Monthly Archives: July 2009

Leadership Lessons from the US Government and the Cash for Clunkers Program

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Cash for Clunkers: What we can learn about Leadership from Bureaucrats?

Whether you agree or disagree that the US Government should be in the business of incentivizing the populace to buy new cars, the fact is that the so-called “cash for clunkers” program simply demonstrates that our government, like all governments, does not employ an overabundance of thoughtful leaders.

If the goal of the program, also known as the Car Allowance Rebate System (CARS), was to encourage the sale of 200,000 new vehicles, then it has been a smashing success. In fact, the one billion dollar program that was scheduled to run for the next three months ran out of money in less than a week. Oops.

“It has succeeded well beyond our expectations and all expectations,” commented President Barack Obama.

Thoughtful Leaders “Do the Math”

Just who in our government was setting these expectations? We all knew the program, which pays dealers up to $4,500 per vehicle to junk old cars traded in for new fuel-efficient cars, only had enough money for about 200,000 such transactions.

  • There are roughly 20,000 new car dealers in the US.
  • That equates to 10 clunker deals per dealer.
  • The average dealer can sell 10 cars in about 3 hours.

We’re actually surprised the program lasted as long as it did given that the demand for new cars in the US has been depressed for more than a year. One could argue that the US auto industry, which is currently selling about 500,000 fewer new cars each month that it did just two years ago, has more pent up demand than the housing market. Prior to the Cash for Clunkers program, you were more likely to catch the Swine Flu than you were to get New Car Fever.


Now, for the Real Ugly Truth about CARS

It’s clear we didn’t plan well enough for the execution phase of this program. Not only did the government drastically underestimate the potential acceptance of CARS, but they’ve been failing (unsurprisingly) to keep up with the very basics of their own program.

Just a couple of quick examples:

TheManager signed up weeks ago at the Cars.gov website to be alerted when there were updates to the program. By our tally there have been dozens of such updates, though we’ve received none of the promised email communications. No biggie, and certainly not surprising.

Now we learn that the website created by the feds to handle dealers’ claim submissions has taken up to an hour to process each transaction. Additionally, there are reports of repeated rejections as dealers spend countless hours submitting and resubmitting data. A little more of biggie, but again, not surprising.

So, who are we Entrusting with CARS?

Let’s not forget that this is program between the government (think: no accountability) and car dealers (think: Rudy Russo in Used Cars). You wouldn’t trust either of these groups to babysit your kids let alone run a now multi-billion dollar program designed to make the world more fuel-efficient. (Congress added $2 billion to the program today.)

Seriously, there are great people who work for the US Government and there are certainly great people who manage and own new car dealerships in America… there just aren’t enough of them in either profession.

The CARS program requires that the clunker “be crushed or shredded so that it will not be resold for use in the United States or elsewhere as an automobile. The entity crushing or shredding the vehicles in this manner will be allowed to sell some parts of the vehicle prior to crushing or shredding it, but these parts cannot include the engine or the drive train.”

Who will inspect this crushing and shredding? Who will ensure that none of these vehicles is resold inside or outside of the US? Who will ensure that no unscrupulous dealers submit false claims? If we are relying on the goodness of mankind to ensure everyone, including the government and car dealers, does the right thing then we are being more than a little naïve.

Thoughtful leaders, of course, take pride in not being naïve. The government could certainly use a few more thoughtful leaders.

Leadership Lessons from Barack Obama

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What Business Leaders Can Learn from Obama’s Bad Week

Wow, what a week for the Leader of the Free World. Just as his something-for-nothing-health-care-plan was starting to lose steam on Capitol Hill, one of his friends breaks into his own home, gets lippy with a cop and gets arrested.

In his typical “you never want to let a serious crisis go to waste” fashion, Barack Obama took a page from previous US Presidents and tried to deflect criticism of his health plan with some presidential sleight of hand. Claiming a decorated police officer acted stupidly in arresting his pal Henry Louis Gates, Obama just might have uttered the dumbest thing he’s said since taking office. Thankfully, he’s provided us with a couple of truly basic lessons for business leaders in the process.

Leaders Make Sure Their Feet Are Clear of Their Mouths Before Speaking

“I don’t know all the facts.” Barack Obama stated as he began to weigh-in on Gatesgate during his nationally televised health care press conference on Wednesday.




