Endless Encores: A Brief Excerpt on Profits

EE CoverWith the September 22, 2015 publication of my second book, Endless Encores, I wanted to share a few excerpts to catch your interest. Published by The Story Plant, this is a business parable about People, Products, Profits—in that order. This excerpt is from the chapter about Profits.

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There was a modest rumble in the room. A flight had been called. It was not Daphne and Paul’s flight to Los Angeles, but both were heartened by the rustling of computer bags and rollaboards around them as fellow passengers-in-waiting began ambling to the door. It had been a long night, but now it appeared the delay would not go on forever, nor the conversation.

“We have hope,” proclaimed Paul. “We’re going to get out of here.”

“Hope is the strength that keeps us going,” said Daphne, watching people around her happily begin to leave the airport lounge. Since their flight wasn’t leaving, she had no reason to follow them, but she knew her remaining time with Paul would be limited.

“When you set out to determine strategy, how do you think about building the business so it keeps growing?” continued Paul. “No sane executive wants to lead a company into the Dead Brand Graveyard, yet so many end up there. Suppose they have the best people and the best products. How do they get their head around a business model that is going to both work now and expand into the future?”

“That’s the greatest enigma of all,” answered Daphne. “You have to think about recurring revenue alongside new revenue. Some transactions have to be there without your prodding, so you can add new transactions on top of them. If you’re going to spend money to acquire new customers, you have to balance that with what you’re spending to retain the ones you have. If all you do is spend to acquire new business, your margins will be perpetually squeezed. No fun, I assure you.”

“My boss says that all the time,” agreed Paul. “If every year you start the P&L from zero, it’s virtually impossible to grow. You have to know there is some business already on its way from your catalogue of products, and on top of that you add new product introductions.”

“Smart guy, your boss,” said Daphne. “He gets the mix a lot of us miss. Maybe he was at the same Paul McCartney concert I attended.”

“The same boss who isn’t going to can me for this lackluster sequel?”

“Yes, that clever fellow. Let me ask you something about that catalogue of products, the base of recurring revenue. Do you cannibalize your own markets before the competition does it for you?”

“Well, we don’t put out the same videogames, so it’s not exactly possible,” said Paul. “But if you’re asking do we sometimes leave one out there longer than we should to extract the last bit of profit from it, yeah, we do that sometimes.”

“How does it make you feel?”

“Queasy”

“Me, too,” winced Daphne. “I think we all do it to some extent, but the key to all of this is balance. Yes, you need a base of recurring revenue, but if you don’t give your customers something new and exciting before your competitors do, they will sweep your customers into their camp. You have to study and manage the ratios of evergreen and introductory endeavors at work in all your sales channels. Remember, constraints on distribution are low, choices are high.”

“It’s staggeringly hard to find the stamina to pull a product from the shelf when it’s still selling,” said Paul. “R&D costs are ridiculously high. We need all the sales we can muster for contribution margin to make sense.”

“One of the hardest choices in business is to pull a product while it’s still moving. Again, what we are talking about is strategy. Of course you don’t want to leave more money on the table than you should, but you’ll often find you need to leave some. If you don’t do it, your competitors will happily obviate your offerings. That can be the end of one brand and the birth of a new one that is no longer yours.”

♫ ♫ ♫

Endless Encores: Repeating Success Through People, Products, and Profits by Ken Goldstein is available in hardcover and as an e-book from Amazon, Barnes and Noble, iBooks, Kobo, IndieBound, Indigo, and at independent bookstores near you.

“Focus relentlessly on the extraordinary.” Pub Day

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Endless Encores: A Brief Excerpt on Products

EE CoverWith the September 22, 2015 publication of my second book, Endless Encores, I wanted to share a few excerpts to catch your interest. Published by The Story Plant, this is a business parable about People, Products, Profits—in that order. This excerpt is from the chapter about Products.

♫ ♫ ♫

Paul’s phone dinged. It was the text alarm. He was afraid to look, but he knew the Band-Aid had to be ripped off in one pull. He turned over the handset so they could both see it at the same time. The text read: “We’ll talk when you get back.”

“I’m not off the hook,” grumbled Paul. “Not even a little.”

“Did you expect you would be with a simple text?” asked Daphne. “He’s your boss, not your father. How much did your company invest in the sequel?”

“Millions. We’re not going to lose all of it. We may not lose any of it. We just aren’t going to make the kind of money we made on the original. Sequels in my business are supposed to do better than the originals as the brand and market expand. Everything we do can’t be a winner.”

“Would you let Randy or Helen off the hot seat for mediocre performance with just a text?”

