The 5 Best Bargains in Business
If you think I’m going to list of a bunch of product bargains or discount sales, think again. This post is about the side of business that drives superior performance at no extra cost. For now, forget about throwing heaps of cash at such initiatives as computer systems, advertising, equipment, recruiting – even training. And for a moment, stop worrying about low-cost foreign competition and the sluggish American economy. The best bargains in business can go a long way to helping business overcome setbacks. The good news is that these bargains can be unleashed from existing overheads. The right mindsets create magic.
1. Leadership heads the list. A good leader costs as much as a bad one. The best leaders have the ability to instill clarity of vision and a compelling purpose that inspires people to make the extra effort. As we know, Steve Jobs wasn’t the easiest guy to work with, but the results? Outstanding. Apple employees not only believed in his vision, they delivered it over and over again.
2. Simplicity. Companies that insist on simplicity are generally the most successful businesses. This is a corollary to leadership but it is also a core value that must permeate the entire organization. Everyone on the same page fighting complexity creates sustainable winners. The California-based In-N-Out Burger Chain is a wonderful example of keeping things simple. Just look at their menu - 3 beef burgers, fries, shakes and soft drinks. If you want chicken, salad, pizza or wraps, go somewhere else.
3. Culture takes time, but once you have it, leverage it and see the results, you are on your way. It is a state of mind that says, “These are the things that really matter in this company.” Some companies thrive on an innovative culture. Others pride themselves on getting things done. Zappos and Patagonia are in a class by themselves. When culture is the brand, you’ve nailed it.
4. Doing less, better. Thirty-five years ago I was part of a turnaround of a company that competed in 8 different food categories with over a thousand stock keeping units. We cut that “red-ink” business back to a coffee and tea company with 35 sku’s. Sales went up and the company went into the black. Within 3 years, our coffee brand became Canada’s top seller. Doing less, better trumps doing more with less and doing more with more. The more and more culture creates complexity in giant companies; this opens the door for smaller competitors.
5. Creativity. While the above bargains don’t have to cost extra money, they take considerable effort and in some cases, considerable time. This is not necessarily the case for creativity. The Big Idea and the process of creating and implementing the Big Idea is the last great bargain in business. I spent my entire career espousing the power of creativity, and the companies I touched did very well by it. As for today, Red Bull stands out as the quintessential idea machine.
Whining about the economy, budget constraints, and low-cost competition does nothing to improve a company’s well-being. Businesses who live by these 5 bargains are the ones who enjoy success – both in the journey and the bottom-line destination. But, beware. Bureaucracy lurks on the periphery, waiting for its opening to subvert the lean, mean, business machine. In the final analysis, bureaucracy is every company’s greatest threat.
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Oct '10
Re: The 5 Best Bargains in Business
Back in 1984, a reporter asked me if the company I'd founded had a “philosophy”. Well, today, I'd probably say “We're engineers; we don't do phil-oss-o-phy”, but instead I replied:
I hesitate to recommend the bleedin' obvious, but it's always worked for me.
Dec '11
Re: The 5 Best Bargains in Business
I love #4. Doing better with less. Narrowing the assortment or even the number of outlets for your products gives an entrepreneur more time to focus upon perfecting the 'limited editions' and making them more profitable. This has always been a successful business formula for me.
Good post; good points all.
Jun '11
Re: The 5 Best Bargains in Business
Excellent post. Thank you for your insights.
This will be read and discussed at our Monday meeting. As our small organization continues to grow, our good days happen when we keep focused on ideas like the ones enumerated above.
Bad days happen when we lose sight of the forest because we are bogged down in the trees.
Dec '11
Re: The 5 Best Bargains in Business
P.S. I would also add #6. Value. Don't try to be the cheapest as there will always be a competitor who can underprice you. Offer the consumer the best possible quality at a fair price. Believe it or not, not everyone is looking for the lowest price; consumers are savvier than ever before and do recognize a value when they see one.
Edited on June 10, 2012 at 10:24pmRe: The 5 Best Bargains in Business
This stuff may seem painfully obvious, but so many businesses struggle with complexity. Visionary leaders of the "do less, better" companies aren't shy about picking one mountain to climb and leaving the range to someone else. While the competition is negotiating the Promised Land presented by the range, the narrow-focused company is already on the summit of one.
Jun '10
Re: The 5 Best Bargains in Business
Thank you, Mr. Bell. A short esay with enough ideas to munch on forever. As a small business owner, I will print your message and hang it on my office wall to remind me daily of a methodology for success.
Aug '10
Re: The 5 Best Bargains in Business
I risk asking a massive essay question in 200 words, but here goes:
#4 Doing Less, Better
The company you described sounds like it started out doing something simple, better than its competitors, then moved into other spaces over time. Paring it back was apparently necessary--apparent at the point where you took a look and started the turnaround--but at the time it expanded into each of the 8 food categories, I bet there were smart people throwing around the words "synergy" and "leverage our core competency" to predict winning in another category.
Buzzwords, sure, but buzzwords accrete around important business concepts. There are times when you will get a synergy moving into one additional product or category. WalMart gets synergy with its stores and procurement/delivery system all the time; others examples include Amazon, Apple, and even local restaurants selling their signature sauces or dishes in pre-packaged form.
My question is: what is your general philosophy towards such horizontal expansions? Is it better to develop a corporate philosophy against it (In & Out Burger), try all opportunities and drop what doesn't work (Amazon), or set a limit on how much you may transform the original business?
Mar '12
Re: The 5 Best Bargains in Business
EJ,
My experience is that whenever a company puts purchasing under a specific group, that group or its management is given an incentive (which may include their jobs) to find the cheapest price. I find that pretty consistently, and the more so as this recession marches on.