Leaders know that this is where they should stop commenting. Leaders understand that it’s important to get all the facts before speaking – especially on topics that could be inflammatory.

“… the Cambridge Police acted stupidly in arresting somebody when there was already proof that they were in their own home,” Obama continued later in his misinformed opinion “… there is a long history in this country of African Americans and Latinos being stopped by law enforcement disproportionately. That’s just a fact.”

Clearly, Obama has never seen an episode of Cops, where nearly everyone is arrested in their own homes. The most misguided takeaway of President Obama’s declaration on Gatesgate is that he equated this incident with the stereotypical racist white cop, and even tried to make what happened in Cambridge a microcosm of race relations in America.

You Move Too Quickly

If you’re wondering what that stuff is dripping off the President’s mug, it’s egg. It seems Obama not only spoke without knowing the facts – as the facts came out it became increasingly clear that we had a belligerent old man who was disrespectful of the very police who were called to his home to investigate a possible burglary – he basically called one of the most colorblind policemen in Massachusetts a racist. Boy, I bet he wishes he’d known that before he opened his mouth.

Cambridge Police Sergeant James Crowley, as you may already know, not only teaches academy plebes on how to avoid racial profiling, but he just happens to be the brave officer who performed mouth-to-mouth resuscitation on Reggie Lewis in 1993. Lewis, you see, was black; and Crowley didn’t care as he tried to save the young man’s life.

The President should be calling for other police departments to hire more men like Crowley instead of continuing to second-guess the officer’s actions. Leaders, at this point, would know enough to apologize and explain they spoke too quickly. Even as recently as today, Obama has continued to lay much of the blame at Crowley’s feet. The American People – just as your subordinates would if you were lying to them – aren’t buying it.

What’s The Rush?

The real leadership lesson we expected to learn this week centered on the Obama Health Care Reform Plan. We were looking for the reason that the White House and certain members of congress seemed so adamant about passing the measure before the August break. The plan is one of the most costly pieces of legislation ever to be proposed, and would (by all accounts) change the way most of us access doctors and hospitals forever.

So what’s the rush? Leaders know that getting it right is always, always, always better than getting it fast. That’s not to say that leaders believe in ready, aim, aim, aim…. On the contrary, leaders are all about quick action – they just don’t take this action without understanding the pros, cons and consequences.

One thousand, one hundred and eighteen. That’s the number of pages in the Health Care Reform Bill Obama wants passed this month. With all that’s happening in the economy – and with the trillions already pledged to stimulating it – asking congress to okay a bill that would commit trillions more without expecting them to both read and understand it is unconscionable – and not very leader-like.

Measure Twice, Cut Once

Obama and the congressional leadership should take a page from careful carpenters and make certain they understand the ramifications of all aspects of the bill before signing on. (It’s quite possible President Obama hasn’t even read the bill in its entirety.)

Obama, however, wants everyone in America (especially the congress) to look the other way and let his plan go into effect. Why, we ask? What’s the rush? If health care is so important to Barack Obama, shouldn’t we make sure we get it right the first time?

We’re not even talking about debating the merits of the plan the President has laid out – it could very well be perfect for America – we just want to know that if health care is so important to the President, why did it take him six months to name a Surgeon General? (And why does she seem so overweight and under-qualified?)

Therein lies the leadership lesson. Leaders’ actions speak louder than leaders’ words – and true leaders know this. That’s why true leaders would never try to shove something down their charges’ throats. Instead, true leaders provide the facts, gain consensus and mentor as their teams do the right things. We wish Obama would do the same.

How Does a Young Manager from the Outside Convince an Interviewer that He Can Lead?

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How Do You Convince an Interviewer That You Can Lead?

Recently, a reader posed a question after finding our article explaining how young managers can lead older subordinates. Because his question (posted below) required more than just a passing comment as a response, we decided to dedicate an entire post to properly address it.

