Thoughts from the Road...

This last week has been spent cycling down the coast of California with some close friends. 

I suppose that when a person spends 6-8 hours on a bike, their minds will tend to wander about...pondering truths, fiction and observations. This week I’d like to share some of those simple thoughts with you.

Being Prepared

Starting out on our third day, one of our riders was having a difficult time keeping his bike in gear. We soon pulled off road and looked at his derailleur and cassette but didn’t see any problems. We then looked at his chain and noticed that one of the links on his chain was bent.

We weren’t carrying an extra chain and we were about 70 miles from the nearest bike store. After some thought, I remembered that I had an extra master link in my tool kit and decided to replace the bad link with a good link.

We broke the chain and tried with all of our might to fit on the new link only to discover (after a great while) that the link was too small for that particular chain. 

Now what?

Well as it happens...I had brought along my old bike just in case we needed some spare parts along the way. Instead of removing the chain on the spare bike (and perhaps ruining both bikes), we decided that it would be best if the stranded rider rode the spare bike until his bike could get repaired.

We encountered a problem (bent chain)...had a possible solution (new master link)...but our solution didn’t fix the problem...

So we needed to go to "Plan C"...

How often in life do we find ourselves in a situation where we have no contingency plan (or a plan that just doesn’t work). Are we resourceful enough to actually have a Plan C or do we try to force a bad solution to work?

Contingency planning is important in business as well as in life.

Entrepreneurs

As it so happens, all of the riders on this trip are somewhat successful entrepreneurs. Some of their businesses are big while others are smaller but growing.
I have found over the years that there are two things that typically contribute to an entrepreneur’s success...being lucky and/or being smart. 

If you ask an entrepreneur who was clearly lucky (being somewhere at the right time with the right product or service)...they will more often than not tell you that they were just smarter than everyone else...

Whereas if you ask a entrepreneur who is clearly smarter...they will say that they were just lucky (or probably say nothing at all).

Pain Relievers

In 1897, Felix Hoffmann discovered aspirin while searching for a treatment for his father’s arthritis. The patent was licensed to Bayer in 1899 and it has been available as an over-the-counter medicine since 1915.

Tylenol (acetaminophen) was patented by David Young while working with Standard Oil at the University of Kentucky. He sold the rights to Johnson & Johnson (McNeil Labs) who began marketing the product in 1955. It has always been an over-the-counter drug.

Advil (ibuprofen) was developed by Dr. Stuart Adam while working for Whitehall Labs in 1969 but wasn’t available as an over-the-counter medication until 1984 (originally sold under the trademark of Advil). Ibuprofen is a pain reliever and anti-inflammatory. 

After ingesting much of these pain reievers this week I wanted to pay homage to the inventors and developers of these wonder drugs. I can’t imagine life before these relatively safe over-the-counter pain killers were available. Most of us take so much for granted in our daily lives; cars, telephones, the internet, airplanes, microwave ovens...it hard to fathom what life must have been like before these great inventions of the 20st century. 

What will people remember about the 21st century?

Bigger is not always better

One night we were forced to spend the evening in a relatively remote location. Unfortunately for us, accommodations in this small town were somewhat sparse and we ended up paying a lot of money for a room that was smaller than some people’s closets and a bathroom that was hard to turn around in. 

Although the bedroom and bathroom were small, they were clean and comfortable. Of course, there was no phone, TV, or wireless internet access in the room but in terms of a good night’s sleep, I can’t complain.

In 1961, the average size house was 1,310 square feet with 3 bedrooms, 1 ¾ bathrooms and a two car garage. It cost, on average, $12,500 (I know this house well...as this was my family’s home as well). 

Fifty years later, the average size of a new home is 2,629 square feet and the average selling price is still $275,700.

Why do we need to live in such big houses?

The following day we rode our bikes down the Big Sur coast. I happened to look up on the hill late that afternoon and noticed the Hearst Castle in San Simeon. Now there’s a big house I thought to myself.

Never mind...question answered.

Thanks for letting me share my random thoughts with you this week...

...and thank you very much for supporting OptiFuse where we don’t know exactly what will come around the next bend in the road but are excited to find out...

Bargain Hunting...

Price is what you pay...value is what you get...

-Warren Buffet

Last weekend I needed to go by the $99 store...er ah...I mean Costco to get a special bottle of wine they sell.  As I walked to the back of the store, I couldn't help but notice the carts passing by me loaded to the brink with 50 lb. sacks of rice, flats of tomatoes, 10 lb. blocks of cheese, 5 gallons of fresh salsa, and sides of beef (I'm exaggerating a bit here...it was only the rib section...so it wasn't a whole side but rather just the middle 1/3 of a side...)

