business strategies: 14 - gary zeune...gary d. zeune the pros & the cons 10356 wellington blvd...
TRANSCRIPT
Training, Writing and Consulting in: Fraud and Audit Failures Leadership: Skills and Strategies Productivity Performance Measures
10356 Wellington Blvd., Suite DPowell, OH 43065
Phone [email protected]
www.TheProsAndTheCons.com
Business Strategies:
14 Things You Need to
Know for 2007
GARY D. ZEUNE The Pros & The Cons 10356 Wellington Blvd Suite D Powell, OH 43065
Office 614-761-8911 Fax 206-202-0880
www.TheProsAndTheCons.com
sing 35 years of experience in auditing, corporate finance, and investment banking, Gary D. Zeune, CPA, provides CPAs, attorneys and executives with hands-on experience in fraud and corporate strategy
performance improvement. Mr. Zeune instructs courses for:
FBI National Training Academy Office of the U.S. Attorney The SEC Institute National Association of Securities Dealers North American Securities Administrators Association American Society for Industrial Security Over 35 state CPA societies and bar associations American Institute of CPAs American Management Association Institute of Management Accountants Entrepreneurship Institute Treasury Management Association Private classes for numerous companies and
accounting firms. Mr. Zeune has instructed Strategy Formulation and Implementation in the Executive MBA Program and Accounting and Honors Finance at The Ohio State University. He is also a member of the Education Executive Council and is past chairman of the Education Marketing and Public Relations Committees of The Ohio Society of CPAs. His other memberships include: the American Institute of CPAs, and the Regulation of Public Offerings Committee of the Ohio Division of Securities.
Prior to forming his consulting practice in 1986, Mr. Zeune was an Assistant Vice President of Corporate Finance at The Ohio Company, a Columbus, Ohio investment banking firm. He also spent more than five years in Treasury and Finance at Wendy's International, where he was responsible for mergers and acquisitions, financial and SEC reporting, and corporate finance. He was on the audit staff of Ernst & Ernst from 1973 to 1977; and taught accounting at Ohio University from 1970 to 1973, where he received his bachelors in mathematics and masters in accounting, with honors.
Mr. Zeune is also widely published. He has published more than 40 professional articles and is the author of The CEO's Complete Guide to Committing Fraud and Outside the Box Performance. He has been a member of the Editorial Advisory Boards of the Journal of Working Capital Management and The Ohio CPA Journal.
For Deloitte & Touche, he authored Financing Business Growth and has completed the first draft of The Complete Guide to Buying or Selling a Closely Held Business, two books in the firm's Entrepreneurial Series. He has authored chapters for two books published by Warren Gorham Lamont, the world's largest financial publisher: Accessing the Capital Markets and Options for Raising Capital.
Mr. Zeune has the ONLY speaker's bureau in the country specializing in white-collar criminals — The Pros & The Cons. Mr. Zeune's speakers tell their stories of how and they committed their crimes. Their frauds range from $18,000 to $350 million. Speakers include CPAs, attorneys, and business people. The frauds include:
Mark Morze created 10,000 phony documents to steal $100 million in the infamous ZZZZ Best Carpet Cleaning fraud (86% of the revenue was fake and no one found it)
Fred Shapiro defrauded nearly every major financial institution in the City of Philadelphia to the tune of $8.6M. He is a former attorney, accountant, educator and inmate. Fred worked undercover with the U.S. attorney's office and the FBI in a drug and money laundering operation in an effort to minimize his sentence.
Nick Wallace committed a $350 million fraud as the President of ESM Government Securities resulting in the collapse of the Ohio Saving & Loan Guarantee Fund, and the bankruptcy of 69 Ohio S&Ls
Dunlap Cannon was the largest real estate closing attorney in Memphis. He went to prison for 32 months for stealing $5 million from his clients.
Suffering from medical expenses and family deaths, bookkeeper Teri Lynn Norwood stole $18,000, promising to pay it back. She ran out of time.
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100% No-Risk Guarantee Mr. Zeune’s executive education training is consistently
rated at least a 4.7 on a 5-point scale. If you are not satisfied for any reason, if you don’t learn at least 10 new things you can use the following day, there are no fees or
expenses. PERIOD.
Training, Writing and Consulting in: Fraud and Audit Failures Productivity Performance Measures Leadership Skills and Strategies
ACTION STEPS FROM GARY’S CLASS
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Thanks for attending. Don’t hesitate to call or email if you have questions. . . .gdz
10356 Wellington Blvd Suite DPowell, OH 43065
Phone [email protected]
www.TheProsAndTheCons.com
Articles at www.TheProsAndTheCons.com
Would your clients, staff, customers, vendors or another group you belong benefit from one of these articles?
Email Gary Zeune at [email protected] for reprint permission.
Wrong Strategy + Wrong People = Fraud/Theft/Abuse – By Gary Zeune, CPA Auditors And Airport Screeners Have Similar Blind Spots - By Gary Zeune, CPA Should Auditors Be Airport Screeners? Or why they both miss what they're paid to detect. - By Gary Zeune, CPA Ex-con: Cunningham Faces Rough Road In Prison - By William Finn Bennett
Walt Pavlo USA TODAY Ethics training -
Gary Zeune on Fraudsters Speaking Out on Fraud The Corporate Counsel - Podcast
OU alumnus examines corporate crime, criminals - By Ashley Ferguson
Ex-cons tout ethics through corporate speakers bureau - By Sarah Anderson
Man's Lifestyle Sold Investors - By Jim Woods
"The Pros of Cons" - By Michael Goldstein
Legal Audits: Does Your Borrower Need A Checkup? - Schottenstein, Zox & Dunn.
An Ex-Con Tells How to Avoid Being Conned. - By Fred Shapiro, in White-Collar Crime Fighter. December, 2004.