Recently I interviewed for a leadership position in a big and reputable organization. The company is considering internal candidates also for the position. This position is likely to lead a huge team which also includes experienced and older team members, many of whom would’ve been interviewed for the same position. The interview panel felt that it would be a humongous challenge for me to lead such a team. Although the panel seemed satisfied with my professional exposure, they considered the people challenges to be the most difficult part of the job. In the subsequent round of interviews, what do you think my approach should be to the people management aspect? – Sourabh De in Mumbai, India

Great question, Sourabh. Our answer is going to assume that you’ve previously led a large team and/or subordinates with more experience. If neither of these is the case, you’ve got a tremendous uphill battle ahead of you. Companies – especially large, reputable ones – are exceedingly unlikely to gamble with important roles like the one you’ve described. If they rolled the dice and hired the untested from outside for key management positions they certainly wouldn’t be large or reputable for very long. While it is perfectly acceptable for these companies to promote an inexperienced top performer from within, it would be institutional suicide if they put unproven outsiders in important leadership roles.

Keep the Focus on the Interviewers, Not the Interviewee

As you are obviously neither untested nor inexperienced, you should still have a shot at the position. To help keep your focus on the task at hand, it’s important to understand there is a reason you are being interviewed in the first place. Certainly, we can assume there are no clear frontrunners currently employed with this company; because great companies don’t waste their people’s time assembling a panel to interview outsiders who have no chance of joining the team. We also have to assume, however, that your skill set is similar to at least a few of their current employees.

How will you stand out and convince them you are capable of leading their team?

The key for anyone attempting to join a new company is to make yourself seem indispensable without having to explain just how much they need you. Telling the interview panel why you’re more qualified than those they already employ makes you seem arrogant and seemingly questions their ability to organically grow talent. The trick is to get them to see you as crucial to their success all on their own.

This is accomplished by keeping the focus on those conducting the interview; and by you keeping quiet when possible. Just as there is a greater likelihood of being successful on a sales call when you let your prospect dominate the conversation, you stand a better chance of landing a job when you allow the interviewer to do most of the talking. People love to hear their own voice, and when you ask their opinions and genuinely listen to their answers with interest, they perceive you as much brighter and more likeable and qualified than if you spoke non-stop during the interview.

In your next interviews, be sure to ask well thought out questions and listen carefully to the responses. This will make you seem mature beyond your years, and may help them see you as the leader of their large team.


What Are Their Goals?

As you prepare your questions for your next round of interviews, it’s important to know as much as you can about the goals of the company and, especially, the individual needs of those on the interview panel. Do you have a “coach” or friend who works for this company? If so, ask them about the hot buttons of each member of the interview panel, and then fashion your questions so that you allow the interviewers to showcase their strengths and fully explain their desires. If you do not have a coach, then you’ll have to use what you already know about the panel to determine their wants.

Obviously, it’s easier if you’re dealing with a single interviewer, but the key to getting people to tell you their goals is to ask them. In cases where you’re dealing with an interviewer one-on-one, you could probe for goals during the interview by asking the right questions and paying attention to the responses. Posing questions such as “assuming you hire me for the position, how will you know if I am successful?” may allow you some insight into whether the interviewer expects only mediocre results from the role or genuinely believes it could chart the future for the company. It also helps the interviewer picture you in the role (this is critical).

Play To Your Strengths

Because we can assume there are no insiders who are truly frontrunners for the position, it’s time to identify your unique strengths and play to them. Without sounding arrogant, you’ll want to align your strengths with the needs of the company and of the interviewers.

More than anything Sourabh, it’s important to present your strengths in a way that ensures those doing the interviewing that you will be an asset because 1) you are an expert at gaining trust and assimilating a new team quickly; 2) you excel at leading large groups; and 3) you are especially adept at leading older subordinates.

The best way I’ve found to give interviewers a sense that you possess these qualities is to identify these as potential pitfalls for whomever they choose. Whether they ask you directly or not, you should find the opportunity to state that the major challenges (as you see them) for the successful candidate are points 1, 2, and 3 above; making certain to provide examples when you 1) quickly gained trust; 2) excelled at leading a large group; and 3) you successfully and joyfully led older subordinates.

Stay Positive

Above all else, stay positive. This company certainly doesn’t want someone in the role who is going to hurt the morale of the team or undermine the authority of their peers. A negative attitude, even if it’s toward a competing candidate, will make you seem disingenuous.

Although you’re certain that you are the best person for the position (or you have no business getting this far in the interview process), you must avoid comparisons that paint the other candidates (either individually or collectively) as unqualified. In their minds, the interview panel has assembled a diverse group of highly talented people; any of whom might be a perfect fit. If you acknowledge this with a positive attitude and highlight where you will be able to overcome the major obstacles, you stand a much better chance of landing the role.