I was absolutely amazed at the sheer volume of food heading to the checkout stand. 

As I was driving home, I began to wonder what drives a family to purchase food in such large package quantities.  Are their families really that large?  Are they hosting a large dinner party?  Are they commercial caters?

A few days later, I found myself discussing my recent foray into social anthropology with some friends.  One of those seated around the table agreed with my observations and commented how his wife purchased a lot of their family's food from a warehouse supermarket only to throw away much of the perishable food several weeks later (they are only a family of three after all). 

He once asked his wife why she continued to shop in this manner (buying great quantities and later throwing away the spoiled food).  Her reply was that the food was so inexpensive at the warehouse store, that even throwing away a portion of the unused food still made the entire purchase a true bargain. 

To me this just sounds just wasteful and not really a bargain at all especially once you add in the additional storage and/or refrigeration.

Are all bargains really such a good deal for consumers?

A deal is only a deal if you truly need or want that product or service.  If not...then it's really just becomes a waste of money and/or resources.

It's not just the "big box" stores that offer up the deals.  Manufacturers and retailers have used the concept of the coupon for decades (maybe longer).  The idea behind the coupon is to get consumers to try and use a product or service that they would not ordinarily purchase by offering the purchaser economic immediate incentives.  Manufacturers hope that consumers will try a new product, like the product and continue to purchase the product at full-price.  Many brands have been launched using the free or low-cost offers.

A few months ago, I moved my place of residence.  As I went through my pantry, packing food items, I noticed that there were dozens of old unused items on the shelves.  I wondered whatever possessed me to purchase these items and thought back to the coupon that I may have clipped out of the Sunday newspaper many years ago.  These food items, that were such a bargain at the time, were now being disposed of as the "use by" dates on the packages were long since expired.  They don't seem like such a bargain now.

Bargain shopping is not limited to food items.  Department stores, furniture retailers, and clothing outlets seemingly have a different sale each week so the "deals" are almost perpetual and ongoing.  Typically, the original prices for their merchandise have been so highly inflated so that they can offer 70-80% "savings" to their potential customers.  

The advent of the Internet and reality television has created an entire subculture of extreme shoppers.  These people are constantly scouring a multiple of sources to find the very best deals. 

Companies like Groupon, Amazon, and restaurants.com offer their subscribers significant savings.  Like supermarket coupon marketers, the actual providers of goods and services are hoping that by offering customers a sample of their wares, they will create awareness and continued patronage by those consumers.  This is rarely the case.

I have a friend who used to own a day spa.  She paid several services, like Groupon and the Entertainment Book, several thousands of dollars to feature her spa in their advertising.  In addition, she offered the consumer a one-time service, at or below her actual cost, in order to entice the consumer to try her spa (for example a 60 minute massage for only $20 whereas she was paying the masseuse $30 per hour). 

After the publication, a steady stream of new customers walked through her door to redeem their deal.  She dutifully recorded their contact information in her database and tracked the repeat business.  After one year, she realized that virtually no one who used the original coupon had returned to her salon despite her best marketing efforts.  It finally dawned on her that the people who came to her spa were now visiting another spa armed with another coupon.  Those people were never potential clients for her spa, they were bargain hunters.

She has since changed her business model to discriminate against those same bargain hunters and create more of an exclusive environment for her clientele.  Her salon is doing much better financially since adopting this model and her existing clients are experiencing a better class of personalized service.

Perhaps it is a reflection of the times, but the notion that a "deal" is a good value just because it carries a low price is nonsense.  A bargain is only a bargain if the goods and/or services provide you with something valuable that you will actually use.  Other times, I've paid for an item or service, only to watch it expire and become worthless.

Yes...there are some very good examples of low-cost providers who may give their customers value (think Southwest Airlines or E-Trade)...but they have low prices only because they have commoditized their services into a "one-size-fits-all" mentality (originally pioneered by the likes of Henry Ford who told his potential customers that they can have any color car they want so long as it was black).

A low price doesn't necessarily guarantee value...value is created when there is actual worth to the buyer.

Thoughts to consider as we do our shopping this weekend...

Thank you very much for supporting OptiFuse where we hope to deliver value to our customers...not just a low price.

A Lifetime of Friends...

1961 was a decent year I suppose.  It was the last year that can be read the same way - upside down or right side up - until 6009 that is. 
             
That year, the United States inaugurated a new president, John Fitzgerald Kennedy.  Construction of the Berlin Wall began.  The cold war was in full bloom.

