About Don Capener

Dr. Capener joined the Monmouth College business faculty in 2001. He is best known as the co-founder of Above The Rim Basketball that sold to Reebok in 1993. Capener recently accepted the Deanship at Jacksonville University’s Davis School of Business in Florida. As an Emmy award winning advertising professional in the Southern CA region, Don was the CMO and marketing architect for Above The Rim and ClickRewards.com. He directed national efforts for Visa’s promotional campaigns such as Visa Rewards at Frankel & Company in Chicago and San Francisco. He rose to Managing Director of Frankel’s San Francisco office. He is now a Professor of Strategic Management and Entrepreneurship and consults for start-up and mid-sized companies

900+ Horsepower Speaker sells NASCAR

In the world of e-bay sales, the market immediately and almost costlessly moves to the new equilibrium of supply and demand.  There is little room or patience for risk management, cost analysis, delays, or mistakes — it is a world simular to perfect information and frictionless movement. This is a virtual world; not a model.  On e-bay, there are minimal costs when moving goods but starting a new firm or leveraging information can be very profitable.  Rod Smith’s experience has been the ideal story of rags to riches. He started selling race car parts at swap meets. Rod learned what people wanted and studied the market and fan base of NASCAR. This knowledge was leveraged into a profitable e-bay “side” business in 2005. In 2011 it became a $300,000 income with over $1,000,000 in sales. Talk about a great retirement plan, Rod works 6-7 months a year spending the majority of his time in Charlotte, NC where Richard Petty, Childers Racing , Dale Earnhardt, Joe Gibbs and any other major NASCAR race teams are headquartered .  

For these NASCAR teams, the goods Rod Smith buys are what we in business  might say that “money is left on the table.” This gap is created because of the considerable time, knowledge, and capabilities it takes to create relationships with the NASCAR teams, offer a no-hassle guareentee to e-bay buyers to set his online NASCAR parts store apart from others.

Rod Smith knows what is possible and what actually happens to these 900 + horsepower engines and parts. It created an excellent niche for growth. Rod’s entrepreneurial venture, called the performance warehouse on e-bay, is planning even more aggresive growth for 2013. ”I have $200,000 in inventory that needs to be inventoried and listed for sale. That is a lot of capital tied up that should bring a 200% return.”

 Dr. Mike Connell said “An entrepreneur can step into this gap and offer a service for a price.  The entrepreneur has some special talent or ability (or economy of scale) that allows the entrenpreneur to efficiently produce the good or deliver the service.  If the price is low enough and the value created is large enough, there will be a viable market for the entrepreneur.  One of the frictions that entrepreneurs can often provide efficiently is the services of a middleman. Recently in the Midwest Entrepreneur’s class we witnessed two such middlemen speak about their business. 

 John Twomey was a grain dealer/handler in Western Illinois.  The farmer could (and some do) deliver their grain to the ultimate user or the barges at river — that is a costly thing to do and an activity at which the farmer has no particuliar comparative advantage.  Given this real world cost to obtain or share information, there is an opportunity for an entrepreneur/middleman.  Someone like John Twomey can offer the service of collecting the grain and moving it closer to its ultimate use more efficinently than the farmer can because of economies of scale and specialized knowledge.  In the real world, John Twomey was a part of the process that caused the market to jump to the new equilibrium price and quantity. 

 Rod Smith is another Monmouth entrepreneur that successfully bought auto parts and sold them on eBay.  NASCAR teams routinely replace all of the parts on their race cars with new parts even when the old parts are still working — often after only one race.  These slightly used parts are highly valuable.  The NASCAR teams could (and to a limited extent do) resell these parts in the secondary market.  Selling used car parts in the secondary market is a costly process that requires specialized knowledge.  Rod Smith travels to North Carolina and buys such parts wholesale in bulk.  Then he sorts, cleans, advertises, sells and ships these parts to buyers in the US and all over the world.  He can provide this service more efficiently than the NASCAR teams.  Rod helps the market move goods from lower valued uses to higher valued uses and creates wealth for society and a profit for himself.

 These two are good examples of entrepreneurial middlemen that exist in the real world but not in the supply and demand models of microeconomics.  Remember that an entrepreneur is an individual that sees an opportunity and takes personal risk to supply a good or service to society.  Entrepreneurs and middlemen are the grease that help reduce the friction of the market and move society to a better place.”

