JACK MIXNER STRATEGY

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

".. character development is the foundation of democratic societies. ... The bedrock of character is self-discipline; the virtuous life, as philosophers since Aristotle have observed, is based on self-control. A related keystone of character is being able to motivate and guide oneself, whether in doing homework, finishing a job, or getting up in the morning. And, as we have seen, the ability to defer gratification and to control and channel one's urges to act is a basic emotional skill, one that in a former day was called will" (Goldman, page 285).

Strategic Implications

IQ is just part of the story. Emotional intelligence may be more important. I return to it each time I realize I have spoken too soon in an important, stressful, conversation. That pause at the right time to recoup your thoughts is good evidence of a high EQ. It may make the difference in succeeding - or failing.

Improving your emotional intelligence increases the likelihood of success.

In facilitating a strategic planning session, always allow for a break in the process. This allows folks to collect their thoughts ad marshal arguments or information to support their position on topics they feel need discussion.

The advertisers used to call it the "pause that refreshes". I call it the pause that enriches.

References

Goldman, Daniel. Emotional Intelligence Why it can matter more than IQ. Bantam. 1994.

Posted by jackmixner at 12:43 PM | Permalink

Copyright Jack Mixner.     714 449 1040.    www.mixnerstrategy.com

Mark Gottfredson at Bain says that the more product offerings (measured in SKUs) per product category, the less profitablity (McGregor). Extensions just for the sake of extensions hurt profits, a fact that seems counter-intuitive.

Kiviat, for instance, talks about Starbucks dilemma. It needs to continue to increase same store sales without diluting the experience. Add food, dilute not only profits, but the coffee smell that drives sales in the first place (Kiviat, page 126). Add too many products, the customer becomes even more confused and service times fall, forcing folks to "keep on walking" to Dunkin' Donuts or, gasp, Burger King.

Strategic Implications

Gottfredson's "complexity creep" and its resultant systems costs kill profitability, especially in retail.

Simple is better. Lively and crowded is OK. New products are OK, especially when they are variations that differ little from each other (think about the 87,000 variations available on the short menu of Starbucks coffee drinks) (Kiviat, page 126).

Starbucks will continue to focus on coffee. The tricky part will be to continue to increase same store revenues.

References

Kiviat, Barbara. The Big Gult At Starbucks. Time. 18 December 2006. Page 124.

McGregor, Jena. The Product-Profit Connection. BusinessWeek. 10 August 2006. http://www.businessweek.com/print/innovate/content/aug2006/id20060809_510389.htm

Posted by jackmixner at 04:29 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Let's assume that American businesses have some time to go before productivity gains have run their course and things start to stagnate again.

What changes would we make, right now, to increase productivity - and valuation as a result?

Normally, productivity gains have been tied to "workers' skills, information technology investment, or even the quality of availability capital (Hubbard, page 2.)"

Called "fixed effects" since the 60's (Hubbard, page 2), additional productivity gains beyond the list above are attributable to "changes in management and the attendant additional personnel, time, attention, and other resources." When you make changes, you expect a pay-off in cost reduction via efficiency of plant and equipment and increasingly skilled workers who improve processes, use goal setting, evaluate performance, and utilized over-all human resource to increase management skills.

These management skills increases pay off in increased productivity - and increase valuation.

Increased productivity. Increased management skills. Increased valuation. They all go together.

Strategic Implications

Which management skills to focus on?

Start with planning and goal-setting. Set quantitative goals and objectives. Measure results repeatedly against goals. Make corrections frequently. 

Recent evidence says that repeatedly returning to your strategic plan over the year will significantly increase results, as well (Hymowitz, page B1).

References

Hubbard, Glenn. The Productivity Riddle. strategy+business. Winter 2006. http://www.strategy-business.com/press/article/06402?gko=e1377-1876-20605692

Hymowitz, Carol. In the Lead: Two More CEO Ousters Underscore the Need For Better Strategizing. Wall Street Journal. 11 September 2006. Page B1.

