Define Mentor

I learned last evening of the passing of Henry J. Gerfen. For me Hank came to define what a real mentor is. Beyond being a coach or guide, he was someone who presented me with great opportunities and then pushed me to realize them. He would dispense some advice but he would also ask questions. A lot of mentors will tell you the answer to a problem. The really good ones help you think through it and find it on your own.

Hank would also drop pearls of wisdom. Three that have always stuck with me were:

1. Don’t answer questions that aren’t asked.
2. Don’t surprise clients.
3. If you bring me a problem, also bring me a solution.

When he interviewed me to come work as an assistant account executive at the agency where he was president, Hank said that if I took the job with its very small salary he would teach me everything he knew about marketing, advertising and account work. He was a man of his word. I will miss him very much.

“We Have Enough Customers”

Have you ever heard that from a prospective client? We hadn’t either. Following a presentation about our capabilities during which the marketing team of the prospect seemed very engaged, a director asked what would be their best route to growth: finding more customers, selling customers more or making more on what they sold. Just as we beginning our response the business owner chimed in with, “We have enough customers.”

During the awkward silence that followed that gem of entrepreneurial wisdom, I thought back to the Emperor’s response in “Amadeus” as to why he did not like the opera. “It has too many notes,” he responded. Guess the Emperor survives but with a different set of clothes.

If you have ever had a client or prospective one make a comment like that let us know. We’d also like to hear if they are still in business or sold their company for less than they wanted … because value growth ultimately relies on the customer.

Synergy: Buffett Style Part 2

The M&M’s TV spot with the GEICO gecko which began to air last week is the latest example of Synergy Buffett Style. How you say? Well remember back in 2008 when M&M Mars acquired Wm. Wrigley? Remember who the financing partner was to the tune of $6.5 billion? You bet … Uncle Warren. Check out the CNBC interview here.

But our question is what’s next? If you have a guess feel free to comment. Not a contest. No prizes. But we will publish a tip of the hat if you happen to call one.

Watch for the latest Growth Trinity Group white paper later this week — Phoenix Brands. It’s the follow up to “The Major Problem with Minor Brands” that I wrote several years ago. If you have a brand that’s about to slip into the “all others” category of the next quarterly report you will want to check it out.

JCPenney Just Might Make It

If you want to see what a retail turnaround looks like head to Sears … then walk to the opposite end of the mall and check out JCPenney. That’s what I did after the JCPenney year-end conference call last week reported some positive numbers.

Regular readers know what I think about the increasingly dismal Sears adventure as the once great retailer circles the drain with increasing velocity. But I really had not paid much attention to JCPenney since the reign of Ron Johnson, former Apple retail guru. When Mr. Johnson announced the end of sale pricing we had disturbing flashbacks to Sears in 1988 when then chief Edward Brennan gave everyday low prices a whirl. Didn’t work then. Doesn’t work hardly ever.

The problem with these strategies in a “tell me what you did last quarter” world is that it is based on the desire to bring in a new base of customers before your loyal customers defect. They defect because you have changed from the store they liked and where they frequently shopped. Would Sears customers who went shopping in search of a deal keep shopping when the deals disappeared? History proved they wouldn’t. Would those who loved the Apple genius concept suddenly start buying shoes at JCPenney? Unfortunately not quickly enough, if ever. Retail turnaround is no place for a lifestyle strategy when what is needed is a two minute offense. Driving customers away and selling less to the ones who remain is a non-growth strategy.

But let’s go back to where we started. After the conference call I took the time to visit a local JCPenney and was stunned. Especially after walking through the Sears at the north end of the mall. JCP was clean, fresh, well stocked. Not like any JCP I had visited in the late 20th or early 21st century. Neat displays of housewares. Crisp shirts and slacks all in a row. Nice signage. New floors. A Sephora store within a store. And most importantly, smiling customers interacting with helpful sales associates. What a delight.

I could not help thinking that maybe with a little more time Ron Johnson could have pulled it off. If only he hadn’t turned his back on the current customer while trying to attract new ones. It also reinforced my belief that the game clock is running out for Sears.

Oh and by the way, if I were Kohl’s I would watch out. That light in your rear view mirror might just be JCPenney.