Rod used his extensive contacts in racing, positive cash flow, increased his appetite for risk by buying more in bulk and the most expensive parts (entire racing engines) to fuel his growth from just over $100,000 in annual sales in 2009 to $340,000 in annual sales in 2011. The NASCAR racing teams now know Rod personally and that he will buy practically everything they have to sell.  They keep a big bin for him at their NC facilities and wait for his monthly visits. He is a regular at all of the major racing team assembly facilities. He plans to achieve $500,000 in net revenues annually in 2012. Rod’s wife is the only other employee along with two interns. His wife does all of the shipping and had to quit her day job to support his business in 2009. Rod attended Monmouth College in the early 70′s but left to work full-time and race on the weekends.

He raced his own car three or four times a week for 25 years and met many people in the racing fraternity before opening his e-bay store.

Last year, Rod bought 20 Richard Petty racing, Dale Earnhardt Racing, Hendrix Sport, and Childress Racing engine blocks (because he is on the super “high trust partnership” with those accounts) and he successfully made a profit selling the items at a 100-300% mark-up often two years after he acquired the parts. The lag is helpful in terms of the marketing catching up with the newest trechnology, but it creates storage issues and a cash drain for Smith. He maintains three warehouses and has a semi “fully-loaded” every two weeks. He now  buys from amost all 70 NASCAR teams and even brokers new stuff to the newer teams. Rod has never hired an attorney or used an accountant until this year. He can buy “by the pile” because he knows what he sees. He makes an average of $81,000 a month during his busy season.  If asked, he can keep the parts for up to two years  (of the line Chevrolet racing engines) before offering it for sale if product development restrictions are necessary. Five local competitors vie for the same items, but he outspends and out-competes most of them.  

Smith said “It is fun to see big gains every Sunday”. Why? Evidently the real eBay buyers come out and buy on Sunday.

The Loyalty Continuum

Loyalty is the ultimate goal of marketers and it should be on the minds of anyone managing brand or new venture. It is often said that 80% of your company’s profits will likely come from the top 20% of your customer base. Another name for the top of that 20% is loyalists. Loyalists talk up their brand, actively engage in promotions or brand activities and rarely switch or  move even if discounts or incentives are offered. They give back in the form of spending more of their share of wallet and through referrals. In higher education, loyalists are the alums that go to homecoming and give back year after year. They go to the reunions and keep up with their former classmates even when it is years after they graduate.

Moving prospects from unaware to awareness is an advertising and social media challenge. In marketing Monmouth College, direct mail to prospects is the traditional route for generating awareness among graduating high school seniors, but today most research on college is done online by the prospects themselves and most importantly, their parents.

Once a college prospect is aware of your brand, you should consider the best strategies and tactics for getting into their consideration frame. The consideration frame is the “short list” of colleges the prospect wants to consider. Another way to describe consideration frame are the the finalists in their wish list.

The next step is generating trial. Trial is most often a virtual tour, visit with an admissions rep or  faculty member on the phone. The campus visit is the preeminent step in trying your school out to see if it “feels right” or “fits”. At this point you will begin to see real benefits from your marketing intiatives. Before you achieve true loyalty you need prospects to establish certain behaviors or pattern of brand perference. Many loyalty programs are built on the premise that the repeat/frequency phase is the most important link to loyalty because its establishes paterns of behavior (plus the financial payback begins from all of your marketing investments).

Repeat/frequency behaviors might mean coming up with an anti-melt strategy if you are an institution of higher learning. The ultimate objective is loyalty and word-of -mouth advertising and social media “pin-action” . Using the example of marketing Monmouth College, loyalty usually results in a current student or alum recommending Monmouth College to a friend or associate.

Brands should plan promotions and incentives for each step in the continuum so that a fresh supply of new prospects is maturing into loyalists one step at a time. It takes effort to manage these activities and measurement devices to monitor the development of prospects along the continuum. My job at Monmouth was to take what we had spent in the past and maximize  the impact. How a CMO handles these challenges varies dramatically by college. Each university must distinguish its unique benefits, programs or faculty to get attention. In higher education it a common practice to copy oneself after an aspirational peer.  In Clay Christenson’s new book on innovation in Higher Education, he is highly critical of any college that copies the Harvard model since Harvard developed into an institution with few market constraints. Harvard, with its multi-million dollar endowments in virtually every major school has few financial limitations. For the rest of us, we face the reality that our institution could be marginalized or completely destroyed (or squeezed) by pressure to follow the Harvards from above and the online/for-profit colleges or community colleges below.