Posted by jackmixner at 09:53 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Letts says that Scotland and England are considering dis-banding the United Kingdom formed in 1707.

Most interesting quote: "If Scotland and England go their separate ways the British would probably disappear as international diplomatic players."

I don't know about you, but that quote caused me to pause, for sure.

References

Letts, Quentin. Scot Free. Wall Street Journal (Opinion page). 8 December 2006. Page A16.

Posted by jackmixner at 03:23 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Two updates on medical device companies in Orange County:

Advanced Medical Optics, Inc. is recalling 3 million bottles of contact lens solutions because of contamination of their production line in China. They're not blaming some other product or people who use their solutions. They're just recalling everything and, a bonus, rebuilding the entire manufacturing lines used to manufacture the products.

Looks like the perfect course of action, especially in light of the recent disasters their competition has faced through less vigorous action in similar situations (Reed, page 1).

SpaceLabs Healthcare, Inc. is relocating to Seattle. An M&A transaction is causing the consolidation and move back to the parent's geographical location (Tolkoff, page 5).

Strategically, the move might make sense, especially if there are actual synergies when manufacturing facilites are merged. Companies buy other companies because they believe they add something special that makes the newly merged company more valuable. We'll see if this is the case this time.

References

Reed, Vita. Advanced Medical: Recall Strategy, Fallout. Orange County Business Journal. 4-10 December 2006. Page 1.

Tolkoff, Sarah. Irvine Device Maker Relocating to Seattle. Orange County Business Journal. 4-10 December 2006. Page 5.

Posted by jackmixner at 11:56 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Collins on the first step in a transformation: " ... good-to-great leaders began the transformation by first getting the right people on the bus (and the wrong people off the bus) and then figured out where to drive it (Collins, page 63)." 

Three supporting steps:

1. "When in doubt, don't hire-keep looking.
2. When you know you need to make a people change, act.
3. Put your best people on your biggest opportunities, not your biggest problems (Collins, page 63)."

Pfizer is in the midst of transformation right now. They just hired a new CEO. They fired twenty per cent of their sales staff. They cancelled their next block-buster drug because of ill-effects in human trials (Murray, page A3). The transformation? Transform the company's focus on block-buster new drugs, to faster developement of a group of new drugs, all at the same time, within budget.

Strategic Implication

Collins makes it pretty clear: people come first. When you have your team on board, make changes. Pfizer isn't likely to change CEOs in mid-stream. They hired their new CEO because he was an outsider able to gauge the current dynamic and make necessary changes - now.

References

Collins, Jim. Good to Great Why Some Companies Make the Leap ... and Others Don't. HarperBusiness. 2001.

Murray, Alan. Drug's Demise Demonstrates Why CEO Is Pushing to 'Transform' Pfizer. Wall Street Journal. 6 December 2006. Page A3.

Posted by jackmixner at 03:36 PM | Permalink

Copyright Jack Mixner.     714 449 1040     www.mixnerstrategy.com

Last week Pfizer laid off twenty percent of its sales force, once, and perhaps still, the largest in the industry.

This week Pfizer stopped development of its next block-buster drug, torcetrapib, after negative performance in human trials.

Most other companies would be looking for a new CEO. Not Pfizer. Instead, they're looking to transform the business to be less reliant on the next big blockbuster. Jeffrey Kindler, CEO for just the last four months, and an industry-outsider to boot, has had to make tough decisions early in his tenure. Expect the "transformation" to continue, company-wide (Murray, page A3).

Strategic Implications

CEOs might look closely at Pfizer's actions to reduce expenses and expedite new products in the pipeline, while making the company more transparent to investors. Finally, Big Pharma companies need realistic projections for analysts. Pfizer has promised too much for too long. This week, the company has taken big hits on its stock. Next steps will include realistic public assessments of what is in the pipeline (Simons). Smaller projects with smaller ultimate pay-outs will be necessary. This will add up to a smaller, more balanced, company. The balance should yield less volatility.