Does your compensation system encourage illegal activity? - By Gary D. Zeune, CPA, Published in White Color Crime Fighter in November 2004
Speaker explains how corporate con men get away with it - By Jim Phillips [Athens NEWS Senior Writer] in The Athens News in October 2004
How to Foster Fraud : Forget Ethics - By Gary D. Zeune in White Color Crime Fighter in August 2004
Your Auditors Can Stop Fraud , If they know what to look for - By Stephen Pedneault published in White Color Crime Fighter in August 2004
After Serving Time, Executives Now Serve Up Advice - by CHRISTOPHER S. STEWART in The New York Times
Local CPA, ex-cons attempt to spread word that crime doesn't pay - by SEAN CASEY [Daily Reporter Staff Writer] in Central Ohio Source " The Daily Reporter"
The costs of not securing personally identifiable Data - By Benjamin Wright "The Information Systems Audit and Control Assn." Site : www.isaca.org
Ex-Cons find peace and paycheck on the Burgeoning lecture circuit - By Joshua Harris Prager published in Wall Street Journal May 25th, 2004
Felons become educators for Business - By Mitch Moxley [ Financial Post ] Published in National Post July 17, 2004
A new regard for ethics on the job - By MEREDITH COHN [ SUN STAFF ] Originally Published JULY 9, 2004
The pros of preventing cons - White-collar criminals help companies avoid fraud in their midst By Chiree McCain, For Business First - June 25, 2004
Are You Teaching Your Employees to Steal? - By Founder Gary D. Zeune, CPA in Strategic Finance
When it's one of your own a first-person account of Fraud Inside A Bank - by ex-con Dave London in RMA Journal
FRAUD HAPPENS : How an honest employee crossed the line - by Teri lyn Norwood Published in White - Collar Crime Fighter Magazine , November 2003
Internal theft can destroy years of small business owner's work - by Jane Applegate
Fraud and Theft Start Small - by Founder Gary Zeune in NJ CPA Society Journal
How to Predict When People Will Embezzle - by Founder Gary Zeune in White Collar Crime Fighter
Hubbell details life of fraud - September, 2000 in San Antonio Express
Speaking with Conviction - from Report on Fraud
Corporate crooks hit lecture circuit - from Denver Post
Ex-Con Tells How Auditors Failed to Help Clients Guard Against Fraud - by Mark Morze in White Collar Crime Fighter
Preventing Your Firm's "Enron" - by Founder Gary Zeune in Ohio CPA Journal
SAS 99 17 Ways to Protect Yourself From Malpractice - by Founder Gary Zeune in 7 CPA journals
Regulation SAS 99 Aimed at Curbing Company Fraud - from Bizjournals , March 2004
Business First Auditors' Alert: How NOT to Get Sued Under Fraud Auditing Standards - by Founder Gary Zeune in White Collar Crime Fighter
SAS 99 Friend or Foe - by Founder Gary Zeune in two publications
(SAS 99 RMA) Look Out! New fraud auditing standard holds worrisome implications for financial statement reliability : interview with Gary Zeune in RMA Journal (for banking industry)
Like an article…….Email Gary Zeune at [email protected] for reprint permission.
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Outside the Box Performance: How to Beat Your Competitors' Brains Out is packed with the techniques small and mid-size world-class companies use to become and stay competitive, and make a ton of money. Learn the secrets to unlock the multitude of new techniques which "drive" your profitability. This book compliments the class and provides new ideas to incorporate in your business. For example, do you know what the basis of competition will be in the next 10 years? It’s around you ALL the time. You expect it everyday as a customer. Or, how to beat your competitors by asking your customers two simple questions? If not, sit back and learn how to "beat your competitors' brains out!"
Don't you want to know how Barry Minkow and Mark Morze stole $100 million from investors in the ZZZZ Best Carpet Cleaning fraud, right under the noses of auditors, underwriters and lawyers? The first chapter of 100 pages in The CEO's Complete Guide to Committing Fraud tells you. It also has 8 chapters on other frauds: computer, real estate, fake financial statements, public company frauds, and a chapter by an auditor who became the target of a fraud investigation, just 4 weeks after becoming the engagement partner. Risk-Free Lifetime Guarantee: Gary Zeune’s books are fully guaranteed. If they ever fail to meet your expectations, even after you've written in them, marked them up, torn pages out, return for a full refund.
I need the following copies of Mr. Zeune's books. Price: 1 @ $19.95: 2 to 5 @ $15.95 6+ @ $12.95 The CEO's Complete Guide to Committing Fraud (300 pages) Outside the Box Performance (200 pages) Number of books ordered 1 @ $19.95 Checks make payable to: 2 - 5 @ $15.95 each Gary Zeune 10356 Wellington Blvd Suite D 6+ @ $12.95 each Powell, OH 43065 Office 614-761-8911 Postage/Shipping $5.00 Fax 801-751-6283 Email [email protected] Total Web www.bigfoot.com/~gzfraud Name _____________________________________________
Company ___________________________________________
Address
City State Zip ______
Phone Fax __ _____________________
Email ______________________________________________
Address is: � Firm � Home
1
Business Strategies14 Things You Need to Know for 2007
Gary Zeune, CPAThe Pros & The Cons
10356 Wellington Blvd, Suite DPowell, OH 43065
Phone 614-761-8911Fax 206-202-0880
v2
FaxAway.com
Business Strategy 2007 2
Required Legal StuffThese materials were developed by Gary D. Zeune.
The following policies govern their use:1. These materials are intended for use in group study situations and
were not developed for self study or reference uses. These materials are copyrighted. Reproduction of the manual or any portion of it is prohibited unless written permission has been obtained from Gary D. Zeune.
2. These materials were prepared solely for the purpose of continuing professional education. They are distributed with the understanding that Gary Zeune is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought.
3. Participants are advised that the Statement on Standards for Formal Continuing Education (CPE) Programs places responsibility on both the individual participant and the program sponsor to maintain a record of attendance at a CPE program.
4. The information the participant should keep on each program is (a) sponsor's name, (b) title and/or description of content, (c) date(s) of the program, (d) location, (e) number of CPE contact hours. This information is found in the printed program for most courses or conferences and/or in a CPE attendance record form. Either or both of these documents should be kept for an appropriate period to enable regular periodic reporting to jurisdictional board(s) and to professional organizations requiring such reports.
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Business Strategy 2007 3
Manual Posted Online
This manual is posted at www.TheProsAndTheCons.com/manuals.It can be viewed and printed but not downloaded, edited or saved on your computer.
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Business Strategy 2007 4
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Business Strategy 2007 5
14 Things You Need to Know for 2007
1. Forecast: what effect will oil prices have on interest rates andthe economic expansion
2. How one drug company’s pricing model could threaten the corner drug store
3. How 70-year old Lego is competing in the internet age4. Find out how Staples developed a unique, and highly
profitable, source of new products5. Do you know what new regulations for E-waste could be
hazardous to your financial health6. To make more money, put customers in charge7. How Kodak gets customers to try its cameras, then buy one
Business Strategy 2007 6
14 Things You Need to Know for 2007
8. How the number of choices affect customer buying behavior9. How the rapidly changing gender mix of college grads will
affect your bottom line10. Why these workers act like owners11. How to tailor perks to retain more employees12. Get the latest on how companies are dealing with computer
misuse 13. Find out how advertisers are requiring measurable results for
their ad dollars 14. How a 125+ year old house wares company went bankrupt
and now makes a profit
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Business Strategy 2007 7
More Strategy Secrets (if we have time)
1. Why things don’t change2. Accountants information market share3. Non-financial performance measures4. Extraordinary guarantees5. Disruptive technologies6. Competing based on service7. Keep customers coming back8. Strategy questions
Business Strategy 2007 8
“Is there a better way?”