The average salary was only $5,300 but the average house cost $12,600 (less than 2 ½ times the average salary).  Then again...the average house was only 1100 square feet...no gated communities...no air conditioning...no swimming pool.

Russian cosmonaut, Yuri Gagarin, was the first man in space.  TWA showed the first in-flight movie.  Pampers disposable diapers were introduced. 

The top grossing movie in 1961 was the Disney animated film "101 Dalmatians" raking in a cool $68.6M as compared with the second place film "West Side Story" with a paltry $19.6M (although West Side Story did win the Oscar for the best picture of the year).  Tossin’ and Turnin’ by Bobby Lewis topped the music charts all summer long.  Westerns were all the rage on television...Gunsmoke, Bonanza, and Wagon Train ruled the Nielsen rating that year.

1961 was also the year that several of my friends were born into the world...a world where a sitting President urged people to build bomb shelters in their backyards, attempted to invade Cuba, and had a nuclear stand-off with communism but yet also founded the Peace Corps to help the less fortunate of the world.

I was driving to work this week thinking about all the people I know who are celebrating the 50th anniversary of their birth in 2011.  I began to wonder about the hierarchy of people who populate our lives and attempted to order their significance.  The people are neatly arranged in a pyramid with only a small handful of people on the top and billions of people on the bottom.  Now I’m sure that there are other ways to categorize people...but here’s my way:

1. Best Friends Forever - These are the people we attended Kindergarten with 45 years ago...went off to summer camp with...double dated with on prom night...joined the same fraternity while away at college...were in each other’s weddings (at least your first weddings), babysat our kids when we needed a quiet night out with our spouse and helped us to tend for our aging parents (those same parents who were perhaps our Little League coaches or Girl Scout leaders).  These are people you played with in the morning, fought with in the afternoon, and laughed with until your mom told the both of you to "be quiet and go to bed".  They know us sometimes better than we know ourselves.  These are the same friends who will someday give the moving eulogy at your funeral...they’re with you for the entire cycle of life.  Forever.
2. Friends - These are the people we have many common interests or years of shared experiences with.  They are people whom we care deeply about and try our best to remain in contact with despite our busy schedules.  These are the friends we play poker with a few times a year...watch our favorite sports teams with on a Saturday afternoon...and drag to the local tavern to sip a few beers on a "boy’s night" out...with them, we reminisce about past adventures and/or old mutual friends that you just ran into at the airport.  These are people who helped us to create great memories.  These are the people who weave seamlessly in and out of our lives. These are the people who help us to celebrate life and death.
3. Acquaintances - These are people we know...but really don’t spend much time with, other than perhaps seeing them at our kids’ Christmas pageant or waving to them as they drive past our house.  It isn’t that we dislike them...we just don’t have the time to give them much thought.  They are typically really nice people but we never really made a connection with them, created any memorable adventures, or had a lot of shared experiences (other than perhaps the experience of sharing the driving duty in the morning carpool).  We feel uncomfortable asking acquaintances for favors.  We knew these people in the past but our lives have now separated. 
4. ??? - These are people who we know of...but we really don’t know.  They may be known to us because of their celebrity such as a movie star or local sports hero.  They may be people that our other friends talk about (which I suppose is another form of celebrity).  We may have read about them and the lives that they lead in a book or newspaper.  We might read their blog each week.  They may be that person who’s name we see on the guest register - the one that rests on the receptionist’s desk of a local manufacturing company - as we ask ourselves..."who is this person who is always visiting all my customers?".  We don’t know them...but would be open to perhaps meeting them if the opportunity presents itself.
5. Strangers - These are people we don’t know and who do not know us.  Strangers constitute the overwhelming majority of the people in the world.  There are approximately 6 billion people who inhabit the earth and if you combine all of the people in the above 4 categories...you may be able to estimate that they represent perhaps no more than 50 thousand people (these are all the people you’ve ever met or have a certain familiarity with over the course of a lifetime)...this leaves us some 5,999,950,000 strangers still to meet (although I believe that roughly a third of those people do have a Facebook account).

I’m somewhat unsure as to what to call the people in between acquaintances and strangers.  Those people you know of...but haven’t met yet.  In preparing for this blog, I actually wrote to the folks at the PBS’s radio show "A Way with Words" trying to see if they had a good word for these people.  Unexpectedly, I received no response...nothing...nada.  Oh well...I guess one day I’ll need to coin a new word for this group of people (drop me a note if you know of such a word).

The group of people that I didn’t include in the above but who could be dispersed equally in all five categories are relatives.  These are people who share our DNA.  They may be our BFF twin sister or a simply a far distant relative that you didn’t even know existed.  Placing relative in the pyramid is tricky.