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Best of luck and please let us know how it turns out.

Leaders Don’t Get Too Caught Up In The Details

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Low Hanging Fruit and the Cost of Perfection

Imagine a small airplane flying low over a crowd at a baseball game. The door of the plane opens and a smiling man appears with a large sack. He turns the sack over just as the plane flies over the bleachers and millions of dollars in various denominations begin to flutter down to the amazed crowd below. The plane makes a dozen more passes, and each time the man empties sacks of bills onto the crowd.

Now imagine you are in this crowd and you see hundreds, fifties, twenties, tens, fives and ones all floating toward your waiting hands. As the bills come within reach, you feel compelled to collect only the fives and ones because you know they’ll be easy to spend and they’ll work in most vending machines. Additionally, you decide to straighten each bill as it reaches your hand and you arrange all bills in sequential order by serial number and denomination as you collect them.

Of course, these decisions hinder your ability to gather the maximum amount of money, but you really want to make sure these dollars are perfectly displayed in your wallet once the money shower subsides.


Crazy? Probably, but managers in businesses of all shapes and sizes make similar decisions every day. While rationale people would grab every bill just as fast as possible, managers locked into some strange quest for flawlessness worry too much about perfection and not enough about the goal – costing their companies millions in actual losses and even more in lost productivity.

 

Leaders Grab the Low Hanging Fruit

 

Often in sales we talk about Low Hanging Fruit (LHF). This overused phrase refers to the sales that are so easy to make you just have to walk up to the great sales tree, reach up and pick the customer of your choice. This phrase is so hackneyed and misunderstood that it nearly cracked the Top Ten in our list of the 25 Most Annoying Business Phrases of All Time.

 

The concept of LHF in sales came about because inexperienced salespeople would often pass up the sure thing only to spend an inordinate amount of time trying to close a sale that would eventually yield them less commission. In leadership, LHF refers to the opportunities that take little effort. These opportunities are often not glamorous, causing unfocused managers to chase shinier objects (leaving the LHF to rot on the vine).

 

Leaders, of course, maintain the goal in the forefront of their minds. This keeps them focused and allows them the wisdom to grab the Low Hanging Fruit; and to avoid the traps of shiny objects and the ill-advised pursuit of perfection. Leaders do what is best for the company and not just what feels best at the time or makes them appear to be in control.

 

Perfection is a Joke, and it Costs Too Much

 

I once worked with someone who was put in charge of overseeing the migration of the company’s website from provider X to provider Z. While X had done a fine job with the site, the company just felt it was time to change. No biggie, this happens. Unfortunately, my colleague got so caught up in how every page of the new website looked (she argued for weeks about shades of blue that were indistinguishable to the naked eye), that the designers at provider Z left out major functionality that would have converted twice as many visitors. Additionally, the new website performed poorly with search engines like Google because my colleague was too busy picking just the right images to notice that the content was incorrect.

 

A leader who was focused on the goal would have known that search visibility and conversion were the primary objectives of the website, and that there were no secondary objectives. This leader would have looked at the opportunity to build the site correctly as Low Hanging Fruit and would never have been caught up in unimportant details like Cornflower blue v. Dodger blue.

 

The Devil is in the Details

 

In today’s business world there is no room for perfection. Those lucky enough to still have a job are likely carrying the weight of several laid-off coworkers. True leaders understand this and do everything they can to maximize the ROI of their activities and decisions. They do not get caught up in colors or sequential bill stacking when the future of the company is at stake. As bad as it may sound to the dilettante managers, leaders understand that good enough is sometimes good enough.

 

Leadership Lessons from the NBA – When Bold Moves are Required, Leaders Don’t Care About Popularity

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Leadership Lessons from the NBA – The Surprisingly Aware Richard Jefferson

Weeks after being acquired by the San Antonio Spurs, star NBA forward Richard Jefferson was scheduled to marry his redundantly named fiancé, Kesha Ni’Cole Nichols, last Saturday. As you’ve likely heard, Jefferson, late of the New Jersey Nets, got cold feet and called the wedding off just hours before he was scheduled to become Mr. Ni’Cole Nichols.




