DROOM (Don't Run Out Of Money) with Beth Polish

The Way We Live Now Revisited

Three years ago, I did a post on Anthony Trollope’s novel The Way We are Now, which former HBS professor Amar Bhide (now at Harvard's Kennedy School of Government) had recommended to me as " the definitve work of business fiction." So I was excited to see that Newsweek just named it #1 on their list of must-read books for our time.

In 2006 I was commenting on the book’s depiction of a way of life that, if you looked at from an entrepreneur’s point of view, embodied its own unstated -- and, it turned out, unsustainable -- business model. But Trollope serves up a lot more wonderful business intrigue than that.

For those of you who don’t read much fiction, this is a novel you’ll savor for its satiric but pitch-perfect view of business and life in a time strikingly like our own, complete with a Bernie Madoff figure.

And for those who shy away from business books, here’s insight into business practice and principle embodied in vivid, enjoyable prose and rich, recognizable characters.

Newsweek has it right. Anthony Trollope’s The Way We Are Now is book not to be missed by anyone, especially considering the way we are now.

War of the Models

Anyone who knows me knows I'm fascinated by business models. I love analyzing them and thinking up new ones that can be game changing.

Over the last few months I've been blown away by the number of articles written about evolving business models in many, many industries. I'm particularly interested in media and communications, and businesses in this industry are very focused on how they are going to make money in a changed and still changing world. The debate of the moment seems to be pushing people toward abandoning print and focusing exclusively on providing content online. But wait, some say, consumers aren't used to paying for online content, in fact they’ve shown some resistance to it, and advertising rates are lower online than in print media. Yes, that’s true, comes the response, but the cost of print is so daunting, and advertising revenue is falling in print, too. That may be, but what kind of content are we going to provide, once our audience is the *World Wide* Web. And so it goes, more opinions than workable solutions.

A recent look on the New York Times website shows the following articles:

• Newspaper Ad Revenue Could Fall as Much as 30%

• Media Executives Plan Online Service to Charge for Content

• Extra, Extra! Homeless Lift Street Papers and Attitudes

• 'Hyperlocal' Web Sites Deliver News without Newspapers

• In Switch, magazines Think About Raising Prices

• Even a Print Advocate Turns to the Web

And then there was this on CBS recently,

• Nonprofit Future Possible for Newspapers

It's all gets pretty confusing pretty quickly.

The Perfect Fit

Over the weekend I belatedly added to my winter wardrobe that new staple, a sleekly designed, precisely fitted, insulated black coat.  I got mine at Searle, where they do a creditable version that's cut well for me, and the experience of buying it was an unexpectedly illuminating demonstration of modern marketing and sales.

Searle fashions are sold at Bergdorf's and Saks and other places, and also at Searle's own retail stores, of which there are half a dozen in Manhattan, arrayed along the East Side from 5th Avenue and 21st Street to Madison Avenue and 84th.  I called ahead to a couple of the stores to be sure they had it in the size I thought would work. (I was guessing based on having tried on a friend's.)

My Saturday travels took me to the downtown 5th Avenue stores, but when I tried the coat on I wasn't sure that the fit was right.  A size smaller might be better, I thought.  The salesman I was talking to quickly determined that they'd just sold their last one in that size.  Then, almost as quickly, he learned that no other store in Manhattan had one.  But there was one in the warehouse in Long Island City.

That I was not staying in the store's neighborhood was no hindrance.  Basically what he said was  -- pick a store and we'll have it there for you in an hour.  I named a store  --  the one three miles uptown on Madison  --  and he quickly verified that they also had one in stock in the bigger size, just in case.  So I could pay for the coat now, arrive uptown at my convenience, try on both sizes, and walk out with the one that fit best.  No fuss, no muss, no extra delivery charges.

What retelling this doesn't fully capture is how effortless and almost instantaneous it all was, or how gracious was everybody I dealt with, including everyone at the uptown store, who had no connection with the sale except to serve as a delivery point and a place for me to try the coats on.

What the experience showed me was a sales staff with a complete 360 mastery of their business and the ability to deploy it seamlessly to make and close a sale.  Searle has combined its website with a transparent inventory control and monitoring system carried on its intranet (and the training to use it all) to make every person on the selling floor knowledgeable about the company's entire inventory.  And they've facilitated movement of inventory from warehouse to store, and cooperation between the stores, to make the most effective use of that knowledge.

