At Monmouth College, we admit 20-30% of students who are “undecided” about their major. We currently have more than 200 business majors who do not know what specific aspect of business they will focus on either. Frankly, I am not concerned despite the high cost of education that a student focuses on international business or entrepreneurism, my specialties, or finance and accounting. I am more concerned that colleges make it practically impossible to come to college undecided or change majors and graduate in four years. That is one of the biggest secrets in higher education today.

It is practically impossible to finish in four years unless you make a plan and stick to it religiously. That sounds good but in practice, but the college years are times of discovery and those revelations often change the path a students is pursuing. Great schools provide a general education platform that is flexible and broad. But the major area of study is where there is little to no flexibility. Specific sequencing can make it practically impossible to complete the undergraduate degree in four years. Examples are engineering, education, some “hard sciences”.

If prospects choose a quality college with excellent programs like those at Monmouth, and study topics that interest them, they will graduate on time. Their passion and smarts will propel them towards a rewarding career too. Why? It is our desire as humans to do more than survive–we want to prosper and thrive. Those aspirations are the most powerful motivators towards success in any business. Despite those yearnings to prosper and make a difference, graduates face some great barriers: high unemployment, taxes, commercial restraints by government, and limited time and capital. It is not easy to win at business.

Plus from research we discovered the average American is forced or elects to change jobs at least seven times over a 40 year career. That is why a broad based education lays the foundation for business success. Learning a little about a lot of things can pay off. That is the philosophy of the political economy and commerce department at Monmouth College.

Additionally, the pace of change in the global economy is rapid. The New York Times Columnist Thomas Friedman said that “getting an education today is like training for the Olympics without knowing what sport you will end up competing in”. Undecided majors that learn from the best faculty and seek learning from the best books and theories will be able to translate that knowledge into problem solving capabilities and entrepreneurial success. I just met with a former student yesterday who is starting a sports marketing agency. He was not a marketing major. But he has smarts, passion, and drive on his side. I would not bet against him. Even undecided majors can be a big success, when the college or program remains flexible.

I often tell my students that management’s philosophy can make or break a business. A good example is the decision to practice open book accounting. The recent settlement between the NBA Owners and the players union focused on the split of revenues from basketball operations. The players have claimed  57% of net revenues since 2003 when the last collective bargaining agreement was signed. Most teams/owners claimed they could not make enough to cover this level of profit sharing so they locked out players on July 1st of this year. The league has been closed for business for the last five months.  http://www.washingtonpost.com/blogs/wizards-insider/post/nba-lockout-owners-players-reach-tentative-agreement/2011/11/26/gIQA5EeRyN_blog.html

Entrepreneurs succeed in a large measure according to how well they recruit and retain talent. One reason employees leave a position for another is higher compensation or the “potential” to make more through stock options or profit-sharing. Without profit sharing, players claim the NBA owners are making millions and stingy with player’s salaries. Owners complain that players high expectations and demands drive them into the red.

In order for profit sharing to work as part of an employee’s compensation, the workers or employees must agree to take a portion of the total net revenues whether they go up or go down. In some ways, the employees that accept profit-sharing become part-owners because their compensation contains a fixed and variable amount tied to the success and profitability of the venture.

Accepting a profit-share and opening the books are both conscious decisions that increase the potential for team oriented goals and decisions that impact all contributors to the success of the business or venture. The risk is misunderstandings and combative relations when a cohesive strategy is not agreed upon.

Employees or in this case, the NBA players union had access to the financial data for each club and from league operations since 2003. At a minimum the players wanted to see the franchisee’s income statement and balance sheet, but that information does not provide the “granularity” to determine what products are losing money and those that are extremely profitable.

In the ideal situation, a profitability analysis is provided along with a list of highly compensated managers. This requires a high level of trust between the owners of the business, its management, and the employees. This level of trust opens management up to criticism because under open book accounting, management’s compensation, major expenses, and income statements can be accessed and scrutinized by the employees or their union representatives.

On the other hand, management shares the real costs of doing business which is often hidden in public accounting reports. Employees often have the misperception that the company or certain profits are much more profitable than they really are.  For the season to begin the NBA owners required a reduction to 49% in the player’s profit-share. There was certainly more “give and take” to the final agreement, but we do not have those details yet.

For NBA players and owners, the 2012 season will be the one when all stakeholders decided to “share the pie”. For the NFL, the players and owners believe they can grow the pie and benefit all parties. It has been one key ingredient in the NFL’s success and sets the standard for all of professional sports.