One last comment. The Economist, in its commentary on Big Pharma, points to the challenges of generic drugs as well as a pipeline "filled" with blockbusters. It remains to be seen whether investors will give management the time it needs to put the house in order (Pharmaceuticals Pfaltering).

Orange County wants more bioscience companies to grow - and stay - here.

Hubbard says successful companies focus on management by hiring professional talent earlier in the process and training them continually. Murray points out that experienced outsiders are useful in times of transformation.

Hire professionals as early in the growth of your company as possible. Outsiders may work better than you might imagine. Then be realistic about projections.

References

Murray, Alan. Drug's Demise Demonstrates Why CEO Is Pushing to 'Transform' Pfizer. Wall Street Journal. 6 December 2006. Page A3.

Hubbard, Glenn. The Productivity Riddle. strategy+business. Winter 2006. http://www.strategy-business.com/press/article/06402?gko=e1377-1876-20605692

Pharmaceuticals Pfaltering. Economist. 5 December 2006. http://www.economist.com/daily/news/displaystory.cfm?story_id=8375233

Simons, John. When Big Pharma Gets Too Big. Fortune. 4 December 2006. http://money.cnn.com/2006/12/04/news/companies/pluggedin_simons_pfizer.fortune/index.htm?postversion=2006120415

Posted by jackmixner at 10:34 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Investment banks are buying advisors of bankrupt businesses and out-of-court restructurings (Wall Street Gets Ready).

Easy credit has allowed companies to mask underperformance by re-scheduling debt. The median bond rating is BB, high grade junk. A decade ago it was BBB, an investment grade rating.

The investment bankers with their new consultancies are ready for a new round of defaults. Interesting times may be brewing, not all of them good.

Strategic Implications

Manage your debt. Get your house in order. Tough times may be around the corner.

References

Wall Street Gets Ready for Rain. http://dealbook.blogs.nytimes.com/2006/11/14/wall-street-gets-ready-for-rain/

Posted by jackmixner at 03:52 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Innovation comes from all sorts of places. A carpet manufacturer realized that making synthetic carpeting was tremendously wasteful in both raw materials and ultimate scrap. A tape manufacturer realized that normal tapes were just as wasteful for very similar reasons. What to do?

Benyus had worked for years as a biologist looking at the way biological systems worked. For instance, she realized that geckos hang from the ceiling from microscopic hairs on the soles of their feet. The forest floor is made up of random leaves dropped helter skelter. Pick up a leaf and the forest floor looks basically the same. Put the leaf back down somewhere else and the same is true.

Benyus ( Bernstein, page 1) convinced the carpet manufacturer to subtitute gecko adhesives for the normally very messy and wasteful adhesives used to lay carpeting. Used to be, even with carpet squares, when you wanted repair a tear or an ugly spill, you basically had to replace the whole carpet. Not anymore. The manufacturer made every square subtly different from its neighbor. Replace one, and you couldn't tell.

The result? Less waste. Cheaper processes. Everyone wins.

Strategic Implication

Look to new sources for solutions to old problems. It's more than a gap analysis. Substitute new ideas for old ones.

References

Bernstein, Amy. Janine Benyus: The Thought Leader Interview. strategy+business. November 2006.

Posted by jackmixner at 03:36 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Welch is no longer managing GE. The GE management dogma is changing. Morris makes some suggestions on some changes (Morris, page 2):

• OLD WAY ... NEW WAY
• Big dogs own the street ... Agile is best; being big can bite you
• Be No. 1 or No. 2 in your market ... Find a niche, create something new
• Shareholders rule .. The customer is king
• Be lean and mean ... Look out, not in
• Rank your players; go with the A's ... Hire passionate people
• Hire a charismatic CEO ... Hire a courageous CEO
• Admire my might ... Admire my soul.

Strategic Implications

Times have changed. Things are different. Take notice.