True, many of their fashions are available at high-end department stores, but why go there when Searle's own stores can provide this level of service?  And compare my experience to the more usual one of convincing a sales person to call around to other stores (if you can), and get busy salespeople there to check their own inventory... or, more often, schlepping from one store to another yourself in the hope of finding the item you want.

Being able to do what they did made that sale.  And it made me a happy customer.  I didn't have to come back, I didn't have to wait (and maybe go somewhere else to buy a competing product).  Almost anything that might have stood in the way of the close had been anticipated and provided for.

There's a moral here for all small businesses, not just retail operations with a half dozen locations in one city.

It's  vital to know all the factors necessary to make a sale, and every bit as vital to give the people who are your front line control over them all.  To do less is to fight with one hand tied behind your back.  The requirements are different for different businesses, but the principle remains.  Not just know your customer thoroughly, but put yourself in a position to meet your customer's needs as (seemingly) effortlessly as you can.

Graciousness -- Never Goes Out of Style

As I write this I’m sitting in the sparely designed Museum Hill Cafe, part of a complex of small museums on a hill overlooking Santa Fe New Mexico. The views of the mountains are beautiful but that’s not why I’ve kept coming back here during my stay in Santa Fe. It’s because I feel at home here.

They offer wireless but they don’t have lots of people just sitting on their computers and not eating their food (unlike the COSI chain in Manhattan that hooks you in by offering free wireless only to shut if off during peak hours). Instead of making you get a waiter bring you your free refill of coffee or tea (iced or hot), they make it available for you to take, yourself. By being gracious even in these and other small ways they give the customer a feeling of control and being welcome.

True, we are living in a time when businesses are cutting back on the services they offer (like airlines that no longer even give main-cabin customers pretzels, let alone dinner, during a four hour flight at dinner time). But there are still ways to offer your customers services that matter to them in terms of their overall experience with you, without scuttling your profitability. It’s not about big things, it’s about simple and significant.

The coffee and tea refills would be free anyway. It’s how I get them that’s simple and significant. Do I drink more than I might if I had to flag down a busy member of the waitstaff? Maybe, but it also frees the waitstaff (very small and efficient here) to do more productive tasks.

And you know what? Because it helps make me feel at home and welcome, I’m not so conscious that everything I buy adds to my tab. And I end up buying more (I really didn’t need that terrific chocolate chip cookie that I got to accompany my free iced tea refill).

So as this year closes in tougher economic times than it began and we all think of ways to streamline our businesses, it seems even more important not to lose sight of how we can make our customers experience with us special. If we do, I have no doubt they’ll be loyal for years to come.

Safety First

Today I went to a meeting of Big City Moms to hear a talk by a baby-proofing expert. It’s something I really need to know about now that my twin boys are rolling over and on the verge of crawling. James, who looks a lot like Jon Bon Jovi, was very impressive as he talked about door latches and electrical outlets and wiring and all the other things little hands and mouths can get into trouble with. I had no hesitation deciding that I wanted to hire him to come over and analyze my apartment and tell me how to make it safe for my guys.

It seemed to me he had a good urban thing going. Find groups of moms to give free lectures to, and pick up clients at each event. He also told us that he writes a column that’s syndicated on some websites and magazines. Another good way to get clients. It looked like he had a business model not so very different from some of the people who lecture at the same events I do. And then I saw his business card. Well, not exactly a business card. More like a rack card. Glossy card stock and on it he’s listed all the services he performs. Baby-proofing (gates and door latches, kitchen safety, etc), fireproofing, custom plexiglass balconies and dangerous railings, pool fencing, nanny surveillance by hidden camera and Internet, and domestic staff background checks.

His company is called Baby-SAFE, and as you can see he’s done a remarkably thorough job of thinking through all the ways to make a baby safer at home, and incorporated them all, no matter how seemingly unrelated they are. After all, what does fire safety have to do with background checks. On the face of it, it’s hard to see how having expertise in one makes you likely to be good at the other.