We must never stop asking, “Is there a better way?” You can’t pray for progress and fight change. In 1829, Martin Van Buren, Governor of New York, wrote to President Andrew Jackson cautioning him about the future: “President Jackson, the canal system of this country is being threatened by the spread of railroads. We must preserve the canals for the following reasons: (1) If canal boats are supplanted by railroads, seriousunemployment will result. Captains, cooks, repairmen and lock tenders will be left without jobs, not to mention farmers now employed in growing hay for horses. (2) Boat builders would suffer, whip and harness makers would be left destitute. (3) Canal boats are absolutely essential to the defense of the United States.
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Business Strategy 2007 9
“Is there a better way?”
In the event of the expected trouble with England, the Erie Canal would be the only means by which we could ever move the supplies so vital to waging modern war. As you may well know, Mr. President, railroad carriages are pulled at the enormous speed of 15 mph by engines, which, in addition to endangering life and limb, snort their way through the countryside belching out smoke, setting fire to crops, scaring the livestock and frightening women and children. Surely the Almighty never intended people should travel at such breakneck speed.”
Poor Martin – what would he think if he knew we were flying 33,000 feet high, at 500 mph, sipping coffee and typing on a notebook computer? God is the author of all true progress, so we must never stop asking, “Is there a better way?”
Business Strategy 2007 10
Why People Don’t Trust Business
Strategy Tip: If customers have to read the ‘fine print’ to understand the deal they won’t _________trust you.
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Business Strategy 2007 11
Why Employees Don’t Trust Management
Business Strategy 2007 12
Hi & Lois Real Estate Jargon
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Business Strategy 2007 13
New Business Ideas
New businesses start when someone sees or has a problem.
Business Strategy 2007 14
Luggage Express
1. Started in 20002. CEO hurt his shoulder getting his golf clubs to
Europe3. Business took off after __________4. Business up 30% since Aug 10, 2006 when TSA
banned _________5. Large bag one-way $130+6. www.usxpluggageexpress.com or 866-SHIP BAGS
Strategy Tip: ALWAYS be alert for problems to ______ solve
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Business Strategy 2007 15
Unintended Consequences
Business Strategy 2007 16
Toyota Drove a Ford to the Bank
1. Sell them here, you must build them here in 1970’s2. GM/Ford/Chrysler had ____% market share
1. 800,000 employees3. Two fuel shocks in 1970’s sent Japan’s market share
from 20% to 30% from sales of small cars4. American car companies, unions and politicians
demanded Japan build cars here5. Japan and US agreed on voluntary import limits6. Detroit thought limits would give it time to rebuild7. Thus forcing plants to be ___________________
70
built here
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Business Strategy 2007 17
Toyota Drove a Ford to the Bank
1. Detroit lost American buyers’ loyalty2. Most Japanese cars come from American plants that
Detroit insisted the companies build3. Gave Japan insight into American life, created
thousands of jobs, keeps profits here4. Toyota builds Camry in 7 countries from lessons it
probably wouldn’t have learned otherwise5. States now line up to provide incentivesStrategy lesson: Unintended Consequence….
Detroit’s brake was Japan’s ________accelerator
Business Strategy 2007 18
Change Rules, Change Behavior
1. FDA requires disclosure of trans-fat content on labels
Companies spending millions ________________reformulating products
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Business Strategy 2007 19
Competitive Threats
Business Strategy 2007 20
Bad Bosses
Survey of 700 employees by Florida State University College of Business reported in The Leadership Quarterly, Fall 2006
23%Supervisors who blamed others to cover up mistakes or to minimize embarrassment
24%Supervisors who invaded their privacy
27%Supervisors who made negative comments about their employees to other co-workers and managers
31%Supervisors who gave their employees the "silent treatment" in the past year
37%Supervisors who failed to give credit when due 39%Supervisors who failed to keep promises
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Business Strategy 2007 21
Gem War
1. $143 billion industry2. Jewelry quality made in a lab3. 15% cheaper than mined stones4. Will people buy synthetic or cultured 5. Mined diamonds have bad reputation6. True diamonds, not fakes 7. Colors are easy to make but rare in nature8. Cultured pearls now 95% 9. Hollywood pushing 10.100 million new customers in _____________India and China
Business Strategy 2007 22
Assist U.S. Car Makers?
Should the federal government provide financial assistance to
U.S. auto makers?
Yes12%
No88%
WSJ, Online Poll, November 13, 2006
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Business Strategy 2007 23
Dilbert on Sales
Business Strategy 2007 24
Ford 500 Renamed Taurus
1. Taurus 3rd most recognized nameplate1. F-Series and Mustang2. 7 million sold in 21 years
2. Ford 500 108,000 sold in 2005 dropped to 84,000 in 2006
3. Freestyle crossover now Taurus X
1st day at Ford…….”Why get rid of the Taurus? How can it go away? It’s the best-selling care in America,” Alan Mulally, Ford CEO, from Boeing.
BS: Will renaming the Ford 500 increase sales Yes No ?
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Business Strategy 2007 25
Pricing Parking
1. Introduced in Oklahoma City in _________2. Never have enough + never cheap enough3. How much does it cost at a meter in your town4. Why are all meters priced the _________5. Seattle no free parking north of downtown6. London up to $___ per hour7. San Fran AT&T Park meter $4500/year but
meters mile away $10/year now adjusts prices in real time
1936
SAME
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Business Strategy 2007 26
Pricing Parking
1. Cities and merchants argue cheap parking brings _____________________
2. People moving back downtown with their ____3. 85% rule: Set prices so that 85% of spaces are
full at any time (Portland OR and Anchorage)4. Portland free to 75¢ bus ridership to Lloyd
District 10% to 33% of office/store employees5. The High Cost Free of Parking, Donald ShoupStrategy Point: You don’t have to charge all
customers the _______________
customers downtown
SAME PRICE
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Business Strategy 2007 27
Cell-Phones Disruptive Technology
1. Watches Why _____________________2. Cameras
1. U.S. 3.2 megapixels2. Europe and Asia 8 to 10 megapixels
1. Built-in flash2. Advanced lenses
3. 2007 est. 74% have cameras with 13% high resolution
4. Send pics from phone without __________Strategy: Cell phones may ___________ low end
cameras
Samsung A990
Cell phones have time built in
obsolete
Business Strategy 2007 28
Are Your Employees Engaged?