While most in the blogosphere have lined up to crucify Jefferson for his last minute email to Nichols calling off the nuptials, the editors of AskTheManager.com believe he showed great leadership in recognizing a bad decision and rectifying it before it was too late. (Of course, there are reports he spent more than $2 million on the wedding that never happened, so we’re not entirely sure he couldn’t have made the decision a few weeks earlier.)

Leaders Make Decisive Moves

While Jefferson spent more than $2 million on the ceremony, he likely saved himself millions more by avoiding the inevitable divorce from KNN. Many have called him a coward, though we call him bold.

A coward, you see, wouldn’t want to face his fiancé, her family, his family, their friends and the rest of the world with the embarrassing news that he made a bad decision in asking her to marry him. A coward, you see, would live with his bad decision and compound it with more and more bad decisions for the rest of his life. Leaders are bold enough and comfortable enough with their own abilities to say “I screwed up, and this is how I’m going to fix it.”

Leaders Do What’s Right

The popular move for Jefferson would have been to go through with the wedding and make the best of a bad marriage. Certainly millions of others before him have done just that. Jefferson, for whatever reason, stepped up and did what was right – that’s what leaders do. Leaders care about popularity only when it doesn’t get in the way of what is right, and marrying someone you just don’t love isn’t right.

Enough Standing on the Sidelines – The Kindle is Worth the Money

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Amazon's Kindle is Worth the MoneyThe Amazing(?) Amazon Kindle

This week Amazon lowered the price of their popular six-inch Kindle by $60. No fanfare, no major announcements and no (á-la-Steve-Jobs) laser shows. In fact, Jeff Bezos was nowhere to be seen, just a new lower price on the Amazon homepage.

The Kindle, for those of you who’ve been under a rock the last year, is a small, thin, electronic display that can hold over 1,500 books. Amazon, the undisputed king of booksellers (online or offline), designed and released this device in advance of deep-pocketed rivals (like Microsoft, Google and Apple) to hopefully create a market for e-readers that they could control.

Amazon took a giant leap of faith and created a product that could destroy their original business model. A risky move, but one that was as necessary for Amazon as it was for Polariod. (Polariod, of course, failed to recognize the move to digital photography and ended up declaring bankruptcy.) Amazon’s bold leadership is strong enough to recognize that either they can destroy their business model, or they can allow a competitor to do it. Bravo Amazon – we only wish more businesses were willing to be so bold. (Did someone just say “General Motors?”)

The Kindle is the Kleenex of e-Readers

Much as Apple’s iPod has become the standard for all portable music players, Amazon is pinning its hopes on the Kindle to one day be the electronic reader of choice. Clearly, Amazon’s price drop to the psychologically appealing $299 level was a move to further popularize the Kindle before rivals have a chance to become established.


Amazon’s latest version of the Kindle is both an amazing home run and an unexciting walk – all at the same time. The Kindle 2, as it’s also called, has an advanced display that truly reads like real paper. Even in bright sunlight, the Kindle acts more like paper than a computer screen; delivering clear text and distinguishably crisp images. A true home run that comes in sixteen shades of grey.

It’s a Great Reader, but Where Are the Books?

If you’re a voracious reader like TheManager you have two needs when it comes to your books: variety and speed of delivery. A faster delivery time is the primary reason I made the switch from traditional paper to an electronic device. Using the wireless connection on the Kindle, I can download books in less than a minute. That is, when the book is available for the Kindle.

Amazon claims over 300,000 titles are obtainable for Kindle owners, but that’s out of the millions of paper books you can buy on Amazon today. An unexciting walk, if you ask me. (Not a stumble, mind you, but Amazon had almost two years to Kindle-ize every book ever published. If Amazon’s rivals have an opening, it’s to have more titles more quickly available for their e-readers.)

Rest assured that the most popular books are Kindle-ready; including every one of the TheManager’s Top Ten Leadership Books of All Time. And, Amazon seems to make daily announcements to add whole categories of books to its device.

The Kindle Family

Amazon launched the original Kindle in November 2007 with a $399 price tag. The relatively minor issues with this device (i.e., battery life, storage and visibility in direct sunlight) were solved back in February when Amazon introduced the Kindle 2 at $359 (now $299).