In higher education, a proven marketing principle is that a high perceived value translates into brand preference and goodwill. The brand value equation provides a meaningful model that helps us understand how to build that goodwill. Ultimately the marketing plan, resources available, execution and learning from results determine the success of your marketing program. Marketing criteria and milestones established in the college’s business plan will become your recipe for brand momentum and success.

Prior to beginning any marketing plan I recommended that the institution conduct professional quality research on the key stakeholders and prospects (and their parents!) that look at your college but decide to go eleswhere.

The problem most institutions face is that marketing themselves is inherently repugnant to academics. For academics, marketing and advertising smacks as manipulation and “spin”.

Even the task of market planning requires colleges to do something that is not natural; to look at the mirror and admit your flaws or accentuate your strengths. Traditional universities were not designed to brand distinctively or address metrics of quality as benefits. Most want to be like Harvard, Stanford or Carlton. Christensen would say these institutions are trying to follow the Harvard model. He believes that trying to be all things to all people in higher education is often a way to unwisely invest in “me-too” strategies which are often misguided.

But starting a distinctive marketing program is not easy. Simply promoting a quality program in business or prominant faculty is like telling prospects you offer a “quality educational experience”—everyone says the same thing. Large universities offer wonderful facilities and sports programs, but do not successfully educate students around their individual and distinct needs.

If your goal is to attract prospects to your college you need to explain the value proposition. The value proposition is the value of the college program degree less the cost to get that diploma. If graduates consistently land their desired jobs and get into prestigious graduate schools you will not need to convince prospects to take a closer look at your school. The evidence and word of mouth will help the programs sell themselves. Today, parents and prospects look around a colleges web site, its program offerings , and decide if it is worth of consideration even before they speak to an admissions rep or faculty member. It is our job to convince them to visit campus (trial). If the prospects live far from the college, your job will be tougher. No matter what their incoming academic achievements, you will need to convince them that they will be a better off, gain more internship/ job prospects, get smarter, and be more capable of handling leadership opportunities when they graduate–otherwise or you will fail in your efforts to generate more word of mouth, social media, and most importantly, campus visits.

In our case,  we are a small college so we had an advantage of taking time to learn as much as we could about each individual prospect and their parents. We customized our approach and campus tour to their specific interests and our strengths. Asking larger, more selective universities to customize their admissions process, let alone marketing something distinctive and memorable is challenging. We do it everyday because we have to.

Becoming a “great college” for Monmouth was a long-term objective that involved getting everyone to believe our central message. Our focus on business and science in the context of liberal arts was unique so we created a campaign to reinforce our strong position in both disciplines . We backed up that commitment by raising money and building a $40 Million Dollar Center that combines the study of science and business. We interviewed close to 100 alumni working in both those areas and focused our promotion efforts on those that were successful in combing both.

Focusing on both alumni and student success represented a seismic shift in how Monmouth and higher education, broadly speaking, will measure high quality programs. Its a move away from the traditional focus on US News rankings or following the great research and knowledge creation universities such as Harvard. Our focus on teaching, active learning and smaller classes moves the Monmouth brand benefits towards an expertise in active learning and knowledge proliferation.

So at the end of the day, the success of your college is still depended on making new prospects aware of your brand, and getting them to seriously consider a visit. The loyalty contiuum works for all companies and non-profits too-everyone needs new customers.

But to be truly successful you will need to move prospects down that continuum to the place where all of that marketing investment pays off– loyalty.

Secrets for a successful job search

It makes sense to share the failures and successes, right? Well, I have been consulting with many of my graduating seniors about how to best search for a job. Finding that first job is usually the most difficult search you will ever undertake. I recently accepted a new position in academia as the Dean of Business for Jacksonville University’s Davis School of Business (pictured below) http://dcob.ju.edu/ so the experience is fresh in my mind personally.I have been told by my students that I helped them find internship and permanent positions so I thought I would share the general principles I use when discussing how to conduct a successful job search.

1. Invite contacts and friends to help you. Your network of references, friends, recruiters, and confidants are your most valuable asset.

2. Gain credibility with your current classmates or colleagues so that you will be seen as someone that your employer and faculty mentors would “hate to see go”.

3. In interviews, be prepared to tell stories of the challenges and lessons you learned that prepared you for the position you want. Show them you have had an increasing amount of responsibility and have been promoted.