Synergy Buffett Style

Berkshire Hathaway’s BNSF railroad is planning on buying 5,000 next generation tank cars according to Laura Stevens’ article in today’s Wall Street Journal. Those of you who have been following my Learning from Berkshire Hathaway series will know that Berkshire is also the owner of industry leading manufacturer Union Tank Car and tank car leasing company Procor Limited through their Marmon Group. While BNSF will probably spread the wealth around, I’d expect their corporate cousins to benefit substantially.

That’s synergy on a big scale. Got to love these guys.

Radio Shack Brand Redux 8.0

Great piece in Yahoo News today by Rob Walker about Radio Shack’s effort to remake its brand for the umpteenth time. Check it out here. After you do tell us what you think Radio Shack should do.

Buffett Invested In 3G Capital, Not In Heinz

Many people may have been surprised when they read Annie Gasparro’s piece in the Wall Street Journal on Tuesday about the cost cutting going on at H. J. Heinz. The purchase of Heinz by a Brazilian firm in 2013 was one of Warren Buffett’s biggest investments when he bankrolled 3G Capital to the tune of $12 billion.

The surprise resulted from Mr. Buffett’s frequently stated desire to invest in good companies run by excellent managers. And he has repeatedly backed up that position with the hundreds of operating companies Berkshire Hathaway has acquired still managed by the former owners. It is that “hands off” approach that we have frequently used as a counterpoint to Eddie Lampert’s micro-management of the death spiral of Sears.

But if you think about it for a moment, Mr. Buffett is true to form. He wasn’t investing in the management and status quo operations of Heinz. He was investing in the management of 3G Capital and what it can do with Heinz. The rude awakening for many now former Heinz employees is that they thought that things would just keep motoring along as usual because Warren Buffett never meddles with operations. Maybe they should have tried to contact as few former Anheuser Busch managers before the “We’ve been acquired by Warren Buffett” celebrations began. Berkshire Hathaway was a significant AB shareholder who welcomed the InBev takeover engineered in part by Jorge Paulo Lemann, co-founder of 3G Capital.

We’ve Moved!

The GTG Blog has moved to its permanent home at the Growth Trinity Group website. It has also had a name change. Head this way.

Unknown Unknowns

Had a discussion the other day with an old friend about this quote from Don Rumsfeld about the Iraq war:

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”

Got to thinking that it also applies to a business or brand in the context of customers.

• The Known Knowns: We know who our customers are.
• The Known Unknowns: We know who we don’t have as customers because they are customers of our competition.
• The Unknown Unknowns: There are potential customers who we don’t know that we don’t know.

The result is a new spin on our Three Mores Growth Principle which is founded on the fact that the value of a business or brand ultimately relies on the customer. In a nutshell it asks you to think not just about stealing customers from the competition but thinking about what you sell as the solution to a need another entirely different group of customers might have.

Huggies begets Depend as one example. Made us think we might be on to something. Plus it fits right in with our Rule of 3 approach.

Is Sears Committing Businicide?

We coined the word “businicide” a while back and define it as the act of killing a business by abusing the customers. This abuse can take many forms but yields a condition that is the exact opposite of our Three Mores Growth Principle.

1. Instead of growing by finding more customers, existing customers are being pushed towards the exits.
2. Instead of growing by selling customers more, those approaching businicide give customers reasons to buy less.
3. And the only way they know how to make more on each sale is to slash costs no matter the impact on quality.

The news last week that the Kenmore brand continues to lose ground to the competition and more customers are heading to Home Depot and Lowe’s for appliances is just the latest example of what looks like a Sears businicide wish.

Regular readers know that we have been pretty critical of what has gone on at Sears. We actually started the criticism back in 2004 when everyone on Wall Street was heralding Eddie Lampert as the next Warren Buffett. We did so because so many writers employed rather simple analogies like retail ownership and owning a troubled first business. What they failed to realize is that Mr. Buffett has fundamentally different approaches to management, customers and types of businesses Berkshire Hathaway buys.

This weekend we re-read some of the glowing praise heaped on Mr. Lampert in 2004 and the expectation of what he would be able to do with a combined Kmart and Sears. It has provided fodder for an interesting new white paper. You will find it posted on the Growth Trinity Group website on Wednesday. See you then.