I recently read an article praising the Oberlin College community for embracing a site that promotes the use of profanity in describing Oberlin as a great place to go to college. As a marketing professional in higher ed, I was surprised to see praise and compliments for a student or alumni site that promotes this site as innovative and creative.

In my review, I find both the site and the article praising the site as cheap. It uses some of the most vile profanity I have seen officially connected to any institution to gain attention and social media posts. Using this level of profanity is akin to using sex as an attention getting device. It is a short cut to gaining attention, but like the Go-Daddy.com ads, it only keeps your attention for the shock value, and lacks the substance and creative content that would hold the audience’s attention in the absence of the obscenities.As the CMO of the college associated with this site, I would be embarrassed.

As advice to entrepreneurs vying for attention, don’t steep to this type of marketing and social media because the long-term damage to your brand’s reputation could be irreversible.

One of the marketing mysteries for most entrepreneurs is the evolution of their brand. How can I build brand equity? What can I do to leverage the power of my brand? How can I encourage more brand loyalty?

A brand is both intellectual property and a living, evolving asset that can be monetized. It differentiates one product from another when they are competing in a category of goods or services. Greater brand awareness can translate into more sales, but this is not a given. It is not a magical, mysterious process though. 

The brand building process requires investment capital and a strategy.  It begins with an understanding of the loyalty continuum. Understanding the importance of each step in the process does not result in brand equity, but knowledge and superior execution of tactics related to each step culminates in loyalty.  

What are the steps in the continuum?

1. Generating brand awareness-a brand that is not known is usually not considered or ignored by buyers unless it competes strickly on price

2. Consideration frame-differentiate and enhance the image of your brand and it will be considered a “viable choice” in a short list of brands for that category. An example might be three or four car models you would consider if you had to spend $30,000 on a new sedan.

3. Trial-whether it is a test drive or trial size of perfume, buyers want to try on or experience your product before they buy. How can you facilitate trial and incent more individuals in your target market to “try it on”  

4. Repeat/frequency-once buyers have purchased your brand, buyer’s remorse is the enemy of loyalty. You must reenforce the buyers decision and provide reasons and products they will want to purchase again and again. This behavior is habit forming and is closely tied to creating loyal customers

5. Loyalty-loyalty is the holy grail for brands because these buyers will accept no substitues and pay more for your brand’s version of quality. Apple is a master of moving people from trial to loyalty. See Alex Morgan’s comment to my blog on the Perfection Trap

Many entreprepreneurs fall victim to what I call “the perfection trap”. What is the perfection trap? Working really hard and spending all of your resources in rehashing or reformulating a product that is 95% market ready. My advice to most entrepreneurs is to launch before you have it perfect. Then fix the bugs or problems during an in market test. Call it a “beta” product or product 1.0 but don’t get trapped in seeking perfection; never able to satisfy your customers basic needs. The “getting everything perfect problem” varies by industry but my experience in academia has taught me that what we think is perfect isn’t usually as close as we think. What our client thinks is perfect is not easily discernible without an experiment or test market.

Why can’t we just ask our client what she wants? Because she will “not know it until she sees it” or may not know what she really wants until she has to open her wallet and choose it over everything else she desperately needs to buy. There is no replacement for a test run with real customers that have to spend their own money on your product. You can’t control most external factors or trends that will impact the success of your product either, so let go–incremental improvement is more proven to drive entrepreneurial success than “hitting a home run on your first at bat”.

When I was doing marketing consulting I worked for a venture that suffered from the perfection trap. The CEO thought his tireless demands for perfection would create the perfect teen spending card based on the Visa platform. Despite some good technology and marketing we experienced a failure to launch.

Let me try an illustrate my point outside the realm of business. My daughter told me about a friend who has frequent headaches. She manages her pain using powerful drugs. The problem is the drug’s side-effects can be as damaging as the headache pain. This is analogous to getting it perfect. She feels perfectly well when on the drugs but comes down hard after its effect wears off. Most importantly, to achieve perfection she sacrifices her sensitivity to the outside world. Feeling a little ache or pain or even a headache periodically keeps you away from the debilitating side-effects of drug use. You feel the outside world rather than constantly balancing the facade you call perfection. It hurts to hear you did not “get it perfect” or even close to right, but that customer feedback is the key to continuous improvement and future product success.