4. Don’t plan to leave a job until you determine there is no way to move up or you have spent at least three years trying to make a difference.

5. Get the most/best education you can possibly afford and document the experiences on the job with an electronic portfolio. Lead with your education if you are new to the industry or lead with your experience when you have many successful years under your belt.

6. Return phone calls and emails promptly, but don’t be afraid to say no thank you.

7. Tell the recruiter what is important to you and ask for feedback on your initial letter of interest.

8. Ask anyone connected with the target organization for help and feedback in effectively competing for the position.

9. Study the target company and its key players, especially those that will decide the winning candidate. Be friendly and outgoing without appearing “fake”. Remember names of those you meet.

10. Listen more than you talk.

11. Don’t expect web sites like The Ladders, Green Ivy, Monster, or Career Builder to be much help. The industry specific verticals and word of mouth are likely to be the best leads.

12. Edit and refine your LinkedIn profile and be circumspect in your Facebook postings about the ups and downs in the job search. Ask for advice from the people who have the job you want.

13. Be patient. Don’t leave the day job until you have something solid lined up. Don’t burn bridges while giving notice.

14. Learn from Tim Tibow–be humble when accepting compliments and praise. Thank your teammates, mentor, and colleagues for helping you be successful

From Paris with Love

I am sure you will enjoy listening to entrepreneur Audrey Kabla tomorrow discuss her new start-up Epykomène in Paris, France. It isn’t just her french accent and knowledge of French culture that will keep you intrigued. It is her courage to launch a marketing agency in the middle of a economic downturn in France. She was given what equates to 1/2 her expected annual salary as start-up funding from what we might call the small business coalition in Paris. She has successfully worked with a number of high profile clients during her first year of operation.
Epykomène is a new agency that specializes in marketing services for luxury goods. http://www.epykomene.com

Audrey left Monmouth College in 2004 and worked for Hilton and other famous brands after graduating with an MBA in luxury marketing from the Paris School of Business in 2009. She will talk in depth about the thrill and peril of launching her own service business which is 1.5 years new.

Being at MC opened doors to the international, Showed Audrey another way to consider business & marketing (more quantatatively oriented than the Paris Business School, used intense business plan & rigor at MC). She credits her international orientation from her experience at Monmouth as critical in finding internships and and her first jobs afterward.

What she learned at Monmouth that was the most useful for her was the Entreprenerism Capstone Business 406, incorporating a Business Plan course & Marketing Communication (BUSI 367) which was one very practical course that Audrey already had in France  but her Monmouth professor (I’m blushing now) taught in another way ; treated the subject differently so that she felt she grew a lot.

“It was truly the first time I experienced to live with people from another new culture. I had to adapt myself still keeping my French background. In Rome you live like the Romans. That’s what I did and that’s what works worldwide.

“I did several internships and then had several positions in International companies.

Her main experience was in marketing and sales: at Dior Couture – a marketing research and survey company in Paris.

She had an internship and job at the Hilton Paris & Chicago – in the capacity of a sales & marketing assistant And then, she decided to leave her past brand management positions… to start with a new challenge  and create her own company.

“First, I knew I always had the entrepreneur fiber within me and knew I would have my small boutique hotel concept in a few years…. however I had no idea of the project externalization concept…

“Things just came to me thanks to this opportunity in hotel & real estate I chose to take – I worked on this project 6 months before leaving my company and slowly but surely —-Epykomène appeared as the natural next step. I am one of those persons that get involved to 150% into projects … when it’s not my own company – 2 years is long time on one project… and so it came to me that I could probably be a marketing manager for several companies at the same time if I could do it for one. I wanted/needed to take a new challenge now that I couldn’t put off until later. I choose this because I want to work/move wherever I needed to. I needed autonomy and I was not totally in a good place in my previous jobs.” We are proud to welcome Audrey back to Monmouth College

Seminary Street Success

Jay Matson did not dream of becoming an entrepreneur. But being “his own boss” always appealed to him since graduating from graduate school in the late 60′s. Despite stints on the east coast and San Francisco during the era of love-ins and drug use, Jay returned to Galesburg and married a entrepreneur, single-parent from the area. He and his wife started their first retail store with $2500 that was a “pay-off” from the Chicago Transit Authority for being hit by a bus.

Today he guided our 24 MC students on his journey in developing Seminary Street into Galesburg’s best known destination.

