JACK MIXNER STRATEGY

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

Over 20 years, GE returned 16% to shareholders annually. Berkshire Hathaway returned 21%. S&P returned 12%. Danaher (DHR), with about $10 billion annual sales, returned 25% (Hindo, page 56). 

How?

• It imposes the "Danaher Business System" (Hindo, page 58 - 59), based largely upon the lean manufacturing process developed in the eighties by Toyota, on every new company purchased for the 600-company conglomerate.
• Managers from throughout Danaher work quickly to install the Danaher system to increase profits in new purchases.
• Sometimes it keeps the best lines and closes the under-producers.
• It carefully walks away from over-priced deals.
• It keeps a low profile by not competing for the Baldrige Quality Award, for instance, in order to reduce copycats and curtail employee raids by competitors.

Increasing manufacturing efficiency increases the bottom line. If you are interested in making your company more enticing to eventual buyers, installing a lean manufacturing process makes sense. 

Interesting update on Toyota's method of keeping management appraised on progress toward goals:

It does not occupy much space on the office wall, but Latondra Newton calls it the hardest thing for Toyota’s new American employees to accept: those colored bar charts against a white bulletin board, in plain view for all to see (Fackler). No, they are not the company’s progress toward goals. Rather, they are the work targets of individual workers, visibly charting their successes or failures to meet those targets. The idea is not to humiliate, but to alert co-workers and enlist their help in finding solutions.

Hindo, Brian. A Dynamo Called Danaher The Rales brothers' sprawling conglomerate makes everything-especially money. BusinessWeek. 19 February 2007. Page 56. http://www.businessweek.com/magazine/content/07_08/b4022065.htm?chan=search

Posted by jackmixner at 12:13 PM | Permalink

Copyright Jack Mixner.     714 49 1040.     www.mixnerstrategy.com

We all know the drill. Buy a new ink jet printer for $40 or so on sale, then, in the not-so-distant future when the ink cartridges are empty, spend $120 to refill the printer.

Kodak is proposing to do it differently. In March they will launch a new printer system relying on new inks and technology that reduce the replacement cost of a cartridge to between ten and fifteen dollars. Prints are archival, destined to last one hundred years, instead of the fifteen expected from current systems (Hamm, page 42). Overall cost reductions total fourteen cents for a Kodak print from the new Kodak system, a substantial (about sixty per cent) savings.

Kodak has been at the brink of failure for fifteen years or so, with various film-based divisions closing periodically. The new strategy represents a make/break strategy for Kodak. The strategy represents a departure from the razors and blades strategy of Kodak's competitor like HP, whose cheap printers require expensive HP inks. HP won't roll-over on this. The fight may be fierce. It will be interesting to watch what happens.

Reference

Hamm, Steve. Kodak's Moment of Truth. BusinessWeek. 19 February 2007. Page 42.

Posted by jackmixner at 02:46 PM | Permalink

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

All of us who understand the travails a start-up pharmaceutical or medical device company goes through are willing to cut the businesses some slack. Hundred million dollar investments are the norm, even before profits, or sales for that matter, kick in.

Is this all a tremendous waste of time - and money? The reason we all put up with is it is the assumption that the alternative, that of developing drugs in-house at the big pharmaceutical companies, is just as inefficient, or more so.

Two assumptions are a work here:

• Little is better - less bureaucracy means faster development times
• There is plenty of money available to startups from the venture capital process.

Maybe we're wrong. It might make sense to reevaluate the efficiency of large companies' research and development process (Pisano). Perhaps they are better than we think at identifying just when an investment in a new drug needs to end. A good portion of the venture capital sloshing around on the balance sheets of startup pharmaceutical companies may be ill-invested (Pollach).

While we rely on capitalistic markets to ultimately decide whether an investment is a good one or not, it appears that a re-examination of the pharmaceutical market might be in order, especially if the money you are about to invest is your own.

References

Pollack, Andrew. It's Alive! Meet One of Biotech's Zombies. New York Time. 10 February 2007. http://www.nytimes.com/2007/02/11/business/yourmoney/11xoma.html?ei=5094&en=5b835935e2350efa&hp=&ex=1171170000&adxnnl=1&partner=homepage&adxnnlx=1171144076-/NBOQr59NAwxcKfsl4xHbw

Pisano, Gary P. Science Business: The Promise, the Reality and the Future of Biotech. Harvard Business School Press. 2006.

Posted by jackmixner at 02:11 PM | Permalink

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

For a while now, the US government has complained about the scarcity of vaccines to treat various illnesses. A plant was closed in the UK and Americans couldn't get flu shots last year. Lately, complaints surface occasionally about the problems to come if bird flu makes a major jump from wildlife to humans. Vaccines aren't necessarily profitable for companies to create. Plus, sterile manufacturing at large volume is apparently problematic. Thus the shortages.

Somebody is doing something about it, and we still hear complaints. Indonesia is starting to sell samples of the bird flu virus to Baxter Healthcare, in a newly formed non-exclusive arrangement. The World Health Organization is complaining (McNeil). 

What's wrong with this picture? The public good is colliding with capitalism. In the long run, we will have to see if it will work. In the short run, the WHO still has a role, that of ensuring that Baxter, and other for-profits that compete for the virus to create vaccines, have the capacity to protect against disaster.