“No, of course not,” said Paul. “I would remind them that there is no growth without risk, that we have to be willing to try things and fail, but when we fail we have to learn. It’s not failure if it’s learning, but there has to be learning. You have to capture that learning and harness it.”

“I suppose he’ll say something to the same effect,” said Daphne. “Of course, I’ve never met him, so you never know. He could mop the floor with you to make him feel better.”

“Thanks, I feel so much more chipper,” grimaced Paul.

“You should,” said Daphne. “Think about the opposite spectrum. Suppose you weren’t willing to risk failure and learn. Suppose you devoted all your energy to protecting the status quo. Think of a company that isn’t around anymore that tried that trick.”

“Kodak comes to mind,” said Paul. “I read somewhere that they developed the first digital camera in 1975, but kept it off the market because they were afraid of what it might do to their traditional film processing business.”

“Polaroid missed the shift to digital as well,” replied Daphne. “They didn’t have to stick with mechanical, self-developing prints. That was a choice.”

“It’s amazing how bad the blunders can be,” continued Paul. “Borders Books, Circuit City, Tower Records—they’re gone forever. With all the customers they had, the vast resources, all that talent and cash in the bank, these days they’re just names, empty shells. Businesses become nostalgia.”

“Tombstones, actually, all in the Dead Brand Graveyard,” said Daphne. “No Endless Encores there. The list goes on and on: Palm, Zenith, Blockbuster, CompUSA, Wang Laboratories—all once beloved brands, all now decaying tales of yesteryear. Now think of the once great brands about to fail, the ones you know will soon evaporate. What is their idea of risk?”

“Way too conservative,” answered Paul. “They’re afraid to take risks because they’re afraid of failing, when in fact they’re already failing by refusing to dance a little closer to the edge.”

♫ ♫ ♫

Endless Encores: Repeating Success Through People, Products, and Profits by Ken Goldstein is available in hardcover and as an e-book from Amazon, Barnes and Noble, iBooks, Kobo, IndieBound, Indigo, and at independent bookstores near you.

Endless Encores: A Brief Excerpt on People

EE CoverWith the September 22, 2015 publication of my second book, Endless Encores, I wanted to share a few excerpts to catch your interest. Published by The Story Plant, this is a business parable about People, Products, Profits—in that order. This excerpt is from the chapter about People.

♫ ♫ ♫

It was getting late in the evening, and as yet there was no additional update on the flight departures. At this point Paul was sort of hoping it would go that way. To leave this conversation unfinished was not something that held much appeal.

“What don’t I know that I wish I knew?” asked Paul, knowing that didn’t exactly come out right. “We put everything into this new game, everything we had to give, but the end result isn’t flourishing.”

“Seems like we’re making quick progress with that wall,” prodded Daphne. “The truth is, you already know everything you need to know. All I can do is perhaps get you to rethink it in a different context. Take me through the project from the beginning.”

“The good one or the follow-up?” asked Paul.

“Why would I want to retrace the path of mediocrity?” replied Daphne. “The good one, the big winner—where did you begin with the original Ethereal Gaze?”

“We started with a pitch. We’d been kicking around this concept for a few years, the idea of an enormous war game, galactic in scope, but without a lot of weapons—without any bullets, or tactical bombs, or spleens exploding, any of the normal shooter stuff that was leaping off the shelf. We said we’d try to do it with clever ideas of strategy, mind-blowing graphics, a full symphonic soundtrack, and characters that made you believe they were real.”

“Sounds visionary, heck of an agenda for a library of program code,” lauded Daphne. “You even went against the grain and tried to build something that wasn’t a proven big seller. But tell me, and I sort of asked you this before but it is worth repeating, who is we?”

“We, the team,” answered Paul. “The core design group, the people I see every day who completely know this stuff, who come up with the ideas that make it happen.”

“Cool, got it, then let me ask you, which came first, the concept, or the talent to create it?”

“Why do I think this is another trick question?” asked Paul.

“The last time you thought I asked you a trick question it wasn’t, so go with your instinct. Which comes first, the idea, or those who offer the idea? This is a key starting point, kind of like the chicken and egg thing, only we’re going to solve it.”

“You can’t have an idea without someone expressing it,” said Paul, hoping he hadn’t said something too obvious.

“There you have it, bulls-eye,” declared Daphne. “Not just someone expressing it, someone with the ability and training to express it, and then be able to deliver on it. A team or an individual, it doesn’t matter, the foundation is the same. Let’s talk a little about talent.”

“I’ll try to keep up with you,” remarked Paul. “You have a lot of big ideas.”