If you want the very best money can buy, and you’re willing to part with $489, you can get your hands on the 9.7-inch Kindle DX. This monster works just as sound as the three hundred dollar 6-inch model, though with a much bigger reading area. It totally feels more like you’re reading an actual magazine or newspaper – plus, the DX comes with a rotating screen and holds 2,000 more books than its smaller cousin.

While books and periodicals for either device are generally cheaper than buying the paper copies, they’re still not what you might call “cheap.” Clearly, there is room to deliver some periodicals (and maybe even books) as ad-supported content. There are some reports that Amazon is exploring ways to make the DX feel even more like reading a magazine by including advertisements on its pages. Of course, there are numerous critics of an ad-supported Kindle; though if it means consumers can receive periodicals at a reduced cost, it seems worth it to us.

The Bottom Line on the Kindle

We’ve recommended a large number of books, rolling briefcases and even an online chat program to our readers: We are now proud to add the Kindle to our small list of products that we stand behind.

So, should you buy a Kindle?

If you like to read and hate to wait for even the two-day express shipping, I recommend buying a Kindle. If you like to read, but hate searching for books on your shelves, get the Kindle. If you like to read, and don’t like to carry books, magazines and newspaper around (especially on an airplane), buy the Kindle. If you want to read newspapers from all over the world, but not on your computer screen, buy the Kindle.

And, if you can afford the extra two hundred bucks, I recommend you step up to the DX – ultimately, you’ll be glad you did.

If you’re a casual reader who cracks just a couple books a month, you may want to wait for an ad-supported version of this or some other e-reader. The good news is that Amazon has set the bar so high that the next generation of e-readers may be worth waiting for…

Gaming and Cheating in Business – Why Companies Always Lose When They Cut Corners

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The Short Term or the Long Term

I’m often asked by young managers whether a given decision should be made for the short-term or the long-term well-being of a company; and I always give the same answer: both. No matter what the issue is, the ultimate decision should weigh the pros, cons and consequences over both the long and short terms.

That is not to say that I think that both are equally important – on the contrary – there is no doubt that the long-term health of a company is always more important than the company’s short-term health. Always. Always. Always. And, before you argue that without short-term strength a company will not have a long term; I’ll concede that you are right… and that you just proved my point.

Short-Term Health v. Long-Term Health

While the argument for short-term health versus long-term health may rage in your office, the truth is that no decisions ever really come down to an either/or – it is not a simple dichotomy. Sound company decisions always weigh long-term health against some potential short-term gain or loss. For example: do we take the gain today knowing that we will lose something (but not everything) in the future?

A decision made in favor of a company’s short-term viability so that this same company can be around in the future is indeed a decision made for both the short and long term. I would argue, in fact, that the company’s long-term health was likely the primary deciding factor in choosing the short-term strategy. You simply cannot make short-term decisions that disregard the company’s long-term well-being and expect to be in business in the future.

Short-Term Health v. Short-Term Wealth

Is it short-term health or short-term wealth you seek? Before you tell me that the two are never mutually exclusive, let’s ask the former executives of Lehman Brothers.

Because nearly all of us are paid more on the short-term outcomes we drive for our companies rather than what we provide over the long term, it is easy to see why some companies will game and cheat to maximize short-term revenue at the sake of long-term viability.

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

We’ve previously shared this Upton Sinclair quote and it is as fitting in this context as it was in earlier posts. Why would middle managers even begin to try and understand the importance of a company’s long-term viability when 99% of their compensation is related to the short term? We should not be surprised, then, that many companies – and even whole industries – routinely mortgage their futures for the sake of a few dollars today. (Mortgage indeed.)




Gamers and Cheaters – Hall of Shame

While there are a number of industries that routinely cut corners to drive a few short-term dollars to their bottom lines (the banking and casual dining industries come to mind immediately), we decided to focus the remainder of this article on two specific industries that habitually game and cheat, and still don’t get it.

The first industry is known in the automotive business as “Third Party Lead Aggregators.” Basically, these companies acquire contact information from consumers who are reportedly in the market for a car, then sell these as leads to automotive dealers.