In the long run, my suspicion is that we are in good hands. In the short run, let's keep an eye on those hands. We need to make sure enough manufacturers are supplying enough for all of us.

References

McNeil, Donald G., Jr. Indonesia May Sell, Not Give, Bird Flu Virus to Scientists. The New York Times. 7 February 2007. http://www.nytimes.com/2007/02/07/world/asia/07birdflu.html?_r=1&ref=health&oref=slogin

Posted by jackmixner at 01:35 PM | Permalink

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

Jack Welch certainly said it with vigor. Replace ten per cent of your staff - the under-performing ones - each year.  State the company values and vision and expect people to buy-in - or leave. Stay in businesses ranking number one or two in their industry or sell the company.

Maybe there is another point of view. Training a new team takes time and money. Selling a company may be a waste of time.

Sometimes it makes more sense to change yourself. OK, there's always going to be turnover in a company, sometimes instigated by you. Many times, however, just changing yourself is quicker. When a consultant works with a company, she or he wants results quickly. If you fire people, things don't necessarily speed up, do they? So a consultant looks for places where change will get results. And the place to look isn't with the team. It's with the CEO (Farson, page 88). The CEO sees the problem. She knows what she wants to fix. She can't fire everyone, every day. No. She can change what she expects from people. Re-shuffle them. Assign them to new tasks that they're better suited to. And, this is the subtle part, make changes in yourself. Don't make big demands about the little things. Make big demands about big things. Big things are things like Vision and Values. But you don't necessarily have to make big changes to get big results.

I worked with one CEO and his team who managed a wonderful company. The only problem was that profits were becoming harder and harder to come by. Everybody thought they needed to sell more. To whom, they were not sure. Just sell more. We decided to sell less. Instead of selling all over the country, they focused on two regions where profits were higher. They needed fewer sales calls as a result. Productivity and net profits increased. They made significant changes, yes. The changes allowed the company to sell more with less effort. In the middle of a large planning effort focusing on nationwide distribution, the CEO made a change by allowing the company to take on a more regional focus. No one really noticed at the time. They had the same amount of work, but it was more focused. And profitable.

Reference

Farson, Richard. Management of the Absurd. Paradoxes in Leadership. Simon & Schuster. 1996.

Posted by jackmixner at 10:57 AM | Permalink

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

Success is fun. You meet new people. You outgrow other people. Succeed long enough and new problems present themselves if you are not careful. Loyalty to your "old" team is one of them.

Tom Brady at the New England Patriots had the potential for a whopper of a problem. His new best friend was Donald Trump, but on Sundays he still depended on the left side of the line to protect him from being blind-sided. If they didn't cover him, somebody would get hurt, and the team would fail (Pierce page 159).

What to do? Brady didn't have to do much as he came in being humble. He ignored much of the press (while still being accessible) and stayed part of the team. His line starred with him in a TV commercial - and they were the stars. Brady chose to be loyal, in itself a decision to remain "loyal to loyalty." It's funny how it works. Loyalty spreads. At the Patriots, team members, recently eligible for free agency, stuck around - for less money than they could have earned elsewhere. Brady was one of them.

How about your company? Realize you have two spheres, one inside the company and the other outside the company. Keep them separate, but honorable. Make new friends, sure. But don't forget about your old friends, the team at work that may see less of you as you go out to grow the company. When things go wrong, like you have to have a lay-off or you lose a big client, be part of the solution. Don't wait around for someone to lead. Do it yourself.

References

Pierce, Charles P. Moving the Chains and the Pursuit of Everything. Farrar, Straus and Giroux. 2006.

Posted by jackmixner at 01:20 PM | Permalink

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

Simplified, Lance Armstrong used four key points to motivate himself - and his large racing team:

• Positive Attitude (avoid "bad" air - negative attitudes)
• Clarity of Purpose (patience is part of it)
• Specialized Intelligence (remember what went wrong in the past, but adopt a big picture perspective)
• Pure Confidence (enjoy the process) (Kearns pages 92, 115, 139, 165).

Key point for me: setting goals like winning the Tour de France depends on setting goals on process. Practice far in advance. Stick to your game plan. Make goals that keep you engaged. 

Reference

Kearns, Brad. How Lance Does It Put the Success Formula of a Champion into Everyting You Do. McGrawHill. 2007.

Posted by jackmixner at 10:34 AM | Permalink

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

Deeply troubled companies don't usually seek help. And when they do, they have a hard time benefitting from it (Farson, page 86). 

How to make your company open to help?

• Be open to change.
• Personal changes - read that, self-reflection - are necessary.
• Don't wait for a crisis to make a change.
• Boom times don't necessarily mean "healthy organization."
• Leaders make changes more easily than managers - or followers.
• Make accomodations yourself. Don't wait for others to.

Consultants work with folks who can change. Those folks, paradoxically, usually need it least. But the resulting changes have the biggest impacts (Farson, page 88).

References

Farson, Richard. Management of the Absurd. Paradoxes in Leadership. Simon & Schuster. 1996.

Posted by jackmixner at 10:05 AM | Permalink