Each and every day I feel blessed to have so many great friends and acquaintances.  They came from blood, school, work and the neighborhood.  With them, I’ve built a lifetime of memories all within only a "half-a-lifetime" time period (or at least I hope so).

It makes me happy to be invited to toast their milestones and celebrate friendship this year.

This weekend, I hope you’re spending your time with the people who bring you joy and happiness whether at a 50th birthday party or just sitting around doing nothing.
           
Thank you very much for supporting OptiFuse where we hope to be counted as one of your friends one day.

Football is back...

It’s now the end of summer so that means two things...the kids go back to school and football season begins. 

Now I’ve never been a fantasy football player and in fact, I don’t even know the rules, but I do participate in a friendly NFL football pool where my friends and I attempt to pick the winning teams against the point-spread each week. The cost for the entire season is menial ($5 per week) and usually I just try to make my money back each season.

It does, however, make watching games I typically have no interest in watching a bit more interesting.

It also gives me reason to listen to the "supposed experts" when selecting my teams each week as I have very little knowledge in most teams and/or players. 

I say "supposed experts" because in reality, no one really knows who will win a particular game (especially against an evening factor like a point spread). Sure the better teams will generally win more games over the course of a season than lesser teams but one never knows exactly week to week.

This also brings to mind...why is it that some teams are simply better than most of the competition year in and year out?

Unlike college football, each team in the NFL has about the same amount of money to spend on their players and facilities (I’ll talk about the disparity of college athletics in another blog). So it’s not about money...

Additionally, the worse a team does in one year...the better its draft picks are the following year. So it’s not about opportunity to get premier players (like it is in Major League Baseball or Premier European football).

The reason, I believe, that certain NFL teams are perennial winners is based on their organization and management. They simply have a winning philosophy, a more selective eye for selecting talent, better coaching, and are better at preparing for a game.

This leads players and coaches to know what is expected of them at all times, the creation of game strategies that help to minimize deficiencies and to exploit the weaknesses of opponents, and lots of hard work and practice that helps to forge talent into skills and make very gifted athletes better.

The better prepared player, typically executes better during a game.

There will always be mistakes made along the way, but the quality teams are able to dissect the problem areas and learn from these mistakes so that they are not repeated in the future.

Lastly, the coaching staff knows exactly how to motivate their players in a way that gives the players the respect of being a professional player yet lets them know that they are a part of a larger team that needs individual contributions but also needs team cohesiveness to win.

Those same key attributes that produce perennial winning football teams are also the same characteristics of a quality business. 

A first-rate company starts, first and foremost, with quality leadership. It is this leadership that sets the tone and direction for the organization. It is typically a top-down structure but one that also embraces the opinions of others within the organization. 

The key element of an exceptional company is its innate ability to attract and select talented management and employees. Quality organizations (be it professional football or software design), know that it takes talent and attitude to win. 

Hire people for talent and attitude, and then train for skills.

With the proper management and employees in place, the next key to a successful organization is preparation and training. Management’s key job responsibility in any organization is to create strategy, communicate that strategy to the rest of the team, and then consistently train their staff to improve their performance and production. 

For example, it should NEVER be the sales manager’s job function to grow sales. Their primary goal is to grow sales people NOT sales (I attribute this piece of great advice to my friend Jack Daly, who in my opinion is the best sales trainer I’ve ever come to know).

The winning team diligently prepares itself for the game that lay ahead...but the game isn’t won in the locker room...it is won on the field. Therefore it means nothing to be well prepared but not execute. Execution is the culmination of preparation. Even with the best management, the best strategies, the best training, and the best preparation...the game is still won or lost on the field.

Mistakes do happen, sales and customers are lost, there are bugs in the code or flaws in the product design, there are shipments that don’t go out on time or items that are in the system but can’t be located in the warehouse, there are computers that go down and simply bad hires. It happens.

Even the best companies make mistakes...New Coke...Apple Lisa...ANY first version of a Microsoft product...the Edsel...

Quality companies try to learn from those mistakes and make corrections so that they never happen again. Great football teams watch and dissect game films in order to discover deficiencies and areas that need improvement. The best companies are constantly monitoring their performance against key indicators and making improvements within their organization. 

Companies like Dell Computers, Wal-Mart, and Amazon are constantly improving their processes to ensure that problems and costs are reduced and efficiency and productivity are increased. This attention to problem correction is what makes them leaders in their field.

The competition to win is fiercer than ever as it now comes from every place on earth with those willing to work harder, smarter and for less money than others. The only hope for a company to succeed is to create a better organization (top to bottom) than the competition, diligently prepare and train, execute on a daily basis, and then make corrections in order to prevent mistakes and increase efficiencies. 