Over the last 30 years Jay has learned a lot about how to create a destination for tourists and locals alike. Seminary Street was shaped by Jay’s vision to be a celebration of historic city centers. He pushed the city to recreate the original brick pavers in the street and special lighting. He bought most of the property over the three block area and installed awnings and restored the original brick exteriors and windows. While acquiring many properties he become a restaurant developer and gained national publicity as someone willing to transform a meat packing plant (sitting idle for years as an “eye-sore”) into a thriving eatery. He became well-known as someone that could transform empty storefronts into a destination shopping and eating experience. When he could not convince existing bakeries to open a new location on Seminary Street, he bought all of the machinery for the bakery, outfitted the kitchen and hired a baker because he was convinced the neighborhood needed a bakery.

Jay built loft-apartments for people who wanted a city-feel in Galesburg and he maintains that these units command the highest rents in the city.

He saw opportunity where others saw risk. He had his share of failures too. He invested $750,000 in a restaurant in Macomb as WIU was growing in the 80′s. When the 12% loan on the $750,000 ballooned to 21% he almost lost everything he had built. “it was a humbling experience after our success in Galesburg”.

Jay is now in the process of selling all of his businesses and even the real estate. “I am ready to retire, and we do not want to have so many employees”. The opportunity to own an outdoor shopping mall in the middle of a small city should appeal to someone who has imagination and drive. “There are so many things that can be done here”, Jay said. The opportunity to expand Seminary Street and tie merchants closer together will bring big benefits to Galesburg and revitalize downtown.

Mike Bond’s Entrepreneurial Success

The founder of Innkeeper’s Coffee spoke to the Midwest Entrepreneurs class last Thursday afternoon. The discussion was open to anyone. In case you missed it….you can read about a classic story of how one of the best secrets in Galesburg became a $1 million business selling specialty coffee, desserts, and lunch. Mike Bond spent 20 years working in management for Bergners (http://www.bergners.com) and had a dream. Don’t be afraid to “dream big” Bond told the 20 students in attendence. “But be careful what you wish for”. His partner Johan worked in New York City and even opened the Belmont Kitchen in Washington, D.C. before starting Innkeepers Coffee in 1997. We thought we might open a nice B & B in Galesburg since we saw a classic victorian during our 20th year renuion, but that business model was not viable. “We listened carefully to our coffee customers, and we did a lot of what they suggested. They wanted food, so we added pastries, breakfast items, then a full lunch menu. They asked for desserts and we did that along with chocolate. It wasn’t what our business plan said we were going to do but it made sense to follow the business. Some of our best customers do business with us 21 times a week.”

It is amazing to see how Innkeepers Coffee succeeded in a small market where Starbucks failed by taking a greater share of wallet from each customer, thus avioding the need to sell thousands of cups of coffee monthly. The volume you would need to sell the 500-1000 avid coffee drinkers in Galesburg that have the means to buy daily coffee didn’t work for Starbucks but by going deeper and getting that greater share of wallet, InnKeepers has been very successful. There current challenges: Innkeepers best customers are 50+ and they want to appeal more to the 20-30′s crowd. Another big challenge–Finding great people who are articulate and willing to work hard.

Smith Speaks on Science Start-ups

Sherm Smith ’72 has long believed that science holds the key to solving the world’s largest problems. But the president and CEO of the Chambers Group, Inc., an environmental consulting firm, also realizes that business can’t be overlooked in the equation. He believed in science so thoroughly that he leveraged everything he owned to acquire and grow the Chambers Group.

“The most important problems, such as issues related to rebuilding Japan’s nuclear energy program or obtaining energy independence in the U.S., will be solved by scientists,” he said. “However, there is one big caveat: unless the scientists obtain grounding in project management and a sense of the balance between risk and reward, they cannot be successful.”

We can refine petroleum from slate or rock, but at what cost? Scientists who make an meaningful impact at his firm learn both the skills of good science and project management, scarcity and risk/reward”. So, combining science skills with business was Sherm’s ideal company marriage. “The fact that Monmouth College is investing in the best facilities and forums for the interaction is the best educational investment I can imagine.”

When choosing a college to attend, Smith said he was drawn to Monmouth, in part, by the national acclaim it had received in the sciences.

“Monmouth had a great reputation for turning out scientists,” he said. “I had heard that not too long before I attended, Monmouth produced more science graduates that eventually became Ph.D.’s than any other small college in the Midwest. I was convinced that future problems would be solved by scientists and engineers.”