References

Morris, Betsy. Tearing up the Jack Welch playbook. Fortune magazine. 11 July 2006.

Posted by jackmixner at 03:03 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Rapidly growing? How do you keep on the tracks?

Welch says start with Mission and Values. They get lost in rapid growth. What to do? "Talk about them ad nauseam (Welch and Welch, page 112.)"

Next, establish operating procedures, planning and budgeting.  

How much planning? Just enough to foster debate among the team. The goal is a dialog on how things are going, not a phone book of a plan.

Personnel appraisal systems come next. We all know Welch enough to realize that he has a fierce appraisal system. It might warrant a look (Welch and Byrne, page 159.)

Speaking of personnel, Welch and Welch say focus on "hiring, motivating, team-building, and firing."

Strategic Implications

Don't just grow. Grow with a plan. But make it a simple plan.

References

Welch, Jack and Suzy. Ideas The Welch Way: Growing Up But Staying Young. BusinessWeek. 11 December 2006. Page 112.

Welch, Jack with John A. Byrne. Jack Straight From the Gut. Warner Business Books. 2001.

Posted by jackmixner at 10:13 AM | Permalink

Copyright Jack Mixner.     714 449 1040      www.mixnerstrategy.com

Collins calls it the Stockdale Paradox, namely, the inability of some companies to confront the brutal facts about the future of their company (Collins, page 34.)

Hubbard points out such a paradox in family owned businesses. When managed by family members, family businesses score poorly on managerial effectiveness and results. Having a family managing the company is detrimental to the long term health of the firm (Hubbard, page 2.) 

Failing to confront the problem of having a family member managing a family business costs everyone money.

Strategic Implication

If yours is a family owned business, consider carefully your management team. It may be that there are better options that you are not taking advantage of.

Pointing out the problem does not have to be a formula for fierce in-fighting. Properly handled, managerial effectiveness can increase, even if family members stay in mangement.

First recognize the problem. Then build in safeguards. Company value increases as a result.

References

Collins, Jim. Good to Great and the Social Sectors. Collins. 2005.

Hubbard, Glenn. The Productivity Riddle. strategy+business. Winter 2006. http://www.strategy-business.com/press/article/06402?gko=e1377-1876-20605692

Posted by jackmixner at 09:20 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Collins makes it clear. Select your team, then make the plan (Collins, page 32.) Concentrate leaders on your team, not powers. In the non-profit realm, it is more ambiguous, as leadership is more "diffuse and less clear." However, in the social (non-profit) sectors, "true leadership is more prevalent, when defined as getting people to follow when they have the freedom not to."

Strategic Implications

It looks to me like social sector groups can teach for-profit institutions, if they will only listen. True leadership is the goal. Figuring out how to get your whole team to follow is crucial.

Igniting their passion for work - their work, and yours - is a good first step.

References

Collins, Jim. Good to Great and the Social Sectors. Collins. 2005.

Posted by jackmixner at 01:59 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

How to end useless - or time-wasting - meetings?

• Dial in from somewhere else.
• Judge by output, not by meetings attended.
• Don't grind on attendance. Watch for effectiveness.

That's what the HR folks at Best Buy say about meetings at corporate headquarters. They're about to roll the philosophy out to the stores.

Strategic Implication

Focusing on the most crucial elements of implementation increases productivity. Meetings aren't necessarily crucial. Maybe they hurt productivity, as well.

References

Conlin, Michelle. How to Kill Meetings. http://www.businessweek.com/magazine/content/06_50/b4013008.htm

Conlin, Michelle. Smashing the Clock. BusinessWeek. December 11, 2006. Page 60. http://www.businessweek.com/magazine/content/06_50/b4013001.htm

Posted by jackmixner at 11:57 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

I have been working on economic development issues in Orange County since the early nineties. Back then, we assumed that the medical device industrial cluster in Orange County was one of the strongest in the world. If memory serves me well, employment in the cluster was about 14,000 people.