“Too many people I’ve encountered over the years in business think it’s solely the big idea that matters,” continued Daphne. “Don’t get me wrong, big ideas are critical to success. You need spectacular concepts when you envision new products and services you want to bring to market. We’ll talk about that shortly. But before you can even think about creating, marketing, distributing, and selling anything of value, you have to have the right people in place to get the job done. Desperate leaders spend too much time worrying first about output. Long-term leaders spend the majority of their time thinking about talent.”

“I don’t know about that,” replied Paul. “I live in a world where customers need to be hugely excited, almost frothing at the mouth, standing in line overnight outside the store, waiting for the product to release before it’s even on the shelf.”

“Don’t flatter yourself, in one way or another, we all do,” countered Daphne. “Great ideas can be thrilling, but they don’t make payroll. Ideas get the ball rolling, but they are overrated. We worry too much about those who would steal them. Getting a product to market that embodies a great idea is what matters, and that is extraordinarily difficult. Products don’t build themselves.”

♫ ♫ ♫

Endless Encores: Repeating Success Through People, Products, and Profits by Ken Goldstein is available in hardcover and as an e-book from Amazon, Barnes and Noble, iBooks, Kobo, IndieBound, Indigo, and at independent bookstores near you.

My Second Book

As noted by the title, tEE Coverhis post is meant to announce the forthcoming release of my second book, Endless Encores. It will be published by The Story Plant on September 22, 2015 in hardcover and as an eBook. Since that is still several months off and I have at times already mentioned the book is coming, let me come back to that in a moment.

I often get into the discussion of whether corporate mission statements matter.

I also wrestle with people on whether we are blowing hot air when we say we want to hire the very best talent we can.

Then there is the loaded question of whether bringing a true “change agent” into a company suggests an oxymoron.

The answer to all three of these questions for me is quite simple: It depends whether your answer is cursory or heartfelt, pat or authentic, expository or evangelistic.

You’re likely quite familiar with the expression Don’t Be Evil. It was the rallying cry of one of the most successful digital companies of our time in its offering prospectus. Here’s a tangent to that declaration I’d like to offer that can put to rest most questions around an empowering mission statement, talent that matters, and harnessing a change agent: Don’t Be Cynical. Today let’s call that DBC.

If you DBC when you speak to mission, you will find nothing more powerful to inspire people to do the best work of their careers. If you DBC when you speak to the impact of extraordinary talent, you will surround yourself with the real deal and reap the rewards. If you DBC when you identify a human change agent, you will open your doors to innovation and allow change to happen.

Fall back into corporate-speak on any of these borderline-highfalutin ideals, and you will suck all the life out of the room. No question. The spread between demoralization and inspiration is just that wide, but the line separating them is micropixel thin. Walk that line carefully. Fall to the wrong side of the balance beam and you lose; to the correct side, and you win.

That’s why I wrote Endless Encores.

What is cynical? Cynical is a poster in the lobby that reads “Our people are what we value most.” Then earnings are announced and miss expectations. Wall Street punishes your company’s stock. There is a layoff and a thousand people see that poster as they are walking out the door carrying boxes of work mementos.

What is DBC? DBC is the same lobby, same poster, but an announcement that because of a soft quarter, all senior management team members are deferring annual bonuses and taking a voluntary pay cut of 10% to cover the shortfall in earnings until the company regains growth momentum. No one walks out the door. The mementos stay on the desks. The boss holds a pizza party to reset the year’s goals. Everyone recommits to achieve growth together.

DBC can be extremely hard to master, mostly because we usually don’t set out to be cynical; we sadly roll ourselves into the muck tub. It’s great to say galvanizing words, but they inevitably have to be followed by felicity in our actions, and that’s when it becomes the greatest of all possible business challenges: to marry the power of intentions with the expectation of outcomes. Said another way: Can our delivered actions live up to our rousing words?

It’s not Utopian. It happens. It’s what matters. If you say it, mean it. If you mean it, do it.

Let’s make it harder. Can we do it consistently? Can we do it again and again? Can we have careers that span more than a single triumph, encompassing values that become us, delighting customers with outrageous excellence in good times and bad?

To invoke another catch phrase, Yes, We Can.

Speaking of catch phrases, if you’ve been following this blog for any amount of time, or even if this is your first visit, you’ll note in the blog’s description the words “People, Products, Profits—in that order.” Those are the business words I have tried to live by these last three decades, part rallying cry, part personal philosophy, part sanity meter. If you’ve worked with me you’ve heard those words way too many times and possibly even begun to repeat them. When I’m called to look at a creative company and I don’t see those words at play, they flow freely from my lips. There’s a reason. They work.

