of the Milwaukee 7 regional initiative and demanded to know what the CEOs were going to do about it. This was like a heckler getting up at a comedian's show and saying,
"Make me laugh." Until greater Milwaukee makes substantial progress on the strategies I've mentioned, the Milwaukee 7 is operating with one hand tied behind its back. Progress will be slow."

No. 2 February 2008

An OPE equipment dealer recently responded in a survey that the brand he was going to focus on building first in 2008 was his own company brand.

I don’t think he meant he was going to ignore the products he sold and the revenue and customers those product brands brought into his business. But he did realize that the most powerful, stable and enduring brand he had to sell was his business brand – what his company name and reputation meant to the people and potential customers living in his local community.

Product lines can come and go. But a business image, positive or negative, endures. And if that image isn’t as strong or stronger than the product brands being sold, getting a consumer to walk in the front door for the first time and then retain them as a customer becomes much harder.

It doesn’t necessarily take a lot of money to build your business’s brand. Customer perception of your business or more importantly – customer trust in your business can make all the difference in building your business reputation.

Once your customer has reason to trust you, your judgment, your knowledge and your service, he is yours for as long you meet his needs and exceed his expectations.

Remember, the value of a customer is not what he buys when he walks in your door for the first time, but the total of what he buys over a lifetime of coming into your store. Customer retention is the lifeblood of your business.

You have a lot of advantages in gaining or retaining customers that a larger company doesn’t have. Those advantages don’t necessarily cost a lot of money either. Use them every day. Think about them every day. Tell your customers about them every day. You have a lot to talk about.


Here’s a quote from the mother of Denzel Washington that sums up life pretty well: “Do what you have to do so you can do what you want to do.” That should be the primary reason we get up and go to work every day.


Snapper, owned by the Briggs & Stratton Power Products Group LLC, will soon be selling their brand of outdoor power equipment in Sears.

The primary and long-time supplier of outdoor power equipment to Sears currently is the consumer products division of Husqvarna (you might remember its predecessors including Roper, American Yard Products, then Frigidaire Home Products, and Husqvarna Outdoor Products.)

In 2007, Husqvarna Consumer Products used Briggs & Stratton manufactured engines almost exclusively on its Craftsman branded mowers sold at Sears.

Briggs & Stratton decided some time ago that one way to respond to the manufacturing threat from China was to change their business model of being an engine producer selling to end-product OEM’s and become an integrated low-cost producer of quality products in each market they serve. That strategy resulted in Briggs buying the small generator division of Generac and Simplicity, Snapper and many of the assets of Murray.

(I just read the most recent issue (Vol. 118) of OPEESA’s “OPE-In-The-Know, The Business of OPE” newsletter and found more information about this interesting strategy. You can request a copy at opeintheknow@yahoo.com .)

The risk to Briggs will be to keep most of their current engine customers like Husqvarna Consumer Products happy, while at the same time competing with them for end-product placement at national retailers like Sears.

This will be an interesting story to watch as it unfolds.

Domestic OPE engine and product manufacturers have no choice – they must change the way they do business to compete against and in the global marketplace. Briggs & Stratton appears to be one of several manufacturers leading the way.

Who wins and who loses may come down to who makes the best decisions on how to respond to the ever-changing business environment. Stay tuned.

No. 1 January 2008

Goodbye 2007. And good riddance!


Does an oil company have an outstanding management team if profits soar when oil prices go up?

Would I be a visionary business leader with a brilliant strategy if sales and profits boomed when actually it rained regularly all spring and summer, and “the season” lasted until November 1st?

Would I be a business leader with poor vision and a flawed strategy who miserably failed when sales and profits “tanked” when actually the season got off to a poor start, there was a season-long drought, and the leaves didn’t fall until December?

I didn’t change at all, my leadership and vision didn’t change and my strategy remained mostly the same in both instances.

Yet the results in each scenario were dramatically different.

So what kind of business leader does that make me: Good, Bad, Lucky?

In this industry, I’ll always take all the luck I can get and hope I’m smart enough to recognize it and enhance it.


Didn’t find a flying lawnmower this Christmas under your Christmas tree? Watch one fly for real here: http://www.maniacworld.com/flying-lawnmower.html


There was an interesting article in the Christmas Eve issue of the Wall Street Journal titled “Why the Perfume Business is Beginning to Stink.” After seeing that headline, I couldn’t resist reading the article.

Apparently there are too many perfumes and even more celebrity scents and fashion-house fragrances being introduced every year. One perfume maker said “The (fragrance) offer is so enormous, you get lost going into a perfume shop. It’s like eating off a plate with too much food and you lose your appetite.”

In 2006, more than 200 new so-called prestige perfumes – those sold in department stores and cosmetics shops, rather than lower-end drugstores or supermarkets – were unveiled in the USA alone.

Yet despite more entries, sales have been slowing, while the overall luxury goods sector has grown by about 12% this year.

The reason is olfactory overkill. “All the new perfumes resemble each other too much,” said one shopper. “They just change their packaging, but everything smells the same inside.”

With so much competition, many companies spend as much as $50 million to promote a major new scent. That’s equivalent to an entire year of sales for most major perfume brands, making it increasingly difficult to recover the costs.

Some fashion brands have been trying a new strategy to make perfume an upscale purchase again. Many new fragrances have been introduced in the $135 to $600 range with aromas such as licorice and lavender or tobacco, gardenia and cedar.

But so far these ultra-exclusive perfumes aren’t selling enough or “reaping bouquets of profits,” mostly because they are so expensive to make. Yet makers continue to keep them on the market for years, even as they remain unprofitable.

And you thought the OPE business could be tough!

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.