Usually, entrepreneurs learn more from consumer or client feedback when the product has been “run through a few laps” by expert practitioners. In Japan, many companies are founded and launched based on an angel investor or corporate benefactors believing there is a market niche where no competitor is adding much value or they see companies in businesses they do not want to be in to satisfy customer demands. These business are ideal spinoffs for would be entrepreneurs who are “willing to make it pretty good for now, and better in the future.” Don’t spend thousands of dollars and three additional months getting some thing that is 95% there, perfect. You likely to find that your efforts stymied growth, deflated morale, and increased your risk because of the lack of in market data testing.

The silver market is described as those who are reaching retirement age now or already 60+ years old. They are referred to fondly as “baby boomers” or consumers born before 1960. In the United States, Europe, and Japan, these senior citizens are growing at an alarming rate comprising almost 20% of those nation’s population (Kohlbacher, 2008). This demographic shift creates a challenge to marketers, and societal issues for government policy makers to grapple with. For example, many families are providing home care and financial support over much longer periods for their parents and grandparents when compared to the generation in the work force after World War II. In both the US and Japan, the social security and private programs (funded by retirement plans, pensions, and 401 K’s) were originally designed, for workers who would retire at 55 or 60 and die before age 70. Today, that is not the reality. This market is changing due in part to longer life spans and better health care maintenance and access. Understanding the consumer mind set and dreams and expectations of older consumers can lead to great business opportunities. The senior market is now positioned to grow dramatically in product categories where services are not widely available or product selection is limited. Examples of a growth market are home health care, retirement travel, health care suppliments, prescription drugs, and financial services . The Japanese practice was children take care for their aging parents in the multi-generational home. This practice conflicts with the modern convention that a worker changes jobs and locations 6-7 times over their career. It is more and more difficult for modern families to acquire or “free-up” the space and time to care for their aging parents (Kohlbacher, 2008). Therefore, the opportunity to develop and maintain successful assisted living facilities or home health care could be part of a new business plan. There are too many opportunities to define all of them. The opportunities to market to older Americans offers a great opportunity to any entrepreneur willing to venture into services driven by senior demand.

Many people like myself are questioning why the NBA continues its strike/lock out. Basketball is the fastest growing sport in China and other Asian countries. It is a popular Olympic sport with high international visibility. There are changes in the technology of sports broadcasting and consumption making it possible for fans all over the world to follow their favorite players and teams. Yet players, owners, and even fans do not realize what a big mistake it is to continue the strike. Major League Baseball has a history of combative labor relations between its owners and players. The players regularly threaten to strike for more money or hold out for more money or free agency. The owners claim they are not making money yet no MLB team has true open book accounting. This combative relationship is what led to a diminished fan base in the 1980’s and a surge in popularity for the National Football League.

Currently, there are more appealing sports and entertainment options for Americans to spend their money and time and the longer the NBA strike persists the more likely those fans will never come back. Examples of other attractions include NCAA basketball, football, soccer, baseball, movies,  music, and many others. Additionally, Americans now spend less money and leisure time (as a percentage of their income) attending sports compared to Europeans or Latin Americans.

Unfortunately, as with any sport, the nature of the game itself is not enough to attract the interest of the mass public. Professional basketball must develop and promote players and coaches who embody the personality traits and style that fit the fan’s tastes. This has been a problem in the NBA, which is often connected to fighting or promoting the ultra rich lifestyle of its most successful stars. It appears as if ego is preventing the NBA players from agreeing to a salary cap which is essential for the leagues survival.

In summary, the key issues preventing an NBA labor agreement are the addition of a “hard” salary cap and open book accounting. Owners must be willing to open their books and share profits, so if the league grows through expanding its fan base in China and other markets, the players can earn a percentage of those profits. Players should be willing to take a smaller percentage in guaranteed  compensation and be willing to profit as the NBA pie grows internationally. Let’s hope the level heads succeed and convince a majority to put their disagreements and grudges aside for the good of professional basketball.

Two well-known models in use for strategic planning have their roots from the Harvard Business School. The analysis of strengths, weaknesses, opportunities and threats (SWOT) was a popular Harvard model from the early 1980’s . It is the most commonly used model for identifying the key advantages and disadvantages of products and services. It is also helpful in analyzing competition.

Michael Porter’s Five Forces is another useful model by whichcompanies can analyze their market position within an industry. The Five Forces model goes beyond the typical Strengths, Weaknesses, Opportunities and Threats analysis and  identifies ways in which the market is susceptable to change from external forces such as technological advances. It forces institutions to predict or explore substitutes .