Because the aggregators sell leads at a fixed price to car dealers, though purchase the leads from their affiliates and the open market at variable prices, the push to achieve a suitable margin (in the short term) means that the aggregators must purchase a significant number of lower priced, lower quality leads to mix in with a few higher priced, higher quality leads. While this behavior results in greater short-term profits, it comes with an increase in customer churn and a reduction of long-term loyalty.

Think of it as watering down the lobster bisque. In the short term you make more money, though over the long run people stop coming to your restaurant.

What About Watering Down the Herbicide?

There’s actually an acceptable practice in business for cheating and gaming one’s customers known as the Least Noticeable Difference (LND). This is a product strategy that involves improving gross margin via minute degradations to the size or ingredient quality of a product. The key is to ensure that the quality or size is reduced just enough so that most consumers will never notice.

The other cheating industry we wish to highlight is one that seems to thrive on making LND changes (on a weekly basis). Welcome to the lawn service business. This industry is dominated by national players like TruGreen ChemLawn, Scott’s and ServiceMagic; but also populated by countless local players with such creative and fun names as Grasshopper Lawn Service and Bizzy Bee Lawn Care.

You can’t blame this group for cheating. All of their customers live in nice homes and hire someone else to cut their lawns and kill their weeds – i.e., they’re not really paying attention. Additionally, much of the work in this industry involves spraying a clear liquid on grass; the results of which are not realized for weeks. Who wouldn’t be tempted to cheat and water down the herbicide?

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Over the last few weeks the crab grass began to spread (again) in our yard. As we seem to have to do every few months, we called our lawn service to complain. What did they do? The same thing they always do: They apologized profusely, blamed it on the “increase in rain” and promised to come out “tomorrow and treat the lawn again, for free.”

“Not good enough,” I replied. “You’re fired.”

While most of their customers are probably fooled by their reactionary customer service and gladly allow them to continue, we simply could not reward this gaming and cheating behavior any longer. The truth is they simply don’t use enough herbicide during their weekly treatments to be effective, and they know it. They’ve watered it down to maximize their margins and they’re crossing their fingers that you’ll never notice. If you do, they simply apologize and “give” you an immediate treatment for “free.” What they’re actually giving you in this one-time treatment is something they should have been giving you all along: Quality.

LNDs: No One Can Eat Just One

Used once, an LND strategy can be an effective way to make a nice short term improvement to profits. Unfortunately we generally assume (incorrectly) that we will make these changes only when most customers will likely never notice. Like crack cocaine or Lay’s Potato Chips, we sometimes become so addicted to making these LNDs that we can’t stop until it’s too late. Our customers have left us and they’re not coming back.

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Make no mistake, we’re not naïve. We understand that there are plenty of business gamers and cheaters who are successfully pulling the wool over the eyes of their gullible customers every day – and have done so for years. Whether it’s from collusion or a lack of competition in their industry, these businesses have (so far) been able to operate in a vacuum; living high on the hog via a long series of short-term decisions.

Odds are that this cannot last; that the customers will revolt or a new competitor will enter the fray offering real value. Whatever happens, rest assured that it will indeed happen, and that by the time the gamers and cheaters realize it, it will likely be too late. (At least that’s what we hope.)

NY Times Business Hardcover Best Sellers – July 2009

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New York Times – Hardcover Business Best Sellers – July 2009

Okay, how long can this thing last?

What will certainly be recorded as the most successful business book written in 2008, Malcolm Gladwell’s Outliers continues to dominate the best seller rankings for the eighth consecutive month. With success like this, Outliers truly stands to become an outlier itself. (For those who’ve read it, you may be asking whether Outliers would have performed so well had it been released in a bull market. Gladwell would likely argue in the negative.)

Given the unbelievable run normally reserved for motivational and self-help titles, we decided Outliers was due both a second read and a dedicated review this month. We even considered changing the title of this regular post to Outliers and the Other Hardcover Business Best Sellers.

What is the Best Book Released in 2008?

In January, we called Outliers “one of the best books released in 2008.” We can now definitively say after our reread that it is not one of the best books released in 2008… Outliers is the best book released in 2008; and second place isn’t even close.

Like similar mega-successful eye-opener Freakonomics, Outliers is not a “how to” book. In fact, it is unlikely that the book provides many readers with any practical knowledge that will easily translate into future success (for them). The only probable application of the lessons learned in Outliers is with future generations. Some readers of this book will certainly use the education gained to hyper-focus their progeny with 10,000 hours of hockey practice or computer programming. (Certainly this was not Gladwell’s intent.)