Renegades11% Know what to do but don't
want to do it
Engaged57% Know what to do and want to
do it
Disengaged27% don't
know what to do, and
wouldn't do it anyway
Enthusiasts 5% Want to
do their work, but don’t'
know what to do.
Sibson Consulting
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Business Strategy 2007 29
Kodak’s Printer Strategy
1. Film fading so Kodak needs new revenue 2. Old Strategy:
1. Cheap printers + Expensive ______2. Printer revenue ¼ ink revenue
3. 70% parents restrict kids printing4. New Strategy: Kodak up-pricing printers
but cutting ink prices about _____ 5. Black ink $10, color ink $156. 4x6 10¢ compared to 29¢Strategy: Who’s at risk ______________
EasyShare 5500 Prints/copies/scans/faxe
1/2
Cartridge refill
Business Strategy 2007 30
CA’s Defective Sales Commission
1. Formerly Computer Associates 1. Why name change _____________
2. $2.2 billion accounting fraud3. CEO, CFO, numerous acctg/fin execs pleaded
guilty to securities fraud and obstruction4. Kumar gets 12 years in prison and fined $8 million
Sanjay Kumar
scandal
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Business Strategy 2007 31
CA’s Defective Sales Commission
1. Revised commission structure 20052. Encourage sales to new customers3. Acquired Niku and Concord Communications4. Negotiated quotas with sales who ___________5. “Overlays” CA told its sales people would be
paid for sales to “their” customers by new sales folks6. Base $45k + $____k if met quota7. Lots of sales people beat quotas 8. Internal comp system failed to alert mgt
Sanjay Kumarsandbagged mgt
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Business Strategy 2007 32
CA’s Defective Sales Commission
1. Restated earnings because higher than expected sales commissions
2. Considered paying less than promised3. $70 million more commissions than expected4. “poor design and administration”5. Managers lost some bonus and can’t exercise options6. No payment to 401(k)7. Sales chief and CFO _________Strategy Tip: People ALWAYS change their __________
to maximize the benefit to themselves
Sanjay Kumar
in jailbehavior
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Business Strategy 2007 33
Finding the Most Profitable Ideas
Business Strategy 2007 34
Staples Reinvents the Letter Opener
1. InventionQuest 10,000 inventors2. Winners get $25,000 + up to 8% royalty3. Products invented by customers who can’t find
____________________________4. Make house items top office products brand 5. In-house design has 50 patents6. Competing with name brand products 3M, Xerox
something they need
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Business Strategy 2007 35
TackDots
1. Inventor Neil Grimwood came up with StickyDots after missing an appt when a Post-It note fell off his ______________
$5,000 royalties at 12/31/052. Mini bulletin boards easy to stick almost anywhere3. Great for small areas like monitors, cabinets, lockers 4. Use to leave notes, put up lists and display photos 5. Powerful adhesive holds strong yet won't leave residue 6. 3M® brand adhesive sticks to almost any surface 7. Includes 8 mini bulletin boards and 8 silver push pins
Business Strategy 2007 36
Handy Strap Stapler
1. Teacher Nancy Garner 2. What do teachers need to staple
________________3. Adjustable strap keeps fingers free to hold papers
while tacking them to a wall 4. Removable base allows this stapler to be used as a
desktop stapler 5. Staples up to 14 sheets and tacks up to 5 sheets 6. Designed for teachers
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Business Strategy 2007 37
Rubber Bandits
1. Former Car designer Adrian Chernoff now full time inventor
2. The easy way to organize and label items3. Instant organization - just wrap and you're done 4. So many uses - organize documents, label items for
storage, create reminders 5. Heavy-duty rubber bands with water- and tear-
resistant, write-on labels 6. Write on label with pen or marker
Business Strategy 2007 38
WordLock
1. Software engineer Todd Basche2. Easy-to-remember combination
lock - you pick the word!3. Choose your combination from over
10,000 word or letter combinations 4. Protecting your valuable equipment is easy5. Reset your combination at anytime 6. 6.5' galvanized steel cable, security mounting plate,
and instructions with sample word list
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Business Strategy 2007 39
Staples Bottom Line Results
1. Staples brands1. 2004 11% 2. 2005 18%3. 2006 20%
2. House brands have _________ profit margins3. 2002-06 sales increased 11% and Profits 26%4. Surpassed OfficeMax as #1 retailer5. 80% of all the best new ideas come from ________Strategy Tip: Do you have a formal program to
_____________________________.capture your customers’ ideas
higher
customers
Business Strategy 2007 40
To Charge Up Customers, Put Customers in Charge
1. Lead-user innovation2. Intensely engaged user find new uses long before
__________________________3. Not market research4. Identifying what most advanced users are ________
the company does
doing
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Business Strategy 2007 41
John Fluevog Shoes
1. Open source footwear2. Rock stars and fashion models3. Solicits ideas from brand _______________4. Who submit their own ____________5. Desire for a connection6. Some are striking but impossible to make7. Best are “intriguing twists on designs we’re already
exploring”8. 300 finalists
enthusiastsdesigns
Business Strategy 2007 42
John Fluevog Shoes
www.fluevog.com/files_2/os-1.html
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Business Strategy 2007 43
Jones Soda
1. “The world does not need another soda” forced a different way to look to form a connection with customers
2. How to let customers own the brand3. 12-24 year-old demographics4. 12-ounce glass bottles5. Labels b&w photos from ___________ 6. That _________ regularly
customerschange
Business Strategy 2007 44
Jones Soda
1. Web site displays some of the millions received2. Visitors do what ________3. Selected labels includes ______________________4. Highest margin product 12-pack with customer’s
own _________________ cost $_______
VOTEName and address
photograph 34.95
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Business Strategy 2007 45
Threadless.com
1. T-shirts 2. 70,000 designs all come from ___________3. Visitors rate 4. Company selects 5 to 7 per week5. Winners get $1500 cash + $500 merchandise6. Customers get points for referring others and
posting photos 7. Customers design, select, market and buy8. Customers ARE ______________
customers
the designers
Business Strategy 2007 46
Threadless.com Screen Shot
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Business Strategy 2007 47
Threadless.com
1. 300,000 registered users +20,000/month2. 150 new designs/day3. Sell 80,000 shirts/month4. 4 rules
1. Members create content2. No advertising3. Members help with the business4. Reward members
5. Low-cost, high-involvement
Business Strategy 2007 48
Threadless.com
1. In effect Threadless.com is a __________________2. What do you want to know about the T-shirts $____
Strategy Tip: Technology makes it easy to let your customers help you _______________
custom job shop
15
run the business
25
Business Strategy 2007 49
Firing Up Your Troops and Customers
Business Strategy 2007 50
For Every 50 Men, There Are __ Women...
