“The E-Myth” Required Reading for Business Start-ups

The Next Wave loves to work with startups and young businesses. We highly recommend “The E Myth Revisited” by Michael Gerber to budding entrepreneurs because of its many insights into the new business process. I was assigned reading it as part of my account executive internship. Continuous learning is a big part of working here, from the moment you apply until the moment you leave.

The E-Myth Revisted book coverThe myth of the entrepreneur is one of a person working against all risks, all odds, all fears, to achieve the dream of starting one’s own business. When we see business success from afar we see a legend, someone who faced all the risk and made it.

That false legend status is the reason why over 40 percent of new businesses fail in the first year, 80 percent in the first 5 years. What causes such drastically high levels of failure? Barring major economic changes or socio-political shifts, the vast majority of business failure is due to one thing, the person who started it bought into the myth of the entrepreneur.

The vast majority of new business owners start from the same spot. You work a number of years and develop a mastery of a technical skill. This is usually followed by the idea that, “I can do this work, very well actually, why am I still doing it for someone else?”

This is “The Fatal Assumption,” as Gerber author of The E Myth, calls it. The myth, that if you understand the technical work of a business, you automatically understand the RUNNING of a business that does that technical work, yet what most entrepreneurs don’t know is, they are two completely different things.
Gerber says one must learn that once you start a business you are no longer working IN you business, but your focus should now be working ON your business. What does that mean? It means as a business owner you must now commit fully to constant and continuing education and improvement.

This holds especially true since your business is a direct reflection who you are as an owner personally. If you are disorganized, your business will be. If you are greedy, your employees will learn to be greedy too, if you are not educating yourself constantly, your business will wither and die. Gerber continues, “people who are exceptionally good in business aren’t so because of what they know, but because of their insatiable need to know more.”

An “ insatiable need to know more.” There is no secret to starting a successful business, one must learn the risks deeply, learn the market clearly, and be willing to accept all of that before the even think of writing a business plan. The greatest weapon against failure is knowledge, and as Gerber agrees, knowledge and success go hand in hand when it comes to business.

If you already are a business owner or should you be interested in starting a new business, the following 5 questions will help you come to a certain quick conclusion:

  • Can my business work without me?
  • How can my employees learn to work without my direct interference?
  • Is my business systematized enough to be franchised nationally or even globally right now?
  • As an owner, how can I also free myself of my business?
  • How can I spend time doing the work I love instead of the work I have to do?

If after this exercise you realize that you DON’T know the answers to these questions, congratulations, you’re already on your way to having a stronger business because you now “know what you don’t know.”

Knowledge, is the foundation upon which your business will be successful. Seek out the questions, since you know now they will lead directly to the answers that drive success.

See Gerber’s “The E Myth” as well as many other incredible book resources for your business success on our booklist.

Advertising done right: "United Problem Solvers" campaign for UPS

UPS is an old brand. FedEx was the upstart. FedEx marketed like crazy, to sell its speed and reliability- “when it absolutely has to be there overnight.” UPS was dragged kicking and screaming into consumer advertising, and had a CEO that didn’t believe marketing was the answer. Maybe that’s why “We run the tightest ship in the shipping business” and “What can brown do for you” and finally “We [heart] Logisitics” all didn’t really talk to the consumer- but- about UPS.

First thing to understand about great advertising- it’s not about you, it’s about what you can do for your customer.

Finally, Ogilvy hit the nail on the head with the new UPS campaign “United Problem Solvers”- telling consumers exactly what they want to hear- UPS solves my problems.

“It does signal a way to look differently at UPS and what we can offer, instead of just thinking of our capabilities of making shipments from point A to point B,” said Maureen Healy, vice president of customer communications.

The ad campaign highlights offerings including temperature sensitive health-care solutions, its ability to help grow small businesses and its e-commerce expertise for retailers.

The company has tried to convey a broader message before. Indeed, the new campaign replaces the company’s previous campaign, “We [Heart] Logistics,” which had been in place for nearly five years and targeted companies aiming to sell their wares globally.