He recalls being “traditionally trained” during that heyday for the sciences.

“Scientists at Monmouth were trained to be logical and speak the language of the discipline,” he said. “I learned statistics and the value of analysis there. The scientific process came to life for me at Monmouth. I learned about what was controllable and predictable and how to work with variables to maximize the impact of my experiments. Those skills are timeless.”

After graduating, Smith furthered his studies at the University of Iowa. Prior to his current consulting work, he was at Fluor Corporation, an internationally recognized company and environmental science pioneer.

“My career there was successful because of my science preparation and Fluor’s excellent training program,” he said. “My timing could not have been better. I started just after the first environmental legislation was passed and the Environmental Protection Agency was established.”

Smith became the company expert at Fluor, helping clients do such things as obtaining government approval for new power plants, establishing acceptable emission levels and regulating the sulfur release from the burning of coal and liquefied coal.

“All of this stuff was regulated for the first time,” he said. “It was a great time to join the industry, and I loved what I did at Fluor. My competitive spirit leads me to want to do whatever it took to be the dominant player in the markets we served. I took advantage of every opportunity I had to learn more science, engineering and business.”

As an example of how the scientific discipline comes together with business, Smith recalled working as the lead environmental engineer on the design of a new coal-fired power generation plant that Louisville Gas & Electric built in an environmentally sensitive area.

“We came to an impasse with the EPA and they refused to give us a permit,” he said. “The issue was the analysis and projections we provided for the air pollution dispersion and heat from the plant running at 100 percent of capacity. I was asked by our client, ‘How do we get around this regulatory impasse?’”

Smith provided three alternatives, but the more he studied his own work, looking at the project holistically, the more he was drawn to his third option, which consisted of design changes, but which could still potentially cost several million dollars to implement.

Ultimately, as Smith’s company worked with designers, they were able to increase the height of the release stacks by 15 feet, eliminating the need to reheat the stack itself.

“We found a solution that could be implemented for less than $100,000,” he said. “The solution combined good science with business acumen. The result was that we saved the client millions of dollars.”

Smith, who hired hundreds of scientists in his career and employs 250 with the Chambers Group, has advice for students who hope to go into that field. Part of their success, he said, will come from lessons learned outside the laboratory.

“At Monmouth, I was more than a science major. I was a leader in student government and in my fraternity (Tau Kappa Epsilon). I recruited volunteers and tried to make things happen. If you can learn how to lead volunteers in a fraternity or student government, you can hone skills for scheduling events, sequencing and motivational change. Those life skills were invaluable.”

Understanding the business behind science is also a key part of achieving success.

“Young scientists must understand the business model they are operating in,” he said. “The No. 1 reason we are in business is to make money, not do good science. We need to make a profit to be able to do good science. Good science alone doesn’t pay all the bills. Many scientists just want to conduct experiments as they did in graduate school. They do not want to deal with any of the project management demands or client mandatories, so they are worth less money.”

His other advice is for scientists to be well-rounded, and be realistic in their expectations.

“No client will pay a field biologist a $100,000 annualized rate for generic fieldwork,” Smith said. “The reality is that the U.S. market values those skills at a $35,000 annualized rate. Both the client and I are willing to pay more for someone who can do the science and manage the project. Putting to use what they have learned in the field is essential, but applying that knowledge for the benefit of the client gets my attention.“

Obtaining that high level of skills doesn’t happen overnight.

“It is worth more money to my company when scientists take a natural career path — a path that normally includes project management within the first five to six years after joining the firm. From there they can lead programs or write proposals. The scientists who are paid the most learn how to combine what they need to know with what it takes to get things done in a variety of situations.”

Oberhelman believes the CEO’s desk is a dangerous place to see the world

Douglas Oberhelman, CEO of Caterpillar spoke on campus today about four central topics:

  1. The last 20 years at Caterpillar and the next 20
  2. His personal legacy and dreaming big
  3. Accountability-the essential ingredient for successful employees and organizations
  4. Government policy

The first topic demonstrated Doug’s great optimism for the future. At CAT, the revenues in 1992 were $10 billion. Twenty years later it is over $60 billion. He expects that number to jump to 70 billion next year. Specifically he discussed the global expansion he has seen (or helped drive) from the perspective of leaving something better off than it was when you started. He expressed thanks for Lee Morgan, former CAT CEO (Monmouth College trustee chair) for leaving a legacy of positive momentum and “setting things in order” to work better for the “next guy; they set us up” [When I joined CAT], I was focused like any other recent graduate on paying off my students loans. I didn’t think, “I will be the next CEO of this company”. But as he had more international experiences, Doug saw the great potential at CAT and a vision of leadership grew in my mind.