31
37
39
48
50
53
0 10 20 30 40 50 60
Master's
Bachelor's
In college
HS grad
High school
Elementary
Women Dusting Men in College
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Business Strategy 2007 51
Women Dusting Men in College
1. “I take the path of least resistance. What’s the difference between an A and a B? Either way, you go on to the next class,”Rick Kohn, UNC.
2. Regardless of race or economic status Dept of Ed stats show men ….
Less likely to graduate and of those who doFewer do it in 4 or 5 years and Get worse grades
Business Strategy 2007 52
Women Dusting Men in College
1. Men are only 42% of students2. Harvard Honors grads 55% women vs. 49% men
2006/7 class was 52% female3. Florida Atlantic women 64% of grads but 75% of
honors degrees and 79% summa cum laude4. “The boys are where they were 30 years ago, but
the girls are on a tear, doing much, much better,”Tom Mortenson, Senior Scholar, Pell Institute.
5. Cultural ADD……..not cool to study
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Business Strategy 2007 53
Women Dusting Men in College
“Most women want a high-powered career that they are passionate about. But they also want a family, time off, and make dinner. I won’t date anyone who plays video games…They’re choosing to…waste their time and it sucks the life out of them. Men don’t hustle as much. It’s that entitlement thing. They think they can sit back, relax and still get a good job. They think if they have a firm handshake and speak properly they’ll be fine.” Jen Smyers, who has a dean's scholarship and has had four internships and three jobs while at American University. She also led the campus women's initiative.
Business Strategy 2007 54
Women Dusting Men in College
Christina, left, and Lynette Thompson attend the University of North Carolina, Greensboro. Their two sisters also went to college, but their three brothers did not. "I think women feel more pressure to achieve," said Christina Thompson, who is majoring in political science.
Strategy Tip: What programs/practices do you have in place get and keep the ________________________?the best and the brightest
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Business Strategy 2007 55
The Paradox of Choice
“We are now discovering the difficulty of deciding just what makes us happy in a world of innumerable options. Since graduation, we’ve struggled to make our own happiness. It seems that having so many choices has sometimes overwhelmed us. In the seven years since I left for college, I’ve had 13 addresses and lived in six cities. How can I stay with one person, at one job, in one city, when I have the world at my fingertips?”, Jenny Norenberg, Newsweek, 12/6/06.
Jenny Norenberg: Paralyzed —and propelled — by choice.
Strategy Question: How do you get employees to stay “down on the _______”.
Business Strategy 2007 56
Reflexite Corp ESOP
1. 75% owned by 500 ___________2. Monthly Town halls: Strategic and
financial update3. “My bosses are all around me. ¾
of the equity is in the hands of people who have direct impact on the business. We attract people who want to be in business for themselves, just not by themselves,” Cecil Ursprung, CEO.
employees
29
Business Strategy 2007 57
Reflexite Corp ESOP
1. $100 million and growing fast2. NY, Conn, 14 foreign locations3. Reflective material for tractor trailors, police cars,
construction cones, roadwork signs, firefighters’coats, and cycling vests
4. Components for overhead projectors, motion sensors, thin films for lcd screens
5. Compete against giants because employees are invested in success through ESOP
Business Strategy 2007 58
Reflexite Corp ESOP
1. Employee Stock Ownership Plan2. 6 to 18% of salary every year3. 60+ in East Germany + 110+ in
China4. “People are at their best when
they’re in a constant state of dissatisfaction, when they’re always looking to make things a little better. That’s what ownership does. It’s remarkable what gets unleashed when people share in the wealth they help create.”
05
1015202530354045
1985
1995
2005
Mill
ions
Value of ESOP Shares
30
Business Strategy 2007 59
Jonathon Barnes Architecture and Design
1. Overseas ‘fellowships’Cutting-edge Creative insightJob well doneWorld-class designsRicher understandingBenefits _________
Bonuses and travel strong retention toolAverage cost ______________
client
$2,500
Business Strategy 2007 60
Jonathon Barnes Architecture and Design
1. Unusual bonuses and incentives tailored to employee work
2. Employee chooses destination3. Meets with local architectural firms4. Presents findings to firm5. Softball and pizza are nice, but trips
enhance expertise, retain clients and make firm/company _______
Strategy Tip: To keep employees customize rewards that benefit you.
money
31
Business Strategy 2007 61
Getting People to Try Your Product
1. Fuji and Sony supply hotels with new gadgets for guests to use cost _____
2. Hotel staff give guest pictures on a CD3. Enhance guest experience4. “It’s a real-world test drive. We are
hopeful people will see how well they operate and buy one,” Andy LaGuarida, Fujifim USA.
Strategy Tip: Find ways to expose customers to your product or service without _____.
Sony PlayStation 3
$0 to customer
selling them
Business Strategy 2007 62
More Choices Isn’t Always Better
Strategy Tip: Choice can no longer justify marketing strategy.
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Business Strategy 2007 63
More Choices Isn’t Always Better
1. Amazon has how many books _______________2. Netflix has how many movies on dvd _________3. Sales increase but profits ______decline
2,000,00035,000
Business Strategy 2007 64
More Choices Isn’t Always Better
1. Sample any number2. $1 off coupon3. 60% of customers sampled 24 4. 40% of customers sampled 65. 30% of 6 jam samplers bought6. __% of 24 jam samplers bought7. More choices take more time and cause
anxiety…”Did I make the __________”
24 jams
6 jams3
right choice?
33
Business Strategy 2007 65
Chocolates on the Pillow Aren’t Enough
1. “Big Aha’s” Each chapter has lessons from loyalty building companies
2. Harley nearly dead 3. Harley lessons
1. Start with people who love you ____________2. Expand their loyalty _____________________3. Plan for next generation __________________
______________________________________Strategy Tip: ________________________________
aging bikersRoad trips, rallies, get-togethers
High performance, less expensive, smaller
www.harley-davidson.com
Business Strategy 2007 66
Lego
34
Business Strategy 2007 67
Lego Redefines Its Business
1. Children outgrowing toys faster2. Sales of traditional toys
2004 $22.1 billion 2005 $ 21.3 billion3. Lego started in 19324. One of last producing toys in U.S.5. Cheaper plastic block competitors6. 1998 first loss ever7. Closing Conn. and some Denmark operations
Business Strategy 2007 68
Lego Redefines Its Business
1. Chased fads and tried to diversify1. RC toys and LegoLand
2. Plastic block production moving to Czech Republic3. High tech electronic toys staying in U.S. + Denmark4. 2004 ($327 million) 2005 $86 million
Strategy Tip: Lego redefined itself as a construction brand.
