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View Input as Resource, Not Threat

“View Input as Resource, Not Threat”

Two minds are better than one.

Left to your own devices, you’re bound to come up with good ideas. But tap the minds of willing and able employees, and those ideas can be finessed into something incredible. Sometimes, a different perspective is all it takes. Other times, someone in the group will come up with a winning idea that could save your business millions of dollars. Either way, being open to others’ input can prove a valuable resource to your business. Consider the following companies, both of which are currently listed on the NASDAQ exchange:

Entrepreneur No. 1: CEO of a gourmet food-by-mail company. A Mr. Do-It-All, he devised the strategy. He made the decisions. He gave the orders. And every year, he took some pretty searing heat at the stockholders’ meeting.

Entrepreneur No. 2: President and CEO of an upscale plants-by-mail company. Always has someone in his office bouncing ideas around. His department devises the strategy as a group. He makes the decisions, but gets complete cooperation. He asks for feedback about strategy implementation and adjusts accordingly.

The profiles:
Company No. 1Company No. 2
Employees: 61Employees: 57
1998 Gross: $27.1 mil1998 Gross: $26.8 mil
1998 Net-net: $125,0001998 Net-net: $9.4 mil
Product Prices: $3.95-$995   Product Prices: $3.99-$799

The key figure is the net-net. Note that both companies invested in substantial expansion, costing roughly $6 million to each company.

Many factors could superficially account for the profit differential, but after consulting with both New England-based firms, it became clear that No. 1’s inability to accept productive input from employees was sinking the company.

For the proof, consider No. 1’s management style:

  1. No. 1’s company had 16 warehouses that were constantly receiving new (and often perishable) product, but wasn’t moving the old inventory. The operations manager suggested revamping the system. "We’re keeping the old one," the CEO said. Nearly a fifth of the inventory regularly spoiled or was not fit for sale, an entirely avoidable loss.
  2. Entrepreneur No. 1’s desire to build an empire resulted in premature expansion. He opened six warehouses in one year, against the advice of the CFO, who warned that revenues would not support the overhead. Stockholders revolted; board members were vilified.
  3. The logo was changed three times in eight months, against the protests of the marketing director. The CEO also wanted to start charging $19.95 a year for "subscriptions" to the direct-mail pieces. The marketing director quit; loyal customers were alienated; the Direct Marketing Association’s suppression file grew 18% and sales dropped 14%.

Now compare the above with Entrepreneur No. 2’s philosophy:

  1. "I asked our reps to write up the questions they get asked most," he says. "That resulted in a new product line, now our company’s most profitable."
  2. By listening to employees who used their company discount to buy Christmas gifts, plant "collections" were born. The efficiencies of one shipment with a higher ticket increased profits 16% in that category.
  3. A customer survey, done at the suggestion of a marketing assistant, revealed that gardeners also like to cook, eventually leading the company to acquire a small gourmet kitchen catalog. Preliminary result: 13% direct-mail response.

Note: The board of directors forced out Entrepreneur No. 1 last April.

Writer: LeAnn Zotta is a strategic marketing consultant in Yarmouthport, Mass.