This book is about those words. It’s about how to have a career that matters, how to infuse those around you with passion, how to love your customers, how to innovate and reinvent without fear of failure, and how to avoid the trap of the one-hit wonder. That’s a lot to cover in so few words, and yet, the book is not a very long one (those who might have been concerned another volume like This Is Rage was on the way can breathe easy). Strangely, the book took me just as long to write, because as my wise editor, Lou Aronica, warned me in advance, writing simply about immensely complex ideas of discipline is no small trick. If you want to get people fired up about something that can change their lives without sounding like a soapbox pundit, you have to pick every word carefully, and that takes time.

Why condense a lifetime of highly personal learning into a book and share it with people I may never meet? I want you to succeed, over and over, and I know you can. I want you to understand why it will make you more productive to embrace the notion of DBC. I want you to master this framework, become a mentor, and pass on your good fortune to others. I want People, Products, Profits to be the worst-kept secret on the planet. I want you to take this little business parable, the story of Daphne Lonner and Paul Beckett, read it all the way through, and then keep it near your desk when you need a hit of pure oxygen.

You can repeat. You should repeat.

A few years ago I wrote a post called Dodging the Great Hits Graveyard. I had been at a Trans-Siberian Orchestra concert with my wife, sitting down front surrounded by fans who had come to hear the familiar tunes of their Christmas show. In the middle of the second set they stopped playing familiar tunes and introduced something completely new. There was an awkward pause, and it would have been easy to assume that the band had taken an immense risk and bit off a raw chunk of failure with the lost energy. Three years later, that song became the tent pole of a new album and tour, joyously celebrated by old fans as well as new. Somewhere in that window I knew I had to turn the fear of the new into a story of returning triumph, even if every triumph wouldn’t be a foregone conclusion. That’s when I knew I had to write about DBC. That’s when I knew I had to write Endless Encores.

I hope you’ll follow some of my recurring themes in the months leading up to publication, and once you have the book in your hands, please let me hear from you. Missions matter. Talent matters. Change agents matter. Don’t Be Cynical. Surround yourself with People, Products, Profits—in that order. You too can have a shot at a lifetime of repeat success, letting the moments of failure become learning opportunities, not endpoints.

Come meet Daphne and Paul. If innovation and reinvention are in your sights, their story might be your story. You can pre-order a copy of Endless Encores so it is sent to you on publication date. Below is an excerpt to give a sense of where this tale wants to take you. See you on the winning side of the balance beam.

♫ ♫ ♫

“Do you like music?” asked Daphne. “Contemporary bands, classic rock, pop tunes from various times?”

“Sure, of course,” said Paul. “Who doesn’t have a favorite band or two?”

“Those bands that are your favorites—did they have one or two hits, or a pretty decent run over the years?”

“You mean like the Eagles? The Rolling Stones? The Beatles? Obviously they had a string of hits, sometimes one after another.”

“How hard do you think it was for them to keep trying to top themselves?” asked Daphne.

“Hard,” conveyed Paul. “Very, very hard. In my business, hardly anyone repeats.”

“More like the one-hit wonders on the pop charts from the sixties, seventies, and eighties,” noted Daphne. “‘My Sharona.’ ‘Tainted Love.’ ‘Kung Fu Fighting.’ ‘Video Killed the Radio Star.’”

“You’re dating yourself a little,” chuckled Paul. “But yes, you nailed it. I don’t want to be a one-hit wonder. I don’t want to be like Friendster or Pet Rocks or the Cabbage Patch Kids. I want to make lots of hits, like you said, an endless series of hits. I want to be that guy. How do you make hits time after time after time?”

“A lot of us ask ourselves that question,” shared Daphne. “I wish I could tell you the answer. What I can tell you is that luck is not such a bad thing. It’s okay to embrace it.”

“Yeah, but can you repeat it?” asked Paul. “Can you make it happen again and again, predict it, make it repeatable?”

“From my experience, I think the best you can do is increase your odds. To build a career that allows for Endless Encores, you can never stand on your laurels. You have to be innovating all the time, not just when the clock is ticking against you. You do a little crowd pleasing with what they know, then a little thought leading by showing them something new.”

“It would be difficult to think about Endless Encores with a limited repertoire,” noted Paul.

“The only sure path to a limited repertoire is not to push yourself beyond the familiar. Your range is only gated by your courage to pursue the unknown, despite the doubters who relish the false safety of narrowing your path. You risk, you stretch, you can’t know what’s going to stick. No matter how much you know the familiar will carry you, you navigate the balance of old and new, constantly committing to reinvention. Repeat success is getting comfortable with the uncomfortable, knowing that luck will shine again, but never knowing when or how.”