35
Business Strategy 2007 69
Oneida Ltd.
1. 120+ years old largest flatware maker in the world2. 5500 employees + $500 million 3. Jan ’03 – Oct ’05 $(157 million)4. Waited to long to offshore production5. 2002 restructured to market/distribute ___________6. 2004 bankruptcy 7. 2006 bought by private equity lendersStrategy Tip: The market doesn’t wait on __________.anyone
imported flatware
Business Strategy 2007 70
Sunny, With Good Chance of Viewers
1. Networks guarantee viewership for programs2. Promising 8 to 10 advertisers specified viewer levels3. TWC will “make-good” short-falls4. All clients of Starcom5. Why isn’t program viewership guarantee enough __6. Nielson measuring commercial viewership
TheWeatherChannel
36
Business Strategy 2007 71
Sunny, With Good Chance of Viewers
TheWeatherChannel
"We want to be smarter about the way we invest our money, and commercial-ratings guarantees get us one step closer to knowing what we are paying for," MiahSullivan, senior manager of media for Luxottica Retail.
Strategy Tip: Rapidly growing demand by clients to pay for results, not effort. So are your systems set up to reliability capture and report ____________.outcomes
Business Strategy 2007 72
Oil Prices Driving World-Wide Prices
1. 2006 16% of corn to ethanol to grow to 30% by 2008
2. Global grain stocks at 30-year low3. China and India growth 4. Central banks increase rates to
fight food inflation5. Developing country residents can’t afford ‘luxuries’6. National Chicken Council calls corn shortage “the
ethanol crisis”Strategy Tip: Have you factored this into your _________. forecast
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Business Strategy 2007 73
Healthcare Update
Business Strategy 2007 74
Drug Patents
1. 70 brand name drugs will lose patent protection by 2001
2. “This is once-in-an-epoch stuff. We haven’thad this kind of a generics wave in decades,” Kemp Dolliver, Health-care analyst, Cowen & Co.
3. Reduce drug cost $24 of $252 billion4. Merck’s Zocor $4.50 to $1 generic from Teva
1. Merck is ____________ Teva’s priceStrategy Tip: Is your PBM encouraging doctors to
__________________________________________
undercutting
prescribe generics when appropriate?
38
Business Strategy 2007 75
Disruptive Pricing
1. Wal-Mart $4 for about 300 generics (included different dosages) WHY $4 pricing? _____________
2. Eliminate different dosages and fewer than _____3. Save $1 to $20 for 30-day supply4. Draw more customers5. Shares of generic and pharmacy companies ______6. Target/CVS and others soon matchedStrategy Tip: Who will $4 pricing hurt ____________
Saying 300 instead of 150 ___________________
150
Public image on health insurance
damaged WalMart’s credibility
Business Strategy 2007 76
ITAGroup Trims Health Care Cost
1. 15% of companies with 100 – 500 employees have adopted high-deductible plans, most with HSAs
2. 450 person marketing/incentive company in Iowa3. Added high-deductible to traditional plan so won’t
alienate employees 4. 17% of employees have signed on5. “We want to cover the things that are costly
while managing the company’s expenses. We’re better off investing in preventive care than dealing with problems,” Dick Rue, CFO.
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Business Strategy 2007 77
ITAGroup Trims Health Care Cost
Adding HSAFlu shotsMammograms
Other benefits
80% up to $2500/$5000
90% up to $1300/$2600
In-network co-pay
$15, $30, $50$10, $25, $40Prescriptions$65/$182$89/$248Premium$25$15Co-pay
$1000/$2000$500/$1000Deductible
High-DeductibleSingle/Family
TraditionalSingle/Family
Business Strategy 2007 78
Books You Should Read
40
Business Strategy 2007 79
Chocolates on the Pillow Aren’t Enough
Jonathan Tisch, CEO, Lowes Corp.3 secrets for lasting customer relationships1. Make guest feel welcome2. Memorable experience3. Feel safe 24/7Tisch says these can be applied to _____________any business
Business Strategy 2007 80
Chocolates on the Pillow Aren’t Enough
1. Lowes hotels “home away from home”2. Go beyond list of goods and services
to ‘total well being’1. eBay2. Harley-Davidson3. Fast Company4. Wall Street Journal
41
Business Strategy 2007 81
GO Put Your Stengths to Work
1. Marcus Buckingham “First, Break All the Rules”2. “The effective executive makes strength productive.
He knows that one cannot build on weakness,” Peter Drucker
3. 87% think success = fix your _________________weaknesses
Business Strategy 2007 82
Steps to Put Strengths to Work
1. Bust the myth that success is fixing weakness2. Label strengths (they aren’t personality tests) but
“consistent, near-perfect ______________”3. Flourish by volunteering your strengths to the team4. “Strengths and weaknesses talk with team and
managers to engage strengths”5. Build strong habits (assisted by his _______)
Strategy Tip: VERY few people can be persuaded to change work habits. Change comes from _________
performance
book
within
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Business Strategy 2007 83
Books Worth Reading
366 Days of Insight and Motivation for Getting the Right Things Done
First Sentence: The proof of the sincerity and seriousness of a management is uncompromising emphasis on integrity of character.
The 8 Point Plan: Concrete guidance, some contrarian, for the newly hired or promoted leader. Interviews with leaders in many industries on the first 100, critical, days of leadership. The ‘honeymoon’period that’s the ‘temporary state of incompetence’.
Business Strategy 2007 84
Books Worth Reading1. People are working longer and longer yet
aren’t happy and their incomes aren’t secure.
2. Best route to emotional satisfaction is to stop looking for it a work.
3. 7 principles for coping with modern work.
1. No Evaluation systems of more than 2 pages.2. Don’t use budgeting. Operations using stretch goals.3. De-link pay to the budget. Link to performance
against prior year and competition.4. Fire people with no surprises and little humiliation.5. Many rules and guidelines, often in list format.
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Business Strategy 2007 85
Books Worth Reading
1. Please customers and profits will follow
2. Give customers what they want at every contact
3. Treat employees right4. Make service a
leadership priority
Business Strategy 2007 86
Is Your Data Secure?
