Investing and Ingenuity

Sometimes you make do with what is available.  I couldn't resist taking a photo of this shovel I spotted on a trip to Niger some years ago.  I've replaced a number of shovel handles through the years, but never had to go find a tree, cut a branch and trim it to fit.  I usually just went to the farm store and bought a handle.  Some people replace the shovel.

I have to applaud the ingenuity of whoever did this.  It was leaning against the wall in a small enclosure where there was a group of young men making mud bricks.  You will notice the wall behind the shovel is made of mud bricks and plastered over to seal it.  Most of the housing in the village where I spotted this was made of the same mud bricks and plaster.  The building materials were primitive, but effective.

I've been involved in a number of startup businesses through the years.  Some burn through cash on the biggest, best and brightest.  Those for which I was responsible for running operated a little differently -- we did our best to get by on ingenuity.  Where possible, we made do with what we had, found an inexpensive way to accomplish the task, or, if it couldn't be avoided, focused our spending on the things that were most critical to growing the business.

I guess my thinking came from both my father and grandfather (maternal).  Both had a knack for figuring out ingenious ways to either build or, substitute something else for what was needed to get things done.  They were the "hands on" type.  They didn't hire someone to change the oil in their pickup, they did it themselves.  Grandpa's barn was a place of repairs.  He had tire-repair tools -- some of which had been made in his shop with a welder and cutting torch -- for patching the tires on the many wheeled trailers, implements and vehicles on his farm.  It didn't make sense to take a tire off and haul it 10 miles one-way to town to have it fixed.  He had a tire patching kit and did it himself.

I wonder today if many new businesses fail because they don't know how to "make do" but, instead act as though they are already successful, spending money on things they could do themselves.  Those are the things "behind the scenes" that are away from the customer eye.  You want your public persona to be polished and professional, but there are always things behind the scenes that don't require the biggest and best -- like the desk and high-dollar artwork on the wall.  If you don't need $5,000 computers, why buy them? Don't sink money into brick-and-mortar until you have to -- rent.  If you don't need a full-time bookkeeper, hire a service.  "Fix your own flats" -- or, replace the handle in your own shovel.

Each situation is different and requires a thoughtful approach.  My point is that if you start a business spending money like a Hollywood Movie Star your chances of failure increase dramatically.  Conserve your resources until they begin to build.  Then, rather than burning through cash, invest back into your business in ways that are meaningful -- that will help it to continue growing.

I remember back in the 90's the primary stockholder of a company I worked for brought his wife, a former beauty queen, with him to see a prototype of a machine my group had been developing.  She was on her knees, looking under the equipment, studying it, trying to understand how it worked and asking great questions.  I'll never forget her comment -- "It's important to see what we are investing in.  I know we are making lots of money but, we don't see much of it; it all goes back into the company!"

It changed my perspective.

Links and Learning

The publisher of the trade publication for which I write sometimes refers to me as her "Renaissance Man."  It is a flattering appellation and one with which many are not familiar.  It refers primarily to something more specifically described as polymathy.

Polymathy generally refers to familiarity with various subjects ranging across a wide variety of disciplines (my definition).  It is a generalist, to put in the simplest of terms.  You might say that it means a "jack of all trades and master of none."

That probably is a good description of my personality, or to put it differently, "one of these days I will figure out what I want to be when I grow up."  Either I haven't figured it out yet, or I haven't grown up -- I don't know which; I continue to be interested in a wide variety of subjects.

One area of study common to those who exhibit polymathy in which I have failed is that of mastering multiple languages.  I struggle with basic Texican, let alone other languages.  I have long had the desire to learn other languages -- that counts doesn't it?  In my mind I can easily place myself in situations in which out of the depths come the proper words and syntax when placed in situations requiring fluency in another language, but the reality is much different.  I recently had the opportunity to interact with a group from Russia and found it difficult to master even a handful of words.

Polymathy, as a path for learning, is one that has endured many fluctuations through the years.  Recent history has pushed it to irrelevance as this age of specialization has forced depth of knowledge as opposed to breadth.  Some have recognized that breadth is necessary at times in order to "connect the dots" between various disciplines so that solutions don't "fall through the cracks" for lack of communication between different fields of study, but it is not commonly pushed within the halls of academia.  "Connecting dots" is, in my opinion, the role of management -- seeing the relationships between things and then making certain resources and systems are available to ensure the dots are connected.  Maybe that's why I sometimes exhibit traits of polymathy -- I have spent most of my career in management.  Specialists get the work done, but management is responsible for heading them down the correct path in order to accomplish the overall goal of the organization.

If you have any interest in understanding what is encompassed by polymathy you might consider the Wikipedia article linked here.  I thought it was interesting, but I tend to think many things are interesting....

An MBA Mentality

As I dive into this topic, please don’t mistake my attitude toward education. I believe an educated society is crucial to the proper operation of our government, to the advance of society, and to a civil public discourse. However, through my years in business I have found that often, there are attitudes which come with a formal education that are counterproductive to business productivity.