It’s a lesson in business model formation. Sometimes it pays to find new ways to categorize your business. In traditional terms, James’s business covers at least professional services, contracting and construction, computers and electronics, and investigation.

Instead of starting from a standard category of business, he started from the needs of a particular consumer and he built a businesss model around serving that particular need.

That turns the usual way of doing things inside out. Typically, for example, someone in construction might start out focusing on small homes, then leverage their understanding of construction to do larger homes or vacation homes or small office buildings. They’re serving different customers within the same industry, using the same basic skills -- how to spec and construct a building. What James has done is ask What are all the jobs this customer (parent of young children) needs done? and then provide all the services needed to do those jobs. So the customer is the hub and the spokes are the industries, instead of the all too common model in which the industry is the hub and the various customers are the spokes.

James is a great example of an entrepreneur who really understands his customer and embodies the principle of putting the customer front and center in your business. And in the process he’s defined a new industry -- child-safety risk management.

An Unexpected Insight

I was surprised by what I read in this morning’s New York Times Week In Review about how the late Pakistani politician Benazir Bhutto built the tremendous support from American governments that was crucial in reaching her dream -- to become prime minister of Pakistan -- not once, but twice (and almost a third time).

I had assumed that, being born not just into wealth and privilege but also a family central to Pakistani politics, she would not have had to put much time or effort into building that support. In fact, though, the Times reports, she was an ardent practitioner of the art of networking, and that made all the difference.

What struck me in the description of how she mastered networking and how she did it, was that it was a veritable primer of how to do it in business.

• She began networking from the very beginning and continued throughout her life
• She sought expert coaching and direction
• She stayed in touch with her existing networks and created new networking opportunities whenever she could
• She befriended people regardless of their skepticism of her and what they took to be her agenda
• She did this aggressively whether or not she was in a position of power

Bottom line... she knew that to achieve her objectives, she had to pay attention to networking constantly and consistently.

These principles are just as valid for achieving business goals as political ones.

The fact that Benazir Bhutto was born to wealth and privilege and had a politically powerful father did made it easier for her to get started building a network. But it also gave her major hurdles to get over. Just like everyone else, she had to work hard at networking. The important point is, whatever your starting point, you can and must build the right network for yourself and make networking a core competency so your business can reach its full potential.

You can learn more about how networking can help you build a profitable business, check out the work of Liz Lynch at the Center for Networking Excellence.

Coming Of Age, Not Just In Samoa: Anthropology and Business

Ever since I switched from being a pre-vet major (yes, I went to college expecting to become a large animal veterinarian) to anthropology, I’ve been barraged by questions like "why anthropology?" and "what can you possibly do with an anthropology major, except teach?" The incredulity only got worse when I went to business school. After all, how could anthropology be an appropriate, let alone valuable, background for someone in business?

The truth? Studying anthropology was the best education I could have had for a career in business. That’s because it’s all about a way to see the world. When you’re learning about an indigenous culture in some remote place, you can’t think about familial relationships, for example, from the perspective of life as an American living in New York City. Rather you try to see things as they’re viewed by the people you’re studying, based on the life they’re leading where they are. You learn to suspend judgement and to look, listen and really hear what they’re saying. To see the world through their eyes.

What brought this to mind again was a recent New York Times article about the Pentagon hiring anthropologists to help American soldiers on the ground in Iraq and Afghanistan.

The idea is that anthropologists, as experts in understanding other cultures, can help the soldiers really hear what’s important to local people and find more effective ways to communicate, and that this can help reduce combat operations and facilitate rebuilding. (I should note that while this is a good thing in many ways, not all anthropologists think the association with the military is good for anthropology. That’s not something I’m in a position to comment on.) Regardless of your views on the war, the point could hardly be made more strongly that anthropology isn’t just an academic exercise. It has significant real world applications.

If you have an anthropologist’s mindset, you constantly seek to understand what’s going on from perspectives other than your own. Wanting to explore the world this way, and being able to, is invaluable when running a company.

For example, employing an anthropological point of view helps you to genuinely see your product or service from your customer’s perspective. That way, you’ll know if you’ve got a product that can be successful, and how you might modify it over time so it will continue to be.