Laptop thefts expose 40,000 Chicago teachersBy Drew Cullen April 9, 2007
A thief walked into the headquarters of Chicago Public Schools (CPS) on Friday, April 6 and grabbed two laptops containing the names and social security numbers of 40,000 teachers. The CPS has released an image of the suspect captured by CCTV and is offering a $10,000 reward for information leading to the arrest of the thief or recovery of the data.
The laptops belonged to _________________ and its subcontractor, who were ___________ pension contributions made by teachers between 2003 and 2006. The data does not include date of birth or addresses, which is something, we suppose.
Strategy Tip: How do you secure your laptops and monitor ‘employees’?
[McGladrey & Pullen]auditing
44
Business Strategy 2007 87
E-Waste Disposal Hazardous to Your Bottom Line
1. Old electronic gear is worth less than zero and can be a liability
2. Computers, servers, cell phones, printers, PDAs, monitors, video projectors, telecom systems, etc.
3. Average cost is prox $100 for sanitizing drive and proper physical disposal
4. Piling in a corner increases long-term disposal cost5. “Out of sight, out of mind doesn’t apply here.
Companies must view E-waste disposal as more than taking out the trash,” Francis O’Brien, Gartner.
Business Strategy 2007 88
E-Waste Proposed Legislation
1. Europe and Asian countries have national laws2. Four proposed Federal bills will drive costs higher
Computer Hazardous Waste InfrastructureNational Computer Recycling ActElectronic Waster Recycling Promotion and Consumer Protection ActTax Incentives to Encourage Recycling Act
3. States and municipalities aren’t waiting
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Business Strategy 2007 89
Where's the E-Waste Risk
Percent of 300 Compaines Surveyed
2
4
4
18
68
0 20 40 60 80
Max sales
Free space
Min disposal
Environ risks
Data/privacy risk
Business Strategy 2007 90
E-Waste Current Law
1. Federal Solid and Hazardous Waste Regulations prohibits simply throwing away most E-waste or sending to regular recycling
2. Disposer's responsibility to determine if there’s any landfill-polluting toxic compounds
3. Graham-Leach-Bliley and HIPAA could apply 4. “Sham recycling” or “sprinkling waste”5. EPA fines if don’t properly dispose6. Do you have an E-waste policy and related controlsStrategy Tip: If not, have you recorded a ___________contingent liability?
46
Business Strategy 2007 91
More Strategy Secrets
Business Strategy 2007 92
Why Things Don’t Change. . . .
Your organization and processes are perfectly
designed to give you the results you are getting.
47
Business Strategy 2007 93
Accountants Information Market Share
Total info used torun business
Portion of info provided by accountants
1900 2000Adapted from "The Future of Audits"Journal of Accountancy, Sept. 1994, p. 74
100%
75%
100%
25%
Business Strategy 2007 94
Nonfinancial Performance Measures: Examples
AMP Corp
A-1LawnCare
48
Business Strategy 2007 95
AMP Corporation
AMP CorpNumber of ringsHang upsAnswer by 3rd ringOrder capture rate
Super
Before
Super
After
Business Strategy 2007 96
Extraordinary Guarantees
100% No-Risk Guarantee
Mr. Zeune’s executive education training is
consistently rated at least a 4.7 on a 5-point scale. If you are not satisfied for any reason, if you don’t learn at least 10 new
things you can use the following day, there are no fees
or expenses. PERIOD.
49
Business Strategy 2007 97
Extraordinary Guarantees Examples
SolotronFederal ExpressRoofing contractorMarine paint distributor
Business Strategy 2007 98
Extraordinary Guarantees
Definition
Why EGs work when other quality programs fail
Why EGs are appealing to customers/company
50
Business Strategy 2007 99
Extraordinary Guarantees
What prevents EGs?Inability to track/identify customer needs/wantsLack of enthusiasmCumbersome organizational structure
Changes required to implement an EGFind out why customers do business with youStream line operationsPush decision making downImprove service
Business Strategy 2007 100
Xerox Docutech Guarantee
Unconditional return3 months6 monthsFull year
51
Business Strategy 2007 101
Types of Extraordinary Guarantees
UnconditionalSpecific
Focus customer attentionNo risk for uncontrollable elementsCustomer participation
Pass through
Business Strategy 2007 102
Driving Your Bottom Linewith an Extraordinary Guarantee
THE MANTIS PROMISE
Try any product that you buy directly from Mantis with NO RISK!
If you’re not completely satisfied, send it back to us within one year for a complete, no-hassle
refund.
52
Business Strategy 2007 103
Driving Your Bottom Linewith an Extraordinary Guarantee
1. Draw 2 lines representing monthly sales:(a) 30-day return guarantee(b) 1 year return guarantee2. What are pros/cons of the 30-day vs. the 1-year guarantee?
Sales
Jan Dec
30-dayguarantee
1-yearguarantee
Business Strategy 2007 104
The Basis of Competition Changes
1970s
1980s
1990s
2000+
Price
QualityValue
Speed
Mass customizationFlexibilityManufacture to order
www.gamblincolors.com/
53
Business Strategy 2007 105
7 Fatal Flaws of Non-Financial Performance Measurements
Business Strategy 2007 106
7 Myths of Measurement
1. Measure the hard results and the soft stuff will follow
2. Measurement is for bean counters3. Measurement is only rearview oriented4. Measurement creates reality5. Measurement stifles creativity6. Measurement is anti-humanistic7. The more measurement the better
54
Business Strategy 2007 107
7 Warning Signs of a Defective Measurement System
1. Performance OK on all indicators except profits2. Customers don’t buy even when prices are
competitive3. No one notices when performance measurement
reports aren’t read4. Managers spend significant time debating the
measures5. Share price is lethargic despite solid results6. You haven’t changed your measures in a long time7. You’ve recently changed your corporate strategy
Business Strategy 2007 108
What Gets Measured Gets Done
Measurement Behavior Side Effect
% aircraft pulling back from gate on time
Number of phone calls to a service center lasting more than 3 minutes
The Boston Consulting Group
Push back even if not repaired
Flights depart even later
Takes longer to help customer
Hang up even if problem not solved
55
Business Strategy 2007 109
Will Technology Obsolete Your Company
Business Strategy 2007 110
The BIG (Xerox) Picture
1. What business is Xerox in ______________2. 1970 The _________ Company3. 1995 The _________ Company4. What’s the difference
1. __________ is ____________2. ______________ is ____________
5. Impact of the internet6. What business is Xerox in ______________
COPIER BUSINESS
COPIERDOCUMENT
COPIER INTERNAL
DOCUMENT EXTERNAL
INFORMATION DISTRIBUTION
56
Business Strategy 2007 111
Business Models
SouthwestAirTranJetBlueATA
OLD NEW
Business Strategy 2007 112
Disruptive Technologies
OLD NEW
57
Business Strategy 2007 113
Disruptive Technologies
OLD NEW
Business Strategy 2007 114
How to Maximize Your Value
58
Business Strategy 2007 115
Competing Based on Service
If you were arrested for customer service, would there be enough evidence
to convict you?