Today there are about 28,745 peopled employed in the biomedical cluster. That includes many employess in sub-clusters like pharmaceuticals and doctor's back offices.

Growth looks robust. What's the problem? Projected growth in the cluster through 2025 shows a 3.3% loss in employment (2025 Wake Up, page 16).

Strategic Implication

Orange County lost its strength in defense related spending during the nineties. It is at risk of losing its medical device strengths unless it takes action - now.

Traditional economic development strategies include stealing businesses from other locations and keeping the businesses we already have from moving to low expense manufacturing areas like Mexico or the Inland Empire in San Bernadino and Riverside Counties. They might work in this case. However, there is something better.

What to Do

Orange County should focus on building new companies in the medical device space. Innovation and increases in productivity in current companies both come from the excitement new companies cause in the marketplace. Traditionally, as companies came and went in an economy, productivity continued to increase. This increased overall GDP in the economy.

There is a better way to do this that is less wasteful. Grow companies and keep them solvent by focusing management talent on their needs early in the growth process (Hubbard, page 4.) Help them hire managerial talent earlier than they would normally expect to. Continue to train them as part of external - or internal - continuing education.

Reference

Orange County Workforce 2025: A Wake Up Call? http://www.ocwib.org/Docs/Workforce_2025.pdf

Hubbard, Glenn. The Productivity Riddle. strategy+business. Winter 2006. http://www.strategy-business.com/press/article/06402?gko=e1377-1876-20605692

Posted by jackmixner at 11:18 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Middle market companies normally leave community objectives behind and focus instead on finance or marketing instead. If they do address the community, they do it with corporate donations.

Aldo, the shoe maker, is doing something different. Teaming with celebrities, it is raising money for AIDS while increasing its own recognition within its target communities (see the YouthAIDS website, below). "Aldo's primary product is no longer a shoe but an idea: the combination of being healthy and being cool (Roberts, page 5.)"

The strategy, called "below-the-line" integrated marketing, includes such alternatives to mass marketing as promotions and events that create buzz and intrigue, particularly among young people (Roberts, page 2.)

Strategic Implication

Mass marketing is very expensive for middle market companies. Targeting marketing efforts like Aldo has increases marketing effectiveness.

References

Roberts, Kate. Marketers for Life. The same techniques that sold cigarettes are slowing the spread of AIDS. strategy+business. Winter 2006. http://www.strategy-business.com/press/article/06401?gko=fa6b7-1876-20605208

http://www.youthaids-aldo.org/

Posted by jackmixner at 10:32 AM | Permalink

Copyright Jack Mixner.     714 449 1040     www.mixnerstragegy.com

Hubbard summarizes management and learning and how they apply to successful businesses. Two things are key to increasing success, managing learning and learning management.

"Learning management: the conscious adoption of methods, such as lean production or better human resources processes, that deploy technology, financial capital, and employees' time more effectively (Hubbard, page 3)."

"Manaaging learning: the systematic developemnt of management skills and knowledge, inside and outside business, and in society as a whole (Hubbard, page 3)."

Businesses - especially family businesses - forget, over and over again, to recognize that a learned management team is crucial to success.

Policy makers forget the importance of providing a learning environment for managers.

Unsure which new management processes to adopt? Choose those that increase productivity incrementally.

The best way to increase productivity over the long term? Add professional management to your entrepreneurially focused, investor funded, firm. When you increase the managerial effectiveness of your firm, you increase productivity, and, ultimately, profitability.

How to avoid hype to increase managerial effectiveness focusing on learning and evolution of successful practices? Improve management capabilities through hiring, training - or both.

Questions to ask yourself: "How do you track production performance? Do senior managers get rewards for bringing in and keeping talented people in the company (Hubbard, page 2)?"

References

Hubbard, Glenn. The Productivity Riddle. strategy+business. Winter 2006. http://www.strategy-business.com/press/article/06402?gko=e1377-1876-20605692

Posted by jackmixner at 09:43 AM | Permalink