Like a game plan on a chalkboard...the theory is easy...

Execution is hard. It takes attitude, dedication and a willingness to win.

To some, the efforts are worth the rewards.

Thank you very much for supporting OptiFuse where we wish you the best of luck in building your fantasy team (or company). 

Music to the Ears

Last week I was out riding my bicycle, trying my best to get myself in shape for an upcoming ride from San Francisco to San Diego. 

One of the glaring deficiencies of my riding is my ability to climb long hills. Unfortunately, the ride down the coast will require me to transverse a lot of hills...day in and day out...and frankly I’m very concerned that I won’t be ready (nothing is as embarrassing as watching a cyclist walk his bike up a long hill).

Therefore, I decided that it is imperative that I do some additional hill training during the next few weeks before my long ride down the coast. So last week, I left work a bit early in order to get in a mid-week climbing workout.

The hill I selected is about 4 miles from my home (which makes for a good warm up) and allows me to ascend about 750 feet over 3 miles at about a 5% grade (a decent size hill for the non-riders who are reading this...but it is in no way to be confused with some of the extreme hills of the Tour de France). Nonetheless, I figured if I could go up and down the hill three times, it would make for a good workout.

Along the way to the base of the hill, I ran into a cycling friend who was on his way to another destination. We started talking as we rode up the hill and before too long we found ourselves at the top of the mountain (hill).

At the top, I was surely breathing hard but I hardly noticed it because of the distraction of the conversation I had with my friend along the way. I wished him a safe ride and proceeded to go back down the hill for my second attempt.

Unlike the first time, the repeat visit up the hill was a grind. Not only was I a bit tired from my first attempt, I also didn’t have the distraction of conversation. The rate of climbing was markedly slower than my first trip. There was pain in my legs which was translated to the grimace on my face.

After heading down the hill for my last hill repeat, I remembered that I had packed my iPod with me. I inserted the ear-buds and tuned it to my favorite riding music.

Although I had already ridden up the hill twice before, with the music beating, my last try up the hill seemed almost easier than the first time. Each pedal stroke was in synch with the beat of the song playing. The music helped me to replace the pained expression on my face with a smile. My attitude went from dread, to triumph in a mere 3 miles.

The music transformed my experience from a painful grind up the hill to that of accomplishment.

Why is it that music effects our moods in such an extreme way? The environment didn’t change (I was still on my bike...climbing a hill at the end of the day), yet something in my attitude changed.

My experience that day caused me to reflect a bit about how music really affects us.

Music can have a calming effect or a stimulating effect (like on my recent ride). 

Music can cause us to remember events of the past. It can bring tears of pain or tears of joy to our eyes. 

It can make us angry (there seems to be a lot of anger in rap music), it can make us happy, it can make us thoughtful, reflective, or nostalgic.

Music is a common ground among all people of the world and helps us to create cultural bridges. Music is something we can agree on and share from one population to another.

Music can make a movie better by adding depth, suspense, or drama. It can help to tell a story as in opera or a Broadway musical.

Attend any religious service and you will find people rejoicing with music.

My daughter enjoys listening to classical music when she studies (she’s currently a college student) because she says it makes her think better.

Many times the same song can fill our head the entire day...perhaps it was the song that woke us up in the morning from our clock-radio alarm...maybe it was the song we played in our night time dreams (doesn’t everyone’s dreams have a soundtrack?)...phychologists even have a name for this phenomenon...they call it an "earworm".

Back when I was a kid, there was really only one method to get your music. You heard a song on the radio and if you liked it, you went out and purchased the single or perhaps the entire record album. Record companies and radio stations controlled what music we heard and subsequently purchased.

Today there are so many options when it comes to music. Music is still available on the radio, but it can also be delivered via satellite or the internet. 

Many different internet sites, such as Pandora, Slacker, Live365 and Jango, allow you to program your own individual and unique musical preferences, even if those preferences change on a moment’s notice, and stream it to your computer or smartphone. 

Using services like iTunes, you are no longer forced to purchase an entire album but can rather buy any individual song that strikes you for about one dollar. 

Portable listening devices such as iPods, smart phones, and portable satellite radio receivers allow us to take our music with us whether we are driving in the car, hiking in the mountains, or out on the road with our bikes.

I can’t imagine living in a world without music. 

Everyone in the world has music inside of them and that may ultimately, one day, bring us the peace we covet. 

Thank you very much for supporting OptiFuse where we desire to stay in tune with what you’re thinking.