“It’s very hard to break through to have people think differently about UPS, because they think they know what they need to know about UPS,” said Alda Abbracciamento, world-wide managing director at advertising firm Ogilvy & Mather, who worked with UPS on the campaign. “While very well-known, we’ve got to provide additional meaning to that.”

via UPS Launches New Ad Campaign – WSJ.

Pivoting the United Parcel Service UPS brand to “United Problem Solvers” may not have been the easiest sell to a company that’s been in business since 1907, but since they’d abbreviated the name to UPS so long ago- they’d lost the essence already. And while those in the business may still use the word “parcel”- we’re in a much less formal era when companies will say “ship my pants” – for shock value. UPS needed a refresh from stodgy- and if you think parcel is an antiquated name- let’s get real- we all thought you were lying when you said you loved logistics.

Good campaigns can change the way consumers view your brand almost overnight. Wendy’s found it out with “Where’s the beef” which hammered home the unique product differentiation that had Wendy’s burgers hanging out past the edges of the bun. Nike found their groove with “Just do it” and now, we may be see UPS finally finding their mantra.

 

The JC Penney rebranding strategy of "Fair and Square Pricing"

JCPenney LogoThere is a difference between selling Apple products and clothes. Ron Johnson, formerly Apple’s retail chief and the new CEO of JC Penney is finding that out quickly. Critics of his move from constant sales to an always fair pricing strategy are having a field day with a Forbes article calling it an “Epic Rebranding Fail”

But nevertheless they launched “Fair and Square Pricing” whereby promotions and sales would be a thing of the past, for the most part, and in their stead would be everyday prices, “best prices” which would be available to consumers on the first and third Friday of each month, plus they would mix in some month-long values, too.

The new tagline ”Enough. Is. Enough.” would speak to the belief that consumers were inundated with promos, coupons and sales and what they really wanted was just plain, old-fashioned, everyday low prices.

No sizzle, just the steak.

via JC Penney’s Epic Rebranding Fail – Forbes.

It’s easy to armchair quarterback these bold moves, many (including this author) thought when Apple decided to open bricks and mortar stores it was a move in the wrong direction. Gateway had failed miserably doing the same thing- and yet, Apple is now considered the most profitable retailer on the planet.

However, there is a big difference between JC Penney and Apple- JC Penney is more of a curator of retail while Apple is the owner of the product. Yes, I can get Apple products elsewhere, but at an Apple store I’m dealing direct. At JC Penney, I can get the products elsewhere and anywhere- there is no exclusivity to what JC Penney sells- or what the brand stands for.

JC Penney Doesn’t Pass the Hand test

The Hand Test- From "The Brand Gap" by Marty Neumeier

Put your hand over the logo and you still know what company made the product and the ad.

In Marty Neumeir’s classic book, “The Brand Gap” he uses Apple as the example when introducing “The Hand Test.” If you cover up the logo of the product in the ad- will you know what the product is? Apple passes with flying colors. JC Penney can’t ever do this. Their products, the brands they sell, their brand itself isn’t able to stand on it’s own. By their very nature, the department store model is nothing other than the supermarket of shopping in comparison to the convenience store. Same products, different experience in selection and purchase. There is nothing exclusive to JC Penney products and once you buy them, they belong to you- not to JC Penney. Compare that to Apple. Once you have an iPhone or a MacBook Air- the brand cachet is still there and there is a connection between you and the brand.

Pricing isn’t a strategy- it’s a tactic

This seems to be the part that Mr. Johnson missed in Marketing 301. Price alone isn’t why people buy- it’s perceived value that is critical. What does JC Penney add in value to the products they sell? Well, nothing really. Do we have any reason to trust JC Penney as a qualified curator of value? Nope. They’ve been through three rebrandings in as many years- and even before that, it’s been a long time since JC Penney held any kind of unique position in the eye of the consumer- if ever. For most consumers the JC Penney brand could go away tomorrow and they wouldn’t miss it. We’ve seen it before as Macy’s has gobbled up other regional department stores, rebranded them and customers barely skipped a beat. The brand name of most department stores stands for nothing- possible exceptions being Neiman Marcus which once stood for exclusivity and expensive, Nordstrom which built a reputation on amazing customer service and Sears which had brands like Craftsman, Kenmore and Die Hard that stood for solid American values.

