A Sense Of History
Bought his first subscription to Fortune when he was 7, now owns every issue ever published. Keeps them for reference. If you want new ideas about an industry go back to the 30s and see what was written about that industry in Fortune magazine.
Next fell in love with retail, He started out as a retail analyst for May department stores, and is familiar with DC as the place where May’s Hecht’s was always trying to overtake Woodward & Lothrop. Well that took care of itself.
Wanted to start his own business, interested in big box stores. In the ’50s, Charlie Lazarus started the first big box store in Adams Morgan, called Toys R Us. Toys R Us has gone through its lifecycle and isn’t so much now, but back then it was precedent breaking.
Just before he started, after seven years of research, he went to a book convention to see what was coming in big box bookstores. Got into the presentation about ‘The Future of Bookselling,” and waited for an hour. They never mentioned big box stores.
After selling the books store, set up the Business Reference company, which became
His speech was on “Requirements for Entrepreneurship.”
1. Curiosity – Entrepreneurs are always asking questions, which other people think are often inappropriate. “Nothing has ever been discovered in the same place as everyone else was looking.”
Technology (def) - Any better way of doing things.
What are you curious about?
The biggest change in the last 50 years was women entering the workforce. Most went to work at banks, which continued to be open , Monday thru Friday, not when the customers were available. People shop nights, weekends and lunch hours. The banks, who hired the women, missed that.
Market researchers are always lagging behind the customers.
Next big themes are the aging of
What would Roland H. Macy do if he were alive today?
He feels that Lou Gerstner was closer to Tom Watson, Senior than how IBM insiders remembered Watson. He said the most important thing was to serve the customer, not wear a blue suit.
3. Geography - Understanding where you are in space and time, can be your most important advantage. What is the difference between an IT consulting firm in
When starting a company, ask what it should look like in 10 to 20 years. To do that, you have to establish what it looked like 10 and 20 years ago.
50 years ago, ads in Fortune always said where the HQ was. “Coca Cola of
Sam Walton said, “In a store, adjacencies are more important than price.”
Vern Harnish of gazelles.com asks, “Do you have a map on the wall of your office?”
Michael Dell knows a lot about
Four requirements for Vision:
1. Clear words, sentences and paragraphs that mean something. Business executives and college professors can’t do this. Need a third grade vision. Best one he ever heard was a national retail chain of hat stores, Hats, Inc. Their vision? “Sell Hats, Have Fun.”
2. Commitment - Great companies do one or two things incredibly well over time. Acquisitions aren’t the way to heaven. Be really focused on what you are doing.
In the 50’s, American car manufacturers decided to get into sports cars. They came up with two, the Corvette and the Thunderbird. The Corvette was always a red 2 seat V-8. Now I am sure they have consulting studies to get into four door, SUV add-ons. But they stayed true to a red, 2 door, V-8.
In contrast Ford took the Thunderbird and moved it to four doors killed the brand, let it lie for a couple of years, brought it back, then killed it again. Today you can’t buy a new Thunderbird.
It was not what the Thunderbird lost, it was what Ford gave away by not being true to their concept. By the way, in the ’50s Thunderbirds outsold Corvettes three to one.
Ford has bought Volvo and is doing the same thing. In the
3. Serving – Saying “we exist to make a profit” is like saying we drive a car to get good gas mileage. You drive a car to get somewhere, good gas mileage is a secondary consideration. Being measured is not why enterprises exist.
When Wal-Mart started, Sears was the king of smart retailing, knowing the most about their customers, selling the highest quality, investing in suppliers, getting the right real estate for the lowest price, having the best merchandise. How did Wal-Mart surpass them?
Turns out they didn’t. Sears took their eye off their customers and started acquiring financial service companies and other services, while Wal-Mart was fanatical about supplying what the customers wanted The bottom line is “all power is in the hands of the customer.”
When someone approached Sam Walton about investing in IT systems, he would ask, “How does that help the person in line check out faster? How does that help us keep adequate stock in each store?” Anything you buy has to directly serve the customer.
4. Unique – You have to be unique.
Steve Jobs is the master of the unique. When they brought him back to save Apple, all computers were beige. He said, “Make ours pink,” and sales took off. The next time he had to save the company, he invented the i-pod.
For the future,
Large firms don’t understand differentiation. To be everything to everybody doesn’t work.
When you understand how you are differentiated, it drives the business, how you define your offer, your work environment, treat your customers and employees.
5. Passion - a successful business has to be built by people who love what they’re doing. You make fortunes doing what you love.
Question (from audience) “What is the role of quality?”
Answer - Yes, we lost it and got it back. In the sixties to nineties how could General Motors have 40 years of idiot CEOs, accountants as CEOs, accountants who didn’t love the product?
Question – I have a problem being government where I have to serve everyone