Outliers, like Freakonomics, is an interesting, enlightening and educational read. Its success during a recession is remarkable (since it provides little to no useful advice) and a testament to just how well Gladwell develops and presents its central theme and ideas. Gladwell knows his audience and he delivers what they want. He superbly delivers his educated observations in an entertaining and informative way.

Yes, But Will Pseudo-Intellectuals Enjoy Outliers?

Just like Freakonomics, Outliers has its detractors; and they are likely one in the same. Despite its success – or, more likely, because of it – there are those who declare they hate this book. (Hate is such a strong word, but it’s warranted here. Those who don’t find either of these books to their liking don’t simply recommend against them, they claim to literally and utterly despise them.)

Without detailing the most common complaints against a great read that (as of today) has spent 245 days on Amazon’s Top 100 list (currently at Number 15), let’s oversimplify it and say that those who dislike this book are mostly jealous, failed writers. Take this excerpt from an unbelievable 2,370-word diatribe masquerading as a review railing against Outliers on Amazon.com: “… McDonaldized salmagundi of information is itself is [sic] an inadequate account of the thesis proffered by Gladwell.”


Where do we start with this overly pretentious, unloved thesaurus user? His silly and revealing typographical errors? (Perhaps his book would be published if he would just proofread a little.) The length of his unreadable review? (This entire post is just 1,015 words long; 57% shorter than his Amazon attack.) His self-satisfying misuse of the made-up term “McDonaldized?” (I’m sure by his misapplication of the word coined by George Ritzer he means Outliers was written for mass consumption – shame on Malcolm for wanting to sell a couple of books.) Salmagundi? (Wasn’t that the guy who wrote The Satanic Verses?)

Okay, enough about the naysayers; other than to mention they remind me a lot of the fat guy in the Def Leopard T-shirt who told me in 1986 that “U2 sucks, man.” He was wrong, he knew he was wrong, but he couldn’t bring himself to like what others liked. His loss.

Alas, Outliers is not Perfect

Although it is the best book of 2008, Outliers is not The Old Man and The Sea and Gladwell is not Hemingway. Those expecting Hemingway or Salinger or Hugo are going to be sorely disappointed in Gladwell’s work; and in the work of the other 200,000+ authors who published books in North America in 2008.

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Why do we read? People read for a number of reasons, though most would say they read to be entertained and/or informed; and Gladwell’s Outliers is entertaining and informative. That’s why it could very well remain Number 1 for twelve straight months. (Unless we just jinxed it.)

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(While we said this article would be a review dedicated to Outliers, it would be disingenuous if we failed to brag that the cleverly titled 10-10-10, by Suzy Welch fell out of the Top 15 after just two months on the list. Way back in May, the AskTheManager.com editors bet that this tome and fellow May 2009 Top 5 read The Ultimate Depression Survival Guide, by Martin Weiss were headed straight for the bargain bin. Weiss’ drivel did not disappoint, and made it to the table-of-shame in June. It seems it took Welch’s formulaic pages a whole month longer. Look for either title on the clearance rack this month only if you’ve run out of good books to read.)

The Top Five – NY Times Business Hardcover Best Sellers July 2009 (to view the entire list, follow this link):

This
Month 		Last
Month
1 OUTLIERS, by Malcolm Gladwell. (Little, Brown, $27.99.) Why some people succeed — it has to do with luck and opportunities as well as talent — from the author of “Blink” and “The Tipping Point.” 1
2 HOW THE MIGHTY FALL, by Jim Collins. (Jim Collins/Harper­Collins, $23.99.) Companies fail in stages, and their decline can be detected and reversed 10
3 SHOP CLASS AS SOULCRAFT, by Matthew B. Crawford. (Penguin Press, $25.95.) A philosopher and mechanic argues for the satisfactions and challenges of manual work.
4 HOUSE OF CARDS, by William D. Cohan. (Doubleday, $27.95.) The fall of Bear Stearns and the beginning of the Wall Street collapse. 5
5 THE TOTAL MONEY MAKEOVER, by Dave Ramsey (Thomas Nelson, $24.99.) Debt reduction and fiscal fitness for families, by the radio talk-show host. 4