Oberhelman has seen so many challenges met and positive changes at CAT over the last 20 years. The last time a CAT CEO spoke at Monmouth College (Lee Morgan), Doug reminisced about that earlier era. “There were 1991 predictions that the Japanese were going to take over everything, manufacturing, finance and even real estate; buying Rockefeller Center in NYC and everything in Hawaii. Now everyone predicts the Chinese will be dominant in a few years and own everything”. Doug does not agree with those pundits, but expressed knowledge that we face some major choices as a nation, including political leadership. This is the least productive political environment in my lifetime–it must be improved to realize greater prosperity and growth as a nation and overseas.

“Growth is good and dreaming big is essential for anyone who wants to be successful”. Oberhelman was optimistic about CAT and the global economy. Even though 20 years ago the world had 1.5 billion less people living on the earth, the last twenty years saw almost 3 billion people lifted out of poverty.

“As a company, we are focused on productivity. Productivity comes from quality built equipment and products that work 24/7. As a company we have proven we can build those quality products. [But they are not the cheapest available] Nowhere is that more obvious than in the Chinese where there are 100 + competitors and more construction than you can imagine. CAT plans to operate 26 manufacturing facilities in China (they now have 17 factories in operation) where they ran only one sales office in 1992. We built a second company under another brand name to sell less expensive equipment to supply demand in Chinese domestic market. It is our core business to focus on value, not price  so as other less expensive products enter the market we were persuaded to produce product at a lower price point in China. I do not see that as a future direction, but it works in the current state of the market there.

He dreams under his watch he will “set them up” (future CEO’s of CAT) for even greater growth, maybe “seven times” its current revenue projection of $70 billion to $490 billion in 2032. Oberhelman would be happy to see the number of employees increase three-fold from 150,000 to 450,000 worldwide under that kind of revenue growth. CAT hopes to provide job opportunities and prosperity everywhere they operate. As an example of the commitment to stay ahead in quality and durability, CAT spent $450,000 on R & D in 1992 and recently spent over $2.5 billion in 2011. They successfully exported $3 billion of products in 1992 and project well over $20 billion in 2012. “95% of my customer base is now overseas”.

His vision of accountability and leadership is unique. “I like the metaphor of running a hardware store”. When someone calls or comes in with a problem you know you better answer the call [because Walmart is down the street, and cheaper than you are]. You find a way for CAT products to be the solution.”

Management is the area where “the desk is a dangerous place to view the world. I trust my team and let them go”. Doug makes it a practice to see at least one customer a week. Oberhelman is definitely keeping it real at CAT.

 

What do Dr. Dre, Owl City, Roberta Flack, and Styx have in common?

What do Dr. Dre, Owl City, Roberta Flack, and Styx have in common? From their individual music styles, one would be hard pressed to find a common denominator .My guess was they are all famous artists in completely separate music genres with huge followings. But all four artists are or were promoted and managed by Ron Spaulding. Ron is currently the President of Fontana Distribution, the music promotion arm of Universal. Universal Music Group is owned by Vivendi Entertainment http://www.vivendi.com/vivendi/-accueil-en-, a huge entertainment conglomerate based in Paris.

What does all of this have to do with entrepreneurs? Mr. Spaulding runs what I characterize as a venture capital firm for popular music. He sees hundreds of artists, promoters, music studio owners, and agents each quarter. He and his staff funded $26 million dollars of music and marketing resources for over 100 different groups. Fontana funds the promotion, distribution, and in-store display for both retailers such as Best Buy or digital content on i-Tunes.