JC Penney is a brand without a position. And since brands aren’t controlled by the marketer, but by the consumer, the way they introduced their new positioning of the brand has been way off target. Pointing out that consumers are tired of being assaulted with ads promising values based on inflated initial pricing is true. Focusing on the competition isn’t usually the best way to spend your advertising dollar. Yes, consumers know that MSRP is a joke, and from diamonds to donuts, everyone wants to pay less- but, are always willing to pay a little more for perceived value. Where is the value proposition for JC Penney?

The Value of “Fair and Square Pricing”

We believe in fair honest prices. When gasoline is sold for dollars per gallon, it’s insane that we still see $3.59.99 prices, especially when the penny, the 1cent piece, is on the verge of being done away with.  The old psychology of .95 or .99 cent pricing to erase perceptions of whole dollar prices being more may still work with the geriatric set, but younger consumers are less likely to be swayed by it. The value of JC Penney not manipulating prices up and down is great- but, when buying fashion, the brand needs to stand for something. We’ve seen denim jeans elevated from durable work clothes to designer label with outrageous price tags- yet, say the word JC Penney and what emotional trigger do they hit?

Our friend Sally Hogshead lists seven triggers in her book Fascinate: Passion. Mystique. Alarm. Prestige. Power. Rebellion. Trust (well, actually, she changed Lust to Passion and Vice to Rebellion just to be absolutely correct). You can find out more about the seven triggers here: The Fascinate System If JC Penney is going to rebrand and be relevant to the consumer, they need to at least score highly on one or two of the triggers. right now, they don’t. Is “Rebellion” against sales and manipulation enough? Hardly, Walmart and Target have been promising some sort of everyday low prices for years.

The “Enough. is. Enough.” line is more about the mendacity of marketing than about the value to the consumer. The TV spot introducing the new pricing is enough to instantly annoy a viewer who already views TV commercials an intrusion to their entertainment.

It will take JC Penney more than a few quarters to transform themselves into a value retailer, which many consumers may find attractive as they grow to understand it. Think about how most department stores are deployed- in a mall with several other competitors. Shoppers go to the mall to find fashion, after looking in Macy’s, Sears, and the other two anchor stores, as well as places like The Gap, Hollister, Abercrombie & Fitch, Aeropostal etc Penney’s may win over converts if they can get consumers to come through their doors to compare. Changing the experience of shopping can take time and while the pundits are quick to write this concept off, once JC Penney finds its new voice and can trip one or two more emotional triggers, they may find the success they are seeking.

Knowing what your brand stands for in the consumers head is the first step to making the sale. Since the consumer controls your brand, changing those perceptions isn’t an overnight or several quarter effort. We believe that Mr. Johnson has the right tactic but needs to find the strategy to convince customers that the value of “Fair and Square Pricing” is more than just saving a few bucks- it’s a statement above fashion about fashion.

Yes, consumers are tired of being lied to, but, they still want the mirage of an oasis beyond the doors to your store.

When wearing clothes from JCPenney becomes a fashion statement (I have the common sense not to be gullible), JC Penney will win.

 

Make History, Don’t Repeat It

Apple recently reported their second quarter earnings of 2012 and to say the least, they are very, very impressive.

How did they manage to do that?!

Apple has provided astonishing goods, services, and they have kept amazing relationships with their customers, but as most business owners know there’s more to it than that. The reality is that they’ve created paradigm shifts and they’ve always thought different. That’s the true strategy that brings in $11.6 billion in quarterly net profits. It’s all about providing nothing less than amazing.

Here's to the Crazy Ones

Creativity is the core of advertising

We’re in the business of creativity. Advertising is just a word to describe the industry we’re working in. We’re no Apple, but what we do brings our clients larger audiences and noticeable presences. Yes – we will work closely with you, but what’s more important is that we will think differently to market and grow your business.  Google has said it best: don’t be evil.  It’s easy to understand why it’s wrong to be unfair to your customers, but what’s more crucial is understanding that you are hurting yourself every time you attempt to repeat history.  Make your own history. Take the risk – make decisions that are odd and abnormal. If you are the first one to do it, then you’ll be the first to get noticed.