If it is a government contract, and the government controls a lot of jobs which have requirements for products and services, then the government demands the lowest bid be used.
Not all of my customers work under this business philosophy, but a large quantity do.
It is also my experience that the largest firms look for the lowest prices, and commonly pay the slowest.
Now, television, with every advertisement for auto insurance or groceries, is driving the message home to everyone who watches. $$ is important. Get great service (or wonderful tasty food) but don't spend more than you must.
The internet is a great place to find things, including prices on things, many of which are published and some of which are updated regularly.
Personal relationships in work environments are wonderful things and may swing some of the business, but not to the extent that it did in a previous era.
Mar '12
Re: The 5 Best Bargains in Business
EJ,
Noted above, the internet is a wonderful place to find products and services, many of which list prices. EBay is a perfect example of that. If you need to replace a product displayed on EBay, you don't want to compete on price, but as EBay notes, someone will.
Good luck.
Edited on June 10, 2012 at 10:33pmDec '11
Re: The 5 Best Bargains in Business
As I've been following this interesting post all afternoon, can somebody explain who "EJ" is ? Did I miss a comment from Mr. Hill?
Oct '10
Re: The 5 Best Bargains in Business
I assume it was actually written to you and DT just typo'd your name. It sounds like a reply to your earlier comment.
May '10
Re: The 5 Best Bargains in Business
As someone who spent close to 4 decades turning around operations of increasing size, I fully endorse everything in your piece. I would add only Courage. It takes a lot of self confidence to do the things you list - and quite often an ability to resist pressure from those above in an organization.
Oct '10
Re: The 5 Best Bargains in Business
I run a small Division in a large enterprise. Recently another Division, with which mine interacts and (mostly) cooperates on a daily basis, was downsized and folded into mine. I'm struggling with how to merge the two cultures.
I'm ecumenical about this transition: I genuinely want to merge the two cultures, not simply impose the one upon the other. That’s little more than a concession to reality, of course, as “imposing a culture" is—well, if not a complete oxymoron, it certainly is something that doesn’t much work beyond the margins of minimal compliance.
Anyone have a book or article they’d recommend on leading/managing cultural change?
Mar '11
Re: The 5 Best Bargains in Business
Just an observation from someone with zero experience running a business (or any portion thereof):
It seems as though most of the criteria on John Bell's list are much easier for private companies to attain than public ones.
For instance, simplicity (#2) seems to be the antithesis of so many large public companies (think Unilever, P + G, or GE).
And I have noticed that culture (#2) seems to be one of the first things out the door when a company goes public and shareholders start looking quarter-to-quarter and not long-term.
Does taking a company public, in general, lead to the dilution of those elements that make winning organizations unique?
Edited on June 11, 2012 at 12:14amDec '11
Re: The 5 Best Bargains in Business
Not an invalid point, but as small business owners provide such a plethora of good jobs in this country, John Bell's advice was useful indeed.
Oct '10
Re: The 5 Best Bargains in Business
Having walked a similar path, however, Courage can become a small word in the overall. The transition from being the most hated soul on site to a respected and appreciated one at the tend of a project is seen by few. Not to speak of what a possibly dangerous task it is to undertake such things. Such things are more likely to arise from the rank and file than from thinking management structures, unwilling to take risks themselves.
Make any sense ?
Edited on June 11, 2012 at 12:40amJul '11
Re: The 5 Best Bargains in Business
A lot of Mr. Bell's points are well taken. I work in a company that (I've come to discover) accepts virtually all RFPs, and spends the bid and proposal money to quote them, without really evaluating whether or not we should even contemplate the bid. In other words, we take the RFP and quote it without analyzing whether or not it's in our long-term or short-term interests to do so. This project portfolio management is apparently non-existent in my division, and I work (at a fairly low level) for a major defense contractor.
It's an old adage, but it's still true. You can't do everything well. You're lucky if you can do one thing well, and get paid for it. By trying to do too many things at once, without understanding whether or not you even should, your business ends up as a muddle, with non-competitive overhead rates, a lot of stagnation in your business processes, and a lot of comfortable people re-stating the phrase "That's how we've always done it".
In other words, it's etchings on a tombstone. Just a question of time, really.
Apr '12
Re: The 5 Best Bargains in Business
@HVTs. The best model for merging cultures in my experience is Edgar Schein who is with MIT Sloane School. http://mitsloan.mit.edu/faculty/detail.php?in_spseqno=121&co_list=F He has a three stage model called Freeze/UnFreeze and that is the one to find as it works wonders. I tried to fund it fir you and instead found his book on culture online and quickly looking through it, you should find some useful concepts. I had a skinny book of his that taught how to use that change model and it is now imprinted into my mind from valuable use. http://files.baobao.webnode.com/200000236-9baf39ca95/The%20corporate%20culture%20survival%20guide.pdf
Apr '12
Re: The 5 Best Bargains in Business
Simplicity is admirable. Your example if the burger place is very good. How tempting it is to just slip in a chicken burger on the menu.
Re: The 5 Best Bargains in Business
EThompson
Not an invalid point, but as small business owners provide such a plethora of good jobs in this country, John Bell's advice was useful indeed. · 6 hours ago
For sure, it is easier for the private, than the public company. Wall Street prefers "generalists" to "specialists" because they want companies to get big at the top end. I'm convinced Starbucks is being transformed into more than coffee company because of Wall Street pressure. The strategy for big, public companies the likes of Kraft Foods is clout. They "buy" growth, not by innovating but via acquisitions - a completely different culture to what I'm talking about in the post.