Or, how about forging a partnership with another company? To work, it’s got to be a win-win for both parties. You’ll increase your odds of making the process successful if you’re able to see the pros and cons from your potential partner’s vantage point.

Similarly when you’re hiring staff or consultants you may think your company is a great place to work, but will they? Understanding the motives and needs of a potential hire (are they looking for financial stability? career mobility? an intellectual or professional challenge?) can help you figure out if the person is right for your company and, if they are, the best way to attract and retain them.

It took me a while to realize that I use my anthropology background all the time -- whether I’m building a company, working with clients, or teaching students about entrepreneurship, strategy and finance. It makes me smile that many more people are beginning to recognize the practical value of anthropology in all sorts of settings.

Business Models and The Way We Live Now

I’ve been immersed in thoughts of business models recently because I’ve been on the lecture circuit talking about them.

In my downtime and on flights, I’ve finally gotten to delve into Anthony Trollope’s "The Way We Live Now," which was first recommended to me by an HBS professor. He said it was the definitive work of business fiction.

In a way, the art of business is the real protagonist -- embodied in a swindler who takes on Victorian society at a time when the way of life of the landed gentry was being overwhelmed by the successes and excesses of industrialists and the merchant class.

What does this have to do with business models?

Trollope gives us an amazing portrayal of the attempt to preserve the economic viability of a threatened way of life (and business model). Consider the business of maintaining a dissolute lifestyle of gambling and drink when the agrarian incomes they depended on are rapidly dwindling.

When agriculture was king, self-indulgence was paid for by the labor of tenant farms. But by the mid-19th century that didn’t necessarily work any longer.

Here’s Trollope on what replaced it:

"...His father’s property was not very large. His father and his grandfather had both been extravagant men, and he himself had done something towards adding to the family embarrassments. It had been an understood thing, since he had commenced life, that he was to marry an heiress. In such families as his, when such results have been achieved, it is generally understood that matters shall be put right by an heiress. It has become an institution, like primogeniture, and is almost as serviceable for maintaining the proper order of things. Rank squanders money; trade makes it; -- and then trade purchases rank by re-gilding its splendour. The arrangement, as it affects the aristocracy generally, is well understood, and was quite approved of by the old marquis -- so that he had felt himself to be justified in eating up the property, which his son’s future marriage would renew as a matter of course."

As you can imagine this is not a sustainable business model. Opening the manor house to tourists has proved a much more durable solution.

Moral of the story: No amount of money can fix a broken business model for long. When faced with challenging economic times, you’ve got to face reality to figure out a new model that works.

An Era Passes at iVillage

Today it was announced that NBC Universal purchased iVillage for $600 million in cash.  I have mixed feelings about this deal.  I liked the idea of iVillage being independent; standing on its own. Despite all the knocks the company has received, I’ve always felt proud of my association with it. So as the founding cfo, I liked owning shares in it the company all these years; it made me feel connected to it even though I haven’t been part of the company for a long time.

On a less emotional level, I wonder about the sale. iVillage’s recent performance has shown that it hasn’t just survived the dot.com boom and bust but that it has thrived. And, this from a company that was founded at a time when smart people wondered whether or not women were going to be a powerful important online constituency and advertisers questioned whether women really had buying power. Perceptions have changed so much over the last decade that it’s hard to imagine that these attitudes ever existed.

iVillage is by far the most important online brand for women and it has been for years. It gets 14 million plus unique visitors per month, hardly an insignificant number. Without knowing the details of what’s really underneath the hood at either General Electric's NBC or iVillage or what their strategy is after the acquisition (only an insider can really know these things), it seems that NBC is buying a company that has the potential to be central to their efforts to revive their sagging fortunes. And they seem to have done so at a price that doesn’t leave people shaking their heads wondering what they were thinking. On the other hand, with all the volatility that iVillage’s stock has had over the last few years, $8.50 a share will make a lot of iVillage stockholders happy. The quandry is that, on the one hand, iVillage seemed to really be hitting its stride leaving many feeling that it hadn’t yet lived up to its full potential and, on the other hand, so many companies end up with nothing by failing to take a reasonable deal.

I just hope that this sale doesn’t provide yet another example of women getting paid less for what they’re worth than men.