A large portion of my career has been spent in sales or sales related activities. My formal title has never been salesman – it has been manager. Managers should be fully engaged in the sales activities of a business or it is likely the business will fail – whether it is retail, wholesale or a service business.

Many organizations – especially large ones – believe that the best managers have MBA’s (Master of Business Administration). From a logical perspective it makes sense. Find someone who has been formally educated in how to run a business and let them run your business. The problem comes when the MBA manager has no practical experience in the day-to-day function of the business itself. They have the head knowledge, but lack the heart knowledge. They know the tools but they don’t know the business – at least not from the hands-on level. Generally their understanding is conceptual in nature – not practical.

Why do I bring this up? Because it seems that I often spend an inordinate amount of time educating my suppliers on the realities of agriculture.

The MBA manager mentality is often one that is focused on the numbers or benchmarks. It is focused on “objective” measurement of factors which indicate progress in the business. This can be things such as the number of sales calls made, the number of contacts at a Trade Show, the percentage of gross margin -- both average and per sales, and similar easily measurable statistical indicators. They have been taught techniques for handling particular situations that regularly occur in business – like competitive pricing issues – and respond according to the “book” answer. The problem is that they have never walked in the shoes of their sales force or of their customer.

The last item is the key. The most successful people that I know understand their customer. They have either been involved in a business similar to what their customer does, or have spent enough time with their customer to understand their business or situation. They look at their own business through the eyes of their customer. They take time to see what their customer sees and adjust their business accordingly.

Do we do this in agriculture? Do we see ourselves from our customer’s point-of-view? When was the last time you spent time examining your operation from the outside? When was the last time you walked through the grocery store and took a hard look at your product – whether it is beef or cotton or wheat – from the consumer’s perspective? How does the quality of your product compare to competing products? What about price?

We are seeing a number of fundamental shifts in our economy. Fuel prices will soon drive dramatic changes of behavior in how we conduct business and in how consumers allocate their dollars. Transportation costs will force many things to be produced locally that have historically been shipped long distances – such as produce. Are we in agriculture merely riding the tide of the ethanol boom or are we preparing for the inevitable changes that the energy economy will drive?

We are good at managing the numbers. In today’s business environment, if a farmer or rancher can’t manage the numbers he’d better have a second job to support his habit. But, are we good at seeing our industry from the perspective of non-farmers and ranchers? If we educated the public to our business and educated ourselves to what the public truly wants, could we do a better job at providing for their wants and needs? When we can do that, there will be plenty of rewards for the effort. Don’t just focus on the numbers of your business; understand your customer and adjust accordingly.

Also published on Common Sense Agriculture, Conservation and Energy.

Fighting Fires vs Focus

Where has the week gone?!? It seems like only yesterday that we were driving home from New Mexico. I guess it seemed to fly by because it was so busy.

On Monday I drove to Kansas to work at our business location there and to meet with a couple of customers. On Wednesday I returned home late and spent yesterday and today at our business location here in the Panhandle. After being off last week (although admittedly I did work some from home part of the time) I had a rather large pile of things that had accumulated while I was out of the office. I have been diligently checking items off of my "to do" list throughout the week and feel that I accomplished quite a lot -- but not everything that I had planned.

That "to do" list is critical to keeping me on task. I spend some time each morning reviewing items from the previous day, adding additional tasks that have popped up, and thinking about priorities so that I can organize my day in a fashion that moves me toward my goals. Without planning, it is easy to become sidetracked into tasks that need to be done, but may not be as important as other things. I rank my tasks according to priority -- I use a modified Franklin-Covey time management system. I always allocate some time for working on long-term projects that are not necessarily "critical" but are important to my long-term goals.

The daily "fires" can be a killer if you do not spend time on the things that will prevent the fires from occurring. The best way to describe that is to give an example from my past. In a previous job I was given the task of evaluating an operating distribution warehouse in Sioux Falls, South Dakota. I was to determine if it should remain open and if so, how it could be turned around from a loss situation to a profitable one. It was a disaster. The warehouse was disorganized, the products were not in assigned locations, the computer system was not set up to match the warehouse, the inventory was off by several hundred thousand dollars, and the employees had no clue what to do. They were working 14 hour days in survival mode.

The "fires" were to get products out the door to meet the orders that were coming in on a daily basis. The solution was to get the warehouse and computer system in order and the employees properly trained. It took almost 3 months to get everything lined out and functioning on a reasonable basis. Then it was a matter of "trimming" the operation so that it became more efficient. I focused on the most important factor in the situation -- correcting the issues in the warehouse. Piece by piece, as the "operating system" was corrected, the fires began to disappear.

While correcting the warehouse operations I also had to work with the salesmen to adjust how they were working their territories. They were doing everything backward. Without going into detail, we turned the division completely around in less than two years. It went from a loss of approximately $350,000/year to a profit of over $400,000/year in that two year time frame just by re-focusing everyone's efforts.

My point is that when you focus on the deep issues -- the things that will move you toward your goals -- the panic response to daily fires disappears. That doesn't mean the occasional issues won't come up, but they become fewer and much farther between.