Porter’s thesis with Five Forces is that the level of competitive rivalry is paramount to how to best strategically plan.With the Porter model, outside influences such as buyer’s power are considered along with other key questions not included in a SWOT analysis. Porter, who hails from the Harvard Business School, first developed the Five Forces Theory as part of his strategy treatise, “The Competitive Advantages of Nations (1986). Porter’s Five Forces theory provides an alternative framework to analyze markets beyond the strengths, weaknesses, opportunities and threats paradigm and is highly recommended for new ventures or start ups.

Jack Welch, former CEO of General Electric said “ Look, in a time of drastic cutbacks, spending money on anything can set off a deafening sound and fury. But don’t let the noise overwhelm you. In fact, try to break through it to get your people to listen as you talk about down-the-road ideas.

The future you describe will need to be exciting and promising to overcome organizational fear and cynicism. You just have to help people understand that someday the organization will be different—and better—with everyone’s determination and buy-in” . Welch understood that in both small and large companies, who is “on the bus” is as important as thinking of a more propsperous future. Being on the bus meant aligning your personal goals and objectives with those of the new venture.
Welch was famous for instituting a system at GE where senior managers ranked their employees 1, 2, or 3’s. If you were a 1, you were considered a top preformer. The rating of 2 meant you were considered more of a marginal employee in some ways, but a solid contributor overall. The “3” rating meant you were out of a job at GE. This system kept people contributing at a rate that produced some of the best productivity in the history of GE.
Many people were highly critical of Welch and his management style, calling it “draconian”. However, his philosophy of keeping a rewarding the 1’s has been duplicated by many successful companies.

If you have not read Atlas Shrugged by Ayn Rand you might want to take a look at her economic scenario by reading the book. It is prophetic in how it describes the economic challenges our country faces today. My last reading helped me better understand the Occupy Wall Street movement too. This movement is a blatantly anti-capitalist group.

According to many academics, Occupy Wall Street finds their inspiration from the philosophy of anarchy.  Anarchists do not believe in a strong central government. Although many anarchists appeared happy with the election of a liberal president, they quickly became annoyed when the redistribution of wealth didn’t happen fast enough.

The rhetoric we hear most often from the Occupy movement appears to match the public sentiment described by Rand in the pages of Atlas Shrugged. In her book every profitable railroad (based in the 1930’s) or steel company was taxed or regulated out of business so the entrepreneurs set up a private state in Colorado outside the control of the federal bureaucracy.

Entrepreneurs were the real heroes according to Ayn Rand. Entrepreneurs lay the foundation for real freedom and choice. Government only helps with enforcing basic rules of law and does not get in the way. Entrepreneurs spread their wealth among those who are the most gifted and willing to risk their time, wealth, and reputation to grow the venture. And yes, those people that help them become rich and prosperous too.  Capitalism helps our economy grow.

How should our system work? Anarchists have a hard time describing their utopia because it does not sound good to most people. Chaos with clans ruling themselves? Anarchists claim it has never been tried “in the right way”. What about the cultural revolution in China or the establishment of Leninism in the old USSR? Wasn’t that a reordering of property rights and the rule of law?

On the other hand, entrepreneurs create jobs. Entrepreneurs are driven to fulfill consumer and business needs and benefit via profits.

Yes, the capitalist system is driven by the profit motive. Ideally, government provides both legal and police protection of private property but “gets out of the way of innovation and progress”. Capitalism may not be ideal, but there is no better system that has proven to work. Anarchy or Utopian societies did not work successfully on a large scale–period.

Capitalism is the engine that powers innovation and change according to Joseph Schumpeter. The reason businesses are willing to invest their savings into new ventures and hire people is make more more money (as evil as that sounds). Without government, entrepreneurs must police and protect of their own real and intellectual property.  That protection can be expensive and increase risk significantly.

Anarchists claim property rights are evil and prevent the “fair ” distribution of wealth, even if it is intellectual property or a patent.

One example of the difference between economic systems is job creation. Entrepreneurs create job opportunities for much less than the government ever could. Liberals believe government should create jobs because they can do it in a “fair” way.

As I understand it, Occupy Wall Street is all about choking off the sources of investment capital that fuel entrepreneurs and less a viable alternative to capitalism. Ayn Rand would be smiling if she could see our economic chaos today. She would not be happy to see the sympathy the Occupy Wall Street folks receive, but happy to see her predictions as played out in Atlas Shrugged nothing less than prophetic.