What did Mr. Spaulding talk about yesterday? He stressed integrity, curiosity, embracing change, and straight talk. He developed his contacts as a retail buyer of music for Shopko Stores, and was involved with retailors such as JCI, MusicLand, and Best Buy in Minneapolis. One of his heroes is Howie Long, who asked everyday what he could learn, or how he could improve his performance on the football field. He said we all should be open and vulnerable to others ideas and new methods. He reads voraciously and his recommendations include Soar with your Strengths: http://www.amazon.com/Soar-Your-Strengths-Revolutionary-Philosophy/dp/044050564X/ref=sr_1_1?s=books&ie=UTF8&qid=1332945743&sr=1-1

An inspiring book for business managers and individuals on how to achieve the absolute best by focusing on strengths and steering away from weaknesses and The Seven Spiritual Laws of Success:http://www.amazon.com/The-Seven-Spiritual-Laws-Success/dp/1878424114/ref=sr_1_1?s=books&ie=UTF8&qid=1332945921&sr=1-1

Mr Spaulding begins each day reading the NY Times, WSJ, LA Times, and USA Today. He worries about the sense of entitlement with teenagers and college students. He believes you must earn and learn to move up and stay relevant. It is not enough to know the right people, or have the right toys. “Dreams are the most potent driver for success. You cannot achieve success alone so you need to treat people with respect. You have to exercise faith too”. He is very clear with expectations for employees and business partners. “Everyone on my staff can recite our sales goals and key drivers for Fontana’s success”.  

“I was so blessed to graduate from Monmouth College. I came from a background that did not encourage study at college or business as an occupation. It was a great leadership opportunity for me and I found out I did not want to be an attorney during my time here”. One of Ron’s greatest accomplishments was helping Hip Hop become a recognized music genre 15 years ago. His greatest challenge has been helping the artists and industry come back from the decimation caused by Napster and free file sharing. “We (the music industry) lost 50% of our revenues and the fight back has been grueling. I am proud to say Fontana has been one of the few profitable music publishers during the last four years with the growth of i-Tunes and digital publishing. Our international opportunities continue to grow and we plan to see exponential growth in the next 5-10 years overseas. The recognition that artistic material is intellectual property that deserves protection is growing in places like China. That means there is great opportunity out there”.

Spaulding majored in Government and Philosophy and was an ATO while here at Monmouth College. Part of his experience most valuable to Ron was his leadership opportunities. He served as President of the Pre-Law Society, Politics Club and ATO. Mr.

Spaulding has held leadership positions within the entertainment industry including Priority Records, Elektra Entertainment Group, and Warner Music Group. Fontana provides expertise and resources as the “best in class” operator for independent labels and artists crossing all music genres. His primary interests are golf, entertainment, motorcycles, new technology and business development.

Brandon and Kathy Bentz Create Fusion Tech

Manufacturing is making a come-back in Western Illinois and Eastern Iowa and this is no where more obvious than outside Roseville at the Fusion Tech Headquarters. I was at their offices with my 24 students yesterday for a tour and Q & A session with Brandon and his senior staff.

There is a positive buzz in the air. Brandon recently annouced a major expansion with a new $2.5 Million Dollar facility and 72 new hires slated for the next 12-18 months. Fusion Tech evolved from a installation team approach for big companies such as BPI http://www.beefproducts.com/ to manufacturing their own brand of food processing equipment. Recently, Fusion Tech expanded its roster of major manufacturing clients to include John Deere, Case, and many other major exporters. Brandon estimated around $10 Million in annual sales but that projection shifts with the economy. Fusion Tech is a job shop that started on Kathy’s parents farm house garage in 1997. They specialized in quick turnaround of precision crafted machine parts for industrial companies but quickly moved into manufacturing. Their manufacturing philosophy is tied to the latest technology, but most importantly, the shifting needs of their customers.

One example of how far they have come is their current project with Hitachi Mining in Japan. They are making critical parts for the largest trucks Hitachi builds, parts that other job shops could not create cost effectively. “We turn around orders in weeks rather than the industry standard month or two”.

Fusion Tech has grown by word of mouth. They pride themselves on doing quality work with the latest tools. They demonstrated the water drills, lasers, and other machinery used in creating football field sized AC units, food processing air purifiers and handlers, and signs or precision parts created by their staff. The only thing Brandon mentioned that was a big impediment to even more hiring and greater profitability was the high taxes in Illinois. “Individuals need a tax break too”.

Brandon claims he spends less sleepless nights than in the past over worry he could get financing for the factory expansion or that his company was too focused on his largest customers. He started with only $200 and some tools in the garage. “Despite the fact that key employees and I spent 100+ hours on the job some weeks, I enjoy what I do– installing our products, and I realized that if I had not started this, 50+ people and their families would have to find work somewhere else. It was a dream that turned into reality over the last 14 years”.