Questions for the small business owner

So what are you doing to make sure your customers remember you? How are you reaching them? How are you thinking different?  If you can’t answer these questions quickly maybe it’s time to change what you’re doing.

Our motto is simple – our job is to make you more money than you pay us.  We are here to do precisely that, so what’s stopping you?  It’s time to establish your brand, attract an audience, and permit the edge of the universe to be your limit.

Video for fund raising events: there is a secret formula

Once a year the local runaway shelter, Daybreak, hosts a fund raising breakfast where they have table captains invite 9 people for a free meal.  Of course there’s a catch, you have to sit through a program that makes you feel warm and fuzzy about their charity cause. This year, the fifth year of using the “secret formula” for raising money- Daybreak asked The Next Wave to provide the 7 minute video for the event.

Yes, folks- it’s prescribed as 7 minutes, and you are supposed to make the audience cry 3 times. It’s near the close of the session, just before the gut-wrenching, heartfelt story of success despite the odds, and the final ask for donations.

After watching the four previous years videos, we knew one thing- we weren’t going to do anything like them: a montage of interviews, “recreations” and narration by staff. It was time for something totally different- something where you wouldn’t know what’s coming- or get caught up in the delivery of the story- just a focus on the story.

Our original idea was to draft David Chappelle to do the MC of the video- and I actually spent 20 minutes talking with him, face-to-face, and offering to pay him to help us out. The goal was to bring national attention to the shelter- and to make more kids aware that it was a positive place for them- instead of an option of last resort. Unfortunately, Mr. Chappelle isn’t reliable- so we found one of Daybreaks own to step in- Mr. Robert Neal Jr.

By placing the clients behind the screen- 60 minute anonymous interview style- we knew that our audience would focus on the story- not on the personalities, when the ending came, it would all draw together in a powerful close. We didn’t want slick production values- and the number of times we had to set up made it an even more daunting task- but the real payoff was the results- watch the video before you look to see how effective it was.

I watched the audience at the table next to me: totally riveted to the big screen, when the totals were counted:

For the first time they had a donor pledge at each of the two highest levels- $10K a year for 5 years and $5K a year for 5 years. Total donations were higher than ever before. They took the concept of the “Fairy tale” gone wrong- and built the whole morning on the theme. While sometimes we wonder if selling more widgets is truly a noble cause, the opportunity to help a great social service organization headquartered a mere 4 blocks from our office makes us proud to do what we do.

As to the secret formula- yes, the whole one hour program follows a fixed script on how to manipulate an audience into giving money. It has worked like clockwork for our client, however, this year, it worked even better.

That’s why we are The Next Wave.

The Web 2.0 marketer: where every page is a home page

We teach a seminar called Websitetology to try to educate clients on web 2.0. We also teach a fair number of other ad agencies (even the local competition) because, well, that’s the kind of people we are.

One of the things we stress is that if you aren’t on the first page of Google you don’t exist, and that content drives traffic. Build valuable content and they will come.

Unfortunately, it’s falling on mostly dead ears. Even huge advertisers like Apple, Burger King and BMW don’t seem to understand how to port their marketing to the web properly. It’s not about how your site looks, especially your “home page”- it’s about the content on every page: every page is home for someone- about something.

So- it was good to see new media bigwigs Avenue A/Razorfish do a study to confirm what we already knew- excerpts from the Ad Age article follow- with a short primer on what we know works on the web:

Do Home Pages Have a Place in Web 2.0’s Future? – Advertising Age – Digital
Avenue A/Razorfish: Brands’ Main Sites Decline in Importance as Consumers’ Reliance on Search Grows
By Abbey Klaassen Published: October 01, 2007

Garrick Schmitt was sitting in a meeting, listening to a client talk about the need to make its website “Web 2.0-compliant,” complete with tag clouds and profile pages. “Tag clouds?” thought Mr. Schmitt, VP-user experience at Avenue A/Razorfish. “Really?”…

The request seemed curious to him — do that many people really use tag clouds that a brand marketer’s website needed to incorporate them? Surprisingly, he couldn’t find the answer to that question. So he decided to find out. (more…)