Business Strategy 2007 116
Customer Satisfaction Drives Loyalty Which Drives Profits
Apostles
Zone of affection
Zone of indifference
Zone of defection 1991 XeroxStudy
Terrorist1
Extremelydissatisfied
2Somewhatsatisfied
3Slightlysatisfied
4Satisfied
5Very
satisfied
Source: Time-based Competition
59
Business Strategy 2007 117
Where Do Profits REALLY Come From?
% ofCustomers 20
% of Profits
80100
Business Strategy 2007 118
Independent Bookstores
What’s happened to 85% of independent bookstores the last 10 years _________
WHY _____________________________________
GONEFAILED TO ADAPT
60
Business Strategy 2007 119
Internet Threatens Realtors
1. Realtor Commissions Face New Pressure2. Federal lawsuit challenging……….
1. National Assn of Realtors rule that real-estate firms can refuse to allow home-listing data
2. State laws that prevent discounters from offering lesser service at lower prices
3. Home owners negotiating commissions
Business Strategy 2007 120
Internet Threatens Realtors
ForSalebyOwner.comListings, supplies and adviceFor Sale by Owner
RealEstate.comMonstermoving.com
Agents share commission via cash or gift cards
Rebates
HelpUSell.comAssist2Sell.com
Fixed prices for services: e.g., list and negotiate
Fee for Service
ZipRealty.comFoxtons.com
Seller’s agent 1 to 2.5% Buyer’s agent 1 to 3%
Discounted commissions
Century21.com REMAX.com
5% to 7% commissionTraditional
COMPANIESHOW IT WORKSSERVICE
61
Business Strategy 2007 121
Dilbert: Take Engineer on Sales Call
Lesson: ________________________Go on sales calls
Business Strategy 2007 122
New Business Ideas
62
Business Strategy 2007 123
Airlines Mull Selling Prepaid Passes
1. Frequent flyer programs lost loyalty2. Build customer loyalty by locking customers3. Battle low-cost carriers without matching prices4. Higher than lowest coach / lower than highest coach5. Customers not a likely to shop around6. Won’t have credit card charges on every ticket7. Less advertising per dollar of revenue8. Transfer some risk of empty seat to customer
Business Strategy 2007 124
Airlines Mull Selling Prepaid Passes
1. Air Canada 1. Selling set number of flights for fixed price2. Companies can buy as many tickets as want3. Can be used by 300 people
2. American1. Businesses can buy 25,000 miles for $10,0002. 40¢ vs. 12.85¢ first quarter average 3. Designing plan for consumers4. 1990s sold 500 lifetime passes but discontinued
63
Business Strategy 2007 125
Airlines Mull Selling Prepaid Passes
1. United1. 25,000 miles in one year for $11,7502. Club privileges and elite-level perks
2. Cape Air books of 10 tickets now 1/3 of revenue3. Cathy Pacific 21-day pass for 18 Asian cities $1299
4. Customers like………1. Predictable cost2. Unused tickets go back into trip bank
Business Strategy 2007 126
Keep Customers Coming Back
1. Hotels, car rental, airlines saving customers by giving front-line employees power to ____________
2. Hell to heaven in 60 seconds3. Put a smile on customer’s face4. Customer has done business with the greatest
company on earth5. Hampton Inn
SOLVE THE PROBLEM
64
Business Strategy 2007 127
Service Recovery KeepsCustomers Coming Back
1. Empowers frontline workers to apologize AND
2. Immediately solve the problem AND
3. Give something of value to the customer THAT
4. Doesn’t cost the company very much Martha Gordon
Hampton Inn housekeeper
Business Strategy 2007 128
How Hampton Inn Saves Customers
1. Auditor Tom Taylor’s room…..1. Hot/cold _____________2. Two lamps weren’t _____________3. Driving directions on web site were _______4. AC was too cold
2. Front desk clerk immediately offered two nights free1. Taylor accepted only one because ___________
3. EVERY employee is empowered to fix a problem
REVERSEDPLUGGED IN
WRONG
2 was EXCESSIVE
65
Business Strategy 2007 129
How Hilton Garden Saves Customers
1. “Own the Goodbye”…..Manager calls every guest before checkout
2. Hilton Garden at LAX has 162 rooms1. 2500 guests per month2. Free night twice a month
Business Strategy 2007 130
Wyndham and Ritz-Carlton Hotels
Wyndham“It was a culture shift to tell [front-line employees] it’s OK to give something away.”Rarely need to give away free roomGive Dry cleaning, Phone, Movie or restaurant
Ritz-CarltonALL employees empowered to settle a customer dispute up to $_____________How many times has a Ritz employee given away the full amount ____________
2,000 per DAY
ZERO
66
Business Strategy 2007 131
Do Customers Scam
1. Downside Estimated scammers _________2. Upside Save 97% with legit complaints who
would leave and _____________________________
3. “Customer service is the key to loyalty, and loyalty is the key to profitability,” Frank Crawford, President, Accounting Firm, Oklahoma City.
1-3%
NEVER come back
Business Strategy 2007 132
How Hampton Inn Makes Money
Hampton Inn
Hampton Inn
Hampton Inn
Hampton Inn & Suites
Hampton Inn & Suites
Hampton Inn & Suites
0 10 20 30 40 50 60
Refunds
Est revenue
Return for $1refunded
67
Business Strategy 2007 133
Strategy Questions #1
How do our customers and non-customers select from among competing suppliers?What are the key quality attributes (purchase criteria)?How important is each criterion (relative weights)?Which criteria are increasing or decreasing in importance?
Business Strategy 2007 134
Strategy Questions #2
How do weights differ by market segment?How do we perform on each criterion?How does each of our competitors perform on each criterion?How do customers (ours and competitors’) size us up versus each of our key competitors?
68
Business Strategy 2007 135
Strategy Questions #3
How is our perceived performance versus that of competitors changing?What process determines our performance versus that of competitors? Who owns it?Why are orders/customers won or lost?Who are we winning orders from-who are we losing them to-why?
Business Strategy 2007 136
Strategy Questions #4
How does each set of competitors’ customers size us up head-to-head versus that competitor?How can we shift the attribute importance weights in our favor?Which segments should we target?How will customers size up the new versus the old technology?Which of the new technologies will win?